Middeldorp v Avondale Jockey Club Incorporated [2020] NZHC 1748 (20 July 2020)

Last Updated: 31 August 2020

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2018-404-1900 [2020] NZHC 1748

UNDER	Judicial Review Procedure Act 2016
IN THE MATTER OF	an application for Judicial Review
BETWEEN	VINCENT JACOB MIDDELDORP Applicant
AND	AVONDALE JOCKEY CLUB INCORPORATED Respondent

Hearing:	On the papers
Appearances:	P David QC and C Boswell for the Applicant G M Coumbe QC and D Bullock for the Respondent
Judgment:	20 July 2020

JUDGMENT (NO 2) OF GORDON J

[As to costs]

This judgment was delivered by me on 20 July 2020 at 3 pm, pursuant to r 11.5 of the High Court Rules

Registrar/Deputy Registrar Date:

Solicitors: Wilson Harle, Auckland

Lee Salmon Long, Auckland

Counsel: P David QC, Auckland

G Coumbe QC, Auckland

MIDDELDORP v AVONDALE JOCKEY CLUB INC [2020] NZHC 1748 [20 July 2020]

• [1] This is an application by Mr Middeldorp for the High Court to reconsider costs awarded to the Avondale Jockey Club Inc (the Club) in light of the outcome of his appeal of my substantive decision to the Court of Appeal.

Procedural background

• [2] Mr Middeldorp was a member of the Committee of the Club. He applied for judicial review, seeking declarations that decisions of the Committee were made without a legal basis under the Rules of the Club and/or in breach of the Club’s legal obligations. He pleaded five causes of action.

• [3] On 26 April 2019, I gave judgment in the Club’s favour (the High Court decision).¹ I dismissed all of the grounds advanced by Mr Middeldorp except the ground that there was no power in the Club Rules to suspend him from the Committee. But I refused to make a declaration in Mr Middeldorp’s favour that the decision to suspend him was unlawful and therefore null and void.

• [4] On 25 June 2019, I awarded the Club 2B costs, with a 15 per cent reduction to reflect Mr Middeldorp’s limited success, plus disbursements (the High Court costs decision).²

• [5] Mr Middeldorp appealed the High Court decision. He appealed my refusal to grant a declaration and my findings that the Committee had acted lawfully in declining the 14 membership applications and that the Committee did not breach the Rules by operating with fewer than 10 members, and conducting elections for Committee membership in a manner that departed from the requirements of the Rules.

• [6] On 12 February 2020, the Court of Appeal gave judgment in the following terms (the Court of Appeal decision):³

• [4] We have concluded that the High Court erred in declining to make a declaration that the suspensions of Mr Middeldorp were not authorised by the Rules, and were unlawful. ...

¹ Middeldorp v Avondale Jockey Club Inc [2019] NZHC 901 [High Court decision].

² Middeldorp v Avondale Jockey Club Inc [2019] NZHC 1447 [High Court costs decision]

³ Middeldorp v Avondale Jockey Club Inc [2020] NZCA 13 [Court of Appeal decision].

• [5] We are not persuaded that the High Court erred in dismissing Mr Middeldorp’s challenges to the decisions made by the Committee in relation to the 14 membership applications, the operation of the Committee with fewer than 10 members, and the process adopted for conducting elections for Committee membership.

Submissions for Mr Middeldorp

• [7] Mr David QC, for Mr Middeldorp, submits that this Court should now reconsider the High Court costs decision in light of the Court of Appeal decision. Citing Kingsbeer v Okey, he submits that, as a matter of practice, the effect of a judgment on appeal which reverses the outcome in the High Court, in whole or in part, is to remove the basis for the costs order and to require that costs be reconsidered.⁴ Mr David submits that the Court of Appeal decision has, by partially reversing the High Court decision, removed the basis of the High Court costs decision in the Club’s favour. He relies on the High Court’s inherent power to deliver a further decision on costs in the proceeding addressing the High Court costs in light of the outcome of the appeal.

• [8] In particular, Mr David submits that Mr Middeldorp is entitled to costs and disbursements in the High Court. He says that, given the Court of Appeal decision that the High Court should have granted a declaration in relation to the unlawful suspensions, Mr Middeldorp is the overall successful party in the High Court. Accordingly, he seeks orders for the payment of $41,207.15 made up as follows: reimbursement of the $19,672.15 which Mr Middeldorp paid to the Club in accordance with the High Court costs decision, $18,732 by way of 2B scale costs with a 25 per cent reduction to reflect the points on which he was unsuccessful, and disbursements in the High Court of $2,803.

