Joden Finance Limited v Auckland District Court

[2021] NZHC 1900

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2020-404-1061

[2021] NZHC 1900

IN THE MATTER

of an application for judicial review

UNDER

The Judicial Review Procedure Act 2016

BETWEEN

JODEN FINANCE LIMITED

Applicant

AND

THE AUCKLAND DISTRICT COURT

First Respondent SANHACHAI PRERSSILP

Second Respondent

Hearing:

2 June 2021

Counsel:

D Beard for applicant

A Fuiava for second respondent

Judgment:

27 July 2021

JUDGMENT OF KATZ J

[Costs]

This judgment was delivered by me on 27 July 2021 at 10:00 am pursuant to Rule 11.5 High Court Rules

Registrar/Deputy Registrar

Solicitors:Denham Bramwell Lawyers, Manukau Legal Street, Auckland

JODEN FINANCE LTD v AUCKLAND DISTRICT COURT & PRERSSILP [2021] NZHC 1900 [27 July 2021]

Introduction

[1]    Sanhachai Prerssilp purchased a Mercedes Benz S350 motor vehicle from Joden Finance Ltd (“Joden”), a second-hand car dealership. The car had several faults, which Joden endeavoured to repair, but ultimately could not fix.

[2]    Mr Prerssilp invoked his right under the Consumer Guarantees Act 1993 (“the Act”) to reject the vehicle, as it was not of acceptable quality.1 Under s 20(1)(c) of the Act, however, the right of rejection will be lost if goods are damaged after delivery to the consumer for reasons not related to their state or condition at the time of supply. Joden argued that Mr Prerssilp had lost his right of rejection by damaging the vehicle when he hit a kerb.

[3]    The Motor Vehicle Disputes Tribunal (“the Tribunal”) disagreed.2 It held that the damage to the vehicle was not substantial enough to qualify as “damage” within the meaning of the Act. Mr Prerssilp’s rejection of the vehicle was upheld.

[4]    Joden appealed to the District Court on the basis that the Tribunal erred in its interpretation of s 20(1)(c).3 Judge Harrison found that the damage had to impair the value of the vehicle to such an extent that it would be unconscionable to force the supplier to accept it back. In this case, however, the Tribunal had found that the damage did not exceed fair wear and tear. Mr Prerssilp had not therefore lost the right to reject the vehicle. Joden’s appeal was dismissed.

[5]    Joden then sought a judicial review of the District Court decision in this Court.4 On 19 April 2021, Joden’s application for judicial review was dismissed. I found that the Tribunal and the District Court were correct to find that minor damage to goods, such as that associated with fair wear and tear, would not result in the purchaser losing their right to reject the goods.5 Further, it was not open to Joden to challenge the Tribunal’s factual findings about the degree of damage in the context of the judicial review proceeding.

1      Section 6(1).

2      Prerssilp v Joden Finance Ltd [2019] NZMVDT 185.

3      Joden Finance Ltd v Prerssilp [2020] NZDC 12239.

4      Joden Finance Ltd v Auckland District Court [2020] NZHC 823.

5 At [29].

[6]    I expressed the preliminary view that Mr Prerssilp was entitled to costs on a 2B basis, but reserved leave to file memoranda if costs could not be agreed.6 Costs have not been agreed.

[7]Mr Prerssilp notes that 2B scale costs for this proceeding would amount to

$17,208. However, he was granted legal aid for these proceedings and incurred actual costs of $13,635. As an award of costs should not exceed the costs incurred by the party claiming costs,7 Mr Prerssilp claims his actual costs of $13,635.

[8]Joden submits that costs should lie where they fall as:

(a)the judicial review proceeding was a test case that raised an important question of law in terms of how s 20(1)(c) of the Act should be interpreted, against the backdrop of inconsistent decisions of the Tribunal; and

(b)Joden’s financial circumstances mean that it cannot meet the award of costs.

Should costs lie where they fall on the basis that the proceeding was a test case?

