SAMPSON PROPERTY DEVELOPMENTS LIMITED AND DMST INTERNATIONALS LIMITED

[2024] NZHC 3653

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

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

CIV-2023-485-483

[2024] NZHC 3653

BETWEEN

SAMPSON PROPERTY DEVELOPMENTS LIMITED

Plaintiff

AND

DMST INTERNATIONALS LIMITED

Defendant

On the papers:	7 October 2024
Appearances:	M R C Wolff for Plaintiff P Morten for Defendant
Judgment:	4 December 2024

JUDGMENT OF ASSOCIATE JUDGE SKELTON

[Costs]

[1]                 The plaintiff seeks costs on the defendant’s application under rule 9.75 of the High Court Rules 2016 [Person refusing to make affidavit]1 and the defendant’s application for summary judgment.2 Both applications were dismissed, and costs were reserved.

[2]                 The parties have been unable to agree on costs. The plaintiff seeks 2B costs with a 50 per cent uplift on both applications. The defendant opposes costs but says that if costs are ordered then that should be on a 2B basis.

1      Sampson Property Investments Ltd v DMST Internationals Ltd [2024] NZHC 555.

2      Sampson Property Investments Ltd v DMST Internationals Ltd [2024] NZHC 1699.

SAMPSON PROPERTY DEVELOPMENTS LIMITED v DMST INTERNATIONALS LIMITED [2024] NZHC 3653 [4 December 2024]

Legal principles - costs

[3]                 Costs are ultimately a matter of the court’s discretion, the overall objective being to achieve an outcome that best meets the interests of justice.3 However, that discretion is qualified by the applicable costs rules,  contained  in  pt  14  of  the  High Court Rules 2016. The primary principle applying to the determination of costs is that costs follow the event –– meaning that a party who is unsuccessful pays costs to a party who is successful.4 Costs are usually to be assessed on the basis of the schedule by applying the appropriate daily recovery rate to the time considered reasonable for each step reasonably required in relation to the proceeding or interlocutory application.5

[4]                 The Court may order a party to pay increased costs where that party has contributed unnecessarily to the time or expense of the proceeding or a step in it.6 Increased costs may be awarded where there is a failure by the paying party to act reasonably.7 An example is if the party opposing costs has contributed unnecessarily to the time or expense of the proceeding or step in it by taking or pursuing an unnecessary step or an argument that lacks merit.8

[5]                 The Court may also award the actual costs reasonably incurred by a party (indemnity costs).9 Indemnity costs may be awarded where a party has behaved either badly or very unreasonably.10 For example, indemnity costs may be ordered if the party has acted vexatiously, frivolously, improperly, or unnecessarily in commencing, continuing, or defending a proceeding or step in a proceeding.11

3      High Court Rules 2016, r 14.1; Manukau Golf Club Inc v Shoye Venture Ltd [2012] NZSC 109, [2013] 1 NZLR 305 at [7] and [16]; Glaister v Amalgamated Dairies Ltd [2004] 2 NZLR 606 (CA) at [21]–[24] and [28]; and Mansfield Drycleaners Ltd v Quinny’s Drycleaning (Dentice Drycleaning Upper Hutt) Ltd (2002) 16 PRNZ 662 (CA) at [27].

4      Rule 14.2(1)(a).

5      Rule 14.2(1).

6      Rule 14.6(3)(b).

7      See Bradbury v Westpac Banking Corporation [2009] NZCA 234, [2009] 3 NZLR 400 at [27].

8      High Court Rules, r 14.6(3)(b)(ii).

9      Rule 14.6(1)(b).

10     Bradbury v Westpac Banking Corp, above n 7, at [27]–[28]; and Prebble v Huata (No. 2) [2005] NZSC 18, [2005] 2 NZLR 467 at [6].

11     High Court Rules, r 14.6(4)(a).

[6]                 However, applications to depart from a standard award of costs based on the schedular approach are discouraged unless there is a clear basis for such departure in accordance with the High Court Rules.12

Application under r 9.75

[7]                 Rule 14.8 requires that costs on opposed interlocutory applications must be fixed when the application is determined, unless there are special reasons to the contrary. In this case, Associate Judge Paulsen reserved costs pending the hearing of the summary judgment application. That seems to have been because further evidence might have been filed for the summary judgment application and/or the outcome of the summary judgment application might be relevant to costs.

