Carson v Lee - [2023] NZHC 1928

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2022-404-311

[2023] NZHC 1928

BETWEEN NICHOLAS FREDERICK CARSON and THE BLOMFIELD TRUSTEE COMPANY 616 LIMITED
Plaintiffs

AND

MATTHEW JOHN LEE and JOANNE LESLEY IRVING

First Defendants

Hearing: On the papers

Appearances:

N Tabb for the Plaintiffs

W Revell for the First Defendants

Judgment:

21 July 2023

JUDGMENT OF ASSOCIATE JUDGE SUSSOCK

[Costs]

This judgment was delivered by me on 21 July 2023 at 4.15 pm pursuant to r 11.5 of the High Court Rules

Registrar/Deputy Registrar

Solicitors:
N Tabb, Barrister & Solicitor, Auckland W Revell, Farry Law, Auckland

CARSON v LEE [2023] NZHC 1928 [21 July 2023]

Introduction

[1] The defendants seek indemnity costs following my decision striking out Farry Law as the second defendant to these proceedings.1 Indemnity costs are sought not only against the plaintiffs but against a non-party to the proceeding, Mr Matthew Blomfield, and against plaintiffs’ counsel, Ms Tabb.

[2] The parties agree that the plaintiffs ought to be liable, jointly and severally, for costs. In addition, they agree that the quantum of 2B scale costs is $7,648.00, although not on whether 2B costs ought to be awarded.

[3] The issues that are disputed are whether indemnity or increased costs are appropriate and whether non-party costs orders ought to be made against Mr Blomfield, the sole director and shareholder of the second named plaintiff, or the plaintiffs’ counsel, Ms Tabb.

[4] Very lengthy memoranda have been filed on behalf of both sides. I set out the relevant costs principles below before considering each of the disputed issues.

Relevant costs principles

[5] The starting point in any costs decision is r 14.1 of the High Court Rules 2016 which confirms that all matters relating to costs are at the court’s discretion. The discretion vested by r 14.1 is wide but must be exercised subject to the general principles in r 14.2 and the remaining costs provisions.

[6] Rules 14.3 to 14.5 provide for the calculation of scale costs through the categorisation of proceedings, appropriate daily recovery rates and the determination of a reasonable time for each step for the purposes of r 14.2(1)(c) by reference to the time specified in sch 3 of the High Court Rules.

[7] Rule 14.6 provides for when increased or indemnity costs may be ordered and relevantly includes as follows:

1 Carson v Lee [2023] NZHC 323.

14.6 Increased costs and indemnity costs

(1)Despite rules 14.2 to 14.5, the court may make an order—

(a)increasing costs otherwise payable under those rules (increased costs); or

(b)that the costs payable are the actual costs, disbursements, and witness expenses reasonably incurred by a party (indemnity costs).

(2) …

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

(a)…

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

…

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

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.

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Details

Case: [2023] NZHC 1928
Decision Date: 21 July 2023

CaseChat Overview and Summary

In Carson v Lee, the defendants sought indemnity costs following the striking out of Farry Law as a defendant in the proceedings. The plaintiffs were ordered to pay costs on a 2B scale with a 50% uplift, amounting to $11,472.00 plus disbursements of $500.00. The court found that the plaintiffs had contributed unnecessarily to the time and expense of the proceedings by opposing the strike-out application without reasonable justification. The court held that while the allegation of improper purpose was serious, there was insufficient evidence to support such a finding. As a result, the court declined to award indemnity costs against the plaintiffs, Mr Blomfield, or Ms Tabb personally. The court considered that the award of increased costs with a 50% uplift against the plaintiffs was sufficient to meet the interests of justice.

The court found that the defendants were entitled to increased costs based on the plaintiffs' failure to accept a legal argument or to pursue an unnecessary step or argument that lacked merit. The defendants had provided detailed correspondence to the plaintiffs prior to filing the strike-out application, outlining the terms of the undertaking provided by Farry Law and how it was obliged to disburse the proceeds only pursuant to a joint instruction from the parties or a court order. Despite this, the plaintiffs opposed the application for strike-out, relying on cases where there was no solicitor's undertaking or it was not clear whether undertakings had been given, and the law firms involved did not oppose being named as a party. The court held that the opposition to the strike-out application was misconceived and represented a serious failure without reasonable justification to accept a legal argument.

Orders