Palmerston North City Council v Hardiway Enterprises Ltd (struck off)

The Palmerston North City Council (PNCC) applied for a discharge of costs awarded against Mr Fugle in his capacity as the sole director of Hardiway Enterprises Limited, a company that had been struck off. The case involved PNCC's substantive application for non-party costs against Mr Fugle, which was denied. PNCC argued that the order should not have been made because the court found that Hardiway was merely a front for Mr Fugle's self-interest. Furthermore, Hardiway owed PNCC costs in the Land Valuation Tribunal, High Court, and Court of Appeal, which, less the $36,000 compensation award, still left PNCC out of pocket by $81,340.51. Mr Fugle responded that the costs awarded in his favor were too low and that he had made a Calderbank offer to settle the matter, which was not considered by the court. The legal issue in this case was whether Rule 14.8(2) of the High Court Rules 2016 permitted the discharge of costs awarded against Mr Fugle.
The court held that Rule 14.8(2) allows the discharge, reversal, or variation of an order for costs on an interlocutory application if the court is satisfied that the original order should not have been made. The court found that the original order should not have been made in this case as it did not provide PNCC with an opportunity to submit that costs should not follow the event. The court was also not satisfied with Mr Fugle's Calderbank argument as PNCC was reasonably justified in rejecting his low-ball offer. The court rescinded the original order and ordered that costs in the substantive application and this application under r 14.8(2) would lie where they fall.