Srinagar Limited v Horowhenua District Council
[2022] NZHC 1094
•18 May 2022
IN THE HIGH COURT OF NEW ZEALAND PALMERSTON NORTH REGISTRY
I TE KŌTI MATUA O AOTEAROA TE PAPAIOEA ROHE
CIV-2021-454-000062
[2022] NZHC 1094
BETWEEN SRINAGAR LIMITED
First Plaintiff
AND
ASHDALE LEVIN LIMITED
Second Plaintiff
AND
HOROWHENUA DISTRICT COUNCIL
Defendant
Hearing: Defendant’s written submissions 6 April 2022
Plaintiffs’ written submissions 29 April 2022
Telephone conference on 17 May 2022Counsel:
D Brabant and J D Cameron for Plaintiffs S M Bisley and J Maltby for Defendant
Judgment:
18 May 2022
COSTS JUDGMENT OF ASSOCIATE JUDGE PAULSEN
This judgment was delivered by me on 18 May 2022 at 3.30 pm pursuant to Rule 11.5 of the High Court Rules
Registrar/Deputy Registrar Date:
SRINAGAR LTD & ASHDALE LEVIN LTD v HOROWHENUA DISTRICT COUNCIL (Costs) [2022] NZHC 1094 [18 May 2022]
In a judgment dated 17 March 2022, I determined competing applications by:
(a)the plaintiffs, Ashdale Levin Ltd (Ashdale) and Srinagar Ltd (Srinagar) for summary judgment; and
(b)Horowhenua District Council (HDC) to strike out four of the five causes of action in the statement of claim.
[2] HDC was the successful party on both the summary judgment and strike out applications. The result of the applications was:
(a)The plaintiffs’ application for summary judgment was dismissed.
(b)As far as HDC’s strike out application was concerned:
the first and third causes of action by Ashdale were struck out;
(ii)the fourth and fifth causes of action by both plaintiffs were struck out; and
(iii)HDC’s application to strike out Srinagar’s first and third causes of action was adjourned to give Srinagar an opportunity to replead, with leave reserved to HDC to bring its application again.
(c)Costs were reserved with leave to apply if there was no agreement.
[3]The parties have not agreed on costs.
[4] HDC applies for costs to be fixed on both the summary judgment and strike out applications. HDC seeks 2B costs with a 25 per cent uplift and disbursements. The plaintiffs submit costs should be reserved until the case is finally resolved, but if costs are to be awarded they should be granted to HDC without an uplift.
[5] Based on the submissions of counsel, the principal issues that need to be determined are whether costs should be fixed now or reserved, and whether HDC is entitled to an uplift and, if so, on what steps and to what extent.
Should costs be fixed?
[6] Under r 14.8(1) of the High Court Rules 2016, costs on opposed interlocutory applications are fixed when the application is determined, unless there are special reasons to the contrary. That rule applies to HDC’s strike out application. It does not apply to an application for summary judgment.1
[7] The most common approach where a plaintiff is unsuccessful in obtaining summary judgment is for the Court to reserve costs until the final result of the case is known.2 That approach is to encourage the use of the summary judgment procedure to efficiently resolve proceedings. It also recognises that it may be difficult to determine who should pay costs until the litigation is completed, and that even an unsuccessful application may ultimately prove beneficial to the parties in efficiently resolving the dispute.
[8] However, as the Court has recognised also, these considerations may not justify reserving costs in cases where the plaintiff’s application was commenced erroneously, unreasonably, in circumstances where the plaintiff knew or ought to have known that summary judgment would not be granted, or as an experiment.3
[9] By way of example, in Mason v Dodd the plaintiff sought summary judgment against his former accountant alleging negligent advice had been given about setting up a family trust and transferring assets to it.4 Katz J dismissed the application as the claims were unsuitable for summary judgment by a wide margin. The defendant applied for costs which were awarded. Katz J held that where it should have been clear to the plaintiff that there was an arguable defence making the case unsuitable for
1 High Court Rules 2016, r 14.8(3).
2 NZI Bank Ltd v Philpott [1990] 2 NZLR 403.
3 Emmons Developments New Zealand Ltd v Mitsui Sumitomo Insurance Co Ltd [2016] NZHC 1244; Vision Aluminium Ltd v McLaughlan HC Christchurch CP123/90, 8 June 1990.
4 Mason v Dodds [2020] NZHC 1508.
summary judgment, costs will generally be fixed immediately. She noted, also, that the prospect of an immediate award of costs in respect of a clearly unmeritorious summary judgment application, incentivises parties to carefully and objectively assess the merits of such applications before bringing them.5
[10] Here, the plaintiffs submit it would be premature to fix costs and they should be reserved, because while the plaintiffs were unsuccessful at the summary judgment stage, it does not necessarily follow they will be unsuccessful in the final result of the proceeding. I do not accept that submission. This is a clear case where costs should be fixed. There were clearly both legal and factual issues which made this case unsuitable for summary judgment. The application should never have been brought.
[11] Further, if ultimately the plaintiffs do succeed against HDC, it will not be on the basis advanced in support of summary judgment. All but the plaintiffs’ second cause of action, for which they did not seek summary judgment, were struck out or the plaintiffs were directed to replead them. The plaintiffs’ application, therefore, will not assist to efficiently resolve the proceeding.
Is HDC entitled to an uplift on costs?
