Fanshawe 136 Limited v Fanshawe Capital Limited [2014] NZHC 650 (2 April 2014)

Last Updated: 10 June 2014

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2013-404-004179 [2014] NZHC 650

BETWEEN	FANSHAWE 136 LIMITED First Plaintiff 136 FANSHAWE LIMITED Second Plaintiff
AND	FANSHAWE CAPITAL LIMITED First Defendant WILSON PARKING NEW ZEALAND LIMITED Second Defendant

Hearing:	On the papers
Appearances:	W McCartney for Plaintiffs No appearance for First Defendant J Long and D Valente for Second Defendant
Judgment:	2 April 2014

JUDGMENT OF KATZ J (Costs)

This judgment was delivered by me on 2 April 2014 at 4:30 pm

Pursuant to Rule 11.5 High Court Rules

Registrar/Deputy Registrar

Solicitors: D Miller, Brookfields, Auckland

Glaister Ennor, Auckland

Lee Salmon Long, Auckland

_{Counsel: W McCartney, Auckland}

FANSHAWE 136 LIMITED & 136 FANSHAWE LIMITED v FANSHAWE CAPITAL LIMITED & WILSON PARKING NEW ZEALAND LIMITED [2014] NZHC 650 [2 April 2014]

Introduction

[1] In Fanshawe 136 Ltd v Fanshawe Capital Ltd & Wilson Parking New Zealand Ltd¹ I found in favour of the plaintiffs. They accordingly now seek 2B scale costs against the second defendant, Wilson Parking New Zealand Ltd (“Wilson”). The plaintiffs and the first defendant (which abided the decision of the Court) had a prior arrangement as to costs and accordingly costs are not sought against the first defendant.

[2] While Wilson does not deny that the plaintiffs is entitled to costs, as the successful party, it contests the quantum of costs claimed. Some issues have been resolved in an exchange of memoranda. The following issues still remain:

(a) Which party (if any) is entitled to costs for the summary judgment application on 17 September 2013?²

(b) Should costs be available for the preparation of two lots of hearing bundles for the plaintiffs and counterclaim defendants, when in reality only one lot of bundles was prepared?

(c) Which party (if any) is entitled to costs for the first substantive hearing, which was aborted after two days due to the Judge recusing herself?

Costs of the summary judgment application

[3] The plaintiffs claim costs of $1,194 in relation to their summary judgment application. Wilson opposes those costs on the grounds that the application was abandoned by the plaintiffs at the very first call.

[4] Wilson had filed a notice of opposition at the time the application was abandoned. Wilson submits that costs should lie where they fall in relation to the summary judgment application as the parties agreed that the application for summary judgment should not proceed. Wilson contends that the application would have been

_{unsuccessful given the central role oral evidence played in the case.}

¹ Fanshawe 136 Ltd v Fanshawe Capital Ltd & Wilson Parking New Zealand [2013] NZHC 3395.

[5] On the other hand, the plaintiffs submit that the application was not abandoned. Rather, Lang J recognised the urgency of the proceeding and offered counsel a trial date of 11 November 2013. The plaintiffs accepted that offer as a full trial in less than two months was more advantageous to them than a summary judgment hearing which might occur no sooner and ran a greater risk of failure. Lang J reserved costs. The usual position is that costs on an unsuccessful summary judgment application are reserved and then follow the event at trial.

[6] The correct approach to the question of costs following a summary judgment application was outlined by the Court of Appeal in NZI Bank Limited v Philpott.³

_{There, the Court stated:}⁴

As with most questions of costs, they should be approached on broad principles. Whilst a defendant may be regarded as successful in one sense in resisting an application for summary judgment, it is of course not a final determination in the proceeding itself. If, ultimately, the plaintiff does succeed it seems to us in the general run of cases that the defendant should pay for both proceedings, the Court paying particular attention to the reasons why the plaintiff was unsuccessful in the first case. If those reasons include some question of fault on the part of the plaintiff then it may be appropriate to reduce or even eliminate an entitlement to costs for that part of the proceedings so far as the plaintiff is concerned. But where the defendant has raised defences which cannot by their nature be resolved at a summary judgment application but ultimately turn out to have no basis, then costs on both sets of proceedings belong to the plaintiff.

There will be other cases where the plaintiff has embarked on summary judgment proceedings erroneously in the sense that the rules do not allow the summary judgment procedure, or in the certain knowledge that there is a bona fide question of fact or law which can only be determined after a trial. In those circumstances the Court should be able in its discretion to deprive the plaintiff of costs in those unsuccessful and abortive proceedings and award costs to the defendant.

