Niagara Sawmilling Company Limited v Carter Holt Harvey Limited [2012] NZHC 964 (10 May 2012)

Last Updated: 20 December 2012

IN THE HIGH COURT OF NEW ZEALAND INVERCARGILL REGISTRY

CIV 2010-425-000147 [2012] NZHC 964

BETWEEN NIAGARA SAWMILLING COMPANY LIMITED

Plaintiff

AND CARTER HOLT HARVEY LIMITED Defendant

Hearing: 27 & 28 February 2012

Counsel: P B Churchman for Plaintiff

R G Simpson and S Elliott for Defendant

Judgment: 10 May 2012

_{COSTS JUDGMENT OF WHATA J}

[1] The defendant was successful in this matter. It now seeks costs calculated on a 2B basis in accordance with the High Court Rules.

[2] Counsel for the plaintiff has raised two issues about calculation, namely:

(a) The time allocation for attendance at trial should only be 1.5 days (not two days as set out in Appendix 1); and

(b) No allowance should be made for junior counsel.

[3] I agree with the defendant that the second day finished shortly before 4 pm and this, counting in half days, equates to two trial days.

[4] I do not consider, however, that this trial warranted allowance for second counsel. The issues were relatively straightforward. I do not doubt that the hearing

_{was given the attention it deserved. But as will be well known to counsel, costs}

NIAGARA SAWMILLING COMPANY LIMITED V CARTER HOLT HARVEY LIMITED HC INV CIV 2010-

425-000147 [10 May 2012]

awards are not an exact reflection of the time spent, but an approximation of it. Applying that approximation consistently, this is not a matter for which second counsel should be certified.

Calderbank offer

[5] There is a further suggestion by the defendant that I should exercise my discretion under r 14.6 to make an award of increased costs on the basis that the plaintiff’s claims have been defeated on the same grounds outlined in a Calderbank letter. That letter is dated 8 November 2010, well in advance of the hearing. The letter records that the solicitors for the defendant consider that the plaintiff’s claim has no merit. It refers to the fact that the lease was varied in September 2003 to include the two factory additions and to incorporate a 10% ceiling on any increase in rent in future rent reviews. It says there can be no serious doubt that this ceiling extended to the entire lease, not merely to the two additions.

[6] It also describes a reference to a further variation to add the Brazier building to the leasehold premises, with this again subject to a 10% ceiling on rent review. It observes that the new lease negotiated in 2006 was sent to Niagara with a covering letter from Mr Palmer dated 29 August that said the lease was “for your approval and if in order execution”. In the view of the defendant’s solicitors, this letter did not contain any misrepresentation and nor was it misleading or deceptive. It is not believed that the plaintiff will succeed in its claim that it placed reasonable reliance on Mr Palmer’s letter. The letter then notes that the solicitors have been instructed to allow the plaintiff one final opportunity to withdraw the proceedings without facing an application for costs by CHH. This opportunity is said to remain open until the end of November 2010.

Assessment

[7] I do not consider that the Calderbank offer was on such terms as to warrant an uplift in costs. Firstly, the grounds set out in the letter for the proposition that the claim was without merit do not align directly with the grounds upon which the defendant succeeded. Indeed, I found that the 10% ceiling did not extend to the

entire leasehold. Rather, it applied to the two additions. While ultimately I have formed the view that it was not reasonable for the plaintiff to reply on Mr Palmer’s representations, the case was not as clear cut as the Calderbank letter suggested and indeed it could be said that Niagara was at least partially successful in terms of the legal argument on that point. Further the Calderbank offer does not present any form of compromise. It seeks an all or nothing outcome. I do not consider that it was unreasonable in the circumstances for the plaintiff to reject that offer.

Outcome

[8] Accordingly, there being no dispute about the allocation of expenses and costs (as opposed to the length of trial) I grant costs to the defendant on a 2B basis as per Appendix 1 to the schedule of CHH costs and disbursements, but I certify for one counsel only in respect to both costs and disbursements.

Solicitors:

Macalisters, Invercargill, for Plaintiff

Palmer & Associates Law, Auckland, for Defendant