Powell Land Holdings Limited v Moonlight Farms Trust Limited

[2025] NZHC 3307

IN THE HIGH COURT OF NEW ZEALAND NELSON REGISTRY

I TE KŌTI MATUA O AOTEAROA WHAKATŪ ROHE

CIV-2025-442-34

[2025] NZHC 3307

BETWEEN

POWELL LAND HOLDINGS LIMITED

Plaintiff

AND

MOONLIGHT FARMS TRUST LIMITED

First Defendant

MICHAEL JOSEPH MCDONALD and KATHERINE MARY MCDONALD

Second Defendants

On the papers:

Counsel:

G Pearson for Plaintiff

S McClean for Defendants

Judgment:

3 November 2025

JUDGMENT OF GENDALL J

[Costs]

[1]                  In a minute I issued in this proceeding on 16 September 2025, I made an order that the substantive proceeding brought by the plaintiff, Powell Land Holdings Limited (PLHL), against the defendants, Moonlight Farms Trust Limited (Moonlight Farms) and the McDonalds, is stayed. The dispute was referred to arbitration in accordance with cl 12.3 of the Farm Lease (the Lease) between the parties.

[2]                  In making that order, I noted that in their application for stay the defendants Moonlight Farms sought an award of indemnity costs against the plaintiff, PLHL, in respect of their stay application and the proceeding generally. Accordingly, I made directions too that memoranda as to costs were to be filed and a judgment on costs would then be issued.

POWELL LAND HOLDINGS LIMITED v MOONLIGHT FARMS TRUST LIMITED [2025] NZHC 3307
[3 November 2025]

[3]                  As to this, counsel for the defendants seeking costs, Moonlight Farms and the McDonalds, filed and served an initial memorandum as to costs on 14 October 2025. Counsel for the plaintiffs, PLHL, in turn filed a reply memorandum on 23 October 2025. Counsel for the defendants responded to this with a final reply memorandum on 30 October 2025. All those memoranda have now been referred to me and I give this decision on the papers on the costs which are sought.

[4]                  In their 14 October 2025 memorandum, counsel for Moonlight Farms and the McDonalds, seek an award of indemnity costs totalling $14,213.50, together with disbursements of $979.22, making a grand total of $15,192.72.

[5]                  Details of the actual costs sought are set out in Schedule A to the memorandum. An attached Schedule B shows a calculation of category 2B scale costs. These are said to amount to $7,528.50. Schedule C outlines a breakdown of the disbursements claim of $979.22.

[6]                  Counsel for Moonlight Farms and the McDonalds in that 14 October 2025 memorandum state that their actual costs and disbursements on an indemnity basis relate to both their protest to jurisdiction on this proceeding and to the stay application which comprise a subtotal of $13,138. In addition, they claim scale costs for the hearing of this matter on 15 September 2025 and for sealing the judgment, which on a category 2B scale basis amount to $1,075.50.

[7]                  Together these cost amounts totalled the $14,213.50 which represents their major costs claim.

[8]                  As noted in my earlier minute, the substantive proceedings here are a claim in contract under a farm lease agreement between PLHL as lessor and Moonlight Farms as lessee with the lessee’s obligations guaranteed by the McDonalds.

[9]                  The lease was alleged by PLHL to have been breached by the defendants. As noted, it was the defendants who were successful in seeking a stay of the present proceeding on the basis that the matter was to be referred to arbitration as an appropriate dispute in accordance with cl 12.3 of the Lease between the parties.

[10]              In accordance with art 8 of sch 1 of the Arbitration Act 1996, the Court was required to stay the proceeding and refer the parties to arbitration. This was on the basis that, in terms of the Lease, all parties had accepted the causes of action pleaded by PLHL should be referred to arbitration and the proceeding stayed.

