Buis v Accident Compensation Corporation HC Auckland CIV 2007-404-4703

[2010] NZHC 280

IN THE HIGH COURT OF NEW ZEALAND

AUCKLAND REGISTRY

CIV 2007-404-004703

BETWEEN  MICHAEL OWEN BUIS

Plaintiff

ANDTHE ACCIDENT COMPENSATION CORPORATION

Defendant

Hearing:         On the papers

Counsel:         R Bedford for Plaintiff

AD Barnett for Defendant

Judgment:      25 February 2010

JUDGMENT OF RODNEY HANSEN J

This judgment was delivered by me on 25 February 2010 at 12.00 pm,

pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date: ………………………….

Solicitors:            Snedden & Associates, P O Box 105195, Auckland (Mr D Snedden) for Plaintiff

MJ Mercier, ACC, P O Box 242, Wellington for Defendant

BUIS V ACC HC AK CIV 2007-404-004703  25 February 2010

Introduction

[1]      In my judgment of 6 March 2009, I dismissed Mr Buis’ application to review two  decisions  of  the  Accident  Compensation  Corporation  (ACC). He  challenged ACC’s decision to deduct the gross benefit he had received before establishing an entitlement to an award under Accident Compensation legislation and to pay the tax component to the Inland Revenue Department.

[2]      The application ultimately turned on a question of statutory interpretation viz whether  a benefit for  the purpose of the  relevant provisions of the Social Security Act 1964 meant gross benefit or net (after tax) benefit.

[3]      Mr Barnett, for ACC, seeks costs on a category 2 band B basis though, for reasons I will later discuss, with some adjustment to the preparation costs allowed by the scale.

No award or reduced award

[4]      Ms Bedford, for Mr Buis, opposes an award of costs on the ground that the proceeding was brought in the public interest without motive of personal gain.   It is well established that costs may be reduced or not awarded  at  all   when  the unsuccessful party brought the proceedings in the public interest and not for personal

gain: NZ Maori Council v Attorney-General[1]  at 525-526.

[1] [1994] 1 NZLR 513 (PC)

[5]      In support of her argument, Ms Bedford made three key submissions.  The first is  that Mr Buis brought the application because  ACC  refused  to  provide  him with statutory review rights on the ground that the decision was a  taxing  matter. That was indeed the initial position adopted by ACC  but,  after  proceedings  were issued  and  counsel  instructed,  it  was  made clear  that  ACC  would  not  stand  in  the way of a statutory review and would not, for example, oppose the late filing of an

application by Mr Buis to exercise his statutory right of review.  On this basis, it was

suggested that the application for judicial review should be discontinued.  That offer was rejected.

[6]      The second submission is that clarification of the   law   was   required. Ms Bedford referred to confusion between the three Crown entities involved in the reimbursement process  –  ACC, the Inland Revenue Department and Work and Income New Zealand (WINZ). She said her client had received conflicting advice from ACC as to what happened to the PAYE tax that had been deducted and was advised at one stage that ACC reimbursed WINZ the  net  figure  in  line  with  the

decision in Department of Social Welfare v Allan[2].

[2] (1993) 10 CRNZ 307

[7]      Mr Barnett accepted that,  while  the  central  issue  raised  by  this  proceeding had not previously been addressed in the High Court, there was well settled authority

to  support  the  ACC’s  position  in  the  District  Court,  namely  Watson  v  ARCIC decision number 111/98.   He pointed out that the ACC’s consistent view, which it had maintained since 1998, was that DSW v Allan did not apply.

[8]      I gave Ms Bedford leave to reply to  this  submission.   She  contended  that Watson  did  not  address  the  major  issue  raised  in  this  proceeding,  namely whether ACC  had  the  statutory  authority  to  pay  the  tax  deducted  to  the  IRD  rather  than WINZ.   She  pointed  out  also  that  ACC’s  present  policy was  not  in  place  in  1996 when the decision which led to Watson was made.

[9]      I accept that the position of the ACC has not always been consistent and that Mr Buis and his advisers were entitled to take  the  view  that  its  actions  were unlawful. However,  from  an  early  stage  of  the  proceeding  the  legal  arguments which  ultimately  prevailed  were  clearly  articulated  to  Mr  Buis’  counsel. The litigation was pursued in  the face of clear notice  that it was inconsistent with first instance authority and would be defended.

[10]     However,  even  if  it  is  arguable  that  the  law  required  clarification,  I do  not accept that the proceeding was brought and   pursued   in   the   public   interest.

Ms Bedford argued that Mr Buis could not have been motivated by personal interest

because, had he succeeded, any sum he recovered would be consumed by legal costs. For this purpose, she included costs incurred in resisting an unsuccessful strike out application brought by ACC.

[11]     I do not accept that this would have been the case as it takes no account of the costs which Mr Buis would have been entitled to  recover  had  he  been  successful. Further, Mr Barnett referred me to a letter in which, through counsel, Mr Buis said,

in response to a proposal for settlement, that the matter was not capable of settlement “unless ACC offers a compelling inducement”.  Ms Bedford’s memorandum in reply included  a letter from  Mr  Buis  in  which  he  explained  that  by  a  “compelling inducement” he had in mind a payment sufficient to meet his legal costs to that point.

[12]     I do not doubt that Mr Buis was genuine in his concern to achieve clarification of what he perceived to be an anomalous situation. But, as he acknowledges himself, he issued the proceedings to ensure that what he saw to be his statutory entitlement was paid to him. Although he may have come to see the issue

as a matter of public importance, that did not change the essential character of the litigation.   The  reality is  that  Mr  Buis  brought  the  proceeding  in  order  to  recover money  he  believed  to  have  been  wrongly  withheld  from  him. The  fact  that  a successful  outcome  would  have  benefited  others  in  the  same  position  does  not change his underlying purpose.

