Shabor Limited v Graham

[2020] NZHC 1592

IN THE HIGH COURT OF NEW ZEALAND HAMILTON REGISTRY

I TE KŌTI MATUA O AOTEAROA KIRIKIRIROA ROHE

CIV-2017-419-88

[2020] NZHC 1592

IN THE MATTER

of the sale and purchase of a farm at 910 Morangi Road, Oparau

BETWEEN

SHABOR LIMITED

Plaintiff

AND

ROBERT GRAHAM

First Defendant

PINE RIDGE TRUSTEE COMPANY LIMITED

Second Defendant

Hearing:

On the papers

Counsel:

KM Quinn and CB Pearce for plaintiff

DM O'Neill and PA Depledge for first and second defendants

Judgment:

7 July 2020

JUDGMENT OF FITZGERALD J

[As to costs]

This judgment was delivered by me on 7 July 2020 at 4pm, pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date……………

Solicitors:           Cargill Stent Law, Taupo

Forgeson Law, Te Kuiti (D Forgeson) Gilbert/Walker, Auckland (I Rosic)

Shabor Limited v Graham [2020] NZHC 1592 [7 July 2020]

Introduction

[1]                 In my substantive judgment in this matter delivered on 13 March 2020, I found that the first and second defendants (collectively “Mr Graham”) had falsely represented the carrying capacity of a farm when advertising it for sale.1 I found this to be in breach of s 35 of the Contract and Commercial Law Act 2017 and s 9 of the Fair Trading Act 1986.

[2]                 Despite these findings, however, I ultimately dismissed the plaintiff’s claim on the basis of a no liability/disclaimer clause in the agreement for sale and purchase between the parties.

[3]                 At the conclusion of my substantive judgment, I encouraged the parties to seek to agree costs. While there is agreement on some aspects of the proposed costs award, the parties have not been able to reach a concluded view. This judgment accordingly determines the competing cost claims.

The parties’ submissions

[4]                 First, there is no dispute that Mr Graham was the successful party overall and is entitled to costs. It is also agreed that costs should be awarded on a scale 2B basis. Also (largely) agreed is the calculation of scale costs for the substantive trial, before any adjustments.

[5]                 Mr Graham says that despite losing on the issues of the carrying capacity of the farm and whether the relevant advertising material was false or misleading, there should be no reduction to the scale costs award in his favour. He says he was always entitled to “put the plaintiff’s case to proof”. The plaintiff, on the other hand, says that a very significant proportion of the evidence adduced by both parties and the time at trial was directed to the issues on which Mr Graham lost. It accordingly proposes a 25 per cent reduction to the scale costs award to be made to Mr Graham.

[6]                 The plaintiff also says that the allowance for second counsel should be reduced by 50 per cent, given second counsel was not in fact present at Court for more than

1      Shabor Ltd v Graham [2020] NZHC 507.

about half of the actual Court sitting time. Mr Graham, on the other hand, says that despite only being in Court for approximately four of the eight sitting days, second counsel was in fact spending all his time working on matters relating to the trial, for example, preparing written submissions. Mr Graham therefore says there should be no reduction to the allowance for second counsel.

[7]                 The parties also disagree on the approach to costs on Mr Graham’s earlier application for a defendant’s summary judgment on the plaintiff’s claims. That application for summary judgment was made on the basis of the no liability/disclaimer clause. Mr Graham was unsuccessful in obtaining summary judgment against the plaintiff, Associate Judge Christiansen finding that the Court would need to assess all the circumstances of the case before it could determine whether the contractual clause was a bar to the plaintiff’s claims.2 Mr Graham says that given he was ultimately successful on the very matter on which he had sought summary judgment, he should also be awarded costs of the summary judgment application (or alternatively, they should lie where they fall). The plaintiff says given it was successful on the summary judgment application and it was an intensely factual matter plainly not suitable for summary judgment, costs on that application should be awarded to it (or at the least, they should lie where they fall).

[8]                 The disbursements claimed by Mr Graham are not disputed, save for the expert witness fees of a Mr Coakley who gave valuation evidence for Mr Graham. In the event, I did not accept Mr Coakley’s valuation evidence. The plaintiff says there should be no allowance for his fees as a result, particularly given his evidence was essentially “dismissed out of  hand”.  The  plaintiff  also  queries  the  quantum  of Mr Coakley’s fees, including by reference to other experts’ fees to be included in the costs award. Mr Graham responds that it was perfectly reasonable for him to have called valuation evidence in response to the plaintiff’s valuation evidence and there is nothing unreasonable about the quantum of Mr Coakley’s fees.

