SPAK (1996) Limited v Leroy - [2023] NZHC 803

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2020-404-001483

[2023] NZHC 803

BETWEEN
SPAK (1996) LIMITED

Plaintiff

AND

REECE LEROY

Defendant

AND

BODY CORPORATE 407404

Third Party

Hearing: (On the papers)

Judgment:

18 April 2023

COSTS JUDGMENT OF VENNING J

This judgment was delivered by me on 18 April 2023 at 2.15 pm, pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date……………

Solicitors: Russell McVeagh, Auckland

K3 Legal Limited, Auckland

SPAK (1996) LIMITED v LEROY [2023] NZHC 803 [18 April 2023]

[1] In a decision delivered on 2 December 2021 this Court dealt with a number of costs orders between the parties to this proceeding.1 Relevantly for present purposes the Court ordered indemnity solicitor/client costs in favour of the defendant (Mr LeRoy) against the plaintiff SPAK (1996) Limited (SPAK) for all attendances in relation to the summary judgment and strike out applications. This Court dealt with the matter as the Judge who had heard the summary judgment and strike out applications had retired.2

[2] SPAK appealed the decision of the Associate Judge entering judgment on the defendant Mr LeRoy’s application for summary judgment. SPAK also appealed the award of indemnity costs.

[3] In its decision delivered on 18 November 2022 the Court of Appeal dismissed SPAK’s appeal against the defendant’s summary judgment but allowed SPAK’s appeal in relation to indemnity costs:3
[192] As discussed, by the time of the hearing into the summary judgment/strike out applications, there was no purpose in continuing with the proceedings. They should have been discontinued. Given our observations in respect of the improper purpose finding, we do not consider that indemnity costs were appropriate, although our other findings suggest increased costs might well be. In the circumstances, we allow the appeal in respect of indemnity costs and remit the matter back to the High Court for costs on the summary judgment and strike out to be considered afresh. Mr LeRoy is to file his submissions within 21 days of the date of this judgment, with any reply required 14 days thereafter.

[4] In accordance with the directions, the parties exchanged memoranda in relation to the issue of costs. Unfortunately those memoranda were not referred to me by the Registry until after the Easter vacation. The Court apologises to the parties for the delay in addressing the issue.

[5] Despite the decision of the Court of Appeal counsel for Mr LeRoy submitted that the interests of justice required the Court to exercise its discretion to reinstate the indemnity costs award in the defendant’s favour. While Mr LeRoy had been awarded indemnity costs he had not received his actual costs but in fact had received

1      SPAK (1996)Limited v LeRoy [2021] NZHC 3278.
2      High Court Rules 2016, r 14.9.
3      SPAK (1996) Limited v LeRoy [2022] NZCA 564.

significantly less than those because the indemnity costs awarded were tied to his costs incurred up until the decision of 2 December…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2023] NZHC 803
Decision Date: 18 April 2023

CaseChat Overview and Summary

In this case, the plaintiff, SPAK (1996) Limited, appealed the decision of the Associate Judge who granted summary judgment in favour of the defendant, Reece LeRoy, and awarded indemnity costs. The Court of Appeal dismissed the appeal against the summary judgment but allowed the appeal in relation to the award of indemnity costs, remitting the matter back to the High Court for a fresh consideration of the costs on the summary judgment and strike-out. The Court was required to determine whether to reinstate the indemnity costs award or to consider an award of increased costs in the defendant's favour.

The Court found that the Court of Appeal had concluded that SPAK should have had the opportunity to have its credibility on purpose tested at a hearing before a finding of improper purpose was made. As such, indemnity costs were not appropriate in this case. However, the Court of Appeal had confirmed that the proceedings were frivolous and an abuse of process and that increased costs might well be appropriate. The Court agreed and found that an uplift of 50 per cent was justified in the circumstances of this case.

The Court further found that some of the steps claimed by Mr LeRoy were not claimable, but the majority of them were. Therefore, Mr LeRoy was to have costs to 2B scale uplifted by 50 per cent which amount to $39,435.00 together with disbursements of $1,487.60, in total $40,922.60.

This case highlights the importance of ensuring that findings of improper purpose are properly tested before being made, and that indemnity costs should not be awarded lightly. It also demonstrates that where proceedings are found to be frivolous and an abuse of process, increased costs may be appropriate.

Orders