Triastra Ltd v The Proprietors of Taharoa “C” Block

• Jurisdiction: New Zealand
• Judge: Fitzgerald J
• Judgment Date: 23 February 2021
• Neutral Citation: [2021] NZHC 251
• Court: High Court
• Docket Number: CIV-2015-419-318
• Date: 23 February 2021

Between

Triastra Limited

Plaintiff

and

The Proprietors of Taharoa “C” Block

Defendant

[2021] NZHC 251

Fitzgerald J

CIV-2015-419-318

IN THE HIGH COURT OF NEW ZEALAND

AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA

TĀMAKI MAKAURAU ROHE

Civil Procedure — determination of costs — in the substantive judgment the defendant was found to have breached the parties contractual arrangement by giving insufficient notice of termination — the plaintiff had sought damages but had abandoned a claim for a success fee before the hearing — a number of the plaintiff's claims were rejected — test for determining the successful party — whether the plaintiff's rejection of a Calderbank offer entitled the defendant to costs — High Court Rules 2016

Appearances:

BD Gustafson and FD Porteous for plaintiff

AJ Horne and JJK Spring for defendant

JUDGMENT OF Fitzgerald J

[as to costs]

This judgment was delivered by me on 23 February 2021 at 2.30pm, pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date

Introduction

1 In these proceedings, the plaintiff (Triastra) originally sought damages from the defendant (Taharoa) of some $2 million, largely comprising what it said was a project “success fee” due to it. By the time of the hearing before me, however, Triastra had abandoned its claim in relation to the success fee, which reduced the claim to approximately $155,000.

2 In my substantive judgment determining the claims, I concluded that Taharoa had breached the relevant contractual arrangement between the parties by giving two weeks' notice of termination of that arrangement, rather than the required one month's notice. 1 Triastra was accordingly entitled to damages, though as I observed in my judgment, they would likely be relatively nominal in amount. In the event, the parties agreed damages of approximately $7,900.00.

3 In the course of determining Triastra's contractual causes of action, I rejected a number of arguments advanced on its behalf as to the status and nature of the arrangements between the parties, and I also dismissed Triastra's alternative cause of action in estoppel.

4 I encouraged the parties to agree costs. Given the overall result in the litigation, I gave an indicative and non-binding view that an appropriate outcome might be that costs lie where they fall. The parties have been unable to agree on costs. Memoranda have been filed and this judgment accordingly determines what costs are payable.

Summary of the parties' submissions

Triastra's submissions

5 Referring to authorities such as AL Barnes v Timetalk 2 and Water Guard NZ Limited v Midgen Enterprises Limited, 3 counsel for Triastra notes that (reduced) scale costs were awarded in those cases to the plaintiff, even though the plaintiff was only

partially successful on its pleaded claims (and failed on other claims). This is on the basis that success to a limited extent is nevertheless success, and it would be wrong in principle to award costs to the “losing” party

6 On the basis it was partially successful on one of its causes of action, Triastra says it was the successful party overall and thus costs should follow the event in the ordinary way. Recognising, however, that it was unsuccessful on a number of aspects of its claims, Triastra proposes a 2B costs award, but reduced to 33.3% of scale. On Triastra's calculations, this results in a costs award in its favour of $25,384.83 (excluding GST and disbursements).

7 Counsel submits that such an award is appropriate because at trial, Taharoa did not call evidence from what Triastra characterises as a key witness. This “unexplained failure” meant that the best evidence on crucial points had to be inferred from other witnesses. Counsel further submits that to establish its position, Taharoa called two witnesses with little or no direct knowledge about the events in question, a matter on which I commented in my substantive judgment. 4 Counsel for Triastra says this is relevant to the Court's overall discretion on costs, in that it counts against any further reduction in the scale costs award in its favour.

8 Triastra acknowledges that Taharoa made a “without prejudice save as to costs” (Calderbank) offer in July 2017 to pay one week's consultation fees in full and final settlement of Triastra's claims. This would have resulted in a payment of about half of what Triastra secured through trial, thus around $4,000. Counsel submits that as of July 2017, Triastra had incurred considerable costs in pleading its claim, completing discovery and inspection and arguing a security for costs application. Counsel notes that had Taharoa hypothetically admitted liability for the one week of consultancy fees and taken no further steps at that time, the plaintiff would have been entitled to costs on a 2B basis of $30,328.00 (plus GST and disbursements). Triastra accordingly submits that the Calderbank offer ought not to affect the costs award in its favour, and does not justify a costs award in Taharoa's favour.

