Cogle v IAG New Zealand Limited
[2019] NZHC 958
•2 May 2019
IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY
I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE
CIV-2018-409-258
[2019] NZHC 958
BETWEEN STEPHEN COGLE and ALEXIS COGLE
Plaintiffs
AND
IAG NEW ZEALAND LIMITED
Defendant
Hearing: (Determined on the Papers) Counsel:
J W Goddard and J R Parker for Plaintiffs
R W Raymond QC and V A Ma for Defendant
Judgment:
2 May 2019
JUDGMENT OF ASSOCIATE JUDGE LESTER
(Costs)
[1] In my judgment of 11 April 2019,1 the defendant’s interlocutory application to clone and inspect the plaintiffs’ computer records on terms was granted against the opposition of the plaintiffs.
[2]The defendant now seeks costs pursuant to the leave reserved in the judgment.
[3] The starting point is r 14.8(1) of the High Court Rules 2016. This rule provides:
Costs on an opposed interlocutory application, unless there are special reasons to the contrary, -
1 Cogle v IAG New Zealand Ltd [2019] NZHC 793.
COGLE v IAG NEW ZEALAND LTD [2019] NZHC 958 [2 May 2019].
(a)must be fixed in accordance with these rules when the application is determined; and
(b)become payable when they are fixed.
[4] The default position is that costs follow the event and in written submissions counsel for the plaintiffs does not suggest the defendant is not entitled to costs, rather the issue is the quantum.
[5] Mr Raymond QC for the defendant has filed a costs memorandum in which he seeks costs on a 3B basis, noting the parties had agreed that the matter was Category 3 for the purpose of costs. He then seeks an uplift of 25 per cent, essentially as a result of a failure by the plaintiffs to take a constructive approach to the application and their failure to engage in discussions to agree terms of inspection despite Associate Judge Osborne (as he then was) in a Minute dated 15 August 2018 referring to the taking of a clone of the plaintiffs’ computer records as an important issue in the proceeding.
[6] The plaintiffs submit that costs should be fixed on a 2B basis, oppose an uplift and suggest that the application was only partly successful and therefore seeks a reduction in costs as a result.
Category of costs
[7] Rule 14.3 deals with the categorisation of proceedings. The parties have agreed this matter is a Category 3 proceeding which is a proceeding that because of its complexity or significance requires counsel to have special skill and experience in the High Court. Each party was represented by two counsel with each counsel for the plaintiffs presenting submissions.
[8] The plaintiffs say that there is nothing in the defendant’s application, supporting affidavit or submissions, to justify a Category 3 classification. The submissions go on to say, “…in any event, a blanket assessment for banding is neither desirable nor even possible under the High Court Rules,” citing Paper Reclaim Ltd v Aotearoa International Ltd.2
2 Paper Reclaim Ltd v Aotearoa International Ltd [2007] NZCA 544, (2007) 19 PRNZ 743.
[9] However, r 14.3 contemplates the opposite to what the plaintiffs submit, that is:
(2) The court may at any time determine in advance a proceeding’s category, which applies to all subsequent determinations of costs in the proceeding, unless there are special reasons to the contrary. (emphasis added)
[10] Given the agreement that the matter was Category 3 as recorded in an earlier Minute of the Court, the onus is on the plaintiffs to establish “special reasons” as to why the agreed banding should not apply to the present case.
[11] An examination of the Paper Reclaim decision relied on by the plaintiffs shows that the Court started with the position set out in r 14.3(2) saying in relation to the categorisation of costs:3
Where such categorisation is done at an early stage, the category applies to all subsequent determinations of costs in the proceeding unless there are special reasons to the contrary.
[12] The Court then went on to examine whether the costs categorisation in that case should apply to all pre-trial steps. The Court’s statement that it did not consider a blanket approach desirable or possible under the Rules was in the context of r 14 contemplating the ability a party has to seek a departure from the costs category that was determined if that is appropriate.
[13] The plaintiffs’ counsel does not approach this issue by attempting to identify special reasons why the category should not apply. In my view, the successful applicant has the benefit of the existing categorisation and other than saying that while a Category 3 classification may be appropriate for the substantive hearing because that will involve allegations of fraud, the submission made is that Category 3 is not appropriate as this was “a standard interlocutory application”.
[14] I do not accept that special reasons have been established in terms of r 14.3 to warrant departing from the agreed costs categorisation.
3 Paper Reclaim Ltd, above n 2, at [29].
Steps to be included in costs schedule
[15] The plaintiffs take issue with the defendant’s preparation of a bundle for the hearing saying that the small bundle of documents prepared by the defendant was not served on the plaintiffs until the day of the hearing. I do not accept this criticism.
[16] The defendant had refrained from preparing a bundle expressly to avoid costs. The plaintiffs filed a memorandum taking issue with the absence of a bundle resulting in my issuing a Minute prior to the hearing saying that the Court would be assisted by a bundle albeit on a reduced basis to include the key documents that were going to be referred to in the argument.
