Beardsmore v Prime Bookkeeping Ltd

[2021] NZHC 2054

IN THE HIGH COURT OF NEW ZEALAND TAURANGA REGISTRY

I TE KŌTI MATUA O AOTEAROA TAURANGA MOANA ROHE

CIV-2018-470-175

[2021] NZHC 2054

BETWEEN

CLARENCE EDWARD BEARDSMORE

Plaintiff

AND

PRIME BOOKKEEPING LTD

First Defendant

CATHERINE ANNE DAVIES

Second Defendant

Judgment:

(On the papers)

10 August 2021

COSTS JUDGMENT OF BREWER J

This judgment was delivered by me on 10 August 2021 at 10 am pursuant to Rule 11.5 High Court Rules.

Registrar/Deputy Registrar

Solicitors:

Braun Bond and Lomas (Hamilton) for Plaintiff

Rejthar Stuart Law (Tauranga) for First and Second Defendants

BEARDSMORE v PRIME BOOKKEEPING LTD [2021] NZHC 2054 [10 August 2021]

Introduction

[1]    In my costs judgment dated 28 August 2020, I awarded indemnity costs to Prime Bookkeeping and Ms Davies against Mr Beardsmore.1 I did not fix the quantum of indemnity costs between 3 June 2020 and 20 July 2020, or the appropriate 2B costs on the costs application itself. I now determine those quanta.

Background

[2]    Mr Beardsmore commenced a proceeding against Prime Bookkeeping Ltd (“PBL”) and Ms Davies. He alleged that PBL and Ms Davies had acted in a fashion that was oppressive, unduly discriminatory, and unfairly prejudicial to him in his capacity as a shareholder and director of PBL. He alleged, among other things, that his shares were transferred to Ms Davies without his consent or payment, that the sole shareholder was registered as Ms Davies, that he was removed as director, that the company’s accounts wrongly recorded payments to him, and that someone had illegitimately used his electronic signature to sign documents. Mr Beardsmore sought declarations that he continued to be a shareholder and director of PBL and that he was entitled to the payment of dividends.

[3]    Before Mr Beardsmore brought his claim, he was provided with copies of the share transfers he had signed. There was extensive documentary evidence that weighed against Mr Beardsmore’s allegations, as well as the evidence of witnesses. The trial was set down for 27 July 2020. On or about 3 June 2020, Mr Beardsmore advised PBL and Ms Davies he would discontinue the proceedings. On 20 July 2020, a week before trial, he did so.

My first costs decision

[4]    I considered that  Mr Beardsmore’s  proceedings  effectively  alleged  that  Ms Davies had engaged in extensive and serious fraud.2   I took into account that    Ms Davies was a chartered accountant, and the allegations could be expected to jeopardise her professional future.3 I considered that Mr Beardsmore acted improperly

1      Beardsmore v Prime Bookkeeping Ltd [2020] NZHC 2231.

2 At [30].

3 At [33].

and unreasonably.4 I considered that in all the circumstances an award of indemnity costs was appropriate.5

[5]    However, the only costs before me were those to 3 June 2020. I noted that 2B costs would be $25,642 and actual costs to 3 June 2020 (according to counsel) were

$38,957.15.6    I  awarded  indemnity  costs  to  3 June  2020,  and  provided  that    Mr Beardsmore was to pay actual and reasonable costs from 3 June 2020 until the actual date of discontinuance, 20 July 2020. If the parties could not agree the quantum, I directed that Mr Beardsmore was to file a memorandum within 15 working days of the date of the judgment, and Ms Davies was to file her memorandum in reply within 10 further  working  days.  Finally,  I  provided  that  Mr Beardsmore  should  pay  Ms Davies’s costs on the costs application on a 2B basis. If they could not agree those costs, the same timetable was to apply.

[6]    This timetable was not adhered to.  Instead  of Mr Beardsmore  filing first, Ms Davies’s  counsel filed a memorandum seeking costs on 6 October 2020, and   Mr Beardsmore’s counsel filed a reply memorandum on 28 October 2020.

[7]    On 23 September 2020, before costs submissions were filed, Mr Beardsmore appealed my costs judgment to the Court of Appeal. I considered that it was appropriate to not issue my final costs judgment until that appeal was decided.7

The Court of Appeal decision

[8]    The Court of Appeal issued its judgment on 10 June 2021. The Court largely dismissed the appeal, except in one respect.8 Counsel for Ms Davies had made a mistake in his submissions before me in the first costs hearing. The sum of $3,828.35 was included in the actual costs to 3 June 2020, but actually the sum related to costs incurred by the defendants before the proceedings were filed. The costs sum was revised, therefore, to $35,128.80. My remaining costs orders were confirmed.

