Vogel v Prestige Building Removals Ltd

[2021] NZHC 2070

IN THE HIGH COURT OF NEW ZEALAND HAMILTON REGISTRY

I TE KŌTI MATUA O AOTEAROA KIRIKIRIROA ROHE

CIV-2021-419-97

[2021] NZHC 2070

IN THE MATTER

of breach of contract

BETWEEN

SHELLEY LYNN VOGEL and BRET ALLEN VOGEL

Plaintiffs

AND

PRESTIGE BUILDING REMOVALS LTD

Defendant

Judgment:

(On the papers)

11 August 2021

COSTS JUDGMENT OF BREWER J

This judgment was delivered by me on 11 August 2021 at 10.30 am pursuant to Rule 11.5 High Court Rules.

Registrar/Deputy Registrar

Solicitors:

Denham Bramwell (Manukau) for Plaintiffs

Beattie Rickman Legal (Hamilton) for Defendant

VOGEL v PRESTIGE BUILDING REMOVALS LTD [2021] NZHC 2070 [11 August 2021]

Introduction

[1]    Mr and Ms Vogel applied for a mandatory interim injunction against Prestige Building Removals Ltd, seeking specific performance of an alleged contract to move a house.1 I heard the matter via telephone on 24 May 2021 and gave judgment the same day.2 I was satisfied that there was a serious question for trial as to whether there was a contract between the Vogels and Prestige obliging Prestige to transport the house. However, I considered that the balance of convenience weighed against granting the injunction. I observed that it was not clear whether Prestige could move the house if ordered to, and noted the Court’s general reluctance to order complicated mandatory injunctions. Furthermore, I considered damages to be an adequate remedy. I declined to grant the injunction. Prestige now seeks costs.

Prestige’s submissions

[2]    Prestige submits that, by analogy, its preparation for the telephone hearing ought to be treated as preparation for an issues conference. This is step 14, which at band B is 0.5 days.

[3]    Prestige also seeks indemnity costs, equal to another 0.5 days. Prestige does not attach invoices demonstrating that this time was spent, or even submit that the time was in fact spent – rather, Prestige appears to treat the proposed costs as an award to penalise the Vogels for their alleged bad behaviour. Prestige seeks these costs on the basis that, since I did not accept the Vogels’ arguments, they took an argument that lacks merit pursuant to r 14.6(3)(b)(ii) of the High Court Rules 2016. Furthermore, Prestige submits that since the contract clearly states that there is an expiry date of    3 March 2021 in the documentation supplied by the Vogels in their application, the Vogels failed to admit facts, evidence, or documents pursuant to r 14.6(3)(b)(iii).

1      The Vogels made an application without notice under r 7.23 of the High Court Rules 2016. I observed in my judgment that this is an empowering provision and does not create a distinct species of application. I treated the application as an application for a mandatory interim injunction.

2      Vogel v Prestige Building Removals Ltd [2021] NZHC 1168.

The Vogels’ submissions

[4]    The Vogels suggest that costs should lie where they fall. First, they submit that there is no basis for an indemnity or uplifted costs award. They note that my Judgment made it clear that there was a serious question to be tried, and deny omitting relevant evidence, as alleged by Prestige.

[5]    The Vogels submit that since they failed to meet a balance of convenience threshold, rather than their overall legal argument being dismissed, costs should lie where they fall. Furthermore, the Vogels submit that Prestige contributed unnecessarily to the time and expense of the proceeding by refusing to initially engage with them, and by Prestige not informing the Vogels that they had instructed counsel until the telephone hearing. Finally, the Vogels submit that this is a matter of public interest, as there is a public interest in the enforcement of contracts.

Are indemnity costs, or an uplift, appropriate?

[6]    Indemnity costs are generally awarded when a party has behaved extremely badly.3 They are exceptional and require exceptionally bad behaviour.4 The bad behaviour must be flagrant to justify the departure from the predictability of the Rules Committee’s costs regime.5 The Court of Appeal recently enumerated the following circumstances in which indemnity costs have been granted:6

(a)the making of allegations of fraud knowing them to be false and the making of irrelevant allegations of fraud;

(b)particular misconduct that causes loss of time to the Court and to other parties;

(c)commencing or continuing proceedings for some ulterior motive;

(d)doing so in wilful disregard of known facts or clearly established law;

3      High Court Rules 2016, r 14.6; Bradbury v Westpac Banking Corp [2009] 3 NZLR 400 (CA) at [27]-[28]; Prebble v Huata [2005] NZSC 18, [2005] 2 NZLR 467 at [6].

