Kingsbeer Transport Limited v Martin-Brower New Zealand

[2024] NZHC 1344

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2019-404-2499

[2024] NZHC 1344

BETWEEN

KINGSBEER TRANSPORT LIMITED

Plaintiff

AND

MARTIN-BROWER NEW ZEALAND

Defendant

Hearing:

On the papers

Counsel:

D M Fraundorfer for plaintiff

S S Cook and S Lee for defendant

Date of judgment:

27 May 2024

JUDGMENT OF JAGOSE J

[Costs]

This judgment was delivered by me on 27 May 2024 at 3.30pm.

Pursuant to Rule 11.5 of the High Court Rules.

………………………… Registrar/Deputy Registrar

Counsel/Solicitors:

D M Fraundorfer, Barrister, Tauranga Buddle Findlay, Auckland

J K Hamilton, Tauranga

KINGSBEER TRANSPORT LTD v MARTIN-BROWER NEW ZEALAND - Costs [2024] NZHC 1344 [27 May 2024]

[1]In this proceeding, I held the defendant (MBNZ) was to pay the plaintiff (KTL)

$42,417.40 on account of KTL’s short-term costs, and $300,000 as damages on KTL’s first cause of action.1

[2]                 My prior judgments reserved costs,2 the last taking the preliminary view, from what I knew then, “MBNZ should pay KTL 2B costs as counsel categorised this proceeding at the outset”.3 With two exceptions, that now is agreed between counsel. The exceptions are if the calculation of 2B costs should be either by reference to other than sitting days or allowable steps, to cater for their longer than usual duration at trial and the contended complexity of closing submissions; and/or increased to reflect KTL’s unaccepted settlement offers at levels short of its recovery at trial or otherwise MBNZ’s unnecessary contribution to trial’s time and expense. And there is dispute if KTL’s claimed expert and litigation support expenses should be allowed as disbursements if “excessive”.

[3]                 General principle is “the party who fails with respect to a proceeding … should pay costs to the party who succeeds”,4  the determination of which “so far as possible

… should be predictable and expeditious”.5 The latter is achieved by the rules’ application of an appropriate rate to specified steps taken in the proceeding,6 capped by the costs incurred.7 And disbursements are recoverable in terms of r 14.12(2) of the High Court Rules 2016 if specified at r 14.12(1)(b) or approved for, and specific to and reasonably necessary for the conduct of, the proceeding and reasonable in amount.

[4]                 While sitting days were longer than usual, frequently commencing at 9 am, trial also was conducted remotely to accommodate requirements then imposed by the COVID-19 Public Health Response (Alert Level Requirements) Order (No 12) 2021. Such meant counsel’s time more efficiently was used in remote attendance from their

1      Kingsbeer Transport Ltd v Martin-Brower New Zealand [2021] NZHC 3494 (Liability judgment) at [99]–[100]; Kingsbeer Transport Ltd v Martin-Brower New Zealand [2022] NZHC 2931 at [8] (Supplementary judgment); and Kingsbeer Transport Ltd v Martin-Brower New Zealand [2024] NZHC 728 (Damages judgment) at [18] and [35].

2      Liability judgment, above n 1, at [114]; Supplementary judgment, above n 1, at [10]; and

Damages judgment, above n 1, at [37].

3      Damages judgment, above n 1, at [37].

4      High Court Rules 2016, r 14.2(1)(a).

5      Rule 14.2(1)(g).

6      Schedule 3.

7      Rule 14.2(1)(f).

respective firm’s office than on in-person appearances in Court. The balance favours scale costs’ predictability and expedition. The result is counsel  agree  the sum  of  2B costs is $113,522.

[5]                 I am offered nothing by which to determine if KTL’s claimed expert and litigation support expenses are “excessive”. Although Mr Manning’s evidence was not accepted in its entirety, it provided the necessary foundation for KTL’s successful damages claim,8 and I approve its expense’s recovery. KTL’s litigation support expenses also are verified. I will allow both (less GST).

[6]                 Rule 14.6 permits making an order “increasing costs otherwise payable under [rr 14.2 to 14.5]”. Increased costs only are available under r 14.6(3)(b) if the ground on which they are sought — here, under r 14.6(3)(b)(v), “failing, without reasonable justification, to accept an offer of settlement … or some other offer to settle or dispose of the proceeding” — has resulted in “the party opposing costs [contributing] unnecessarily to the time or expense of the proceeding or a step in it”. “[L]ogically”, the uplift should not be more than 50 per cent.9 The ‘logic’ is derivative of scale costs being “two-thirds of the daily rate considered reasonable in relation to the proceeding”,10 meaning increased costs should not exceed that reasonable daily rate.

[7]                 The requirement to establish ‘unnecessary contribution’ illustrates unaccepted settlement does not in itself qualify for an award of increased costs. That the unaccepted offer was less than success at trial also does not mean unnecessary contribution is established. That is because “costs awards should allow litigants with real arguments presented responsibly to approach the Court without apprehension that the ‘predictable costs regime’ will not be applied if their case fails”.11 Hence the failure must be “without reasonable justification”.

[8]                 Here, multiple formal and informal settlement offers were made by both parties, none approaching the $300,000 I awarded KTL as lost profits. Nonetheless,

8      Damages judgment, above n 1, at [11].

9      Holdfast NZ Ltd v Selleys Pty Ltd (2005) 17 PRNZ 897 (CA) at [46]–[48].

10     High Court Rules, r 14.2(1)(d).

11     New Zealand Carbon Farming Ltd v Mighty River Power Ltd [2016] NZCA 624 at [40], citing

Bradbury v Westpac Banking Corp [2009] NZCA 234, [2009] 3 NZLR 400 at [94].

MBNZ says it was justified in rejecting even KTL’s last (and highest) offer of some

$230,000, given its “significant disconnect” with KTL’s pleaded $680,000 claim and expert evidence contending for lost profits of $1.1 million. KTL’s offer in the month before trial came after MBNZ’s expert’s contest to that quantification, and calculation of KTL’s lost profits at some $212,000.

[9]                 Given the relative closeness of KTL’s $230,000 offer to MBNZ’s $212,000 calculation, which gap is taken up by the $17,000 in other expenses also allowed by MBNZ’s expert, any reasonable justification available to MBNZ must turn on the foundation for its better prospects at trial. Although it is a fine-run thing, given their lack of success, MBNZ’s counterclaims offered that foundation. They were MBNZ’s ‘real arguments presented responsibly’. MBNZ’s counterclaim for short notice only was unsuccessful in duration on the evidence at trial;12 similarly, its claim for KTL’s “unjust enrichment” resounded in ‘contradictory’ allocation of the residual value of KTL’s business.13 And my ultimate quantification of KTL’s success drew on the experts’ “effective agreement”,14 reduced by my acceptance of some of MBNZ’s expert evidence.15 MBNZ did not contribute unnecessarily to the time or cost of trial. I will not uplift KTL’s award of costs.

[10]             I order MBNZ pay KTL 2B costs in the amount of $113,522 plus claimed disbursements (less GST).

—Jagose J

12     Liability judgment, above n 1, at [107]–[108].

13     Damages judgment, above n 1, at [22].

14 At [11].

15 At [14].