The Malthouse Limited v Rangatira Limited [2018] NZHC 1293 (1 June 2018)

Last Updated: 1 August 2018

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-Ā-TARA ROHE

CIV-2017-485-191 [2018] NZHC 1293

BETWEEN	THE MALTHOUSE LIMITED Plaintiff
AND	RANGATIRA LIMITED Defendant

Counsel:	Mr H McIntosh and Ms H Macfarlane for the plaintiff Mr S Gollin and Ms J Standage for the defendant
Judgment:	1 June 2018

COSTS JUDGMENT OF ASSOCIATE JUDGE JOHNSTON

[On the papers]

[1] The Court delivered a substantive judgment in this matter on 27 April 2018. The plaintiff’s claim was unsuccessful. Churchman J reserved costs. The defendant now seeks costs.

[2] As directed by the judge, memoranda have been filed by Mr Gollin and Ms Standage on the defendant’s behalf in support of its application, and by Mr McIntosh and Ms Macfarlane in response for the plaintiff.

[3] Essentially, the defendant seeks costs on a 2B basis in respect of all aspects of the proceeding (other than those where costs have already been resolved). The plaintiff accepts that the defendant is entitled to a costs award but says that any award should be less than the costs sought for various reasons.

[4] The usual principles apply:

(a) costs are at the Court’s discretion;

THE MALTHOUSE LIMITED v RANGATIRA LIMITED [2018] NZHC 1293 [1 June 2018]

(b) generally, costs will follow the event — the successful party will be entitled to an award of costs;

(c) the costs to be awarded will be determined according to the formulae provided for in pt 14 of the High Court Rules 2016 which categorise proceedings by reference to how complex (categories 1, 2 or 3) and time consuming (categories A, B or C) they are;

(d) provision is made for both increased and reduced costs in particular circumstances.

[5] Unusually, following the commencement of this proceeding, a preliminary assessment of the appropriate costs category was not made.

[6] Whilst Churchman J did not express any view about categorisation, as a starting point at least, categories 2B would appear to me to be appropriate.

[7] The issue is whether costs calculated on a 2B basis should be reduced on any of the grounds raised on the defendant’s behalf.

[8] The first issue raised by Mr McIntosh is that the parties were involved in two High Court hearings — the first being the disposal of the plaintiff’s application for summary judgment and the second being the substantive trial. Mr McIntosh submits that there was no need for two hearings. He says that what the parties needed to resolve their dispute was a final decision by a Court of competent jurisdiction. He says that the plaintiff sought to achieve that by the most cost-effective process; an application for summary judgment. He says that where things went wrong is that Associate Judge Smith in his judgment dated 31 August 2017 refusing the plaintiff summary judgment did not definitively resolve the interpretation issue which left the plaintiff with no option but to appeal. He says that Associate Judge Smith erred a second time by refusing the plaintiff leave to appeal. By necessary implication he asks the Court to conclude that if Associate Judge Smith had decided the interpretation point that would have been an end of the matter because it would have provided a definitive conclusion
from a court of competent jurisdiction which would have become unappealable when the appeal period expired.

[9] That appears to me to be speculative. It assumes that a definitive decision by Associate Judge Smith would not have resulted in an appeal by the unsuccessful party.

[10] In any event, it was the plaintiff that determined the shape of this proceeding by applying for summary judgment upon commencement. If — and I do not wish to be taken to have formed any view on this — Associate Judge Smith erred in his judgment of 31 August 2017 by not reaching a definitive conclusion then that is not an outcome for which the defendant is responsible, and it does not seem to me to be a matter which should influence costs.

[11] The second issue raised on the plaintiff’s behalf by Mr McIntosh is that the only factual issue in the proceeding was raised by the defendant and, although Churchman J dealt with the issue, Mr McIntosh submits that it was not definitive in terms of the outcome.

[12] That is an assessment made with the benefit of hindsight. In my judgement the defendant cannot be criticised for putting the point in issue. In my view, the fact that it did so should not influence the outcome on costs.

[13] The next issue raised on the plaintiff’s behalf by Mr McIntosh concerns aspects of the evidence included in the defendant’s affidavits in the summary judgment application and at trial. The plaintiff says that the defendant attempted to introduce inadmissible material in relation to the construction of the important clause in the contract. Objection was raised by the plaintiff to the introduction of this material in the summary judgment application. That objection was upheld by Associate Judge Smith. The defendant then sought to include some of the same material in the evidence for trial. The evidence — or the bulk of it — was excluded by Churchman J.

