New Core Properties Limited v Ganellen Construction Limited

[2015] NZHC 228

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV2014-404-001608 [2015] NZHC 228

BETWEEN

NEW CORE PROPERTIES LIMITED

Plaintiff

AND

GANELLEN CONSTRUCTION LIMITED

Defendant

Hearing:	On the papers
Counsel:	T J Rainey for the Plaintiff R G Smedley for the Defendant
Judgment:	20 February 2015

COSTS JUDGMENT OF ASSOCIATE JUDGE CHRISTIANSEN

This judgment was delivered by me on

20.02.15 at 4:30pm, pursuant to

Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date……………

NEW CORE PROPERTIES LIMITED v GANELLEN CONSTRUCTION LIMITED [2015] NZHC 228 [20

February 2015]

[1]      The plaintiff filed a claim seeking a declaration that it did not enter into a contract with the defendant relating to the construction of a building in Christchurch. Also it sought an order to restrain the defendant from appointing an arbitrator to arbitrate any dispute between the parties.

[2]      In response the defendant filed a protest to jurisdiction.

[3]      After hearing the parties I ruled that the protest to jurisdiction be dismissed.  I

ordered the matter be referred to arbitration.

[4]      The defendant has applied for indemnity or increased costs.   The plaintiff submits ordinary 2B scale costs are appropriate.  Counsel agree on how to calculate an award in accordance with the 2B scale.

[5]      The  defendant’s  solicitors  advise  that  actual  costs  have  amounted  to

$65,123.88, inclusive of disbursements.

Defendant’s submissions

[6]      For  the  defendant  it  is  submitted  there  was  no  merit  in  the  plaintiff’s application to set aside the defendant’s protest and that the plaintiff acted unreasonably by commencing the proceeding and making the application.

[7]      Mr Smedley for the defendant submits the application to set aside the notice

was “doomed to failure” because:

a)       The very contract the plaintiff claimed did not exist was adduced in unchallenged evidence;

b)        The plaintiff did not deny that it had executed the contract.

c)      The alternative arguments of the defendants regarding the earlier formation of the contract on either 1 March or 29 April 2014 were upheld.

d)The Court agreed with the submission that it was “incredible”, if the plaintiff genuinely believed it had not accepted the contract, that it would  have  instructed  its  solicitors  to  correspond  in  a  way  that referred to the very contract it said did not exist.

e)       The relief sought by the plaintiff in its substantive application was clearly unsustainable.

f)        The plaintiff was wholly successful.

g)      The plaintiff acted unreasonably in commencing the substantive application.

Opposition to application for increased/indemnity costs

[8]      Mr Rainey for the plaintiff submits the arguments advanced on its behalf were not hopeless or without support in the evidence because:

a)       Whilst the plaintiff never denied signing the final agreement it was always its position that it did not intend to be bound to a construction contract until it had executed the final written agreement.   It says before signing the agreement it had advised the defendant it was not proceeding with the project.

b)Until execution of the agreement the defendant believed it could elect not to proceed.

c)       Mr  Rainey  appears  to  challenge  the  Court’s  conclusions  that  an agreement was reached pre the signed contract.   He says it was the intention of the plaintiff’s principals only intended to be bound once confirmation of an executed agreement had been communicated to the defendant.

d)The case is far removed from those where increased or indemnity costs have been awarded.

[9]      In the Court’s view clear cause has been shown to justify an increase but the Court does not accept indemnity costs as appropriate.   The Court considers the plaintiff  contributed  unnecessarily to  the  time  or  expense  of  the  proceeding  by pursuing arguments that lacked merit.

[10]     The  Court  agrees  that  the  litigation  was  unremarkable  but  nevertheless clearly the plaintiff’s application was without merit.  The evidence clearly showed:

a)       That a written agreement was concluded when the plaintiff executed the agreement.

b)Despite  its  execution  the  plaintiff’s  refused  to  confirm  such  and pursued arguments to the effect that notwithstanding execution a contract had not been concluded.

[11]    The clear evidence is that an agreement had been reached pre contract, notwithstanding claims that minor matters of detail had yet to be resolved.

[12]     In the Court’s view the contract was concluded when the parties settled on a contract price but the position taken on behalf of the plaintiff was that no contract was concluded because only the price had been agreed.

[13]     The executed contract was concluded early in May 2014.  Thereafter it was not until about the end of June that it was suggested for the first time on behalf of the plaintiff that there was no contract.

[14]     The plaintiff’s pursuit of declarations was in all the circumstances bound to fail.

[15]     The Court directs 2B scale costs together with a 50 per cent uplift are payable together with those disbursements identified in paragraph 5 of defendant counsel’s

submissions.

Associate Judge Christiansen