Topa Partners Limited v JWL International Group Limited

[2020] NZHC 576

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE

CIV-2019-409-000629

[2020] NZHC 576

UNDER

Section 143 of the Land Transfer Act 2017

IN THE MATTER

of Caveat Number 11570638.1

BETWEEN

TOPA PARTNERS LIMITED

Applicant

AND

JWL INTERNATIONAL GROUP LIMITED

Respondent

Hearing:

Determined on the papers

Counsel:

P A Cowey and D L Bell for Applicant

S M Bevin and M L Rhodes for Respondent

Judgment:

20 March 2020

COSTS JUDGMENT OF ASSOCIATE JUDGE PAULSEN

This judgment was delivered by me on 20 March 2020 at 12.00 pm pursuant to Rule 11.5 of the High Court Rules

Registrar/Deputy Registrar Date:

TOPA PARTNERS LTD v JWL INTERNATIONAL GROUP LTD [2020] NZHC 576 [20 March 2020]

A dispute about costs

1. In a judgment of 17 February 2020, I made an order that pending further order of the court the applicant’s caveat lodged over the respondent’s Salisbury Street property not lapse.

1. Counsel have not been able to agree on costs and have submitted memoranda.

1. The applicant argues that it was the successful party and is entitled to costs1 on a 2B basis. It has submitted a schedule of costs and disbursements seeking $15,633 (inclusive of disbursements). However, the building contract between the parties, upon which the applicant relied when lodging its caveat, provides the applicant may claim its legal costs on an indemnity basis. As its entitlement to indemnity costs can only be determined after the substantive dispute has been resolved, the applicant seeks leave to apply for a top-up in the event that it ultimately establishes its entitlement to indemnity costs.

1. The respondent argues costs should lie where they fall because:

(a)the applicant’s caveat was sustained on conditions which the applicant had neither proposed nor agreed to;

(b)the applicant was not entirely successful because it advanced grounds to sustain its caveat which were unsuccessful; and

(c)the applicant’s arguments to support its caveat shifted over time.

1. The respondent also argues that costs should be finally determined now and not be subject to the possibility of a later top-up.

1. Finally, the respondent disputes the applicant’s schedule of costs and disbursements in several respects.

1. High Court Rules 2016, r 14.2(1)(a).

Discussion

1. The court has a discretion as to costs, but this must be exercised in a principled way and in accordance with the Rules. So far as possible, the determination of costs should be both predictable and expeditious.

1. The general rule is that the party who fails should pay costs to the party who succeeds. In this case, the applicant was successful. The applicant has sought costs on a 2B basis which is appropriate given the nature of the proceeding.

1. The applicant’s entitlement to costs is not affected because the caveat was sustained on conditions. This is common in such applications and it was never the respondent’s position that the caveat be sustained subject only to the imposition of conditions.

1. Looking at the applicant’s schedule of costs and disbursements, there are claims which I disallow as follows:

(a)There are duplicate claims for preparing memoranda and appearances at case management conferences on 5 December 2019. Two appearances (and memoranda) were required because the applicant was without appropriate instructions and the respondent should not be liable for those costs. Furthermore, the appearances on 5 December 2019 were at mentions hearings not case management conferences.

(b)There is a claim for second counsel. This is not a case that required second counsel.

(c)There is a claim for preparing and filing the costs memorandum which I disallow because the respondent has raised meritorious objections to the applicant’s costs claims necessitating the filing of memoranda.

(d)A claim has been made for a LINZ fee, but it is not clear what that is, nor do I consider that it is a recoverable disbursement under r 14.12.

1. Subject to what I say below, the applicant’s reasonable costs and disbursements are as set out in the attached schedule.

1. The respondent advanced an argument that was not pleaded and had no prospect of success. This was dealt with at [43] – [50] of the judgment. In doing so it unnecessarily increased the time and expense of the proceeding.

1. Rule 14.7 deals with the circumstances where the court may refuse or reduce costs and relevantly provides:

Despite rules 14.2 to 14.5, the court may refuse to make an order for costs or may reduce the costs otherwise payable under those rules if –

…

(f)the party claiming costs has contributed unnecessarily to the time or expense of the proceeding or step in it by –

…

(ii)taking or pursuing an unnecessary step or an argument that lacks merit;

…

1. I consider that some reduction in the costs payable to the applicant is justified in this case. I emphasise that this is not because it pursued an argument that was unsuccessful but because it pursued an argument that was not relied upon in its caveat, nor pleaded in its application and had no prospect of success. I consider that a 20% reduction on the applicant’s costs is justified on this ground.

1. On the issue of whether the applicant should have leave to seek a top-up, the applicant relies on the Court of Appeal decision in OOO DV Ryboprodukt v UAB Garant.2 In that case the Court of Appeal adopted the approach proposed by the applicant and said:3

We turn to costs. Clause 8 of the 27 July 2006 agreement and cl 9 of the 21 December 2006 agreement arguably permit Garant to recover costs on an indemnity basis. Whether that is the case will be a matter for trial. The correct course, we think, is to allow Garant interim costs in the normal amount for a one-day appeal, namely $6,000. But we reserve to Garant the right to apply in due course for “top-up” costs in the

1. OOO DV Ryboprodukt v UAB Garant [2008] 3 NZLR 326.

2. At [88].

event it establishes in the High Court that Ryboprodukt did agree to pay Garant’s costs on an indemnity basis …

1. The respondent argues against that approach because it will leave the proceeding in an incomplete state, and because it is not clear in what context the applicant’s entitlement to indemnity costs will be determined. I do not accept that submission. It is a condition of sustaining the applicant’s caveat that it issues proceedings to uphold the interest claimed by its caveat. Its entitlement to indemnity costs will be determined in that proceeding.

Result

1. I have calculated the applicant’s entitlement to costs on a 2B basis to be the sum of

$11,472 which I reduce by 20% for the reasons in [14] above. The result is that the applicant is awarded costs of $9,177.60 and disbursements of $590 making a total of $ 9,767.60.

1. Liberty is reserved to the applicant to apply in due course for “top-up” costs in the event that it is able to establish its entitlement to costs on an indemnity basis in the substantive proceedings between the parties.

O G Paulsen Associate Judge

Solicitors:

Parry Field Lawyers, Christchurch for Applicant Cavell Leitch, Christchurch for Respondent

Schedule of Costs and Disbursements

Item	Description	Date	Allocated days or part days	Amounts
37	Filing originating application and supporting affidavits	12 November 2019	2	$4,780
11	Filing memorandum for mentions hearing	5 December 2019	0.4	$956
13	Appearance at mentions hearing	5 December 2019	0.2	$478
29	Sealing order or judgment	5 December 2019	0.2	$478
40	Preparation of written submissions	20 January 2020	1.5	$3,585
42	Appearance at hearing of defended application	3 February 2020	0.5	$1,195
Sub-Total	$11,472
Disbursements
Filing fee for application	$540
Sealing fee	$50
Sub-Total	$590
Total	$12,062