[14] I accept that the costs incurred by the parties in this litigation appear to have been increased by the defendant’s attempt to introduce inadmissible material.
[15] Mr McIntosh next submits that further unnecessary costs were incurred by the parties because of a belligerent (my word, rather than his) insistence on the part of the defendant’s solicitors that the plaintiff’s solicitors prepare a fresh bundle of documents for trial, rather than reusing the bundle prepared for the summary judgement hearing. Mr McIntosh describes this as a breach on the part of the defendant’s solicitors of their obligation to cooperate, and appends to his memorandum an exchange of correspondence confirming the defendant’s solicitors’ approach. Mr McIntosh says that none of the witnesses were taken through the material in any event.

[16] My sense is that there is something in this complaint. The organisation of paper for trial is time consuming. The proposal made by the plaintiff was a reasonable one.

[17] Moving from the general to the particular, Mr McIntosh then focusses his attention on the time allocations for individual steps in the proceeding:

(a) first, the defendant’s claim for entering a defence. The defendant did not enter a defence until after the summary judgment proceeding and then entered a short defence which reiterated matters covered in their notice of opposition to that application for which an allowance is claimed. I accept that there is something in the contention that in those circumstances the claim involves an element of “double-dipping”;

(b) second, the claim in respect of discovery. The defendant discovered only 54 documents and Mr McIntosh says that the full allowance of 2.5 days for discovery should not be permitted. I do not accept this contention. It is often the case that the process of excluding material on relevance grounds and the like is more time consuming than including it;

(c) third, the claim in respect of inspection. Mr McIntosh says that a full allowance should not be permitted for inspection because the plaintiff discovered only 52 documents. I do not accept this contention. The rules make an allowance for inspection, and the defendant is entitled to claim on that basis;
(d) fourth, the claim in respect of preparation of affidavits and briefs. Mr McIntosh says that a full allowance of 2.5 days should not be granted for the reasons referred to in [13] and [14] above. I accept that there is force in this argument.

(e) fifth, the claim for preparation of a list of issues, bundle of authorities and the common bundle. Mr McIntosh says there was no list of issues, that the preparation of a bundle of authorities had already been done at the summary judgment stage and the defendant did not prepare the common bundle. I accept that costs for these things are not justified;

(f) sixth, Mr McIntosh submits that the Court should not certify for second counsel in this case, essentially because the case was a straight forward one not justifying the involvement of two counsel. I agree (insofar as this contention concerns costs as opposed to disbursements);

(g) finally, Mr McIntosh submits that the last item on the defendant’s schedule which concerns the preparation of costs memorandum should be disallowed. I do not understand the basis for this contention.

[18] On the defendant’s behalf Mr McIntosh also challenges the defendant’s claim to certain disbursements:

(a) there is what amounts to a res judicata point in relation to the filing fee for the notice of opposition filed by the defendant to the plaintiff’s application for leave to appeal from Associate Judge Smith’s judgment declining leave to do so. The plaintiff says that the costs of that proceeding have been dealt with. I agree;

(b) the defendant seeks disbursements in respect of costs incurred for “litigation support” services. I accept the contention that that is not a legitimate disbursement. It is covered in the costs claimed;
(c) Mr McIntosh submits that the travel and accommodation costs of counsel should be disallowed on the basis that Wellington counsel could have dealt with this matter. I do not accept this. I am prepared to rely on the judgements made by the defendant’s solicitors as to the most efficient way of running the case.

[19] In dealing with costs, the court resists a minute issue-by-issue examination of the case. It is only in rare cases where the conduct of one party verges on abuse of process that the court will dissect the conduct of the litigation in order to determine costs. The whole point of having costs awarded by reference to the scales I have described is to avoid a post-mortem examination of the litigation for costs purposes.

[20] That said I am satisfied that in this case there is enough in the points raised by Mr McIntosh on the plaintiff’s behalf to justify an adjustment to the costs award.

[21] Notwithstanding Mr McIntosh’s argument to the contrary, I regard the 2B categorisation of this case as appropriate. However, in order to take account of the matters in respect of which I have accepted the plaintiff’s contention that there should be some discount, my assessment is that substantial justice will be done in relation to costs if the defendant’s calculation of costs on a 2B basis is discounted by 15 per cent. My calculation is that that will reduce the defendant’s claim to costs to $41,179.73 and I set costs at that level.

[22] Disbursements are fixed at $2,233.68.




Associate Judge Johnston

Solicitors:

Dew & Company, Blenheim for the plaintiff Minter Ellison Rudd Watts, Auckland for defendant