Janes v Benney

[2019] NZHC 2719

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2019-404-580

[2019] NZHC 2719

BETWEEN

KIM JANES

First Plaintiff

JADE PAUL VATSELIAS
Second Plaintiff

AND

MARGARET BENNEY
First Defendant

DANIEL JOHN REED
Second Defendant

UNLIMITED POTENTIAL LIMITED

Third Defendant

SANDI ANDERSON

Fourth Defendant

Hearing:

On the papers

Appearances:

K Sheehan for the Plaintiffs

C R Andrews for the Second and Third Defendants No appearance for First and Fourth Defendants

Judgment:

24 October 2019

COSTS JUDGMENT (No.2) OF ASSOCIATE JUDGE R M BELL

This judgment was delivered by me on 24 October 2019 at 11:00am

pursuant to Rule 11.5 of the High Court Rules.

…………………………………

Deputy Registrar

Solicitors:
Kate Sheehan, Auckland, for the Plaintiffs

McVeagh Fleming (C R Andrews), Auckland, for Second and Third Defendants

JANES v BENNEY [2019] NZHC 2719 [24 October 2019]

[1]    Before this case is sent to the District Court, costs in this court need to be resolved. There are two aspects:

(a)For those parts of the case that remain alive, costs need to be set to assist the District Court in awarding costs after the case is heard there.

(b)For those parts of the case that have now been resolved, costs orders are required before the case is transferred to the District Court.

[2]    The plaintiffs sued the vendor, Ms Benney (the first defendant), the real estate salesman, Mr Reed (the second defendant), the real estate agency, Unlimited Potential Ltd (the third defendant) and their lawyer, Ms Anderson (the fourth defendant). The plaintiffs applied for summary judgment against them all.

[3]    Costs in the claim against Ms Benney have been resolved. Ms Benney did not oppose the summary judgment  application.  I  gave  Ms  Janes  judgment  against Ms Benney for $267,955.25 plus interest, but that was a partial award only.1 I fixed costs payable by Ms Benney in my minute of 7 October 2019. Ms Janes may now enforce her judgment against Ms Benney. She does not wish to continue her claim against Ms Benney for further damages.

[4]    The plaintiffs withdrew their application for  summary  judgment  against  Ms Anderson, the fourth defendant. After my decision of 5 August 2019, the plaintiffs and Ms Anderson settled. The plaintiffs have discontinued against Ms Anderson. No costs issues arise there.

[5]    Mr Reed and Unlimited Potential opposed the plaintiffs’ applications for summary judgment and cross-applied for summary judgment against the plaintiffs. Unlimited Potential also counterclaimed for unpaid commission and sought summary judgment on the counterclaim.

1      Janes v Benney [2019] NZHC 1911.

[6]    I dismissed the plaintiffs’ application for summary judgment against Mr Reed and Unlimited Potential. I granted Mr Reed’s and Unlimited Potential’s application for summary judgment against Mr Vatsellias. I struck out Ms Janes’ cause of action for breach of contract against Mr Reed, but dismissed his application for summary judgment against her. I dismissed Unlimited Potential’s applications for summary judgment against Ms Janes.2

[7]    On settling with Ms Anderson, Ms Janes discontinued against Mr Reed and Unlimited Potential. In the meantime, Unlimited Potential applied for leave to appeal to the Court of Appeal against my decision dismissing its summary judgment applications. Aside from the appeal, the only part of the case left alive was Unlimited Potential’s claim for commission of $28,000. As that was easily within the jurisdiction of the District Court, I said that the case should be heard there, and an appeal was not required.3

Costs for the District Court

[8]    A District Court Judge will decide costs after a defended hearing of Unlimited Potential’s claim for commission. That costs award will need to allow for costs for steps taken in this court. To assist the District Court Judge, I fix the amounts of those costs.

[9]    Under r 14.13 of the High Court Rules 2016, I direct that costs are to be fixed according to the High Court scale. That is because the plaintiffs began this proceeding in this court. It therefore made sense for Unlimited Potential to counterclaim in this court, rather than to start a separate proceeding in the District Court, even though the unpaid commission is within the District Court’s civil jurisdiction.

