Catherwood v Asteron Life Limited
[2023] NZHC 150
•9 February 2023
IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY
I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE
CIV-2021-409-581
[2023] NZHC 150
BETWEEN HUGH RODERICK CATHERWOOD
Plaintiff
AND
ASTERON LIFE LIMITED
Defendant
Hearing: On the papers Appearances:
H D J Holderness for Plaintiff
C M Meechan KC and A M Quesado for Defendant
Judgment:
9 February 2023
JUDGMENT OF DUNNINGHAM J RE: COSTS
This judgment was delivered by me on 9 February 2023 at 11 am, pursuant to r 11.5 of the High Court Rules
Registrar/Deputy Registrar Date:
CATHERWOOD v ASTERON LIFE LIMITED [2023] NZHC 150 [9 February 2023]
Introduction
[1] On 8 December 2022, I issued a judgment which found in favour of the interpretation contended for by Asteron Life Ltd (Asteron), of a life insurance policy taken out by the plaintiff, Mr Catherwood.1 I reserved the issue of costs but indicated the defendant would normally be entitled to costs on a 2B basis.
[2] The parties have largely agreed on costs, save on one issue which they have referred to me for determination. The issue is whether preparation costs under Items 33 and 33B of sch 3 to the High Court Rules 2016 (the Rules) should be calculated by reference to the allocated hearing time of four days or the actual hearing time of a day and a half in the particular circumstances of this case.
Background
[3] Counsel for Mr Catherwood had estimated a three day hearing would be required, but at a case management conference on 3 March 2022, Paulsen AJ set the matter down for a four-day hearing given the views of counsel for Asteron that three days would be insufficient.
[4] However, shortly before the scheduled hearing I convened a telephone conference with counsel to discuss the implications of industrial action by Court staff. That action meant that even if the hearing commenced at 9 am each day, there would only be three and a half hours hearing time available each day. In the circumstances, to ensure the hearing did not have to be adjourned part-heard, I urged counsel to consider what evidence could be admitted by consent, effectively as agreed facts,2 and whether parts of the evidence could be taken as read if it was uncontentious. This was particularly so when the dispute appeared to relate solely to the interpretation of a provision in the insurance contract rather than the factual background.
1 Catherwood v Asteron Life Ltd [2022] NZHC 3296.
2 Evidence Act 2006, s 9.
[5] As it transpired, the majority of the evidence regarding the handling of Mr Catherwood’s claim was agreed to be admitted by consent, and there was relatively limited cross-examination of the witnesses who were called. The hearing was able to be concluded in a day and a half.
[6] However, that has led to a dispute between the parties as to whether costs for preparation pursuant to the High Court’s cost schedule should be calculated based on the estimated trial duration of four days or the actual trial duration of one and a half days. This affects the items claimable at 33 and 33B of sch 3, which both relate to preparation for hearing.
[7] Asteron says it prepared its case on the basis of the four-day estimate. The fact that the hearing was compressed because of the need to work within the hearing time actually available as a result of industrial action, and the advice given shortly before the start of the hearing that five of the six Asteron witnesses would not be required to be cross-examined, does not, in Ms Meechan KC’s submission, alter the fact that Asteron prepared on the basis of the matter being set down for a four-day trial. She accepts that items 34 and 35 (which relate to appearance at the hearing) must be calculated based on the hearing’s actual duration, but in her submission, items 33 and 33B should not be in this case.
[8] Counsel for Mr Catherwood, Mr Holderness, submits that the actual hearing duration of one and a half days should limit the amount claimable under items 33 and 33B. This is because:
(a)the relevant part of sch 3 refers to “hearing days” not “allocated hearing days”;
(b)it does not follow that because counsel prepared on the basis that the trial would run for four days, it is necessarily appropriate to award four days of scale costs on account of trial preparation. The scale is designed to give a party a partial and relatively modest cost recovery in respect of specified steps taken in a proceeding;
(c)the approach suggested by Asteron could, if endorsed, encourage parties to exaggerate the time needed for trial in order to secure a larger costs award under items 33 and 33B in the event of success; and
(d)if items 33 and 33B are calculated in relation to time actually used in trial it would tend to encourage the parties to run witness hearings quickly and efficiently and it would be inappropriate if the unsuccessful party was nevertheless liable to pay additional scale costs for days which did not need to be used.
