Ballantyne Trustees Limited v Papprill Hadfield & Aldous Solicitors Nominee Company Limited
[2016] NZHC 1392
•24 June 2016
IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY
CIV-2014-409-000178 [2016] NZHC 1392
UNDER the Companies Act 1993 IN THE MATTER
of GOOSE BAY RANCH HOLDINGS LIMITED (IN LIQUIDATION)
BETWEEN
BALLANTYNE TRUSTEES LIMITED AND OTHERS
Applicants
AND
PAPPRILL HADFIELD & ALDOUS SOLICITORS NOMINEE COMPANY LIMITED
First Respondent
AND
D D CRICHTON AND ANOTHER Second Respondents
CIV-2015-409-000173
BETWEEN BALLANTYNE TRUSTEES LIMITED AND OTHERS
Plaintiff
ANDHFK LIMITED First Defendant
ANDKEIRAN ANNE HORNE Second Defendant
Memoranda: Defendants/Respondents – 1 June 2016 and 7 June 2016;
Plaintiffs/Applicants – 16 June 2016
Appearances:
M J Tingey and H P H Lui for Plaintiffs/Applicants
A B Darroch for First Respondent
M E Parker for Second Respondents/First and Second
DefendantsJudgment:
24 June 2016
BALLANTYNE TRUSTEES LIMITED v PAPPRILL HADFIELD & ALDOUS SOLICITORS NOMINEE COMPANY LIMITED [2016] NZHC 1392 [24 June 2016]
JUDGMENT OF ASSOCIATE JUDGE OSBORNE
on costs
Introduction
[1] There is a common background to these two proceedings and a substantial overlap of parties.
[2] On 11 April 2016, the Court heard interlocutory applications on each proceeding. In the proceeding under CIV-2014-409-178 (the Companies Act proceeding), I granted a number of aspects of the applications.1 In doing so, I reserved costs, but indicated that my preliminary view was that costs must follow the event on a 2B2 basis in favour of the first and second respondents.3
[3] In the proceeding under CIV-2015-409-173 (the ordinary proceeding), I dismissed an application of the plaintiffs and granted a cross-application of the defendants.4 I ordered the plaintiffs to pay costs in any event on a 2B basis.5
Consideration of costs application together
[4] Having regard to the fact that the interlocutory applications in each proceeding were heard for convenience on the same day, it is equally convenient to deal with the submissions now received in a single judgment. By doing so, the Court can take into account the time taken in hearing and allocate disbursements across the
hearings.
1 Ballantyne Trustees Ltd v Papprill Hadfield & Aldous Solicitors Nominee Company Ltd [2016] NZHC 713.
2 High Court Rule, Category 2 under r 14.3(1) and band B under r 14.5(2).
3 At [75]–[77].
4 Ballantyne Trustees Ltd v HFK Ltd [2016] NZHC 917.
5 At [79](f).
The Companies Act proceeding
[5] Through Mr Tingey, the applicants have accepted that they are liable to pay the respondents’ costs. The applicants do however challenge aspects of the amounts claimed by the respondents for both costs and disbursements.
Costs
[6] The first and the second respondents were separately represented on the interlocutory applications. They seek separately costs of a full allowance for each relevant item under Schedule 3 High Court Rules, calculated on a 2B basis.6
[7] The second respondents were the liquidators of Goose Bay Ranch Holdings Ltd (Goose Bay). The first respondent, as mortgagee of land owned by Goose Bay, sold the land at mortgagee sale. The applicants (some of Goose Bay’s shareholders) sought an order under s 284 Companies Act giving directions to the second respondent to bring proceedings in the name of Goose Bay. In the alternative, the applicants sought leave to bring a derivative action in the name of Goose Bay for breach of the duty of care to obtain the best price reasonably obtainable at the time of sale.
[8] The first respondent seeks costs of $7,136 as set out in Table 1.
