Monaghan v Mineral Park Limited

[2021] NZHC 1872

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2020-404-1316

CIV-2019-404-1333 [2021] NZHC 1872

BETWEEN

COLIN JOHN MONAGHAN and MARIA TE RANGIMARIA BROWN

Plaintiffs

AND

MINERAL PARK LIMITED

First Defendant

AND

ERIC YIN CHIC LIU and DAISY FANGYUE LIU

Second Defendants

Hearing:	On the papers
Appearances:	MC Josephson for the Plaintiff B Murray for the Defendants
Judgment:	23 July 2021

JUDGMENT OF FITZGERALD J

[As to costs]

This judgment was delivered by me on 23 July 2021 at 12.30pm, pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date………………….

Solicitors:      T M Bates & Co, Auckland

Vallant Hooker & Partners, Auckland

To:               M Josephson, Auckland

MONAGHAN v MINERAL PARK LIMITED [2021] NZHC 1872 [23 July 2021]

Introduction

[1]By judgment delivered on 15 June 2021,1 I:

(a)stayed the enforcement of a default judgment obtained by Mineral Park Limited and Mr and Mrs Liu  (collectively,  Mineral  Park)  against Mr Monaghan and Ms Brown on 19 September 2019;

(b)ordered  that  the  stay  of  enforcement  be  on  the  condition  that  Mr Monaghan and Ms Brown pay $15,000 by way of security for costs within 20 working days of my judgment; and

(c)ordered that should security for costs not be paid within 20 working days, the stay of enforcement of the default judgment would lapse.

[2]                 At the conclusion of my judgment, I observed that as both parties had had a measure of success on their respective applications, I considered it appropriate that costs on the applications were to lie where they fell. I noted that, if despite that indication, either party sought costs, memoranda were to be filed.

[3]                 Mineral Park seeks a contribution to its costs on both applications. Costs are sought on the basis that the outcome in my substantive judgment effectively mirrored a  proposal  made  by  Mineral  Park  prior  to   the  hearing  of  the  applications.   Mr Monaghan and Ms Brown, on the other hand, submit that costs should lie where they fall.

Parties’ submissions – more detail

Mineral Park’s submissions

[4]                 Counsel for Mineral Park, Mr Murray, notes that in a proposal made on behalf of Mineral Park on 22 February 2021 (the Offer), it was suggested that:

1      Monaghan v Mineral Park Ltd [2021] NZHC 1407.

(a)Mr Monaghan and Ms Brown pay $17,000 by way of security for costs (to cover certain steps including discovery), with Mineral Park having leave to renew the application for further security if required;

(b)the default judgment be stayed on conditions;

(c)Mineral Park be permitted to file and serve applications to adjudicate Mr Monaghan and Ms Brown bankrupt, based on the default judgment, but those applications would be adjourned by consent;

(d)Mr Monaghan and Ms Brown would have nine months within which to pay the security for costs, otherwise the bankruptcy applications could proceed;

(e)in those circumstances, the parties were to be free to take any further steps they wished;

(f)if the Offer was accepted, the parties would bear their own costs of the two applications;

(g)if the security was paid in accordance with the Offer, the stay of enforcement would continue and the respective proceedings continue to their conclusion; and

(h)both sides were to have leave to apply to be released from the stay of enforcement/stay of bankruptcy proceedings.

[5]                 The Offer was made by Mineral Park after the hearing date of 21 April 2021 had been advised by the Registry. It was rejected by Mr Monaghan and Ms Brown. Following that point in time, certain steps were taken on both applications, namely preparing submissions, preparation of a common bundle and attendance at the half day hearing.

[6]                 Mr Murray submits that the Offer, which was marked “without prejudice except as to costs”, ought to be taken into account on the costs of the applications.

Mineral Park accordingly seeks an award of costs for those steps taken after the Offer was made. Scale costs would total $7,409 plus disbursements. Counsel notes, however, that Mineral Park’s actual costs are less than scale, being $4,880 plus GST and disbursements. A costs award of $5,688.32 is accordingly sought.

Mr Monaghan and Ms Brown’s submissions

[7]                 Counsel for Mr Monaghan and Ms Brown, Mr Josephson, submits that the Offer does not meet the requirements of rr 14.10 and 14.11, given the amount of security ordered in my judgment is less than the amount which Mineral Park offered to accept. Counsel submits that the fact the $15,000 of security is to be paid within 20 working days, rather than nine months under the Offer, does not erase the $2,000 difference. Mr Josephson refers  to  the  Court’s  finding  that  Mr Monaghan  and Ms Brown are impecunious, and submits “they were simply not in a financial position to accept the defendants’ offer”. Mr Josephson confirms that there is no litigation funder involved.

[8]On this basis, counsel submits that costs ought to lie where they fall.

Discussion

[9]                 The starting point is that costs follow the event. On this basis, the successful party overall will usually be ordered to pay costs. My initial indication that an appropriate outcome might be that costs lie where they fall reflected that I ordered a stay of the enforcement of the default judgment, as sought by Mr Monaghan and   Ms Brown, though on the condition that some security for costs was paid, as sought by Mineral Park.

[10]              Turning to what effect, if any, the Offer should have on costs, r 14.11(1) provides that whether any written offer made “without prejudice except as to costs” (a Calderbank offer) is to be taken into account on costs is at the discretion of the court. Subject to the court’s overriding discretion, however, a party who makes a Calderbank offer that exceeds the amount of a judgment obtained to that other party, or makes an offer that would have been more beneficial to the other party than that actually

obtained, is prima facie entitled to costs for steps taken after the offer was made.2 Where the Calderbank offer is less than but “close to the value or benefit” obtained by the other party, the offer may be taken into account on the question of costs.3

[11]              I am satisfied that the Offer ought to be taken into account on the question of costs in this case. While the security ultimately obtained by Mineral Park was slightly less than as proposed in the Offer, a significant benefit to Mr Monaghan and Ms Brown from the Offer was the lengthy period of time over which security was to be paid. In my view, a nine month payment period versus 20 working days is sufficient to “counterbalance” the slightly lower amount of security ordered in my judgment. And while the Offer had a number of conditions attached to it, these were not of a type which should disentitle Mineral Park from the benefit of the Offer being taken into account  on  costs.  For  example,  without  the  default  judgment  being  stayed,   Mr Monaghan and Ms Brown were exposed to bankruptcy proceedings. Further, it remains open to Mineral Park to revisit the quantum of security as these proceedings progress.

[12]              I note Mr Josephson’s submission that Mr Monaghan and Ms Brown are impecunious and therefore were simply not in a position to accept the Offer. That may be so, but they have nevertheless commenced significant High Court proceedings against Mineral Park seeking millions of dollars in damages. Given their impecuniosity, and that they are not progressing the proceedings via Legal Aid funding, it is not clear to the Court how they propose to fund these proceedings. Further, while I observed that aspects of their claim did not appear wholly without merit, there are nevertheless a number of potential weaknesses or difficulties in some aspects of it. In those circumstances, it was somewhat inevitable in my view that some security would be ordered, particularly if the default judgment was to be stayed.

[13]              There will therefore be a  costs  award  in  Mineral  Park’s  favour  against  Mr Monaghan and Ms Brown, on a joint and several basis.

2      Rule 14.11(3).

3      Rule 14.11(4).

[14]              Noting that Mineral Park’s actual costs on those steps taken after the Offer was made are less than the scale costs, I make a costs award in Mineral Park’s favour of

$4,880 plus GST, together with those disbursements set out in its costs memorandum. That produces a total costs award of $5,688.32.

Fitzgerald J