[9] In addition, Mr Holderness says that Mr Catherwood had always suggested a shorter hearing time was required than the time estimated by Asteron. In any event, the estimation of the duration of a witness hearing is always difficult and uncertain, and this supports the position that costs claimed under items 33 and 33B should be tied to the hearing days actually used, not those allocated.
[10]In response, Ms Meechan points out:
(a)the time spent in preparation for trial is necessarily coloured by the estimated duration; and
(b)she rejects the suggestion that awarding costs for items 33 and 33B based on time allocated would encourage parties to exaggerate time needed for trial, saying this is unlikely with responsible counsel and, in any event, counsel’s estimates of hearing time are checked by the Court at the point the matter is set down.
[11] Finally, she notes that if the matter had settled before trial, but the Court was required to fix costs, it would clearly have awarded preparation costs on the basis of the then estimated duration.
Discussion
[12] What is at issue is whether it is appropriate to calculate the reasonable time for preparation for hearing by reference to the actual hearing time, when that was truncated relatively late in the piece because of industrial action by Court staff.
[13] The starting point under r 14.5 of the Rules is that a reasonable time for a step under the High Court costs regime is “the time specified for it in Schedule 3”.3 Preparation time in sch 3 is referenced to the actual hearing time involved whether the hearing is categorised as Band A, B, or C. The clear presumption therefore is that the task of preparing briefs, list of issues, authorities and the common bundle, and the task of preparing for hearing, are both appropriately referenced to the time the hearing actually took.
[14] Under r 14.6, there is the ability to award increased costs for a range of reasons, although generally those relate to behaviour by the other party which contributed unnecessarily to the time or expense of that step in the proceeding. However, the rule is flexible enough to accommodate increased costs where preparation time was likely to far exceed hearing time for any reason.
[15] Accordingly, the default position is that the defendant can claim for 1.5 days under items 33 and 33B, unless I am satisfied that some other reason exists which justifies the Court making an order for increased costs, despite the principle that the determination of costs should be predictable and expeditious.4
[16] In my view, this hearing never required four days to traverse the relevant evidence. The plaintiff made it clear that no issue was taken with the factual background to the claim, and the only issue in dispute was the interpretation of the contract of insurance. Indeed, this was made clear in submissions made in late 2021, when Mr Catherwood sought to bring the proceeding under pt 19 of the High Court Rules and not as an ordinary proceeding under pt 5. In a hearing before Paulsen AJ, Mr McVeigh KC said that the only area of dispute was the proper interpretation of the
3 High Court Rules 2016, r 14.5(1)(a).
4 Rule 14.6(3)(d).
insurance policy, and the evidence would have a very narrow compass.5 This was a case where there could have been more dialogue between the parties earlier in the piece, with a view to agreeing facts, so that they were not required to be the subject of oral evidence at hearing. It was fortuitous that the industrial action brought those issues to a head and encouraged counsel to responsibly consider what evidence was in fact contested and needed to be led in Court.
[17] For this reason, in the particular facts of this case, I do not consider it appropriate to depart from the usual position which is that the claims for preparation costs are referenced to the actual time of hearing. In saying that, I point out that both parties have, in any event, incurred savings through not having to attend the additional two and a half days of hearing, for which the successful party could never have recovered in full in any event.
Result
[18] Accordingly, on the disputed issue, I rule that Asteron’s costs claim under items 33 and 33B should be tied to the hearing days actually used, not the days of hearing allocated in advance.
[19] In light of this ruling, I trust that the parties can agree the issue of costs. I reserve leave to the parties to revert to the Court if they require a final order to be made in respect of costs. However, any such application must be made within the next 20 working days, failing which I will assume that costs have been resolved as between the parties and the proceedings will be at an end.
Solicitors:
Meares Williams, Christchurch Annette Quesado, Auckland
Copy To:
H D J Holderness, Barrister, Christchurch C M Meechan KC, Barrister, Christchurch A Borchardt, Barrister, Christchurch
5 Catherwood v Asteron Life Ltd [2021] NZHC 2612 at [16].
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