UTTINGER V BAYCITY NEW ZEALAND LIMITED CA CA251/07

UTTINGER V BAYCITY NEW ZEALAND LIMITED CA CA251/07 29 August 2008IN THE COURT OF APPEAL OF NEW ZEALAND CA251/07 [2008] NZCA 330BETWEEN MICHAEL JOSEPH UTTINGER Appellant AND BAYCITY NEW ZEALAND LIMITED Respondent Hearing: 18 August 2008 Court: Glazebrook, Fogarty and Mackenzie JJ Counsel: I Finch for Appellant K W McLeod for Respondent Judgment: 29 August 2008 at 10.00 amJUDGMENT OF THE COURT A The appeal is dismissed. B The appellant must pay the respondent costs for a standard appeal on a band A basis and usual disbursements.____________________________________________________________________REASONS OF THE COURT(Given by Glazebrook J)Introduction[1] Baycity New Zealand Ltd made an application for revocation of a patent held by Mr Uttinger. The proceedings settled and, on 31 August 2005, the parties executed a deed of settlement. The recitals referred to the proceedings and said that the parties sought to "settle their dispute as set out in this deed". The body of the deed required Baycity to discontinue its proceedings upon execution of the deed. It also provided for an upfront payment of $15,000 and four annual payments of $10,000 each. A third party associate of Mr Uttinger was also a party to the settlement deed and the deed also covered matters relating to that third party. [2] The notice of discontinuance was duly filed by Baycity on 11 May 2006. On 16 January 2007 Mr Uttinger applied for costs with regard to the discontinuance. That application was refused by Harrison J on 4 May 2007 (HC AK CIV-2004-404- 3404). Mr Uttinger now appeals. [3] The issues for determination in this appeal are: (a) Whether the decision of Harrison J on costs is an interlocutory decision (and hence whether leave to appeal should have been sought under s 24G of the Judicature Act 1908). (b) Whether Harrison J was correct in holding that the settlement deed covered the costs of the litigation. (c) Whether Harrison J correctly exercised his discretion in refusing to make an order that Baycity pay Mr Uttinger's costs.Is the costs decision an interlocutory decision?[4] Baycity argues that leave was needed under s 24G of the Judicature Act because it was an interlocutory decision in the commercial list. No authority was cited for the proposition that a costs decision is interlocutory.[5] Section 24G(1) of the Judicature Act provides as follows:24G Restriction of right of appeal from interlocutory decisions(1) No appeal shall lie from an interlocutory decision of the High Court in respect of any proceeding entered on a commercial list unless leave to appeal to the Court of Appeal is given by the High Court on application made within 7 days of the decision being given or within such further time as the High Court may allow.[6] The term "interlocutory decision" is not defined in the Judicature Act. However, s 2 of the Act defines "interlocutory application" in the following manner:interlocutory application–(a) Means any application to the Court in any civil proceedings or criminal proceedings or intended civil proceedings or intended criminal proceedings for an order or a direction relating to a matter of procedure or, in the case of civil proceedings, for some relief ancillary to that claimed in a pleading; and (b) Includes an application for a new trial; and (c) Includes an application to review an order made, or a direction given, on any application to which paragraph (a) or paragraph (b) of this definition applies:[7] Mr McLeod, for Baycity, referred to relevant definitions in the High Court Rules. The definition of "interlocutory application" in the Rules relates to the form of the application. However, there is a definition of "interlocutory order" in r 3 of the High Court Rules on which he relied:interlocutory order–(a) means an order or direction of the Court that - (i) is made or given for the purposes of a proceeding or an intended proceeding; and (ii) concerns a matter of procedure or grants some relief ancillary to that claimed in a pleading; and (b) includes– (i) an order for a new trial; and (ii) an order striking out the whole or part of a pleading; and (iii) an order varying or rescinding an interlocutory order.[8] We do not accept the submission that a decision on costs after a discontinuance is covered by s 24G. It is not expressly referred to in the definition of "interlocutory application" in the Judicature Act. Nor is it expressly covered in the definition of "interlocutory order" in the High Court Rules. It does not come within the words of those definitions as ordinarily understood. [9] It is true that an order striking out a proceeding is expressly included in the definition in the Rules. This reflects the historical position. Strike-out applications have long been regarded as interlocutory applications. This may at first blush not seem particularly logical but such applications are made at the beginning rather than at the end of a proceeding and, depending on the result, a proceeding can continue after a strike-out application is determined. [10] By contrast, once the discontinuance was filed in this case, the proceeding was at an end. In no sense therefore can any subsequent costs decision be described as an interlocutory, as against a final, decision. In any event, it may be that the case would no longer be regarded as continuing in the commercial list once the proceeding had been discontinued.Did the settlement agreement cover the costs of the litigation?[11] Mr Finch, for Mr Uttinger, submitted that, as the settlement agreement did not deal with costs, it should be interpreted in light of r 476C of the High Court Rules, which provides that, unless the defendant otherwise agrees or the Court otherwise orders, a plaintiff must pay costs to the defendant up to and including the discontinuance. Further, the settlement agreement included matters relating to a third party. [12] We do not accept Mr Finch's submission. In our view, r 476C is aimed largely at the unilateral discontinuance of proceedings by a plaintiff and not those resulting from a settlement. On its face, r 476C contemplates that the parties may agree on any costs matters arising on a discontinuance. Whether there is such an agreement will depend on a construction of the settlement documentation in question, free of any presumptions based on r 476C. If anything, the presumptionwould be that parties would intend any settlement documentation to cover all matters at issue between them. [13] In this case legally advised parties recorded an agreement in a deed to "settle their dispute". There is nothing in the deed to suggest that this was a partial settlement only. Further, there is nothing on the face of the deed to suggest costs were not in fact covered in the sums Baycity agreed to pay (and extrinsic evidence to the effect that they were not is inadmissible). Contrary to Mr Finch's submission, the fact that the settlement deed involved another party and covered other matters has no bearing on the interpretation of the terms of the deed relating to the settlement. It follows that Harrison J correctly held that the settlement deed precluded Mr Uttinger's application for costs on the discontinuance.Did Harrison J correctly exercise his discretion?[14] We do not need to deal with this issue, having upheld Harrison J's decision on the construction of the deed but we see no error of principle in Harrison J's refusal to exercise his discretion and would have upheld his decision on this ground too.Result[15] The appeal is dismissed. [16] The appellant must pay the respondent costs for a standard appeal on a band A basis and usual disbursements.Solicitors: James & Wells Lawyers, Auckland for Appellant A J Park, Auckland for Respondent