Norman v Norman Glass Services Limited

[2017] NZHC 2085

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2017-404-379 [2017] NZHC 2085

UNDER	Part 19 of the High Court Rules
IN THE MATTER	of an application to remove caveat pursuant to s 143 Land Transfer Act 1952
BETWEEN	MARK NORMAN Applicant
AND	NORMAN GLASS SERVICES LIMITED Respondent

CIV-2017-404-611

BETWEEN  NORMAN GLASS SERVICES LIMITED Plaintiff

ANDMARK NORMAN Defendant

Hearing:	On the papers
Counsel:	DJG Cox for Applicant in proceeding CIV-2017-404-379 and Defendant in proceeding CIV-2017-404-611. MAH Macfarlane and H Yiu for Respondent in CIV-2017-404- 611
Judgment:	29 August 2017

JUDGMENT OF GORDON J [As to costs]

This judgment was delivered by me

on 29 August 2017 at 3.30 pm, pursuant to r 11.5 of the High Court Rules

Registrar/Deputy Registrar
Date:

Solicitors:           Robert Burnes & Associates Rennie Cox, Auckland Hesketh Henry, Auckland

NORMAN v NORMAN GLASS SERVICES LTD [2017] NZHC 2085 [29 August 2017]

[1]      On 1 February 2017 Norman Glass Services Limited (NGSL) lodged a caveat against the title of a property owned by Mr Norman in order to prevent the sale of the property by Mr Norman to a third party.  NGSL was previously a tenant of the property.

[2]      Mr Norman filed proceedings seeking to remove the caveat.  NGSL opposed that application.   It also filed civil proceedings to enforce its alleged right of first refusal under a lease and sought an interim injunction restraining Mr Norman from proceeding with the sale until this Court had determined its claim.   Mr Norman opposed the application for an interim injunction.  By agreement both applications were heard together.

[3]      By judgment dated 11 July 2017 I dismissed Mr Norman’s application to remove NGSL’s caveat and I dismissed NGSL’s application for interim relief.1

[4]      The parties were not able to agree on costs and separate memoranda have been filed.

[5]      For NGSL Ms Macfarlane notes that NGSL relied on affidavits previously filed in opposition to the application to remove the caveat as support for its subsequent  application  for  an  interim  injunction.    However,  Mr  Norman  filed separate opposition affidavits to the application for the interim injunction and NGSL filed a reply affidavit in that proceeding.  In its cost calculations NGSL accordingly applies separate scale costs to each of the steps in each of the proceedings.

[6]      Ms Macfarlane further notes that until the filing of the interim injunction, case management steps related to the application to remove the caveat proceedings alone.   Once the application for an interim injunction had been filed, case management steps applied to both proceedings.   In its cost calculations NGSL has treated case management steps that addressed both proceedings as cancelling each other out and only allows for case management steps that apply to one proceeding alone.

[7]      The parties addressed both applications by way of a single set of written submissions.   Based on her review of the written submissions of both parties, Ms Macfarlane says that submissions relating to the caveat took up the bulk, resulting in approximately an 80/20 split.  Having regard to the cross-examination and argument at the hearing, Ms Macfarlane submits that an 80/20 split is appropriate for the hearing as well.

[8]      NGSL therefore submits that the appropriate costs order is to award 2B scale costs on a pro rata basis of 80/20.  On that basis NGSL would be entitled to costs of

$11,150.00 for the opposition to the application to remove the caveat.

[9]      NGSL’s  calculation  for  Mr  Norman  on  his  opposition  to  the  interim

injunction at 20 per cent of the 2B scale costs is $2,865.55. [10]       This results in net costs of $8,284.45 to NGSL.

[11]     NGSL also seeks disbursements in the sum of $130.37 and accordingly seeks a total of $8,414.82 in costs and disbursements.

[12]     For Mr Norman, Mr Cox relies on the statement in Packing in Ltd (in liq) v

Chilcott where it was held:2

[5]       In a case such as the present, where in broad terms each party has had similar success, we do not consider it helpful to focus too closely on the question which party has failed and which has succeeded.  Costs in a case such as this should rather be based on the premise that approximately equal success and failure attended the efforts of both sides.  …

[13]     Mr Cox  therefore submits  that  as  each  party was  successful,  the correct formula is to first calculate the scale costs associated with each application in full and then apply the “set-off” principle pursuant to r 14.17 of the High Court Rules

2016.

