Burmester v Burmester

[2019] NZHC 32

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2017-404-000485

[2019] NZHC 32

BETWEEN

PETER BURMESTER

Appellant

AND

BEVERLEY JOY BURMESTER

First Respondent

ANNELIESE BURMESTER and SARAH BURMESTER

Second Respondents

Hearing:	On the papers
Counsel:	D A T Chambers QC for the first respondent Anneliese Burmester in person
Judgment:	29 January 2019

JUDGMENT OF KATZ J

[Costs of contempt application]

This judgment was delivered by me on 29 January 2019 at 2.15 pm pursuant to Rule 11.5 High Court Rules

Registrar/Deputy Registrar

Solicitors:           Dyer Whitechurch, Auckland

Counsel:            D A T Chambers QC, Bankside Chambers, Auckland Copies to:  Anneliese Burmester

P E Dacre QC, Auckland
N S Leader, Barrister, Whangarei

BURMESTER v BURMESTER [2019] NZHC 32 [29 January 2019]

Introduction

[1]    Anneliese Burmester was found to be in contempt of court (on the application of her mother, Mrs Beverley Burmester) for failing to comply with a court order made in these proceedings. Anneliese was committed to prison for a period of seven days. Mrs Burmester now seeks indemnity costs against Anneliese in respect of the contempt application.

Background

[2]    In the course of relationship property proceedings between Mrs Burmester and her former husband Peter Burmester, orders were made by the Family Court regarding the operation of a partnership. The partners were Mrs Burmester, and the couple’s two adult daughters, Sarah and Anneliese. (Anneliese and Sarah were both parties to the Family Court proceedings).

[3]    The Family Court decision regarding relationship property issues was appealed to this Court. In my appeal decision of 2 February 2018, I varied the Family Court orders regarding the operation of the partnership, to better facilitate enforcement of the Family Court’s orders. The order made on appeal (“Partnership Order”) stated that:1

I order that Anneliese Burmester and Sarah Burmester do all things necessary within 14 days of this judgment to appoint Mrs Burmester as the sole agent for the partnership, both in regard to the operation of the ABS Partnership bank account and in regard to dealing with all authorities in Germany.

[4]    I declined, however, to make a pre-emptive order (as sought by Ms Chambers QC) that Anneliese would be in contempt of court if she failed to comply with the Partnership Order. I noted, however, that “any failure by Anneliese to comply with the [Partnership Order and the Family Court’s orders] will likely constitute contempt of court and could ultimately result in penalties (including fines or imprisonment) being imposed”.2

1      Burmester v Burmester [2018] NZHC 47, [2018] NZFLR 206 at [143(b)].

2 At [129].

[5]    Sarah Burmester complied with the Partnership Order. Anneliese Burmester, who has aligned herself with her father in the bitter and protracted proceedings between her parents, refused to do so. As a result, on 15 March 2018, Mrs Burmester applied for orders that Anneliese be held in contempt of court, that an arrest order be issued, and that Anneliese be committed to prison. Having reviewed the application, I issued a Minute on 12 April 2018 directing that the Judgment be personally served on Anneliese, rather than being emailed or posted to her father’s address for service. (Anneliese lives with her father on a boat moored in a marina).

[6]    On 1 May 2018, Mr Burmester emailed documents to the Court (a “reply” and supporting affidavit) indicating that Anneliese opposed the contempt application. Due to a Registry oversight, the relevant documents were not formally registered on the Court file. Further copies were provided by Mr Burmester on 4 July 2018, together with a second “reply” setting out further grounds of opposition.

[7]    On 10 July 2018, a notice of hearing was sent to the parties, advising that the contempt application had been set down for hearing on 3 August 2018 at 10.00 am. A copy of that notice was sent to Anneliese.

[8]    Mrs Burmester filed a further affidavit on 30 July 2018, together with supporting submissions. The supporting submissions addressed whether Anneliese should be held in contempt, and also addressed the issue of penalty (committal to prison was sought).

[9]    As Anneliese had not engaged counsel to represent her, and she was facing the possibility of imprisonment, I appointed Mr Paul Dacre QC as counsel to assist the Court, in essence to represent Anneliese’s interests and ensure she had access to independent legal advice.

