Alpine South Fishing Limited (in receivership) v Kim

[2018] NZHC 3253

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV 2017-404-002985

[2018] NZHC 3253

BETWEEN

ALPINE SOUTH FISHING LIMITED (in Receivership) First Plaintiff

AND

HYUN CHOI

Second Plaintiff

AND

SANG HEE KIM
First Defendant

AND

IAN ANDREW NELLIES & KEITH VINCENT HARRIS

As Receivers of Alpine South Fishing Limited in Receivership Second Defendants

Hearing:	On the papers
Appearances:	I M Hutcheson for Plaintiffs A Cherkashina for Defendants
Judgment:	11 December 2018

COSTS JUDGMENT OF VAN BOHEMEN J

This judgment was delivered by me on 11 December 2018 at 12 noon Pursuant to Rule 11.5 of the High Court Rules

…………………………

Registrar/Deputy Registrar

Counsel:

I M Hutcheson, Barrister, Auckland Solicitors:

Small Law Firm Ltd, Auckland Park Legal Ltd, Auckland Norling Law, Auckland

ALPINE SOUTH FISHING LIMITED (in Receivership) v CHOI [2018] NZHC 3253 [11 December 2018]

Introduction

[1]                  On 2 October 2018, I delivered judgment dismissing the interlocutory application by Alpine South Fishing and Mr Choi. I held that the defendants were entitled to costs on a 2B basis and gave leave to the parties to submit memoranda if they could not agree costs.1

[2]                  Ms Cherkashina, counsel for the first defendant, has filed a memorandum advising that the parties have agreed on costs except in one respect. The first defendant seeks costs for the preparation of the affidavits for the interlocutory proceeding under item 30 “Preparation of affidavits” on a 2B basis, that is 2.5 days at a rate of $2,230, a total of $5,575. The first defendant seeks these costs in addition to the costs sought under item 23 “Filing opposition to introductory application”.

[3]                  In his memorandum dated 4 December 2018, Mr Hutcheson, counsel for the plaintiffs, says the plaintiffs accept the claim under item 23 and say that item includes the preparation of affidavits in interlocutory proceedings so further costs under item 30 are not appropriate.

[4]                  If the Court accepts the first defendant’s claim under item 30, Ms Cherkashina says the first defendant seeks costs of $892 on the costs application, comprising of item 11 “filing memorandum” for 0.4 days at $2,230. Costs on the costs memorandum are opposed by the plaintiffs on the basis that the costs application was unnecessary. The plaintiffs submit that a reduction should be made to the costs claimed by the first defendant to represent the plaintiff having to file a costs memorandum in response.

[5]                  The parties have also agreed on disbursements except in one respect. The first defendant has raised an additional item in his costs memorandum, namely the defendants’ translation fees. The plaintiffs have informed the Court they will abide the decision of the Court on that matter.

1      Alpine South Fishing Limited (in Rec) v Kim [2018] NZHC 2579 at [54].

Submissions on costs award for preparation of affidavits

[6]                  Ms Cherkashina says the first defendant accepts that item 30 “Preparation of affidavits” is listed in Schedule 2 of the High Court Rules 201 under the heading “Trial preparation and appearance” and, by inference, not under the heading “Interlocutory applications (including applications for summary judgment and for review of interlocutory decisions)” under which item 23 is listed. Ms Cherkashina submits, however, that the allocation the first defendant seeks is appropriate.

[7]                  Ms Cherkashina’s principal argument is that, notwithstanding rr 14.2 and 14.5 of the High Court Rules 2016, which state the principles that apply to the determination of costs and prescribe what a reasonable time for a step in a proceeding is, under r 14.1(1) ultimately all costs matters are at the discretion of the Court. She submits that the defendant was required to devote considerable time and resources to preparing affidavits responding to the lengthy affidavit filed by the second plaintiff in support of the plaintiff’s application and that the time and costs of this preparation warrant the exercise of the Court’s discretion to allow a separate recovery for those affidavits.

[8]                  Ms Cherkashina’s secondary argument is based on the fact that items 37 and 38 – concerning originating applications – make specific reference to the preparation of affidavits when filing and opposing such applications whereas items 22 and 23 – concerning interlocutory applications – do not make specific reference to the preparation of affidavits when filing and opposing those applications. Ms Cherkashina submits that the absence of any reference to the preparation of affidavits in items 22 and 23 means that affidavits in support of or in opposition to interlocutory applications are to be charged separately.

[9]                  Mr Hutcheson submits that items 22 and 23 are intended to cover the preparation of affidavits in interlocutory proceedings and additional costs should not be ordered. He also submits that item 30 deals with a substantive trial issue and does not relate to the interlocutory application process.