[14]     Mr Cox submits that to calculate the number of pages is not an accurate or fair reflection of the actual time spent by the parties in preparation or argument.  He

says in particular that the reason the number of pages devoted to the injunction

2      Packing in Ltd (in liq) v Chilcott (2003) 16 PRNZ 869 (CA).

application  in  the  parties’ synopsis  appears  to  be  less  was  because  the  caveat application was dealt with first and there was some duplication of the arguments used in the two applications.   He says, however, there was no short-cut for the respondent in its obligation to prepare and consider the relevance of those arguments to its opposition in the injunction application.

[15]     He says all of the evidence was relevant to each application.  He submits that the Court’s finding that the interim injunction was of no practical effect indicates that the injunction application was redundant and the costs award should reflect this.  He submits that a costs award should be reflective of the approximately equal time the parties spent in preparation for and in the hearing of the two applications.

[16]     Mr Cox calculates NGSL’s costs in the removal of the caveat proceeding on a

2B  basis  resulting  in  an  amount  of  $12,711.00.    He  accepts  the  disbursements claimed are appropriate, resulting in a total for costs and disbursements for NGSL of

$12,841.37.

[17]     The costs for Mr Norman in opposing the application for an injunction, again calculated on a 2B basis, are $9,143.00 with disbursements of $145.91.  The total of costs and disbursements is $9,288.91.

[18]     On the basis of r 14.17 Mr Cox submits that the net result is that the sum of

$3,552.46 should be paid by Mr Norman to NGSL.

Analysis

[19]     The guiding principle is that although costs are at the discretion of the Court, the unsuccessful party should generally contribute to the costs of a successful party.3

On one view of the matter, Mr Cox’s approach might appear to be correct given that each party succeeded in opposing the other party’s application.

[20]     However, that would be to ignore the fact that in successfully opposing the application to lift the caveat, NGSL has prevented the proposed sale of the property

by  Mr  Norman  from  going  ahead,  pending  the  outcome  of  the  substantive proceeding.

[21]     Further, in relation to the interim injunction I was satisfied that there was a serious question to be tried as to the existence and effect of NGSL’s right of first refusal.  I was also satisfied that a right of first refusal may be enforced by a decree of specific performance, provided, of course, that NGSL was successful at trial.  The reason the application for an injunction failed was that, despite being placed on notice by Mr Norman’s opposition that there was no reason to believe NGSL would be in a position to pay damages in the event that it was called upon to do so, NGSL provided no evidence of its ability to meet any award of damages.  For that reason, along  with  the  fact  that  grant  of  an  interim  injunction  would  have  little  or  no practical effect having regard to my decision in relation to the application to uplift the caveat, I refused the application for an interim injunction.

[22]     I also note that the passage from the Court of Appeal judgment in Packing in

Ltd (in liq) relied on by Mr Cox is followed by the following statement:4

To that starting point should be added issues such as how much time was spent on each transaction or group of transactions in issue, and any other matters which can reasonably be said to bear on the Court’s ultimate discretion on the subject of costs.   In the end, as in all costs matters, the Court  must  endeavour  to  do  justice  to  both  sides,  bearing  in  mind  all material features of the case.

[23]     In my view the approach advocated by Mr Cox does not do justice between the parties.   The caveat removal application was the main focus of the parties’ written submissions.  But I do accept that it was necessary for each to address the relevant law in relation to interim injunctions and apply the facts to the law.

[24]     At the hearing the parties spent limited time addressing the application for an interim injunction as it was anticipated that any order on that application would follow the decision on the application to remove the caveat.  Further, a significant part of the hearing was occupied by the calling of evidence on disputed issues of fact.   NGSL was effectively successful in that regard in relation to the interim

injunction.   The reasons for refusing the interim injunction are referred to in [21]

above.

[25]     While  Ms Macfarlane’s  approach  does  justice,  in  a  way  that  Mr  Cox’s approach does not, I consider a more orthodox way to approach costs is to calculate NGSL’s costs on its successful opposition to the application to remove the caveat in the way that Mr Cox has done but instead of allowing two days for the hearing I would allow 1.75 days.  The remaining 0.25 days I attribute to the interim injunction. The resulting amount for costs and disbursements is $12,283.87.

[26]     For Mr Norman, on his successful opposition to the interim injunction I again follow Mr Cox’s approach but allow only 0.25 of a day for the hearing rather than two days. The resulting amount for costs and disbursements is $5,386.41.

Result

[27]     I award the amount of $6897.46 (being $12,283.87 less $5386.41) in costs and disbursements in favour of NGSL against Mr Norman.

Gordon J