Carrington Resort Jade LP v Van Den Brink

[2023] NZHC 2805

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV 2022-404-000262

CIV 2022-404-000330

[2023] NZHC 2805

BETWEEN

CARRINGTON RESORT JADE LP

Applicant/Plaintiff

AND

THEO VAN DEN BRINK

Respondent/Defendant

On the papers
Counsel:	J J K Spring & R Hastie for the Applicant/Plaintiff No appearance for the Respondent/Defendant
Judgment:	6 October 2023

JUDGMENT OF TAHANA J

( Costs )

This judgment was delivered by me on 6 October 2023 at 2.00pm Pursuant to Rule 11.5 of the High Court Rules

…………………………

Registrar/Deputy Registrar

Solicitors/Counsel:

Minter Ellison Rudd Watts, Auckland Pidgeon Judd, Auckland

CARRINGTON RESORT JADE LP v THEO VAN DEN BRINK (Costs) [2023] NZHC 2805 [6 October 2023]

Introduction

[1]    On 23 August 2022 I issued my liability judgment and determined that costs be awarded against the defendant, Theo van den Brink, on a category 2B basis.1 I adjourned the determination of any loss suffered by the plaintiff, Carrington Resort Jade LP (Carrington), and directed that Carrington file further evidence and submissions.2

[2]    On 13 December 2023, I issued my judgment on loss and directed that Carrington file a memorandum as to costs.3

[3]    Carrington now seeks increased costs of 50 per cent and disbursements, or alternatively costs on a 2B basis and disbursements.

[4]    Carrington’s cost memorandum was referred to me on 30 August 2023 for determination.

Should Carrington be awarded increased costs?

[5]    Carrington submits it should be awarded increased costs on the grounds in r 14.6(3)(b)(i) and (ii) of the High Court Rules 2016 (HCR), which provide that:4

(3)The court may order a party to pay increased costs if—

…

(b)the party opposing costs has contributed unnecessarily to the time or expense of the proceeding or step in it by—

(i)failing to comply with these rules or with a direction of the court; or

(ii)taking or pursuing an unnecessary step or an argument that lacks merit; or

…

1      Carrington Resort Jade LP v Van den Brink [2022] NZHC 2104.

2      At [82] and [83].

3      Carrington Resort Jade LP v Van den Brink [2022] NZHC 3348.

4      High Court Rules 2016, r 14.6(3).

[6]    The party seeking increased costs bears the onus of convincing the Court to award them and “clear cause” must be shown.5 Once the conduct engaging the relevant rule has been identified, whether to uplift costs is ultimately a matter for the Court and is highly fact-dependent.

[7]    Rule 14.6(3)(b) is concerned with circumstances where a party’s conduct has contributed unnecessarily to the time or expense of a proceeding. Increased costs will only be awarded where the conduct “unnecessarily contribute[s] to some actual and palpable increase in time or expense”.6

[8]       The Court of Appeal in Bathurst Resources Ltd v L&M Coal Holdings Ltd

explained the applicable principles for increased costs:7

[16]  Generally, increased costs may be ordered where there is a failure by the paying party to act reasonably. It is not enough that an appeal (and therefore cause of action at first instance) lacks merit. Increased costs will generally not be appropriate where there are “at least available starting points” for the argument — where its pursuit is not “unreasonable” nor “hopeless”. The costs regime should be predictable and litigants with “real arguments presented responsibly” to the courts should not fear an adverse increased costs award if their case fails. The standard costs regime recompenses in the case of normal failure.

[9]    An uplift of 50 per cent on scale 2B costs was awarded in Baker v Waimakuku Whanau Trust Board Inc in respect of an unsuccessful joinder application because it was held to be a collateral attack and an abuse of process which incurred unnecessary time and expense.8

[10]   An uplift of 25 per cent on scale 2B costs was upheld by the Court of Appeal in Jarden v Lumley General Insurance (NZ) Ltd in circumstances where the plaintiff pursued a claim without proper justification.9

5      Strachan v Denbigh Property Ltd HC Palmerston North CIV-2010-454-232, 3 June 2011 at [27]; and Bradbury v Westpac Banking Corp [2009] NZCA 234 at [28].

6      Red Bull New Zealand Ltd v Drink Red Ltd [2016] NZHC 1473 at [11].

7      Bathurst Resources Ltd v L&M Coal Holdings Ltd [2021] NZCA 684 (footnotes omitted).

8      Baker v Waimakuku Whanau Trust Board Inc HC Napier CIV-2010-441-581, 13 October 2011 at [19]–[20].

9      Jarden v Lumley General Insurance (NZ) Ltd [2018] NZCA 6.

[11]   In respect of non-compliance and failure to abide by the Court’s directions,10 Carrington submit that Mr van den Brink’s overall conduct in the proceeding was poor, and he failed to meet a number of timetable directions, thus requiring Carrington to incur extra expense.

[12]   Mr van den Brink failed to file and serve a statement of defence on time and provided no reason for the non-compliance, despite initially advising the Court and Carrington’s counsel that he would do so. The failure to file a statement of defence was the basis for the formal proof hearing, so this fact alone does not justify an increase in costs.

