In its recent decision in Manukau Golf Club Inc v Shoye Venture Ltd [2012] NZSC 109, the Supreme Court considered whether the Court of Appeal had erred in refusing to award costs to the Manukau Golf Club (the Club) despite its successful appeal against the grant of summary judgment in the High Court.

In overturning the Court of Appeal's refusal to award costs, the Supreme Court noted that the Court of Appeal had failed to apply the fundamental principle applying to the determination of costs i.e. that costs follow the event. The Supreme Court stated that although costs decisions are discretionary, that discretion is not unfettered, and, unless there is a reason to the contrary, there is a strong implication that the statutory costs regime will be applied.

As the Court of Appeal had not given any reasons for its decision not to award costs, the Supreme Court had to infer what its reasoning had been. The Supreme Court agreed with the Club's submission that it was most likely that the Court of Appeal, having allowed the appeal on the basis that the High Court Judge had erred in granting summary judgment, had decided that it would be unfair for Shoye to have to pay costs to the Club for an error committed not by Shoye but by the Judge. The Supreme Court disagreed with such an analysis and noted that the consequence of a respondent fighting an appeal to maintain its win, and supporting the findings of the judge below, is that it becomes liable for costs if the decision that it supports is overturned.

As there was no suggestion of any disentitling behaviour on the part of the Club which would justify a refusal to award costs, the Supreme Court allowed the Club's appeal. Shoye was ordered to pay the Club costs of $12,220, plus disbursements of $5,051.73, being the sums sought by the Club in its written submissions in the Court of Appeal.