The Three Sisters Vineyard Limited v Storey - [2014] NZHC 1507

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

CIV 2014-409-000122 [2014] NZHC 1507

BETWEEN
THE THREE SISTERS VINEYARD

LIMITED Plaintiff

AND

CARL DAVID STOREY, JEANETTE HELEN JOY STOREY and STEPHEN DAID HOBDAY AS TRUSTEES OF THE STOREY FAMILY TRUST Defendants

Hearing: (On Papers)

Judgment:

2 July 2014

COSTS JUDGMENT OF WHATA J

[1] This is a judgment as to costs. In my decision of 14 March 2014 I made the following orders in terms of the first cause of action, namely:1

(a) The sale and purchase agreement and lease are cancelled;

(b) The defendants must vacate the property and surrender the property to the plaintiff; and

(c) An order restraining the defendants from harvesting, selling or in any way dealing with the grapes on the property.

[2] The plaintiff was successful and ordinarily costs would follow the event. However the parties agreed that costs should be reserved. Mr Elliott has also indicated that the defendants seek that costs be reserved pending the outcome of substantive proceedings including a claim for potential loss on the resale of the property. Mr Elliott notes that any such claim would need to take into account the deposit paid by the plaintiff and any improvements to the property which exceeded
the obligations under the lease.

1 The Three Sisters Vineyard Limited v Trustees of the Storey Family Trust [2014] NZHC 471 at
[36].

THE THREE SISTERS VINEYARD LIMITED v TRUSTEES OF THE STOREY FAMILY TRUST [2014] NZHC 1507 [2 July 2014]

[3] Indemnity costs are now sought by the plaintiff in relation to the application for summary judgment and in relation to the defendants’ application for relief from forfeiture. The plaintiff identifies case law dealing with applications for relief against forfeiture wherein solicitor/client costs were granted.2 This authority is not disputed by the defendants.

[4] Reference is also made to cl 13.3 of the lease which provides, in short, that the lessee has to pay the lessor’s costs where it is necessary to enforce any of the lessee’s covenants or any of the lessor’s rights arising from the lease.

Assessment

[5] I propose to make the following orders:

(a) Costs on an indemnity basis as sought by the plaintiff; and

(b)My costs order lie in Court pending the resolution of substantive proceedings referred to by the defendants, but with leave granted to the plaintiff to bring this matter back to me in the event of unreasonable delay in the ventilation of the substantive proceedings.

[6] My reasons are as follows:

(a) It appears to me that I am bound by the Court of Appeal Authority of Watson & Sons Ltd v Active Manuka Honey Association,3 helpfully cited by Brewer J in Maydanoz NZ Limited v Popplewell.4 As Brewer J noted, the Court of Appeal in that case said:5

It is clear on principle and on authority that once it is established that the indemnity is applicable in the circumstances and that, properly construed, it includes solicitor-client costs, no discretion remains available other…

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: [2014] NZHC 1507
Decision Date: 2 July 2014

CaseChat Overview and Summary

In the High Court of New Zealand, Christchurch Registry, The Three Sisters Vineyard Limited filed a lawsuit against Carl David Storey, Jeanette Helen Joy Storey, and Stephen Daid Hobday, who are the trustees of the Storey Family Trust. The case revolves around a sale and purchase agreement and lease concerning vineyard property. The plaintiff sought the cancellation of these agreements, the defendants' vacating and surrendering of the property, and an order to prevent the defendants from dealing with the grapes on the property. The plaintiff was successful in their claims, but the parties agreed to reserve costs for later determination.

The legal issues the court had to decide centered on the appropriate basis for awarding costs, specifically whether indemnity costs should be granted to the plaintiff. The plaintiff cited relevant case law and referred to a clause in the lease agreement that stipulated the lessee must pay the lessor's costs if it is necessary to enforce any of the lessee's covenants or any of the lessor's rights arising from the lease. The defendants did not dispute this authority.

The court determined that it was bound by the Court of Appeal authority in Watson & Sons Ltd v Active Manuka Honey Association, which held that once it is established that indemnity costs are applicable, no discretion remains other than on public policy grounds or as part of an assessment by the court as to whether the amount of solicitor-client costs is objectively reasonable. The court found that the costs incurred by the plaintiff were reasonable and that the defendants did not contest the reasonableness of these costs. Therefore, the court awarded indemnity costs to the plaintiff. However, the court decided to hold the costs order in abeyance pending the outcome of substantive proceedings to ensure a just assessment of the respective claims of the parties. The court also granted leave to the plaintiff to seek reconsideration if there is unreasonable delay in ventilating the substantive proceedings.

Orders