Manukau Golf Club Inc. v Shoye Venture Ltd

• Jurisdiction: New Zealand
• Judge: McGrath,William Young,Glazebrook JJ
• Judgment Date: 04 December 2012
• Neutral Citation: [2012] NZSC 109
• Docket Number: SC 36/2012
• Court: Supreme Court
• Date: 04 December 2012

Between

Manukau Golf Club Inc

Appellant

and

Shoye Venture Ltd

Respondent

[2012] NZSC 109

Court:

McGrath, William Young, Chambers and Glazebrook JJ

SC 36/2012

IN THE SUPREME COURT OF NEW ZEALAND

Appeal against Court of Appeal (“CA”) refusal to award costs in favour of successful appellant — no reason was given for refusal to award costs to successful party but it appeared likely that the CA considered the High Court decision which it overturned had been the result of the Associate Judge's fault instead of any fault on the part of the respondent — whether the CA had erred in not awarding costs and not giving reasons for doing so.

Counsel:

J Long and K L J Simcock for Appellant

No appearance for Respondent

JUDGMENT OF THE COURT

• A The appeal is allowed.

• B The respondent must pay to the appellant, with respect to costs in the Court of Appeal, costs of $12,220, plus disbursements of $5,051.73.

• C By agreement, no order as to costs in this Court.

REASONS

(Given by Chambers J)

Costs in the Court of Appeal

1 In October 2007 Manukau Golf Club Inc, the appellant, and Shoye Venture Ltd, the respondent, entered into an agreement which the Courts below have called “the venue agreement”. In 2010, the Club sued Shoye alleging it had breached the venue agreement. Shoye counterclaimed. Sometime later it applied for summary judgment with respect to the Club's claim. It asserted that none of the causes of action in the Club's statement of claim could succeed. 1

2 Associate Judge Bell ruled in favour of Shoye and granted it summary judgment, plus costs. 2 The Club appealed. The Court of Appeal allowed the appeal. 3 The Court of Appeal set aside the summary judgment in Shoye's favour and quashed the order for costs. The Court made “no order for costs” with respect to the appeal.

3 The Club's claim and Shoye's counterclaim proceeded on the normal trial route. Indeed, we were told the substantive trial has now taken place, with the decision reserved.

4 The Club was not happy, however, about not receiving costs in the Court of Appeal. As required by r 41(1)(c) of the Court of Appeal (Civil) Rules 2005, the Club in its written submissions set out in detail its claim for costs should it win. It calculated costs on the basis that the appeal would be classified as a “standard appeal” 4 and that each step should have a band A time calculation. 5 The claim came to $12,220. Disbursements were also set out; they totalled $5,051.73.

5 Shoye also dealt with costs in its submissions in response. It did not dispute the Club's claim in the event of the appeal succeeding. It did submit, however, that it wanted indemnity costs in the event the appeal failed.

6 Notwithstanding the Club's success on the appeal and the parties' stated positions, the Court did not award costs in the Club's favour. It gave no reasons. The Club sought leave to appeal against the failure to award costs. This Court granted leave. 6

Did the Court of Appeal err in refusing the Club costs?

7 Although r 53 of the Court of Appeal (Civil) Rules, like r 14.1 of the High Court Rules, renders costs decisions discretionary, the discretion has never been unfettered and must be exercised judicially. 7 Particularly since detailed costs regimes were introduced in the High Court (in 2000) and the Court of Appeal (in 2008), the general discretion has been held to be qualified by the specific rules. 8 As the Court of Appeal said in Mansfield Drycleaners Ltd v Quinny's Drycleaning (Dentice Drycleaning Upper Hutt Ltd), the overall structure of the costs regimes now means “there is a strong implication that a Court is to apply the regime in the absence of some reason to the contrary”. 9

8 A fundamental principle applying to the determination of costs in all the general courts in New Zealand is that costs follow the event. Because we are dealing with a Court of Appeal costs decision, we cite the principle as set out in r 53A(a) of the Court of Appeal (Civil) Rules, but the same principle underlies costs in the District Court, 10 the High Court 11 and this Court: 12

The party who fails with respect to an appeal should pay costs to the party who succeeds.

9 The Court of Appeal did not follow that principle on the present appeal. Nor did it explain why it was not following that principle.

10 Mr Long, for the Club, submitted the Court of Appeal must have either taken into account irrelevant considerations or failed to take into account relevant ones. The Court of Appeal obviously knew the Club had won and the panel clearly would have known the general principle of costs following the event. Why then was the Club denied its entitlement to costs? Mr Long surmised it must have been because the Court considered something had gone wrong with the process in the High Court

and it would therefore be unfair for Shoye to have to pay costs to the Club. We need to explain that suggestion in a little more detail

11 The Court of Appeal considered Shoye had won in the High Court on the basis of an implied term it had never pleaded. 13 The Court of Appeal considered it “was a breach of natural justice for an affirmative defence to be adopted when it was not pleaded and no notice had been given of it, and when the Golf Club had no opportunity to respond with evidence or submissions”. 14 Further, in any event, the Court considered “an implied term of the type articulated by the Associate Judge was not a defence that was certain to succeed” with the consequence that the Judge had been...