E v J
[2016] NZHC 419
•11 March 2016
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV-2013-404-4910 [2016] NZHC 419
BETWEEN E
Applicant
AND
J Respondent
On the papers Judgment:
11 March 2016
JUDGMENT AS TO COSTS OF THOMAS J
This judgment was delivered by me on 11 March 2016 at 3.00 pm pursuant to Rule 11.5 of the High Court Rules.
Registrar/Deputy Registrar
Date:………………………….
E v J [2016] NZHC 419 [11 March 2016]
Background
[1] By my decision of 8 September 2015, I was satisfied that the applicant had a valid and enforceable claim against the respondent and an entitlement to a 10 per cent shareholding.
[2] The parties have been unable to agree on the issue of costs. This decision deals with a number of issues in dispute. First, the applicant’s memorandum was filed out of time. Secondly, the applicant was self-represented but is a senior barrister. Thirdly, the original hearing was adjourned, part-heard, as a result of the applicant’s failure to provide a comprehensive affidavit. Both parties say these factors have a bearing on the outcome of the costs decision in conflicting ways. I deal with each issue in turn.
[3] I will not traverse the background facts of this case as they are set out in my substantive decision.
Submissions
[4] The respondent filed its application for costs on 29 September 2015 after the
applicant’s time period for filing a memorandum had expired that afternoon.
[5] In essence, the respondent’s submissions are that the applicant should not be entitled to any costs as any application for costs is now time-barred and, in any event, he acted for himself and did not incur legal costs within the meaning of r
14.2(f) of the High Court Rules (Rules).
[6] The respondent seeks indemnity costs pursuant to r 14.6(3) of the Rules on the grounds that:
(a) the applicant failed to comply with timetable directions;
(b)the applicant took or pursued an unnecessary step or an argument that lacked merit, specifically the admissibility of evidence in the form he suggested;
(c) the applicant’s behaviour, lack of preparation and inappropriate admission of evidence wasted an entire sitting day (which is particularly unacceptable given his seniority and experience in the law which the Court ought to expect him to apply even in proceedings issued in his own name); and
(d)the applicant made scurrilous, inappropriate and prejudicial suggestions about a non-party in that evidence.
[7] The applicant filed a memorandum seeking costs on 2 October 2015. He did not give any reasons for delay.
[8] The applicant submits he is entitled to costs on a category 2B basis in the sum of $33,678, calculated as follows:
Step
Attendance
Days
Amount
2
Commencement of proceedings
3
$5,970
13
Case management conference
0.3
$597
24
Preparation of submissions
1.5
$3,345
30
Preparation of briefs
2.5
$5,825
31
Preparation of bundle
2.5
$5,825
33
Preparation for hearing
3
$6,990
26
Appearance at hearing
2
$4,660
29
Sealing order
0.2
$466
Total
$33,678
[9] The applicant concedes that some reduction could reasonably be made in respect of the wasted half day on 8 June 2015. The reasonable approach, in the applicant’s submission, would be to deduct one half of the daily rate, plus one preparation day.
[10] The applicant also seeks increased costs on the basis that the defence made a large number of objections to evidence which were not sustained, and which resulted in the hearing running over the allocated time. He says the defence was also based on evidence which was not accepted by the Court; for example, the evidence presented was directly contradicted by affidavits/pleading documents filed earlier by the respondent and its solicitor.
[11] In reply, the respondent submits the applicant has not suffered costs within the meaning of r 14.2 because he has not paid any legal costs to a solicitor and, accordingly, cannot recover for his “lost” time. In any event, Ms Reed submits, it would not be appropriate to award costs given the applicant failed to demonstrate that he applied proper skill and judgement to these proceedings. In addition, the applicant failed to comply with directions as to filing and was unable to proceed at the first hearing because of his poor preparation of the affidavit evidence. When directed to file proper affidavit evidence, he failed to comply with the order, maintaining his position in respect of the irrelevant material and only abandoned this position part way through the August sittings.
[12] Ms Reed submits the applicant has overstated the costs claimed. Having relied on r 14.7(a), the applicant has failed adequately to consider the actual time taken for each particular step claimed, she says. On the respondent’s calculation of costs, the appropriate sum would be $5,154.70.
