HARRINGTON v WILDING [2019] NZCA 605

HARRINGTON v WILDING [2019] NZCA 605 [3 December 2019]IN THE COURT OF APPEAL OF NEW ZEALANDI TE KŌTI PĪRA O AOTEAROACA412/2018[2019] NZCA 605BETWEEN JONATHAN OWEN HARRINGTONAppellantAND TIMOTHY WILDINGRespondentHearing: 11 September 2019Court: Gilbert, Venning and Woolford JJCounsel: I G Hunt and C Light for AppellantP J Dale QC for First RespondentJudgment: 3 December 2019 at 9.30 amJUDGMENT OF THE COURTA The appeal is dismissed.B The cross-appeal is dismissed.C We make no order for costs.____________________________________________________________________REASONS OF THE COURT(Given by Gilbert J)Table of ContentsIntroduction [1]Mr Harrington's appeal [10]Mr Wilding's cross-appeal [11]Applicable principles [14]Did Mr Wilding fail, without reasonable justification,to accept settlement offers? [15]Did the Judge err in assessing comparative success? [24]Submissions [25]Analysis [30]Did the Judge err in disregarding the hacking ofMr Harrington's emails in assessing costs? [36]Should the Judge have made a Sanderson order? [41]Should the Judge have awarded costs to Mr Harringtonon his application for costs? [43]Should the Judge have increased the costs award tocompensate Mr Harrington for the delay in issuingthe judgment? [46]Conclusion [49]Result [51]Introduction[1] This appeal and cross-appeal are against a comprehensive costs judgment(comprising 82 pages including three schedules) delivered by Nicholas Davidson J on22 June 2018.1 In making his assessment as to how costs should be dealt with,the Judge had the unique advantages of having: presided over the 32-day trial;painstakingly analysed the many contested issues involved in the claims andcounterclaims in the course of producing an interim results judgment on 5 April 20172and a comprehensive (153 page) reasons judgment on 12 April 2017;3 presided overa one-day hearing of submissions on the various costs applications made on behalf ofall parties; and grappled with the competing arguments about every conceivable aspectof costs in the course of preparing his lengthy and detailed costs judgment. This isan unpromising backdrop for a successful appeal against the exercise of a discretionin awarding costs.[2] The Judge described the principal issue in the substantive litigation as beingwhether Mr Wilding (the first plaintiff in the High Court and the respondent inthis Court) should have the opportunity to acquire the shares of the other defendantshareholders in Te Mania Livestock Ltd (the company) or whether the companyshould be liquidated, as sought by Mr Harrington (the third defendant in the HighCourt and the appellant in this Court). This was in the context of claims and1 Wilding v Te Mania Livestock Ltd [2018] NZHC 1506 [Costs judgment].2 Wilding v Te Mania Livestock Ltd [2017] NZHC 649 [Interim judgment].3 Wilding v Te Mania Livestock Ltd [2017] NZHC 717 [Reasons judgment].counterclaims alleging oppressive and unfairly prejudicial conduct under s 174 ofthe Companies Act 1993. The Judge decided that Mr Wilding should be giventhe opportunity to purchase the defendants' shares rather than making an order to windup the company. Mr Wilding subsequently elected to purchase the shares at fair valueas assessed by the Court. Various other claims and counterclaims failed. The Judgeattributed the cause of the underlying dispute to a falling out between Mr Harringtonand Mr Wilding which "descended into acrimonious recrimination".4[3] The Judge concluded that neither Mr Harrington nor Mr Wilding achievedsuccess on all issues. Mr Wilding succeeded on the share purchase/liquidation contestand in defeating Mr Harrington's malicious prosecution and abuse of process claims.On the other hand, Mr Wilding failed on his monetary claims. Success on the sharevaluation issues was shared.[4] The Judge ordered Mr Wilding to pay Mr Harrington $103,500 costs and$27,500 disbursements. This award was based on the following broad analysis:(a) Because success overall was shared, neither received costs for any stepstaken before 28 June 2016.(b) Mr Wilding ought to have accepted (on 28 June 2016) a global offermade by the defendants. This was better than the outcome he achievedfollowing trial.(c) Taking this into account, Mr Wilding was ordered to pay scale costs toMr Harrington, uplifted by 50 per cent, after 28 June 2016.(d) These costs were reduced by one third to allow for the time that wouldhave been required in any event to resolve the share valuation issues.This reflected the Judge's assessment that two of the six weeks of trialtime would have been required for this purpose.4 At [522].(e) Mr Harrington was awarded 50 per cent of his disbursements,consistent with the Judge's overall assessment of relative success.