Clode v Sullivan

[2016] NZHC 551

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2014-404-2717 [2016] NZHC 551

BETWEEN

BRENT DOUGLAS CLODE

First Plaintiff

SYNERGY MANAGEMENT LIMITED Second Plaintiff

AND

MICHAEL GRANT SULLIVAN and DUTHCO TRUSTEES (SULLIVAN) LIMITED as trustees of THE SULLIVAN FAMILY TRUST NO 1

First Defendants

DAVID ROBERT JANS Second Defendant

THOMPSON PARK TRUST LIMITED as trustee of THE THOMPSON PARK TRUST

Third Defendant

Hearing:	On the papers
Counsel:	First Plaintiff in person M D Pascariu for First and Third Defendants P T Finnigan for Second Defendant
Judgment:	4 April 2016

JUDGMENT OF M PETERS J

This judgment was delivered by Justice M Peters on 4 April 2016 at 9 am pursuant to r 11.5 of the High Court Rules

Registrar/Deputy Registrar

Date: .................................

CLODE v SULLIVAN [2016] NZHC 551 [4 April 2016]

[1]      This judgment determines matters as to costs between the Plaintiffs and the First and Third Defendants, to whom I shall refer as the Defendants.  The parties are agreed that I may determine the matters on the papers.

Plaintiffs’ application for further discovery

[2]      It is common ground that the Plaintiffs are entitled to costs of $6,521 from the Defendants in respect of an application by the Plaintiffs for further discovery.  I make an order to that effect.1

Costs on application for security for costs

[3]      The Defendants seek costs and disbursements of $7,100.80 in respect of their application that the Plaintiffs give security for costs.2   The costs sought are net of a

20 per cent reduction in the costs otherwise payable on a 2B basis, this reduction being made because the sum I ordered the Plaintiffs to provide was less than the sum the Defendants sought.  In fact the security I ordered the Plaintiffs to provide was less than 50 per cent of the sum the Defendants sought.

[4]      The Plaintiffs accept that the Defendants are entitled to an award, but contend that the award should be 50 per cent of the scale amount.  If such a reduction were made, then the award to the Defendants would be $4,438.3

[5]      I am satisfied that a reduction greater than that offered by the Defendants is required to reflect the extent of their success on the application but not as much as the Plaintiffs propose.   Looking at it in the round, an award of costs and disbursements of $6000 would be reasonable and I order the Plaintiffs to pay that sum accordingly.

[6]      Orders as to set off between these awards, and those referred to below, are addressed at the conclusion of this judgment.

1 Memorandum for Plaintiffs Regarding Outstanding Costs Issues dated 15 March 2015 at [3].

2 Memorandum of Counsel for First and Third Defendants dated 21 December 2015 at [14].

3 Memorandum for Plaintiffs Regarding Outstanding Costs Issues, above n 1, at [8].

Wasted costs

[7]      The Plaintiffs and Defendants each seek orders for wasted costs pursuant to

High Court Rules, r 7.77(8).

[8]      The Defendants seek an order that the First Plaintiff, Mr Clode, pay $4,245 in respect of their (wasted) statement of defence and counterclaim dated 25 November

2014.4

[9]      The Defendants filed this statement of defence and counterclaim in response to the statement of claim by which Mr Clode, then the sole Plaintiff, commenced this proceeding on 14 October 2014.

[10]     Mr Clode’s statement of claim was subsequently superseded by the amended statement of claim that Mr Clode and Synergy, as First and Second Plaintiffs, filed on  17 February  2015.     The  Defendants  filed  a  statement  of  defence  to  the

17 February statement of claim on 4 March 2015.  They contend that the costs they incurred on their first statement of defence/counterclaim in November 2014 were thus wasted and they seek an order accordingly.   The Plaintiffs oppose any order, alternatively dispute the quantum sought.5

[11]     The Plaintiffs have made two applications against the Defendants for wasted costs.  I determined one in the context of the Defendants’ application for security.  In particular I gave the Plaintiffs costs they sought of $1,894 and made provision for the Defendants to pay that sum into Court as part of the security that the Plaintiffs were to provide.  The Defendants have done so and I need say no more about the matter subject to one point referred to below.

[12]     The application that the Plaintiffs now pursue concerns costs wasted as a result of an admission the Defendants made and then retracted.