4 At [35].

5 At [35].

6 At [36].

7      By minute dated 17 December 2020.

8      Beardsmore v Prime Bookkeeping Ltd [2021] NZCA 245.

The parties’ submissions on costs

PBL and Ms Davies’s submissions

[9]Ms Davies has provided time cost records indicating that 7.4 hours of work at

$380 an hour were done between 3 June 2020 and 17 July 2020, the last date on which work was done before the discontinuance on 20 July 2020. This work consisted of preparation for trial, consideration of the bundle index, the issue of two witness summons, and two memoranda. Including GST, this comes to $3,233.80.

[10]   Ms Davies submits that the appropriate steps to be claimed on the costs dispute are the written memoranda – treated as preparation of written submissions on an interlocutory application, step 24, by analogy – and the sealing of the costs order. This comes to 1.7 days at the category 2 rate of $2,390, which is to say $4,063.

[11]Ms Davies therefore claims a total of $7,296.80.

Mr Beardsmore’s submissions

[12]   Mr Beardsmore reiterates his earlier submissions before the first costs judgment, suggesting that the costs are unreasonable. Notably, he reiterates his submission that counsel for Ms Davies’s fee for his attendance when Mr Beardsmore contacted Ms Davies’s employer is unreasonable. I note that this took place on 6 July 2019. Since I have already resolved the costs disputes to 3 June 2020, this is not relevant.

[13]   Mr Beardsmore observes that in the first costs judgment I relied on a calculation of what 2B costs would otherwise be to determine whether indemnity costs were reasonable. This calculation included the preparation of affidavits, the agreement of a common bundle, and preparation for hearing. Mr Beardsmore submits that by including those figures in the 2B calculation in the first costs judgment, Ms Davies has already received costs for those steps. She would be double-counting those steps if  she  received  an  additional  costs  award  for  substantially  the  same  steps.     Mr Beardsmore does not advance a submission as to what portion of the additional indemnity costs claimed, if any, might be reasonable. He instead makes the general

submission that no indemnity costs at all ought to be awarded from 3 June 2020 to 20 July 2020.

[14]   Mr Beardsmore submits that the memorandum on costs cannot be analogised to filing submissions on an interlocutory application. He notes that it is only seven pages long, and the supporting affidavit is only two pages long. He submits that it cannot have taken one and a half days. He submits that 0.8 days for the two together would be more appropriate. He submits, without argument, that the sealing of the judgment should not be covered.

The indemnity costs between 3 June 2020 and 20 July 2020

[15]   Mr Beardsmore’s counsel appears to have misunderstood my first costs judgment. I considered the 2B costs on the basis that they would be compared not only to the indemnity costs to 3 June 2020, but to the entire indemnity costs, even though a small portion of them were not, at the time, before me. This was recognised by the Court of Appeal at [42] of their judgment. I observe that the total indemnity costs claimed by Ms Davies come to $38,362.60, while the 2B costs would be

$25,422. Indemnity costs in this case are not materially different to scale costs with a 50 per cent uplift, as anticipated by the Court of Appeal.

[16]   I made it clear in my first costs judgment that additional indemnity costs would be awarded for the time after 3 June. This was appealed to and confirmed by the Court of Appeal.

[17]   Separately, I consider the costs claimed by Ms Davies to be entirely reasonable in the circumstances. Since Mr Beardsmore had not formally withdrawn the proceedings, and the trial date was relatively close, it was necessary to take the steps that Ms Davies enumerates to properly prepare for trial. I approve the additional indemnity costs as set out in Ms Davies’s memorandum.

2B costs on the costs application

[18]   Ms Davies’s counsel’s costs memorandum was helpful and to the point. Its brevity is not a mark against it. It is often remarked that concise but helpful submissions can take more time to compose than lengthy submissions.

[19]   In this case, the costs dispute was very significant, and indeed went to the Court of Appeal. It is appropriate to be relatively liberal with the time allocation for the costs memorandum.9 I am prepared to accept that 1.5 days for the costs memorandum is reasonable. Likewise, the time allocation for sealing the costs judgment is, in these circumstances, plainly reasonable.

Decision

[20]   I award indemnity costs of $3,233.80 for the period between 3 June 2020 and 20 July 2020. I award 2B scale costs of $4,063 for the preparation of the costs memorandum, affidavit in support, and sealing the judgment. This comes to a total of

$7,296.80.

Brewer J

9      Jeffreys v Morgenstern [2013] NZHC 1361 at [40]; Epsom Woods Ltd v Waitakere Farms Ltd [2020] NZHC 3137 at [4]; and Combined Property Maintenance Limited v Singh [2021] NZHC 621.