[13] Ms Reed also asks the Court to consider rules 14.7(b) and (c) whereby the court is able to refuse to award costs or reduce the amount otherwise payable if the property at stake is of exceptionally low value or if the issues at stake were of little significance. She submits that the value of the shares is minimal and entirely contingent on the outcome of pending litigation. Ms Reed further submits that the order requiring registration of the shares has added nothing to the applicant’s claim
for $150,000. She characterises the applicant’s claim as essentially a claim for legal fees for the Court of Appeal hearing in November 2009. On this basis, Ms Reed submits that registration of the shares is of little significance to the applicant’s claim to $150,000 which has also been advanced under s 9 of the Fair Trading Act 1986 and as an alleged breach of the shareholder’s agreement.
Principles
[14] The principles applying to the award of costs are well settled. These are set out at rules 14.1-14.7 of the Rules. The starting point in an award of costs is contained in r 14.2(a), which provides that in any proceeding, the unsuccessful party should generally pay costs to the successful party. In accordance with r 14.2, the determination of costs should be predictable and expeditious.
[15] The award of disbursements is set out in r 14.12. It presumes that the successful party will be awarded the amount of disbursements it claims if the disbursement was specific to, and reasonably necessary for, the conduct of the proceeding and is reasonable in amount.
[16] Despite rules 14.2 to 14.5, the court may refuse to make an order for costs or may reduce the costs otherwise payable under those rules if the circumstances in r
14.7 are met. Increased costs and indemnity costs may be justified under r 14.6 in identified circumstances where the court is justified in making those orders, despite the principle that the determination of costs should be predictable and expeditious.
Analysis
[17] The applicant’s costs memorandum was filed out of time and no reasons have been provided for the delay. While I grant leave for the memorandum to be filed out of time, I consider this to be a display of the applicant’s repeated failure to meet timetable directions. This is a factor relevant to reduction in costs (considered below).
Solicitor/litigant exception to the litigant in person rule
[18] The starting point is the general rule that litigants in person are not, in the usual course, entitled to costs.
[19] The Court of Appeal in Brownie Wills v Shrimpton confirmed the practice of allowing costs to a lawyer litigant:1
… as an exception to the general rule denying costs to a litigant in person, a practising barrister and solicitor who brings or defends a proceeding in person or by a partner or employee of the first is entitled to the same costs as when acting on behalf of a client. So the lawyer litigant may have the same costs as if another lawyer had been instructed but cannot, of course, charge for consulting, instructing, or attending upon him or herself…
[20] In Brownie Wills, the Court of Appeal awarded costs to the appellant, a law firm, which was represented in the proceedings by one of its associates. The Court referred to this exception as a “long established rule”2 and cited a number of cases in
support of it.3
[21] Ms Reeds submits that decision predates the Rules and does not correlate with the wording of r 14.2(f).
[22] My view is that the principle espoused in Brownie remains as a principle and can be read consistently with r 14.2. The rule in Brownie recognises that lawyers in person are held to a different or higher standard than lay litigants generally. Unlike self-represented lay litigants, lawyer litigants continue to owe a duty to the court. Counsel for the respondent recognised this point in her submission that the applicant was expected (but failed) to apply his knowledge and experience in the law even in proceedings issued in his own name.
[23] The Court in Brownie clearly stated that lawyer litigants “cannot charge for consulting, instructing, or attending upon him or herself”. That, in my view, is consistent with the no-profit rule in r 14.2(f) which limits costs awardable to those
actually incurred.
1 Brownie Wills v Shrimpton [1998] 2 NZLR 320 (CA) at 327.
2 Above n 1, at 7.
3 London Scottish Benefit Society v Chorley (1884) 13 QBD 872; Lysnar v National Bank of New
Zealand Ltd (No. 2) [1935] NZLR 557 (CA); Re Collier (A Bankrupt) [1996] 2 NZLR 438 (CA).
[24] I proceed on the basis that costs for litigant lawyers are allowed to the extent that the costs awardable are those actually incurred.
Calculation of and reduction in costs
[25] I consider that the categorisation of costs on a 2B basis is appropriate.
[26] Ms Reed emphasises the rule in Brownie that lawyer litigants “cannot charge for consulting, instructing, or attending upon him or herself”. She queries many of the applicant’s claims for scale costs on this basis. I agree that some reductions should be made.
