Midgen Enterprises Ltd v UV Water Systems Ltd - [2017] NZSC 68

IN THE SUPREME COURT OF NEW ZEALAND

SC 32/2017
[2017] NZSC 68

BETWEEN

MIDGEN ENTERPRISES LIMITED
First Applicant

DAVID JAMES MIDGEN
Second Applicant

AND

UV WATER SYSTEMS LIMITED
Respondent

Court:	William Young, OʼRegan and Ellen France JJ
Counsel:	D W Grove for Applicants M J Fisher and K J Ng for Respondent
Judgment:	9 May 2017

JUDGMENT OF THE COURT

A The application for leave to appeal is dismissed.

B The applicants are to pay costs of $2,500 to the respondent.
____________________________________________________________________

REASONS

The case arises out of costs decisions relating to claims brought by the respondent, Water Guard NZ Ltd (Water Guard),[1] against the applicants, Midgen Enterprises Ltd[2] and David Midgen (Midgen) for damages for breaches of contract. Water Guard alleged that Midgen had misrepresented sales figures when selling its New Zealand distribution business for water filtration units in 2013 (the misrepresentation claims). Additionally or alternatively, Water Guard alleged that the units were not fit for purpose or of merchantable quality (the defects claims).
[1]The company is now called UV Water Systems Ltd.
[2]Midgen Enterprises Ltd was placed in liquidation on 7 April 2017. The liquidator has consented to an appeal to this Court.
In the High Court, Asher J dismissed the misrepresentation claims but allowed, in part, Water Guard’s defects claim.[3] Damages were dealt with separately and the proceeding resolved when the parties subsequently consented to the entry of judgment in Water Guard’s favour for about $67,500. Costs were reserved. Asher J subsequently awarded Midgen costs on a 2B basis for one counsel for a six day hearing on the liability trial plus disbursements (costs order (1)).[4] The Judge directed that costs incurred after the liability judgment were to lie where they fell (costs order (2)).[5]
[3]Water Guard NZ Ltd v Midgen Enterprises Ltd [2015] NZHC 2227.
[4]Water Guard NZ Ltd v Midgen Enterprises Ltd [2016] NZHC 1546 [HC costs judgment] at [36].
[5]At [36].
This approach reflected Asher J’s view that, overall, Water Guard was largely unsuccessful and Midgen was, for the most part successful.[6] Further, Asher J considered Water Guard had acted unreasonably in not accepting or not responding to Midgen’s settlement offers.[7]
[6]As the Court of Appeal noted, the Judge worked on the basis about 25 per cent of the trial was directed to Water Guard’s successful claims and the balance spent on its unsuccessful claims: Water Guard NZ Ltd v Midgen Enterprises Ltd [2017] NZCA 36 [CA costs judgment] at [5]
[7]HC costs judgment, above n 4, at [28].
Water Guard’s appeal to the Court of Appeal on the costs award succeeded in part.[8] Costs order (1) was set aside with the result that costs were to lie where they fell in the High Court. The Court of Appeal ordered Midgen to pay Water Guard’s costs on the appeal.
[8]CA costs judgment, above n 6.
In allowing the appeal against costs order (1), the Court of Appeal considered Asher J gave insufficient weight to Water Guard’s success and obtaining of relief…

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.

Keep reading for free

Create a free CaseChat account to read Midgen Enterprises Ltd v UV Water Systems Ltd and more:

Read every judgment in full
Ask AI and get answers linked to paragraphs
See how each paragraph was cited in later cases
Download judgments as PDF or Word

Continue with Google

One click creates your free account or signs you in.

By continuing you agree to the Terms and Privacy Policy.

Details

Case: [2017] NZSC 68
Decision Date: 9 May 2017

CaseChat Overview and Summary

Midgen Enterprises Ltd and David Midgen brought an application for leave to appeal against the decision of the Court of Appeal in relation to a costs award in proceedings brought by UV Water Systems Ltd (formerly Water Guard NZ Ltd) for breaches of contract. The Court of Appeal had set aside the costs order of the High Court, which had awarded Midgen costs on a 2B basis, and ordered Midgen to pay UV Water Systems Ltd's costs on the appeal. The applicants argued that the Court of Appeal did not properly direct itself in setting aside the costs order and that it should have endorsed the High Court Judge's assessment of the parties' approach to settlement. The applicants also argued that there was no basis for the Court of Appeal to award costs against Mr Midgen in his own right given he was successful in the High Court in the claims against him.

The Court dismissed the application for leave to appeal. The Court found that the Court of Appeal had properly applied well-established principles in setting aside the costs order of the High Court. The Court of Appeal had considered the Judge's error in the application of the general principle that costs should follow the event and had also considered the impact of UV Water Systems Ltd's "unreasonable approach to settlement". The Court found that there was no basis for interfering with the decision of the Court of Appeal. The Court found that no question of general or public importance arose and that the proposed appeal did not involve a matter of general commercial significance. The Court also found that there was no appearance of a miscarriage of justice.

The application for leave to appeal was dismissed. The applicants were to pay costs of $2,500 to the respondent. The Court ordered that the applicants pay costs of $2,500 to the respondent.

Orders