4      Memorandum of  Counsel  for  First  Defendants in Anticipation of  First  Case  Management Conference dated 9 March 2015; and  Memorandum of Counsel for First and Third Defendant s as to Costs Pursuant to Rule 7.77(8) dated 10 April 2015.

Discussion

[13]     The relevant parts of High Court Rules, r 7.77 provide:

7.77     Filing of amended pleading

(1)       A party may before trial file an amended pleading and serve a copy of it on the other party or parties.

...

(8)       If an amended pleading has been filed under this rule, the party filing the amended pleading must bear all the costs of and occasioned by the original pleading and any application for amendment, unless the court otherwise orders.

[14]     In Assa Abloy New Zealand Ltd v Allegion (New Zealand) Ltd, Venning J

said:6

[9]  … Where there is an amendment to pleadings r 7.77(8) provides for all costs incurred in relation to the prior pleading to be borne by the party filing the amended pleading.  …

[15]     As I have said, the Defendants submit that they should have costs for their 25

November 2014 pleading, being $3,980 as the sum allowed on a 2B basis for step 2, Schedule 3, High Court Rules, plus a filing fee of $110.  They also seek a partial payment in respect of  a memorandum of 9  February 2015.   That  latter sum is de minimis and I am not satisfied there is any basis for claiming it, so I put it to one side.

[16]   In opposition, Mr Clode submits that the costs either were not wasted alternatively that only some partial measure should be allowed.

[17]     I do not accept that none of the costs were wasted.  I have reviewed the two statements of claim and they are quite different.

[18]     The October 2014 statement of claim was 25 pages long and recited the facts relied upon in considerable detail.  In his first cause of action, Mr Clode alleged that he had suffered loss of $3,275,000 as a result of a transfer of assets in July 2014.  In

the second he sought damages in respect of an alleged loss of intellectual property said to be valued at $5,000,000.

[19]     The amended statement of claim of February 2015 was more confined and included Synergy as Second Plaintiff.   It pleaded two causes of action against the Defendants.  The first was for relief under s 9 Contractual Remedies Act 1979.  The second was for breach of contract.

[20]     Accordingly, the issue is not whether the Defendants should have an award of costs but how much, ie what were the “costs of and occasioned by the original pleading” of November 2014.

[21]     The Plaintiffs submit that I addressed this issue in principle when I made the order referred to in [11] above.7   That is because the wasted costs that I allowed the Plaintiffs were those sought in their memorandum of 17 July 2015, ie under item 9, Schedule 3 High Court Rules, that is a “pleading in response to an amended pleading”.  The 2B time allocation for this is 0.6 of a day, as opposed to the two days for step 2.

[22]     But how the Plaintiffs chose to put their claim cannot affect the Defendants who are entitled to seek a greater sum, as they have.  I am satisfied that the “costs of and occasioned by the original pleading” of October 2014 are as the Defendants have claimed (subject to the issue as to the memorandum referred to above), and that the Defendants should have an award of costs of $4,090, made up as set out in [15] above.

[23]     I turn now to the Plaintiffs’ application for wasted costs.

[24]     In [2] of their amended statement of claim of 17 February 2015, the Plaintiffs pleaded that Thompson Park Trust Limited was a trustee of the Sullivan Family Trust No. 1.    The Defendants admitted this allegation in their statement of defence of

4 March 2015 but retracted it in their 10 March 2015 pleading.

[25]     The Plaintiffs had filed a reply in the interim.  The costs of the reply (step 3, Schedule 3) and filing fee were wasted as a result and I order the Defendants to pay those costs accordingly.  I shall leave the parties to ascertain the precise amounts due to the Plaintiffs as a result of this order.

Set-off

[26]     High Court Rules, r 14.17 provides:

14.17   Set-off if costs allowed to both parties

If opposite parties are awarded costs against each other, their respective costs must be set off and the lesser sum must be deducted from the greater, unless the court otherwise directs.

[27]     The costs due under in [2], [5] and [25] above are to be set off as between the

Plaintiffs and Defendants.

[28]     Mr Clode is required to pay the Defendants the sum referred to in [22] above.

..................................................................

M Peters J

Solicitors:         Minter Ellison Rudd Watts, Auckland

Duthie Whyte, Auckland

Counsel:           P T Finnigan, Auckland

Copy for:          First and Second Plaintiffs