JMB Trust Limited v China Animal Husbandry Group
[2025] NZHC 3123
•20 October 2025
IN THE HIGH COURT OF NEW ZEALAND HAMILTON REGISTRY
I TE KŌTI MATUA O AOTEAROA KIRIKIRIROA ROHE
CIV-2023-419-123
[2025] NZHC 3123
BETWEEN JMB TRUST LIMITED
Plaintiff
AND
CHINA ANIMAL HUSBANDRY GROUP
First Defendant
BODCO LIMITED
Second Defendant
Hearing: On the papers Counsel:
W D Hofer for Plaintiff
B A Keown and T N Hutchinson for First Defendant
Judgment:
20 October 2025
JUDGMENT OF O’GORMAN J
[As to costs]
This judgment was delivered by me on 20 October 2025 at 4 pm pursuant to r 11.5 of the High Court Rules 2016.
Registrar/Deputy Registrar
…………………………………
Solicitors:
Tompkins Wake, Hamilton
Bell Gully, Auckland
JMB TRUST LTD v CHINA ANIMAL HUSBANDRY GROUP [2025] NZHC 3123 [20 October 2025]
[1] In a judgment delivered 1 July 2025, I dismissed the claims of the plaintiff, JMB Trust Ltd (JMB Trust) against the first defendant, China Animal Husbandry Group (CAHG).1
[2]CAHG has filed a memorandum seeking costs of $857,645.66, comprising:
(a)disbursements of $319,099.46;
(b)scale costs of $49,712 on a 2B and 2C basis (depending on the specific step) up to 27 February 2025 (when JMB Trust rejected CAHG’s settlement offer); and
(c)actual costs of $521,034.40 on all steps taken after 27 February 2025.
[3] CAHG accepts $32,200.20 is deductible from the award of costs, being the amount it says JMB Trust is entitled to as a result of the costs orders made in Jagose J’s judgment of 13 September 2024.
[4] The plaintiff has filed a memorandum taking the position that the Court ought not award increased or indemnity costs. It has not otherwise commented on the first defendant’s calculation of scale costs set out in Appendix 1 of its memorandum (a total of $137,544.50), the claimed disbursements, or the proposed deduction for JMB Trust’s outstanding costs entitlement.
Legal principles
[5] The Court has a general discretion to award costs under r 14.1 of the High Court Rules 2016.
[6] Subject to that discretion, r 14.2 provides the principles to be applied in most cases:
(a)Under r 14.2(1)(a), the party who fails with respect to a proceeding or an interlocutory application should pay costs to the party who succeeds.
1 JMB Trust Ltd v China Animal Husbandry Group [2025] NZHC 1758.
(b)Under r 14.2(1)(b), an award of costs should reflect the complexity and significance of the proceeding. For those purposes, r 14.3 provides for three categories of proceeding (1, 2 or 3).
(c)Rule 14.2(1)(c) provides that costs should generally be assessed by applying the appropriate daily recovery rate to the time considered reasonable for each step reasonably required in relation to the proceeding or interlocutory application. The reasonable determination of time is set out in r 14.5 by band (A, B or C).
(d)Rule 14.2(1)(f) provides that an award of costs should not exceed the actual costs incurred by the party.
[7] The above position of limiting a losing party’s liability for costs to scale in most cases is supported by access to justice considerations.2 Other objectives are that the determination of costs should be predictable and expeditious.3
[8] Rule 14.6 provides for increased and indemnity costs. Relevantly, rr 14.6(3) and (4) provide:
(3) The court may order a party to pay increased costs if—
…
(b)the party opposing costs has contributed unnecessarily to the time or expense of the proceeding or step in it by—
…
(iii) failing, without reasonable justification, to admit facts, evidence, documents, or accept a legal argument; or
…
(v) failing, without reasonable justification, to accept an offer of settlement whether in the form of an offer under rule 14.10 or some other offer to settle or dispose of the proceeding; or
2 Bradbury v Westpac Banking Corp [2009] NZCA 234, [2009] 3 NZLR 400 at [10]; and Ben Nevis Forestry Ventures Ltd v Commissioner of Inland Revenue [2014] NZCA 348, (2014) 22 PRNZ 322 at [13].
