Brkic v White - [2018] NZHC 2868

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2015-404-003066 [2018] NZHC 2868

BETWEEN
GORDON BRKIC, EMILIJA BRKIC and

NAGI FALTAUS Plaintiffs

AND

CAROLINE RUTH WHITE, CRUMMER TRUSTEES NO. 82 LTD and MARK DONALD STALKER as Trustees of the GRAFTON ROAD TRUST

Defendants

Hearing: (On the papers)

Counsel:

Phillip Rice for the Plaintiffs
Lawrence Herzog for the Defendants

Judgment:

6 November 2018

[COSTS] JUDGMENT OF MOORE J

This judgment was delivered by me on 6 November 2018 at 3:00 pm pursuant to Rule 11.5 of the High Court Rules.

Registrar/ Deputy Registrar
Date:

BRKIC & ORS v WHITE & ORS [2018] NZHC 2868 [6 November 2018]

Introduction

[1] On 18 June 2018 I entered judgment for the plaintiffs, and ordered that the defendants repay the loan sum of $109,820 together with interest.1

[2] The defendants raised two matters in defence: that the loan agreement and associated agreement for sale and purchase were the product of fraudulent misrepresentation, or fraudulent alteration. The first defence was abandoned at hearing, and I rejected the second in my judgment.

[3] I indicated 2B costs were appropriate.2 The plaintiffs have now filed a memorandum seeking $166,666.37 in indemnity costs and disbursements based on cl
14 of the loan agreement, which provides:

“14 COSTS

The borrower shall pay to the Lender on demand the amount of all reasonable costs, charges and expenses (including legal fees and disbursements calculated on a solicitor and own client basis) incurred by the Lender in connection with the negotiation, preparation, execution, enforcement and administration of this Deed and the Security Documents.”

[4] The defendants oppose the award of indemnity costs. This judgment resolves that dispute.

Indemnity costs principles

[5] Where the party claiming costs is entitled to indemnity under a contract or deed, the court may order the other party to pay indemnity costs.3 The approach to be taken was set out in Black v ASB Bank Ltd, and is summarised below:4

(a) An order for indemnity costs pursuant to a contractual provision is distinct from an order for indemnity costs under other parts of r 14.6(4).

1      Brkic v White [2018] NZHC 1458.
2 At [85].
3      High Court Rules 2016, r 14.6(4)(e).
4      Black v ASB Bank Ltd [2012] NZCA 384 at [77]-[99].

(b)Namely, while indemnity costs arising out of a contractual right must be “reasonable”, “reasonable” does not import a discretion in the usual sense. Assessing whether indemnity costs claimed under a contract are reasonable involves the Court making an objective assessment of:

(i)what tasks attract a costs indemnity on a proper construction of the contract;

(ii)whether the tasks undertaken were those contemplated in the contract;

(iii)whether the steps undertaken were reasonably necessary in pursuance of those tasks;

(iv)whether the rate at which the steps were charged was reasonable having regard to the principles normally applicable to solicitor/client costs; and

(v)whether any other principles drawn from the general law of contract would in whole or in…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Brkic v White

Details

AGLC: Brkic v White [2018] NZHC 2868
Case: [2018] NZHC 2868
Decision Date: 6 November 2018

CaseChat Overview and Summary

The High Court of New Zealand, Auckland Registry, heard the case of Brkic v White, where the plaintiffs sought indemnity costs and disbursements from the defendants based on a contractual clause. The plaintiffs, Gordon Brkic, Emilija Brkic, and Nagi Faltaus, sued the defendants, Caroline Ruth White, Crummer Trustees No. 82 Ltd, and Mark Donald Stalker as Trustees of the Grafton Road Trust, for the repayment of a loan sum of $109,820 with interest. The defendants raised two defences, which they later abandoned. The plaintiffs sought $166,666.37 in indemnity costs and disbursements based on a clause in the loan agreement.

The legal issues the court had to decide were whether the plaintiffs were entitled to indemnity costs under the contract, and if so, whether the amount claimed was reasonable. The court considered the five criteria for assessing reasonable indemnity costs as outlined in Black v ASB Bank Ltd: the tasks attracting costs, whether the tasks undertaken were contemplated in the contract, the necessity of the steps taken, the reasonableness of the rates charged, and any other principles drawn from the general law of contract.

The court concluded that the plaintiffs were entitled to indemnity costs as the contract explicitly referred to the entitlement to legal fees and disbursements on a solicitor-client basis. The court found the only question was whether the clause covered litigation costs incurred to enforce the loan agreement. The reference to "enforcement" and "legal fees and disbursements" indicated the possibility of litigation and indemnity for those costs. The defendants did not dispute this interpretation. The court found the steps taken were reasonably necessary, with two exceptions. First, some costs were duplicated as the plaintiffs had already been awarded wasted costs on a 2B basis. Second, the court found that considering the judgment and preparing a memorandum on costs were not reasonably necessary in pursuance of enforcement of the loan agreement. The court also found that GST should not be included in the indemnity costs as the plaintiffs were likely GST-registered.

The court ordered that the plaintiffs were awarded indemnity costs in the sum of $111,736.95 and are entitled to disbursements, exclusive of GST, to be fixed by the Registry. The court reduced the amount claimed by $20,000 to account for duplication and by $19,760.55 to exclude GST.

Orders