[5] Mr Wilding was ordered to pay to the other defendants costs of $201,000 and$30,000 disbursements. The Judge considered these defendants were in a differentcategory. In summary, the Judge said that Mr Wilding "had less and limited successagainst these defendants, and they had undoubted success against him".5Those defendants do not challenge this award and they are not involved in this appeal.[6] Mr Harrington complains that he should have received: a significantly highercosts award (comparable to the other defendants); costs on the application for costs;and interest on the award to take account of the time the costs judgment was reserved.Mr Harrington lists 13 grounds of appeal in his notice of appeal, two of which are nolonger pursued.[7] For his part, Mr Wilding complains that the Judge should have directed thatcosts lie where they fall as between him and Mr Harrington. Further, he says the Judgeshould have made a Sanderson order requiring Mr Harrington to pay the costs awardedto the other defendants instead of him.6 Mr Wilding lists six grounds of appeal in hisnotice of cross-appeal. He also gives notice to support the judgment on other grounds.[8] The parties' approach to costs — leave no stone unturned and never say die —is a continuation of the way they conducted the underlying litigation. The Judgedescribed their approach in the following way in the Reasons judgment:[6] Along the way a commercial approach to resolution was lost.These Reasons address multiple allegations and counter allegations played outover 32 days of hearing, with prior and subsequent litigation attendances,more than 1,300 pages of evidential transcript, and several thousanddocumentary exhibits. The value of the shares in dispute is out of allproportion to the costs of this litigation, which has unfolded with excruciatingdetail and contest on every conceivable issue.[9] The Judge made similar comments in his Costs judgment under the heading"An exhaustive approach":5 Costs judgment, above n 1, at [206].6 Sanderson v Blyth Theatre Co [1903] 2 KB 533 (CA).[23] The determination to pursue every issue to the last evidential vestigegreatly stretched the trial, because at heart each of the multiple issues wasrelatively straightforward at law. It is no exaggeration to say the waythe litigation was conducted stretched the parties', counsel's, and the Court'sresources. It was excessive in its reach, but as discussed further, there wasa good opportunity to avoid all but the valuation issues, which opportunitywas not seized.Mr Harrington's appeal[10] Mr Harrington appeals against the award of costs made in his favour onthe following grounds:(a) The Judge should have assessed the proceeding as being category 3, notcategory 2. (Not pursued).(b) The Judge should have awarded Mr Harrington costs on Mr Wilding'sunsuccessful monetary claims although he acknowledges these wouldhave to be offset by costs on the claims on which he failed (maliciousprosecution/abuse of process and his application to put the companyinto liquidation).(c) The Judge failed to take account of earlier written offers made withoutprejudice except as to costs (rr 14.10 and 14.11 of the High Court Rules2016).(d) The Judge failed to take account of "collateral attacks and abuse ofprocess" by Mr Wilding (rr 14.6(3)(b)(ii) or 14.6(3)(d)).(e) The Judge failed to take account of "egregious misconduct" byMr Wilding in the hacking of Mr Harrington's confidential and legallyprivileged emails for litigation advantage (r 14.6(3)(d)).(f) The Judge failed to take into account that Mr Wilding's allegations ofanimal neglect by Mr Harrington failed because no loss was proved andthese allegations were in any event irrelevant to Mr Wilding's pleadedclaims under s 174 of the Companies Act.(g) The Judge erred in concluding that the animal neglect allegations wererelevant to remedy, namely whether Mr Wilding should be giventhe right to purchase the shares or whether the company should beliquidated.(h) The Judge erred in reducing costs to Mr Harrington to take account ofa notional two-week valuation trial.(i) The Judge erred in applying an uplift of 50 per cent on the costsawarded to Mr Harrington after having reduced costs on a notionaltwo-week valuation trial. The reduction in costs (otherwise correct)should have been applied to the uplifted level of costs. (Not pursued).(j) The Judge erred in differentiating between the costs awarded toMr Harrington and the costs awarded to the other defendants.(k) The Judge erred in failing to award the full amount of disbursementsincurred by Mr Harrington.(l) The Judge erred in failing to award costs to Mr Harrington on hisapplication for costs.(m) The Judge erred by failing to take account of Mr Harrington's loss ofuse of money caused by the delay in giving judgment on costs.Mr Wilding's cross-appeal[11] Mr Wilding cross-appeals on the following grounds:(a) The Judge erred in finding that Mr Wilding should have acceptedan offer made on 26 June 2016, shortly after the commencement ofthe trial.