Okey v Kingsbeer

[2019] NZCA 419

IN THE COURT OF APPEAL OF NEW ZEALAND

I TE KŌTI PĪRA O AOTEAROA

 CA32/2019
 [2019] NZCA 419

BETWEEN	RONALD GORDON OKEY First Appellant MCKENZIE MCPHAIL CORPORATE TRUSTEES LIMITED Second Appellant
AND	PAULINE ANNE KINGSBEER AND BERNADETTE PLAW AS TRUSTEES OF THE PAK TRUST Respondents

Hearing:	2 September 2019
Court:	Collins, Wylie and Ellis JJ
Counsel:	J K Mahuta-Coyle for Appellants G P Mason for Respondents
Judgment:	9 September 2019 at 3.00 pm

JUDGMENT OF THE COURT

AThe appeal is dismissed.

BThe respondents are entitled to one set of costs in this Court for a standard appeal on a band A basis plus any disbursements.

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REASONS OF THE COURT

(Given by Collins J)

Introduction

1. The appellants challenge a costs judgment of Cooke J delivered in the High Court on 14 December 2018.[1]  The costs judgment was a further stage in what has been a protracted dispute that has seen a substantive judgment delivered in the High Court[2] and a successful appeal from that judgment.[3]

   [1]Kingsbeer v Okey [2018] NZHC 3309 [costs judgment].

   [2]Kingsbeer v Okey [2017] NZHC 57 [substantive judgment].

   [3]Okey v Kingsbeer [2017] NZCA 625, (2017) 19 NZCPR 25.

2. The costs judgment necessitated Cooke J to determine costs in the High Court as a consequence of this Court’s decision allowing the appeal from the substantive judgment in the High Court.  We note that Cooke J was not the Judge who heard the case in the first instance in the High Court. 

3. The gravamen of the dispute is a roading easement over land owned by the respondents in their capacities as trustees of the PAK Trust.  For many years, the appellants benefitted from that easement.  A dispute arose about upgrading and maintenance of the road. 

4. In 2013, the respondents commenced proceedings for orders extinguishing the easement and for the appellants to pay the cost of repair to bring the road back to the condition it was prior to the appellants’ use of it.  Alternatively, if the easement was upheld, the respondents sought the costs of upgrading the road.  

5. In its substantive judgment, the High Court held that the easement was invalid because of a failure to comply with s 348(1) of the Local Government Act 1974, which required local authorities to give permission before private roads are created.[4]  It was held in the alternative that the use of the road had changed since the grant of the easement to such a degree that the equitable easement had been extinguished.[5]  On appeal, this Court held the appellants’ equitable easement had not been extinguished and that it prevailed over s 348(1) of the Local Government Act but that, an upgrade of the road was required.[6]  This Court directed the appellants meet 75 per cent of the costs of the upgrade, and the respondents 25 per cent.  This Court did not expressly address in its judgment how costs in the High Court were to be determined.[7]  The respondents applied to the High Court for determination of costs in that Court.

   [4]Substantive judgment, above n 2, at [65].

   [5]At [92]–[93].

   [6]Okey v Kingsbeer, above n 3, at [80]–[81].

   [7]Okey v Kingsbeer CA106/2017, 27 March 2018 at [3].

6. In his costs decision, Cooke J determined that the respondents were entitled to costs in the High Court on a scale 2B basis, but only 50 per cent of the costs that would otherwise be payable.[8]  Costs were fixed at $30,337.88. 

   [8]Costs judgment, above n 1, at [23].

7. The appeal is based on the contention that the appellants substantially succeeded as a result of this Court’s decision and that they are therefore entitled to a full award of costs, namely $60,675.76.  Alternatively, if it is accepted that each party had some measure of success, costs should lie where they fall.  In contrast, the respondents contend that they also succeeded, albeit not to the degree they hoped.  Mr Mason, for the respondents, submitted his clients could have benefitted from a higher percentage of costs than were awarded, but that in any event the orders made by Cooke J were within the range that was reasonably available and ought not to be disturbed.  Both counsel accept that the issues raised by the appeal concern Cooke J’s assessment of which party succeeded as a result of this Court’s judgment.

Basis of costs decision

1. Cooke J recognised that the costs decision he was required to make was “not necessarily straightforward”.[9]  There were two complicating factors:

   (a)The issue concerning the scope and application of s 348 of the Local Government Act emerged during the trial, largely at the instigation of the High Court Judge at the substantive hearing.

   (b)Prior to the hearing in the High Court, the appellants made an offer to pay 50 per cent of the costs of upgrading the road.

   [9]At [20].

2. In his costs judgment, Cooke J observed that the starting point is that the unsuccessful party should be liable for costs to the successful party, and that success on a limited basis is still generally regarded as success.[10]

   [10]High Court Rules 2016, r 14.2(1)(a); and Weaver v Auckland Council [2017] NZCA 330, (2017) 24 PRNZ 379 at [26].

3. In making an overall assessment, Cooke J had regard to the fact that the appellants succeeded in establishing a valid easement, but that their offer to pay prior to trial 50 per cent of the costs of the upgrade of the road was less than the amount that this Court directed.  In these circumstances, the Judge reasoned that it would not be appropriate to make a full award of costs in favour of the respondents and that the 50 per cent award that he settled upon was appropriate.

Analysis

1. It is accepted by both parties that a costs decision involves the exercise of judicial discretion.  Nevertheless, that discretion is to be exercised in accordance with the principles that underpin the relevant rules.[11]

   [11]Cunningham v Butterfield [2014] NZCA 213, (2014) 22 PRNZ 521 at [60].

2. We have examined the methodology adopted by Cooke J and are satisfied that his decision was one that was reasonably available to him.  In our assessment, Cooke J applied appropriate principles, took into account relevant considerations and did not take into consideration irrelevant matters.

3. The appellants are correct to emphasise that they successfully defended the claim that the equitable easement should be extinguished.  Their offer prior to trial to pay half of the costs of the upgrade of the road was, however, significantly below the amount that this Court ultimately directed them to pay.  In reality, the respondents also succeeded, although not to the degree they wished when they sought to have the appellants pay the entire cost of upgrading the road.

4. This was one of those cases in which the High Court was justified in considering not only which party won the principal contest at trial, but also making a realistic overall appraisal of the end result.  We endorse the approach Cooke J followed and the result he reached.

Result

1. The appeal is dismissed.

2. The respondents are entitled to one set of costs in this Court for a standard appeal on a band A basis plus any disbursements.

Solicitors:
Brittens Lawyers, Palmerston North for Appellants
Strachan O’Connor, Upper Hutt for Respondents