Melco Property Holdings (NZ) Limited v Hall

[2022] NZHC 2416

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE

CIV-2020-485-40

[2022] NZHC 2416

BETWEEN

MELCO PROPERTY HOLDINGS (NZ) LIMITED
Plaintiff

AND

ANTHONY JOHN HALL

Defendant

Memoranda:	Counsel for the Plaintiff – 2 September 2022 Counsel for the Defendant – 16 September 2022
Judgment:	20 September 2022

COSTS JUDGMENT OF GENDALL J

[1]                 A judgment I issued on 25 May 2022 in this proceeding related to a sale and purchase contract whereby the plaintiff purchased from the defendant a commercial property immediately neighbouring the plaintiff’s existing head office and showroom premises in Lower Hutt. At paragraphs 171 and 172 of that 25 May 2022 judgment, I reserved costs but noted that:

My preliminary view on costs, however, is that Melco, as the successful party here, should be entitled to costs from Mr Hall. Counsel and the parties are encouraged to liaise with a view to settling the issue of costs by agreement between them. In the event this is not achieved, then counsel may file memoranda on costs (sequentially) – with these memoranda to be no more than five pages each – and these are to be referred to me for a decision.

[2]                 The parties have been unable to settle costs between them. Counsel for the plaintiff has filed his costs memorandum dated 2 September 2022. Counsel for the defendant has filed his memorandum in response dated 16 September 2022. I now give my decision on this costs question.

MELCO PROPERTY HOLDINGS (NZ) LIMITED v ANTHONY JOHN HALL [2022] NZHC 2416 [20

September 2022]

[3]                 In his memorandum, counsel for the plaintiff seeks costs against the defendant here for costs in this proceeding of $82,903.13 representing category 2B scale costs, plus a 50 per cent uplift. In addition, disbursements totalling $23,224.03 are sought.

[4]                 In his reply memorandum as to costs, counsel for the defendant appears to agree and accept that the plaintiff as the successful party here should be entitled only to simple category 2B scale costs and the calculation by Mr Beck for the plaintiff of this amount at $55,268.75 is agreed. No uplift on scale costs, however, according to the defendant, is considered to be appropriate.

[5]                 So far as the plaintiff’s disbursements at $23,224.03 sought here are concerned, Mr Holloway for the defendant appears to accept also that this claim is in order.

[6]                 The issue before me therefore is whether the plaintiff acknowledged, as the successful party in this proceeding, should receive usual category 2B scale costs only at the figure of $55,268.75, or whether the additional 50% uplift sought by Mr Beck (totalling $27,634.38) should be awarded by way of increased costs as well.

[7]                 Increased costs are regulated by r 14.6(3) of the High Court Rules 2016. Rule 14.6(3) addressing increased costs and indemnity costs relevantly states here:

[3]    The court may order a party to pay increased costs if –

(a)    The nature of the proceeding or the step in it is such that the time required by the party claiming costs would substantially exceed the time allocated under band C; or

(b)   The party opposing costs has contributed unnecessarily to the time or expense of the proceeding or step in it by –

(i)  failing to comply with these rules or with a direction of the Court; or

(ii)  taking or pursuing an unnecessary step or an argument that lacks merit; or

(iii)   failing, without reasonable justification, to admit facts, evidence, documents, or accept a legal argument; or

(iv)   failing, without reasonable justification, to comply with an order for discovery, a notice for further particulars, a notice for interlocutories, or other similar requirement under these rules; or

(v)  failing, without reasonable justification, to accept an offer of settlement, whether in the form of an offer under r 14.10 or some other offer to settle or dispose of the proceeding; or

(c)    The proceeding is of general importance to persons other than just the parties and it was reasonably necessary for the party claiming costs to bring it or participate in it in the interests of those affected; or

(d)   Some other reason exists which justifies the Court making an order for increased costs, despite the principle that the determination of costs should be predictable and expeditious.

[8]                 Here, it is the plaintiff’s submission that the 50 per cent uplift on scale costs, which is sought from the time the proceeding was initially filed, is appropriate under r 14.6(3)(b)(ii), (iii) and (v). Nor, according to Mr Beck, does a 50 per cent uplift represent any over recovery of the plaintiff’s actual costs for this proceeding. He confirms these are at a figure of $135,529 (plus GST and disbursements). Here overall the plaintiff contends the threshold for increased costs is clearly met as the defendant failed to act reasonably in relation to this proceeding and that failure has contributed to a significant increase in the time and expense which has been incurred.1

[9]                 I turn first to issues relating to r 14.6(3)(b)(v), addressing a failure to accept a reasonable offer of  settlement.  It appears  here  that on 3  December 2020, some   17 months before trial, through counsel the plaintiff wrote to the defendant, setting out an offer to settle this proceeding by way of increasing the purchase price for the property from $1.5 million to $1.54 million. The extra $46,000 added to the original

$1.5 million purchase price was to allow for a contribution to the plaintiff’s legal costs at that point.

[10]              This settlement offer was made in response to an earlier offer the defendant had made on 25 November 2020. This offered to settle the sale and purchase of the property, but only at an increased price of $2 million plus a contribution of $38,828.21 towards the plaintiff’s then legal costs. The 25 November 2020 offer from the defendant asserted that “no counter offers will be considered.” It was rejected by the plaintiff.

