Public Health Action Limited v Tū Ora Compass Health

[2025] NZHC 2523

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE

CIV-2025-485-180

[2025] NZHC 2523

BETWEEN

PUBLIC HEALTH ACTION LIMITED

Plaintiff

AND

TŪ ORA COMPASS HEALTH

Defendant

Hearing:	On the Papers
Counsel:	P W Michalik and M E Hubble for Plaintiff L Clark and C J S Robinson for Defendant
Judgment:	1 September 2025

JUDGMENT OF McQUEEN J

[Costs]

[1]                The plaintiff, Public Health Action Ltd (Public Health), provided health services under a contracted provider agreement with the defendant, Tū Ora Compass Health (Tū Ora), a primary health organisation. This proceeding relates to a dispute between Public Health and Tū Ora as to the validity of a termination notice given by Tū Ora under that agreement. Public Health was unsuccessful in its two applications for interim injunctions, and Boldt J set the matter down for an urgent fixture.1

[2]                In a judgment dated 18 July 2025, I concluded that the termination notice was valid and dismissed the plaintiff’s claim (the substantive proceeding).2 I indicated that in the ordinary course, costs follow the event and category 2B is likely appropriate. I encouraged the parties to agree costs but set a timetable for memoranda to be filed if

1      Public Health Action Ltd v Tū Ora Compass Health [2025] NZHC 1351 (Interim judgment). Costs were reserved in this judgment to be determined as part of the substantive proceeding.

2      Public Health Action Ltd v Tū Ora Compass Health [2025] NZHC 2001.

PUBLIC HEALTH ACTION LIMITED v TŪ ORA COMPASS HEALTH [2025] NZHC 2523 [1 September 2025]

that was not possible. The parties have each filed a memorandum accordingly. I now determine costs on the papers.

Parties’ positions

[3]                Tū Ora seeks costs on a category 2B basis and disbursements against Public Health for the interim injunction applications, the substantive proceeding and preparing a memorandum on costs. A schedule of costs and disbursements is attached to the memorandum filed for Tū Ora. Ms Clark, for Tū Ora, submits that increased costs of 50 per cent are appropriate as Public Health has contributed unnecessarily to the time and expense of the proceeding by pursuing an argument that lacks merit, and by failing to accept offers of settlement to dispose of the proceeding. Ms Clark submits that costs for filing a memorandum as to costs are also appropriate. Allowance for second counsel is also sought.

[4]                Public Health oppose the application for costs. Mr Michalik, for Public Health, submits that Public Health is instead entitled to costs on the basis it can be seen as the successful party in the proceeding, having achieved what it set out to do. Mr Michalik submits that was obtaining time to arrange a new funding arrangement without having its patients contacted to tell them their subsidised care was ending. Mr Michalik says that Public Health would have obtained an injunction except that the Court was able to provide a timely hearing for the substantive argument. Public Health also seeks increased costs of 50 per cent because it says Tū Ora has contributed unnecessarily to the time and expense of the proceeding by taking an unnecessary step (being a strike out application), and by failing to accept offers of settlement to dispose of the proceeding. Public Health were self-represented for a period and the costs schedule filed reflects the time allowance for those relevant items. Allowance for second counsel is also sought.

Cost principles

[5]                All matters of costs are at the discretion of the Court.3 The general principles which apply to the determination of costs include that costs follow the event, and that

3      High Court Rules 2016, r 14.1.

the determination of costs should be predictable and expeditious.4 The overriding consideration when exercising the discretion to award costs is that the costs award ought to do justice between the parties.5

[6]                I first note the following observations of Cooke J in Lepionka & Company Investments Ltd v Gibson Sheat:6

[3] A large number of issues are raised in the memoranda that have been filed. The issues raised evidence of a misunderstanding of the costs regime set out in pt 14 of the High Court Rules 2016 (the Rules). This misunderstanding is not unusual — it is becoming increasingly common for there to be applications to depart from a standard award of costs determined under pt 14. That is a practice that should be discouraged unless there is a clear basis for such departure in accordance with the Rules. Most cases can be expected to involve costs being calculated on a 2B basis, with perhaps some adjustments to the time bands for some steps. But costs should normally be straightforward...

…

[7]   Given the schedular approach the Court should only be involved in    the determination of costs in a limited number of cases. The regime is relatively straightforward and costs should be able to be settled by the parties in the majority of cases. Yet it has become increasingly apparent that the Court is being asked to grant uplifts, discounts or exceptions to costs awards almost routinely...

