Public Trust v Silverfern Vineyards Limited

[2016] NZHC 1002

IN THE HIGH COURT OF NEW ZEALAND NAPIER REGISTRY

CIV-2014-441-38 [2016] NZHC 1002

UNDER

Part 18 of the High Court Rules, the

Declaratory Judgments Act 1908 and the
Companies Act 1993

BETWEEN

PUBLIC TRUST Plaintiff

AND

SILVERFERN VINEYARDS LIMITED Defendant

CIV-2014-441-39

BETWEEN  SOUTHLAND BUILDING SOCIETY Plaintiff

ANDSILVERFERN VINEYARDS LIMITED Defendant

Hearing:	On the papers
Counsel:	J W Ormsby and M Prendergast for Public Trust S M Dwight for Southland Building Society M Heard and D Bullock for Silverfern Vineyards Limited
Judgment:	17 May 2016

RECALLED COSTS JUDGMENT OF MUIR J

This judgment was delivered by me on Tuesday 17 May 2016 at 4.00 pm

Pursuant to Rule 11.5 of the High court Rules.

Registrar/Deputy Registrar

Date:…………………………

Counsel/Solicitors:

Wynn Williams, Christchurch, for Public Trust
Cavell Leitch, Christchurch, for Southland Building Society

Lee Salmon Long, Auckland, for Silverfern Vineyards Limited

PUBLIC TRUST v SILVERFERN VINEYARDS LIMITED [2016] NZHC 1002 [17 May 2016]

Introduction

[1]      In my judgment dated 8 December 20151  I indicated that if matters of costs could not be resolved between the parties I would receive memoranda.  I indicated that they were to be exchanged in advance so as to limit areas of difference.  In the event,  no  such  exchange  has  taken  place  despite  the  efforts  of  the  successful plaintiffs to do so.

[2]      I have now received memoranda from each of the Southland Building Society

(SBS), Public Trust (PT) and the defendant (Silverfern).

Recall

[3]      This costs judgment was originally published on 17 May 2016.  It included at that time joint and several orders against Silverfern and a non-party Grov Holdings Ltd (GHL).  A subsequent recall application was made, in relation to those parts of the costs judgment which relate to GHL on the basis that it was not severed with notice of the application.   By minute published contemporaneously with this judgment I grant that application, pointing out, however, that the appropriate course is to recall the entire judgment of 17 May 2016, simultaneously reissue judgment against Silverfern and reserve rights to the plaintiffs to apply on notice for a costs order against GHL.

Quantum of Award

1.       SBS

[4]      SBS seeks costs on a 2B basis which is, in my view, appropriate.   In an updated schedule attached to its reply submission it identifies attendances which, with the relevant time and daily rate allocations, total $50,327.50.

[5]      It then seeks an uplift of 50 per cent on this sum, primarily on the basis of the

defendant’s applications to review the decision of Smith AJ on discovery which was, it says, abandoned “at the last minute”.

1      Public Trust v Silverfern Vineyards Limited [2015] NZHC 3078.

[6]      I contrast the desired uplift of 50 per cent on the total award with the position

outlined in the letter from SBS’s solicitors to the solicitors for the defendant dated 9

March 2016 in which it said:

SBS maintains the position that an increase in costs in relation to particular attendances relating to  the review hearing is justified on account of the conduct of your client during the course of the proceeding.

[7]      In my view that identifies the approach appropriately followed, such that any uplift is limited to attendances relating to the review.  I allow an uplift of 50 per cent on Step 23 in the SBS’s schedule for a total allowance of $1,791 for that step.  I do so having regard to the history of prosecution of the review application identified in paragraph 23 of SBS’s submission which in my view contributed unnecessarily to increased time and expense.

[8]      In addition, I have considered the submission by Silverfern that both SBS and Silverfern had a measure of success before Smith AJ, with the result that costs should lie where they fall on that application.  It was true that the Judge found both parties had succeeded to some extent.   I accept that SBS failed on a number of grounds and increased the costs of Silverfern.   However, I also accept SBS’s submission that the application was necessary to compel Silverfern to provide a number of discoverable documents.  In my view costs are appropriately payable to SBS but a deduction, which I assess at 50 per cent, is necessary to reflect the respective wins and losses. The quantum of that deduction is $2,835.75.

[9]      I also reduce by 50 per cent the claim in respect of the memorandum dated 11

June 2015 which was filed jointly with PT. The quantum of that deduction is $398.