3 Lawrence v Glynbrook 2001 Ltd [2015] NZHC 1005 at [18]–[20], citing North Shore City Council v Body Corporate 188529 [2010] NZCA 234, (2010) 20 PRNZ 740 at [12].
…
(4) The court may order a party to pay indemnity costs if—
(a)the party has acted vexatiously, frivolously, improperly, or unnecessarily in commencing, continuing, or defending a proceeding or a step in a proceeding; or
…
(f) some other reason exists which justifies the court making an order for indemnity costs despite the principle that the determination of costs should be predictable and expeditious.
[9] Indemnity costs are exceptional. Indemnity costs under r 14.6(4)(a) requires that the unsuccessful party has pursued a “hopeless case”,4 being a position “totally without merit” 5 and “bound to fail”,6 or one commenced or continued for an ulterior motive or where there has been wilful disregard of the known facts or the clearly established law.7 A party’s misconduct can qualify as grounds only if it is “flagrant”,8 or constitutes “exceptionally bad behaviour”.9
[10] Under r 14.6(3) the circumstances where increased costs may be appropriate include a failure to act reasonably,10 or where the party opposing costs has contributed unnecessarily to the time or expense of the proceeding by pursuing an argument that lacks merit, or unreasonably failing to accept a legal argument. In such a case, the Court must consider the extent to which the failure to act reasonably contributed to the time or expense of the proceeding and it is only to that extent that any percentage uplift from scale can be justified.11
[11] Rule 14.10(1) of the High Court Rules provides that a party to a proceeding may make a written offer to another party at any time that is expressly stated to be
4 Ben Nevis Forestry Ventures Ltd v Commissioner of Inland Revenue, above n 2, at [17].
5 TheCircle.co.nz Ltd v Trends Publishing International Ltd (in liq and in rec) [2021] NZCA 235, (2021) 25 PRNZ 766 at [34].
6 Big Basin Ltd v Stockco Ltd [2023] NZHC 2130 at [45].
7 Ben Nevis Forestry Ventures Ltd v Commissioner of Inland Revenue, above n 2, at [17]; and Big Basin Ltd v Stockco Ltd, above n 6, at [53].
8 Batley v MacDonald [2025] NZHC 2122 at [17], citing Bradbury v Westpac Banking Corp, above n 2; and Prebble v Awatere Huata (No 2) [2005] NZSC 18, [2005] 2 NZLR 467 at [6].
9 Phillips v Heremaia [2025] NZCA 394 at [14], citing Bradbury v Westpac Banking Corp, above n 2, at [28].
10 Bradbury v Westpac Banking Corp, above n 2, at [27].
11 Commissioner of Inland Revenue v Chesterfields Preschools Ltd [2010] NZCA 400, (2010) 24 NZTC 24,500 at [165].
without prejudice except as to costs and relates to an issue in the proceeding. The offer may only be taken into account if it is better than or close to the benefit achieved by the other party under the judgment.12 Under r 14.11(1), the effect that the making of such an offer has (if any) on the question of costs is at the discretion of the Court.13 Even when a settlement offer has been unreasonably refused, the Court has cautioned against increasing any award of scale costs above 50 per cent,14 in the absence of exceptionally bad behaviour or very unreasonable conduct. Factors that may be relevant to the exercise of discretion include:15
(a)the size of the offer relative to the actual costs of counsel;
(b)the amount of the claim;
(c)the reasonable expectations of the party that refuses the offer;
(d)the amount of preparation for trial already undertaken;
(e)whether the proceeding concerns an uncertain area of law;
(f)whether the parties were in a position to assess the merits when the offer was received;
(g)the information available to the party who receives the offer and the extent to which they can to assess the offer;
(h)the timing of the offer; and
(i)the conduct of the offeror.
