Manning Private Limited v Triple Star Management Limited

[2016] NZHC 6

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

CIV-2014-409-000729 [2016] NZHC 6

BETWEEN

MANNING PRIVATE LIMITED

Plaintiff

AND

J E MANNING AND L K MANNING Second Plaintiff

AND

TRIPLE STAR MANAGEMENT LIMITED

First Defendant

AND

EDGE CONSTRUCTION 2010
LIMITED
Second Defendant

AND

WATERPROOF STRUCTURES QUEENSTOWN LIMITED Third Defendant

Hearing:	On the papers
Counsel:	J K Steward & D-M Cross for the Plaintiff D A Webb & S Goodwin for the Second Defendant
Judgment:	14 January 2016

JUDGMENT OF NATION J

[1]      The first plaintiff (MPL) seeks an award of increased costs following its successful opposition to an application by the second defendant (Edge) to strike out MPL’s claim against it in contract.

[2]      MPL has asked for costs on a 2B basis but with a 50 per cent uplift on the basis that Edge failed to act reasonably in continuing with the strike out application

when, in MPL’s submission, it was without merit and bound to fail.

MANNING PRIVATE v TRIPLE STAR & ORS [2016] NZHC 6 [14 January 2016]

[3]      Edge says costs should be awarded on a 2A basis without any uplift.  It also disputes the entitlement to certain disbursements as claimed for by MPL.

[4]      In my judgment of 3 December 2015, I directed that, if agreement could not be reached over costs, MPL was to file a memorandum as to costs by 11 December

2015 and Edge was to file a memorandum in response by 18 December 2015.  MPL filed its memorandum on 11 December 2015.   On 17 December 2015, through counsel, Edge asked MPL to agree to an extension of time for it to file submissions. MPL did not agree and on 22 December 2015 counsel for MPL filed a further memorandum with the Court asking the Court to issue a judgment over costs in the absence of any memorandum having been filed for MPL.   Edge filed its detailed memorandum over costs on 23 December 2015.

[5]      Although it does not reflect well on Edge or its counsel that a memorandum as to costs had not been filed in a timely fashion in accordance with the directions of the Court, the reality is that the Court’s timetable was set so that submissions from both parties could be considered by the Court, if this was necessary, when High Court Judges returned from leave in 2016.  With Edge having filed its memorandum on 23 December 2015, this can still be achieved.   I thus deal with costs having regard to the memoranda filed for MPL and Edge.

Discussion

Scale of costs

[6]      I consider costs should be awarded on a 2B basis rather than a 2A basis.  The factual background, as pleaded and as had to be considered on the strike out application, was not straightforward.  The application, if successful, would have had significant consequences for MPL.  Given the costs that Edge would have incurred in having counsel pursue the application, I would be surprised if a “comparatively small amount of time” had been involved in Edge’s counsel’s pursuit of the application, both when it was originally filed and when it was decided to continue with the pursuit of that application after MPL had filed amended statements of

claim.1   I accept that more than a “comparatively small amount of time” would have

been required of MPL’s counsel in dealing with the application.

[7]      I do not, however, consider this was a situation where there should be an uplift on the basis the application was pursued when it was manifestly without merit and bound to fail.   The application was filed after MPL had filed an  amended statement  of  claim  in  which  it  claimed  that  the  original  contract  was  between Manning Investments Limited (not the Mannings personally) and Triple Star.  It was in response to those pleadings that Edge filed the application to strike out.   MPL acknowledged the potential difficulty in the way it had pleaded its claim through filing a second amended statement of claim in which it  referred to the original contract as being between Manning Investments Limited or, alternatively, the Mannings personally and Triple Star.   It also pleaded that the subsequent contract with Edge was for the benefit of MPL or, alternatively, the Mannings personally.  It is apparent from those pleadings that the basis on which MPL could bring a claim in contract was not clear-cut.

[8]      MPL’s counsel did correspond with Edge’s counsel suggesting that Edge’s apparent  criticisms  of  the  pleadings  could,  if  necessary,  be  met  with  further particulars being provided as to the legal basis on which MPL was pursuing its claim in contract.  However, this suggestion was made only at a time close to the hearing and would have still left room for argument as to whether the factual basis, as pleaded, did provide a sufficient basis for bringing a claim in contract.  I implicitly acknowledged this in my judgment in referring to the possibility of the claim being tenable on the basis of estoppel.

[9]      I accept that the application did have limited prospects of success.   I also question the utility of the application given that, even if it had been successful, the proceedings would still have continued against Edge on the basis of a claim in tort for negligence.   With  the application  for strike out  having failed,  Edge is  now required to make a significant contribution to the actual costs incurred by MPL in

bringing the claim.   It has also, no doubt, incurred its own further costs for legal

1      High Court Rules, r 14.5(2)(a).

representation with regard to this application.   It is not, however, appropriate to award costs on an uplifted basis.

[10]     MPL is also entitled to costs on a 2B basis for this costs application and, in particular, as allowed for in written submissions as to costs on the basis referred to in the schedule relating to submissions on an interlocutory application.

Disbursements

[11]     I do not accept that reasonable disbursements should be assessed on the basis that Christchurch counsel should have been instructed to appear on the application. As apparent from the judgment and my earlier comments, the factual background which had to be considered was not straightforward.  Significant further costs would have been incurred in instructing Christchurch counsel to the extent required to enable such counsel to appear on the application with the necessary understanding of both the legal and factual background which the Court had to consider.

[12]     MPL is thus entitled to recover the cost for one counsel to fly to and from Christchurch for the hearing and the cost of accommodation in Christchurch for one counsel for one night.   If meal costs were incurred on the evening or morning in Christchurch prior to the hearing, I would regard those meal costs as being recoverable as specific to the conduct of the proceeding and reasonably necessary for the conduct of the proceeding.  If internet costs were incurred while in Christchurch in connection with the proceedings, I consider they should also be recoverable as a disbursement.  Taxi costs for one counsel for travel within Christchurch and taxi or other costs incurred through one counsel having to travel in Auckland to and from the Auckland airport should also be recoverable.  If there is any further dispute over disbursements, MPL is to be entitled to disbursements as approved by the Registrar.

Solicitors:

Minter Ellison Rudd Watts, Auckland

Lane Neave, Christchurch.