Tololi v Johnson

[2025] NZHC 1620

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2025-404-000367

[2025] NZHC 1620

UNDER

the District Courts Act 2016

IN THE MATTER

of an appeal against a decision of the District Court at Auckland

BETWEEN

MICHAEL TOLOLI

Appellant

AND

ELIZABETH JANE JOHNSON

Respondent

Hearing:	(On the papers)
Judgment:	17 June 2025

COSTS JUDGMENT OF VENNING J

This judgment was delivered by me on 17 June 2025 at 3.30 pm, pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date……………

Solicitors:           Kent Legal, Auckland

Douglas M A Burgess, Auckland

Counsel:            S Carey, Auckland

TOLOLI v JOHNSON [2025] NZHC 1620 [17 June 2025]

Introduction

[1]    This is an appeal against an award of costs made in the District Court. Elizabeth Johnson sued Michael Tololi in the District Court at Auckland. Ms Johnson had taken an assignment of the lessor’s rights under a lease with Linwood Park Stud Limited (LPSL) as lessee. Mr Tololi had been a guarantor of LPSL’s obligations under the lease. In a substantive judgment issued on 26 September 2024, Judge D J Clark entered judgment in favour of Ms Johnson for rental and outgoings under the lease and High Court costs previously awarded against Mr Tololi together with interest.1 The judgment was however, for less than the sum initially sought by Ms Johnson.

[2]    As to costs, the Judge noted that Ms Johnson was seeking indemnity costs under the terms of the lease but then observed:2

Given the results and relative success each of the parties have enjoyed, it seems the obvious position costs should be lie where they fall.

[3]    Nevertheless the Judge directed that if counsel could not agree costs they were to exchange memoranda and he would deal with the matter on the papers.

District Court costs judgment

[4]    Ms Johnson sought indemnity costs relying on the provisions of the lease. The indemnity sum sought was $35,980.55 excluding GST. Mr Tololi submitted that no costs should be awarded to Ms Johnson but, because he had made a Calderbank offer on 18 April 2024, two months before the fixture, costs should be awarded in his favour. Counsel for Mr Tololi submitted scale costs from the date when the offer was rejected with an uplift of 50 per cent was appropriate.

[5]    The Judge acknowledged that Ms Johnson was prima facie entitled to indemnity costs under the lease. However he referred to the principles discussed in Frater Williams & Company Limited v Australian Guarantee Corporation (NZ)

1      Johnson v Tololi [2024] NZDC 15932.

2 At [134].

Limited and Exuberant Limited v Quinovic Property Management Limited.3 The Judge then first assessed whether the costs sought by way of indemnity costs were reasonable. He considered that a large portion of the time spent at the hearing was required to overcome the difficulties caused by Ms Johnson’s absence and failure to give evidence to prove her claim. Accordingly he reduced the amount of the indemnity costs claimed to $21,000. He considered that represented reasonable indemnity costs.

[6]    The Judge then considered that Mr Tololi was entitled to a further discount from that reduced costs figure due to his success in defending aspects of the claim notwithstanding he remained liable for payment of some of the claim. The Judge accepted Mr Tololi’s counsel’s suggestion of a 35 per cent discount which reduced the reasonable indemnity costs to an adjusted figure of $13,650.

[7]    The Judge then considered the impact of Mr Tololi’s Calderbank offer. He noted that Mr Tololi sought $8,117.50 for steps taken since the offer was rejected together with an uplift of 50 per cent. The Judge rejected the suggestion an uplift was appropriate. He did not consider an award over scale was justified in the circumstances of the case. The Judge considered that, having regard to the time spent arguing the issues Mr Tololi was unsuccessful on, such as the admissibility of the deed of assignment, Mr Tololi should not receive full scale costs. In the exercise of his discretion he reduced the costs sought by Mr Tololi for Ms Johnson’s rejection of the Calderbank offer to a round figure of $7,000. The result was a net award in favour of Ms Johnson of $6,650 ($21,000 less 35 per cent = $13,650 less $7,000).

[8]    The Judge delivered a costs judgment on 15 January 2025, awarding costs in favour of Ms Johnson in that sum, together with disbursements.4

Appeal procedure

[9]    On 24 March 2025, Robinson J noted that the Court could not be expected to allocate fixtures for matters of this kind and ultimately directed the matter to be dealt

3      Frater Williams & Company Limited v Australian Guarantee Corporation (NZ) Limited (1994) 2 NZConvC 191, 873; and Exuberant Limited v Quinovic Property Management Limited [2021] NZHC 3533.

4      Johnson v Tololi [2025] NZDC 312.

with on the papers. The Registrar has referred this file to me as duty Judge to deal with the appeal on the basis of counsels’ submissions. The Court has Mr Tololi’s submissions in support of the appeal, Ms Johnson’s response and Mr Tololi’s submissions in reply.

Principles

[10]   A decision as to costs is discretionary.5 The approach to an appeal against the discretion requires the appeal court to consider whether the Judge:6

(a)made an error of law or principle,

(b)took into account irrelevant considerations or failed to take into account a relevant consideration; or

(c)made a decision that was plainly wrong.

