TPD 2018 Limited v Godfrey and Company Limited
[2021] NZHC 1584
•30 June 2021
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2019-404-93
[2021] NZHC 1584
BETWEEN TPD 2018 LIMITED
Plaintiff
AND
GODFREY AND COMPANY LIMITED
Defendant
AND
CNZ (AUCKLAND) LIMITED (IN LIQUIDATION)
First Third Party
Hearing: On the papers Counsel:
S O McAnally and N W Coyle for the Plaintiff and First Third Party
R J Hollyman QC for the Defendant
Judgment:
30 June 2021
JUDGMENT OF GAULT J
(Costs)
This judgment was delivered by me on 30 June 2021 at 3:00 pm pursuant to r 11.5 of the High Court Rules 2016.
Registrar/Deputy Registrar
……………………………………
Solicitors / Counsel:
Mr S McAnally, Keegan Alexander, Auckland Mr R J Hollyman QC, Barrister, Auckland
Mr K Stolberger and Mr T Bielby, Lowndes Jordan, Auckland
TPD 2018 LTD v GODFREY AND COMPANY LTD [2021] NZHC 1584 [30 June 2021]
[1]In my judgment of 9 March 2021,1 I made an order that Godfreys pay TPD
$589,844. This was the amount determined to be owing on a final accounting following termination of a joint venture. At the conclusion of my judgment,2 I recorded that the parties agreed that the calculation of interest should be deferred and, if necessary, dealt with at the same time as costs. I provided for memoranda to be filed, and indicated I would determine interest and costs on the papers unless I needed further assistance from counsel.
Interest
[2] TPD claims interest on the judgment debt from 1 November 2013 to 1 April 2021 pursuant to s 24 of the Interest on Money Claims Act 2016 (the Act).
[3] Mr McAnally, for TPD, acknowledges that s 24 excludes the application of Part 1 of the Act, but submits the Court may award interest, or a lump sum in lieu thereof, at the prescribed rate of 5 per cent per annum (or determine not to award interest at all).
[4] In relation to timing, Mr McAnally submits that, by analogy, s 9 in Part 1 specifies that interest should be awarded from either the date on which the cause of action arose or, if the amount on which interest is to be awarded was not quantified on that date, on a later date that the Court specifies as the date on which the amount was quantified. Again he acknowledges, by analogy, the Court retains a discretion under Part 1 not to award interest for a period if it would be inequitable to do so.3 He submits these provisions largely reflect the position at common law and equity that would, otherwise, apply in this case. He also submits that quantification for the purposes of s 9 does not require precision, and that the means of quantifying the amount owed was present on 31 October 2013 (except for the run-off costs).
[5] Mr Hollyman QC, for Godfreys, submits there is no jurisdiction to award interest as the relevant section of the Act was not pleaded, or alternatively that interest
1 TPD 2018 Ltd v Godfrey and Company Ltd [2021] NZHC 431.
2 At [87].
3 Interest on Money Claims Act 2016, s 18.
should only be from the date of judgment or, at the earliest, the date the proceeding was filed, and at a rate of 2 per cent.
[6] TPD’s pleading only claimed interest pursuant to s 10 whereas it now seeks interest under s 24.4 That reflects its acceptance that in this case the Court may not award interest under s 10 for the period before the date of judgment because of s 24. Section 24 applies to the period before the date of a money judgment if the judgment is given for an amount under, or for breach of, a contract entered into before the coming into force of the Act.5 Where s 24 applies to the period before the date of a money judgment, the Court may not award interest under Part 1 (that is, including s 10).6 Instead, the Court may award interest (or a lump sum) under s 24.
[7]However, s 25 of the Act provides:
25 Court may not award interest unless procedural requirements complied with
(1)A court may not award interest under a section of this Act for a period unless the party who claims interest under the section for that period specifies the section and, as far as possible, the period in that party’s statement or notice of claim or counterclaim.
…
(2)If a party claims interest under section 17, 18, 22, or 24,—
(a)the party must specify in that party’s statement or notice of claim or counterclaim the amount or rate of interest claimed; and
(b)the court may not award interest—
(i)exceeding the amount claimed under paragraph (a); or
(ii)at a rate exceeding the rate claimed under paragraph (a).
(3)Nothing in this section prevents interest being claimed in a statement or notice of claim or counterclaim in the alternative.
(4)Nothing in this section prevents a court from making an award of interest where the court has at any time made or accepted an
4 Section 26(1) provides that the Act does not limit or affect the ability of any person to bring a claim for interest at common law or in equity, but no such claim was brought in this case.
5 Section 24(1).
6 Section 24(2)(a).
amendment to a statement or notice of claim or counterclaim in accordance with the rules of court and where that statement or notice of claim or counterclaim, as amended, complies with the requirements in subsections (1) and (2).
[8] These provisions are mandatory. Section 25(1) precludes an award of interest under the Act unless the relevant section has been pleaded. Accordingly, I consider there is no jurisdiction to award interest under s 24 for the period before the date of judgment.