[10]   The hearing on 3 August 2018 was attended by Ms Chambers and Mr Dacre. Anneliese did not attend. I raised a concern with Ms Chambers as to whether the Partnership Order was still operative, as there was some indication that the partnership may have been dissolved. Ms Chambers sought an adjournment to file further submissions on that issue. The hearing was accordingly adjourned to 30 August 2018,

and timetable directions were made for the filing of further submissions by Mrs Burmester and Anneliese. In a Minute dated 7 August 2018 I noted that it was in Anneliese’s interests to attend the hearing and present her arguments, and strongly encouraged her to do so. She was provided with Mr Dacre’s contact details, although she did not contact him.

[11]   An email received from Mr Burmester on the morning of 3 August 2018 (following the hearing) alleged that the notice of hearing that had been sent to Anneliese was insufficiently specific and not a “legally correct summons” and that Anneliese had accordingly “not been summoned to today’s hearing”.

[12]   On 17 August 2018 Ms Chambers filed supplementary submissions addressing whether the Partnership Order was now moot.

[13]   On 24 August 2018, Anneliese filed a further brief memorandum, opposing the orders sought.

[14]   The contempt of court hearing took place on 30 August 2018. Ms Chambers and Mr Dacre appeared, but Anneliese did not attend.

[15]    I delivered judgment on 7 September 2018, holding Anneliese in contempt of court.3 I directed that a further hearing take place on 12 October 2018 to determine the next steps, including determination of an appropriate penalty. I directed that a warrant issue for Anneliese’s arrest. At Mr Dacre’s suggestion, however, I directed that it lie in Court until 10.00 am on 12 October 2018, to give Anneliese a final opportunity to voluntarily attend Court. I further directed that the warrant would be cancelled if Anneliese purged her contempt prior to 12 October 2018.

[16]On 1 October 2018, Ms Chambers filed further submissions.

[17]   Anneliese did not attend the hearing on Friday 12 October 2018. She did, however, email a further brief memorandum to the Court that morning, opposing the orders sought. I was not willing to proceed with the penalty hearing in Anneliese’s

3      Burmester v Burmester [2018] NZHC 2352.

absence (given that the penalty sought was committal to prison for six weeks). Rather, as I was scheduled to be sitting in Whangarei (where Anneliese resides) the following Monday and Tuesday, I issued a warrant for Anneliese’s arrest and directed that she be brought before the High Court in Whangarei. A Whangarei barrister, Nick Leader, was engaged as additional counsel to assist the Court.

[18]   Anneliese voluntarily surrendered herself at the Registry of the Whangarei High Court on Monday 15 October 2018 and appeared before me that afternoon (Ms Chambers appeared by way of AVL link from Auckland). Prior to that appearance she had spoken briefly to Mr Leader. Mr Leader’s view was that Anneliese may be willing to purge her contempt by signing the required documents if committed to prison for a brief interim period (away from the influence of her father). Both counsel viewed this as preferable to finally determining the issue of penalty on that date, given that committal to prison for a period of six weeks was being sought. I accordingly committed Anneliese to prison, on an interim basis, until later that week (Friday 19 October 2018) and encouraged her to purge her contempt by signing the required documents.

[19]   When Anneliese appeared before me on Friday 19 October 2018, she was still not willing to sign the required documents. I accordingly heard full argument on the issue of penalty and delivered judgment on the issue.4 I ordered that Anneliese be committed to prison for a further period of seven days, on the basis that she would be eligible for early release if she purged her contempt by signing the required documents. She did not do so.

[20]   Anneliese has still not complied with the Partnership Order, which has precluded an orderly winding up of the partnership. The partnership’s funds are effectively “frozen” in an overseas bank account and tax penalties are accruing.

4      Burmester v Burmester [2018] NZHC 2728.

Mrs Burmester’s costs application

[21]   Mrs Burmester seeks costs of the contempt proceedings, up to and including the hearing on 19 October 2018, on an indemnity basis. She claims $42,121.25 as the actual and reasonable costs and disbursements of the contempt proceedings.

[22]   As the successful party, Mrs Burmester is clearly entitled to an award of costs. There is no reason why the usual principle that costs follow the event should not apply. Rather, the key issues are:

(a)whether costs should be awarded on an indemnity basis;

(b)whether the quantum of indemnity costs claimed is reasonable;

(c)whether the Court should order that Mrs Burmester is entitled to deduct any costs from Anneliese’s share of the partnership funds; and

(d)whether Anneliese should be required to meet the costs of counsel to assist.

Should costs be awarded on an indemnity basis?

