Chiem v Fordyce Company Limited

[2023] NZHC 1324

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2018-404-754

[2023] NZHC 1324

BETWEEN

BON CHEAK CHIEM

Plaintiff

AND

FORDYCE COMPANY LIMITED

Defendant

Hearing:	23 March 2023
Appearances:	R J Latton and K B Arthur for Plaintiff D S McGill for Defendant
Judgment:	30 May 2023

COSTS JUDGMENT OF PETERS J

This judgment was delivered by Justice Peters on 30 May 2023 at 3 pm pursuant to r 11.5 of the High Court Rules

Registrar/Deputy Registrar Date: ...................................

Re-delivered at 4.30 pm on 20 June 2023

Solicitors:           Graham & Co, Auckland

Duncan Cotterill, Auckland

Counsel:R J Latton, Auckland K B Arthur, Auckland

CHIEM v FORDYCE COMPANY LTD [2023] NZHC 1324 [30 May 2023]

[1]        I issued a judgment determining costs and disbursements in this proceeding on 30 May 2023. It has been necessary to recall that judgment, because submissions of 24 March 2023, filed by Mr Latton, counsel for Mr Chiem, the plaintiff, had not been referred to me. This judgment takes those submissions into account, but the result is unchanged.

Background

[2]        Mr Chiem commenced this proceeding in April 2018, pleading three causes of action and seeking damages of approximately $909,000.

[3]        FCL, the defendant, defended the claim and, in March 2019, it counterclaimed against Mr Chiem for approximately $2.8 million. It had previously pleaded its counterclaim as an affirmative defence, but the counterclaim was the appropriate form of pleading.

[4]        Each party’s claim arose in connection with FCL’s development and subdivision of land in West Auckland.

[5]        Mr Chiem sued FCL to recover sums that he alleged he had advanced to or on behalf of the company, and for remuneration he alleged FCL owed him for services rendered.

[6]FCL denied Mr Chiem’s claim.

[7]        FCL’s case on its counterclaim was that Mr Chiem owed it a duty of care as he had assumed responsibility to project manage the development. FCL’s case was that Mr Chiem had breached this duty, causing FCL substantial loss.

[8]        Mr Chiem denied that he had assumed such responsibility, alternatively had caused loss.

[9]        On 21 July 2021, eight working days before the trial was to commence,     Mr Chiem notified FCL that he would not pursue his two most substantial causes of action at trial. Mr Chiem’s sole remaining cause of action was his claim for

remuneration between November 2016 and November 2017, this being for a sum of

$38,771.49.

[10]      By the time Mr Chiem abandoned those two causes of action, the litigation had been on foot for more than two years, the evidence served, and the common bundle completed or very nearly so. To all intents and purposes, the only remaining matter was to prepare for trial to the extent that had not already been done, and to conduct the trial itself.

[11]      Thus it was that the proceeding ultimately went to trial on a modest claim by Mr  Chiem  and  FCL’s  more  substantial  counterclaim.  The  trial  commenced  on 2 August 2021 and concluded on 11 August 2021, occupying eight sitting days.

[12]      Each party failed on their claim at trial. I was not persuaded that FCL had engaged Mr Chiem on the terms he alleged. Nor was I persuaded that Mr Chiem owed FCL a duty of care. Had I been persuaded of this, FCL had not proved loss.

2B classification

[13]It is common ground that 2B is the appropriate costs classification.

[14]      Applying the general principle that the party who fails in a proceeding must pay costs to the successful party,  FCL  is  entitled  to  an  award  of  costs  against Mr Chiem, and Mr Chiem to an award of costs against FCL.

Submissions

[15]Counsel’s first submissions on costs were to the following effect.

[16]      In his, Mr Latton submits that the time spent on Mr Chiem’s claim during the proceeding, including on all preparatory steps, was in his words, minimal; that the vast majority of time was spent on FCL’s counterclaim; and that this inequality ought to be reflected in a costs award in Mr Chiem’s favour.

