Masterton Investments Limited v Watson - [2021] NZHC 2343

IN THE HIGH COURT OF NEW ZEALAND MASTERTON REGISTRY

I TE KŌTI MATUA O AOTEAROA WHAKAORIORI ROHE

CIV-2020-435-19

[2021] NZHC 2343

BETWEEN
MASTERTON INVESTMENTS LIMITED

Plaintiff

AND

DENIS ERIC WATSON

Defendant

Hearing: 26 August 2021

Appearances:

S Maloney and E St John for plaintiff K P Sullivan for defendant

Judgment:

8 September 2021

JUDGMENT OF ASSOCIATE JUDGE JOHNSTON

[Costs]

[1] In my judgment of 7 July 2021, I dismissed an interlocutory application by the plaintiff for summary judgment against the defendant.1

[2] At the conclusion of my judgment I reserved costs, commenting that as a matter of convention the courts are disinclined to award costs against a plaintiff in an unsuccessful application for summary judgment.2

[3]Notwithstanding that indication, the defendant seeks costs in this case.

[4]Mr Sullivan’s submissions are helpfully direct.

1 Masterton Investments Ltd v Watson [2021] NZHC 1681.
2 At [52].

MASTERTON INVESTMENTS LIMITED v WATSON [2021] NZHC 2343 [8 September 2021]

[5] He begins by explaining the defendant’s disappointment that, following the unsuccessful application for summary judgment, the plaintiff did not propose alternative dispute resolution but rather indicated that it wished to press ahead to trial. It is not obvious to me why that is relevant.

[6] Mr Sullivan then traverses various aspects of my judgment, which, as he says, led me to conclude that the plaintiff could not succeed on a summary basis in this case, and he says that the plaintiff and its advisers were aware of all of these points before applying for summary judgment because the defendant’s solicitors raised them in correspondence. The inference that Mr Sullivan invites the Court to take is that the summary judgment proceeding should never have been commenced in the first place.

[7] Mr Sullivan accepts that as a general rule the courts do not award costs against plaintiffs in unsuccessful applicants for summary judgment, but he points out that there are any number of examples of that general principle being departed from. He refers in particular to Emmons Developments New Zealand Ltd v Mitsui Sumitomo Insurance Co Ltd,3 Mason v Dodd4 and Fullarton v AWN Holdings Limited,5 all of which are examples of this Court doing just that.

[8] In those cases the judge concluded not only that the application for summary judgment was weak, but also that the plaintiff and or the plaintiff’s advisers knew or ought to have been aware of its weaknesses. In other words, Associate Judge Matthews in Emmons, Katz J in Mason and Fitzgerald J in Fullarton all concluded that the application should not have been made in the first place. In those situations, there are good reasons for awarding costs. As Katz J said in Mason:6
… The prospect of an immediate award of costs in respect of clearly unmeritorious summary judgment applications incentivises parties to carefully and objectively assess the merits of such applications before bringing them.

3 Emmons Developments New Zealand Ltd v Mitsui Sumitomo Insurance Co Ltd [2016] NZHC 1244.
4

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2021] NZHC 2343
Decision Date: 8 September 2021

CaseChat Overview and Summary

The High Court of New Zealand considered an application for costs made by the defendant, Denis Eric Watson, against the plaintiff, Masterton Investments Limited, following an interlocutory application for summary judgment which was dismissed. The case highlights the issue of whether costs should be awarded against a plaintiff in unsuccessful summary judgment applications. The court examined the general principle that the courts are disinclined to award costs against plaintiffs in unsuccessful applications for summary judgment, but also considered exceptions to this principle.

The legal issue before the court was whether there were special reasons to award costs against the plaintiff in this case, despite the general rule that such costs should not be awarded. The defendant argued that the plaintiff's application for summary judgment was weak, and that the plaintiff and its advisers knew or ought to have known about its weaknesses. The defendant cited several cases where the court had awarded costs against the plaintiff in similar circumstances.

The court found that while the plaintiff's application for summary judgment was ultimately unsuccessful, it was not hopeless and there were advantages to both parties in having the issues clearly defined and the arguments traversed. The court also considered the benefits of the summary judgment procedure in promoting earlier settlement of disputes and the risk of a large order for costs acting as a deterrent to plaintiffs from using this procedure. The court concluded that there were no special reasons to award costs against the plaintiff in this case.

The court declined to make any costs award against the plaintiff. The court found that the case fell within the broad category of cases where costs should be reserved, and there were no exceptional circumstances that warranted an award of costs against the plaintiff.

Orders