Regent Trustee Limited v Pang
[2020] NZHC 2855
•30 October 2020
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2020-404-1216
[2020] NZHC 2855
BETWEEN REGENT TRUSTEE LIMITED
Plaintiff
AND
YIFEI PANG
Defendant
Hearing: On the papers Counsel:
N W Coyle for the Plaintiff AHH Choi for the Defendant
Judgment:
30 October 2020
JUDGMENT OF GAULT J
This judgment was delivered by me on 30 October 2020 at 4:00 pm pursuant to r 11.5 of the High Court Rules 2016.
Registrar/Deputy Registrar
……………………………………
Solicitors / Counsel:
Mr N W Coyle, Keegan Alexander, Auckland Mr AHH Choi, Barrister, Auckland
Mr SCM Waalkens (defendant’s instructing solicitor), Rice Speir, Auckland
REGENT TRUSTEE LTD v PANG [2020] NZHC 2855 [30 October 2020]
[1] Following the plaintiff’s discontinuance of its summary judgment proceeding, the defendant seeks costs for its preparation prior to the discontinuance, which occurred six days before the first call of the application for summary judgment.
[2] Mr Choi, for the defendant, submits that by the time the defendant was served with the notice of discontinuance, the defendant had completed his notice of opposition and his affidavits in support were ready for swearing (but for the confirmation of a couple of details). The notice of opposition and affidavits were due the next day.
[3] The defendant seeks 2B scale costs of $3,824 based on cost item 2 (commencement of defence by defendant) and cost item 23 (filing opposition to interlocutory application). The defendant seeks one day rather than two days in relation to item 2 on the basis that while the defence was ascertained and developed for summary judgment, the statement of defence was not drafted.
[4] The plaintiff says costs should lie where they fall. The plaintiff says that it was a perfectly reasonable commercial decision for the plaintiff to seek orders for specific performance of the sale and purchase agreement. Subsequent to filing the proceeding, the plaintiff elected to cancel the agreement and forfeit the deposit. The plaintiff intends to commence a fresh proceeding and claim damages if the unit is resold at a reduced price. Mr Coyle, for the plaintiff, submits the evidence filed in support of the application for summary judgment shows that the plaintiff has established its claim on the balance of probabilities. While acknowledging that there is a presumption that a plaintiff who discontinues will pay costs and that such costs can be awarded despite the defendant having completed no formal steps, Mr Coyle submits that the presumption is rebutted and costs should lie where they fall given the perceived merits, that the plaintiff acted reasonably by commencing the proceeding and the defendant acted unreasonably in not advising of a defence.
[5] In a reply memorandum, Mr Choi disputes Mr Coyle’s reference to pre-commencement conduct, the alleged prima facie merits and the claimed change in circumstances. This provoked a further memorandum for the plaintiff addressing the factual circumstances of the pre-commencement conduct.
Discussion
[6] On a discontinuance, there is a presumption in favour of awarding costs to a defendant against whom a proceeding has been discontinued but it may be displaced if there are just and equitable circumstances not to apply it.1 As the Court of Appeal has said, the approach is that the Court “does not lightly allow a plaintiff to displace the presumption”, but “the Court is prepared, in a clear case, to recognise that the plaintiff may have achieved its end by other means or otherwise discontinued for reasons not connected to the merits”.2 Also, the Court may consider, in a clear case, why the parties brought and defended the proceeding, and whether steps taken in it were reasonable. This recognises that the interests of justice occasionally may require that such matters be taken into account. It is not to invite a general inquiry into the reasonableness of the parties’ conduct.3 A plaintiff cannot generally displace the presumption by showing that it had some merit on its side. The Court ordinarily refuses to consider the merits unless they are immediately apparent.4 The reluctance to enquire into the merits or conduct reflects the objectives of the rules, which allow a plaintiff by discontinuance to end its proceeding unilaterally and fix its liability for costs at that point in a predictable way. To conduct a post-discontinuance inquiry into the merits or the reasonableness of the parties’ conduct is ordinarily contrary to these objectives.5
[7] The succession of memoranda filed in relation to costs in this case highlights why the Court does not lightly allow a plaintiff to displace the presumption. Irrespective of the perceived merit of the claim as filed, the explanation for the plaintiff’s discontinuance (before the defendant was required to respond) is not addressed in evidence and, in any event, I do not consider it displaces the presumption taking the approach set out above.
1 Kroma Colour Prints Ltd v Tridonicato NZ Ltd [2008] NZCA 150, (2008) 18 PRNZ 973 at [12].
2 Powell v Hally Labels Ltd [2014] NZCA 572 at [20]-[21].
3 At [22].
4 At [23].
5 At [24].
[8] The memoranda also addressed pre-commencement conduct, which is not normally relevant to costs. Generally, costs are to reflect how parties have acted during litigation, not before it.6
[9] I accept Mr Coyle’s alternative submission that costs should only be awarded in respect of the opposition to the application for summary judgment and not in respect of item 2, commencement of defence. No statement of defence was prepared. I also consider that scale costs in respect of the notice of opposition and affidavits should be reduced by 10 per cent given that the discontinuance occurred before those documents were finalised and filed.
Result
[10]The defendant is entitled to costs of $1,290.60.
Gault J
6 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].
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