12 High Court Rules 2016, rr 14.11(3) and (4). See Gorringe v Pointon [2023] NZCA 426 at [36]−[37].
13 Under r 14.11(2)(b), the principles in rr 14.6 and 14.7 apply. See Weaver v HML Nominees Ltd [2016] NZHC 473 at [30].
14 R Kumar Holdings Ltd v TDL Group Ltd [2025] NZHC 1617 at [27]; Vanifatova v Wang [2025] NZHC 2265 at [21]; Deliu v Attorney-General [2023] NZHC 2375 at [25]; and Holdfast NZ Ltd v Selleys Pty Ltd (2005) 17 PRNZ 897 (CA) at [46]–[48].
15 Vanifatova v Wang, above n 14, at [14]; and Weaver v HML Nominees Ltd, above n 13, at [30].
[12] Rule 14.12 governs awards of disbursements incurred during a proceeding. Disbursements (including the fees of expert witnesses)16 are usually recovered in full, if reasonably incurred. The rule relevantly provides:
14.12 Disbursements
(1)In this rule,—
disbursement, in relation to a proceeding,—
(a) means an expense paid or incurred for the purposes of the proceeding that would ordinarily be charged for separately from legal professional services in a solicitor’s bill of costs; and
(b) includes—
(i)fees of court for the proceeding:
(ii)expenses of serving documents for the purposes of the proceeding:
(iii)expenses of photocopying documents required by these rules or by a direction of the court:
(iv)expenses of conducting a conference by telephone or video link; but
(c) does not include counsel’s fee.
(2)A disbursement must, if claimed and verified, be included in the costs awarded for a proceeding to the extent that it is—
(a) of a class that is either—
(i)approved by the court for the purposes of the proceeding; or
(ii)specified in paragraph (b) of subclause (1); and
(b) specific to the conduct of the proceeding; and
(c) reasonably necessary for the conduct of the proceeding; and
(d) reasonable in amount.
…
Party submissions
[13]This proceeding has already been classified as category 2.
16 New Zealand Bus Ltd v Commerce Commission [2007] NZCA 502 at [218]–[219].
[14] In terms of its calculation of scale costs, CAHG accepts that most steps in the proceeding should be assessed on a band B basis. The steps for which band C has been claimed are:
(a)Step 20 (discovery): This was a significant cross-border discovery requiring a manual review of over 10,000 documents and managing content in different languages.
(b)Step 33 (preparation of evidence and agreeing common bundle): A comparatively large amount of time was required given the broad scope and number of allegations dating back to 2014.
(c)Step 33B (preparation for hearing): The same complexities and challenges applied for the step of preparing for hearing.
[15] On 21 February 2025, CAHG solicitors sent a written settlement offer labelled “without prejudice except as to costs”, as provided for in r 14.10 of the High Court Rules, with the effect governed by r 14.11. The offer was for CAHG to acquire JMB Trust’s shares for $300,000. This was almost double the highest amount that CAHG’s expert had sworn the shares could be worth, even adopting the most favourable speculative alternative valuation methodology. The offer stated that CAHG would seek increased costs if the offer were rejected and the plaintiff did not do better at trial. If the parties proceeded to trial, CAHG indicated that it expected to incur costs exceeding $500,000. The deadline for acceptance (subject to contract) was 5 pm on Wednesday, 26 February 2025.
[16] In a letter dated 27 February 2025, JMB Trust rejected that offer, and made a counter-offer to sell its shares for $4 million.
[17] Based on its rejected offer dated 21 February 2025, the first defendant seeks indemnity costs from that date, submitting that they were properly and necessarily incurred, and reasonable in amount. The costs claimed from 28 February 2025 onwards were invoiced at Bell Gully’s standard charge out rates less a 20 per cent discount.