[13]   Mr van den Brink failed to provide an affidavit with copies of his bank statements and the location of assets purchased by Carrington. Mr van den Brink was granted two extensions of time to do so (on 30 March 2022, and on 7 April 2022). He failed to comply with the deadline without explanation, despite assuring Carrington’s counsel and the Court that he would comply. Mr van den Brink’s failure to file this affidavit put Carrington to extra expense. Had he provided the information, Carrington’s main concerns about how money paid to Mr van den Brink was used would have been answered at an earlier stage. Instead, Carrington was forced to proceed to a hearing on this issue. Carrington submits it still does not have full knowledge of how Mr van den Brink used the money.

[14]   Mr van den Brink filed a notice of opposition and an unsworn affidavit on   25 March 2022. Carrington submits that the affidavit did not comply with the High Court Rules; contained information that was speculative, scandalous, defamatory, and irrelevant; and contained proposals that Mr van den Brink surrender his passport and arrange for a “guarantee” to “sort this out promptly to get to the heart of things,” which, aside from being unusual, did not answer the application or orders sought.

[15]   Carrington submits that when Mr van den Brink did engage with the proceeding, he sought indulgences of the Court, for example asking that orders obtained by Carrington be varied. Carrington notes that Mr van den Brink was

10     High Court Rules 2016, r 14.6(3)(b)(i).

represented by counsel on these occasions so he cannot claim to lack understanding or awareness of his obligations to the Court.

[16]   After the hearing of the formal proof application on 4 July 2022, the Court received an affidavit of Mr van den Brink (dated 1 July 2022 and filed at the Kaikohe District Court that same day but received by the Auckland High Court Registry on 13 July 2022). He did not serve it on Carrington. Carrington were then required to file a memorandum in response. Carrington has claimed costs on a 2B basis in relation to that memorandum.

[17]   In respect of taking steps that were unnecessary or lacking merit,11 Carrington submits that Mr van den Brink’s defence was baseless and did not answer the application, thus requiring Carrington to incur further time and expense.

[18]   I note that Carrington is entitled to claim for additional steps it was required to take in the proceeding as a result of Mr van den Brink’s failure to comply so to that extent, it is able to recover for those steps.

[19]   I have already determined that costs in relation to the formal proof hearing be awarded on a category 2B basis. The issue is whether the remaining costs should be subject to a 50 per cent increase.

[20]   Carrington did not succeed on all its causes of actions, and it cannot be said that Mr van den Brink’s defence to allegations of misleading and deceptive conduct was hopeless. I do however, accept that Mr van den Brink failed to comply with timetable orders and took additional steps in the overall proceeding that led to further delays such as filing his affidavit in Kaikohe instead of at the High Court in Auckland.

[21]   Mr van den Brink appears to have been representing himself at the time that he swore and filed his affidavit dated 1 July 2022. I note the memorandum filed by his counsel instructed to act in relation to the injunction indicates that his counsel had never met Mr van den Brink, contact was difficult and sporadic, and then non-existent. Counsel for Mr van den Brink requested the Court’s leave to withdraw.

11     High Court Rules 2016, r 14.6(b)(ii).

[22]   Much of Mr van den Brink’s conduct appears to have arisen because he was attempting to defend the claims himself and to the extent he had counsel, he did not engage with them.

[23]   Whether to allow an uplift and how much to uplift costs is ultimately a matter for the Court and is highly fact-dependent. The approach is generally that the proceeding must be categorised, then it is necessary to determine which time band applies for each step in the proceeding, and finally, where circumstances exist supporting increased costs, the Court must consider, in respect of each step affected, what a reasonable fee is in the circumstances. However, if increased costs are awarded because a claim lacked merit and was unlikely to succeed, it is often appropriate for increased costs to apply to all steps.12

[24]   The Court of Appeal in Holdfast NZ Ltd v Selleys Pty Ltd indicated that an uplift of 50 per cent is usually the maximum uplift, but exceptional circumstances may justify higher uplifts.13

[25]   I do not consider that Mr van den Brink’s conduct of his defence constitutes an abuse of process or a collateral attack. He was attempting (unsuccessfully) to defend claims which included matters that were not straightforward such as whether representations he made as to his experience and expertise were misleading and/or deceptive. Much of Mr van den Brink’s conduct appears to arise because he was representing himself and he was clearly unfamiliar with Court processes. This is evident by his attempt to file his affidavit in Kaikohe.

[26]   Further, Carrington has claimed, and is entitled to, scale 2B costs in relation to additional steps it took responding to Mr van den Brink’s late filing of documents. In those circumstances, Carrington has been compensated for the additional steps taken.

[27]In the circumstances, I am not satisfied that an increase in costs is justified.

12     NR v MR [2014] NZCA 623 at [52]; and Broadspectrum (New Zealand) Ltd v Nathan [2017] NZCA 434 at [57].

13     Holdfast NZ Ltd v Selleys Pty Ltd (2005) 17 PRNZ 897 (CA) at [46]–[48].

Disbursements

[28]   Carrington also claims disbursements and has set out the amount of each disbursement (excluding GST) in a schedule to its memorandum. The GST exclusive calculations for court filing fees appear to be inaccurate. For example, under the High Court Fees Regulations 2013, the sealing fee is $50.00 so that the GST exclusive amount should be $42.50 and not $43.48 as set out in the schedule. The calculations set out in the schedule need to be reviewed and updated to ensure they are accurate before orders are sealed.

Result

[29]I order that Mr van den Brink pay Carrington costs on a 2B basis of $34,177.00.

[30]   I order that Mr van den Brink pay actual disbursements (excluding GST) and direct Carrington to file an updating schedule of disbursements with the correct GST exclusive amounts within 10 working days.

Tahana J