Analysis

[10]              On Ms Cherkashina’s secondary argument, I do not consider it is useful to try to determine the scope of items 22 and 23, which are clearly focused on interlocutory applications, by reference to the items dealing with originating applications.

[11]              Rules 7.20 and 7.25 require a party filing an interlocutory application or filing a notice of opposition to an interlocutory application to file any affidavit evidence in support or in opposition. Those affidavits are an integral part of the interlocutory process and must be filed before the preparation of written submissions and the bundle

– which are the next two items in Schedule 2. It follows that the preparation of affidavits in support of or in opposition to an interlocutory application are part of the processes provided for in items 22 and 23.

[12]              I also agree with Mr Hutcheson that item 30 deals with a substantive trial issue and is not intended to relate to the interlocutory application process.

[13]              I do not accept, therefore, Ms Cherkashina’s secondary argument for the first defendant’s separate claim under item 30.

[14]              With respect to Ms Cherkashina’s primary argument, while rule 14.1(1) states the general proposition that costs are at the discretion of the Court, and while rule 14.1(2) states that rules 14.2 to 14.10 are subject to rule 14.1, the Court of Appeal has made it clear in Bradbury v Westpac Banking Corporation that the general discretion in rule 14.1 is qualified by the specific costs rules and is exercisable only in situations not contemplated or not fairly recognised by them.2

[15]              For the reasons given at [11], I consider that item 23 of Schedule 2 contemplates costs for the preparation of affidavits in opposition to an application for summary judgment. I consider, therefore, that it is not open to me to exercise the discretion conferred by rule 14.1 to make a separate allocation with respect to the preparation of the affidavits in opposition.

2      Bradbury v Westpac Banking Corporation [2009] NZCA 234, [2009] 3 NZLR 400 at [6].

[16]              That said, I accept that the first defendant was required to prepare substantial responses to the large number of allegations made by Mr Choi, the second plaintiff, about the history of the dealings between the plaintiffs and the first defendant, to   Mr Choi’s challenges to the accuracy of translations from Korean into English, to  Mr Choi’s evidence on the valuation of the Alpine South vessel, and to Mr Choi’s criticisms of the actions of the receivers. In these circumstances, I am satisfied that costs on 2B basis for item 23 would not be sufficient to reflect adequately the time required to be taken by the first defendant in preparing the affidavits in opposition.

[17]              As made clear by the Court of Appeal in Paper Reclaim v Aotearoa International Ltd and reaffirmed in Commissioner of Inland revenue v Chesterfields Preschools Ltd, it is open to a successful party to seek band C costs for a particular step if they can demonstrate why a normal amount of time under band B may be insufficient.3 I consider that the first defendant has established that an additional time allocation is warranted for item 23 and that the preparation of the four affidavits in opposition to the plaintiff’s application for summary judgment justifies a time allocation for this step being awarded on a band C basis, which is 2 days. I note that Dunningham J took a similar approach in Tyre Collection Services Ltd v Le Roy where an applicant for an interim injunction also made a claim under item 30, in addition to a claim under item 22, because of the time required to prepare three affidavits in support of the application and a further three affidavits in reply.4

[18]              Accordingly, I set the time allocation for item 23 at a 2C basis of 2 days, resulting in a total for that step of $4,460.

Other claims

[19]              The plaintiffs were technically correct in objecting to the claim under item 30, although they have not succeeded with the substance of their argument that there ought to be no further recognition for time taken for the preparation of the affidavits in

3      Paper Reclaim v Aotearoa International Ltd [2007] NZCA 544, (2007) PRNZ 743 at [35]; Commissioner of Inland revenue v Chesterfields Preschools Ltd [2010] NZCA 400, (2010) NZTC 24,500 at [161].

4      Tyre Collection Services Ltd v Le Roy [2016] NZHC 898 at [18].

opposition. In the circumstances, I do not consider that an award of costs is appropriate, and find that the costs on costs are to lie where they fall.

[20]              The additional disbursements of $854.91 for the translator fees are supported by an invoice filed with the first defendant’s costs memorandum. I am satisfied these were appropriate.

Result

[21]              The costs set out at 2.1 of the first defendant’s memorandum of 1 November 2018 are approved, subject to amending item 23 to $4,460 (2 days at the daily recovery rate of $2,230). This amendment results in a total award of costs of $13,826.

[22]              The agreed disbursements of $365.99 plus disbursements of $854.91 for translator fees are certified. Total disbursements, therefore, are set at $1,220.90.

[23]Costs on the costs application are to lie where they fall.

G J van Bohemen J