(b) The Judge erred in failing to take into account that Mr Wilding provedactual oppression by Mr Harrington, including animal neglect.(c) The Judge erred in failing to place sufficient weight on Mr Harrington'sconduct leading to the breakdown in the relationship betweenthe shareholders.(d) The Judge erred in failing to take account of Mr Harrington's conduct(theft of hay) and his subsequent claims for malicious prosecutionand/or abuse of process (arising out of this) were wholly lacking inmerit.(e) The Judge erred in not making a Sanderson order requiringMr Harrington (rather than Mr Wilding) to pay the costs awarded tothe successful defendants.(f) The Judge erred in failing to take into account that Mr Wilding had notcommitted any acts of oppression or any other conduct falling withinthe ambit of s 174 of the Companies Act.[12] Mr Wilding supports the judgment on other grounds. These are the groundsset out at [11(a)] and [11(b)] above and two further grounds. The two further groundsare that the Judge:(g) erred in concluding that Mr Wilding was responsible for hackingMr Harrington's emails; and(h) ought to have concluded Mr Harrington was "liable" under s 174 ofthe Companies Act for animal neglect.[13] For convenience, we have assembled these grounds into groups and willaddress them under the following headings:(a) Did Mr Wilding fail, without reasonable justification, to acceptsettlement offers?(b) Did the Judge err in assessing comparative success?(c) Did the Judge err in disregarding the hacking of Mr Harrington's emailsin assessing costs?(d) Should the Judge have made a Sanderson order?(e) Should the Judge have awarded costs to Mr Harrington on hisapplication for costs?(f) Should the Judge have increased the costs award to compensateMr Harrington for the delay in issuing the judgment?Applicable principles[14] A decision on costs involves the exercise of a discretion. The discretion is notunfettered and must be exercised in accordance with the principles set out in pt 14 ofthe High Court Rules. An appeal against the exercise of such a discretion cannotsucceed unless it can be shown that the Judge acted on a wrong principle, failed totake account of relevant considerations, factored in the irrelevant or was plainlywrong.7Did Mr Wilding fail, without reasonable justification, to accept settlement offers?[15] Under this head we will address ground (c) of the appeal and ground (a) ofthe cross-appeal.[16] As noted, the Judge considered that Mr Wilding should have accepted an offermade by Mr Harrington on 23 June 2016, which was endorsed by the other defendantson 26 June 2016, shortly after the trial commenced.8 Under this global settlementproposal Mr Wilding would purchase the defendants' shares including those ofMr Harrington, the parties would walk away from all their claims and counterclaims,and costs would lie where they fall. The only issue that would remain to be resolved7 May v May (1982) 1 NZFLR 165 (CA); and Manukau Golf Club Inc v Shoye Venture Ltd [2012]NZSC 109, [2013] 1 NZLR 305.8 Costs judgment, above n 1, at [198]–[199].at the trial would be the price to be paid, namely the fair value of the shares. The Judgedescribed this as a "thoroughly sensible proposal".9[17] The Judge estimated that two weeks of trial time would have been sufficient todispose of the valuation issues.10 Thus, acceptance of the offer would have saved fourweeks of the total trial time.11 For that reason, the Judge ordered Mr Wilding to paytwo-thirds of the costs claimed by Mr Harrington (subject to other adjustments) from28 June 2016, the date the offer should have been accepted.12[18] Mr Hunt, for Mr Harrington, submits that Mr Wilding ought to have acceptedearlier settlement offers and the costs award should have been extended to cover costsincurred between the date of those offers and 28 June 2016. Mr Dale QC, forMr Wilding, takes the opposite position. He submits that all parties made reasonableefforts to achieve a settlement and the defendants' global offer on 23/26 June 2016came too late. He contends that all settlement offers should have been disregarded inassessing costs.[19] The first offer Mr Harrington relies on is dated 24 July 2015. This was an offeron behalf of three of the defendants, Mr Harrington, WH Holdings Ltd (the seconddefendant) and Wong Chun Win (the fifth defendant) to sell their shares to Mr Wildingat $5.08 each, a total of $1,523,949. It was a condition of the offer that the companypay Mr Harrington an amount of $186,795 plus interest in accordance with an ordermade by the Employment Relations Authority. Like the Judge, we do not considerthis offer has any relevance to costs. First, the amount stipulated for the shares farexceeded the amount subsequently assessed as the fair value — $3.43 per share.Secondly, acceptance of the offer would not resolve the litigation because it related toonly 44.43 per cent of the total shares and was made on behalf of only three of the sixdefendants.9 At [198] (emphasis in original).10 At [199].11 At [213(d)].12 At [213(d)].