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

ROAD RUNNER 2012 LIMITED v MEMELINK (COSTS) [2022] NZHC 704 [7 April 2022]IN THE HIGH COURT OF NEW ZEALANDWELLINGTON REGISTRYI TE KŌTI MATUA O AOTEAROATE WHANGANUI-A-TARA ROHECIV-2021-485-548[2022] NZHC 704UNDER the District Court Act 2016IN THE MATTER OF an appeal against a decision of the DistrictCourt at Hutt ValleyBETWEEN ROAD RUNNER 2012 LIMITEDFirst AppellantSUNTHIR NGUONSecond AppellantAND HARRY MEMELINK and CISCAFORSTER as trustees of the Link TrustNo. 1RespondentsOn the PapersCounsel: J J Pietras for the AppellantsD G Livingston for the RespondentsJudgment: 7 April 2022COSTS JUDGMENT OF GWYN J[1] In my judgment dated 2 March 2022,1 I upheld the appellants' appeal againstthat part of the decision of the District Court where the Court concluded that therespondents could continue with their claim in respect of outgoings under the leasebetween the parties.2 I found that the District Court judgment was a final judgment1 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].on the respondents' claim against the appellants under the lease, including on the issueof outgoings payable by the appellants to the respondents.3[2] I expressed the preliminary view that costs should lie where they fall, but thatcounsel should file memoranda if they took a different view.4[3] Counsel for the appellants and for the respondents subsequently filedmemoranda on costs on 2 March and 14 March 2022, respectively. The memorandawere put before me on 5 April 2022.[4] The appellants seek costs on a 1B basis. The basis for the claim to costs iswhat 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 (inparticular [37] of the decision, where the Judge suggested a further casemanagement conference if the respondents sought recovery of otheroutgoings).(b) The respondents would undertake not to pursue the question ofoutgoings any further, whether in the District Court or at arbitration.(c) The respondents would agree not to appeal the District Court decisionto the High Court.[6] The appellants' correspondence was marked "Without Prejudice, Save as toCosts".[7] By response of 12 September 2021, the appellants' offer was rejected by therespondents.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 theyfall on a technical appeal of this nature. However, the appellants say that the offerreferred to at [5] above was a Calderbank offer for the purposes of r 14.10 of the HighCourt Rules 2016 (the Rules). Although the appellants' memorandum does notexplicitly invite the Court to award costs to the appellants pursuant to r 14.11, that isimplicit 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 againstthe 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 toactual costs approved by Legal Aid Services. The appellants say that would enablethem to request a top-up payment from the Legal Services Commissioner under s 105of the Legal Services Act 2011.Respondents' position[11] In response, counsel for the respondents says that this is not a situation underthe relevant rules where the Court may take into consideration in setting costs that aparty has rejected a settlement offer where they would have been better off acceptingthat offer. Counsel disagrees that any reasonable settlement offer was rejected. If therespondents had accepted the appellants' offer, they would actually be in a worseposition now, following the High Court judgment, because they would be without acase management conference in respect of outgoings in the District Court and withoutappeal rights. For those reasons, the principles at play in rr 14.10 and 14.11 do notapply 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 atany 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 tothe 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'sdiscretion. However, the maker of a r 14.10 offer which has a higher value or is morebeneficial for the recipient than a judgment subsequently obtained, has a "presumptiveentitlement" to costs from the time of the offer.[14] The question at issue here is whether the appellants' offer was more beneficialfor the respondents than the subsequent judgment of this Court. The respondents sayit was not.[15] While the High Court judgment was in the appellants' favour, the respondentsretain appeal rights (subject to any time limits). It cannot be said that acceptance ofthe appellants' offer would have been more beneficial for the respondents thandeclining the offer and proceeding to defend the appeal. I agree with Mr Livingstonfor the respondents that rr 14.10 and 14.11 therefore have no application to thissituation.Result[16] I decline to fix costs for the appellants.[17] In these circumstances it is not necessary for me to consider whether theappellants could properly request a top-up payment under s 105 of the Legal ServicesAct 2011 in the manner proposed.Gwyn JSolicitors:Thomas Dewar Sziranyi Letts, Lower HuttLivingston & Livingston, Wellington