[10]     Otherwise I consider SBS’s revised calculation correct and therefore award costs to it in the total amount of $48,884.75 plus disbursements of $5,644.2

2      I note that in the schedule of disbursements attached to the submission some of the dollar amounts are not properly aligned with the relevant claim.  However, that alignment occurs in a duplicate of the schedule provided by SBS’s solicitors to the solicitors for the defendant.

2.       PT

[11]     PT seeks costs in the amount of $58,212.50 with a similar uplift of 50 per cent relying on the submissions of SBS.  My previous comments apply and I allow such uplift in respect of Step 23 only.

[12]     My previous comments also apply to the discovery application between PT and Silverfern and to the joint memorandum of 11 June 2015 in respect of which I make combined deductions of $3,233.75.

[13]     I also make the following adjustments reflected in SBS’s revised schedule which was filed following receipt of Silverfern’s submissions:

(a)       Only 1.5 hours (as opposed to 2.5 listed) for item 21 “Insepction of

Documents” (a deduction of $1,990); and

(b)A reduction by half for the preparation of the common bundle as it was  produced  by  both  plaintiffs  in  collaboration  (a  deduction  of

$2,787.50).

[14]     PT also claims for the appearance of second counsel at the hearing.  I do not, having regard to the decision in Nomoi Holdings Ltd v Elders Pastoral Holdings Ltd,3 regard there as being anything so atypical about this litigation as to warrant an allowance for second counsel. Although there were some novel legal issues involved the case was conducted on affidavit evidence with no requirement for cross- examination of Silverfern’s Mr John O’Connor.   Moreover PT and SB’s positions

were in large measure common, meaning that there was significant opportunity for collaboration and assistance between counsel.   The case is not one, in my view, where the analogy with “former trial practice” referred to by Chambers J in Nomoi Holdings is sufficiently strong to warrant such an allowance.   This results in a deduction of $2,230.00.

[15]     Silverfern also seeks a deduction for appearances on 9 and 14 July 2015 on the grounds that there were no appearances on those dates.  However, whether such

3      Nomoi Holdings Ltd v Elders Pastoral Holdings Ltd (2001) 15 PRNZ 155 (HC) at [21].

appearances were claimed in an earlier circulated draft of PT’s submissions they did not feature in Schedule One to its claim as filed.

[16]     In  the  result,  I  award  costs  to  PT  of  $49,762.25  plus  disbursements  of

$6,418.23.

Result

[17]     I award costs and disbursements against Silverfern in the following amounts. (a)     In favour of SBS, costs of $48,884.75 and disbursements of $5,644. (b)           In favour of PT, costs of $49,762.25 and disbursements of $6,418.23.

[18]     I reserve to  the plaintiffs the right  to  seek  costs  against  GHL following

service in accordance with my minute dated 8 June 2016.

Muir J

IN THE HIGH COURT OF NEW ZEALAND NAPIER REGISTRY

CIV-2014-441-38

UNDER  Part 18 of the High Court Rules, the Declaratory Judgments Act 1908 and the Companies Act 1993

BETWEEN                PUBLIC TRUST

Plaintiff

ANDSILVERFERN VINEYARDS LIMITED

Defendant

CIV-2014-441-339

ANDSOUTHLAND BUILDING SOCIETY Plaintiff

ANDSILVERFERN VINEYARDS LIMITED

Defendant

Hearing:  On the papers

Counsel:  J W Ormsby and M Prendergast for Public Trust

S M Dwight for Southland Building Society
M Heard and D Bullock for Silverfern Vineyards Limited

Minute:  8 June 2016

MINUTE OF MUIR J

Counsel/Solicitors:

Wynn Williams, Christchurch, for Public Trust

Cavell Leitch, Christchurch, for Southland Building Society
Lee Salmon Long, Auckland, for Silverfern Vineyards Limited

[1]      Silverfern Vineyards Limited (Silverfern) applies for the recall of part of my costs  judgment  dated  17 May 20164   relating  to  the  non-party  costs  order  made against Grov Holdings Ltd (GHL),5  and the joint and several order made against GHL.6

[2]      It  does  so  on  the  basis  that  GHL  was  not  served  with  the  plaintiffs’ application (made by way of memorandum) for an order against it, and that it has not had the opportunity therefore to advance arguments and produce evidence to support the proposition that costs should not lie against it as a non-party.

