Waimauri Limited v Powell Junior Limited

[2022] NZHC 1506

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2020-404-1694

[2022] NZHC 1506

UNDER

Part 18 of the High Court Rules

BETWEEN

WAIMAURI LIMITED

Plaintiff

AND

POWELL JUNIOR LIMITED

Defendant

Judgment:

(On the papers)

28 June 2022

JUDGMENT OF HARLAND J

[re costs]

This judgment was delivered by me on 28 June 2022 at 2 pm pursuant to Rule 11.5 High Court Rules.

Registrar/Deputy Registrar

Solicitors/Counsel:

Brown Partners, Auckland Glenie Legal Ltd

M Lenihan Auckland

WAIMAURI LIMITED v POWELL JUNIOR LIMITED [2022] NZHC 1506 [28 June 2022]

Introduction

[1]    On 20 June 2022, the Registry forwarded to me the submissions of counsel in relation to costs.1 By my judgment dated 21 March 2022, I dismissed Waimauri Limited’s (Waimauri) application for summary judgment. I expressed the tentative view that costs should be reserved.2

[2]    Powell Junior Limited (PJL) submits that Waimauri should be ordered to pay 2B scale costs now. Waimauri disagrees.

Legal principles

[3]    Costs on an unsuccessful summary judgment application are often reserved.3 This is because although a defendant can be regarded as successful in resisting a summary judgment application, it is not a final determination of the proceeding itself. As the Court said in NZI Bank v Philpott:4

If, ultimately the plaintiff does succeed it seems to us in the general run of cases that the defendant should pay for both proceedings, the Court paying particular attention to the reasons why the plaintiff was unsuccessful in the first case.

…

where the defendant has raised defences which cannot by their nature be resolved at a summary judgment application but ultimately turn out to have no basis, then costs on both sets of proceedings belong to the plaintiff.

[4]    Despite this general principle, there are instances where costs are awarded to defendants following unsuccessful summary judgment applications. Counsel for PJL referred to some of the more recent cases where this has occurred:5

1      Submissions for the Defendant dated 4 April 2022, submissions for the Plaintiff dated 19 April 2022.

2      Waimauri Ltd v Powell Junior Ltd [2022] NZHC 515 at [91].

3      NZI Bank Ltd v Philpott [1990] 2 NZLR 403 (CA).

4      At 405, line 30 onward.

5      Emmons Developments New Zealand v Mitsui Sumitomo Insurance Co Ltd [2016] NZHC 1244;

Mason v Dodd [2020] NZHC 2005; and Fullarton v AWN Holdings Ltd [2021] NZHC 1873.

[5]    Mr Glenie, for PJL, submitted that the following factors arise from the recent cases which weigh in favour of awarding costs to a defendant who has successfully resisted a summary judgment application:

(a)There has been “fault on the part of the plaintiff”6;

(b)The plaintiff knew or ought to have known that there was “a bona fide question of law or fact which can be determined only after a trial”7, or that there was “considerable scope for argument”8, or that there was an “arguable defence”9;

(c)The plaintiff knew or ought to have known that resolution of the claim would involve consideration of much evidence10, especially on contested issues;

(d)The summary judgment application has led only to delay rather than to a narrowing of the issues in dispute11; and

(e)Imposing an immediate costs award would incentivise other plaintiffs to “carefully and objectively assess the merits of such applications before bringing them”.12

[6]    Ultimately, each case will depend on its facts as to whether or not an award of costs is appropriate.

Discussion

[7]    PJL submits that an award of costs should be made largely because matters referred to in another proceeding (the GJL proceeding) were always relevant to

6      Emmons Developments New Zealand v Mitsui Sumitomo Insurance Co Ltd, above n 5, at [14].

7      NZI Bank LTD v Philpott, above n 3, at 405.

8      Emmons Developments New Zealand v Mitsui Sumitomo Insurance Co Ltd, above n 5, at [10] and [13].

9      Mason v Dodd, above n 5, at [10].

10     Fullarton v AWN Holdings Ltd, above n 5, at [23].

11     Fullarton v AWN Holdings Ltd, above n 5, at [29].

12     Mason v Dodd, above n 5, at [10].

whether a summary judgment application was appropriate. I referred to these proceedings in my judgment dealing with PJL’s application for leave to file further evidence and submissions,13 where I found in favour of the defendant that affidavits from the PJL proceeding annexed to further affidavits from Mr Harvey for PJL should be admitted in this proceeding. I also referred to aspects of these affidavits, which were relevant to my decision not to exercise my discretion to grant summary judgment.14

[8]    Mr Glenie submits that this was “never the kind of open and shut case” suited to summary judgment; that Waimauri “stubbornly refused to withdraw its application”; the case “always cried out for proper discovery and cross-examination”; and that Waimauri’s approach had caused delays.

[9]    In response, Waimauri relies on my observation at the end of the judgment that regardless of the outcome, PJL still owes Waimauri a principal sum which has not been repaid and the nature of the loan (bridging finance) means that interest higher than the usual rate would reasonably be able to be charged by Waimauri.15

[10]   Further, Waimauri did not accept that it had inappropriately used the summary judgment process and sought to distinguish the cases referred to by PJL. Waimauri submits that the nature of this proceeding, an order of possession based on an expired PLA notice, is a scenario in respect of which summary judgment would normally be sought.

[11]   I am not persuaded that Waimauri inappropriately applied for summary judgment. Rather, this is a case that evolved as the application progressed. I am not prepared to conclude at this stage that fault can be attributed to Waimauri for the approach it has taken in relation to the recovery of the debt allegedly owed to it by PJL. The potential defences raised by PJL are not straightforward, but neither can they be described as compelling, at least at this stage of the proceeding. I am not persuaded that the factors referred to in the cases highlighted by Mr Glenie apply in this case.

13     Waimauri Ltd v Powell Junior Ltd [2021] NZHC 1760.

14     Waimauri Ltd v Powell Junior Ltd, above n 2.

15 At [89].

[12]   It follows that I am not persuaded that this is an appropriate case for costs to be awarded at this stage of the proceeding. The validity of the defences raised should be resolved at a substantive hearing before costs are determined.

[13]   Because I have reached this view, I do not need to address the quantum of costs sought by PJL at this point.

Costs

[14]Costs are reserved until the outcome of the substantive proceeding.

Harland J