[27] I deduct one day from the allocation for commencement of the proceedings. This is because preparation of the statement of claim would have required the applicant to consult or attend upon himself.
[28] The applicant seeks 1.5 days for the preparation of submissions allocated under step 24 of the time allocations laid out in Schedule 3 of the Judicature Act
1908. As Ms Reed correctly points out, however, step 24 relates to interlocutory applications. Ms Reed submits that there were no interlocutory applications in respect of this proceeding at which the applicant was successful and that no allowance should be made.
[29] I also deduct one day from those allocated to the preparation of briefs or affidavits. Only two were filed and there should be no allowance for time the applicant spent attending on himself.
[30] There is force in the respondent’s submission that an allocation of 2.5 days for the preparation of the bundle seems excessive given the shambolic nature of the applicant’s pleadings. I reduce this to one day.
[31] The applicant accepts there ought to be a reduction in costs to take into account the unnecessary time or expense resulting from the part-heard hearing of
8 June 2015.4 The proceedings that day were conducted in an unacceptable way, completely wasting court and counsel time.
[32] By my Minute of 8 June 2015, I recorded my thoughts in respect of costs relating to the part-heard hearing. I rejected then, as I do now, the applicant’s submission that the respondent needed to take some responsibility for not having raised the fact that the applicant did not respond to the affirmative defences and that he was late in filing his synopsis. It was up to the applicant to present his case properly and in accordance with the Rules. He may have been a litigant in person but he is also a lawyer.
[33] The respondent is entitled to indemnity costs against the applicant in respect of that day, being $1,375.50.
[34] Furthermore, I deduct from the applicant’s claim half of the daily rate for appearance at the hearing, accepting the respondent’s submissions as to the conduct of the case and that it should have concluded in a shorter time. The applicant is entitled to one and a half days of preparation time, the reduction accounting for time spent instructing or attending on himself and recognising there is some legitimacy in the observations of the respondent on the applicant’s synopsis.
[35] Ms Reed submits that the applicant’s failure to admit evidence should be taken into account for costs purposes. In my view, that is already inherent within the reduction in costs for reasons given above.
[36] Ms Reed submits the applicant made scurrilous, inappropriate and prejudicial suggestions about a non-party in evidence. There were issues on both sides in this regard and I put this submission to one side.
[37] The respondent also submits that there is no need to seal the order as the order has already been complied with. However, given the nature of the parties’ relationship and the need for finality, I consider the making of a sealing order was
appropriate in the circumstances.
4 High Court Rules, r 14.7(f).
[38] Ms Reed’s submits that I should make a further reduction pursuant to rules
14.7(b) and (c) because:
(a) the value of the shares is minimal and entirely contingent on pending litigation; and
(b) the registration of the shares is of little significance to the applicant’s
claim for $150,000.
[39] I reject that submission. The property at stake is a 10 per cent shareholding in an entity currently involved in a claim exceeding $180 million. I do not consider the circumstances to fall within those contemplated by rules 14.7(b) and (c).
[40] Accordingly, after the foregoing deductions are taken into account, costs are awarded on the following basis:5
Step Attendance
Days
Amount
2
Commencement of proceedings
2
$3,980
13
Case management conference
0.3
$597
24
Preparation of submissions
0
$0
30
Preparation of briefs
1.5
$2,985
31
Preparation of bundle
1
$1,990
33
Preparation for hearing
1.5
$3,345
26
Appearance at hearing
1.5
$3,345
5 The applicant is entitled to costs calculated on the daily rate in force at the time the events in question occurred. Thus for events prior to 1 July 2015, the daily recovery rate is $1,990 and for events after 1 July 2015, the daily recovery rate is $2,230. See McGuire v Manawatu Standards Committee [2015] NZHC 2708 and cases cited therein.
29 Sealing order
0.2
$446
Total
$16,688
Disbursements
[41] I allow the applicant the following disbursements:
Filing fee statement of claim $1,350
Hearing fees
$1,280
Result
[42] The applicant is entitled to costs in the sum of $16,688 with disbursements of
$2,630.
[43] The respondent is entitled to indemnity costs in the sum of $1,375.50.
Thomas J
2