Beattie v Mason
[2024] NZHC 1099
•6 May 2024
IN THE HIGH COURT OF NEW ZEALAND BLENHEIM REGISTRY
I TE KŌTI MATUA O AOTEAROA TE WAIHARAKEKE ROHE
CIV-2023-406-15
[2024] NZHC 1099
UNDER the Property Law Act 2007 IN THE MATTER
of an application for an order for possession of land comprised in a lease
BETWEEN
NICHOLAS COLVIN BEATTIE AND MARAMA CONNIE BEATTIE
Applicants
AND
CONSTANCE MASON
Respondent
Further submissions:
On the Papers
9 April 2024 and 17 April 2024
Counsel:
M J Radich for Applicants D J Clark for Respondent
Judgment:
6 May 2024
JUDGMENT OF ISAC J
[Costs]
[1] On 11 December 2023, I declined the respondent’s application for relief against forfeiture and made orders bringing to an end a lease agreement between the parties.1
[2]In relation to costs, I made the following order:2
The applicants are entitled to contractual indemnity costs being their actual and reasonable costs in relation to this proceeding. If the parties are unable to agree they may file memoranda, but that comes with a warning: I am likely to
1 Beattie v Mason [2023] NZHC 3613.
2 At [63(d)].
BEATTIE v MASON [2024] NZHC 1099 [6 May 2024]
order costs on the determination of costs and on an indemnity basis against the unsuccessful party.
[3] The parties could not agree on costs. In a memorandum of 1 March 2024, counsel for the applicants submitted that, pursuant to the Lease terms, the applicants were entitled to costs of $35,328 on an indemnity basis. Additionally, the applicants sought $956 for the costs they have incurred in making submissions on costs. In response, counsel for the respondents submitted that costs must be “actual and reasonable”, which requires proof of the costs incurred. Given the absence of any breakdown in costs, Mr Clark submitted the respondent does not have to “blindly pay” the costs sought.
[4] On 28 March 2024 I issued a minute asking the applicants to provide the hourly rates charged by their lawyers, the total number of hours charged and copies of the relevant invoices. The applicant filed a memorandum providing this information on 9 April 2024, to which the respondent replied on 17 April 2024.
Indemnity costs
Legal Principles
[5] The court may order a party to pay indemnity costs if they are entitled to them under a contract.3 Whether such an entitlement arises is a matter of contractual interpretation.4 The entitlement must be “plainly and unambiguously expressed”.5
[6] However, an order for indemnity costs is limited to the “actual” costs “reasonably incurred” by a party.6 The leading case on the reasonableness of indemnity costs claimed under a contract is the Court of Appeal’s decision in Black v ASB Bank Ltd.7 The position is different from orders under either of r 14.6(4)(a) or (b), which concern indemnity costs imposed for a party’s bad behaviour.
3 High Court Rules 2016, r 14.6(4)(e).
4 Synlait Milk Ltd v New Zealand Industrial Park Ltd [2020] NZSC 157; [2020] 1 NZLR 657 at [192].
5 Newfoundworld Site 2 (Hotel) Ltd v Air New Zealand Ltd [2018] NZCA 261; [2018] NZCCLR 22 at [84], citing Re Adelphi Hotel (Brighton) Ltd [1953] 1 WLR 955 at 961 (Ch).
6 Rule 14.6(1)(b).
7 Black v ASB Bank Ltd [2012] NZCA 384 at [77]-[99].
[7] As found in my principal judgment, cl 13.1(c) of the Lease confers on the lessors a right to indemnity costs.8 The provision makes it plain that all actual costs incurred by the lessor enforcing the lease or their rights under it are recoverable. This does not appear to be doubted by the respondent.
[8] The central issue is therefore whether the costs claimed are reasonable. As the Court of Appeal observed in Regan v Brougham, assessing the reasonableness of indemnity costs claimed under a contract requires the Court to consider two things:9
(a)Whether the tasks undertaken were reasonably necessary, and thus within the contractual indemnity; and
(b)Whether the costs claimed for undertaking those tasks were reasonable, both in terms of the hours expended and the hourly charge rate(s).
[9] Applying this approach, there cannot be any real doubt that the steps undertaken by the applicants were reasonably necessary, and therefore within the contractual indemnity.
[10] Turning to the second inquiry, in the memorandum on behalf of the applicants provided in response to my minute dated 28 March 2024, the applicants helpfully provided a breakdown of the hourly rates and time records.
[11]The hourly rate of all staff who worked on the matter were as follows:
(a)Partner one: $500, plus GST;
(b)Partner two: $300, plus GST;
(c)Support staff one: $250, plus GST;
(d)Support staff two: $150, plus GST.
8 Beattie v Mason above n 1, at [52].
9 Regan v Brougham [2020] NZCA 173 at [12].
[12] These hourly rates are not unreasonable, especially when having regard to how the work was carried out and by whom. In particular, the total amount of hours recorded on the proceedings were itemised as follows:
(a)Partner one: 6 hours, 48 minutes
(b)Partner two: 40 hours,24 minutes
(c)Support staff one: 39 hours, 6 minutes
(d)Support staff two: 48 minutes
(e)Support staff three: 4 hours, 24 minutes.
