Keast v Crown Worldwide (NZ) Limited t/a Crown Relocations

[2022] NZHC 12

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2021-404-328

[2022] NZHC 12

BETWEEN

NICHOLA JANE KEAST and STEPHEN CHARLES PENNEY
Plaintiffs

AND

CROWN WORLDWIDE (NZ) LIMITED

trading as CROWN RELOCATIONS First Defendant

FIRST MORTGAGE CUSTODIANS LIMITED and FIRST MORTGAGE MANAGERS LIMITED
Second Defendants

HI TECH SECURITY DISPOSALS LIMITED

Third Defendant

Hearing:

On the papers

Appearances:

Plaintiffs in person

J Armstrong for First Defendant

J W McDougall for Second Defendants L A Shepherd for Third Defendant

Judgment:

12 January 2022

JUDGMENT OF LANG J

[costs following determination of summary judgment applications]

This judgment was delivered by me on 12 January 2021 at 3 pm, pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar Date……………

KEAST v CROWN WORLDWIDE (NZ) LIMITED [2022] NZHC 12 [12 January 2022]

[1]                  The plaintiffs in this proceeding are the trustees of a trust that owned a property situated at Waiuku. The property was subject to a mortgage to the second defendants (collectively referred to as FM). The plaintiffs defaulted under the mortgage and FM obtained an order for possession of the property. FM subsequently sold the property in exercise of its power of sale under the mortgage.

[2]                  The plaintiffs had left household contents and tools of trade at the property. They failed to uplift them after FM took possession of the property. FM subsequently engaged the first defendant, Crown Worldwide (NZ) Ltd (Crown), to uplift the property and place it in storage. After the plaintiffs failed to uplift it from storage FM arranged for the property to be destroyed by the third defendant, Hi Tech Security Disposals Ltd (Hi Tech).

[3]                  In this proceeding the plaintiffs seek compensation from all three defendants for the value of the goods uplifted and destroyed. They sue the defendants in trespass and conversion.

[4]                  In an oral judgment delivered on 5 August 2021 Associate Judge R M Bell granted an application by Crown for summary judgment against the plaintiffs on the basis that the claims against it could not succeed.1 The Associate Judge dismissed a similar application by FM. Hi Tech did not seek summary judgment on the claims against it.

[5]                  The parties have not been able to reach agreement regarding the issue of costs payable on the applications for summary judgment. Associate Judge Bell has now retired and I have been asked to determine that issue in his absence.2

Decision

[6]                  The general principle is that an unsuccessful party to an interlocutory application will be required to pay costs to the successful party.3 In addition, costs on an opposed interlocutory application must ordinarily be fixed when the application is

1      Keast v Crown Worldwide (NZ) Ltd [2021] NZHC 2143.

2      High Court Rules 2016, r 14.9.

3      High Court Rules 2016, r 14.2.1(b).

determined and are payable once fixed.4 Application of these principles to the facts of the present case would ordinarily result in the plaintiffs receiving an award of costs against FM and Crown receiving an award of costs against the plaintiff. However, r

14.8.3 of the High Court Rules 2016 exempts the summary judgment regime from the usual principles that apply in relation to costs. The Court is therefore required to determine the issue of costs in the exercise of its discretion under r 14.1(1). In doing so, however, it must apply the principles set out in r 14.2 to the extent they are appropriate.

Costs as between the plaintiffs and FM

[7]                  The plaintiffs have elected to represent themselves in this proceeding and would not normally be entitled to an order for costs in their favour for that reason.5 In addition, FM points out that the Associate Judge accepted much of the argument advanced by it. He only found in favour of the plaintiffs by granting them the indulgence of proceeding on the basis that the plaintiffs could amend their claim against FM to make it tenable.6 FM therefore says an order for costs in favour of the plaintiffs would be inappropriate in any event, and that FM may be entitled to an award of costs in its favour. To keep these options open I accept FM’s submission that it is appropriate to reserve costs on FM’s application and direct that they be determined at the conclusion of the proceeding.

Costs as between the plaintiffs and Crown

[8]                  The plaintiffs say they should not be required to pay costs to Crown notwithstanding the fact that it succeeded in its application for summary judgment. The plaintiffs point out that costs are at the discretion of the Court.7 They say that the particular circumstances of the present case justify the Court making an order requiring FM to pay the costs that the plaintiffs would ordinarily be required to pay to Crown.