[7]                Both parties seek a 50 per cent uplift on scale costs pursuant to r 14.6(3) of the High Court Rules 2016. Relevantly, under r 14.6(3) the Court may order a party to pay increased costs if:

(b)the party opposing costs has contributed unnecessarily to the time or expense of the proceeding or step in it by—

…

(ii)taking or pursuing an unnecessary step or an argument that    lacks merit; or

…

(v) failing, without reasonable justification, to accept an offer of settlement whether in the form of an offer under rule 14.10 or some other offer to settle or dispose of the proceeding; or

4      Rule 14.2(1)(a) and sub-r (1)(g).

5      Packing In Ltd (in liq) v Chilcott (2003) 16 PRNZ 869 (CA) at [5].

6      Lepionka & Company Investments Ltd v Gibson Sheat [2023] NZHC 2745.

Discussion

[8]                I am not persuaded that Public Health can be regarded as the successful party in the proceeding. Tū Ora wholly succeeded in defeating the claims against it at the interim hearing and the substantive hearing. While Tū Ora had earlier given an undertaking not to contact patients, Tū Ora was released from that undertaking in the interim injunction judgment. Tū Ora pursued its substantive claim that the giving of the termination notice was unreasonable, and that the dispute between the parties should be determined under the dispute mechanisms in the agreement. Costs follow the event and I see no reason to depart from that ordinary course. Tū Ora are entitled to scale costs on a category 2B basis against Public Health.

[9]                Tū Ora submits that it is entitled to increased costs because of a failure by Public Health to accept reasonable settlement offers. First, Tū Ora says it outlined through correspondence its claim and explained why Public Health’s interim application was redundant and unmeritorious. Second, on the same day the interim judgment was issued, Tū Ora says it  explained  through  correspondence  that  Public Health’s substantive claim was expected to fail, and offered to defer the termination of the agreement until 30 September 2025 and that costs would lie where they fall if Public Health discontinued the proceeding.

[10]            I do not consider that a refusal of either of the offers presented to Public Health constitutes acting without reasonable justification. As Boldt J pointed out in the interim judgment, there was a risk associated with Tū Ora’s defence to the claim of unreasonableness if it did not explain why the termination of the agreement occurred.7 That is a situation where Public Health had an arguable case on the evidence (or lack of it) at that point.

[11]            That second offer from Tū Ora also followed an offer by Public Health to discontinue the proceedings and leave costs to lie where they fall if it could be agreed the notice for the termination of the agreement be extended to 24 December 2025, and that Public Health notify patients of the change in funding provider. That offer was not accepted by Tū Ora and instead it made a second offer, as mentioned. It is also clear

7      Interim judgment, above n 1, at [33]–[37].

that while Public Health were taking steps to secure a new funder, the outcome of any arrangements was not certain, nor was the timeline for when any new relationship would be formalised.

[12]            Tū Ora further submits that it is entitled to increased costs on  the  basis Public Health pursued an argument that lacks merit. Ms Clark submits that Tū Ora communicated to Public Health on several occasions that it was likely to be unsuccessful, however, Public Health continued to pursue the proceedings. For the reasons given above, I do not consider that Public Health’s arguments were devoid of merit. The circumstances are short of a situation where uplifted costs would be appropriate.

[13]            There are four further points to address. First, Mr Michalik submits that Tū Ora should not be entitled to recover costs from Public Health for its strike out application that was withdrawn. I agree. Those costs are to be deducted from the schedule of costs and disbursements. Second, I do not regard this case as requiring an allowance for second counsel. There are no unusual features in the litigation that warrant the allowance being granted.8 Third, I do not regard this matter as one where “costs on costs” is appropriate. Those costs and allowance for second counsel are to be deducted from the schedule of costs Fourth, Tū Ora claims as a disbursement “UK cases required to defend hearing”. Without providing any specifics of what this disbursement is, I consider it is not to be claimed. It appears to fall under the category of library research which is typically not claimable.9 This item is deducted from the disbursements schedule.

Result

[14]            I order that Public Health Action Ltd is to pay Tū Ora Compass Health as follows:

(a)category 2B scale costs in the sum of $31,787; and

8      See, for example, Body Corporate S73368 v Otway (No 2) [2018] NZHC 1761; ZYXCBA Developments Ltd v Auckland Council [2015] NZHC 2224 at [16]; and Tao v Strata Title Administration [2016] NZHC 1821 at [52].

9      See, for example, Houghton v Saunders [2015] NZHC 548 at [110].

(b)disbursements in the sum of $286.

[15]I decline Public Health Action Ltd’s claim for costs and disbursements.

McQueen J

Solicitors:

O’Regan Arndt Peters and Evans, Wellington for Plaintiff Dentons, Wellington for Defendant