[20] The second "offer" relied on is a letter from Mr Harrington's solicitors tocounsel for Mr Wilding and is dated 8 October 2015. This lengthy letter is also notrelevant to costs. It records:32. This letter is therefore not, as such, a Calderbank proposal. Nor is ita proposal to settle on any terms other than on terms similar to thoseproposed in the offer of 24 July 2015. This is not a renewal of thatoffer, but an indication that, were your client to accept that a solutionsimilar to that proposed should be negotiated, when the door was openfor him to approach his fellow shareholders with positive intent toresolve matters in a realistic and economic basis (sic).[21] The third "offer" relied on is a letter dated 11 May 2016. This letter is alsoirrelevant to the issue of costs because it does not contain any offer. It recordsMr Harrington's view that "an acceptable outcome would be a transfer of shares to[Mr Wilding]". However, the solicitors acknowledged that the "proposal did notpresume that such transfer should be at any particular value — whether liquidation,fair value, fair market value, or some other basis". Mr Harrington's solicitors agreedwith counsel for Mr Wilding's "suggestion that there should be agreement as tothe basis upon which the shares are valued, and what is required to achieve this".The letter concludes on this aspect by seeking "clarification of your client's intentions"and whether he has "any alternative proposals to make, to settle these proceedings".[22] Finally, Mr Harrington refers to an offer made on 3 June 2016, some threeweeks prior to the offer the Judge regarded as decisive. The problem with this offerwas that, although the share price offered was below that set following the trial(average share price of $3 per share cf $3.43), the offer was conditional on transfer tothe second defendant of a grazing licence of land owned by the Department ofConservation.13 The Judge found that this licence was held by Mr and Mrs Wildingon behalf of the company, as Mr Wilding asserted, not for the second defendant.Taking that into account, the Judge considered it was not unreasonable for Mr Wildingto reject this offer.14 The Judge considered the rights to this land were properlyregarded as important in the context of the farming operation.13 At [194].14 At [197].[23] We are not persuaded that the Judge made any appealable error in placing noweight on this letter, rather on the offer made three weeks later. We agree withthe Judge's assessment that the 23/24 June 2016 global offer was a very constructiveproposal that ought to have been accepted. Though it came late, it would have savedconsiderable court time and substantial costs for all parties. We are not persuadedthe Judge was wrong to take Mr Wilding's rejection of this offer into account in fixingcosts.Did the Judge err in assessing comparative success?[24] It will be convenient to address grounds (b), (d), (f), (g), (h), (j) and (k) ofthe appeal and grounds (b), (c), (d), (f) and (h) of the cross-appeal/supporting groundsunder this general heading.Submissions[25] Mr Hunt submits the Judge was wrong to conclude that there was someequality of success between Mr Harrington and Mr Wilding such that Mr Harringtonshould not receive any costs prior to 28 June 2016 and only half of his disbursements.As noted, that was the date the Judge considered Mr Wilding should have acceptedthe defendants' global offer. Mr Hunt notes that Mr Wilding failed on all his claimsagainst Mr Harrington, including the stock neglect claim which took up significanthearing time. As to Mr Wilding's success on the share sale/liquidation contest,Mr Hunt relies on the pre-trial offers made by Mr Harrington to sell his shares toMr Wilding (referred to above) to support his contention that Mr Wilding achievednothing more by going to trial than what he had already been offered.[26] Mr Hunt argues that the only discrete issues on which Mr Harrington failedwere his malicious prosecution/abuse of process claims. Assuming costs calculatedon a category 2, band B basis on those claims, Mr Hunt calculates that Mr Wildingwas entitled to costs of $13,491, assuming one and a half days of hearing time todispose of them. In addition, Mr Hunt says Mr Wilding was entitled to $14,481, beingthe agreed costs in separate proceedings in which Mr Harrington unsuccessfullyattempted to liquidate the company.15 On that basis, Mr Hunt contends the Judgeought to have awarded costs to Mr Harrington from the commencement ofthe proceeding, offset only by these two amounts. Mr Hunt says that becausethe liquidation costs had been agreed prior to the commencement of the trial, theseshould not have been relevant to the Court's assessment of the parties' comparativesuccess or failure in the present proceeding.