2      Shabor Ltd v Graham [2017] NZHC 3146.

Discussion

Substantive trial costs

[9]                 As the parties agree, Mr Graham is entitled to costs and I agree that the award should be made on a scale 2B basis. I accept the plaintiff’s submission, however, that there should be a reduction to the costs award to reflect the fact that a (very) significant amount of time and energy by both parties was devoted to assessing the carrying capacity of the property in question, a topic on which Mr Graham was unsuccessful. And Mr Graham’s case was not limited  to  putting the plaintiff  to  proof.  Rather, Mr Graham led a significant amount of both factual and expert evidence on that issue. The plaintiff would therefore have had to spend considerable time and effort responding to that evidence. I therefore agree that a 25 per cent reduction to scale costs is appropriate (and indeed is, if anything, a generous approach to such a reduction).

[10]            The scale costs award in favour of Mr Graham for steps 33, 33B and 34 will accordingly be reduced by 25 per cent.

[11]              I also accept the plaintiff’s submission that the award for step 35, second counsel, should be reduced by 50 per cent. The plaintiff’s position that second counsel’s work “behind the scenes” on submissions and the like will already have been captured in other steps included in the costs award (and in particular, step 33B), is correct.

[12]              There is accordingly a scale costs award in Mr Graham’s favour for the substantive trial of $62,559.25, as set out in the schedule at paragraph 17 of the plaintiff’s memorandum dated 9 April 2020.3

3      The plaintiffs agree with the scale costs at Schedule One (before reductions are made). Schedule One distinguishes between the daily recovery rate which applied prior to the High Court Amendment Rules 2019 coming into force on 1 August 2019 ($2,230) and the daily recovery rate which applied post 1 August 2019 ($2,390). It is correct to do so; see EA v Rennie Cox Lawyers (No 3) [2020] NZHC 1372. However, I note the reference to Step 33 (preparation of briefs, lists of issues, authorities, and agreeing common bundle) is applying the post-August time period, but the pre-August daily recovery rate. This results in an amount which is less than what would have been recovered if using the new daily recovery rate but more than what would have been recovered using the previous rates. It is unclear whether the defendants have attempted to apportion the steps taken in Step 33 between when the Amendment Rules took effect. That may be the principled approach; see Delegat v Norman [2014] NZHC 1099 at [31]. Despite that, and in light of the

[13]              As to disbursements, I am not persuaded that Mr Coakley’s fees should be excluded altogether. The fact his evidence was not accepted does not mean it was unreasonable to have obtained valuation evidence. The plaintiff had called valuation evidence and therefore it was perfectly reasonable for Mr Graham to call valuation evidence in response.

[14]              I agree, however, that the quantum of Mr Coakley’s fee appears somewhat high, at least as compared to other expert fees. I propose to include in the costs award an allowance for Mr Coakley’s fee of $10,000. This is no reflection on the reasonableness of Mr Coakley’s fees themselves, which presumably reflect the instructions given to him. But I consider this a reasonable and proportionate amount in the context of the nature of the trial (and the issues on which Mr Graham was not successful, to which Mr Coakley’s evidence was directed), and reflecting that the evidence itself was not accepted.

Summary judgment costs

[15]              As to the summary judgment application, given the enforceability or otherwise of the disclaimer clause called for an inquiry as to all the circumstances of the case (and there were clearly factual disputes over matters which might affect that overall assessment), a summary judgment application was always going to be challenging. And the application was not finely balanced or dismissed by the Associate Judge by a narrow margin. That said, however, Mr Graham has ultimately been successful on the issue upon which he brought his summary judgment application. I therefore consider that the appropriate course, being each party’s suggested “fall-back” position, is that costs on the summary judgment application lie where they fall. There is an order to that effect.

Fitzgerald J

plaintiff’s acceptance of the defendants’ calculation, I consider it would put the parties to greater cost to attempt to divide the steps taken under Step 33 as between the previous and amended daily recovery rates. For those reasons, I adopt the agreed figure for Step 33.