MV Celebre Ltd v Airwork Flight Operations Ltd

[2015] NZHC 1400

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2014-404-001511 [2015] NZHC 1400

BETWEEN

MV CELEBRE LTD

Plaintiff

AND

AIRWORK FLIGHT OPERATIONS LTD Defendant

Hearing:	10 June 2015
Appearances:	S J Neville for plaintiff S Cook and A Wallace for defendant
Judgment:	19 June 2015

JUDGMENT OF ASSOCIATE JUDGE J P DOOGUE

This judgment was delivered by me on

19.06.15 at 4.30 pm, pursuant to

Rule 11.5  of the High Court Rules.

Registrar/Deputy Registrar

Date……………

MV CELEBRE LTD v AIRWORK FLIGHT OPERATIONS LTD [2015] NZHC 1400 [19 June 2015]

Introduction

[1]      An application for particular discovery that MV Celebre Ltd (“the plaintiff”) had filed was listed for hearing on a defended basis on 10 June 2015.   However, prior to the date of fixture, Airwork Flight Operations Ltd (“the defendant”) and the plaintiff reached agreement which resolved the differences between them concerning what documents the defendant ought to additionally make discovery of.

[2]      The remaining issue is that of costs. The arguments for each side and the issue that arises will be considered in the judgment that follows.

Discretion to order costs

[3]      The principal point that Mr Cook, for the defendant, made was that the defendant voluntarily handed over documents which fell into some of the categories in regard to which particular discovery was sought.  The argument, therefore, was that the defendant ought not to have to pay costs on the application for particular discovery.

[4]      In order to correctly analyse the relevance of such a submission, if any, it is necessary to attempt to identify which of the rules and principles that govern costs orders apply in the present case.

[5]      Mr Cook himself submitted that the point had relevance with regard to r

14.2(a) of the High Court Rules, which provides that the party who fails with respect to an interlocutory application should pay the costs to the party who succeeds.  The submission was that the defendants in this case had not relevantly failed.

[6]      It is correct that the terms of r 14.2(a) appear to address a case where the decision was the subject of the decision of the Court leading to an application for costs by the successful party.

[7]     However, the rule which governs the position where there has been a discontinuance of a proceeding is also of application.   Rule 15.23, which is to be considered  shortly,  is  stated  in  terms  which  literally  limit  its  effect  to  the

circumstances in which a proceeding in its entirety has been discontinued.  That rule provides as follows:

15.23 Costs

Unless the defendant otherwise agrees or the court otherwise orders, a plaintiff who discontinues a proceeding against a defendant must pay costs to the defendant of and incidental to the proceeding up to and including the discontinuance.

[8]       The underlying principle behind the rule has been applied analogously in circumstances where an applicant has terminated an interlocutory application.1

[9]      Assuming, as I do, that r 15.23 is able to be applied analogously to the case of interlocutory applications, it is necessary to consider how the discretion contained in that role is to be applied.  In the Court of Appeal decision in Kroma, the Court held that the principle can be displaced in circumstances where the court considers that it is just and equitable that it should not apply.2   The Court also concluded that while the court will not usually consider the merits of the respective cases of the parties when dealing with costs on a discontinuance, there is no objection to that doing so in cases where the merits are obvious.

[10]     I accept that it is legitimate for the Court to have regard to r 15.23, and the authorities decided under it, when considering a case such as the present one which involves, in effect, the discontinuance of an interlocutory application, although not the substantive proceeding of which it is part.

[11]     The second point is that it is understandable why the Court will not in general have regard to the merits of the respective cases of the parties on a discontinuance. The fact is that the court has not, of necessity, in those circumstances embarked upon the  hearing  of  the  case  and  therefore  is  not  in  a  position  to  come  to  a  recent conclusion about the merits of the respective cases.

[12]     The reason why the Court ought not to attempt to come to a view about the merits of the case is that it does not have the means of coming to a reasoned

1      See Rocket Surgery Ltd v Goodwin [2013] NZHC 2667.

2      Kroma Colour Prints Ltd v Tridonicato NZ Ltd [2008] NZCA 150 at [12].

conclusion, or, in the alternative, conducting some kind of hearing into that matter would result in the parties incurring avoidable legal costs and contributing to delay in the proceedings.  Both of those outcomes would be contrary to the objective of the High Court Rules, which is stated in r 1.2 to be securing the just, speedy and inexpensive determination of any proceeding or interlocutory application.

[13]     On the other hand, there will be cases where the Court simply does not know what the merits of the respective positions of the parties were and ought not to try to come to a view about it.  In a circumstance where the court knows no more than that the applicant has discontinued the proceeding, the analogous application of r 15.23 will require that the applicant should pay costs.   Such an approach recognises the reality that, in the absence of some other explanation, a likely explanation for the applicant not proceeding is that it appreciated that it was unlikely that its application would prevail.  In such a circumstance where the opposing party has been put to the expense of opposing the application, an order for costs against the discontinuing party would often be the just result.

[14]     In  the  present  case,  the  parties  advised  me  that,  in  general  terms,  the defendant had provided to the applicant substantially the relief which the defendants sought in the application for particular discovery pursuant to the High Court Rules. Mr Cook made some submissions on the details of how the parties progressed to the point where the applicant decided not to proceed with the application but those submissions do not affect the substantive position which was arrived at and which is as I have described it in the previous sentence.