[27] Mr Hunt argues that the Judge failed to take adequate account of the significanthearing time consumed in addressing Mr Wilding's claims, particularly the stockneglect claim. Mr Hunt says these claims were always doomed to fail and some wereso hopeless they were abandoned by Mr Wilding in closing submissions.[28] Mr Dale realistically acknowledges that this Court will be reluctant to interferewith the Judge's assessment of the overall merits, especially given there weresuccesses and failures on both sides. However, he says that if this Court is mindedto interfere with the Judge's assessment, then it should do so in favour of Mr Wildingbecause he succeeded in proving misconduct by Mr Harrington, whereasMr Harrington did not establish any conduct relevant to the analysis under s 174 ofthe Companies Act on the part of Mr Wilding.[29] In developing this submission, Mr Dale refers to three issues in particular.These are: the animal neglect issue; Mr Harrington's attempt to wind up the companyin the separate proceedings for non-payment of holiday pay (a debt that had beensatisfied); and a proposal by the defendants to lease grazing land to a competitorcontrary to the company's interests. Mr Dale claims there was overwhelming evidencethat Mr Harrington deliberately starved the livestock and the Judge should not haveexonerated Mr Harrington on a basis of extreme stress from the breakdown inrelationships. This was not pleaded, was not supported by the evidence and was notdealt with in submissions. Mr Dale points out that the pleaded defences — a wetwinter, selenium deficiency and hard farming — all failed. Further, Mr Dale saysMr Wilding was forced to intervene and defend the separate winding-up proceedingsinitiated by Mr Harrington against the company. Although this was based on15 Harrington v Te Mania Livestock Ltd [2016] NZHC 785.a statutory demand for holiday pay that had been paid, Mr Harrington and the secondand third defendants voted against the company being allowed to instruct solicitors orfile a defence. Mr Dale says this was a plain breach by the defendants, includingMr Harrington, of their obligations to the company. Mr Dale also refers toMr Harrington's proposal to lease land to a competitor, rather than renewingthe company's lease of this land, in circumstances where Mr Wilding consideredthe land was important to the company's continued success.Analysis[30] There can be no real dispute that the Judge was correct to conclude that overallsuccess was shared. As the Judge observed, Mr Wilding succeeded on remedy, whichwas the primary contest under s 174 of the Companies Act. Mr Wilding was giventhe option to purchase the defendants' shares at fair value; Mr Harrington failed toobtain an order winding the company up. Mr Wilding failed on his claims againstMr Harrington. Mr Harrington failed on his claims against Mr Wilding.[31] We have already explained why we reject Mr Hunt's submission thatMr Wilding was not justified in rejecting earlier "offers". It follows that one ofthe principal premises of Mr Hunt's overall success submission — that Mr Wildingachieved nothing more by proceeding to trial than he had been offered much earlier— falls away. The earlier offers were not relevant to the assessment of costs up to28 June 2016.[32] We agree with the Judge that the parties' conduct underpinning the discreteclaims was also relevant to the claim under s 174 of the Companies Act, includingthe appropriate remedy. The Judge was entitled to take this into account in assessingcomparative success broadly, rather than attempting to calculate costs for each partybased solely on the time required to deal with each of their discrete claims.Indeed, in a case such as this where the conduct giving rise to the discrete claims wasalso relevant to whether there had been oppressive or unfairly prejudicial conduct andthe appropriate remedial response, a broad assessment was required to produce a justoutcome on costs. The animal neglect claim is a good example. While Mr Wildingfailed on his claim for loss on the animal neglect issue, Mr Harrington did not by anymeans escape criticism for his care of the animals. The Judge commented on this issuein his Costs judgment as follows:Stock management/neglect[17] I found that something went seriously wrong with the stockmanagement, which justifiably alarmed Mr Wilding. This may have beenassociated with the extreme stress on Mr Harrington arising fromthe breakdown in relationships. I concluded that Mr Harrington did notdeliberately neglect or starve the animals, but his high standards fell away andrational decision making was compromised. [The company's] fine reputationwas put at risk by this. It was not deliberate but the mismanagement wasa "serious and unusual circumstance", which occupied a great deal ofthe hearing, as did the circumstances in which the [Department ofConservation land] was withdrawn from [the company's] occupation.These were each in different ways manifestations of the breakdown inrelationships and the parties' different aspirations for the future of[the company], and they deepened distrust, which was already embedded.