[9]    The general rule is that the party who fails with respect to a proceeding should pay costs to the party who succeeds.8 This is, however, subject to the Court’s overriding discretion as to costs.9 The discretion not to award costs has sometimes been exercised where a losing party has brought a test case to Court to clarify the law on a particular point.10 A test case raises a novel point of law, rather than involving only the exercise of applying settled principles of law to a particular set of facts.11

6 At [40].

7      High Court Rules 2016, r 14.2(1)(f).

8      Rule 14.2(1)(a).

9      Rule 14.1.

10 See for example Civil Aviation Authority of New Zealand v Heavylift Cargo Airlines Pty Ltd [2008] NZCA 76 at [52]; Ye v Minister of Immigration [2009] NZCA 291, [2009] 2 NZLR 596 at [331]; and Tasman Pulp and Paper Ltd v New Zealand Forestry Corporation Ltd CA272/90, 27 November 1992.

11 Birkdale Service Station Ltd v Commissioner of Inland Revenue [2001] 1 NZLR 293 (CA) at [85].

[10]   I acknowledge that the decisions of the Tribunal on the application of s 20(1)(c) of the Act were difficult to reconcile. Nevertheless, both the Tribunal and the District Court correctly stated the law on the proper interpretation of s 20(1)(c) in their decisions in this case. It was not necessary, as Joden contends, to bring a judicial review proceeding to the High Court for authority on this point to bind the Tribunal. The Tribunal was already bound by the (correct) decision of the District Court.

[11]   In any event, the manner in which the judicial review proceeding was run suggests that clarification of the law was not a key objective of the proceeding. Although the legal argument regarding the proper interpretation of s 20(1)(c) may have been the primary focus of Joden’s appeal to the District Court, its main focus in this Court was challenging factual findings of the Tribunal (which Joden had not challenged in the District Court).12 Joden also sought to adduce further evidence in support of those factual contentions.

[12]   I have accordingly not been persuaded that costs should lie where they fall on the basis that the judicial review proceeding was a test case.

Should costs lie where they fall because Joden cannot meet an award of costs?

[13]   The Court may exercise its discretion as to costs in light of the financial circumstances of the parties.

[14]   Joden submitted that costs should lie where they fall as the company’s financial circumstances mean that it cannot meet an award of costs. Joden referred to Lepcha v Immigration and Protection Tribunal, where Andrews J made an order for reduced costs as:13

The applicant was out of work for six to seven months up to 1 November 2013, since when he has been in paid employment which will end in April 2014, apparently due to visa conditions. It is also noted that the applicant and his family have little in the way of assets. There is a car valued at $6,000, and three bank accounts with very small balances in them. It is submitted that the applicant and his family are struggling financially, made more pressing by the

12    The District Court Judge (whose decision was under review) simply adopted the factual findings of the Tribunal on appeal. The alleged errors of fact therefore could not be raised in an application for judicial review.

13 Lepcha v Immigration and Protection Tribunal [2013] NZHC 3227 at [2].

fact that a new baby is expected in April 2014, and the applicant's partner will then spend several months on maternity leave.

[15]   In support of this submission, Joden provided financial statements purporting to show that for the financial year ending 31 March 2020 its net profit was $386, it has equity of $4,063, and only $1 in its bank account. It owes $142,191 as a related party receivable to the Hawea Trust, which is a 99 per cent shareholder of Joden. Joden is simultaneously said to be owed as related party receivables a total of $143,784 from Central Car Company Ltd, Greenlane Car Company Ltd and Paris Motor Group Ltd. Its assets are said to be $4,115 and its liabilities $52. I note, however, that Joden’s financial statements contain a disclaimer that they are unaudited. It is unclear whether they are reliable.

[16]   In any event, this case bears little resemblance to Lepcha. Joden is not a financially struggling family who are expecting a new baby. Rather, Joden is a commercial party that pursued litigation (at great length) to avoid accepting the return of defective goods that it had sold to a consumer. Once its appeal rights had been exhausted,14 it brought judicial review proceedings in this Court, seeking to relitigate not only legal issues, but also factual matters previously determined by the Tribunal.

[17]   Mr Prerssilp is not a government department as the respondent was in Lepcha. Rather, he is a private individual of limited means who has been forced to expend considerable sums of money in an attempt to force Joden to comply with its legal obligations. As the successful party, he is entitled to an award of costs.

Result

[18]I order Joden to pay costs to Mr Prerssilp in the sum of $13,635.

Katz J

14 Motor Vehicle Sales Act 2003, sch 1 cl 16 provides that any decision by the District Court on  appeal from the Motor Vehicle Disputes Tribunal is final. Although, cl 16(6) preserves the right to seek judicial review.