[11]              By way of background to their indemnity costs claim, Moonlight Farms and the McDonalds have outlined in their 14 October 2025 memorandum as to costs, the following:

5Before filing this proceeding, the respondent had already referred the allegations in its claim to arbitration. The parties had also expressly confirmed in a standstill agreement in March 2025 that all claims pertaining to the Lease would be subject to arbitration and the High Court would not have any jurisdiction.

6After being served with the statement of claim, the applicants asked the respondent to discontinue the claim, accepting that the issues would be arbitrated, raising the matters above and noting that if it continued its High Court claim, the applicants would be put to the unnecessary cost of responding.

7The respondent did not discontinue its claim. Accordingly, the applicants were required to file the Protest to Jurisdiction on 1 July. On 13 August, they filed the Stay Application and sought indemnity costs.

8No notice of opposition or evidence was filed to the Stay Application and the respondent failed to engage in correspondence on this issue. Accordingly, the unopposed orders were sought by way of memoranda on 10 September. It was only shortly after filing that the respondent engaged and filed  a  memorandum  of  counsel  dated  10 September.

9The respondent accepted that a stay must be granted, but rather than agree that a stay in accordance with the Arbitration Act was appropriate, it sought leave for any party to apply to take further steps during the arbitration and for one month after any award.

10In its memorandum of 12 September and the first call on 13 September, the applicants opposed the orders sought by the respondent. It did not oppose the Court granting a stay in accordance with the Arbitration Act 1996. The permanent stay originally sought had been justified when there was no engagement by the respondent.

11While it is the applicants’ position that this claim never should have been filed, at the very least, the respondent should have immediately applied for a stay, pursuant to the Arbitration Act. Instead, the applicants were forced to incur costs in this proceeding due to the respondent refusing to engage.

[12]As to indemnity costs, r 14.6(4) of the High Court Rules addresses this:

[4]The court may order a party to pay indemnity costs if—

(a)the party has acted vexatiously, frivolously, improperly, or unnecessarily in commencing, continuing, or defending a proceeding or a step in a proceeding; or

(b)the party has ignored or disobeyed an order or direction of the court or breached an undertaking given to the court or another party; or

(c)costs are payable from a fund, the party claiming costs is a necessary party to the proceeding affecting the fund, and the party claiming costs has acted reasonably in the proceeding; or

(d)the person in whose favour the order of costs is made was not a party to the proceeding and has acted reasonably in relation to it; or

(e)the party claiming costs is entitled to indemnity costs under a contract or deed; or

(f)some other reason exists which justifies the court making an order for indemnity costs despite the principle that the determination of costs should be predictable and expeditious.

[13]              As I understand the position, there is a reasonable starting point argument here that the defendants, who have essentially been the successful party in having the proceeding stayed and the dispute referred to arbitration in terms of the Lease, must be entitled to costs.

[14]              On the question as to whether indemnity costs are appropriate, I have had the opportunity to consider all the material before the Court including the various memoranda filed by the parties. In doing so, I have formed the clear view that the defendants have done all in their power to resolve matters without the need for Court intervention. I say this, in particular bearing in mind the early discussions between the parties relating to arbitration, and what I understand to be the express agreement between the parties in the March 2025 standstill agreement, that all claims pertaining to the Lease would be subject to arbitration with the High Court having no jurisdiction.

[15]              That said, I am satisfied that an award of actual and reasonable costs incurred by the applicants here on an indemnity basis is justified either under cl 12.3 of the Lease or otherwise.

[16]              Those indemnity costs are outlined as I note above at a total of $13,138 for work up to the hearing and on a category 2B basis at $1,075.50 for the appearance hearing and sealing the Court order.

[17]              This total of $14,213.50 has not been directly challenged on a reasoned or evidential basis by the respondent. Therefore the total indemnity and scale costs quantum amount of $14,213.50 plus disbursements of $979.22 is now awarded.

[18]An order is made that the plaintiff is to pay to the defendants the sum of

$15,192.72 for costs and disbursements with respect to these matters.

Gendall J

Solicitors:

Marshall McDowall Law Ltd for Plaintiff Anderson Lloyd, Dunedin for Defendants