Botev Trustee Limited v Tait

[2022] NZHC 1

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV 2021-404-387

CIV 2021-404-445

[2022] NZHC 1

UNDER

Article 35 of Schedule 1 to the Arbitration Act 1996 and Rules 26.21 to 26.26 of the High Court Rules 2016

IN THE MATTER OF

An Application to Register an Arbitral Award as a Judgment of this Court

BETWEEN

BOTEV TRUSTEE LIMITED

Plaintiff in CIV 2021-404-387
First Defendant in CIV 2021-404-445

AND

BRENDON TAIT

First Defendant in CIV 2021-404-387 Plaintiff in CIV 2021-404-445

SUSAN TURNER and TERRY TURNER

Second Defendants in Both Proceedings

On the papers
Counsel:	S R J Hamilton for Botev Trustee Limited T Bates for Mr Tait
Judgment:	5 January 2022

COSTS JUDGMENT OF CAMPBELL J

This judgment was delivered by me on 5 January 2022 at 2:00pm pursuant to Rule 11.5 of the High Court Rules

Registrar/Deputy Registrar

BOTEV TRUSTEE LIMITED v TAIT [2022] NZHC 1 [5 January 2022]

[1]    In my judgment dated 26 August 2021, I granted Botev Trustee Ltd’s (BTL) originating application to enter an arbitral award as a judgment and dismissed Mr Tait’s originating application for an order refusing recognition and enforcement of the award. It is common ground that BTL is entitled to costs from Mr Tait. The parties disagree on the amount of costs.

[2]    BTL seeks costs at 2B, which it calculates at $26,051. BTL asks for a 25 per cent uplift, claiming a total costs award of $32,563.75. BTL also seeks disbursements of $10,799.78.

[3]    Mr Tait agrees costs should be awarded on a 2B basis, but calculates such costs at $14,579. He resists any uplift. He also says that BTL’s claim for disbursements should be reduced to $6,320.

[4]    Counsel filed memoranda on costs in September 2021. Regrettably, the memoranda were not referred to me until just before the Christmas break. I apologise to the parties and counsel for the consequent delay.

[5]    There are three issues: what is the proper calculation of 2B costs; should there be an uplift on costs; and what award of disbursements should be made?

What is the proper calculation of 2B costs?

[6]    The difference in the parties’ respective calculations of 2B costs arises from BTL seeking allowances for four matters, each of which Mr Tait resists.

Reply affidavits

[7]    BTL seeks one day for affidavits in reply. Mr Hamilton, for BTL, acknowledges that sch 3 of the High Court Rules 2016 does not specify any time for affidavits in reply. He submits that r 14.5(1)(b) applies. That rule provides that, where sch 3 does not apply, a reasonable time for a step is determined by analogy with that schedule.

[8]    Mr Bates, for Mr Tait, submits that affidavits in reply are already allowed for by step 37 of sch 3, “Filing application and supporting affidavits”. Because they are allowed for by step 37, r 14.5(1)(b) does not apply.

[9]    I accept Mr Bates’ submission. An affidavit in reply is an affidavit that is “supporting” the application. It is therefore covered by step 37. Rule 14.5(1)(b) does not apply to provide a further time allowance.

[10]   Schedule 3 is consistent in its approach to this issue. For interlocutory applications, affidavit hearings and originating applications, sch 3 provides a global time allowance for the preparation of the application (where applicable) and affidavits. Given that reply affidavits are common in all three types of application or hearing, this global time allowance is intended to cover the preparation of reply affidavits.

Preparation for hearing

[11]   BTL claims 1.5 days for preparation of written submissions (step 40 of sch 3) and 0.6 days for preparation of the bundle for the hearing (step 41). Mr Tait accepts both.

[12]   BTL also claims 2.0 days for preparation for the hearing. Mr Hamilton acknowledges that sch 3 does not specify any time for preparation for the hearing. He submits that r 14.5(1)(b) applies and that 2.0 days is a reasonable allowance.

[13]   Mr Bates submits that no additional allowance for preparation is appropriate. This was an originating application. The evidence was all by affidavit and the hearing was devoted solely to submissions.

[14]   I reject BTL’s additional claim for preparation. For originating applications, steps 40 and 41 cover the preparation for the hearing.

Preparation of further submissions

[15]   At the hearing of the originating applications, Mr Bates put forward an alternative argument for resisting recognition and enforcement of the arbitral award.

Because this argument had not been raised before the hearing, I asked counsel to file further written submissions on the argument. I said the new issue was a narrow one and that submissions should not exceed five pages.

[16]   BTL claims one day for the further submissions it filed. Mr Tait resists any allowance for the further submissions.

