Lawson v Wenley no.2

[2012] NZHC 1265

JUDGMENT ISSUED 22 FEBRUARY 2012 RECALLED AND REISSUED

7 JUNE 2012.

IN THE HIGH COURT OF NEW ZEALAND NAPIER REGISTRY

CIV 2010-441-000833 [2012] NZHC 1265

BETWEEN  MATTHEW BRUCE LAWSON AND BLAIR ROBINSON

Appellants

ANDMICHAEL JOHN WENLEY, ALAN JAMES DAVIES, LAWRENCE WILLIAM WILLIS AND RICHARD IAN CROSS Respondents

Hearing:         6 June 2012

Counsel:         M B Lawson for Appellants

M J Wenley for Respondents

Judgment:      7 June 2012

JUDGMENT (NO 2) OF THE HON JUSTICE KÓS

[1]      This case concerns a partnership dispute.  Retiring partners are paid out their proportions of capital, advances and work in progress.  A clause in the partnership agreement caps the amount payable by the remaining partners to 5 per cent of the net income of the continuing partnership in any one year, and marshals the order of payment.  The effect of the clause is to postpone payment to the appellants.  They challenged the application of the clause before an arbitrator, and again before me on appeal. The challenge was unsuccessful on both forums.

[2]      The concluding paragraph of my judgment read:

[75]     Costs in this Court are to lie where they fall.

LAWSON AND ROBINSON v WENLEY, DAVIES, WILLIS AND CROSS HC NAP CIV 2010-441-000833 [7

June 2012]

[3]      That was perhaps too delphic.  It reflects the fact that the merits (legal, moral and economic) were not vested uniquely in the successful respondents, and that all parties must take some responsibility for the imperfect state of the partnership agreement.

[4]      Both parties apply for me to recall my judgment.

Respondents’ application

[5]      The respondents ask me to recall paragraph [75] in two respects.  The first is that it does not address the question of costs on the originating application for leave before Allan J.  The Judge granted leave to appeal, and awarded the appellants costs of $14,508.  I was informed by Mr Wenley (appearing on his behalf and that of the other respondents) that that amount has not yet been paid.

[6]      The respondents say it would be unfair for them to remain liable for the costs order by Allan J when (despite their success in the substantive appeal) no costs have been awarded by me on the appeal.  For the appellants, Mr Lawson (who is himself one of the appellants) submits that I do not have jurisdiction to recall because this case does not fit within any of the three categories set out in Horowhenua Counties v

Nash No 2.[1]    Further, High Court Rule 14.8(2) (which enables the Court to reverse

costs orders made on interlocutory applications when determining costs in the final event) is inapplicable because the leave application was an originating rather than interlocutory application.

[1] Horowhenua Counties v Nash No 2 [1968] NZLR 632 (HC).

[7]      In delivering paragraph [75] of my judgment I had overlooked the costs order made by Allan J on the leave application.  There is no question that the outcome is anomalous.  Either costs should lie where they fall on both hearings (in which case I should discharge the order made by Allan J), or I should rectify the position by awarding the respondents costs in the substantive appeal.  I am satisfied that I have jurisdiction therefore to recall my judgment in accordance with the “special reasons” for recall category identified in Horowhenua.  I am also satisfied that I have power

under HCR 14.8(2), and HCR 1.6 (cases not provided for) to reconsider the order

made by Allan J.   To avoid anomaly, I discharge that order.   If the jurisdiction position were otherwise, then I would have revisited costs before me, and made an order in the respondents’ favour. That would achieve substantively the same result.

[8]      The second respect in which the respondents seek recall of paragraph [75] is to contend that I should award them costs on the substantive appeal.  The argument was not pressed with vigour either in the written submissions or before me.  It is not a matter falling within the Horowhenua categories.  I decline to recall my judgment in that respect.  If the respondents wish to challenge that aspect of my judgment, then they must exercise their appeal rights.

Appellants’ application

[9]      The  appellants,  while  contending  on  the  one  hand  that  I  do  not  have jurisdiction  in  terms  of  Horowhenua  to  recall  my judgment  at  the  respondents’ instance, on the other hand themselves ask me to recall my judgment to “address and clarify” paragraphs [35] and [66] of my judgment.  Their particular concern is when the limitation period in s 11 of the Limitation Act 2010 will run from.  I have held at paragraph [66] that the debt itself accrues for the purposes of limitation from the date of dissolution, in accordance with s 46 of the Partnership Act 1908.

[10]     I do not consider that it is appropriate for me to recall my judgment in this respect, for three reasons.   First, this is not a matter that falls within any of the Horowhenua categories.   Secondly, the issue of when limitation period runs from was not before the arbitrator, and accordingly was not before me on appeal.  It is a collateral issue that has arisen in light of my ruling on the appropriate interpretation of clause 15 of the agreement.  Thirdly, such clarity on the point as is required is in any  event  provided  by  paragraph  [67]  of  my  judgment,  and  by  the  written submission of Mr Wenley which reads:

The agreement itself provides for deferred payment and accordingly the limitation period would run from the time that the payment was due under the agreement.

and on which the appellants should be entitled to rely.

Disposition

[11]     Accordingly I recall my judgment of 22 February.    Paragraph [75] of that judgment will now read:

Costs in this Court are to lie where they fall.  The costs award made by the

Court on the leave application is discharged.

Stephen Kós J

Solicitors:

Lawson Robinson, Napier for Appellants

Willis Toomey Robinson, Napier for Respondents