Nelson City Council v Newman HC Nelson CIV 2010-442-512

[2011] NZHC 171

IN THE HIGH COURT OF NEW ZEALAND NELSON REGISTRY

CIV 2010-442-512

UNDER  the District Courts Act 1947

IN THE MATTER OF     an appeal under section 72 of the Act

BETWEEN  NELSON CITY COUNCIL Appellant

ANDALFRED NEWMAN Respondent

Hearing:         1 March 2011

Counsel:         K O Beckett for Appellant

Respondent in Person

Judgment:      2 March 2011

JUDGMENT OF RONALD YOUNG J

Introduction

[1]      This appeal by the Nelson City Council concerns a successful application by Mr Newman to set aside a default costs judgment in the District Court.  Mr Newman did not want to pay the Nelson City rates.  And so when he failed to pay them the Council sued him.

[2]      Mr Newman  tried  some  fancy  procedural  footwork  by  protesting  the jurisdiction of the Court.   At a hearing to resolve that issue the Judge set aside

Mr Newman’s appearance under protest.

NELSON CITY COUNCIL V ALFRED NEWMAN HC NEL CIV 2010-442-512 2 March 2011

[3]      As to costs arising from that hearing he said (in a Judgment of 6 May 2010)

at [21]:

[21]     I  will  reserve  the  issue  of  costs  and  you  can  reflect  upon  it. Mr Newman the rates will need to be paid.

[4]      On 14 May 2010 the City Council filed and served a memorandum seeking costs.    Mr Newman  replied  objecting  to  any  costs  order  but  Judge Zohrab  on

3 June 2010 issued a judgment awarding costs of $645 in favour of the Council relating to the unsuccessful jurisdictional challenge.

[5]      On  21 June 2010  the  City  Council  filed  an  application  for  costs  on  the proceeding  itself,  no  response  having  been  filed  to  the  notice  of  claim  by Mr Newman.  On that same day judgment was entered by the Deputy Registrar for costs of $1,815 being the original costs order of $645 plus further costs in the proceedings itself of $1,170.

[6]      On 14 July 2010 Mr Newman applied to set aside the judgment sealed by the Deputy-Registrar. The matter came before a District Court Judge who made an order quashing  the  order  for  costs  against  Mr Newman.     The  Judge  said  that  if Mr Newman paid the balance of rates plus penalties outstanding of $427.90 as at

26 May 2010 then no costs order should be made.   However, if he failed to do so within 21 days then the costs order would remain.

[7]     Some brief background is required to understand the complex set of circumstances that this relatively modest amount of money has thrown up.

[8]      After  the  Judge’s  comments  on  6 May 2010  ([3])  when  he  set  aside  the protest of jurisdiction, Mr Newman paid $2,352.90 to the Council.  That left $427.90 owing to the Council for outstanding rates and penalties as at that date.

[9] The Nelson City Council’s notice of claim was for $1,849.70 of outstanding rates and penalties. By the time the matter came to Court there were additional rates and penalties owing which increased the amount to the sums identified in [8]. However this further amount was not and could not be part of the Council’s claim.

[10]     The Council’s cost application of 21 June 2010 for $1,170 was for costs for preparing the notice of claim of $960, filing fee of $140, service fee of $30 and sealing the Judgment $40.  Thus the costs sought were no more than for the filing of the notice of claim seeking payment of the rates.

[11]     Mr Newman’s    claim    for    a    rehearing    was    based    arose    from    a

Nelson City Council email to him of 7 May 2010 which said (in part):

If you pay the outstanding rates that will be an end to the matter

[12]     Mr Newman said this was an offer of settlement.  It meant he said that if he paid the outstanding rates and penalties the Council would not seek costs on the proceedings.

[13]     Mr Newman paid $2,352.90 on 26 May 2010. Although that did not clear his full rates account, including arrears, it did pay more than the Council’s notice of claim of $1,849.

[14]     The Judge in the District Court concluded that the pivotal question to answer in the application for rehearing before him was whether the email of 7 May 2010 interpreted objectively meant the City Council would not seek costs if Mr Newman paid his outstanding rates and penalties in full.

[15]     The Judge concluded that what the email meant was:

Putting that again it seems to me that the general manager’s email of 7 May meant that if the defendant paid the outstanding rates and penalties that would be an end to the matter so that there would be no costs sought.

[16]     The Judge considered that Mr Newman’s payment was $427.90 short of full payment.  The Judge thought that Mr Newman may have failed to pay this further amount as a result of a misunderstanding.  Therefore he said if Mr Newman paid the further $427.90 then he should be free of any costs.

[17]     I agree with counsel for the Nelson City Council that the Judge made some factual errors which affected his decision.  For example, of the total costs awarded,

$645  related  to  the  jurisdictional  challenge  and  was  ordered  to  be  paid  after

Mr Newman and the Council had made submissions.  That sum, therefore, could not possibly be part of any order setting aside costs.  Thus only $1,170 was susceptible to such an order.

[18]     I am also satisfied the Judge’s decision was  wrong.   I am satisfied that interpreted objectively the email by the chief executive of the City Council of 7 May was an offer that if Mr Newman paid all the rates and penalties, then outstanding, they would not seek any order for costs in Court on the notice of claim.  The rates and penalties referred to can only mean the total rates and penalties as at the date of the email which were outstanding rather than the amount of the claim filed in Court. Mr Newman claimed his payment of $2,352.90 was the sum the Council had sought for rates and penalties.  However, it is clear that cannot be correct.  It is more than a coincidence that the sum Mr Newman left unpaid was almost exactly the outstanding penalty.    The  clear  inference  is  that  all  Mr Newman  intended  to  pay  was  the outstanding rates.

[19]     By  21 June,  when  the  Council  sought  costs  on  the  notice  of  claim, Mr Newman had not paid the full rates and penalties.  Thus assuming as I have that the  Council’s  email  was  an  offer  of  settlement  it  was  not  fully  taken  up  by Mr Newman by 21 June when the Council sought costs.   The Council, therefore, were entitled to seek costs given there was no concluded or performed agreement that  they  would  not  do  so.     Given  that  conclusion  there  was  no  merit  in Mr Newman’s application to set aside the judgment.

[20]     In the circumstances the appeal is allowed.   I reinstate the order for costs made both by the District Court Judge relating to the challenge to jurisdiction and by the Registrar relating to the notice of proceedings.

[21]     On this appeal the appellant is entitled to costs.   It is appropriate I fix an amount rather than rely upon a scale payment.   The appellant is entitled to costs

against the respondent of $500 plus disbursements as fixed by the Registrar.

Ronald Young J

Solicitors:

K O Beckett, Fletcher Vautier Moore, Lawyers, PO Box 3029, Richmond 7050 email:  [email protected]

A Newman, 36 Tyree Drive, Stoke, Nelson