[17]      In his submissions in response, Mr McGill, for FCL, submitted that costs should lie where they fall. This is on the basis that the time spent on each party’s

claim, both before and at trial, was largely equal. FCL also seeks an award of costs in respect of Mr Chiem’s claim for costs. (I do not consider it necessary to make any award in respect of this latter claim.   Similarly, Mr Latton’s claim for interest on   Mr Chiem’s costs.)

[18]      Having considered the parties’ submissions, I convened a hearing with counsel on 23 March 2023, and suggested to them that each party’s costs up to and including 21 July 2021 would be largely the same and should be set off against each other, as per High Court Rules 2016, r 4.17. This would confine any award to the costs and disbursements incurred after that date, apportioned on the basis of the estimated time spent at trial on each party’s claim.

[19]I invited counsel to file any further submissions they wished on this proposal.

[20]      In his subsequent submissions of 24 March 2023, Mr McGill maintains that costs should lie where they fall for the reasons previously advanced.

[21]      In his submissions (being those referred to me recently), Mr Latton continues to submit that there should be some award to Mr Chiem in respect of costs for the period prior to 21 July 2021. This is because the costs Mr Chiem incurred in respect of discovery, preparation for trial and in connection with the preparation of the trial bundle were incurred principally in respect of FCL’s counterclaim, not Mr Chiem’s own claim, even prior to 21 July 2021.

[22]      I accept Mr Latton’s submission that FCL’s counterclaim was of a greater magnitude than Mr Chiem’s own claim, even before 21 July 2021. This in turn means that counsel would have been required to devote more time to FCL’s claim than to Mr Chiem’s, particularly on steps such as discovery, compiling the common bundle, and in preparing for trial. That said, for reasons below, I am not persuaded that translates to an award of increased costs.

Discussion

[23]      As I said above, as a matter of principle each party is entitled to an award of costs against the other in respect of that other’s unsuccessful claim. To take one

example, each party is entitled to an award of costs for discovery, in this case being

2.5 days at the applicable daily rate.1

[24]      In seeking a greater award of costs, Mr Latton submits that matters as to costs are at the discretion of the Court (see r 14.1). However, that discretion is not unfettered but is qualified by rr 14.2 to 14.10.2 Thus a party who seeks increased costs must bring itself within one of those rules.

[25]      Mr Chiem would be entitled to seek an award of increased costs for steps prior to 21 July 2021 if he could bring himself within one of the circumstances provided for in r 14.6(3). However, counsel has not referred me to any in particular, and I am not satisfied that any apply in this instance.

[26]      That brings me back to the approach I proposed on 23 March 2023, and which I intend to take.

[27]      Mr Latton’s assessment as to 20 per cent to Mr Chiem’s claim and the balance to FCL’s accords with my own assessment of what is fair in respect of events after  21 July 2021. The submissions and evidence were largely devoted to FCL’s claim. FCL called eight witnesses, including two experts, whereas Mr Chiem alone gave evidence on his side, for approximately a day and a half.

[28]      Given that, FCL is to pay Mr Chiem the following  costs calculated on a     2B basis:

(a)the sum due for preparation of the statement of defence filed to the amended statement of counterclaim that I granted FCL leave to file and serve during trial;

(b)sixty per cent of the costs due for steps 33A, 33B, 34, and 35 (I allow for second counsel) of Schedule 3 to the High Court Rules 2016;

1      These awards would be set off against each other pursuant to High Court Rules 2016, r 14.17.

2      See McGechan on Procedure (looseleaf ed, Thomson Reuters) at [HR14.1.02(1)(b)].

and these disbursements:

(c)the filing fee payable on the statement of defence referred to above; and

(d)sixty per cent of the sums claimed for translation and interpreter assistance, and the hearing fees.

Result

[29]      The defendant is to pay costs and disbursements to the plaintiff in accordance with [28] of this judgment.

Peters J