Phi Construction Limited v Thomson

[2021] NZHC 706

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2020-404-2120

[2021] NZHC 706

UNDER

the Land Transfer Act 2017

IN THE MATTER

of an application under s143 to sustain a caveat

BETWEEN

PHI CONSTRUCTION LIMITED

Applicant

AND

MARK DOUGLAS THOMSON, VICTORIA JANE TAYLOR and JOHN

ROBIN HOLMES (as trustees of the VT Family Trust)

Respondents

Hearing:	On the papers
Counsel:	J Long and T Nelson for the Applicant AJB Holmes for the Respondents
Judgment:	31 March 2021

JUDGMENT OF GAULT J

(Costs)

This judgment was delivered by me on 31 March 2021 at 3:00 pm pursuant to r 11.5 of the High Court Rules 2016.

Registrar/Deputy Registrar

……………………………………

Solicitors / Counsel:

Mr J Long and Ms T Nelson, Barristers, Auckland

Ms K King (applicant’s instructing solicitor), Duncan King Law, Auckland Mr AJB Holmes, Barrister, Auckland

Mr J Holmes (respondents’ instructing solicitor), HAD Lawyers, Auckland

PHI CONSTRUCTION LTD v THOMSON, TAYLOR and HOLMES [2021] NZHC 706 [31 March 2021]

[1]        This originating application to sustain a caveat has been resolved except as to costs, with costs to be determined on the papers.

[2]        The applicant seeks 2B costs and leave to seek a top-up under a contractual entitlement to indemnity costs following the determination of the substantive dispute in the District Court.

[3]The respondents submit that costs should lie where they fall.

Discussion

[4]        The starting point is that the applicant obtained the order sought, albeit ultimately by consent and on the condition that the applicant diligently prosecutes the District Court proceeding (and reserving leave to the respondents). Ordinarily, costs follow the event, including in a caveat proceeding irrespective of the separate and ongoing substantive proceeding.1

[5]        The respondents say they had a measure of success given the condition imposed as the applicant had not commenced a proceeding close to three years after the dispute arose. However, the condition is not unusual and I do not consider it justifies a departure from the general principle that costs follow the event. In addition, a post-resolution inquiry into the reasonableness of the parties’ conduct is ordinarily contrary to the objectives of the costs rules. That applies even more to an inquiry into conduct prior to the proceeding. Generally, costs should reflect how parties have acted during litigation, not before it.2

[6]        It is also appropriate to reserve leave for the applicant to seek top-up costs following determination of the substantive proceeding, as occurred in Topa Partners Ltd v JWL International Group Ltd.3

1      Samson v Mourant [2016] NZHC 1119 at [16]-[17]; Ding v Ai [2020] NZHC 858 at [4]; and Sain v Millie Erceg Trustee Ltd [2020] NZHC 1778.

2      Paper Reclaim Ltd v Aotearoa International Ltd [2006] 3 NZLR 188 (CA) at [160]; and Paper Reclaim Ltd v Aotearoa International Ltd [2007] NZSC 26, [2007] 3 NZLR 169 at [40]-[41].

3      Topa Partners Ltd v JWL International Group Ltd [2020] NZHC 576 at [15]-[16], citing the Court of Appeal decision in OOO DV Ryboprodukt v UAB Garant [2008] NZCA 136, [2008] 3 NZLR 326.

Result

[7]        The respondents are to pay the applicant’s 2B costs of $5,258 plus disbursements of $546.87.

[8]        I reserve leave for the applicant to seek top-up costs in the event it establishes a contractual entitlement to indemnity costs in the substantive District Court proceeding.

Gault J