Jacomb v Wikeley HC Wellington CIV 2010-485-997

[2010] NZHC 2111

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

CIV-2010-485-997

BETWEEN  MICHAEL JOHN JACOMB

TRENA KATHLEEN JACOMB AND PETER REGINALD RICHARDSON Plaintiffs

AND  KENNETH DAVID WIKELEY

ALSO CALLING HIMSELF KENNETH DAVID WIKLEY

Defendants

Hearing:         On the papers

Counsel:         G J Toebes for Plaintiffs

M Lenihan for Defendant

Judgment:      26 November 2010

JUDGMENT (COSTS) OF CLIFFORD J

[1]      Mr Wikeley applies for costs on his successful defence before me of the trustee plaintiffs’ summary judgment application.   He does so notwithstanding the decision in NZI Bank v Philpott [1990] 2 NZLR 403, accepted authority for the general rule that the question of costs on an unsuccessful summary judgment application is reserved for the substantive hearing. Mr Wikeley’s opposition to the plaintiffs’ application included the proposition that “no obligation for repayment has yet arisen out of the terms of the guarantee”. Given that in declining summary judgment I concluded similarly, Mr Wikeley argues that this is an occasion where, notwithstanding that general rule, costs should be awarded in his favour. The

plaintiffs oppose, relying on that general rule.

JACOMB AND ANOR V WIKELEY (COSTS) HC WN CIV-2010-485-997  26 November 2010

[2]      In  NZI  Bank  v  Philpott  a  defendant  had  successfully  opposed  summary judgment on a basis that had been signalled in correspondence which took place between  the  parties,  and  that  had  been  unequivocally  raised  in  the  notice  of opposition filed three days before the hearing.  Costs were awarded to the defendant in the High Court.

[3]      Reversing that award the Court of Appeal held that, if a plaintiff is ultimately successful in litigation, the Court may enquire as to why the summary judgment application was dismissed and, if satisfied that this was due to some fault on the part of the plaintiff, may decline to award costs on the earlier hearing.   The Court of Appeal considered that the best course was, therefore, to reserve costs except in the exceptional case where the plaintiff’s use of the summary judgment procedure amounted to an abuse of process, that is, where the procedure was used erroneously, unreasonably, by way of an experiment or with certain knowledge of its failure.

[4]      I declined the plaintiffs’ summary judgment application because I considered it was at least arguable that the relevant guarantee documents were to be interpreted on the basis that no liability arose until the full amount of the relevant loan had fallen due  for  payment.    Mr  Lenihan  acknowledged  that,  whilst  he  argued  that  that reasoning was reflected in the ground of opposition referred to in [1], the defendant’s position had not been made plain for “tactical reasons”.

[5]      In these circumstances, I do not think this is one of those exceptional cases of the type referred to by the Court of Appeal where the general rule should not be followed.   That is, although I acknowledge that Mr Toebes for the plaintiffs recognised the strength of the argument once I had articulated it, I do not conclude that the plaintiffs embarked on the summary judgment application with “certain knowledge of its failure”.   If Mr Lenihan chose not to show his hands for tactical reasons, then that tactic counts against awarding costs in Mr Wikeley’s favour.

[6]      I  also  record  that  the  plaintiffs  have  indicated  that,  when  the  difficulty identified in my earlier judgment as to the time at which liability under the guarantee will crystallise has been resolved by the passage of time, they are likely to apply again for summary judgment.  It may be, therefore, that they will succeed on their

second summary judgment application, and the matter will not proceed to a substantive hearing.   Be that as it may, and whether they succeed or fail on that application, I think the general principle in NZI Bank v Philpott applies.  If they are successful on a second summary judgment application the Court at that point can consider the question of costs on the unsuccessful first application.  It may well be that,  if  the  second  summary  judgment  application  succeeds,  the  Court  would consider it appropriate for costs to lie where they fall, reflecting the earlier unsuccessful application.  Alternatively, and if the matter proceeds to a substantive hearing, the question of costs can be resolved at that point.

[7]      I therefore decline to award costs in Mr Wikeley’s favour and reserve that matter pending the final outcome of this dispute.

“Clifford J”

Solicitors:   JTLaw, P O Box 25443, Wellington for the plaintiffs (J Toebes)

Jones Young, P O Box 189, Auckland for the defendant (Counsel: M Lenihan, P O Box

1294, Auckland