[23]    Pursuant to r 14.6(4)(b) of the High Court Rules 2016, the court may order a party to pay indemnity costs if “the party has ignored or disobeyed an order or direction of the court or breached an undertaking given to the court or another party”. Conduct that constitutes contempt of court will often justify indemnity costs being awarded against that individual.5

[24]   Anneliese acknowledged that she had deliberately ignored the Partnership Order.6 Her contempt of court was flagrant. She remained resolute in her commitment to not comply with the Partnership Order, despite being given multiple opportunities to do so.

5      See Grant v Bhana [2015] NZHC 2596; Qu v Zeng [2018] NZHC 1355; Shawyer v Thow HC Invercargill CIV-2010-425-116, 20 October 2011; Bowie v Weyburne [2013] NZHC 1728 at [45]– [46]; Solicitor-General of New Zealand v Krieger [2014] NZHC 744. See also G E Dal Pont Law of Costs (4th ed, Lexis Nexis, Wellington) at [8.69].

6      Burmester v Burmester, above n 4, at [13].

[25]   Ms Chambers noted that one consequence of Anneliese’s refusal to appoint her mother as sole agent of the partnership is that the partnership bank account is being charged penalty rates regarding tax, which is automatically deducted from the funds of the account.  Mrs Burmester, Sarah Burmester, and indeed also Anneliese and   Mr Burmester, are all prejudiced by this. 7 Ms Chambers submitted that this ongoing prejudice to all four members of the family is a significant aggravating fact in favour of indemnity costs.

[26]   Anneliese opposed any award of costs and submitted that the entire contempt proceedings are a miscarriage of justice. Any award of costs, she submitted, would further compound the injustice. She argued that her “offence” was petty and that costs of more than $42,000 would be out of proportion for a simple matter – “likely not even 2B”. She further submitted that the complexity of the matter “does not justify indemnity costs of New Zealand’s most expensive family barrister…”.

[27]   I accept Ms Chambers submission, however, that indemnity costs are appropriate in this case. The circumstances fall clearly within r 14.6(4)(b). Anneliese deliberately disobeyed a court order, despite being given repeated opportunities to comply. Counsel to assist were appointed, both in Auckland and in Whangarei, to ensure that Anneliese had access to independent legal advice at all material times. Anneliese, however, largely elected to not avail herself of such advice and to instead take advice from her father. She was resolute in her commitment to flout the Partnership Order, to the extent of being willing to go to prison over the issue. She put Mrs Burmester to considerable expense in attempting to enforce the Partnership Order. Anneliese’s contempt is ongoing. Her actions have prejudiced not only herself, but her entire family, all of whom have a financial interest in the partnership.

7      Mr and Mrs Burmester each have a one sixth share and Sarah and Anneliese each have a one third share in the partnership funds.

What is the appropriate quantum of costs?

[28]   Costs are at the discretion of the Court.8 Rule 14.6(1)(b) defines “indemnity costs” as “the actual costs, disbursements and witness expenses reasonably incurred by a party”.9 Indemnity costs are determined by reference to the actual costs, but may be less if the court considers the actual costs are unreasonably high.10 In such circumstances, costs are calculated from a “reasonable allocation of actual costs” based on the appropriate time taken, the significance and complexity of the work, and a median hourly rate that is reasonably applicable.11

[29]   Indemnity costs include GST if the party receiving the award is not GST registered. If the party can recover GST, then it is excluded from the award.12

Costs

[30]   The Court must endeavour to calculate indemnity costs on the basis of a reasonable allocation of actual costs, based on the appropriate time taken, the significance and the complexity of the work, and a median hourly rate reasonably applicable.13

[31]   Mrs Burmester claims $42,121.25. However, by reference to the invoices supplied, the full sum claimed including GST is $41,941.25 (or $43,316.00 when disbursements are included). I therefore assume that there has been an arithmetical error on the part of counsel. Accordingly, when determining the appropriate sum, I will refer to the amounts claimed in the invoices. I infer from the sums claimed that costs are sought on a GST inclusive basis.

8      High Court Rules 2016, r 14.1.

9      (Emphasis added). See Bradbury v Westpac Banking Corp (2009) 18 PRNZ 859 (HC) at [18].