[7] As per Lang J’s minute dated 17 September 2013, the summary judgment application was dismissed due to counsel agreeing that it would be inappropriate to deal with the application.

[8] At the substantive hearing there was extensive examination and cross-examination of witnesses. There were significant factual and legal disputes.

_{The situation is not analogous to that described in Philpott, where, while the matter}

³ NZI Bank Ltd v Philpott [1990] 2 NZLR 403, (1990) 3 PRNZ 695 (CA).

could not be resolved at summary judgment, the defendant had no case. Realistically the prospects of these proceedings being resolved by way of a summary judgment application were small.

[9] In the particular circumstances of this case it is my view that costs should lie where they fall in relation to the summary judgment application.

Should costs be awarded for the preparation of two lots of hearing bundles, when in fact only one was prepared?

[10] The plaintiffs’ schedule of costs includes a claim for $4,975 for the preparation of a list of issues, authorities and common bundle in their role as plaintiffs, as well as $3,980 for the preparation of a list of issues, authorities and common bundle in their capacity as counter-claim defendants.

[11] Wilson contests the plaintiffs’ inclusion of two bundles in its costs schedule, covering their preparation of bundles as both the plaintiffs and the counter claim defendants in the proceeding. Wilson claims that as only one lot of trial bundles was prepared, the plaintiffs should only be entitled to costs associated with the bundle preparation that actually occurred. Parties are not entitled to costs for steps that did not occur. Further, with regards to the six volumes of the bundle, 224 of the 1151 pages were compiled and produced by Wilson. Wilson therefore contends that the plaintiffs should only be entitled to 80.5 per cent of the scale cost for the preparation of the bundle.

[12] The plaintiffs submit, on the other hand, that the relevant costs claims (items

31 and 32) do not apply solely to the bundle, they include “preparation of list of issues, authorities, and common bundle”. An award of costs is an award as to the total costs claimed, and whether or not individual steps amount to more or less than the costs incurred for those individual steps is not relevant. The plaintiffs deny that, for costs purposes, the claim and counterclaim should be considered as “two sides of the same coin.”

[13] The reality is that, although there were separate claims and counterclaims, the

parties’ claims were run as a cohesive whole. There were not two separate lists of

issues, bundles of authorities, and common bundles – one for the claim and one for the counterclaim. Only one set of trial bundles was prepared. It necessarily follows that costs can only be claimed for one set. Further, as Wilson has already contributed to the costs of that one set of bundles, costs for this item should be reduced accordingly. Accordingly the total payable in respect of items 31 and 32 is

$4,004.90, as set out in the revised schedule annexed to Wilson’s memorandum of

24 February 2014.

Costs of the aborted trial

[14] The plaintiffs claims costs of $4,975 in relation to the first trial, which was aborted after two and a half days of hearing.

[15] The proceeding was initially set down for trial before Courtney J on

11 November 2013. That hearing was aborted when it became apparent that the former commercial solicitor for the plaintiffs would be required to give evidence. As a result of a personal connection between that witness and the Judge, Courtney J recused herself and the hearing was aborted.

[16] The plaintiffs seek costs in relation to the aborted hearing. So does Wilson, on the basis that the plaintiffs must bear responsibility for the events that led to the trial being aborted. In the alternative, if the plaintiffs are not found to be at fault, Wilson submits that costs ought to lie where they fall. Wilson submits that a party may be held liable for the costs of a hearing aborted by its conduct whether or not the party is ultimately successful.

[17] Both parties have set out, in some detail, why they believe that fault for the hearing being aborted lay with the other. It is not necessary to traverse those submissions in detail. In my view the “fault” for the first trial being aborted cannot be laid squarely at the door of either party. It is not unusual for trials to develop in ways that were not initially anticipated. In this case that resulted in it being necessary to call a witness that the plaintiffs had not originally intended to call. Unfortunately that witness was known to the Judge and she therefore had to recuse herself. Neither party could have reasonably foreseen that outcome. In such circumstances it is appropriate that costs should lie where they fall.

Result

[18] In summary:

(a) Costs are to lie where they fall in relation to the summary judgment application.

(b) The total payable in respect of items 31 and 32 is $4,004.90, as set out

in the revised schedule annexed to Wilson’s memorandum of 24

February 2014.

(c) Costs are to lie where they fall in respect of the aborted trial before

Courtney J.

[19] The consequence of these rulings it that Wilson is to pay costs to the plaintiffs in the sum of $51,732.90.

Katz J