Resources Services Limited v AMR Nickel Limited

[2017] NZHC 1267

IN THE HIGH COURT OF NEW ZEALAND

AUCKLAND REGISTRY

CIV-2015-404-002851

[2017] NZHC 1267

BETWEEN

RESOURCES SERVICES LIMITED

Plaintiff

AND

AMR NICKEL LIMITED

Defendant

AND

ASIAN MINERAL RESOURCES LIMITED

Second Defendant

Hearing:	15 February 2017
Appearances:	C M Fisher for the Plaintiff J L Bates for the Defendants
Judgment:	12 June 2017

JUDGMENT OF ASSOCIATE JUDGE SARGISSON

This judgment was delivered by me on 12 June 2017 at 3.30 p.m. pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date.......................................

Solicitors:

Fortune Manning, Auckland

RESOURCES SERVICES LTD v AMR NICKEL LTD [2017] NZHC 1267 [12 June 2017]

Brown & Bates, Napier Duncan Cotterill, Auckland

[1]                 This judgment deals with an outstanding costs matter on an application made by the defendants, AMR Nickel Ltd and Asian Mineral Resources Ltd.

[2]                 The application rolled together what were essentially two quite different applications:

(a)The first sought an order:

(i)Striking out the plaintiff’s statement of claim (on grounds that there was no reasonably arguable cause of action, or that the claim is an abuse of process or time barred); or alternatively

(ii)Giving summary judgment against the plaintiff on the grounds that none of the plaintiff’s causes of action could succeed.

(b)The second was for an order requiring the plaintiff pay $60,000 into the Court as security for costs and staying the proceeding pending payment, assuming orders for strike out or summary judgment were made.

[3]                 In the judgment I issued on 26 January 2017, I declined to make strike out orders or to give summary judgment; but I did make an order that the plaintiff pay

$42,000 for security for costs for a stay pending payment. I allowed the parties the opportunity to file costs memoranda, which they have done as they have been unable to agree on costs.

[4]                 Counsel for the plaintiff submits that as the defendants failed in their attempt to have the plaintiff’s claim struck out or dismissed, and only partially succeeded on their application for  security  for  costs,  that  the  plaintiff  should  be  treated  as  the successful party overall and entitled to costs. The award she seeks is for $6,801.50 (assessed  on  a   2B   basis)   plus   disbursements   of   $110.   She   relies   on   High Court Rule 14.2(a) which relevantly states that the party who fails with respect to an interlocutory application should pay costs to the party who succeeds. As she also submits, at the hearing the plaintiff did not dispute that he should pay a reasonable

sum by way of security but successfully opposed the full amount of the security claimed.

[5]                 Counsel for the defendants submits that costs should be reserved for determination at trial after the court has determined the substantive issues in the proceeding. He relies principally on High Court Rule 14.8(3). This rule is generally taken to have preserved the Court’s traditional approach, set out in NZI v Philpott,1 that following an unsuccessful summary judgment application, costs are best reserved until the result of the litigation is known. Additionally, counsel argues that liability for security for costs was opposed all the way through to the hearing and the outcome was substantially in the defendants’ favour. Taking these factors into account, counsel contends that there are good reasons for reserving costs pending the outcome of the proceedings; or alternatively, for letting costs lie where they fall.

Decision

[6]                 Putting aside the summary judgment component of the application momentarily, there could be no dispute that:

(a)The court would be required to fix costs on the application pursuant to r 14.8(1), which requires that costs be determined when the application is determined;

(b)Pursuant to the general principles in r 14.2, the defendants would be liable for costs on their failed bid for an order striking out the claim but entitled to costs on their substantial success on the security for costs matter. (Separate orders might be called for or alternatively the court might make a reduced award pursuant to r 14.7(g) to allow for the fact that there was one overall application and not two separate applications).

[7]                 However the position is complicated by the fact that the application also involved a failed bid for summary judgment and therefore it is necessary to consider r 14.8(3). It states that the rule that costs must be fixed when the application is

1      NZI v Philpott [1990] 2 NZLR 403 (CA).

determined does not apply to an application for summary judgment. At issue is whether this complicating factor justifies the defendants’ proposition that costs should be reserved or lie where they fall.

[8]                 I stress that the focus of the argument at the hearing was concentrated mainly on the strikeout application and not the summary judgment application. This reflected the fact that the grounds relied upon for strikeout were simply repeated as grounds for summary judgment – therefore, since these grounds failed for the purpose of the former they inevitably failed for the latter. It is also appropriate to note that in this case the summary judgment application was made by defendants and not (as in Philpott) by a plaintiff.

[9]                 The observations  of  Associate  Judge  Faire  (as  he  then  was)  in  Suharnan v Brookfields are apposite in this context.2 While a plaintiff’s summary judgment can have considerable benefits in relation to the overall disposal of the litigation, the Associate Judge noted that the same does not necessarily apply where a defendant seeks summary judgment and in fact founds its claim on principles that are pertaining to strike out applications.3 That is essentially what happened in this case.

[10]            There was an additional ground for summary judgment: namely, that the bonus provision in the contract represented an instance of unlawful self-dealing and was therefore unenforceable by the plaintiff. However, that did not significantly shift the focus of the argument away from the strikeout application. It was akin to a ground for strikeout and it was dismissed as not being beyond a tenable challenge. It was also not suggested by counsel for the defendants that the argument relating to this additional ground has produced significant benefits of the kind referred to in Philpott.

[11]              Taking these factors into account, as well as the overall discretion as to costs conferred on the court by r 14.1, I am satisfied, as Judge Faire was in Suharnan, that there is no justification for not ordering costs in favour of the successful party on the strike out and summary judgment applications. As in Suharnan, the considerations

2       Suharnan v Brookfields [2013] NZHC 586, (2013) 22 PRNZ 790.

3      Therefore summary judgment would fail unless there was another separate ground that knocked out the two causes of action. There was not.

that support a different approach to the strike out and summary judgement applications do not apply in this case. I accept, however, that there should be some reduction pursuant to r 14.7(g) to deal with the outcome of the security for costs application.

Result

[12]              The defendants are ordered to pay costs of $4,761.05 to the plaintiff (being 2B costs claimed of $6,801.50 less a reduction of 30%) plus disbursements of $110 for the filing fees claimed.

Associate Judge Sargisson