Taharoa's submissions

9 Taharoa submits that all factors point towards a costs award in Taharoa's favour.

10 First, counsel submits that all Triastra's pleaded claims failed at trial, the only one succeeding being a very small claim for a two week reasonable notice period that was introduced (with the leave of the Court) for the first time on the third day of trial. Counsel for Taharoa seeks to distinguish authorities such as Water Guard on the basis they were predicated on pleaded claims succeeding in part at trial, whereas in this case, Triastra's success was on a claim introduced mid-trial.

11 Counsel further notes that Triastra's damages award represents around 5% of the total value of its claim at the start of the trial, and only 0.03% of the value of Triastra's original claim when filed in 2015. Counsel submits that claims of that type ought to be brought in the Disputes Tribunal and on these amounts, Triastra cannot claim to be the “winner” overall. On this basis, counsel says the position is quite different to that in cases such as Water Guard, in which the plaintiff had partial but nevertheless meaningful success, obtaining an award of damages which totalled some 63% of the total claim.

12 As to its Calderbank offer, counsel emphasises that the offer was made relatively early in the proceedings (unlike the offer in Water Guard, which was made just before trial), and in the event proved to be very close to the ultimate value of the judgment.

13 Counsel also refers to Geary v Accident Compensation Corporation, which is said to be analogous to the present circumstances. 5 In that case, Mr Geary succeeded on only about 20% of his claim, and ACC had to undertake significant work addressing the claims which resulted in extended hearing time and wasted costs. ACC made a Calderbank offer of $15,000, which Mr Geary “beat” in a $21,135.84 judgment in his favour on appeal. As Mr Geary had succeeded on only a small proportion of his claim, and even though the settlement offer was slightly less than the amount awarded, the

High Court awarded ACC one half of its costs from the date of the offer. Counsel for Taharoa submits that the facts in the present case point even more strongly to an award in Taharoa's favour, as Triastra succeeded in a much lower percentage of its claim

14 Counsel for Taharoa also emphasises that Triastra caused Taharoa substantial wasted costs by pleading claims that were either abandoned shortly before trial or that failed at trial. Taharoa also submits that it did not increase costs by its decision to respond to Triastra's evidence with evidence of its own (namely the two witnesses referred to at [7] above).

15 On this basis, Taharoa says a costs award in its favour should follow. It seeks:

• (a) 2B scale costs totalling $65,450.50, or alternatively;

• (b) if the Court is minded to award costs only from the point of the July 2017 settlement offer, 50 per cent of 2B scale costs from the date of that offer.

16 If costs are awarded to Triastra, Taharoa says Triastra has incorrectly calculated scale costs and that any scale costs award would need to be reduced accordingly.

Applicable principles

General principles

17 The starting principle is that the successful party is entitled to an award of costs in the ordinary way. This is so even though there has been partial, and indeed relatively modest, success only. As the Court of Appeal stated in Weaver v Auckland Council, success on more limited terms is still success. 6 In that context, the Court referred to the Supreme Court's judgment in Shirley v Wairarapa District Health Board, in which the Court made clear that “the loser and only the loser pays, unless there are exceptional reasons”. 7 The Court in Weaver stated:

[21] Recourse may then be had in search of such reasons to r 14.7(d) of the High Court Rules, which gives the Court discretion “despite rr 14.2 to 14.5” to refuse to award costs to the successful party if, notwithstanding overall success, “that party has failed in relation to a cause of action or issue which significantly increased the costs of the party opposing costs.” The same rule also empowers the Court to reduce costs in such circumstances.

18 In Weaver, Ms Weaver had succeeded in her claims but only to roughly half the extent pleaded. She had also failed to accept a Calderbank offer substantially greater than the amount she was awarded at trial. The offer was close to the total amount claimed, and twice what was ultimately awarded in the High Court. 8 For the period up to the Calderbank offer, the Court of Appeal concluded that Ms Weaver was entitled to scale costs, but with the award reduced by 50 per cent to reflect that she had failed on a number of its claims. As to the period following the Calderbank offer, the Court agreed with the High Court's analysis that on orthodox principles, Auckland Council was...