4      High Court Rules 2016, r 14.8(1).

5      McGuire v Secretary for Justice [2018] NZCS 116 at [88].

6      The pleadings against FM did not include an allegation that it arranged for the goods to be destroyed.

7      High Court Rules, r 14.1(1).

[9]                  FM opposes this and says that the plaintiffs should be required to pay costs to Crown in the usual way and without contribution from it.

[10]              The plaintiffs rely on a series of principles developed by the English courts and applied in New Zealand in certain circumstances. In Shirley v Wairarapa District Health Board the Supreme Court described these as follows:8

[18] It is not unusual for an unsuccessful defendant to pay the costs of a successful defendant, either by way of a Bullock order9 (where the Court orders the plaintiff to pay a successful defendant’s costs, but requires the unsuccessful defendant to pay the same amount to the plaintiff), or more usually, by way of a Sanderson order10 (where the Court orders the unsuccessful defendant to pay the successful defendant’s costs directly). …

These principles, and their history, were discussed in considerable detail by the Court of Appeal in Lane Group Ltd v D I & L Paterson Ltd.11

[11]              The plaintiffs say they acted reasonably in joining Crown as a defendant because it was the party responsible for uplifting and storing their possessions. They therefore say that FM should be required to meet the costs that they would otherwise be required to pay Crown. In Lane Group, however, Tipping J, writing for the Court, observed that he preferred the view that the issue of whether the joinder of a defendant was reasonable is not sufficient without more to justify the making of a Sanderson order.12 Rather, if the joinder was reasonable it is then necessary to go on to consider whether it was appropriate to make such an order in the circumstances of the case. This approach recognises that the principles developed through the Sanderson and Bullock lines of authority are merely examples of the Court exercising its discretion to meet the needs of justice in particular circumstances. A consideration of all relevant circumstances must therefore be undertaken.

[12]              This provides an immediate difficulty in the present case because Sanderson and Bullock orders are generally made when a case has proceeded to trial and the Court has a full appreciation of the factual background. That is not the position here because

8      Shirley v Wairarapa District Health Board [2006] NZSC 63, [2006] 3 NZLR 523.

9      Bullock v London General Omnibus Co [1907] 1 KB 264.

10     Sanderson v Blyth Theatre Co Ltd [1903] 2 KB 533.

11     Lane Group Ltd v D I & L Paterson Ltd [2000] 1 NZLR 129 (CA) at [79]-91].

12 At [89].

the evidence has not yet been tested and the Court is unable to reach any final factual conclusions.

[13]              However, one important feature of the present case is that the Associate Judge held that, in its capacity as mortgagee, FM was entitled to arrange for Crown to uplift and store the goods after it took possession of the property and the plaintiffs failed to remove their goods.13 In this context the Associate Judge noted that Crown was acting as FM’s sub-bailee.14

[14]              The issue that required the case against FM to proceed to trial was whether FM was subsequently entitled to arrange for Hi Tech to destroy the goods after the plaintiffs failed to remove them from storage. The Associate Judge held that it was “far from clear” that a mortgagee has the right to sell goods uplifted from the mortgaged property.15 If that was the case there must also be uncertainty as to whether a mortgagee can destroy such goods.

[15]              The plaintiffs may not have known who made the ultimate decision to have the goods destroyed when it issued the proceeding. They obviously knew, however, that Crown had uplifted and placed the goods in storage and that the goods were removed from storage to be destroyed. Given that knowledge I accept they can be said to have acted reasonably by including Crown as a defendant.

[16]              However, the conclusions reached by the Associate Judge mean there was no legal basis for the claims that the plaintiffs advanced against Crown. They also mean Crown’s actions did not cause actionable loss to the plaintiffs because it acted throughout as FM’s lawfully instructed agent in uplifting and storing the goods. Likewise, and for the same reasons, FM caused no loss to the plaintiffs by instructing Crown to uplift the plaintiffs’ goods and place them in storage. Any actionable loss that the plaintiffs may have suffered as a result of FM’s actions arises from the subsequent destruction of their goods. Crown played no part in that.

13     Keast v Crown Worldwide New Zealand Ltd, above n 1, at [34].

14 At [35].

15 At [42].

[17]              These factors persuade me that the interests of justice do not require FM to pay the costs that the plaintiffs would otherwise be required to pay to Crown. I consider the usual principles should apply, and that the plaintiffs should be required to pay costs to Crown.

Result

[18]              The costs of the summary judgment application brought by FM are reserved for determination at the conclusion of the proceeding.

[19]              The plaintiffs are required to pay costs to Crown on a category 2B basis together with disbursements as fixed by the Registrar.

Lang J