Hawken Lane Development LP v Property Sales Direct Limited [2021] NZHC 2051 (9 August 2021)

Last Updated: 17 September 2021

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2021-404-0830 [2021] NZHC 2051

BETWEEN	HAWKEN LANE DEVELOPMENT LP Applicant
AND	PROPERTY SALES DIRECT LIMITED Respondent

Hearing:	On the papers
Counsel:	E St John and S Maloney for applicant P Spring for respondent
Judgment:	9 August 2021

JUDGMENT OF KATZ J

[Recall application]

This judgment was delivered by me on 9 August 2021 at 3:00 pm Pursuant to Rule 11.5 High Court Rules

Registrar/Deputy Registrar

Solicitors: Keegan Alexander, Auckland

Heritage Law, Auckland

Counsel: E St John, O’Connell Chambers, Auckland

HAWKEN LANE DEVELOPMENT LP v PROPERTY SALES DIRECT LTD [2021] NZHC 2051

[9 August 2021]

• [1] On 8 June 2021, I delivered a judgment granting Hawken Lane Development LP’s (“Hawken Lane”) application to remove a caveat lodged by Property Sales Direct Limited (“PSDL”).

• [2] I reserved the issue of costs and directed that if costs could not be agreed any memorandum from Hawken Lane was to be filed by 22 June 2021 and any memorandum in response from PSDL was to be filed by 29 June 2021.

• [3] Costs could not be agreed. Hawken Lane filed a memorandum seeking indemnity costs or, in the alternative, increased costs. Hawken Lane’s primary focus, however, was its claim for indemnity costs. Invoices were provided to substantiate the quantum of indemnity costs sought. However, no calculation of scale costs was provided. (I note that increased costs are calculated using scale costs as the starting point.)

• [4] Hawken Lane subsequently filed an updating memorandum. It noted that its previous calculation of indemnity costs had not included the costs incurred by their instructing solicitor in removing the caveat. An updated figure for indemnity costs was provided, in the sum of $23,727.00.

• [5] PSDL then filed its costs memorandum. It acknowledged liability for costs but opposed an award of indemnity costs. Rather, it submitted, an order of 2B scale costs was appropriate. A calculation of 2B scale costs was provided, in the sum of $10,994.

• [6] Although no provision had been made for a reply memorandum (as is the norm with costs) Hawken Lane could, of course, have sought leave to file a memorandum challenging PSDL’s assessment of 2B scale costs. It did not do so. The costs judgment was delivered several weeks later.

• [7] Hawken Lane now applies for the costs judgment to be recalled, or corrected under the slip rule,¹ on the basis that PSDL’s calculation of 2B scale costs (which was adopted in the judgment) is incorrect. Hawken Lane says that, correctly calculated,

¹ High Court Rules 2016, r 11.10.

2B scale costs are actually $14,101. Applying a 50 per cent uplift would bring that figure to $21,151.50.

• [8] PSDL opposes the recall application. It submits that the present circumstances do not fall within the ambit of the slip rule or the recognised circumstances justifying the recall of a judgment. PSDL also referred to the observations of the Court of Appeal in Murren v Schaeffer that:²

... it must be a rare case when [the recall jurisdiction] is exercised in relation to a cost order.

• [9] I am not persuaded that the slip rule applies in the present circumstances. The costs judgment does not contain a clerical mistake or an error arising from an accidental slip or omission. Nor is it drawn up so that it does not express what was decided or intended. The order made was that PSDL “pay costs to Hawken Lane in the sum of $16,491”. That was the order I intended to make, based on the information before me at the time the judgment was delivered.

• [10] The issue therefore is whether the costs judgment should be recalled. The leading authority on recall is Horowhenua County v Nash (No 2).³ It identifies three discrete circumstances where recall may be appropriate:

(a) where since the hearing there has been an amendment to a relevant statute or regulation, or a new judicial decision of relevance and high authority;

(b) where counsel have failed to direct the Court’s attention to a legislative provision or authoritative decision of plain relevance; and

(c) where for some other very special reason justice requires that the judgment be recalled.

• [11] I accept PSDL’s submission that none of those circumstances are engaged here. Hawken Lane should have provided its own calculation of 2B scale costs, particularly

² Murren v Schaeffer [2019] NZCA 34.

³ Horowhenua County v Nash (No 2) [1968] NZLR 632 (SC) at 633.

given that it sought increased costs as an alternative to indemnity costs. Further, indemnity costs are exceptional. PSDL should have realised there was a realistic prospect that its application for indemnity costs would not succeed. A calculation of scale costs should therefore have been provided as a “fallback” position. At the very least, Hawken Lane should have subsequently sought to correct PSDL’s calculation of scale costs, if it believed it to be wrong.

• [12] Hawken Lane’s explanation for not doing these things is that counsel had assumed (wrongly) that the judgment would not quantify costs (unless, presumably, indemnity costs were awarded). Rather, it was assumed that the judgment would just indicate the basis on which costs should be calculated and leave it to the parties to undertake the required calculations. This was an unfortunate assumption. The usual practice is for the court to quantify costs whenever possible. This promotes certainty and finality in litigation and avoids the risk of ongoing disputes over quantum, possibly requiring further court resources and a second costs judgment.

• [13] In this case, Hawken Lane sought indemnity costs in the sum of $23,727.00. It is arguable whether the solicitor’s costs for removing the caveat should be included in the indemnity costs claim for the litigation. If those costs are excluded, the quantum of indemnity costs would be $19,386.00. The increased costs of $21,151.50 now sought by Hawken Lane (based on its own calculations of 2B scale costs) exceed that sum. Indeed they are not far off the full amount of indemnity costs claimed (including the solicitor’s costs).

• [14] PSDL’s conduct did not meet the high threshold of misconduct necessary for an award of indemnity costs. Accordingly, if a higher starting point for 2B scale costs had been adopted, it is quite possible that a lower percentage uplift may have been applied. This would likely have been necessary to ensure that the ultimate costs award was not, in practical terms, an award of indemnity costs (or close to it).

• [15] Ultimately, I concluded that $16,491.00 was an appropriate award of costs in all the circumstances. I remain of the view that such a costs award is within the appropriate range. I am therefore not persuaded that “for some other very special reason justice requires that the judgment be recalled.”
• [16] The application to recall the judgment, or correct it under the slip rule, is accordingly dismissed. Hawken Lane is, however, entitled to its reasonable disbursements, in the sum of $1,506.00.

Katz J