Road Runner 2012 Limited v Memelink

[2022] NZHC 704

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE

CIV-2021-485-548

[2022] NZHC 704

UNDER

the District Court Act 2016

IN THE MATTER OF

an appeal against a decision of the District Court at Hutt Valley

BETWEEN

ROAD RUNNER 2012 LIMITED

First Appellant

SUNTHIR NGUON
Second Appellant

AND

HARRY MEMELINK and CISCA

FORSTER as trustees of the Link Trust No. 1

Respondents

On the Papers

Counsel:

J J Pietras for the Appellants

D G Livingston for the Respondents

Judgment:

7 April 2022

COSTS JUDGMENT OF GWYN J

[1]    In my judgment dated 2 March 2022,1 I upheld the appellants’ appeal against that part of the decision of the District Court where the Court concluded that the respondents could continue with their claim in respect of outgoings under the lease between the parties.2 I found that the District Court judgment was a final judgment

1      Road Runner 2012 Limited v Memelink [2022] NZHC 346 (High Court judgment).

2      Memelink and Cisca Forster as trustees of the Link Trust No. 1 v Road Runner 2012 Limited

[2021] NZDC 17246 at [37].

ROAD RUNNER 2012 LIMITED v MEMELINK (COSTS) [2022] NZHC 704 [7 April 2022]

on the respondents’ claim against the appellants under the lease, including on the issue of outgoings payable by the appellants to the respondents.3

[2]    I expressed the preliminary view that costs should lie where they fall, but that counsel should file memoranda if they took a different view.4

[3]    Counsel for the appellants and for the respondents subsequently filed memoranda on costs on 2 March and 14 March 2022, respectively. The memoranda were put before me on 5 April 2022.

[4]    The appellants seek costs on a 1B basis. The basis for the claim to costs is what is said to be a Calderbank offer to the respondents before the appeal was filed.

[5]    On 9 September 2021 the appellants’ solicitor wrote to the respondents’ solicitor proposing that:

(a)The appellants would agree not to appeal the District Court decision (in particular [37] of the decision, where the Judge suggested a further case management conference if the respondents sought recovery of other outgoings).

(b)The respondents would undertake not to pursue the question of outgoings any further, whether in the District Court or at arbitration.

(c)The respondents would agree not to appeal the District Court decision to the High Court.

[6]    The appellants’ correspondence was marked “Without Prejudice, Save as to Costs”.

[7]    By response of 12 September 2021, the appellants’ offer was rejected by the respondents.

3 High Court judgment, above n 1, at [59].

4 At [60].

[8]The appellants’ appeal was filed in this Court on 24 September 2021.

Appellants’ position

[9] Counsel for the appellants accepts that ordinarily costs should lie where they fall on a technical appeal of this nature. However, the appellants say that the offer referred to at [5] above was a Calderbank offer for the purposes of r 14.10 of the High Court Rules 2016 (the Rules). Although the appellants’ memorandum does not explicitly invite the Court to award costs to the appellants pursuant to r 14.11, that is implicit in the memorandum. The appellants’ legal aid costs for the appeal were

$3,425.85, including GST and disbursements. The legal aid grant is secured against the second appellant’s family home.  Costs for the appeal on a 1B scale basis are

$8,745.

[10]   Accordingly, the appellants request that costs be fixed on a 1B basis subject to actual costs approved by Legal Aid Services. The appellants say that would enable them to request a top-up payment from the Legal Services Commissioner under s 105 of the Legal Services Act 2011.

Respondents’ position

[11]   In response, counsel for the respondents says that this is not a situation under the relevant rules where the Court may take into consideration in setting costs that a party has rejected a settlement offer where they would have been better off accepting that offer. Counsel disagrees that any reasonable settlement offer was rejected. If the respondents had accepted the appellants’ offer, they would actually be in a worse position now, following the High Court judgment, because they would be without a case management conference in respect of outgoings in the District Court and without appeal rights. For those reasons, the principles at play in rr 14.10 and 14.11 do not apply here.

Discussion

[12]Rule 14.10 of the Rules provides:

14.10   Written offers without prejudice except as to costs

(1)A party to a proceeding may make a written offer to another party at any time that—

(a)is expressly stated to be without prejudice except as to costs; and

(b)relates to an issue in the proceeding.

(2)The fact that the offer has been made must not be communicated to the court until the question of costs is to be decided.

[13]   Under r 14.11 of the Rules, any effect on costs of a r 14.10 offer is at the Court’s discretion. However, the maker of a r 14.10 offer which has a higher value or is more beneficial for the recipient than a judgment subsequently obtained, has a “presumptive entitlement” to costs from the time of the offer.

[14]   The question at issue here is whether the appellants’ offer was more beneficial for the respondents than the subsequent judgment of this Court. The respondents say it was not.

[15]   While the High Court judgment was in the appellants’ favour, the respondents retain appeal rights (subject to any time limits). It cannot be said that acceptance of the appellants’ offer would have been more beneficial for the respondents than declining the offer and proceeding to defend the appeal. I agree with Mr Livingston for the respondents that rr 14.10 and 14.11 therefore have no application to this situation.

Result

[16]I decline to fix costs for the appellants.

[17]   In these circumstances it is not necessary for me to consider whether the appellants could properly request a top-up payment under s 105 of the Legal Services Act 2011 in the manner proposed.

Gwyn J

Solicitors:

Thomas Dewar Sziranyi Letts, Lower Hutt Livingston & Livingston, Wellington