James v Robb HC Christchurch CIV-2009-406-000266 [2011] NZHC 1672 (17 November 2011)

Last Updated: 25 November 2011

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

_{CIV-2009-406-000266}

BETWEEN SHAUN DAVID JAMES First Plaintiff

AND BLUE COD INVESTMENTS LIMITED Second Plaintiff

AND JAMES IVAN ROBB EULALIE RATA ROBB First Defendants

AND GARY WILLIAM ROBB Second Defendant

Hearing: 15 November 2011

Appearances: J E Bayley for Plaintiffs

M J Wallace for Defendants

Judgment: 17 November 2011

JUDGMENT OF HON JUSTICE FRENCH As to Costs and Application for Stay

Introduction

[1] In my decision of 11 July 2011, I upheld the plaintiffs’ claim for rectification of an agreement for the sale and purchase of land. The effect of the rectification was to include in the sale agreement an area of land known as “the lost land”. I also declared that Mr Gary Robb held the lost land on a constructive trust for the benefit of the second plaintiff and ordered him to transfer the land to the second plaintiff.

[2] As regards costs, I stated my expectation was that the parties would be able to resolve those without the need for any formal Court order. However, I also stated that in the event agreement did not prove possible, then leave was reserved for the

_{filing of submissions.}

JAMES V ROBB HC CHCH CIV-2009-406-000266 17 November 2011

[3] Agreement was not able to be reached, and accordingly counsel filed submissions in September 2011.

[4] Unfortunately, the submissions were never drawn to my attention. I only became aware of their existence on 14 November 2011 in the course of perusing the defendants’ subsequent application for a stay of execution. The defendants have filed an appeal against my substantive decision in the Court of Appeal.

[5] At the hearing of the stay application, I invited further submissions on costs and after hearing from counsel gave oral rulings on both the costs and the stay application.

[6] The detail of those rulings and the reasons for them now follow.

Costs application

[7] It was common ground that because the plaintiffs had been successful, they were entitled to an award of costs. The issue was quantum.

[8] The plaintiffs sought an award of indemnity costs or alternatively costs on a

2B scale basis to the date of a Calderbank offer, with a 50 per cent uplift for all steps in the proceeding thereafter.

[9] In support of the application for increased costs, Mr Bayley advanced the following grounds:

(i) The defendants’ rejection of the Calderbank offer.

(ii) The failure of the first defendants to give evidence, necessitating the preparation of subpoenas and a memorandum.

(iii) The conduct of the second defendant at trial.

[10] For their part, the defendants opposed the application for increased costs and further argued that it was the District Court scale that should apply, not the High Court scale. The only evidence of the value of the lost land at trial was a desktop valuation of $8000 and the amount in the transfer from the first defendants to the second defendant of $53,270.48. Both are figures within the jurisdiction of the District Court, and accordingly the defendants argue that r 14.13 should apply.

[11] In my view, however, the nature and complexity of the proceeding was such that it was properly brought in the High Court.

[12] On the other hand, I am not persuaded that any uplift from the scale is warranted.

[13] Following New Zealand Sports Merchandising Ltd v DSL Logistics Ltd,[1] the reasonableness of the defendants’ rejection of the Calderbank offer is to be assessed at the time of the rejection. At that time, the plaintiffs did have a significant litigation risk because of their inordinate delay. It was arguable that they should be denied rectification on those grounds, and accordingly it cannot be said, to use the words of r 14.6(3)(b)(v), that the defendants’ failure to accept the offer was “without reasonable justification”.

[14] As for the other matters relied upon by the plaintiffs, I am not satisfied that any of those matters necessarily lengthened the trial or justify any award in excess of the scale.

[15] I therefore award the plaintiffs costs on a High Court 2B scale which, together with disbursements, amounts to $32,409.61.

The stay application

[16] The defendants sought a stay of execution of all of the judgment including costs, which as at the date the stay application was filed had not of course been

_fixed.

[17] The defendants have now filed the notice of appeal and also paid security for costs. It is uncertain when the appeal will be able to be heard.

[18] Both parties advanced reasons why they will be prejudiced should the stay application be decided against them. Both were also prepared to provide undertakings to mitigate the specific prejudices identified by the other.

[19] Applying the principles articulated in Keung,[2] I consider the key factors in this case to be the need to preserve the status quo, while at the same time giving expression to the plaintiffs’ right to enjoy the fruits of their judgment.

[20] Mr Bayley accepted that if the plaintiffs were entitled to the exclusive use and occupation of the lost land pending the appeal, then the only potential prejudice of a stay to them would be if there was damage to the property and an insurance dispute arose. He conceded, however, that such a scenario was unlikely and that any concerns would be met if the plaintiffs were given the right to come back to the Court for further direction. He submitted, and I accept, that the payment of the costs is in a different category, there being no evidence that the plaintiffs would be unable to repay the money in the event the defendants win the appeal.

[21] Weighing up the strength of the competing interests, I decided that the most just solution was to grant a stay in respect of the order to transfer the land, but on the following conditions:

(i) Within 10 working days the defendants must apply for a Court of Appeal fixture date and undertake the prosecution of their appeal with the utmost diligence.

(ii) From 15 November 2011 the plaintiffs are entitled to the exclusive use and possession of the lost land, pending the

_{outcome of the appeal.}

(iii) The plaintiffs shall, while in possession of the lost land pending the outcome of the appeal, maintain the lost land in its current state of repair.

(iv) Within 10 working days the defendants must pay the plaintiffs the costs of $32,409.61 together with the costs of this application (which I award on a 2B basis plus a 50 per cent uplift).

[22] Leave is reserved to either party to apply for further orders or directions if necessary.

[23] My reason for awarding costs on this application to the plaintiffs is that the defendants, without reasonable justification, rejected a generous offer which would have avoided the need for any contested hearing.

Solicitors:

Rhodes & Co, Christchurch

I McNish, Kaiapoi

Counsel: M J Wallace, Christchurch

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[1] New Zealand Sports Merchandising Ltd v DSL Logistics Ltd HC Auckland CIV-20-09-404-

005548, 19 August 2010.

[2] Keung v GBR Investment Ltd [2010] NZCA 396.