[10]   If Unlimited Potential succeeds in the District Court, the High Court costs it will be able to claim are:

2      Janes v Benney [2019] NZHC 1911.

3      Minute of 7 October 2019.

Item	Category	Daily rate	Days	Amount
4	Counterclaim	$2,230.00	1.6	$3,568.00
22	Application for summary judgment on counterclaim	$2,230.00	0.6	$1,338.00
11	Memorandum of 16 May 2019	$2,230.00	0.2	$446.00
12	Appearance at mentions hearing on 21 May 2019	$2,230.00	0.2	$446.00
24	Submissions for summary judgment hearing	$2,230.00	1.5	$3,345.00
26	Appearance at defended summary judgment hearing on 5 August 2019	$2,390.00	0.75	$1,793.00
Sub-Total:	$10,936.00
Disbursements	Filing fee on counterclaim	$1,350.00
TOTAL:	$12,286.00

[11]   On the other hand, if Ms Janes successfully defends the claim for commission, she will be able to claim the following costs for steps taken in this court:

Item	Category	Daily rate	Days	Amount
2	Commencement of defence	$2,230.00	1.00	$2,230.00
11	Joint memorandum of 16 May 2019	$2,230.00	0.2	$446.00

12	Appearance    at mentions hearing        on 21 May 2019	$2,230.00	0.2	$446.00
24	Preparation     of written submissions	$2,230.00	1.5	$3,345.00
25	Preparing bundle         for hearing	$2,230.00	0.6	$1,338.00
26	Appearance    at defended summary judgment hearing        on 5 August 2019	$2,390.00	0.75	$1,793.00
Subtotal	$9,598.00
Disbursements	Filing     fee on counterclaim	$1,350.00
TOTAL:	$10,948.00

[12]   Some allowance is required for Ms Janes to begin her defence of the counterclaim, just as there must be an allowance for Unlimited Potential to begin its counterclaim. She does not have 3 days for starting the proceeding, because she discontinued. The defence of the counterclaim is independent of the discontinuance. I allow band A and 1 day for Ms Janes to begin her defence of the counterclaim.

Costs on the discontinuance

[13]   As the plaintiffs have discontinued against the second and third defendants, the starting point for fixing costs is r 15.23 of the High Court Rules:

15.23   Costs

Unless the defendant otherwise agrees or the court otherwise orders, a plaintiff who discontinues a proceeding against a defendant must pay costs to the

defendant of and incidental to the proceeding up to and including the discontinuance.

[14]   McGechan on Procedure at HR15.23.01 sets out the principles taken from the cases:4

(a)The r 15.23 presumption obviates any requirement for the defendant to demonstrate that the plaintiff acted unreasonably in commencing and then discontinuing the proceeding. The defendant has the advantage of the presumption even when there has not been such unreasonableness.

(b)Although the r 15.23 presumption is designed to give a certain and practical outcome upon discontinuance, it may be displaced if the court finds there are circumstances which make it just and equitable that it should not apply.

(c)Although the court is not limited in the factors it may take into account when considering whether the presumption is displaced, generally:

(i)The court will not consider the merits of the respective cases, unless they are so obvious that they should influence the costs outcome.

(ii)The court will consider the reasonableness of the stance of both parties up to the point of discontinuance: whether it is reasonable for the plaintiff to bring and continue the proceeding; and for the defendant to oppose the proceeding. The plaintiff will not be able to avoid the presumption by showing that at one point it had reasonable grounds for believing it would be successful in the proceeding.

(iii)The reason for discontinuing may be relevant, for example, a change of circumstances rendering the proceeding unnecessary. However, it must be clear that the plaintiff would have succeeded had the circumstances not changed.

(d)The court’s general discretion under r 14.1 as to costs can also override the general principles relating to discontinuance.

[15]   Ms Janes discontinued against Mr Reed and Unlimited Potential after she had obtained judgment against Ms Benney and after she had entered into a settlement with Ms Anderson, the fourth defendant. In these circumstances, the discontinuance of her claims against Mr Reed and Unlimited Potential is understandable. While I do not know how much she obtained under her settlement with Ms Anderson, she obviously

4      Andrew Beck and others McGechan on Procedure (online ed, Thomson Reuters) at [HR15.23], citing Kroma Colour Prince Ltd v Tridonicatco NZ Ltd [2008] NZCA 150, (2008) 18 PRNZ 973; FM Custodians Ltd v Pati [2012] NZHC 1902 at [10]-[12]; and Opus International Consultants Ltd v Colac Bay Vision Ltd [2015] NZHC 1782.

considered that that sum, plus whatever she could recover from Ms Benney, was enough to compensate her for her loss. It was no longer necessary for her to continue her claim against the land agent.

[16]   For Ms Janes, Ms Sheehan cites  Body  Corporate 81381 v Trebe  NZ  Ltd   (in liq),5 as an example where costs were not ordered against a plaintiff who discontinued against one defendant after the plaintiff had settled with all other defendants. That approach recognises the benefits of settlement. Awarding costs to a defendant who has not participated in a settlement but who has benefited from it by the discontinuance would create a disincentive to settle and may prolong proceedings.