[18] A costs adjustment has been made in respect of interlocutory applications already addressed by costs decisions.17 In a judgment dated 13 September 2024, Jagose J directed CAHG to pay the actual costs and disbursements reasonably incurred by JMB Trust in respect of certain applications.18 However, by judgment dated 13 December 2024, Lang J directed that JMB Trust was not entitled to any costs in respect of its unsuccessful 13 November 2024 discovery application, as it was filed out of time and without leave.19
Analysis
[19] In terms of the calculation of scale costs, I accept that it is appropriate to classify the steps listed at [14] above as band C (for the reasons given), with the balance of the steps classified as band B.
[20] The offer made on 21 February 2025 was better than the result achieved by the plaintiff under the judgment, therefore it is relevant to the question of costs. However, I do not accept that indemnity costs are justified. While the claim was weak and failed, I do not classify the plaintiff’s pursuit of the claim as exceptionally bad behaviour or very unreasonable conduct.
[21] I consider that an uplift of 40 per cent from 27 February 2025 is appropriate, considering the following factors:
(a)Both parties made offers that represented almost entire success on their respective positions, without significant compromise to bridge the gap and incentivise the avoidance of significant legal costs for both parties.
(b)The offer did not allow much time for consideration. It was made only shortly before trial after the plaintiff had already incurred significant expense (given those are sunk costs, I accept the plaintiff’s assessment of net expected value at that point might have been higher than the offer,
17 High Court Rules, r 14.17.
18 JMB Trust Ltd v China Animal Husbandry Group [2024] NZHC 2653 at [10].
19 JMB Trust Ltd v China Animal Husbandry Group [2024] NZHC 3833 at [38]–[40].
taking into account even a low chance of success and other potential remedial outcomes).
(c)The plaintiff had already incurred the costs and delays of CAHG’s ongoing non-compliance with timetable orders, culminating in an unless order. Its dissatisfaction with discovery placed it in a position where it had to prioritise maintaining the fixture, with increased uncertainty about how trial evidence might unfold.
(d)Against the above, I accept the claims were weak.
[22] Set out in the schedule is my calculation of the effect of the above on the calculation of costs.
[23] Appendix 2 of the first defendant’s cost memorandum sets out the disbursements claimed. No issue has been taken with the reasonableness of those disbursements, which include substantial out-of-pocket expenses for discovery, translation services and the fees of expert witnesses. I accept they are all properly claimed.
Result
[24]I award the first defendant costs of $172,677.50 plus disbursements of
$319,099.46.
[25] From the above sums, CAHG has accepted it will offset (deduct) $32,200.20 payable by it to the plaintiff under previous costs orders.
[26] Interest is awarded on the net amount under s 10 of the Interest on Money Claims Act 2016 from the date of this judgment until payment in full.
O’Gorman J
Schedule
Costs on a 2B/2C basis with uplift Step Description Time allocation Total 2 Commencement of defence by defendant (band B) 2.00 $4,780.00 9 Pleading in response to amended pleading (band B) 0.60 $1,434.00 10 Preparation for first case management conference (3 x 0.4) (band B) 0.40 $2,868.00 11 Filing memorandum for case management conference or mentions hearing (17 x 0.4) (band B) 0.40 $16,252.00 12 Appearance at mentions hearing or callover (2 x 0.2) (band B) 0.20 $956.00 13 Appearance at case management conference (band B) 0.30 $717.00 16 Notice to answer interrogatories (band B) 1.00 $2,390.00 20 List of documents on discovery (band C) 7.00 $16,730.00 21 Inspection of documents (band B) 1.50 $3,585.00 Total for steps before settlement offer
$49,712.00
33 Preparation of briefs, list of issues, authorities, and agreeing common bundle (band C) 12.00 $28,680.00 33b Preparation for hearing (band C) 9.75 $23,302.50 34 Appearance at hearing for sole or principal counsel (to nearest quarter day) 10.00 $23,900.00 35 Second counsel (5 per counsel) 10.00 $11,950.00 Total for steps after settlement offer
$87,832.50
Uplift of 40 per cent $35,133.00 TOTAL SCALE COSTS WITH UPLIFT $172,677.50
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