Magpie Properties Limited v Crouch
[2017] NZHC 2262
•20 September 2017
IN THE HIGH COURT OF NEW ZEALAND
AUCKLAND REGISTRY
CIV-2016-404-002037
[2017] NZHC 2262
UNDER the Declaratory Judgment Act 1908 and the Judicature Act 1908 BETWEEN
MAGPIE PROPERTIES LIMITED
Plaintiff
AND
POPPY LOUISE CROUCH
Defendant
Hearing: 21 February 2017 Appearances:
C T Patterson and R A Dellow for Plaintiff S B Fellows for Defendant
Judgment:
20 September 2017
JUDGMENT OF ASSOCIATE JUDGE SARGISSON
This judgment was delivered by me on 20 September 2017 at 2.30 p.m. pursuant to Rule 11.5 of the High Court Rules.
Registrar/Deputy Registrar Date.......................................
Solicitors:
Holland Beckett, Auckland Lovegroves Lawyers, Auckland
Chris Patterson Barrister Ltd, Auckland
MAGPIE PROPERTIES LTD v CROUCH [2017] NZHC 2262 [20 September 2017]
Introduction
[1]This judgment deals with remaining costs issues, following the plaintiff’s
withdrawal of this proceeding.
[2] The plaintiff, Magpie Properties Ltd, issued proceedings to seek a declaration that the defendant, Ms Crouch, “provide … an All Obligation mortgage instrument” over her property in Tauranga. Ms Crouch objected to this and filed a strike-out application.
[3] At a telephone conference I presided over on 21 February 2017, the parties sensibly agreed that the plaintiff’s statement of claim, and defendant’s strike-out application, would both be withdrawn.
[4]The parties have filed memoranda concerning costs.
Background
[5] The dispute emerges out of construction work the plaintiff undertook on the defendant’s property. The plaintiff now says the defendant has not paid all that it is owed pursuant to the parties’ contract, and also a personal undertaking made by the defendant.
[6] The defendant counters that the contract and undertaking were not entered into with the Magpie Properties company, but rather with a related Trust. She also submits she has a claim for defective work that exceeds the amount of the claim made against her.
[7] I advised the parties in the telephone conference on 21 February 2017 that the Disputes Tribunal was well suited to resolving such a dispute, and with substantially less expense to each party. The parties agreed. As I recorded in my conference minute, “both sides recognise that given the amounts in issue … it is simply not sensible to pursue the parties’ disputes in this Court”.1
1 Associate Judge Bell gave a similar indication earlier in the proceeding.
[8] It also became apparent in that conference that it was the dispute over costs that was standing in the way of settlement. But counsel advised that the parties were able to agree that costs should be dealt with by the Court and the costs memoranda would be filed and costs dealt with on the papers.
[9] In the consent directions made at the conference, counsel agreed to a timetable for the memoranda and that:
a)The interlocutory application for strike-out is withdrawn.
b)The plaintiff’s claim is withdrawn.
c)The withdrawals are without prejudice to the parties’ rights to bring
their respective claims to the Disputes Tribunal.
The parties’ position on costs
[10]I have carefully considered those parties’ respective submissions.
[11] The plaintiff seeks that costs be reserved pending the outcome on the parties’ respective money claims in the Disputes Tribunal so that the Court can have the benefit of the Tribunal’s comments on the “merits” of those claims. If that submission is not accepted, the plaintiff seeks 2B costs against the defendant on the basis that she refused to provide the security she was contractually bound and had undertaken to give.
[12] The defendant seeks 2B costs of and incidental to the proceeding pursuant to the statutory presumption in rule 15.23 that a plaintiff who withdraws a proceeding is to pay costs. If that submission is not accepted then she seeks 2B costs on the strikeout application pursuant to r 14.8 which provides for costs to be fixed when an interlocutory application is determined. She calculates such costs at $2,899. Whether costs are awarded for the entire proceeding or else only on the application, she also seeks an uplift of 33 percent.
[13] Both sides rely on correspondence that was exchanged about the possible withdrawal of the proceeding and the terms upon which that would be agreed. Each
says the other was unreasonable. Each also asserts that its own view of the merits is to be preferred.
Assessment
[14] There is no argument that the proceeding is appropriately classified in Category 2, and that the steps taken and claimed in the proceeding attract costs on a Band B basis.
[15] I put the parties’ arguments as to the merits to one side. The general rule is that when a proceeding or application is withdrawn, the court will generally not make statements that are determinative of the merits unless they are patently obvious. Further, in this case the parties have agreed that the merits of the underlying claims are to be determined by the Tribunal, and it would be inappropriate for this court to encroach on the Tribunal’s decision-making function.2
[16] I also do not accept the plaintiff’s submission that costs issues in this proceeding should be deferred pending the Disputes Tribunal’s rulings on the merits of the money claims. The usual course is for costs to be determined on the withdrawal of a proceeding or an interlocutory application.3
[17] The real issue is whether there is any good reason to depart from the statutory presumption in rule 15.23, which provides:
15.23 Costs
Unless the defendant otherwise agrees or the court otherwise orders, a plaintiff who discontinues a proceeding against a defendant must pay costs to the defendant of and incidental to the proceeding up to and including the discontinuance.
[18] I am not satisfied there is any good reason why the presumption should not stand.
2 McGechan at [15.23.01].
3 High Court Rule 14.2(a) and (g), and rule 15.23.
[19] It is unfortunate that a dispute of this kind has ended up in the High Court. The amounts involved are, by High Court standards, fairly trivial; each side’s claim is of approximately $10,000 or less. The Tribunal is without question the appropriate forum for such a dispute, without involving costs that are wholly disproportionate to the amounts in issue.
[20] It appears that the plaintiff filed proceedings in this court because of the Tribunal’s jurisdictional limitations to grant the relief sought. But it became clear that the plaintiff’s entitlement to that relief (a mortgage security for the disputed debt) was not really at issue. The issue was whether there was liability for a debt upon which such an entitlement could be founded. And this question is one that the Tribunal was perfectly well suited to resolving.
[21] I do not mean to suggest by these observations that the plaintiff was in any was restricted in its access to the High Court. The right of access to justice remains. But this is not a question of rights but wisdom, or perhaps just good sense. By taking the high and costly road, the plaintiff has dragged the defendant along with it, and the defendant is entitled to compensation for the cost she has been put to as a result.
[22] However, by 1 December 2016 the plaintiff had come to its senses. On that day it made a Calderbank offer on the following terms: it would provide $2,000 costs contribution to the defendant and the defendant retained the right to defend and advance counterclaims in the Disputes Tribunal.
[23] To my mind, it was a fair and reasonable offer. That offer would have placed the defendant in exactly the position she now finds herself in, but without a good deal of unnecessary further cost.
[24] I do not consider that the defendant can claim costs for any steps taken after she refused the offer. There was no reasonable justification for that refusal.
[25] In the round, I am satisfied that justice is achieved by awarding reduced costs of $2,000 against the plaintiff pursuant to r 14.7(g). That is, an approximately one third reduction from the 2B costs of $2,899 claimed by the defendant.
[26]I make orders accordingly.
Associate Judge Sargisson
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