The Mall Upper Hutt Limited v Upper Hutt City Council

[2025] NZHC 1878

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

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

CIV-2023-485-271

[2025] NZHC 1878

BETWEEN

THE MALL UPPER HUTT LIMITED

Plaintiff

AND

UPPER HUTT CITY COUNCIL

Defendant

Hearing:	On the papers
Appearances:	J Long and G Barton for Plaintiff T Smith for Defendant
Judgment:	10 July 2025

JUDGMENT OF ASSOCIATE JUDGE SKELTON

[Costs]

[1]         The parties have been unable to agree costs following the discontinuance of the plaintiff’s claim and the discontinuance of the defendant’s counterclaim. That is surprising because correspondence between the parties around the time that the claims were discontinued indicated there was a willingness to agree to the respective claims being discontinued with no issues as to costs.

[2]The defendant now seeks indemnity costs and disbursements in the sum of

$307,447.44 (GST exclusive). Alternatively, the defendant seeks increased scale costs calculated on a 2B and 2C basis with a 50 per cent uplift and disbursements (of

$6,661.74) in the total sum of $104,352.99.1   The plaintiff accepts that it should pay

the defendant’s 2B scale costs in the sum of $43,617.50 and disbursements in the sum of $6,661.74.

1      The 2C costs claimed relate to discovery only.

THE MALL UPPER HUTT LIMITED v UPPER HUTT CITY COUNCIL [2025] NZHC 1878 [10 July 2025]

[3]       Rule 15.23 of the High Court Rules 2016 is clear that, unless the defendant agrees otherwise or the Court otherwise orders, a plaintiff who discontinues a proceeding must pay costs to the defendant of and incidental to the proceeding up to the point of discontinuance. The presumption is designed to give a certain and predictable outcome. There is no implication that an award of increased or indemnity costs follows.2

[4]       The defendant contends that it is entitled to increased or indemnity costs because the plaintiff had a “hopeless case” which “patently lacked merit”. The defendant also contends that much of the plaintiff’s evidence addressed events irrelevant to the pleaded case which increased the burden on the defendant in responding. Counsel for the defendant suggests there is a “strong implication” that the plaintiff knew its case was fundamentally flawed and brought the proceedings with an ulterior motive. The defendant has filed a 191-page affidavit in support of its claim for costs, including selected excerpts from briefs of evidence served by the parties.

[5]       It is well established that increased or indemnity costs may only be awarded in a case which has been discontinued before or during trial where the lack of merit is “utterly clear” and “both obvious and incontrovertible”.3 The Court will not engage in speculation as to the merits, nor consider briefs of evidence that would have been called if the matter had proceeded to trial. To do so would defeat the whole purpose of discontinuance, which is to provide a quick and inexpensive end to the proceedings.4

[6]       Having reviewed the memoranda filed by counsel for the parties and the affidavit filed by the defendant, I am not satisfied that it is “utterly clear” and “both obvious and incontrovertible” that the plaintiff’s case was hopeless and fundamentally flawed.5 Nor is it obvious that much of the plaintiff’s evidence was irrelevant, or that the plaintiff brought the proceedings with the ulterior motive of pressuring the

2      Jessica Gorman and others McGechan on Procedure (online looseleaf ed, Thomson Reuters) [McGechan] at [15.23.04] citing Arnold v Fairfax New Zealand Ltd [2016] NZHC 1078 at [19].

3      N-Tech v Abooth [2012] NZHC 1167 at [99] and [108].

4      North Shore City Council v Attorney-General on behalf of Department of Building and Housing [2012] NZHC 734 at [10] and McIlroy v New Zealand Act Party HC Wellington CIV-2003-485- 174, 16 December 2005 at [16].

5      N-Tech v Abooth, above n 3, at [99] and [108].

defendant to enter a new funding agreement. The defendant is inviting me to engage in difficult and detailed speculation on these matters, involving consideration of selected excerpts of briefs of evidence which set out what the witnesses might have said in evidence, and has obviously not been tested by cross-examination. I am not prepared to engage in this exercise. As found by MacKenzie J in McIlroy, it would be wrong to do so.6 I do not consider this is an appropriate case to award increased or indemnity costs.

[7]       The plaintiff accepts that it should pay the defendant’s 2B scale costs and reasonable disbursements. But even here, there is controversy that counsel have been unable to resolve. The defendant claims costs on a 2C basis for discovery and inspection which is opposed by the plaintiff. On the face of it, the scope of the discovery exercise undertaken by the defendant (20,811 documents reviewed, 875 documents discovered) is not of the same order as other cases where 2C costs have been awarded. For example, in Oxygen Air Ltd v LG Electronics Australia Pty Ltd, 2C costs were awarded for a review of 85,000 documents, with 13,500 being discovered.7 However, I accept that the review by the defendant of 20,811 documents covering a nine year period in this case involved a comparatively large amount of time. I do not accept the submission on behalf of the plaintiff that the fact that a key document was not immediately to hand indicates poor file management and/or imprecision in searching for documents on the part of the defendant. I am prepared to allow 2C scale costs for item 20 (list of documents on discovery).

Result

[8]       Accordingly, the defendant is entitled to costs in the sum of $54,372.50 and disbursements in the sum of $6,661.74.

Associate Judge Skelton

Solicitors:

Ganson Management Ltd, Auckland for Plaintiff Wynn Williams, Christchurch for Defendant

6      McElroy v New Zealand Act Party, above n 4, at [16].

7      Oxygen Air Ltd v LG Electronics Australia Pty Ltd [2020] NZHC 1863.