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      Mason v Dodd [2020] NZHC 2005.

5      Fullarton v AWN Holdings Limited [2021] NZHC 1873.

6      Mason v Dodd, above n 4, at [10].

[9]        The starting point is of course r 14.8(3) of the High Court Rules 2016, which states the general rule — that costs must be fixed when the application is determined unless there are special reasons to the contrary — does not apply to an application for summary judgment.

[10]      From the outset, summary judgment proceedings have been treated as exceptional. In NZI Bank Ltd v Philpott the Court of Appeal said that in the case of a plaintiff’s unsuccessful application for summary judgment, costs should usually be reserved although that may be departed from where the circumstances justify that in the view of the presiding judge (or any judge dealing with costs).7

[11]      The cases to which Mr Sullivan invites the Court to have regard are all examples where the judge reached just that conclusion on the basis not only that the plaintiff’s application for summary judgment was a weak one but also on the basis that the plaintiff’s advisors knew or ought to have known that that was the case and ought not to have made the application in the first place.

[12]      I reach no such conclusion in this case. Whilst, as Mr Sullivan submits, I was able in the end to conclude that the plaintiff was not entitled to summary judgment, or, rather, that the plaintiff could not establish that the defendant did not have an arguable defence, I do not take the view urged upon me that the application was hopeless. Not only was the plaintiff entitled to make its application, it was an arguable one.

[13]      Moreover, the plaintiff having done so, that has some advantages for both parties in the sense that virtually all relevant documentation is now at large, the issues are clear, and the arguments have been traversed. As a result, the trial is likely to be more focussed.

[14]I also bear in mind the Court of Appeal’s statement in NZI Bank Ltd v Philpott:8

The introduction of the summary judgment procedure has accelerated the passage of commercial litigation through the Courts and promoted earlier settlement of disputes. As a result it has proved of considerable benefit to the commercial community and others. We agree with Mr O'Brien that the risk of

7      NZI Bank Ltd v Philpott [1990] 2 NZLR 403, (1990) 3 PRNZ 695.

8      At 699.

a large order for costs would act as a deterrent to plaintiffs to use this quick and effective means of obtaining relief where at the outset, in any event, there seems no defence to the claim …

[15]      In short, my view is that this is a case that falls clearly within the broad category of cases where costs should be reserved, and I decline to make any costs award accordingly.

Associate Judge Johnston

Solicitors:

O’Connell Chambers, Auckland for plaintiff Avid Legal, Wellington for defendant