[8]                 No further evidence was filed for the summary judgment application, and the application has now been dismissed. The outcome of the application confirmed that an order for examination was not necessary. While Mr Walker’s evidence may be relevant at trial to the determination of the factual dispute as to whether there was consultation in the relevant period, an order for examination at the summary judgment stage would have given rise to difficult procedural issues13 and risked converting the summary hearing to a substantive hearing.14 Regardless of the factual issue as to consultation, the application for summary judgment also turned on the interpretation of the sale and purchase agreement as to when consultation was required and whether performance of the obligation to consult was “essential”, which did not require any evidence from Mr Walker.

[9]The plaintiff was successful and is entitled to costs.

[10]             The plaintiff claims a 50 per cent uplift on 2B scale costs because by making an application under r 9.75 in relation to an application for summary judgment, the defendant should have appreciated that their application had little prospect of success. However, while orders for examination are generally inappropriate in summary judgment because they are likely to give rise to contentious evidence, that does not

12     Lepionka & Company Investments Ltd v Gibson Sheat [2023] NZHC 2745 at [3] and [7].

13     Sampson Property Investments Ltd v DMST Internationals Ltd, above n 1, at [46].

14     Chen v Xi [2019] NZHC 2509 at [49].

mean that applications should never be made. In this case, I do not consider that the defendant acted unreasonably in contending that examination of Mr Walker might adduce evidence which the Court had a “substantial reason to believe” would assist in deciding whether there was a defence.15 Associate Judge Paulsen found that if further evidence was filed in the summary judgment application then “the Court may well look leniently upon a further application”.16 This is not a case where it is appropriate to depart from a standard award of costs based on the schedule.

Defendant’s summary judgment application

[11]             My preliminary view was that costs of the defendant’s application for summary judgment should be reserved.17 Having considered the memoranda filed, I remain of that view for the following reasons.

[12]Rule 14.8(3) provides that r 14.8 does not apply to summary judgment. The

exception is  so as not  to discourage summary judgment applications  in  appropriate

circumstances as,  even if unsuccessful, they  can  serve a useful purpose in  bringing

particularly when dealing with a plaintiff’s application for summary judgment, the incidence of costs may be best decided when the final result of the case is known.19

[13]On a defendant’s unsuccessful application, there is no settled practice.20

Because a defendant’s application for summary judgment is more closely related to a

strike-out application and judgment (successful or otherwise) may be determinative,

it  may  be  more  likely  that  costs  will  be  fixed  at the  time  of  judgment.  This is

particularly so where the defendant’s application is opportunistic and fails to comply

with the principles applicable to such an application.21

[14]             However, in this case, the defendant’s unsuccessful application for summary judgment was not determinative. While I found that the defendant had not satisfied the

15     Dyer Whitechurch & Bhanabhai v Pauanui Publishing Ltd (2000) 14 PRNZ 568.

16     Sampson Property Investments Ltd v DMST Internationals Ltd, above n 1, at [47].

17     Sampson Property Investments Ltd v DMST Internationals Ltd, above n 2, at [73].

18     Matthew Casey and others Sim’s Court Practice (online ed, LexisNexis) at [HCR14.8.5].

19     NZI Bank Ltd v Philpott [1990] 2 NZLR 403 (CA).

20     Miah v The National Mutual Life Association of Australasia Ltd [2016] NZCA 590 at n 39.

21     Sim’s Court Practice, above n 18, at [HCR12.12.6].

onus on it to establish that the plaintiff’s case “cannot succeed” and is “hopeless”, the interpretation issues and factual issues remain to be determined at trial. The defendant’s application was not opportunistic nor contrary to applicable principles. The application was based on an available interpretation of the sale and purchase agreement. The defendant considered it had adduced sufficient evidence to establish consultation had not occurred in the relevant period and that the defendant had not responded with credible evidence of its own.

[15]             I am not prepared to determine costs on the defendant’s application on a self-contained basis reflecting the immediate outcome. In my view, in the circumstances of this case, it is more appropriate that costs be reserved, pending the substantive determination of the issues.22

[16]             As the plaintiff has not been successful in obtaining an award of increased costs on the defendant’s r 9.75 application, and costs have been reserved on the defendant’s summary judgment application, there is no basis for awarding costs to the plaintiff for the preparation of its costs memoranda.

Result

[17]             On the defendant’s application under r 9.75, the plaintiff is awarded costs on a 2B basis in the sum of $6,214.

[18]             On the defendant’s summary judgment application, costs are reserved pending the substantive determination of the issues in the proceedings.

Associate Judge Skelton

Solicitors:

JB Morrison, Wellington for Plaintiff

Costa Varuhas & Co, Wellington for Defendant

22     EBS v CAS [2014] NZHC 2929 at [90].