Maydonoz NZ Ltd v Poppelwell - [2012] NZHC 2223

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2011-404-8144 [2012] NZHC 2223

BETWEEN MAYDANOZ NZ LTD Plaintiff

ANDIAN RONALD POPPELWELL AND DOROTHY POPPELWELL TRADING AS THE POPPELWELL PARTNERSHIP Defendants

Hearing: (On the papers)

Counsel: DL Schnauer for Plaintiff
SHN Chan for Defendants

Judgment: 30 August 2012

JUDGMENT OF BREWER J (Costs)

This judgment was delivered by me on 30 August 2012 at 4:30 pm pursuant to Rule 11.5 High Court Rules.

Registrar/Deputy Registrar

SOLICITORS
Schnauer & Co (Auckland) for Plaintiff
McVeagh Fleming (Auckland) for Defendants

MAYDANOZ NZ LTD V POPPELWELL HC AK CIV-2011-404-8144 [30 August 2012]

Introduction

[1] In my judgment delivered on 17 May 2012, I granted the plaintiff’s application for relief against cancellation of the lease it holds from the defendants. I now have to decide costs.

[2] On 13 December 2011, the defendants re-entered the leased premises from which the plaintiff operates a Turkish food takeaway business. The defendants had issued two default notices which had not been complied with. The first related to the absence of a type of fire extinguisher required by the defendants’ insurer and the second related to unpaid operating expenses in the sum of $2,805.41.

[3] The plaintiff commenced proceedings on 16 December 2011 and, on

22 December 2011, gained an interim injunction allowing the plaintiff to re-enter the premises. In my judgment, I ruled that the first default notice was invalid but that the second default notice was valid. I granted relief against cancellation on the basis of proportionality. The gravity of the default, in all the circumstances, was greatly outweighed by the destruction of the plaintiff’s livelihood which would have occurred if the relief was not granted.

[4] Both parties seek costs. The defendants seek their actual costs on a solicitor- client basis. The plaintiff seeks scale costs.

Submissions

[5] The costs sought by the plaintiff on a 1B basis amount to $11,375 plus disbursements of $6,319.92. The basis for the application is the submission that the defendants acted unreasonably in insisting on a defended hearing when there were several opportunities to resolve the dispute. It is submitted that the plaintiff was largely successful in the overall litigation in that the first default notice was found to be invalid and that relief against cancellation was granted.

[6] Counsel for the defendants submits that clause 6.1 of the deed of lease requires the plaintiff to pay the defendants’ costs on a solicitor-client basis.[1] These costs, supported by invoices, amount to $44,889.72 (GST exclusive). It is submitted that these costs are within the range of what is considered reasonable for a case such as this.

The Law

[1] Rule 14.6(4)(e) provides that the Court may order indemnity costs if the party claiming costs is entitled to indemnity costs under a contract or deed.

[7] The leading decision on costs in relief against forfeiture cases is Roses are Red Ltd v Methodist Church.[2] The Court of Appeal set out the policy considerations as follows:[3]
[2] Roses are Red Ltd v Board…

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: [2012] NZHC 2223
Decision Date: 30 August 2012

CaseChat Overview and Summary

In the case of Maydonoz NZ Ltd v Poppelwell, the High Court was tasked with determining costs after granting relief against the cancellation of a lease. The plaintiff, Maydonoz NZ Ltd, operates a Turkish food takeaway business from premises leased from the defendants, Ian Ronald Poppelwell and Dorothy Poppelwell, trading as The Poppelwell Partnership. The defendants had issued two default notices to the plaintiff, one related to the absence of a required type of fire extinguisher and the other to unpaid operating expenses. The plaintiff filed proceedings and obtained an interim injunction allowing them to re-enter the premises. The court found the first default notice invalid but upheld the second, granting relief against cancellation on the basis of proportionality. Both parties sought costs, with the plaintiff seeking scale costs and the defendants claiming actual costs on a solicitor-client basis.

The legal issues before the court involved whether the defendants were entitled to indemnity costs as per clause 6.1 of the lease and, if so, whether these costs were objectively reasonable. The court considered the nature of the relief granted and whether the defendants' actions in pursuing the proceedings were reasonable and necessary. The court held that the defendants were entitled to costs as the clause applied and the steps taken were reasonably necessary, but limited the basis of costs to those relating to the second default notice. The court did not have sufficient information to assess the reasonableness of the costs directly but ordered the defendants to provide a detailed account for taxation, allowing the plaintiff to challenge the costs if necessary.

Orders