[15]     The fact that the defendant had eventually conceded the entitlement to the entirety of the relief claimed amounts to a concession that the merits of the case were with the applicant.   It is not a matter for this Court to come to a view about the merits.  The parties have come to their own view on that subject which is reflected in the fact that the defendant has conceded the relief claimed.

[16]     In any event, in the circumstances of this case, because it is known that the defendant has provided the bulk of the documents in relation to which the plaintiff

sought particular discovery, there is little difficulty in assessing the plaintiff as the successful party.

Other issues

[17]     Some remaining points need to be considered. The first is the criticism which the defendant makes of the statement of claim which the plaintiff has filed for being unparticularised and extensive.  This does not appear to have any relevance to the question of which party should pay costs on the discovery application.

[18]     A party who is required to give discovery must ascertain the issues that are relevant by having regard to the pleadings in the case.  The obligation will be the end to discover documents which are relevant in that sense.   There may be cases where the principal pleading put forward by the opposite party is so unclear as to what case the party is putting forward that it is difficult or not possible for the opponent to understand what the relevant issues are in the proceeding, and therefore what matters are relevant to discovery.  A party faced with such a pleading, though, has a remedy available to it which is to apply for particulars or strike-out or some other summary remedy.  If it does not do so, the inference arises that the party understands what the relevant issues are and therefore the state of the pleadings is not a reason why discovery cannot be pleaded.

[19]     The point was also made for the defendant that the bulk of the documents which the plaintiff sought were actually provided at various stages prior  to the fixture date.  I do not consider that that circumstance is an additional factor which should influence the decision of this Court as to whether or not to order costs.  It has a limited relevance, in that the fact that the defendant supplied those documents suggests that the defendant expected that such an outcome would result if the defended application for discovery were to proceed.

[20]     The defendant also submitted that some of the documents were provided even though it did not consider that they were documents that it was under a duty to discover, on the understanding that they were irrelevant.  That does not change the fact that, overall, the plaintiff obtained what it set out to when it filed the application for further discovery.  Further, it is not open to the defendant to voluntarily concede

the relief sought in the application and then to argue, at the point when an issue of costs arises, that it did so without any acceptance that it was obliged to.  To take such position is to attempt to both impliedly admit the validity of the application brought while  at  the  same  time  arguing  at  the  point  where  costs  are  sought  that  the application  was  not  one  which  the court  would  have  granted  had  the  defended hearing gone ahead.

[21]     The defendant either admits the validity of the application or it does not.  If it does not, the correct course for it to take was to defend the proceedings, in which case it should be the unsuccessful party who will be required to pay costs.  After all, there was no obligation on the defendant to voluntarily provide documents to the plaintiff which it had no entitlement to discovery of.

[22]     The plaintiff also submitted that there ought to be an uplift to the costs to be awarded on the application.  Ms Neville, for the plaintiff, submitted to me that there has been a lengthy history of the plaintiff having, in effect, to prise documents out of the defendant.  While there will be cases where the respondent has a history in the proceeding of obdurately declining to make discovery of documents which have been legitimately sought and which will then justify the court in making an increased order for costs, I do not consider that that circumstance has been made out in this case.  While the court will enquire into such matters in an appropriate case, it needs to be kept in mind that there are very good reasons why interlocutory application should be kept within close parameters in order to secure the just, speedy, and inexpensive determination of the interlocutory application.  That said, flagrant non- compliance with the rules governing discovery cannot be allowed to pass without consequences   to   the   offending   party.      Where   there   has   been   evident   of destructiveness on the part of the party who is in default under discovery obligations, uplifted orders for costs and more draconian remedies may well be considered.

[23]     While it was necessary for the applicant to bring the current application, the position which the defendant took is able to be understood. Arguments, for example, about relevance of the lease over the aircraft hangar premises which are referred to in the  defendant’s  submissions  were  not  entirely  baseless  and  do  not  have  the appearance of having been contrived in order to obstruct the process of discovery.

[24]     The next issue concerns which steps  in the discovery application should attract an order for costs.   Mr Cook submitted that because of the timing of the various offers which the defendant made to provide disputed documents without the need for a defended hearing, there should be no order made in favour of the plaintiff for the costs of preparation and for preparing the bundle of documents that was filed in Court.  I do not agree.  I accept the position of the plaintiff, which was that it was not until 9 June 2015 that it could be certain that all of the relief which it was seeking in the proceeding was going to be voluntarily conceded.  The submissions and casebook that the plaintiff was required to provide were filed in accordance with the Court order dated 26 May 2015.  The defendant has not persuaded me that the plaintiff ought to have appreciated by that date that there would be no need for the defended hearing to proceed and therefore that the preparatory steps were not going to be required. Accordingly, the plaintiff is entitled to an award of costs for steps 22,

24 and 25 under schedule 3.  I do not intend to make any costs allowance in respect

of the parties’ preparation for and attendance at the costs hearing on 10 June 2015.

Results

[25]     The plaintiff is entitled to an award of costs for steps 22, 24 and 25 under schedule 3.

J.P. Doogue

Associate Judge