10     Andrew Beck (ed) McGechan on Procedure (online loose-leaf, Thomson Reuters) at [HR14.6.03(2)(a)].

11     Bradbury v Westpac Banking Corp (2009) 18 PRNZ 859 (HC) at [204] and [209].

12     New Zealand Venue and Event Management Ltd v Worldwide NZ LLC [2016] NZCA 282, (2016) 27 NZTC 22-058 at [13].

13     See Huang v Luo [2017] NZHC 3290 at [14], citing Bradbury  v  Westpac  Banking  Corporation (2008) 18 PRNZ 859 (HC) at [204] and [209].

[32]Mrs Burmester seeks the following costs:

Invoice	Mrs Burmester’s claimed actual costs (GST incl.)
Anja Borchardt – Bankside Chambers	$5,796.75
Robert Fisher QC – Bankside Chambers (invoice relates to services provided by his junior, Augustine Choi)	$4,295.25
Dyer Whitechurch	$6,077.75
Ms Chambers QC	$25,771.50
Total claimed  $41,941.25

[33]   Ms Borchardt’s invoice relates to approximately 20 hours work on this matter during the period 11 to 30 July 2018, at a rate of $250.00 per hour. It appears from her invoice that Ms Borchardt’s involvement primarily related to the preparation of Mrs Burmester’s further affidavit of 30 July 2018 (three pages) and the supporting submissions (12 pages) filed on that date.

[34]   Mr Fisher QC’s three invoices (relating to services provided by Ms Choi) record 27.4 hours of work, at a rate of $150.00 per hour. The period covered appears to be from July 2018 to 19 October 2018. Ms Choi’s focus appears to have been on research and drafting submissions. In addition to the 30 July submissions (12 pages), further submissions were filed on 17 August (three pages) and 1 October (four pages). Ms Choi also attended Court on 12 October 2018.

[35]Ms Chambers spent 24.9 hours on the matter, at a rate of $900 per hour.

[36]   Dyer Whitechurch’s invoice does not break down the number of hours spent, or the relevant charge out rates. Its invoice records that the firm charged a total of

$6,077.75 for its services, which included drafting the contempt application and supporting affidavit, arranging service on Anneliese, reviewing submissions, correspondence, meetings and so on. (The affidavit and supporting affidavit were each one page long.) Assuming (hypothetically) that the average charge out of the staff

involved was similar to that of Ms Borchardt ($250 per hour) this would reflect a further 24.3 hours of work.

[37]   On this analysis, approximately  100  hours  would  have  been  spent  by  Mrs Burmester’s legal team working on the contempt application. The number of lawyers involved was at least four (and more than that if more than one lawyer at Dyer Whitechurch was involved).

[38]   Although determination of indemnity costs is to be awarded by reference to the actual costs incurred and not the costs scale, the sum Mrs Burmester may have been entitled to on a scale basis may provide some benchmark as to reasonable costs.14 The appeal was categorised as a Category 3 proceeding. The contempt application, however, was much more limited in scope and was relatively straightforward. In my view, if assessed on a scale basis, the contempt application would appropriately have been Category 2B. In accordance with the scale, the total time allowance would likely have been three to four days, at a daily rate of $2,230 ($6,690 to $8,920).

[39]   In my view, a relatively “Rolls Royce” approach was taken to the contempt application.  Mrs Burmester was, of course, entitled to take such an approach.  If   she were meeting the associated  costs  herself,  no  questions  would  be  raised.  Mrs Burmester is seeking, however, an order that Anneliese meet her legal costs, on an indemnity basis. Anneliese is only required to meet the “reasonable” costs of the proceeding, viewed objectively. She is not required to finance a “leave no stone unturned” approach to the litigation.

[40]   The matter was not particularly complex. The liability issue was fairly clear- cut given that, on Anneliese’s own admission, she had deliberately failed to comply with a court order. The only potentially difficult legal issue was whether the Partnership Order was now moot, as a result of the (possible) dissolution of the partnership. Submissions were also necessary on the issue of penalty, with reference to relevant authorities. The penalty hearing was analogous, in some respects, to a

14     See Grant v Bhana [2018] NZHC 1527 at [35]; N R v  District  Court At Auckland  [2014] NZHC 1919 at [41]–[43].

sentencing hearing. It focussed largely on how long any term of imprisonment should be.

[41]   Anneliese was self-represented. Counsel to assist did not file any written submissions (and were not requested to do so). This reflected that their key role was to ensure that Anneliese had access to independent legal advice throughout, and was aware of the potentially serious ramifications (imprisonment) of failing to comply with the Partnership Order.