(Emphasis in original).[33] Later in his analysis, the Judge again commented on the merits and relevanceof this issue:16Mr Wilding's stock neglect claim was not factually hopeless as the evidenceof neglect was stark and troubling. It was not viable as an action in damagesor compensation under s 174, but it bore on the contest for [the company's]shares and the liquidation.[34] The Judge found that Mr Harrington had wrongfully attempted to liquidatethe company in the separate proceedings we have referred to. While costs for thoseproceedings were settled prior to the commencement of the trial in this proceeding,Mr Harrington's conduct remained relevant for the reasons the Judge briefly explainedin his Costs judgment:Liquidation of [the company][19] In proceedings antecedent to trial, Mr Harrington had wrongfullycontinued his attempt to liquidate [the company], even though its employmentliability to him had been met. This incensed Mr Wilding, whose actions alonesaved the company from liquidation. Mr Harrington's conduct and the at leasttacit support of other defendants was in my view not just ill founded, butantithetical and harmful to the interests of [the company].(Emphasis in original).16 Costs judgment, above n 1, at [184].[35] The Judge was uniquely placed to make the required assessment ofcomparative success overall. He took great care in doing so. We are far frompersuaded that he made any appealable error in his careful assessment of this issueafter considering all matters urged upon him. In short, the Judge made no error ofprinciple, he took account of all relevant considerations, put to one side irrelevantconsiderations, and was not "plainly wrong". There is no basis for us to interfere withhis assessment.Did the Judge err in disregarding the hacking of Mr Harrington's emails inassessing costs?[36] Here we address ground (e) of Mr Harrington's appeal and ground (g) ofMr Wilding's supporting grounds.[37] The Judge explained the background to this issue in his Reasons judgment.17Mr Wilding's brother-in-law, Mr Heyward, had set up a cloud-based email system forthe company and he knew the password for Mr Harrington's email address.When the relationship between Mr Wilding and Mr Harrington deteriorated,Mr Heyward passed on to Mr and Mrs Wilding emails sent or received byMr Harrington (or his partner) he thought might be helpful. These documents were ina date range from 2010 until 23 September 2014 although the hacking occurred overa shorter period. Some of these documents were not confidential and werediscoverable, but some were legally privileged in that they contained advice fromMr Harrington's solicitor, Mr Thwaites. The Judge described this latter category asfollows:18Emails in June 2013 included Mr Thwaites' advice sent to Mr Harringtonbefore a Board meeting. There was correspondence with Mr Thwaites in2014, as to how Mr Harrington and others might exit [the company].[38] Mr Wilding did not initiate the hacking. The Judge noted that Mr Wildingasked Mr Heyward to stop, but he did not do so.19 As soon as Mr Wilding's counselfound out about the hacking, it was disclosed to the defendants.20 The Judge observed17 Reasons judgment, above n 3, at [86]–[89].18 At [89].19 At [88].20 At [88].in his Costs judgment that there was no issue at the trial about what had occurredsaying the issue "was straightforward evidentially and there was no contest aboutthe illicit nature of the hacking".21 The Judge considered it was mostly relevant towhether Mr Wilding should be given the opportunity to purchase the shares.22[39] Mr Hunt submits that an order for increased costs should have been made toreflect that these emails were hacked to obtain litigation advantage.[40] We disagree. The hacking of the emails by Mr Heyward occurred outsidethe period of the litigation, prior to 23 September 2014, whereas the proceeding wasnot filed until 17 December 2014. The hacking did not contribute to the cost ofthe litigation, it merely formed part of its subject matter. The Judge was entitled toplace no weight on this when determining who should bear the costs of the litigation.Should the Judge have made a Sanderson order?[41] This is ground (e) of Mr Wilding's cross-appeal. Mr Dale suggests that ifthis Court is persuaded to interfere with the Judge's exercise of discretion, one option,in addition to a direction that costs lie where they fall as between Mr Wilding andMr Harrington, would be to make a Sanderson order requiring Mr Harrington to paythe costs of the other defendants.