Wellington Developments Limited v FMS Construction Limited - [2024] NZHC 592

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE

CIV-2023-485-000803

[2024] NZHC 592

UNDER the Arbitration Act 1996 and the High Court Rules 2016

IN THE MATTER OF

an application for an interim injunction to restrain the calling of a specific security deed pending an arbitration

BETWEEN

WELLINGTON DEVELOPMENTS LIMITED

Applicant

AND

FMS CONSTRUCTION LIMITED

Respondent

Hearing: (On the papers)

Counsel:

J R Sumner and F B Q Collins for Applicant M R C Wolff for Respondent

Judgment:

19 March 2024

JUDGMENT OF LA HOOD J

(Costs)

[1] By judgment dated 29 January 2024, I granted Wellington Developments Ltd’s (WDL) application for interim measures under s 17B of the Arbitration Act 1996, preventing FMS Construction Ltd (FMS) from enforcing a security deed by taking possession of excavators, pending completion of a dispute resolution process. I indicated a preliminary view that the applicant is entitled to costs on a 2B basis, but gave the parties leave to file memoranda if they disagreed.

WELLINGTON DEVELOPMENTS LTD v FMS CONSTRUCTION LTD [2024] NZHC 592 [19 March 2024]

[2] The parties have been unable to agree and the Court is accordingly required to determine costs.

[3] WDL seeks costs and disbursements totalling $26,685.75 on the following basis:

(a)scale costs on a 2B basis totalling $16,490.50;

(b)a 50 per cent uplift on scale costs amounting to $8,245.25; and

(c)disbursements totalling $1,950.00.

[4]FMS’s position is:

(a)WDL took excessive and unnecessary steps by commencing the proceedings on an urgent basis and should not be able to recover the costs associated with these steps.

(b)There is no basis for costs to be uplifted and costs should be awarded on a 2B basis for costs reasonably incurred and not those incurred due to the taking of excessive and unnecessary steps in respect of urgency.

(c)The applicant is therefore only entitled to costs of $11,471.50 and disbursements of $550.00, totalling $12,021.50.

Costs principles

[5] Costs are at the discretion of the Court, which must be exercised in accordance with the settled principles and provisions of pt 14 of the High Court Rules 2016.

[6] I note the following observations of Cooke J in Lepionka & Company Investments Ltd v Gibson Sheat:1

[3] A large number of issues are raised in the memoranda that have been filed. The issues raised evidence of a misunderstanding of the costs regime

1 Lepionka & Company Investments Ltd v Gibson Sheat [2023] NZHC 2745.

set out in pt 14 of the High Court Rules 2016 (the Rules). This misunderstanding is not unusual — it is becoming increasingly common for there to be applications to depart from a standard award of costs determined under pt 14. That is a practice that should be discouraged unless there is a clear basis for such departure in accordance with the Rules. Most cases can be expected to involve costs being calculated on a 2B basis, with perhaps some adjustments to the time bands for some steps. But costs…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2024] NZHC 592
Decision Date: 19 March 2024

CaseChat Overview and Summary

Wellington Developments Limited, the applicant, sought an interim injunction to prevent FMS Construction Limited, the respondent, from enforcing a security deed pending an arbitration. The applicant was successful in obtaining the injunction by judgment dated 29 January 2024. The court was required to determine the costs of the interim application. The applicant sought costs on a scale 2B basis, a 50% uplift on the scale costs, and disbursements. The respondent opposed the costs application, arguing that the applicant had taken excessive and unnecessary steps by commencing the proceedings on an urgent basis, and that there was no basis for an uplift on the scale costs.

The court considered the principles of costs under the High Court Rules 2016 and the authority of Cooke J in Lepionka & Company Investments Ltd v Gibson Sheat. The court rejected the applicant’s claim for an uplift on the basis of failure to accept settlement offers, lack of merit, and unnecessary urgency. The court accepted that the applicant was entitled to claim the costs of the steps it took to achieve the result of the urgent hearing in the New Year. The court also certified for second counsel in the sum of $575.50. The court ordered that the respondent is to pay the applicant’s costs on a 2B basis for all of the items set out in Schedule 1 of the applicant’s memorandum, totalling $16,490.50 plus disbursements of $1,950.00. The court declined the uplift sought by the applicant and rejected the respondent’s submission that reduction is required to reflect an unreasonable approach to urgency by the applicant. The court allowed a service charge of $700.00 instead of the disputed $1,400.

Orders