SPAK (1996) Limited v Leroy

[2023] NZCA 77

IN THE COURT OF APPEAL OF NEW ZEALAND

I TE KŌTI PĪRA O AOTEAROA

 CA614/2021
 [2023] NZCA 77

BETWEEN	SPAK (1996) LIMITED Appellant
AND	REECE LEROY First Respondent BODY CORPORATE 407404 Second Respondent

Court:	Courtney, Thomas and Peters JJ
Counsel:	M Eastwick-Field and J B C Trezise for Appellant E J H Morrison and E F R Bello for First Respondent
Judgment: (On the papers)	24 March 2023 at 2.30 pm

JUDGMENT OF THE COURT

Costs awarded in favour of the first respondent for a standard appeal on a band A basis with usual disbursements.  Second counsel certified.

____________________________________________________________________

REASONS OF THE COURT

(Given by Thomas J)

1. In September 2020, SPAK (1996) Limited (SPAK), the operator of an Auckland hotel intended for use as a managed isolation facility in response to the COVID-19 pandemic, commenced proceedings in trespass against Reece LeRoy, the building manager of apartments located within the same building as the hotel.  In October 2020, SPAK obtained an interim injunction against Mr LeRoy restricting his entry into the hotel.  Almost a year later, by which time Mr LeRoy had ceased working as the building manager, the High Court gave summary judgment dismissing SPAK’s trespass claim, finding SPAK had no arguable case against Mr LeRoy and that it had an improper purpose in bringing the proceeding.[1]  Indemnity costs were awarded.

   [1]SPAK (1996) Ltd v LeRoy [2021] NZHC 2398.

2. SPAK appealed the decision.  In a judgment delivered on 18 November 2022, this Court dismissed the appeal against summary judgment but allowed the appeal against the award of indemnity costs, remitting costs back to the High Court.[2]  We reserved costs in this Court, noting that while we considered it appropriate that costs should lie where they fell, the parties were able to file submissions as to costs if they wished.  They have done so.

   [2]SPAK (1996) Ltd v LeRoy [2022] NZCA 564 at [195]–[197].

3. Mr LeRoy seeks an order for costs on a standard appeal band A basis (including second counsel) totalling $5,975.  SPAK opposes the granting of such an order on the basis there is no reason to depart from the Court’s preliminary indication that costs should lie where they fall.

Submissions

1. Mr Morrison, for Mr LeRoy, submits that an award of costs in his favour is justified on the grounds that SPAK’s substantive proceeding was meritless and Mr LeRoy was largely successful on appeal.  Not only was Mr LeRoy largely successful in his opposition to the appeal against the substantive High Court judgment but he was also successful in his application to adduce further evidence and in his opposition to SPAK’s application to adduce further evidence.  Mr Morrison submits that Mr LeRoy was put to significant expense in taking steps in relation to the appeal.  Further, that SPAK’s claim was, from the outset, frivolous and not worthy of the Court’s resources and that this was recognised by the Court.[3]

   [3]Citing paragraphs [178], [181] and [187].

2. Citing Tyrion Holdings Ltd v Infrastructure NZ Ltd, Mr Morrison submits that SPAK’s success in its appeal against indemnity costs does not disentitle Mr LeRoy from costs.[4]  Counsel also notes, as an additional relevant factor, the risk that Mr LeRoy might be required to repay costs paid to him by SPAK following the High Court reconsideration of High Court costs.  Mr LeRoy has limited means.  He anticipates SPAK would pursue payment vigorously.  Mr Morrison contends the result would be that SPAK will achieve its apparent purpose of creating financial difficulties for Mr LeRoy. 

   [4]Tyrion Holdings Ltd v Infrastructure NZ Ltd [2019] NZCA 308.