[3]      By way of background, my substantive judgment in the proceedings records the plaintiffs’ concerns that any judgment as to costs against Silverfern was likely to be irrecoverable and its assumption that other entities associated with Silverfern or its director, Mr O’Connor, were funding the litigation.   I directed Silverfern to disclose the party funding its defence “as a possible foundation for [an application for costs against a non-party].”

[4]      I further directed that in the event the parties were unable to agree costs they were to exchange memoranda before filing so as to limit areas of difference. Silverfern did not co-operate in such exchange.   The plaintiffs therefore filed memoranda seeking costs of $50,327 (SBS) and $58,212.50 (PT), with an uplift of

50 per cent.  They did so against Silverfern and GHL.  Belatedly, Silverfern engaged in the process with a memorandum raising various points which, if prior advanced, may  have  been  the  subject  of  negotiated  solution  between  the  parties.     No submission was made by GHL, a point noted in my costs judgment.

[5]      In the result, I awarded costs of $48,884.75 and disbursements in favour of

SBS, and $49,762.25 plus disbursements in favour of PT.  I did so on a basis jointly and severally against Silverfern and GHL.

4      Public Trust v Silverfern Vineyards Limited [2016] NZHC 1002.

5      At [16]-[27].

6 At [28].

[6]      Fundamental to the principles of natural justice, as enshrined in s 27 of the New Zealand Bill of Rights Act 1990, is the right of parties to know the case against them and be heard before a final determination against their interests.

[7]      My joint and several judgment against GHL proceeded on the assumption of notification to it of the plaintiffs’ application for non-party costs.  It now appears to be  common  ground  that  GHL  was  not  served  with  the  plaintiffs’  applications. Rather, the plaintiffs relied on the fact that Mr O’Connor was a common director of both Silverfern and GHL and that there has been an apparent two-way flow of information between Silverfern and GHL based on the content of Silverfern’s application for recall.  They say that the application represents an attempt to advance “form over substance”.

[8]      Silverfern responds in terms that it is not a “part of an indistinguishable corporate morass comprising [Silverfern and GHL], or any other company the plaintiffs elect  which  Mr O’Connor also  happens to direct”.   It  emphasises the methods of service on companies prescribed in s 387 of the Companies Act 1993 and that these do not include service of documents on other companies with common directors.  It says, therefore, that there is no basis in law for the substance over form approach advanced by the plaintiffs.

[9]      I have some concerns that GHL may have been on notice throughout of the plaintiffs’ applications but chosen not to participate on the basis that, in so doing, it could reserve the point now taken.   However, so fundamental is the principle of natural justice engaged in the recall application and so clear are the service requirements  specified  in the Companies  Act,  that  I consider  the  ‘other special

reasons’ criteria specified in Horowhenua County v Nash (No. 2)7 properly satisfied

and the recall granted.  Because of difficulties with part recall, I intend to recall the whole  judgment  and  to  simultaneously  publish  a  new  judgment  limited  to Silverfern’s liability in costs, with leave reserved to the plaintiffs to seek costs against GHL.

[10]     I make the following consequential orders:

7      Horowhenua County v Nash (No. 2) [1968] NZLR 632 (SC) at 633.

[a]       The plaintiffs are to serve on GHL at its registered office and within

14 days hereof:

[i]        A copy of my substantive judgment dated 8 December 2015; [ii]      A copy of my costs judgment against Silverfern and GHL

dated 17 May 2016;

[iii]      A copy of this Minute recalling the judgment of 17 May 2016; [iv]    A copy of my costs judgment against Silverfern dated 8 June

2016; and

[v]      A copy of the memoranda filed by the plaintiffs in support of costs orders against GHL, which shall be considered applications in their terms.

[b]      GHL is within 14 days of service to file and serve any affidavit in opposition to the costs applications and any memorandum setting out why orders ought not to be made against it.

[c]      The plaintiffs are to file and serve any evidence and or submissions in reply within 14 days thereafter.

[d]      I add GHL as a second defendant to both proceedings to the extent that may be necessary to assert jurisdiction over it for these limited purposes.8

[e]      If any party requires to be heard they are to advise accordingly in their memoranda.   Otherwise the matter will be dealt with on the

papers.

8It is not clear on the authorities whether this is necessary.  It is done so out of an abundance of caution.  Easton Agriculture Ltd v Manawatu-Wanganui Regional Council HC Palmerston North CIV-2008-454-3, 22  December 2011 at  [50]:  Black  Trading Ltd  v  Chandra HC Auckland CIV-2008-404-7202, 15 December 2008 at [3].

Muir J