[9] Even if there were jurisdiction under s 24 to award interest in the period before the date of judgment, I would not award interest from 1 November 2013 (immediately following termination of the joint venture). As Mr McAnally acknowledges, s 24 precludes interest under Part 1 in this case so when the amount on which interest is to be awarded was quantified is not determinative. Quantification may still be a relevant factor. Here, although the joint venture parties exchanged reconciliations in late 2013, the accounting also sought to address run-off costs. In part therefore, the amount owing was not quantified until later even acknowledging that quantification need not match exactly the amount ultimately awarded. Also, there was a lack of clarity in the terms of the joint venture agreement given the way the joint venture commenced and evolved in pressing circumstances following the February 2011 earthquake, which may have exacerbated the differences between the joint venture parties. Moreover, following the correspondence in 2013, the matter largely languished from 2014 until 2018. The proceeding was commenced on 30 January 2019 (still seeking more than double the amount awarded). In the circumstances, if there were jurisdiction, I would have set 30 January 2019 as the start of the period for interest purposes. I would have awarded interest from that date at 2 per cent rather than the maximum prescribed rate of 5 per cent given prevailing interest rates over the period.
[10] I conclude that TPD is entitled to interest pursuant to s 10 from the date of judgment to the date of payment, calculated in accordance with ss 12 to 16.
Costs
[11] TPD/CNZ seek increased costs – an uplift of 20 per cent on 2B scale costs – pursuant to r 14.6(3)(b) of the High Court Rules 2016, submitting that Godfreys
contributed unnecessarily to the time or expense of the proceeding by maintaining unmeritorious positions. TPD/CNZ refer to Godfreys’ arguments relating to partnership, Mr Godfreys’ management time, Wellington premises costs, the different financial systems and more generally widening the dispute.
[12] Godfreys seeks to have 2B costs reduced by 30 per cent because of TPD’s conduct and Godfreys’ partial success. It also seeks a 50 per cent reduction in the disbursement for TPD’s accountant.
[13] Rule 14.6(3)(b) relevantly provides that the Court may order a party to pay increased costs if:
(b)the party opposing 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; or
(iii)failing, without reasonable justification, to admit facts, evidence, documents, or accept a legal argument; or
…
[14] As the Court of Appeal said in Bradbury v Westpac Banking Corp, increased costs may be ordered where there is failure by the paying party to act reasonably.7
[15] The onus is on an applicant for increased costs to persuade the Court that such an award is justified.
[16] I accept that Godfreys sought adjustments and pursued other arguments that were not accepted (as did TPD to a lesser extent). Some of those arguments no doubt contributed to the cost of the proceeding. But I am not persuaded that Godfreys acted unreasonably in relation to the matters raised such that increased costs should be awarded. As indicated, there was a lack of clarity in the joint venture terms given the way the joint venture commenced and evolved in pressing circumstances following the February 2011 earthquake, which may have exacerbated the differences between
7 Bradbury v Westpac Banking Corp [2009] NZCA 234, [2009] 3 NZLR 400 at [27].
the joint venture parties. Each side commenced trial a good distance away from the end result. The accounting experts narrowed the quantum difference at trial and the parties made some other compromises to narrow the issues. Although late in the piece, these would have resulted in a time and therefore cost saving at trial for the benefit of all.
[17] Turning to Godfreys’ submission that costs should be reduced, r 14.7 relevantly provides that the Court may reduce the costs otherwise payable if:
…
(d) although the party claiming costs has succeeded overall, that party has failed in relation to a cause of action or issue which significantly increased the costs of the party opposing costs; or
…
(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; or
(iii)failing, without reasonable justification, to admit facts, evidence, or documents, or accept a legal argument; or
…
[18] I accept that TPD’s claim was for a higher amount than awarded. But this is in the context of an even higher (third party) claim by Godfreys. Moreover, I do not consider that TPD’s unsuccessful components significantly increased Godfreys’ costs in terms of r 14.7(d). For similar reasons to those relating to Godfreys above, I am not persuaded that TPD acted unreasonably such that costs should be reduced under r 14.7(f). Also, the fact that TPD has not referred to settlement offers in support of its increased costs application does not mean that costs should be reduced on the basis those (unseen) settlement offers were unreasonable. I do not consider that costs should be reduced.
[19] In relation to 2B costs, Godfreys also disputes the inclusion of case management memoranda on the basis they were required partly as a result of the
actions of TPD at interlocutory stages and were not for the sole benefit of TPD. The costs of interlocutory applications are normally dealt with separately at the time,8 and the costs of the remaining steps in the proceeding as a general principle follow the event. The Court does not review the remaining steps to ascertain how each was required or whether it was for the sole benefit of the successful party.
[20] I also do not accept there should be a reduction for TPD’s accounting disbursement. I am not in a position to attribute blame for the failure of the experts to confer earlier nor to assess the significance of Ms Pratt’s concessions when they did. In any event, I consider the disbursement is reasonably claimed.
Result
[21] TPD is entitled to interest from the date of judgment to the date of payment, calculated in accordance with ss 12 to 16 of the Act.
[22] TPD/CNZ (jointly) are entitled to 2B costs of $91,537.50 plus disbursements of $36,438.01.
[23]By consent, I direct the Registrar to release the security for costs.
Gault J
8 Rule 14.8.
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