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Ballance Agri-nutrients (Kapuni) Limited v The Gama Foundation [2005] NZCA 306 (7 December 2005)

Last Updated: 14 December 2005

IN THE COURT OF APPEAL OF NEW ZEALAND

CA32/05

BETWEEN BALLANCE AGRI-NUTRIENTS (KAPUNI) LIMITED
Appellant

AND THE GAMA FOUNDATION
Respondent

Hearing: 15 September 2005

Court: William Young, O'Regan and Robertson JJ

Counsel: R P Thomas and M B Beech for Appellant
B M Nathan for Respondent

Judgment: 7 December 2005

JUDGMENT OF THE COURT

A The respondent will have costs against Ballance in the sum of $15,000 together with usual disbursements.
B The order for costs against the respondent in favour of the appellant made in the High Court on the application for leave to appeal is quashed.

____________________________________________________________________

REASONS

(Given by Robertson J)

Background

[1] In a judgment delivered on 9 November 2005, we dismissed the appeal and the question of costs was reserved.
[2] We have had an opportunity to consider the respondent’s submissions on costs dated 15 November 2005 and the submissions of the appellant in response dated 1 December 2005.
[3] It is common ground that costs should follow the event and the only issue is quantum.

Respondent’s case

[4] On behalf of the respondent, it was argued that there were two factors which justified an award of costs in its favour, either at the level of solicitor/client costs or approaching that level.
[5] First, there was a lack of any merit from a commercial perspective in pursuing the appeal which simply delayed the resolution of the real issue between the parties. Secondly, the terms of an offer made on 7 April 2005, which included a written undertaking that if Gama Foundation was treated as the correct party for the purposes of arbitration, no action would be taken by Gama Holdings Limited at any time in respect of any of the matters which form the subject of the arbitration, meant that an appeal was unnecessary.
[6] There was no response to that offer prior to the appeal hearing.
[7] The respondent, in addition, sought an order reversing the costs award in the High Court against it on the application for leave to appeal. The respondent submitted that, as the appeal was unsuccessful, the High Court costs order should now be in its favour.
[8] The solicitor/client costs of the respondent were a little over $22,000 including disbursements and GST.

Appellant’s case

[9] In the response, the appellant submitted that costs should be $6,000 plus reasonable disbursements. It noted that, although this Court took the view that there were better ways of pursuing the actual dispute between the parties, a Judge of the High Court had granted leave and the parties had jointly acquiesced in the substantive matters awaiting the outcome of the appeal.
[10] It was stressed that there had been a difference of opinion within the Court on the meaning of s 112 of the Property Law Act so the matter could not be treated as totally unmeritorious.
[11] Counsel further submitted that the offers which had been made were couched in layman’s terms and had not been legally crafted so there was uncertainty as to their effect. In any event it was contended that there were significant questions of law which required legal adjudication.

Discussion

[12] We do not deny that there were fascinating theoretical issues which could be debated in this litigation. However, the Court’s concern throughout was the failure to focus upon the genuine dispute between the parties which required accommodation and resolution. The pursuing of this appeal did nothing to assist in achieving an outcome for the parties and at best would have only added further layers of Court processes.
[13] We are not satisfied that because the 7 April 2005 undertaking had not been drawn by a lawyer, this lessened its effect. If there were questions about its form or consequences they could have been addressed and the underlying substantive matter could have been pursued in the arbitration without the appeal being necessary.
[14] This is one of those cases where the successful respondent should be substantially reimbursed for costs it was forced to incur in litigation which had little practical utility.
[15] There is also strength in the argument that the costs order in favour of the appellant on the application for leave to appeal should be quashed, but we consider that the costs of that proceedings in the High Court should lie where they fall.
[16] In respect of the hearing before us, there will be an order of costs in favour of the respondent in the sum of $15,000 together with usual disbursements.

Solicitors:
Sharp Tudhope, Tauranga for Appellant
White Fox and Jones, Christchurch for Respondent

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[1]	In a judgment delivered on 9 November 2005, we dismissed the appeal and the question of costs was reserved.
[2]	We have had an opportunity to consider the respondent’s submissions on costs dated 15 November 2005 and the submissions of the appellant in response dated 1 December 2005.
[3]	It is common ground that costs should follow the event and the only issue is quantum.

[4]	On behalf of the respondent, it was argued that there were two factors which justified an award of costs in its favour, either at the level of solicitor/client costs or approaching that level.
[5]	First, there was a lack of any merit from a commercial perspective in pursuing the appeal which simply delayed the resolution of the real issue between the parties. Secondly, the terms of an offer made on 7 April 2005, which included a written undertaking that if Gama Foundation was treated as the correct party for the purposes of arbitration, no action would be taken by Gama Holdings Limited at any time in respect of any of the matters which form the subject of the arbitration, meant that an appeal was unnecessary.
[6]	There was no response to that offer prior to the appeal hearing.
[7]	The respondent, in addition, sought an order reversing the costs award in the High Court against it on the application for leave to appeal. The respondent submitted that, as the appeal was unsuccessful, the High Court costs order should now be in its favour.
[8]	The solicitor/client costs of the respondent were a little over $22,000 including disbursements and GST.

[9]	In the response, the appellant submitted that costs should be $6,000 plus reasonable disbursements. It noted that, although this Court took the view that there were better ways of pursuing the actual dispute between the parties, a Judge of the High Court had granted leave and the parties had jointly acquiesced in the substantive matters awaiting the outcome of the appeal.
[10]	It was stressed that there had been a difference of opinion within the Court on the meaning of s 112 of the Property Law Act so the matter could not be treated as totally unmeritorious.
[11]	Counsel further submitted that the offers which had been made were couched in layman’s terms and had not been legally crafted so there was uncertainty as to their effect. In any event it was contended that there were significant questions of law which required legal adjudication.

[12]	We do not deny that there were fascinating theoretical issues which could be debated in this litigation. However, the Court’s concern throughout was the failure to focus upon the genuine dispute between the parties which required accommodation and resolution. The pursuing of this appeal did nothing to assist in achieving an outcome for the parties and at best would have only added further layers of Court processes.
[13]	We are not satisfied that because the 7 April 2005 undertaking had not been drawn by a lawyer, this lessened its effect. If there were questions about its form or consequences they could have been addressed and the underlying substantive matter could have been pursued in the arbitration without the appeal being necessary.
[14]	This is one of those cases where the successful respondent should be substantially reimbursed for costs it was forced to incur in litigation which had little practical utility.
[15]	There is also strength in the argument that the costs order in favour of the appellant on the application for leave to appeal should be quashed, but we consider that the costs of that proceedings in the High Court should lie where they fall.
[16]	In respect of the hearing before us, there will be an order of costs in favour of the respondent in the sum of $15,000 together with usual disbursements.