[13] The total fees for which there are identifiable time records come to $25,833. The applicants acknowledge the difference between this figure and the figure claimed of $35,328.75 indicating the difference arises because the time recorded does not reflect the actual time Ms Radich spent on the case and because invoicing was undertaken “in consideration of the value of the work which Ms Radich has provided”:
For example, the time records confirm that Ms Radich has not recorded any time for hearing preparation, appearing at the hearing and that limited time has been recorded by Ms Radich for miscellaneous attendances and meetings. Invoicing has therefore been undertaking on a value basis and in consideration of the value of the work which Ms Radich has provided.
[14] Based on this, the applicants submit that the costs claimed when viewed “objectively” are reasonable.
[15] In response, the respondent submits that given the matter is within the Court’s discretion, a “broad brush” approach can be taken and an appropriate costs figure should be no more than $25,000.
[16] I accept that when charging for legal services practitioners are not required to slavishly apply an arithmetical calculation based on recorded time and the relevant
hourly rate. The law has long recognised that other factors ought to be taken into account when determining the reasonableness of a fee. These include:10
(a) the time and labour expended;
(b)the skill, specialised knowledge, and responsibility required to perform the services properly;
(c)the importance of the matter to the client and the results achieved;
(d)the urgency and circumstances in which the matter is undertaken and any time limitations imposed, including those imposed by the client;
(e)the degree of risk assumed by the lawyer in undertaking the services, including the amount or value of any property involved;
(f)the complexity of the matter and the difficulty or novelty of the questions involved;
(g)the experience, reputation, and ability of the lawyer;
(h)the complexity and difficulty of the work undertaken, the risk attaching to it, and the outcome and its value to the client.
[17] In the present case, it is clear Ms Radich has not recorded all the time she spent on the proceedings. In addition, the case was not without complexity for what it involved, came with a considerable history, and Ms Radich’s clients were, ultimately, successful. Having regard to the factors noted at [16] above, I do not consider the total claimed fee of $35,328 is unreasonable in the circumstances.
10 Lawyers and Conveyancers Act (Lawyers: Conduct and Client Care) Rules 2008, rule 9.1(a)–(g).
Costs on costs
[18] Counsel for the applicant sought costs in amount of $956 for the preparation of costs memorandum, reflecting costs on a 2B scale under the High Court Rules 2016.
[19] The court has jurisdiction to award ‘costs on costs’ steps, in the discretion of the court.11 Generally, this will usually only be awarded in specific circumstances, such as where a party is shown to be wholly successful in its costs claim,12 or where a party fails to accept or engage with a reasonable offer to agree or settle costs issues without the determination of the court.13
[20] The applicants have been successful in their costs claim, as I warned they would likely be in my previous judgment. Despite this, the applicants’ submissions indicate the respondent has continued to be “obstructive and difficult” in terms of addressing the parties’ personal affairs, including the issue of costs. This has involved the applicants in further legal cost which could have been avoided.
[21] The time allocation sought by the applicant is well within the range generally awarded in these situations.14 The respondent is therefore ordered to pay additional costs in relation to the applicants’ costs application of $956.
Conclusion and result
[22]The respondent is liable to pay to the applicants costs of $36,284, being:
(a)The applicants’ reasonable legal costs incurred in enforcing the Lease agreement; and
11 See Strata Title Administration Ltd v Body Corporate Administration Ltd [2014] NZCA 96 at [14];
Harrington v Wilding [2019] NZCA 605 at [45].
12 Paper Reclaim Ltd v Aotearoa International ltd [2007] NZCA 544, (2007) 18 PRNZ 743 at [62]; Energy Securities LP v Vector Ltd [2019] NZHC 1387 at [27]; Helilogging Ltd (in rec & liq) v Civil Aviation Authority of New Zealand [2021] NZHC 1676 at 34.
13 Booth v Poplar Road Farms Ltd [2019] NZHC 1889 at [25]; North Eastern Investments Ltd v Auckland Council [2018] NZHC 1805 at [20].
14 David Bullock and Tim Mullins The Law of Costs in New Zealand (LexisNexis NZ, 2022) at 124, citing Zeng v Cai [2018] NZHC 2277 at [22]; Griffin Trust AG v Global Oil Services Lts [2019] NZHC 3418 at [35]; Zhao v Chief Executive of the Ministry of Business, Innovation and Employment [2019] NZHC 326 at [20]; Hojsgaard v Chief Executive of Land Information New Zealand [2018] NZHC 2188 at [13].
(b)Scale costs on a 2B basis in relation to this costs application.
Isac J
Solicitors:
Radich Law, Blenheim for Applicants
Wisheart Macnab & Partners, Blenheim for Respondent
14
0