[12] The Court may order a party to pay increased costs in circumstances set out in r 14.6, which include where the party opposing costs has contributed unnecessarily to the time or expense of the proceeding or a step in it by:
(a)taking or pursuing an unnecessary step or an argument that lacks merit;6 or
(b)failing, without reasonable justification, to admit facts, evidence, documents, or accept a legal argument.7
[13]HDC has sought increased costs in respect of several matters, namely:
5 Mason v Dodds [2020] NZHC 2005.
6 Rule 14.6(3)(b)(ii).
7 Rule 14.6(3)(b)(ii).
(a)the plaintiffs failed to withdraw the summary judgment application with no issue as to costs, when invited to do so;
(b)the summary judgment application was meritless;
(c)the plaintiffs failed to engage reasonably in relation to timetabling directions;
(d)the plaintiffs filed extensive submissions not directed to their pleaded case;
(e)the plaintiffs filed late submissions and voluminous authorities a day prior to the hearing; and
(f)the plaintiffs failed to engage on payment of costs.
[14] The plaintiffs argue the threshold for ordering increased costs is a failure by the paying party to act reasonably, contributing to the time and expense of the proceeding. They contend HDC has failed to demonstrate any conduct on their behalf justifying increased costs.
[15] Increased costs are justified. While I accept the plaintiffs’ position that the mere fact the summary judgment application failed does not, of itself, justify increased costs, I consider in certain respects the application was pursued in an unreasonable manner that significantly added to HDC’s costs.
[16] First, before HDC had been put to the cost of defending the proceeding, its lawyers wrote to the plaintiffs’ lawyers clearly setting out the basis for its defence and reserving its right to claim increased costs should the summary judgment application not be withdrawn. HDC also invited the plaintiffs to re-engage with it on resolving the areas of disagreement. I consider that having had HDC’s position set out plainly, the plaintiffs should have realised they had no prospect of obtaining summary judgment at that early stage.
[17] Further, the plaintiffs’ evidence contained significant omissions that HDC had to address in its evidence. The plaintiffs also put HDC to the expense of responding to claims that ultimately it did not pursue. For example, the submissions filed for the plaintiffs addressed in some detail the second cause of action in restitution, but at the hearing this cause of action was not pursued.
[18] I also consider the plaintiffs acted unreasonably in serving upon the defendants, only the day before the hearing, a substantial amount of material, including additional submissions, which raised new matters.
Quantum
[19] HDC seeks an uplift of 25 per cent on scale costs which I consider is too great. An increase of 15 per cent is appropriate as reflecting the additional time and cost caused by the plaintiffs’ failure to act reasonably. As one of the reasons justifying increased costs is that the plaintiffs’ claims lacked merit, the increase will apply across all steps taken in response to the summary judgment application.
[20] The plaintiffs did not, in their written submissions, take issue with HDC’s costs calculation, except in relation to the claimed uplift. At the teleconference on 17 May 2022, however, Ms Brabant did raise objection to some amounts claimed.
[21] The costs and disbursements that I award are set out in the tables attached to this judgment. I note the following matters:
(a)I accept that HDC is entitled to costs for the filing of a statement of defence, noting that the plaintiffs have had to replead their claim and HDC’s costs were effectively wasted.8
(b)I do not allow the claim for two memoranda for the case management conference on 9 December 2021. I consider the filing of sequential memoranda is to be discouraged and accept Ms Brabant’s submission
8 Hardy v Whitcombe [2017] NZHC 3132.
that to the extent HDC took issue with the plaintiffs’ memorandum, that could have been dealt with at the teleconference.
(c)I do not make an allowance for second counsel. I consider it an unusual case where second counsel would be necessary in a summary judgment context. I do not consider the late filing of material by the plaintiffs justifies such an award either, as this is reflected in the uplift on scale costs.
(d)I do not allow the claim for costs under step 30 of sch 3 of the High Court Rules, but consider the time allowance for the filing of HDC’s opposition to the summary judgment application should be assessed on a 2C basis.
(e)As there was a close connection between HDC’s defence of the summary judgment application and its strike out application, I make only one allowance for the preparation of written submissions.
Result
[22] HDC is awarded costs and disbursements on both the plaintiffs’ application for summary judgment and HDC’s application for strike out in the amount of $20,954.32 for costs and $770 for disbursements, as set out in the attached schedules.
O G Paulsen Associate Judge
Solicitors:
Willis Legal (Justin Cameron), Napier Buddle Findlay, Wellington
SCHEDULE 1: COSTS
Scale 2B costs
Step in the proceeding Time
allocation
(days – band B except in relation to step 23 which is band C)
Cost ($)
(daily rate of
$2,390 –scale 2)
Cost ($) (15% uplift
applied only to steps
opposing summary judgment)
2 Commencement of defence by defendant 2 4,780.00 4,780.00 11 Filing memorandum dated 7 December 2021 for call-
over on 9 December 2021
0.4 956.00 1,099.40 12 Appearance at call-over on 9 December 2021 0.2 478.00 549.70 22 Filing interlocutory application for strike out 0.6 1,195.00 1,195.00 23 Filing opposition to
interlocutory application for summary judgment
2.0 4,780.00 5,497.00 24 Preparation of written submissions 1.5 3,585.00 4,122.75 26 Appearance at hearing on 4 February 2022 for principal counsel 0.75 1,792.50 2,061.37 11 Filing memorandum seeking costs 0.4 956.00 1,099.40 29 Sealing an order for costs (to be incurred) 0.2 478.00 549.70 Total 8.05 19,000.50 20,954.32
SCHEDULE 2: DISBURSEMENTS
Disbursement – document filed
Fee
Statement of defence
110.00
Notice of opposition to summary judgment
110.00
Interlocutory application for strike out
500.00
Sealing costs order (to be incurred)
50.00
Total
770.00
6
0
0