[42] This is a very ambitious submission which we have no hesitation in rejecting.We have already found that the Judge was entitled to award increased costs againstMr Wilding for the costs of trial after 28 June 2016 because he unreasonably failed toaccept a global settlement offer made by all defendants. There could be no principledreason for requiring Mr Harrington to pay the other defendants' costs after that date;indeed, it would be perverse to make such an order in the circumstances.All defendants (other than the fourth defendant) had to be joined to the proceedinggiven the nature of the relief sought, including under s 174 of the Companies Act.Mr Harrington was not an unsuccessful defendant who should be ordered to paythe costs of the successful defendants. The defendants were equally successful in21 Costs judgment, above n 1, at [21].22 At [21] and [44].respect of Mr Wilding's claims. Mr Harrington's costs award was reduced to reflectthat he failed on his counterclaims against Mr Wilding.Should the Judge have awarded costs to Mr Harrington on his application forcosts?[43] This is ground (l) of Mr Harrington's appeal. The Judge declined to awardcosts on the application for costs for the reasons set out in the following paragraph ofhis Costs judgment:[221] Costs are sought in respect of these very thorough and lengthysubmissions, accompanied by large volumes of authorities, bundles ofsupporting documents, and associated memoranda. Each party has had somewins and some losses and I decline to make an order for "costs on costs".[44] Mr Hunt notes that the High Court sometimes awards costs for the costsincurred in seeking costs. He says, citing the High Court's judgment in Parsot v GreigDevelopments Ltd, it is "settled law" that a successful party is "entitled" to anappropriate allowance for the preparation of costs memoranda.23 He contendsthe Judge should have awarded Mr Harrington costs for preparation of costssubmissions and for the one-day hearing on costs.[45] There is no inflexible rule that a party who is awarded costs is "entitled" tocosts associated with the application for costs. Costs for each step in a proceeding arealways at the discretion of the court. The Judge considered that success onthe respective costs applications was shared. That assessment is borne out bythe present appeal and cross-appeal on costs. We see no appealable error in the Judge'sexercise of discretion in not awarding costs to Mr Harrington on his partiallysuccessful costs application.Should the Judge have increased the costs award to compensate Mr Harringtonfor the delay in issuing the judgment?[46] This is ground (m) of Mr Harrington's appeal. The Judge addressed this issueas follows:23 Parsot v Greig Developments Ltd (2008) 18 PRNZ 995 (HC) at [23].[222] Mr Hunt submitted I should make the equivalent of an order forinterest on costs. The law he cites is against this but there is a "use of money"impact on the defendants by delay in judgment. It is, however, very small,and would not impact the broad exercise of discretion which is at the date ofjudgment.[47] Mr Hunt submits that the Judge failed to exercise his discretion properly onthis issue given that the Costs judgment was not delivered until 22 June 2018, the costshearing took place on 3 August 2017 and the costs were mostly incurred prior toDecember 2016. Mr Hunt says Mr Harrington should have been compensated forbeing kept out of his money for this lengthy period by an increased award of costs.He acknowledges that the court cannot award interest on costs before costs have beenawarded.[48] Section 20 of the Interest on Money Claims Act 2016 provides that a court maynot award interest under the Act on costs awarded to a party for any period precedingthe date the costs are awarded. We do not consider this prohibition can be subvertedby increasing an otherwise appropriate costs award, in effect to recognise interest onthe costs incurred.Conclusion[49] An appeal against the exercise of a discretion, such as a decision on costs,cannot succeed unless it can be shown that the Judge acted on a wrong principle, failedto take account of relevant matters, factored in the irrelevant, or was plainly wrong.No such error has been demonstrated in this case. Any reading of the comprehensiveCosts judgment demonstrates the considerable care the Judge took in considering allarguments advanced before him on the competing costs applications. Nothing wasoverlooked. There is no basis for us to interfere with the Judge's carefully reasonedconclusions. The appeal and cross-appeal must accordingly be dismissed.[50] Both parties sought costs for the appeal. As neither the appeal northe cross-appeal has succeeded, costs should lie where they fall.Result[51] The appeal is dismissed.[52] The cross-appeal is dismissed.[53] We make no order for costs.Solicitors:Young Hunter, Christchurch for AppellantEwart & Ewart, Auckland for Respondent