Bank of New Zealand v Fernando

[2021] NZHC 2898

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE

CIV-2021-409-000015

[2021] NZHC 2898

BETWEEN

BANK OF NEW ZEALAND

Plaintiff

AND

JOHN WINSTON LAKSHAN FERNANDO

Defendant

Hearing:	On the papers
Counsel:	N J Robertson for Plaintiff G P Davis for Defendant
Judgment:	29 October 2021

COSTS JUDGMENT OF ASSOCIATE JUDGE PAULSEN

This judgment was delivered by me on 29 October 2021 at 11.00 am pursuant to Rule 11.5 of the High Court Rules

Registrar/Deputy Registrar Date:

BANK OF NEW ZEALAND v FERNANDO Costs Judgment [2021] NZHC 2898 [29 October 2021]

[1]    The plaintiff, Bank of New Zealand Ltd (the Bank), commenced this proceeding on 18 December 2020. On 8 April 2021, the defendant (Mr Fernando) filed a statement of defence. The Bank then applied for summary judgment on its claim on 30 April 2021. The application was followed, on 4 May 2021, by an application for leave to apply for summary judgment under r 12.4 of the High Court Rules 2016. The Bank’s application for leave was opposed by Mr Fernando. In a judgment of 7 July 2021, I granted the Bank’s application and timetabled the summary judgment application to a hearing. I reserved costs.1

[2]    In a subsequent judgment of 30 September 2021, I granted the Bank summary judgment against Mr Fernando.2 I found the Bank was entitled to costs and reasonable disbursements but formally reserved costs so that if agreement could not be reached as to quantum counsel could submit memoranda.

[3]    Counsel agree that the Bank is entitled to costs on the summary judgment application on a 2B basis. The only dispute between the parties concerns whether the Bank is also entitled to costs and the filing fee relating to the Bank’s application for leave to apply for summary judgment.

[4]    The general principles in relation to costs are well-established. They include that all matters of costs are discretionary but the discretion must be exercised on a principled basis.3 The determination of costs, so far as possible, should be both predictable and expeditious.4 The party who has lost should pay the costs of the party that has won unless there are exceptional reasons to the contrary.5 Generally, costs awards should reflect the complexity and significance of the proceeding and be assessed by applying the appropriate daily rate to the time considered reasonable for each step required in relation to the proceeding.6

1      Bank of New Zealand Ltd v Fernando [2021] NZHC 1683.

2      Bank of New Zealand Ltd v Fernando [2021] NZHC 2595.

3      High Court Rules 2016, r 14.1(1).

4      Rule 14.2(1)(g).

5      Rule 14.2(1)(a) and Shirley v Wairarapa District Health Board [2006] NZSC 63, [2006] 2 NZLR 523 at [19].

6      Rule 14.2(b) and (c).

[5]    Counsel for the Bank emphasises that in relation to both the leave application and the substantive proceeding the Bank was successful, that the application for leave was filed only after receipt of Mr Fernando’s statement of defence which did not provide any reasonably arguable defence to the claim, that a significant amount of time, effort and cost was involved in making the leave application which Mr Fernando was not required to, but chose to oppose. The Bank also contends the parties benefited by it obtaining leave to apply for summary judgment as it resulted in the just, speedy and inexpensive determination of the proceeding, whereas the costs incurred would have been much greater if the case had been allowed to continue to trial in the ordinary manner.

[6]    Counsel for Mr Fernando argues that in the circumstances of this case granting the Bank leave to apply for summary judgment was an indulgence and conventionally the grant of an indulgence to a party is at the expense of a costs award against that party. In the alternative, reliance is placed on r 14.7(f)(ii) and (g) of the High Court Rules. It is argued that no order for costs should be made in favour of the Bank because it contributed unnecessarily to the time and expense of the proceeding and because of defects in the leave application and the absence of any accompanying affidavit evidence to support it. It is submitted these defects were substantially relied upon by Mr Fernando in making his decision to oppose the leave application.

[7]    The starting point is that the Bank was the successful party on the leave application and prima facie entitled to its costs. I am mindful that the general rule that costs follow the event should not be easily displaced. Relevantly, in Roberts v Professional Conduct Committee of the Nursing Council of New Zealand when referring to the “other reason” exception under r 14.7(g), the Court of Appeal noted:7

[24] The “other reason” exception has been invoked to support the creation of other categories of cases exempt from the general rule, for example cases involving indulgences. However, in our view, the number of such exempt categories should be kept limited, having regard to the policy of the costs regime and the emphasis it places on costs following the event. Otherwise the exception will swallow the rule. In our view, the fact that professional conduct committees perform a public function is not of sufficient weight to justify the wholesale creation of a new exempt category and the displacement of the usual presumption with another higher threshold.

7      Roberts v Professional Conduct Committee of the Nursing Council of New Zealand [2014] NZCA 141, (2014) 21 PRNZ 753. (footnotes omitted).

[8]    Notwithstanding that, I consider there is merit in Mr Fernando’s position that in the circumstances of this case costs on the leave application should lie where they fall. As I noted in my judgment, the Bank did not file any evidence as to the reasons that it did not apply for summary judgment upon commencing the proceeding, which is to be expected. 8 It is not clear why the Bank did not apply for summary judgment immediately when it considered Mr Fernando had no defence to its claim. Counsel’s submission that the decision was made after receipt of Mr Fernando’s pro forma statement of defence, would suggest that the Bank deliberately adopted a wait-and-see approach before applying for summary judgment or gave no consideration to the matter upon the commencement of the proceeding. In either case, the Bank unnecessarily added to the cost of the proceeding as far as Mr Fernando was concerned.

[9]    In response, the Bank says that Mr Fernando chose to oppose the leave application thereby increasing the time and cost burden to the Bank. The force of that submission is lost to a large extent by the fact that the leave application was irregular in a number of respects. Specifically, the application was made following the filing of the summary judgment application, the notice of application did not comply with the requirements of the Rules for an on notice application9 and did not seek costs. Importantly, the application was not accompanied by an affidavit specific to the leave application setting out the reasons for the delay in applying for summary judgment and no affidavit was subsequently filed by the Bank notwithstanding provision for that in the timetable.10 Mr Davis submits, and I cannot discount, that had the application been accompanied by an affidavit explaining the reasons for the delay in applying for summary judgment, Mr Fernando may have taken a different view of his prospects of opposing it. Ultimately my decision to grant the Bank leave to apply for summary judgment was made despite the unsatisfactory aspects of its application for the reasons set out in my judgment. I agree with Mr Davis that the decision was indulgent in character.

8      Bank of New Zealand Ltd v Fernando, above n 1, at [30].

9      See High Court Rules, r 7.19(1) and Form G31.

10     Bank of New Zealand Ltd v Fernando HC Christchurch CIV-2021-409-15, 27 May 2021 at [3] (Minute).

[10]   I do not think it is  relevant  that  ultimately  the  Bank’s  success  avoided  Mr Fernando incurring significantly greater costs of going to trial. What is in issue here is the Bank’s claim for costs on the granting of leave to apply for summary judgment and in my view those costs were unnecessarily incurred.

[11]   It follows that I disallow the Bank costs in relation to the leave application. There is no dispute as to the quantum of the Bank’s entitlement to costs of the proceeding in those circumstances. It is set out in the memoranda filed.

Result

[12]   The Bank is awarded costs of the proceeding in the sum of $17,686 and reasonable disbursements of $3,287.50 (a total of $20,973.50).

O G Paulsen Associate Judge

Solicitors:

Sanderson Weir Limited, Auckland Shaun Cottrell Law, Christchurch