3. Ms Eastwick-Field, for SPAK, submits that Tyrion Holdings is distinguishable because SPAK’s successful appeal against indemnity costs was more material overall than was the case in TyrionHoldings.  Further, she submits that it is not appropriate for this Court to award costs simply to offset Mr LeRoy’s possible separate obligation to repay a portion of the High Court costs to SPAK.  We interpose at this point to record that we accept that submission.  The result of the High Court’s reconsideration of costs has no bearing on this decision.

4. Ms Eastwick-Field submits that, if we conclude that costs should lie where they fall, SPAK will have been put to unnecessary expense in responding to Mr LeRoy’s application.  Scale costs of $956 for the preparation of submissions on costs should then be awarded to SPAK.

Decision

1. Costs are a matter of the Court’s discretion.  The Court may make any orders that seem just concerning the whole or part of the costs and disbursements of an appeal.[5]  The general principle is that a party who fails with respect to an appeal should pay costs to the party who succeeds.[6]  A party who is largely, but not entirely, successful on appeal will likely still be entitled to costs.[7]

   [5]Court of Appeal (Civil) Rules 2005, r 53.

   [6]Rule 53A.

   [7]See for example: Spencer v Spencer [2013] NZCA 449, [2014] 2 NZLR 190; Department of Internal Affairs v Whitehouse Tavern Trust Board [2015] NZCA 398, [2015] NZAR 1708; Napier Tool & Die Ltd v Oraka Technologies Ltd [2016] NZCA 554, [2017] 2 NZLR 611; Nation v Nation [2005] 3 NZLR 46 (CA); Skids Programme Management Ltd v McNeill [2012] NZCA 491; Lambie Trustee Ltd v Addleman [2023] NZSC 7; and Scott v Williams [2017] NZSC 185, [2018] 1 NZLR 507.

2. Having reflected on counsel’s submissions, we agree that Mr LeRoy was the largely successful party in this appeal.  We dismissed the appeal against summary judgment and agreed with the Judge that, had summary judgment not been granted, the claim should nevertheless have been struck out.  While we considered that the findings as to improper purpose could not be justified in the circumstances, that conclusion affected the outcome of the appeal in relation to indemnity costs only.  We remitted costs back to the High Court, observing that increased costs might well be appropriate.  The appeal against costs occupied little, if any, hearing time and was addressed in only seven of the judgment’s 197 paragraphs.

3. Moreover, despite the lack of justification for a finding of improper purposes in the circumstances, SPAK’s conduct during these proceedings was not above reproach.  We said:[8]

   [187]    But the trespass claims were trivial and petty.  We consider the proceedings frivolous and, to that extent, an abuse of process.  Even if they had been commenced for a proper purpose, by the time of the application for summary judgment and strike out, there was no proper purpose in continuing with them.  ...

   [8]We also refer to our observations in respect of the interim injunction application at [161].

4. Tyrion Holdings is analogous.  In that case, the appeal against the substantive decision of the High Court was dismissed but the appeal against the order for indemnity costs was allowed.  This Court concluded that Tyrion Holdings’ conduct warranted an order for increased costs in the High Court and awarded costs in this Court for a standard appeal on a band A basis.  We reject the submission that SPAK’s successful appeal against the High Court’s award of indemnity costs was more material to the overall case than in Tyrion Holdings.  In both cases, indemnity costs had been awarded in the High Court as a result of unreasonable behaviour during the course of the proceedings.  In both cases, the appeal against indemnity costs was allowed.  While this Court in Tyrion Holdings did not elaborate on its reasons for awarding costs against Tyrion Holdings in respect of the appeal, it is plain that the award was made because it was unsuccessful in its appeal against the substantive decision of the High Court, with its success being limited to the decision on costs.  The same can be said of SPAK’s appeal.

5. For these reasons we conclude that costs should be awarded to Mr Leroy. 

Result

1. Costs for the appeal in this Court in favour of Mr LeRoy are awarded for a standard appeal on a band A basis with usual disbursements.  We certify for second counsel. 

Solicitors:
Russell McVeagh, Auckland for Appellant
K3 Legal Ltd, Auckland for First Respondent