Premier Property Developments Limited v OHL Limited

[2023] NZHC 3032

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2021-404-1536

[2023] NZHC 3032

BETWEEN

PREMIER PROPERTY DEVELOPMENTS LIMITED
Plaintiff/counterclaim defendant

AND

OHL LIMITED

Defendant/counterclaim plaintiff

AND

COLLIERS NEW ZEALAND LIMITED

(discontinued) Third party

Hearing:	On the papers
Counsel:	S E Wroe and TJM Ashley for plaintiff/counterclaim defendant J D McBride and E A Gambrill for defendant/counterclaim plaintiff
Date of judgment:	30 October 2023

JUDGMENT OF JAGOSE J

[Costs]

This judgment was delivered by me on 30 October 2023 at 3.30pm.

Pursuant to Rule 11.5 of the High Court Rules.

………………………… Registrar/Deputy Registrar

Counsel/Solicitors:

Sarah Wroe, Barrister, Auckland Josh McBride, Barrister, Auckland

Elizabeth Gambrill, Barrister, Auckland Grant & Co, Auckland

Burton Partners, Auckland Meredith Connell, Auckland

PREMIER PROPERTY DEVELOPMENTS LTD v OHL LTD – Costs [2023] NZHC 3032 [30 October 2023]

[1]    My 27 July 2023 judgment found Premier was entitled to recover from a stakeholder the $692,000 balance of sale price paid by OHL on a property transaction. I took a preliminary view neither party could claim comprehensive success, because “although Premier has obtained the relief it sought, that only is because it offered reasonable mitigation for its established (but not admitted) warranty breach”, and costs therefore should not be payable. I nonetheless reserved costs for determination on any exchange of memoranda.1

[2]    Premier says its recovery as sought is its success, giving it “a prima facie entitlement to costs” calculated at 2B scale as $71,222 (plus disbursements of

$30,122.40), for uplift by 50 per cent to reflect OHL’s  failure to accept Premier’s   14 September 2020 offer of commercial settlement (by reimbursement of $111,000 of the stake to OHL, and release of the $581,000 balance to Premier).

[3]    OHL responds my found breach of Premier’s warranty means Premier cannot be considered successful as if vindicated at trial. After removal of a costs allowance for second counsel and exclusion of GST from disbursements, it recalculates scale costs at $65,247 (and disbursements of $26,193.39). But it endorses my preliminary view costs are not payable, and says — if Premier’s offer qualified for consideration as an offer to settle or dispose of a proceeding issued nearly a year later — OHL was reasonably justified in rejecting it in the context of the parties’ respective commercial negotiations.

[4]    In reply, Premier accepts OHL’s recalculation. But it reasserts its success, and says its offer plainly was to settle an anticipated proceeding as the only alternative to obtain the stake’s release.

[5]    The starting point for my determination of Premier’s costs claim is the fundamental principles “the party who fails with respect to a proceeding … should pay costs to the party who succeeds” and “so far as possible the determination of costs should be predictable and expeditious”.2 I may refuse or reduce costs otherwise payable if “although the party claiming costs has succeeded overall, that party has

1      Premier Property Developments Ltd v OHL Ltd [2023] NZHC 1962 at [68]–[70].

2      High Court Rules 2016, r 14.2(1)(a) and (g).

failed in relation to a cause of action or issue which significantly increased the costs of the party opposing costs”.3

[6]    I held OHL made out its claim for particular breach(es) of warranty4 and loss.5 But availability to OHL of complete mitigation meant nothing then was recoverable from Premier.6 Critically, as I said, “[m]itigation issues arise after a defendant is established liable for the normal measure of damage”.7 Thus Premier cannot be successful “overall”, only in the end.

[7]    The stake was a commercial device to avoid OHL’s claims for compensation disrupting the property transaction.8 The parties’ establishment of the stake for their commercial purposes does not convert its recovery by Premier into success “overall”.

[8]    The counterfactual is the purchase price was paid in full, leaving OHL to its claims against Premier. Assuming the same substantive findings of breach and loss, only OHL could be characterised the successful party, in first principle entitled to Premier’s payment of costs. Although succeeding overall, OHL’s failure to establish recoverable loss significantly increased Premier’s costs. So costs to OHL may be refused. OHL rightly accepts my preliminary view.

[9]    But Premier clearly then would not be the successful party, having been found liable for both breach and loss. Without success justifying costs payable under the rules, there is no foundation for any uplift to them.9 I therefore do not address the offer’s qualification. Alternatively, even if succeeding overall, Premier’s failure on the substantive issues put OHL to those costs of trial. So costs to Premier may be refused.

[10]I formally confirm my preliminary view by refusing to make an order for costs.

—Jagose J

3      Rule 14.7(d).

4 At [58].

5 At [66].

6 At [66].

7 At [42].

8      Premier Property Developments Ltd v OHL Ltd, above n 1, at [34].

9      High Court Rules, r 14.6(1)(a).