Jones v Tasman Motor Camp 2011 Limited

[2022] NZHC 3415

IN THE HIGH COURT OF NEW ZEALAND NELSON REGISTRY

I TE KŌTI MATUA O AOTEAROA WHAKATŪ ROHE

CIV-2021-442-047

[2022] NZHC 3415

BETWEEN

REBECCA NICOLE JONES and PETER CRAIG WILSON

First Plaintiffs

TASMAN MOTOR CAMP 2019 LIMITED
Second Plaintiff

AND

TASMAN MOTOR CAMP 2011 LIMITED

First Defendant

JOANNE ALISON HILL
Second Defendant

TONY JAMES MCROBERT

Third Defendant

Hearing:	On the papers
Appearances:	L S B Acland for Plaintiffs G Praat for Defendants
Judgment:	15 December 2022

JUDGMENT OF ASSOCIATE JUDGE JOHNSTON

[Costs]

[1]    In late 2019 the defendants, Tasman Motor Camp 2011 Ltd and its directors, Joanne Hill and Tony McRobert sold a business to the plaintiffs, Tasman Motor Camp 2019 Ltd and that company’s directors, Rebecca Jones and Peter Wilson. As will be evident from the names of the two companies involved, the business involved the operation of a holiday motor camp in the Tasman District.

JONES v TASMAN MOTOR CAMP 2011 LIMITED [2022] NZHC 3415 [15 December 2022]

[2]    Following settlement a dispute arose. The vendors had warranted that all necessary local authority consents were in place. It turned out that this was not the case. As I understand it a waste water system was not properly consented. As a result, the purchasers incurred substantial costs in obtaining the same. These amounted to hundreds of thousands of dollars. They claimed those costs from the vendors. Ultimately, the purchasers secured summary judgment against the vendor parties. Now they are seeking costs. They seek costs on a 2B basis totalling $23,504.00. These cover the steps taken since the commencement of the proceeding in October 2021.

[3]Described in that way the purchasers’ costs claim appears irresistible.

[4]However there is more to this case than that.

[5]    For a start, notwithstanding the existence of what this Court has referred to as a “clear” submission to alternative dispute resolution contained in the sale and purchase agreement, the plaintiff commenced proceedings in this Court. In due course, following service of the proceeding, which, as Mr Acland says, required an application for substituted service, the defendants applied for a stay and a reference of the dispute to arbitration. In a judgment dated 17 February 2022 Gendall J stayed the proceeding and referred the dispute to arbitration. Mr Matthew Casey KC was appointed. In due course, Mr Casey issued an award. It seems that there was some misunderstanding, probably arising from the terms of the award, as to whether the award of damages in favour of the plaintiffs attracted GST. The plaintiffs contended that it did. The defendants contended that it did not. That issue was ultimately referred to back to Mr Casey. The defendants prevailed on the issue.

[6]    In the meantime, the plaintiffs had filed summary judgment proceedings effectively for the purposes of enforcing the award. In response to the commencement of those proceedings the defendants acknowledged liability but not quantum on the ground that quantum had not been resolved by Mr Casey.

[7]    When Mr Casey issued his supplementary award dealing with GST, the defendants consented to the entry of summary judgment in the relevant sum.

[8]    The Court is not informed as to how costs were dealt with in the arbitration. However, it would be an exceptional case had Mr Casey not dealt with costs.

[9]    In any event, the only costs over which the Court has jurisdiction are those relating to the commencement of the original proceeding and the subsequent summary judgment application.

[10]   In the absence of agreement, costs are dealt with in accordance with pt 14 of the High Court Rules 2016. Costs are quintessentially a matter for the Court’s discretion. Generally they follow the event, that is to say the successful party is entitled to an award of costs. As to quantum, in all but exceptional cases costs are determined in accordance with the scales contained in the second and third schedules to the Rules which are intended to be an objective basis for identifying costs by reference to the complexity of the proceeding itself.

[11]   In this case the plaintiffs seek costs on a 2B — that is the middle range —basis, and in doing so inferentially at least claim to be the successful parties in the proceeding.

[12]As Mr Praat submits, it is not obvious that they are entitled to claim that.

[13]   Ultimately, the plaintiffs obtained judgment, but in their initial proceeding the defendants were successful in obtaining a stay, the Court having concluded that the plaintiffs should not be permitted prosecute their claim in the face of the submission to alternative dispute resolution. In the second component of the proceeding, the summary judgment application, right from the outset the defendants acknowledged liability, reserving their position in relation to quantum until such time as this had been determined by the arbitrator, and then agreed to the entry of summary judgment.

[14]   It appears to me that it would not be overstating the position to say that, at least in terms of the High Court proceeding, the defendants prevailed over the plaintiff in most respects.

[15]   On that basis, it may have been open to the defendants to seek costs. On their behalves, Mr Praat does not do so. What he submits is that the Court should make no order as to costs at all. I agree. That outcome will, in my assessment, do substantial justice as between the parties.

[16]   I decline to make a costs award in favour of either party. Costs in these Court proceedings will, to adopt the common terminology, be left to lie where they have fallen.

Associate Judge Johnston

Solicitors:

Rout Milner Fitchett, Nelson for Plaintiffs Knapps Lawyers, Nelson for Defendants