1 Bradbury v Westpac Banking Corporation [2009] 3 NZLR 400 (CA) at [27].

[11]              In all the circumstances here, I find it was not reasonable for the defendant to reject the $1.54 million settlement offer from the plaintiff made on 3 December 2020. The position taken by the defendant on this, in my view, was clearly unreasonable in circumstances where:

(a)he must have known at the time that, despite his claims to the contrary, he had acted deliberately so as to avoid the sale and purchase agreement with the plaintiff. By way of example, his story as to why he postponed the critical inspection on 8 January 2020 changed, too, on multiple occasions);

(b)he knew that the price of $2 million for the property was significantly higher than either the original $1.5 million purchase price under the plaintiff’s original contract, or the  offer  which  he  received  from  Mr Chambers, or indeed the assessed value of the property from the experts, Colliers, which he had at the time.

[12]              The plaintiff’s settlement offer was made reasonably early. It could not be said to be made too late here. The offer was accompanied by detailed reasons which proved later to be entirely correct, but these were rejected by the plaintiff on a justification that was without merit.

[13]              It is clear, too, the defendant continued to maintain his firm position throughout these proceedings and after November 2020 did not initiate any further settlement discussions. All this, as I see it, was despite:

(a)In the caveat proceeding, both the Court of Appeal and the High Court, acknowledging that the defendant arguably was in breach of his contractual obligations to the plaintiffs; and

(b)Discovery of his telephone records which established (despite his initial protestations to the contrary) that he had received the Chambers telephone call offering $1.6 million for the property, prior to cancelling the scheduled inspection arranged by the engineer for the plaintiff; and

(c)The release of the result and later the reasoning of the plaintiff’s appeal to the Supreme Court regarding the caveat proceeding.

[14]              In all this, it is clear the defendant failed to acknowledge he had any level of risk in this proceeding and that he should engage in a realistic effort to resolve the dispute. If he had taken a different approach then a significant portion of the plaintiff’s costs associated with their claim could have been avoided.

[15]              For all these reasons I find that r.14.6(3)(b)(v) is engaged here. The defendant as I see it has failed without reasonable justification to accept the plaintiff’s reasoned 3 December 2020 settlement offer (which increased the purchase price effectively by

$40,000). The grounds for another order for increased costs are predicated on actions taken by a defendant like Mr Hall here which increased the costs of a proceeding once issued. With the defendant’s unreasonable rejection of the plaintiff’s settlement offer, those grounds are clearly made out in this case. I conclude that increased costs are justified here under r. 14.6(3)(b)(v) and the 50 per cent increase in my view, given the reasonably early timing of the offer in the history of this proceeding, is appropriate. The costs sought by the plaintiff at $82,903.13 are to be awarded. This resolves the issue I noted at [6] above.

[16]              For completeness, however, I will go on to make one or two additional comments relating to this proceeding, which I now do. In addition to the defendant’s conduct in relation to the 3 December 2020 settlement offer, I found the evidence provided by him before me on the central issue alleging that it was his conduct that prevented the sale agreement from being fulfilled, was inconsistent, evasive, and contradictory in many aspects. On this I noted in part at [87] of the 25 May 2022 judgment:

Despite Mr Hall’s insistence to the contrary, as I see the position this illustrated in a number of respects Mr Hall’s developing intentions at the time not to comply with his obligations under the Contract and to ensure that he could cancel the Contract and proceed with a sale at a higher price to Mr Chambers.

[17]              Clearly I found this behaviour on the part of the defendant as central to the issues in this proceeding, as was his lack of:

…any genuine desire to provide reasonable assistance for Melco to carry out its due diligence inquiries and work under the Contract. This is especially the case here, in a situation where Mr Hall insisted he was to be the only person to control completely all means of access to a significant part of the property.2

[18]              On the r 14.6(3)(b)(iii) question of the defendant’s unreasonable failure to admit facts and evidence here, I also found at [86] of my judgment that:

(a)The defendant’s story as to why he postponed earlier arranged inspection meetings on 8 January 2020 changed on multiple occasions, and that was a key part of his defence at trial; and

(b)The defendant asserted he had simply forgotten to call Ms Isaacs of the plaintiff on 9 January 2020 regarding rescheduling the postponed inspection. Significantly, this was despite clear documentary evidence that on that same day he had actually instructed his lawyer specifically

not to respond to the plaintiff or its agents.

[19]              In addition, throughout the proceeding the defendant insisted the higher offer that he had received from the alternative purchaser, Mr Chambers, was not a factor in his decision-making. On this aspect, following the eleventh hour discovery of the defendant’s phone records, which identified that he had received the higher offer from Mr Chambers before postponing the planned and critical inspection meeting at the property, a reasonable argument does exist that it was unreasonable for the defendant to:

(a)refuse to accept the higher offer influenced his decision to postpone that inspection; and

(b)not then to respond to the plaintiff regarding an extension, or to reschedule the inspection; and

(c)to purport to avoid the sale agreement.

2      At [89] of my 25 May 2022 judgment.

[20]              Significantly on these aspects, the Supreme Court in its later judgment appeared to accept too that this was a matter resulting in additional work and justifying an increased costs award.3

[21]              Overall, as I see it too, a reasonable argument exists that some of the costs of the plaintiffs in this proceeding and at trial in my view would not have been required had the defendant conceded that he always wanted to take advantage of the higher Chambers offer he had received, despite his earlier and adamant claims to the contrary, and especially so after his phone records were discovered.

[22]              For all the reasons I have outlined above I am satisfied the plaintiff has met its onus of persuading the Court that an increase on category 2B scale costs at the level of a 50 per cent uplift sought in this case is appropriate in all the circumstances here.

[23]              Costs on this proceeding totalling $82,903.13 are therefore awarded to the plaintiff against the defendant (these calculated on a category 2B scale basis, together with a 50 per cent uplift) together with disbursements totalling $23,224.03. The total amount awarded to the plaintiff for costs and disbursements on this proceeding is therefore $106,127.16.

Gendall J

3      Melco Property Holdings (NZ) 2012 Ltd v Hall [2022] NZSC 101 at [13].