[17] The short point is that the plaintiffs having taken an issue over the absence of a bundle cannot complain about the defendant seeking an allowance for the preparation of a bundle as a result.
[18] The plaintiffs challenge the allowance sought for second counsel. Second counsel for the defendant did not present submissions at the hearing. While no doubt second counsel for the defendant provided substantial assistance to Mr Raymond, in the absence of specific reasons as to why there should be an allowance for second counsel, this claim is not allowed.
[19] The plaintiffs submit that the defendant can only claim for one memorandum because the memorandum in relation to not filing the bundle of documents was necessary because of the defendant’s failure to provide a bundle as contemplated by the Rules. I am inclined to agree. The Rules required a bundle and in the absence of agreement that the bundle could be dispensed with once issue was taken with the absence of a bundle, I do not consider the defendant can claim costs for a step prompted by its own non-compliance with the Rules. That is to some extent balanced out by the points I have made in respect of the allowance for the preparation of that bundle.
[20] Subject to these challenges, the plaintiffs do not take issue with the claims in the Schedule set out at para 4 of the defendant’s costs memorandum.
Uplift
[21] Mr Raymond’s main point in support of an uplift is that with Associate Judge Osborne referring to the provision of a clone of the plaintiffs’ computer records as if it was a given and then leaving it to counsel to work out the terms under which a clone could be made, the plaintiffs’ opposition to the application was unreasonable. Mr Raymond says that unreasonableness was compounded by the plaintiffs’ failure to engage with approaches from the defendant, even after the application was filed, to seek agreed terms of inspection so as avoid the costs of a hearing.
[22] The plaintiffs’ position is that the terms of inspection originally put forward by the defendant were very wide ranging and the original inspection protocol suggested by the defendant bears little resemblance to the much narrower draft order proffered at the hearing by the defendant.
[23] Counsel for the plaintiffs goes so far as to say that if the draft orders had been sent an earlier time the hearing could have been avoided.
[24] I do not accept this. Mr Raymond in an email of 13 February 2019 to the plaintiffs’ counsel said: “The investigation can be limited to the documents identified by Ms Emile in her affidavit of 6 December 2018”, which were the documents that were ultimately referred to in the defendant’s draft order. In substance, there was little more Mr Raymond could do to try and advance discussions.
[25] Even when presented with the draft order at the hearing, the plaintiffs maintained their opposition to the application.
[26] Finally, on the issue of uplift the plaintiffs say that the defendant was not successful on its application under r 8.29, that is an order to facilitate inspection. I do not accept this. The application was successful and that my judgment refers to the application being made under r 9.34 rather than under both Rules does not alter the fact that the defendant obtained orders that in substance mirrored what it proposed on 13 February 2019.
[27] In my view, an uplift of 25 per cent is appropriate for all steps after Mr Raymond’s email of 13 February 2019. The email was written in a constructive tone inviting discussion on how a restricted inspection could occur. The email referred to costs and the fact that it was written expressly on an open basis would be understood to have costs consequences. I consider the uplift is justified on the basis that the plaintiffs failed without reasonable justification to accept the offer contained in the email of 13 February 2019 or accept the invitation to negotiate terms. The plaintiffs’ memorandum in reply does not really engage with this issue.
[28] For completeness, I note the plaintiffs submit that the defendant failed to raise any issues with either discovery or the plaintiffs’ affidavit of documents. I do not see merit in this point. Again, from early on Associate Judge Osborne treated the need for disclosure of the computer records as being necessary.
[29] The plaintiffs say if the orders result in a privileged report of the defendant’s computer expert which is not produced then there may have been no benefit from the application. I do not accept this point. If there is no computer expert called by the defendant to support its allegation that the plaintiffs fabricated documents, then the plaintiffs will be free to ask the Court to draw inferences from the absence of such a report.
Timing
[30] The plaintiffs submit there are special reasons to delay the requirement that costs are payable when they are fixed. The plaintiffs make the submission that costs should only be payable once the merit of the defendant’s application can be assessed. Essentially, they say unless the defendant’s computer expert finds evidence of a forgery or manipulation of documents then the defendant should not have costs. I do not accept this. That is to confuse the outcome of the search of the computer records with the outcome of the application. This is not a special reason to depart from the default position created by r 14.8(1)(b) that costs are payable when they are fixed.
[31] Accordingly, there is a costs award in favour of the defendant in terms of its Schedule set out at para 4 of its costs memorandum of 18 April 2019, save there is no allowance made for second counsel and the claim for the second memorandum of
31 October 2018 is disallowed. There is an uplift of 25 per cent for steps taken after 13 February 2019. The disbursement of $500 sought is not opposed by the plaintiffs.
Associate Judge Lester
Solicitors:
WCM Legal, Wellington
Duncan Cotterill, Christchurch
Copy to counsel:
R W Raymond QC, Christchurch
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