4      Bradbury, above n 3, at [28].

5      Bradbury, above n 3, at [28].

6      Bradbury, above n 3, at [29], adopting Goddard J’s adoption in Hedley v Kiwi Co-op Dairies Ltd (2002) 16 PRNZ 694 (HC) at [11] of the Australian rule, as expressed in Colgate-Palmolive Co v Cussons Pty ltd [1993] FCA 801 at [24]. Much of our law in this area is adopted from the Australian courts.

(e)making allegations which ought never to have been made or unduly prolonging a case by groundless  contentions,  summarised  in French J’s “hopeless case” test.7

[7]    None of these criteria are met here. Indemnity costs are not appropriate. The one submission that could, in theory, have grounded a successful claim for indemnity costs – the submission that the contract, on its face, expired before the Vogels attempted to have it enforced – appears to be a misinterpretation of the quote for the work on the page before the contract. The contract has no expiry date. The quote is not obviously part of the contract, and appears to simply set a date by which the Vogels must accept the offer or it might be withdrawn – which, on their submission, they did.

[8]    Increased costs are also not appropriate. The relevant rule provides that the Court may order increased costs if a party contributed unnecessarily to the time or expense of the proceeding by failing to comply with the rules, pursuing an unnecessary step or meritless argument, failing to accept facts or an argument without reasonable justification, or unreasonably failing to accept a settlement offer.8 The Court may order increased costs if a party acts vexatiously, frivolously, improperly, or unnecessarily in the conduct of a proceeding, or if another reason exists justifying the award.9

[9]    While I did not ultimately accept the Vogels’ argument as to the balance of convenience, I observed that there was a serious question for trial. Raising reasonable arguments in good faith that are not ultimately accepted by the Court cannot justify increased costs.

Should costs lie where they fall?

[10]   Rule 14.8 provides that costs on an opposed interlocutory application, unless there are special reasons to the contrary, should be fixed when the application is determined. The fact that the Vogels failed to meet the balance of convenience standard instead of losing at trial does not mean that the application for an interim

7      This refers to J-Corp Pty Ltd v Australian Builders Labourers Federated  Union of Workers   (WA Branch) (No 2) [1993] FCA 70. Footnote not in the original.

8      High Court Rules 2016, r 14.6.

9      I omit several other possibilities enumerated by the Rules that are not relevant to this case.

injunction was misconceived. The merits of the substantive proceeding and those of an interlocutory are distinct.10

[11]   There is caselaw that suggests where the successful party contributed to much of the difficulty giving rise to the litigation, costs might be left to lie where they fall.11 This, however, requires extreme circumstances. In Goodwin v Rocket Surgery, for example, the successful defendant had breached the spirit of a family arrangement and predictably caused the proceedings, and although they were successful in their appeal against the summary judgment, the end result being against them was “inevitable”.12 That is not the case here.

[12]   The claim that this is a case in the public interest because there is a general public interest in the enforcement of contracts is not defensible. Applied consistently, that submission would apply to all civil matters. The dispute in this case is purely private. There are no important questions of law raised, the clarification of which will have general significance.

[13]I will not order costs to lie where they fall.

The appropriate scale costs

[14]   I consider it appropriate to treat the telephone hearing as if it had been an issues conference for costs purposes.

[15]   I am prepared to categorise the proceeding as 2B. Standing back and pragmatically assessing the result, 0.5 days was a reasonable amount of time to spend on preparing for, and appearing at, the telephone hearing based on the documents filed.

10     Chapman v Badon Ltd [2010] NZCA 613, (2010) 20 PRNZ 83 at [12].

11     A's Company Ltd v Dagger HC Auckland M-1482-SDOO, 14 August 2003; see also Goodwin v Rocket Surgery Ltd [2013] NZCA 172, (2013) 3 NZTR 23-009 at [30].

12     Goodwin, above n 11, at [30].

Result

[16]I award Prestige costs on a 2B scale basis, totalling $1,195.

Brewer J