• [9] Mr David submits that while Mr Middeldorp did not succeed on all issues in the High Court, he prevailed on the first and primary cause of action, namely that the Club acted unlawfully and contrary to its Rules in suspending him. He says that the further causes of action concerning natural justice and unreasonableness were advanced as alternatives to the unlawful suspension cause of action. If the Club had

⁴ Kingsbeer v Okey [2018] NZHC 2384.

conceded the unlawfulness point, he says, these other causes of action would have fallen away and would not have had to be addressed.

• [10] Finally, Mr David explains that the question of costs should have been addressed administratively between the parties following the Court of Appeal decision. He says that Mr Middeldorp sought to resolve costs with the Club, but the Club has not provided any substantive response to the correspondence, which included an offer to settle costs.

Submissions for the Club

• [11] In response, Ms Coumbe QC, for the Club, submits that there are insufficient grounds for disturbing the High Court costs decision other than to make a further small percentage discount in Mr Middeldorp’s favour to reflect the formal declaration made by the Court of Appeal. She submits that the Club should still be considered the overall successful party in the High Court. Mr Middeldorp’s challenge compromised five pleaded causes of action, and the High Court dismissed all of his claims except for the unlawful suspension cause of action.

• [12] Furthermore, while the Court of Appeal held that a declaration should have been made in Mr Middeldorp’s favour in relation to the unlawfulness point, the Court held that the declaration should be in much more limited terms than that sought by Mr Middeldorp in his statement of claim. Mr Middeldorp sought a declaration that the two suspension decisions were “void and of no effect”. However, the Court of Appeal held that the declaration “should not extend to the validity or effect of the suspension decisions”, and instead made a declaration only that the decisions were “not authorised by the Rules, and were unlawful”.⁵ Ms Coumbe submits that this is a significant difference with practical implications. The Court of Appeal’s more limited declaration ensured that the declaration would not enable Mr Middeldorp to later challenge the validity of any further decisions that had been made by the Club (such as the decision regarding the training track) during the periods of his unlawful suspension. In short, she submits, Mr Middeldorp obtained a declaration that simply

⁵ Court of Appeal decision, above n 3, [49]–[50].

reflected the reasons given in the High Court, not that which he sought in his statement of claim.

• [13] Accordingly, Ms Coumbe submits that the only difference in the overall outcome in the High Court, following the Court of Appeal decision, has been the making of a formal declaration in Mr Middeldorp’s favour (albeit in more limited terms than that which was sought). Apart from that, the High Court decision remains intact. Therefore, the High Court’s analysis in the High Court costs decision still stands; the Club is still the overall successful party in this Court and is rightly entitled to costs.

• [14] Finally, as to the failure to respond to Mr Middeldorp’s settlement offer, Ms Coumbe explains that, first, the settlement offer did not reflect the Club’s largely successful defence of Mr Middeldorp’s wholesale attack on its governance and, secondly, the COVID-19 situation made it difficult for the Committee members (many of whom are older people) to meet either in person or virtually to consider the offer.

Discussion

• [15] First, I must determine which party is the overall successful party in this Court in light of the outcome in the Court of Appeal decision. I consider that the Club is still the overall successful party; the Court of Appeal decision did not remove the basis for the costs order in the Club’s favour. My reasons are as follows.

• [16] The Club is the overall successful party from a numerical or quantitative perspective. As Ms Coumbe submits, Mr Middeldorp advanced five causes of action in his statement of claim. I dismissed four of those causes of actions, finding in his favour only in relation to the unlawfulness of the suspensions. The Court of Appeal agreed that the suspensions were unlawful, but it considered that a declaration should have been made and accordingly made one in Mr Middeldorp’s favour. It dismissed Mr Middeldorp’s other grounds of appeal.

• [17] Furthermore, the Club is also the overall successful party from a qualitative perspective. The declaration made by the Court of Appeal in Mr Middeldorp’s favour was in more limited terms than which he sought in his statement of claim, as noted at

[12] above. The Court declared that the suspensions were unlawful but did not declare that the suspension decisions were invalid or of no effect. This is significant as the more limited declaration meant that the declaration would not enable Mr Middeldorp to challenge the validity of any decisions that had been made by the Club during the periods of his unlawful suspensions.

