BLACKHAWK FARM LTD v ARMADA EQUINE LTD [2017] NZHC 686

BLACKHAWK FARM LTD v ARMADA EQUINE LTD [2017] NZHC 686 [10 April 2017]IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYCIV-2016-404-002540[2017] NZHC 686BETWEEN BLACKHAWK FARM LIMITEDPlaintiffAND ARMADA EQUINE LIMITEDDefendantHearing: On the papersJudgment: 10 April 2017COSTS JUDGMENT OF DOWNS JThis judgment was delivered by me on Monday, 10 April 2017 at 3.30 pmpursuant to r 11.5 of the High Court Rules.Registrar/Deputy RegistrarSolicitors:Tripe Matthews & Feist, Wellington.Anthony Harper, Auckland.[1] The only outstanding issue as between the parties—at least in this Court—concerns costs. The plaintiff seeks 2B costs in relation to its interlocutoryapplication for an injunction, and increased costs in relation to the defendant'sabandoned application to rescind or vary consent orders. The defendant resists costs.And, it contends it should have the costs in relation to its (abandoned) application onthe basis it was brought only because the plaintiff failed to comply with the Court'sdirections.[2] The plaintiff emphasises it "won", and so r 14.2(a) of the High Court Rules.The defendant emphasises the discretionary nature of costs awards pursuant to r 14.1 of those rules.[3] The case is before me as Duty Judge.[4] Some background. Tomahawk II is a racehorse. The plaintiff is its owner (with others). The defendant grazes and train horses. The plaintiff and defendant entered an oral agreement by which the defendant was to graze and train Tomahawk II at the plaintiff's cost.[5] On 10 October 2016, the plaintiff filed a statement of claim alleging the defendant had breached the agreement, including by failing to surrender Tomahawk II. By way of interlocutory application, the plaintiff sought an injunction for Tomahawk II's return.[6] That application was served on a Pickwick basis. The defendant consented to injunctive relief providing the plaintiff held certain monies on trust in relation to the underlying dispute. On 11 October 2016, Muir J made orders by consent. His Honour's orders recognised the plaintiff would notify the defendant of its intention in relation to Tomahawk II's sale.[7] The case came back to Muir J the next day. His Honour recorded the plaintiff would not commit to not selling Tomahawk II within 21 days. Further consent orders were made, including a direction the plaintiff would, within 21 days, providethe defendant with its proposal for the horse's sale. The defendant was given leaveto apply to vary or rescind the orders if agreement was not reached in relation to sale.[8] On 19 December 2016 the defendant filed an application to vary or rescind the orders as the plaintiff had not identified a sale proposal. It adduced affidavit evidence in support. The plaintiff filed a notice of opposition with affidavit evidence. But the parties also negotiated.[9] Agreement was reached on 14 February 2017. The defendant abandoned its application. And Tomahawk II remained with the plaintiff. But the parties could not agree on costs. Hence this decision.[10] I have concluded costs should lie where they fall for five interrelated reasons.[11] First, at the heart of this dispute is a structural problem: the absence of a written agreement between the parties, and consequential disagreement about theagreement's terms. The plaintiff appears to have believed it was entitled to the returnof Tomahawk II as it had cancelled the agreement and given the defendant notice ofcancellation. Conversely, the defendant appears to have believed it was entitled toretain possession of Tomahawk II until the horse was sold, with 10 percent of thesale proceeds to go to it irrespective of who brokered the sale.[12] Second, each of these competing contentions finds support in the affidavitevidence. Each is plausible. And facially reasonable. Materially, I am in noposition to resolve which is correct given the absence of any adjudicative ruling tothis point and now settlement.[13] Third, while the plaintiff sought and obtained interlocutory relief, thedefendant consented to that relief providing certain conditions were met. They were.Terms were agreed as between the parties.[14] Fourth, I am in no position to resolve who, if anyone, was at fault in relation to non-compliance with the timetable fixed by Muir J on 12 October 2016. Theplaintiff contends it was not at fault because the horse's condition was so poor it wasworthless, hence could not be sold, hence there could be no proposal for sale. The defendant contends it properly cared for Tomahawk II. And, asserts the plaintiff had utterly unrealistic expectations in relation to sale price.[15] To the extent the defendant appears not to have complied with the timetable,there is force in its submission that was because the plaintiff did not comply withMuir J's directions to provide the defendant with a sale proposal. Beyond this, I sayno more.[16] Fifth, against this background, it is commensurate with the interests of justice costs lie where they fall...Downs J