Millstone Grazing Limited v Myoak Holdings Limited
[2016] NZHC 1760
•29 July 2016
IN THE HIGH COURT OF NEW ZEALAND NAPIER REGISTRY
CIV-2016-441-25 [2016] NZHC 1760
BETWEEN MILLSTONE GRAZING LIMITED
Plaintiff
AND
MYOAK HOLDINGS LIMITED Respondent
Hearing: 29 July 2016
(On the papers)
Appearances:
J Haig and H Gordon for Applicant
N Farrands for RespondentJudgment:
29 July 2016
JUDGMENT OF MANDER J
[1] Millstone Grazing Limited (Millstone) was successful in sustaining a caveat lodged over land owned by Myoak Holdings Limited (Myoak). It now seeks costs in the absence of agreement between the parties.
The arguments
[2] Millstone relies on the ordinary principle that costs follow the event, and submits there are no reasons why the Court should not follow the general principle provided by r 14.2(a) of the High Court Rules, that a party who fails on an interlocutory application should pay costs to the party who succeeds. Millstone submitted that its application to sustain the caveat can be likened to an interlocutory application which, in the absence of special reasons, costs on the application are to
be fixed when the application is determined and thereby become payable.1
[3] Myoak opposes costs being awarded. It submits the question of costs should
be reserved until the merits of Millstone’s case is tested and the proceeding
1 High Court Rules,r 14.8.
MILLSTONE GRAZING LTD v MYOAK HOLDINGS LTD [2016] NZHC 1760 [29 July 2016]
determined. It notes the Court may yet conclude that Millstone has no caveatable interest. In support of its opposition, Myoak drew on a number of cases where this Court has taken the view that it was more appropriate to reserve the question of costs until the outcome of the substantive proceedings were known or, alternatively, that costs should lie where they fall.2
[4] Myoak further submitted the relief granted to Millstone was based on a low threshold which inherently involves preserving the present position until the issue can be fully determined on its merits. It was critical of Millstone not having expeditiously pursued its claim, and submitted that it was appropriate in those circumstances for any question of costs to be held over until the substantive matter was decided.
[5] Myoak expressed concern that Millstone having sustained the caveat would be unmotivated having regard to the merits of the substantive dispute to diligently advance the substantive proceeding. In the circumstances, Myoak submitted it was more appropriate for each party to bear its own costs.
[6] In response to Myoak’s objection to an award of costs, Millstone submitted the cases relied upon turned on their individual circumstances, and that there were features in those cases justifying the non-award of costs which are not present here. Millstone rejected the suggestion it has been tardy in prosecuting its claim. It points to the steps it has taken to sustain the caveat, that it has complied with timetable
orders throughout, and that it intends to file its claim by mid August.
2 Sia-Fox v Jubilee Management Ltd HC Wellington CIV-2010-454-377, 2 August 2010; Thomas v Thomas HC Christchurch CIV-2011-409-002514, 24 April 2012; Wakenshaw v Wakenshaw [2016] NZHC 773; Raiser Developments Ltd v Treefoil Property Ltd HC Auckland CIV-2005-
404-5883, 16 November 2006; Hall v Attorney-General HC Auckland CIV-2008-404-7172, 15
April 2009.
Decision
Is Millstone entitled to costs?
[7] The starting point is that a successful party to a proceeding or an interlocutory application is entitled to costs.3 Originating applications share many similarities with interlocutory applications, and in many respects the same rules apply.4
[8] In large measure, Myoak’s opposition rests on the proposition that because typically applications to sustain a caveat are the prelude to more substantive litigation and have the effect of only preserving the position pending more rigorous assessment of the merits of the parties’ cases, it would be premature to decide the issue of costs. There is some attraction to an approach that allows the question of costs to be informed by the subsequent substantive proceedings. However, that may result in the more confined nature of the issue with which the Court is concerned at this preliminary stage being overlooked. The issue for the Court in deciding whether to sustain the caveat is quite different from the ultimate decision that will be required on the substantive proceeding.
[9] The issue of costs is to be determined on the basis of the success of the parties as it relates to the discrete application before the Court. The parties in contesting the restricted question of whether a caveat should be sustained are aware of the limited nature of the Court’s inquiry and the low threshold which is to be applied. The parties are able to make their own assessment of the respective merits of their arguments as it relates to the particular issue to be determined by the Court based upon the known test. This was the situation in the present case. There is nothing inconsistent in a party being awarded costs for being successful in sustaining a caveat measured against the applicable legal principle of showing a reasonably arguable case, and that party ultimately being unsuccessful at trial for which it will
have to bear the costs.