[13]     In  any  event,  I  do  not  accept  that  Mr  Buis  would  not  have  achieved  a personal advantage had he succeeded.   Ms Bedford’s calculations did not take into account  costs  awarded  to  him  following  his  successful  opposition  to  a  strike  out application by ACC and the costs he would have been awarded had he succeeded on the substantive application.

[14]     Mr Buis has not established grounds for either declining to award costs to the

ACC or for reducing the award.

Quantum of costs

[15]     The ACC originally claimed scale costs as follows:

Item	Description	Days
2	Commencement of defence	2.0
4.10	Filing  memorandum  for  case  management  conference  or  mentions hearing (3 x 0.4)	1.2
4.11	Appearance at case management conference (1 x 0.3)	0.3
4.17	Appearance at callover (15/8/07)  (1 x 0.2)	0.2
7.3	Preparation of affidavits ( 4 affidavits)	2.0
7.4	Common bundle and all other preparation	1.0
8	Preparation for hearing	2.0
9.1	Appearance for hearing	1.0
Total: 9.7 days at $1,600 = $15,520.00

[16]     Ms Bedford challenged:

a)        The  amounts  claimed  under  items  4.10  and  11  for  memoranda  and appearances at case management conferences.

b)        Costs under item 4.17 for the appearance at callover.

c)        Amounts claimed for preparation under items 7.3, 7.4 and 8. d)        Travel costs.

Conferences

[17]     There were five memoranda filed for the purpose of conferences or mentions. Mr Barnett claimed for memoranda in relation to a reduced number of conferences to take account of the fact that three of the  memoranda also dealt with the strike out application.  As earlier noted, Mr Buis successfully resisted that application and was awarded costs, including costs in respect of two of the conferences.

[18]     Ms Bedford submits that only one case conference related to the substantive hearing and that all others related to the strike out application.  The record indicates otherwise.   All memoranda dealt, at least in part, with matters other than the strike out application.   In my view, the ACC’s claim appropriately allows for the fact that some  of  the  conferences  also  dealt  with  the  strike  out  application. Given  that Mr Buis received costs in respect of two of the three conferences in this category, the ACC’s concession is, if anything, overly generous.

Callover

[19]     Ms  Bedford  questions  whether  a  callover  took  place  on  15  August  2007. Mr Barnett  is  insistent  that  it  did.   He  said  he  attended,  although  there  was  no appearance by the plaintiff.   His position is consistent with a notice of a hearing on that date.  I allow the claim.

Preparation

[20]     The hearing occupied one day.  Under item 8 of Schedule 3 that entitled ACC

to  an  allowance  for  preparation  of  two  days. Mr  Barnett  says  this  allowance  is inadequate in this case and will often be unrealistic in judicial review proceedings where a lot of time can be put into the preparation of affidavits. This will generally result in shorter  hearings. He submits that it is anomalous that when a matter proceeds to a hearing, and the hearing is only a day, the allowance for preparation is less  than  what  is  allowed  if  a  hearing  does  not  take  place. In  this case, had the plaintiff discontinued, the ACC would have been entitled (on  a  2B  basis)  to preparation time totalling four days for the preparation of evidence and other matters – see items 7.3 and 7.4 of the Schedule.

[21]     I agree with Mr Barnett that this  is  an  anomalous  outcome. I  accept  that preparation  time  would  have  substantially  exceeded the two days allowed. There was extensive affidavit evidence – four affidavits by the defendant. Comprehensive written submissions were filed in advance of the hearing. I consider  that  the

allowance  of  three  days  sought  by  the  defendant  is  modest,  having  regard  to  the actual time preparation is likely to have taken.

[22]     The claim for preparation under items 7.3 and 7.4 of the scale is disallowed but I make an increased allowance of three days for preparation under item 8.

Disbursements

[23]     The ACC claims the cost of return  air  travel  of  counsel  who  is  located  in

Wellington.  That part of the claim for disbursements is opposed.

[24]     The costs of air travel is a disbursement for the purpose of r 14.12(1).   The question  is  whether  it  meets  the  criteria  in  r  14.12(2)  -  relevantly,  in  this  case, whether the expense is reasonably necessary for the conduct of the proceeding and reasonable in amount.

[25]     The cost of counsel’s travel will not be reasonable where there is no special justification for instructing out of town counsel  –  Russell v Taxation Review Authority[3]. The  circumstances in which it will be reasonable are discussed in Ainsworth & Collinson Limited v Edmunds[4]  at [5] – [9] and cases cited therein. See

also Air  New Zealand  Limited  v  Commerce  Commission[5] at [84] – [87]. It is not

possible  to  lay  down  any  hard  and  fast  rules.    In  the  end,  the  question  of reasonableness will turn on the circumstances of each case.

[3] (2002) 14 PRNZ 515

[4] HC NAP CIV-2009-441-000348 22 October 2009

[5] (2005) 17 PRNZ 786

[26]     In this case, I consider it was perfectly reasonable for Mr Barnett to have appeared. It  was  appropriate  for  ACC  to  instruct  Wellington  counsel  in  the  first place. The decisions in issue were made in Wellington and involved  Wellington- based personnel. Instructions had to be obtained and evidence gathered in Wellington. All  deponents  of  affidavits  on  behalf  of  the  ACC  were  resident  in Wellington. With Mr Barnett having done  all the work on the  file, it would have

been ludicrous to instruct Auckland counsel to appear at the hearing.

Result

[27]     ACC  is  entitled  to  costs  of  $12,320  as  particularised  in  [15]  above  and amended  in  accordance  with  [22]  and  disbursements  as  fixed  by  the  Registrar, including the cost of air travel by counsel for the hearing.