Table 1
Step
Item
Time allocation
(2B)
Cost
Filing Application
22
0.6
$1,338.00
Submissions
24
1.5
$3,345.00
Preparation of
bundle/chronology
25 0.6 $1,338.00 Appearance 26 0.5 $1,115.00 Total $7,136.00
6 High Court Rule, Category 2 under r 14.3(1) and band B under r 14.5(2).
[9] The second respondents seek costs of $8,028.00 as set out in Table 2:
Table 2
Step
Item
Time allocation
(2B)
Cost
Filing Application
22
0.6
$1,338.00
Submissions
24
1.5
$3,345.00
Preparation of
bundle/chronology
25 0.6 $1,338.00 Appearance 26 0.5 $1,115.00 Memorandum 11 0.4 $892.00 Total $8,028.00
Items challenged by applicants
[10] The applicants challenge two aspects of the respondents’ costs calculations.
[11] First, Mr Tingey notes that there was a single bundle and chronology prepared for the hearing, which was presented by the second respondent’s solicitors. In those circumstances, it is appropriate to make a full allowance of Item 25 for the second respondents but to not allow Item 25 to the first respondent.
[12] Secondly, Mr Tingey submits, having regard to a commonality of the interlocutory position between the first and second respondents, that it would have been more appropriate that they be jointly represented on a matter allocated a half- day hearing. Mr Tingey submits that each set of respondents should receive only 50 per cent of a 2B calculation for their submissions (Item 24).
[13] The recognition that common or overlapping interests may be taken into account in the assessment of reasonable costs is recognised by r 14.15 High Court Rules. That rule precludes the Court from allowing more than one set of costs if several defendants have defended a proceeding separately and it appears to the Court that all or some of them could have joined in their defence, unless it appears to the
Court that there is good reason to award separate costs. The rule reflects the concept Mr Tingey relies upon. The reality in the present case is that the claims against the two sets of respondents are greatly different in nature and each set needs to be represented separately. Their interests differ. Once the need for separate representation is recognised, their decision to pursue their own interlocutory applications and to have counsel appear in support was fully justified. Their responses to a negotiated resolution might have differed. The economics of one existing set of solicitors briefing the other for the hearing of an interlocutory application would be poor. The two sets of respondents were justified in remaining
at arm’s length from each other.7
[14] The interests of each of the first and second respondents were appropriately represented separately in their submissions. Items 24 and 26 are allowed in full for each set of respondents.
Disbursements
[15] The first respondent claim disbursements of $1,985.80 as set out in Table 3.
Table 3
Item Costs Filing fee $500.00 Counsels’ travel $374.50 Copying/binding $976.30 Accommodation $135.00 Total $1,985.80
7 I adopt this formulation from Jordan v O’Sullivan (No 2) HC Wellington CIV-2004-485-2611, 1
May 2009, per Clifford J at [8].
[16] The applicants accept the various items except for the copying and binding ($976.30). Mr Tingey noted that no breakdown was provided. He submits that the fees charged for copying and binding are not reasonable, given the limited scope of the application.
[17] For a disbursement of the amount claimed, there should have been provided either a GST invoice for an external provider or a detailed breakdown of components if the solicitors’ firm undertook the task. While the bundle was of a significant size, it is not appropriate that the Court simply guess that some large costs were incurred in the production of the bundle. I assess a reasonable disbursement for copying and binding at $500.00. The other disbursements will be allowed as claimed.
[18] The second respondents claim disbursements of $2,201.05, as set out in Table
4.
