Anderson v Swindells

[2018] NZHC 2101

IN THE HIGH COURT OF NEW ZEALAND HAMILTON REGISTRY

I TE KŌTI MATUA O AOTEAROA KIRIKIRIROA ROHE

CIV-2018-419-58

[2018] NZHC 2101

BETWEEN

CRAIG ANDERSON AND VICKI VOLKOVA
Applicants

AND

EDWARD SWINDELLS

First Respondent

AND

MCDOWALL RENOVATIONS LIMITED

Second Respondent

Hearing:

On the papers

Counsel:

M R Taylor for Applicants

A W Johnson & K R Narayanan for Second Respondent

Judgment:

16 August 2018

COSTS JUDGMENT OF PAUL DAVISON J

This judgment was delivered by me on 16 August 2018 at 11:00 am pursuant to r 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Solicitors:

M Taylor, Auckland Martelli McKegg, Auckland

[1]                 The applicants brought a successful application for judicial review and I ordered the quashing of the first respondent’s determination as an adjudicator under the Construction Contracts Act 2002, the applicants now apply for costs.1

[2]                 The applicants seek scale costs and disbursements on a 2B basis for the proceeding and further apply for an uplift in scale costs.

[3]                 The applicants note that the Court has the power to order increased costs where the unsuccessful party has contributed unnecessarily to the time or expense of the proceedings or steps taken in it, including by taking or pursuing an unnecessary step or an argument that lacks merit or some other reason exits which justifies the Court in making an order for increased costs.2

[4]                 The applicants submit that it is appropriate for the Court to award an uplift in costs by reason of:

(a)Communications between the parties prior to the commencement of the proceedings in which counsel for the applicants advised counsel for the second respondent that the first respondent’s determination was legally unsound; despite such advice the second respondent declined the opportunity of avoiding the proceedings.

(b)The second respondent refused to agree to a stay or enforcement of the determination pending the outcome of the judicial review proceeding and instead made an application to the District Court to enforce the determination against the applicants. The second defendant’s enforcement action required the applicants to make an interlocutory application for a stay of enforcement and to pay the sum determined into Court.

(c)The applicants submit that the submissions and arguments raised by the second respondent in defence of the application for judicial review

1      Anderson & Anor v Swindells & Anor [2018] NZHC 1803.

2      High Court Rules 2016, r 14.6.

lacked merit and ought not to have been advanced given the nature and substance of the determination. The applicants say that it ought to have been obvious to the second respondent that the determination was fundamentally flawed. Despite the fundamentally flawed nature of the determination, the second respondent elected to defend the review application and uphold the first respondent’s determination.

[5]                 The applicants have incurred actual costs in the proceedings of $17,250 which are described as a “discounted, flat fee”.

[6]                 The applicants have prepared and filed a schedule of scale costs on a 2B basis which total $16,279 together with disbursements, being a filing fee of $540. The total for costs and disbursements therefore amounts to $16,819.

[7]                 Counsel for the second respondent has filed a memorandum in response to the applicant’s memorandum advising that the second respondent does not oppose the applicant’s application.

Discussion and result

[8]                 While the second respondent does not oppose the applicant’s application for an award of costs on a scale 2B basis together with increased costs ordered pursuant to r 14.6, the Court must nevertheless be satisfied that it is a proper case for the award of increased costs. Here the scale costs on a 2B basis and disbursements total $16,819 compared to the actual fee incurred by the applicants of $17,250. There is a difference of only $431 between the two amounts.

[9]                 High Court Rule 14.2(1)(f) sets out a principle applying to the determination of costs:

an award of costs should not exceed the costs incurred by the party claiming costs:

[10]              In Joint Action Funding Ltd v Eichelbaum the Court of Appeal observed as regards this principle that:3

It places a cap on a permissible award of costs by reference

to “the costs incurred by the party claiming costs”. It reflects the long-standing principle that the function of an award of costs is partial indemnity, not reward or (except in unusual circumstances) punishment.

[11]              While the grounds advanced by the applicants contain some justification for an uplift of the award of costs from the costs calculated on a scale 2B basis, I do not consider that it is appropriate to make an order for increased costs having regard to the small difference between the scale 2B costs calculation and the actual costs incurred by the applicants.

[12]              Applying the principle in r 14.2(f), it would be inappropriate to make an award exceeding the amount of costs actually incurred by the applicants.

[13]              I consider that costs on a scale 2B basis are an appropriate measure of costs in the present case and accordingly I make an order awarding the applicants costs in the total sum of $16,819 inclusive of disbursements.

[14]              I also make an order directing the Registrar of the High Court at Hamilton to pay to the applicants the sum of $36,166.66, being the amount paid into Court by the applicants on or about 4 April 2018 pursuant to the order for stay of enforcement of the first respondent’s determination.

Paul Davison J

3      Joint Action Funding Ltd v Eichelbaum [2017] NZCA 249 at [27].