[17]   The final merits of the dispute between Ms Janes and Unlimited Potential have not been resolved; they are still alive. They will be decided in Unlimited Potential’s commission claim in the District Court. Any costs award in the District Court, which will include costs I have set above, will reflect the parties’ respective success or failure on the substantive merits. Accordingly, all other matters being equal, it may be appropriate to let costs lie where they fall, to await the outcome in the District Court.

[18]   But all other matters are not equal. The plaintiffs’ applications for summary judgment against Mr Reed and Unlimited Potential were unnecessary. Claims for breach of professional duty, even against land agents, are generally unsuitable for summary judgment determination.6 The claim for damages for the agent’s alleged failure to advise that a deposit had not been paid was new (as opposed to the question whether the agent was entitled to its commission). The court is wary of pronouncing on breaches of professional duty in summary judgment applications, as they often turn on how the facts are found.

[19]   It was unnecessary to make Mr Vatselias a plaintiff to the causes of action against Mr Reed and Unlimited Potential. While he may have been in a de facto relationship with Ms Janes, he did not have any recognisable legal interest in the

5      Body Corporate 81381 v Trebe NZ Ltd (in liq) HC Wellington, CIV-2003-485-332, 10 September 2003.

6      Economy Services Ltd v Smith & Hughes (1989) 2 PRNZ 657 (HC); Ghent v Brinkman HC Wellington CP379/87, 11 September 1987; Ball v NZ Debt Repay Ltd (in liq) HC Auckland CP490/02, 5 August 2003.

Clifton Road property. Neither Mr Reed nor Unlimited Potential owed him any duties. He had no standing.

[20]   It was unnecessary to sue Mr Reed. Mr Reed clearly acted as a salesperson for Unlimited Potential, and it was vicariously liable for his acts and omissions.7 Having him in the proceeding added nothing but more costs and effort. These unnecessary aspects to Ms Janes’ case added to the matters that Unlimited Potential had to deal with, and to its costs.

[21]   On the other hand, Unlimited Potential added unnecessarily to the costs of the proceeding by applying for summary judgment. It also failed in its summary judgment applications. Its application for leave to appeal to the Court of Appeal was also unsuccessful, because the proceeding was more suitable to go to a full hearing on the merits in the District Court. But even if Ms Janes had not discontinued, leave to appeal was not assured. A better option would have been to allow the case to go to a hearing on the merits, and leave any appeal rights to be exercised following a final judgment.8

[22]   Weighing these matters up, I assess Ms Janes as having caused more unnecessary costs to Unlimited Potential than the other way round. I assess that at two extra days’ work carried out before 1 August 2019: $4,460.

Mr Reed

[23]   Mr Reed and Unlimited Potential appropriately had joint representation and there is therefore no need to make a separate order for costs in favour of Mr Reed.9 Unlimited Potential undertook the conduct of the case on behalf of them both. The costs order is in favour of Unlimited Potential alone, not Mr Reed.

7      Real Estate Agents Act 2008, s 51.

8      Siemer v Heron [2011] NZSC 133, [2012] 1 NZLR 309; Li v Chief Executive of Ministry of Business Innovation and Employment [2018] NZHC 1171; and Body Corporate 202692 v Auckland Council [2019] NZHC 1696.

9      High Court Rules 2016, r 14.15.

Mr Vatselias

[24]   Unlimited Potential seeks a separate order for costs against Mr Vatselias. It says that his claims are entirely at an end and there is no part of his case to be transferred to the District Court. It says that his claim was entirely unsuccessful. It seeks costs  of $9152 plus a filing fee for the  notice of opposition.   That  treats     Mr Vatselias as though he were some independent party in the proceeding. He was, however, linked to Ms Janes. While he may have been an appropriate plaintiff in the claim against Ms Anderson, he had no standing for the claim against the second and third defendants. But that is a matter of simple misjoinder. It does not warrant an order of the scale sought by Unlimited Potential. Instead, the matter can be addressed in the way I have set out above, as being one of the matters that goes to Ms Janes paying costs on the discontinuance. Given that Ms Janes and Mr Vatselias have now separated, it would add unnecessary complexity and expense to make a separate order for costs against Mr Vatselias. If I were to do so, it would not be for the amounts sought by Unlimited Potential.

Summary

[25]   Ms Janes is to pay Unlimited Potential Ltd costs of $4,460 on the discontinuance.

[26]   This proceeding is now transferred to the District Court at Auckland under s 94 of the District Court Act 2016.

[27]   For any costs decision made in the District Court the costs claimable by Unlimited Potential Ltd if it wins for steps taken in this court are $12,286. The costs claimable by Ms Janes if she succeeds are $10,948.

……………………………….

Associate Judge R M Bell