3 High Court Rules, r 14.2.
4 See r 19.10.
[10] While Myoak was able to point to a number of cases where no award of costs were made, it appears that in recent time successful applications to sustain caveats have typically been accompanied by cost orders in favour of the applicant on a 2B basis.5 It is trite to observe that each case turns on its individual circumstances and that the award of costs is quintessentially discretionary. That discretion, however, is not unfettered, and in the absence of good reason the cost regime will be applied in accordance with the principles and guidance provided by the rules.6
[11] For these reasons, I consider it is appropriate that in the ordinary way costs should follow the event in favour of the successful party.
Categorisation of costs
[12] Myoak submitted the appropriate categorisation of costs is on a 1A basis because the application and the affidavits were minimal in length. Rule 14.3(1) provides that category 1 proceedings are those of a straightforward nature able to be conducted by counsel considered junior in the High Court, and are to be contrasted with category 2 proceedings being those of average complexity requiring counsel of skill and experience considered average in this Court.
[13] The assertion that the proceeding is a category 1 case has not been accompanied by any real analysis of the relative complexity of the matter. There was reference to the application itself and the affidavits being of minimal length, which it is said to be contrasted with “complex trust matters” where “the affidavits are substantial”.
[14] As I have already observed, cost orders made in relation to applications to sustain caveats have ordinarily and routinely been made on a 2B basis. The present case raised issues of relative complexity, with a factual background of some depth
involving earlier litigation between the parties. I am satisfied the current
5 Logmao v Valdrez [2016] NZHC 315; Global Pacific Corporation Ltd v Hanslay Holdings Ltd [2015] NZHC 2425; Cerny v Cerny [2015] NZHC 2256, (2015) 16 NZCPR 768; Ford v Ensor [2015] NZHC 1459; Geneva Healthcare Ltd v Essential Assets Ltd [2014] NZHC 3236.
6 Manukau Golf Club Inc v Shoye Venture Ltd [2012] NZSC 109, [2013] 1 NZLR 305 at [7] and [16]; Glaister v Amalgamated Dairies Ltd [2004] 2 NZLR 606 (CA) at [21]-[24] and [28]; Mansfield Drycleaners Ltd v Quinny’s Drycleaning (Dentice Drycleaning Upper Hutt) Ltd (2002) 16 PRNZ 662 (CA) at [27].
proceedings was of average complexity requiring counsel of average skill and experience, and is appropriately categorised as 2B.
[15] Myoak submitted that no allocation of costs should be made for case management. A joint memorandum was filed and an agreed position reached for the file to be transferred to Wellington for hearing. I agree the “case management”, such as it was, was straightforward, however, it was necessary for these limited initiatives to be taken to bring the matter on for hearing, and the modest claim by Millstone to reflect these steps is not unreasonable.
[16] I accept there should be no allowance for second counsel. Mr Gordon as the instructing solicitor acting on behalf of Millstone was called upon during the hearing, but that was only in an attempt to provide clarification of factual background in relation to matters not covered by the affidavit evidence – essentially evidence from the bar. That is not the function of counsel, and the nature and extent of the argument was not of a type which required the appearance of second counsel.
[17] Myoak queried the need for interim and final orders to be sealed. Millstone submitted sealed orders sustaining the caveat were required by LINZ. I accept this is a usual and orthodox step, the reasonable cost of which can be recovered by the successful party.
Progressing the substantive proceeding
[18] As I have already referred, Myoak expressed concern regarding Millstone’s prosecution of its substantive claim. It sought to link the costs issue with that concern. Neither at the hearing nor in its written submissions did Myoak seek any conditions in the event the caveat was sustained, and I do not consider it appropriate to conflate the different issues of the merits of the costs application and the progress of Millstone’s substantive claim. However, aside from remedies Myoak may wish to pursue should it be concerned about any strategic motive Millstone may have to avoid initiating proceedings, it now at least has the benefit of counsel for Millstone’s formal representation to the Court, contained in its memorandum of 11 July, that it will file its claim within four weeks of the date of that document.
Orders
[19] Making an adjustment for the non-allowance for second counsel, I make an order that costs be paid by Myoak in the sum of $10,258, and disbursements of
$1,280. The details of that award are set out in the attached schedule.
Solicitors:
Nowland Gordon & Associates, Wellington
Morrison Kent, Auckland
COSTS SCHEDULE
2B COSTS @ $2,230 PER DAY Item Description Days Amount 37 Originating application and supporting affidavits 2.0 4,460.00 39 Case management (joint memorandum of counsel) 0.2
446.00
40 Written submissions 1.5 3,345.00 42 Appearance at hearing 0.5 1,115.00 29 Sealing (interim and final orders) 0.2 x 2 0.4 892.00 Total 4.65 $10,258.00
DISBURSEMENTS Description Cost Filing fee $540 Sealing fees: $50 x 2 $100 Hearing fee $640 Total Disbursements $1,280.00
TOTAL COSTS AND DISBURSEMENTS $11,538.00
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