[11]As to costs appeals, this Court said in Clayton v Clayton:7

Decisions on costs are among the types of discretionary decisions where the overall appreciation of the trial judge is especially important, thereby placing them among the types of case where the requirement for an appellant to make out one of the four types of error is fundamental. The Court of Appeal has observed that, in exercising the discretion on costs, a court will be influenced by a myriad of details that are difficult to replicate on appeal and consequently appellate courts will be particularly slow to interfere. The Court cited an earlier Court of Appeal decision in which Cooke P observed that the Court:

“ … is always especially reluctant to disturb a decision of a High Court Judge on a matter as discretionary as that of costs.”

The appellant’s arguments

[12]   Mr Tololi calculates that Ms Johnson had sought approximately $113,000 against him but the Judge accepted a large part of the claim was statute barred. Ms Johnson only succeeded in a principal sum of just under $23,000, including the High Court costs and interest.

5      Clayton v Clayton [2014] NZHC 3086.

6      Kacem v Bashir [2010] NZSC 112.

7      Clayton v Clayton, above n 5, at [14] (footnotes omitted).

[13]   While accepting that the costs judgment was an exercise of a discretion Mr Tololi submits the District Court Judge erred by:

(a)failing to determine the successful party in the proceeding before making the award,

(b)refusing to award increased costs to Mr Tololi for Ms Johnson’s refusal to accept the Calderbank offer; and

(c)awarding Ms Johnson costs for steps following refusal of the Calderbank offer.

Analysis

[14]   Mr Tololi first says costs should not have been awarded to Ms Johnson as it was plain from the Judge’s initial indication, that costs should lie where they fall, that Ms Johnson was not the successful party. That was a relevant matter the Judge failed to take into consideration.

[15]   However, that was only the Judge’s initial impression. That initial impression was overtaken by the substantive costs judgment delivered by the Judge following the exchange of the submissions contained in counsels’ costs memoranda and the Judge’s further consideration of the issue in more detail. The Judge’s ultimate conclusion on this point that:8 “It is indisputable [Mr Tololi] enjoyed success but nonetheless is liable following the findings of this Court” was open to him. Ms Johnson was successful overall, albeit in a lesser sum than initially claimed, but the Judge accepted Mr Tololi was entitled to have his measure of success in defending aspects of the claim recognised by a discount from any costs ultimately payable.

[16]   Ms Johnson was prima facie entitled to indemnity costs under the terms of the lease.9 However indemnity costs must be reasonable and they can also be reduced because of public policy grounds which take into account the measure of success. The Judge reduced the costs sought in accordance with that principle.

8      Johnson v Tololi, above n 4, at [30].

9      District Court Rules 2014, r 14.6(4)(e).

[17]   There is no basis to interfere with the Judge’s assessment of what a reasonable figure ($21,000) for solicitor/client costs would have been nor with his decision to reduce that figure by a further 35 per cent (as had been argued for by Mr Tololi in the District Court) to reflect Mr Tololi’s measure of success in opposing the claim, or put another way, Ms Johnson’s limited measure of success overall.

[18]   Next, Mr Tololi says the Judge erred in finding that none of the considerations in r 14.6(3)(a) or (b), District Court Rules 2014 were invoked in refusing to award increased  costs  for  Ms  Johnson’s  failure  to  accept  the  Calderbank  offer  when  r 14.6(3)(b)(v) was applicable. That rule applies to the rejection of a Calderbank offer. That can support an uplift.

[19]   While the Judge may have erred in finding that none of the considerations in  r 14.6(3)(a) or (b) were applicable, he clearly took the Calderbank offer into account. His decision to take into account the Calderbank offer and to reduce Ms Johnson’s award of costs accordingly was open to him in the exercise of his discretion. The Judge was entitled to find that neither an uplift as sought by Mr Tololi nor actual scale costs were warranted in the circumstances for the reasons he gave, namely that at the hearing Mr Tololi had pursued matters which he had been unsuccessful on and had therefore added to the cost of the hearing.

[20]   The final ground of appeal that Ms Johnson should not have been awarded costs following the rejection of the Calderbank offer is misconceived. The starting point was that Ms Johnson, having succeeded, was entitled to indemnity costs.

[21]   The process the Judge then followed was to reduce Ms Johnson’s adjusted reasonable indemnity costs (after taking account of the 35 per cent reduction for Mr Tololi’s success) by a further amount that he calculated appropriate to award to Mr Tololi for Ms Johnson’s rejection of the Calderbank offer.

[22]   The Judge had already reduced the indemnity costs otherwise payable to reflect the requirement for reasonableness and also to take account of Ms Johnson’s limited success (or put another way to take account of Mr Tololi’s limited success in opposing the claim). Mr Tololi then received the further benefit of the award of $7,000 which

the Judge considered to be an appropriate recognition of the consequences of Ms Johnson’s rejection of the Calderbank offer. That was open to the Judge.

[23]   For the above reasons it follows that the Court rejects the submissions on behalf of Mr Tololi.

Result

[24]The appeal is dismissed.

Costs

[25]   Ms Johnson is entitled to costs on the appeal. There is no reason to reduce the reasonable solicitor/client costs which she is entitled to under the terms of the lease. There will be a costs award in favour of Ms Johnson against Mr Tololi for the steps associated with this appeal on a reasonable solicitor/client basis.

Venning J