• [18] Additionally, I reject Mr David’s submission that the unlawful suspension cause of action was the primary cause of action. It is plain from the statement of claim and the declarations sought that Mr Middeldorp’s judicial review application was a wide-ranging challenge to the governance of the Club over many years. This is not a case where all the alleged grounds of judicial review challenged the same decision. The fifth cause of action, for example, was a serious allegation that the Club Committee had operated unlawfully and in breach of the Rules from October 2014. The issue would have been of great significance to the Club, and it should not be characterised simply as an ancillary cause of action.

• [19] Finally on this issue, I consider that the present case is distinguishable from

Kingsbeer v Okey. In that case, Associate Judge Johnston noted that:

[7] Kós P’s minute made it clear that costs in the High Court needed to be revisited, though, as I understand it, that is yet to be done.

...

[However, counsel opposed the reconsideration of costs because:]

• [11] First he submits that after the Court of Appeal delivered its judgment the PAK trustees were “perfectly entitled to take enforcement steps” because the Court of Appeal “gave no indication that the High Court costs order was to change”. It seems to me that the fact that the Court of Appeal expressly overturned the High Court’s judgment might have been such an indication.

• [12] Second, in reliance on rr 48(4) and 53J of the Court of Appeal (Civil) Rules 2005, [counsel] submits that “unless an order is specifically set aside on appeal, orders made in the lower court stand”. In support of his conclusion, he refers to McGechan on Procedure at para CR53J.03 where the following passage appears:

If the High Court’s judgment is merely adjusted (for example, its findings on liability are upheld, but its award of damages are reduced), the costs order made by the High Court is likely either to be left unaltered, or at most be somewhat reduced.

• [13] The difficulty with this contention, I think, is that this is not a case in which the High Court’s order was “merely adjusted”. The High Court concluded that there was no lawful easement. The Court of Appeal concluded that there was. To that extent, the outcome of the appeal was a reversal of the High Court’s judgment.

• [20] That case can be distinguished on the following basis. In that case, the Court of Appeal reversed the High Court’s judgment entirely — “[t]he High Court concluded that there was no lawful easement. The Court of Appeal concluded that there was.”⁶ By contrast, in the instant case, the High Court’s findings as to liability were upheld; it was only the award of relief that the Court of Appeal differed on, namely the granting of a declaration. Indeed, the High Court found that the Committee did not have the power to suspend a Committee member under the Rules, and the Court of Appeal agreed, saying, “[w]e agree with the High Court Judge that the Committee did not have the power to suspend Mr Middeldorp.”⁷

• [21] It is also notable that the Court of Appeal did not quash the High Court costs decision, which it could have done under rr 48(4) and 53J of the Court of Appeal (Civil) Rules 2005, nor did it refer costs back to this Court. The Court of Appeal only said that:

• [91] ... [W]e consider that honours were broadly even [in the Court of Appeal].

• [92] The respondent [the Club] must pay the appellant [Mr Middeldorp] usual disbursements. Apart from that, we make no order as to costs.

• [22] Accordingly, “the costs order made by the High Court [should] either be left unaltered, or at most be somewhat reduced [further].”⁸

• [23] Turning to that issue next, I must determine whether or not to disturb the High Court costs decision to reflect the Court of Appeal making a formal declaration in Mr Middeldorp’s favour. Ms Coumbe submits that the High Court costs decision should only be disturbed to make a further small percentage discount in Mr Middeldorp’s favour. She accepts that an increase from the 15 per cent reduction made to the costs calculated in the High Court costs decision to a 25 per cent reduction

⁶ Kingsbeer v Okey, above n 4, at [13].

⁷ Court of Appeal decision, above n 3, at [38].

⁸ McGechan on Procedure (online loose-leaf ed, Thomson Reuters) at [CR53J.03].

to the Club’s costs to reflect the fact that Mr Middeldorp had slightly more success in the Court of Appeal may be appropriate in the circumstances. That is the approach I take.

Costs order

• [24] The High Court costs decision is amended such that the scale costs calculated in the High Court costs decision (as set out in Annexure B to that decision) is to be reduced by 25 per cent (rather than 15 per cent as originally ordered). Therefore, the costs payable to the Club are $16,725 (not $18,955 — a difference of $2,230). There is no change to the disbursements payable to the Club. The rest of the High Court costs decision remains unchanged. I understand that Mr Middeldorp has already paid costs to the Club. The Club should return $2,230 to Mr Middeldorp to reflect the 25 per cent reduction.

Gordon J