Millbrook Country Club v S.F.M. Investments Limited [2014] NZHC 1352 (17 June 2014)

Last Updated: 21 July 2014

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2013-404-003265 [2014] NZHC 1352

BETWEEN	MILLBROOK COUNTRY CLUB LIMITED Plaintiff
AND	S.F.M. INVESTMENTS LIMITED First Defendant GARRY ALBERT MUIR Second Defendant

Hearing:	17 June 2014 [On the Papers]
Counsel:	C Heaton for the Plaintiff M S Hinde for the Defendants
Judgment:	17 June 2014

JUDGMENT OF DUFFY J [Re Costs]

This judgment was delivered by Justice Duffy on 17 June 2014 at 4.00 pm, pursuant to

r 11.5 of the High Court Rules

Registrar/Deputy Registrar

Date:

Counsel: M S Hinde, Auckland

Solicitors: Morrison Kent, Wellington

_{Stainton Chellow (K Hetherington), Auckland}

MILLBROOK COUNTRY CLUB LTD v S.F.M. INVESTMENTS LTD [2014] NZHC 1352 [17 June 2014]

[1] The plaintiff seeks scale costs in this Court on a 2B basis. The plaintiff relies on r 14.2(a) of the High Court Rules, which provides that the party who fails with respect to a proceeding or an interlocutory application should pay costs to the party who succeeds.

[2] The plaintiff acknowledges that its primary application for specific performance was not granted, but says that the alternative application which it made by way of submission, was granted.

[3] The plaintiff refers to the defendants’ conduct at a late stage in the process when it filed an admission of claim. The plaintiff contends that this admission did not however deal with the issue of specific performance and the related issue of ongoing interest at the contractual rate. The plaintiff submits, therefore, that it was reasonable for it to have sought for the hearing to go ahead as scheduled. The plaintiff recognises that its claim in respect of ongoing contractual interest (which was dependent on this Court ordering specific performance) was declined. The plaintiff contends that despite this, the proceeding against the defendant was a substantive success and in reliance on Packing in Ltd (in liq) formally known as Bond Cargo Ltd v Chilcott [2003] NZCA 124; (2003) 16 PRNZ 869 (CA), it submits that the success of the plaintiff ought to be reflected in the award of costs in the plaintiff’s favour.

[4] The defendants have filed a complex memorandum in which they argue that if costs are awarded, they should be in accordance with the District Court scale, as the District Court was clearly the appropriate place to obtain judgment for the debt. The defendants point to the fact that they did not file a statement of defence, which left the plaintiff entitled to apply for judgment. Further, the defendants later filed an admission of cause of action on 12 November 2013, which accepted a costs order on the proceeding as at the fixture date being calculated on a 2B basis, or such lesser sum in accordance with r 14.13. The defendants state that the plaintiff did not, following that event, seal judgment but instead, pressed on with its summary judgment application for specific performance, which it then failed to achieve.

[5] The defendants contend that the plaintiff’s pursuit of an order for specific performance has caused this proceeding to drag on unnecessarily at the defendants’ expense.

[6] I have carefully considered the submissions on costs. I have read the decision that I delivered on 6 March 2014 (Millbrook Country Club Ltd v S.F.M. Investments Ltd [2014] NZHC 380). In my view, the judgment shows that whilst the plaintiff obtained judgment against the defendant, the plaintiff completely failed to achieve the outcome that it sought in the summary judgment application. This was not a case where the defendants denied the existence of the debt that it owed to the plaintiff. The plaintiff’s sole purpose in pursing the summary judgment was to obtain an order of specific performance, rather than judgment for a monetary sum. This was because specific performance would have allowed it to continue to recover interest at the contractual rate, after judgment, rather than interest under the Judicature Act 1908, which is a lower rate of interest. Were it not for the plaintiff’s wish to continue to receive contract interest after judgment, the plaintiff could readily and more cost effectively have obtained a judgment against the defendants without the need to pursue the summary judgment application to a hearing. First, given that the plaintiff sought payment for a liquidated demand in money, the defendants’ failure to file a statement of defence would have permitted the plaintiff to obtain judgment under r 15.7. Secondly, the defendants’ admission of claim would have allowed the plaintiff to seal judgment under r 15.16. As it was, time was spent at an opposed hearing on 15 November 2013, with further written submissions received after that date. The need to provide further time for written submissions arose from the plaintiff being unable to provide the Court with a proper foundation for its case at the opposed hearing on 15 November 2013.

[7] The need for an opposed hearing and subsequent written argument was entirely due to the plaintiff’s unsuccessful attempt to persuade this Court that it ought to make an order for specific performance. Whilst the Court has entered judgment against the defendants, in substance it was the defendants who enjoyed the greatest measure of success in this proceeding. They achieved all that they set out to do whilst the plaintiff did not. In such circumstances, I consider that the defendants’ success requires recognition.

[8] The costs that the plaintiff would ordinarily be entitled to for the steps that it took to recover the debt are in my view cancelled by its later failure to obtain the judgment that it sought. In the circumstances, I consider this to be an appropriate case for costs to lie where they fall.

Duffy J