[17]   An allowance for the further submissions is appropriate. Had Mr Tait’s argument been raised at the appropriate time, BTL would have been able to respond to it in its principal submissions. Instead it had to deal with the matter after the hearing. I am satisfied that this required more time than would otherwise have been the case.

[18]   However, I find that 0.5 days is a reasonable allowance. The new argument raised a narrow issue that could be addressed in relatively brief submissions.

Filing memorandum on costs

[19]   BTL seeks 0.4 days for its costs memorandum. I accept that in appropriate cases an allowance can be made for a costs memorandum. This is not such a case, as for the most part I reject BTL’s position on the matters in issue.

Summary

[20]   The 2B costs to which BTL is entitled total $16,730, calculated using the daily rate of $2,390 as follows:

Step	Date	Description	Time (days)	Costs
37	8 March 2021	Filing application and supporting affidavit	2.0	$4,780
10	Undated	Preparation     for     first     mention hearing	0.4	$956
11	26 March 2021	Joint memorandum for first mention hearing	0.4	$956
40	19 May 2021	Preparation of written submissions	1.5	$3,585
41	19 May 2021	Preparation of bundle for hearing	0.6	$1,434
11	26 May 2021	Filing joint memorandum	0.4	$956
42	2 June 2021	Appearance at hearing by sole counsel	1.0	$2,390

21 June 2021	Further submissions requested at hearing	0.5	$1,195
29	Undated	Sealing judgment	0.2	$478
TOTAL	7.0	$16,730

Should there be an uplift on costs?

[21]   BTL seeks increased costs on two bases. The first is that prior to making its originating application BTL invited Mr Tait to consent to the award being entered as a judgment under r 26.20. Mr Tait refused to consent, raising various arguments against entry of the award as a judgment. In my judgment, I rejected all the arguments raised by Mr Tait. BTL says that Mr Tait clearly should have consented and that, had he done so, BTL would not have had to incur most of its costs. BTL says Mr Tait’s refusal to consent engages r 14.6(3)(b)(v).

[22]   BTL’s second basis for an increase is that it says Mr Tait’s grounds of opposition had no prospect of success. BTL says this engages r 14.6(3)(b)(ii).

[23]   Rule 14.6(3)(b)(v) allows the Court to order a party to pay increased costs if that party has “contributed unnecessarily to the time or expense of a proceeding” by failing, “without reasonable justification”, to accept an offer of settlement. I do not consider that the rule is engaged in this case. BTL’s invitation to Mr Tait is not properly characterised as an offer of settlement. Even if it could be so characterised, the arguments raised by Mr Tait had merit (even though I ultimately rejected them). It therefore cannot be said that Mr Tait had no reasonable justification for refusing BTL’s invitation, nor that his refusal contributed “unnecessarily” to the time or expense of the proceeding.

[24]   Rule 14.6(3)(b)(ii) allows the Court to order a party to pay increased costs if that party has contributed unnecessarily to the time or expense of a proceeding by pursuing “an argument that lacks merit”. This rule is not engaged because, as I have just said, Mr Tait’s arguments had some merit.

[25]Accordingly, I reject BTL’s claim for increased costs.

What award of disbursements should be made?

[26]   BTL claims disbursements for various Court fees, with which Mr Tait takes no issue. BTL also claims about $9,000 for the fees of Ian McManus, an expert planning witness. Mr Tait says that only about 50 per cent of Mr McManus’s fees should be recoverable as a disbursement, as large parts of his evidence (devoted to revisiting Auckland Council’s resource consent decision) were not relied upon or considered by me in my judgment.

[27]   Rule 14.12 provides that a disbursement must be included in a costs award to the extent that it is (among other things) reasonably necessary for the conduct of the proceeding and reasonable in amount. An expert witness’s fees can be recovered notwithstanding that, on the basis on which the Court decided the case, the expert’s evidence (or part of it) was irrelevant.1 The questions to resolve are whether the expert’s evidence was reasonably necessary for the conduct of the proceeding and whether the expert’s fees were reasonable in amount.

[28]   All of Mr McManus’s evidence was reasonably necessary for the conduct of the proceeding. One of Mr Tait’s key arguments relied on Auckland Council having refused resource consent for the removal of part of Mr Tait’s patio. Although I did not ultimately have to decide whether the Council’s decision was correct, in those circumstances it was reasonably necessary for BTL to put forward expert evidence on that matter. There is no question that Mr McManus’s fees were reasonable.

[29]   Accordingly, BTL is entitled to recover the full amount of its claimed disbursements of $10,799.78.

Result

[30]I order Mr Tait to pay to BTL costs of $16,730 and disbursements of

$10,799.78.

1      The Beach Road Preservation Society Inc v Whangarei District Council (2001) 16 PRNZ 13 (HC) at [18].

Campbell J