[42]   Anneliese is a young woman (aged 25) whose engagement with the proceeding was minimal, other than filing several short memoranda. When she was eventually compelled to attend court, she did not make any oral submissions of substance.

[43]   Taking all of these matters into account, I do not consider that the sum claimed for indemnity costs is reasonable. Given Ms Chambers previous involvement in the proceeding, it is not surprising that Mrs Burmester wanted her to remain closely involved in the contempt issues. Objectively, however, the issues were straightforward and did not require the extensive involvement of such senior counsel, at a charge out rate of $900 per hour.

[44]   Determining costs is often an imprecise (and difficult) exercise. Overall, however, I do not consider that Anneliese should bear the full financial burden of the contempt proceeding, due to the various matters I have outlined. In my view, a reasonable allocation of actual costs would be not more than $24,500. This would allow for 50 hours of work at an average rate of $250 per hour (the rate charged by Ms Borchardt) and a further 20 hours at $600 per hour, to reflect the involvement of senior counsel.

Disbursements

[45]In respect of disbursements, Mrs Burmester claims:

Source

Mrs Burmester’s

claimed disbursements

Anja Borchardt – translation 30.07.2018

(This appears to relate to the translation of a German document undertaken by Sibylle Ferner, exhibited to Mrs Burmester’s affidavit dated 30 July 2018.)

$120.00

Dyer Whitechurch

Filing fee for contempt application, service fee, server’s fee and schedule fee on hearing.

$1,144.75

Ms Chambers QC Court filing fee

$110.00

Total claimed  $1,374.75

[46]   My only concern with the disbursements is that there appear to be two sets of filing fees, one from Dyer Whitechurch and the other from Ms Chambers. Pursuant to the schedule of the High Court Fees Regulations 2013, the fee for filing “any other interlocutory application”, which the contempt application would fall under, is $200. The filing fee for the contempt application, as recorded by Dyer Whitechurch, is recorded as being $200. It is not entirely clear what the $110 filing fee claimed by Ms Chambers relates to. Given the possibility that it is claimed in error, or might relate to a document filed in the substantive appeal, I propose to err on the side of caution by excluding it. The appropriate quantum of disbursements is therefore $1,264.75.

Source of the costs and disbursements

[47]   Ms Chambers also seeks an order that Mrs Burmester be entitled to deduct the costs order from Anneliese’s share of the partnership funds (which are held in a bank account in Germany).

[48]   I have reservations regarding the appropriateness of such an order as, to some extent, it conflates issues of liability and enforcement. In reality, as Ms Chambers acknowledged, it is very unlikely that Anneliese will now (belatedly) agree to sign the

necessary documents to release the partnership funds, which are held in a German bank account. Hence, in order to access those funds, it will likely be necessary to apply to enforce this costs judgment in Germany. This Court must therefore be careful to avoid making any orders that potentially encroach on the jurisdiction of the German courts in relation to issues of enforcement. I have accordingly not been persuaded that the order sought is appropriate.

Costs of counsel to assist

[49]   Somewhat unusually, given that Mrs Burmester has no financial interest in this issue, Ms Chambers also sought an order that Anneliese reimburse all costs incurred in respect of the appointment of counsel to assist. She submitted that such a course would be appropriate on the basis that the costs were incurred as a result of Anneliese’s “criminal” behaviour, and the costs should not be borne by the taxpayer.

[50]   The fees of a private practitioner appointed as counsel to assist the Court are generally paid from public funds, although there will be cases where it would be appropriate to direct that a party to the proceedings meet the costs of such counsel. I am not satisfied, however, that this is such a case.

[51]   Anneliese had no wish to retain legal counsel and did not do so. That was her right. I determined, however, that the interests of justice required that Anneliese have access to independent legal advice, given that she was facing the possibility of a six-week term of imprisonment. I was also concerned  that she was heavily under  the influence of her father (a retired German lawyer) who clearly has his own agenda. Mr Burmester’s interests were not, in my view, aligned with those of Anneliese. Anneliese, however, declined to engage with Mr Dacre at all, and only engaged with Mr Leader reluctantly and to a minimal extent (albeit she now says that she regrets having spoken to him).

[52]   I do not consider that it would be just to oblige Anneliese to pay for services she did not want, did not retain herself, and largely did not use (as was her right).

Result

[53]   I order that Anneliese Burmester pay indemnity costs to Mrs Burmester, in the sum of $24,500, together with disbursements of $1,264.75 (totalling $25,764.75).

Katz J