Table 4
Item Costs Filing fee $500.00 Travel and accommodation (apportioned) $725.05 Copying and binding $396.70 Agent’s fee $542.50 Courier/postage $36.80 Total $2,201.05
[19] For the respondents, Mr Tingey submits that the travel and accommodation costs are unreasonable. The $725.05 claimed for the Companies Act proceeding represents 50 per cent of a total $1,450.10 claimed in relation to both interlocutory applications. In his submissions, Mr Parker has submitted that it is reasonable that the respondents have the travelling and accommodation costs of counsel, who is based in Queenstown. Mr Parker records that the disbursement includes two nights’ accommodation which he states was required due to the length of the interlocutory hearings and the availability of flights between Queenstown and Christchurch. Mr Tingey has noted a difference in the travel costs he incurred (Auckland to
Christchurch return) and those incurred by Mr Parker (Queenstown to Christchurch return). Such difference (in the absence of evidence or an analysis which demonstrates an economical alternative) does not of itself suggest that the disbursement claimed was incurred unreasonably. Having regard to the limited hours of operation of Queenstown airport and the length of the hearing, I regard Mr Parker’s accommodation costs as reasonably incurred.
[20] The second respondent’s disbursements should be allowed in full as having
been reasonably incurred.
The ordinary proceeding
Costs
[21] In the ordinary proceeding, I dismissed an application by the plaintiff and granted cross-applications of the defendants. I ordered the plaintiff to pay costs in any event on a 2B basis, together with disbursements. I am now to fix those.
[22] Mr Parker represents in the ordinary proceeding both defendants (being one of the liquidators of Goose Bay and her firm). The defendants seek costs in a total of
$11,321.50 as set out in Table 5.8
Table 5
Step
Item
Time allocation
(2B)
Cost
Filing Application
22
0.6
$1,338.00
Filing opposition to application
23
0.6
$1,338.00
Submissions (on
application)
24 1.5 $3,345.00 Submissions (in
opposition)
24 1.5 $3,345.00 Preparation of bundle for
hearing
25 0.6 $1,338.00 Appearance 26 0.5 $1,115.00 Total $11,819.00
8 Table 5 as set out is not exactly as provided by counsel for the defendants. Counsel’s schedule
included two errors, one typographical and one of calculation. Table 5 corrects the errors.
[23] For the plaintiffs, Mr Tingey submits that the items claimed for submissions are inappropriate. He submits that the defendants had no need, in relation to overlapping (albeit competing) applications, to deal with their submissions in two parts. He submits that allowance for a single set of submissions would be appropriate. I agree. But Mr Tingey then provides a calculation which would allow only 50 per cent of the standard Item 24 (2B) allowance of 1.5 days. I do not find there to be reason to depart from the 1.5 day allowance.
[24] The result is that the defendants’ costs should include a single full Item 24 allowance.
Disbursements
[25] The defendants claim total disbursements of $1,494.02, as set out in Table 6.
Table 6
Item Costs Filing fee $500.00 Agency fee for filing notice of
opposition (apportioned)
$232.17 Travel and accommodation (apportioned) $725.05 Courier/postage $36.80 Total $1,494.02
[26] The plaintiffs object to a single set of disbursements, namely those for travel and accommodation (as apportioned). I have above considered that objection before rejecting it at [19] above.
Outcome
[27] The orders to be made largely reflect the calculations proffered by the respondents/defendants but with some alteration. In the circumstances, it is appropriate that the costs of filing memoranda (in relation to costs) lie where they fall.
Orders
In relation to CIV-2014-409-178
[28] I order the applicants to pay in any event the costs of the first and second
respondents’ applications, together with disbursements, which I fix:
(a) In favour of the first respondent in a total sum of $8,645.50 (comprising $7,136.00 costs and $1,509.50 disbursements); and
(b) In favour of the second respondents which I fix at a total of
$10,229.05 (comprising $8,028.00 costs and $2,201.05 disbursements).
In relation to CIV-2015-409-173
[29] I fix costs and disbursements payable by the plaintiffs to the defendants in a total sum of $9,968.02 (comprising $8,474.00 costs and $1,494.02 disbursements).
Associate Judge Osborne
Solicitors:
Bell Gully, Auckland Darroch Forrest, Wellington Parker Cowan, Queenstown
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