Fraser v Fraser
[2017] NZHC 1307
•14 June 2017
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV-2016-404-2987 [2017] NZHC 1307
UNDER Section 22 of the Trans-Tasman
Proceedings Act 2010
IN THE MATTER
of an application for stay
BETWEEN
ROBERT LINDSAY FRASER AND GENENE FLORENCE FRASER Plaintiffs
AND
ROBERT WILLIAM FRASER AND DEBORAH JEAN FRASER Defendants
Hearing: On the papers Counsel:
CR Andrews for plaintiffs
GA Cooper for defendantsJudgment:
14 June 2017
JUDGMENT OF FITZGERALD J [As to costs]
This judgment was delivered by me on 14 June 2017 at 4 pm, pursuant to Rule 11.5 of the High Court Rules.
Registrar/Deputy Registrar
Date……………
Solicitors: McVeagh Fleming, Auckland
Cavell Leitch, Christchurch
Fraser v Fraser [2017] NZHC 1307 [14 June 2017]
Introduction
[1] On 19 May 2017, I gave judgment granting the defendants’ application to stay these proceedings pursuant to s 22 of the Trans-Tasman Proceedings Act 2010 (“Act”). At the conclusion of my judgment, I indicated my preliminary view that the defendants were entitled to costs on a 1A basis. I noted that if the parties were not able to agree costs, memoranda were to be filed, upon which I would determine costs on the papers.
[2] The parties have been unable to agree costs. This judgment therefore determines the basis upon which the plaintiffs ought to pay the defendants’ costs of this proceeding.
Background
[3] The background is fully set out in my judgment dated 19 May 2017.1 In short, the plaintiffs, who reside in Warkworth, Auckland, commenced proceedings in the Auckland High Court against the defendants, who reside in Perth, Australia. The underlying dispute concerns advances of moneys by the plaintiffs to the defendants. The plaintiffs claim approximately NZ$286,000 which they say remains outstanding to them pursuant to a “loan transaction” between the parties. The defendants deny that any amounts remain outstanding. The defendants say that the arrangement between the parties was a partnership and that all funds due and owing to the plaintiffs upon the winding up of that partnership have been paid. The defendants further say that on a proper accounting of the partnership, they have actually paid too much to the plaintiffs, and have flagged that a counterclaim for the alleged overpayment may be brought.
[4] As I made clear in my judgment dated 19 May 2017, it is neither possible nor appropriate for me to make any findings on the merits of the parties’ respective positions. However, on the stay application, and taking into account those factors to which I must have regard pursuant to s 24(2) of the Act, I found that, while the
matter was relatively finely balanced, the Australian courts are the appropriate forum
1 Fraser v Fraser [2017] NZHC 1055.
in which these proceedings ought to be determined. On that basis, I granted the application for a stay.
Costs – categorisation of the proceeding
[5] As noted, at the conclusion of my judgment, I had indicated a preliminary view that the plaintiffs ought to pay the defendants’ costs on a 1A basis. My initial view that the proceeding be categorised as a category 1 proceeding was because the issues involved were fairly narrow, not particularly complex or difficult, coupled with the indication in the Act that, unless either party requests a hearing, an application for a stay may be dealt with on the papers. In my view, this reinforces that applications under the Act are to be dealt with expeditiously, and are not expected to give rise to detailed or complex issues.
[6] In the costs memorandum filed on behalf of the defendants, Mr Cooper submits that the proceeding is properly characterised as category 2.
[7] Mr Cooper submits that category 2 is appropriate given the proceedings were not of a straightforward nature which were capable of being conducted by junior counsel. Rather, Mr Cooper submits that the proceedings were of average complexity requiring counsel with at least average experience in the High Court. Mr Cooper says that this was demonstrated by the need for a half-day hearing and the appearance of two counsel for the plaintiffs, neither of whom could be described as junior.
[8] Mr Andrews, for the plaintiffs, unsurprisingly agrees with my preliminary view that costs should be ordered on the basis of a category 1 proceeding. He submits that the application was of a single issue of not great complexity, to be determined on the basis of well-established criteria now largely laid out in the relevant sections of the Act.
[9] I am not satisfied that these proceedings warrant being classed as a category 2 proceeding. While this matter did have a half-day hearing and the plaintiffs had two counsel appearing for them, the fact that a party has chosen to instruct senior counsel, or to have more than one counsel appear at the hearing, is not relevant to
categorisation of the proceeding. Rather, it is the nature of the proceeding itself which is relevant. In this case, the nature of the proceeding was an application pursuant to the Act. For the reasons outlined above, I remain of the view that the proceeding is properly characterised as category 1, given the matters in issue did not give rise to any real complexity or detailed legal analysis. Rather, it involved a relatively straightforward analysis of the mandatory factors which the Court must take into account upon hearing such an application, and making an evaluative judgment when all of those factors are balanced. Accordingly, I consider that, for the purposes of r 14.3, the proceeding is appropriately categorised as a category 1 proceeding.
Categorisation of steps taken
[10] I accept, however, Mr Cooper’s submission that for the purposes of r 14.5, it is appropriate to categorise the proceeding as band B for the steps involved in the bringing the application to a hearing. I accept that, in relation to each of the steps involved, a normal amount of time is reasonable.
Increased costs
[11] The defendants seek a 50 per cent increase on scale costs. Increased costs are addressed in r 14.6(3), which provides as follows:
14.6 Increased costs and indemnity costs
…
(3) The court may order a party to pay increased costs if—
(a) the nature of the proceeding or the step in it is such that the time required by the party claiming costs would substantially exceed the time allocated under band C; or
(b) the party opposing costs has contributed unnecessarily to the time or expense of the proceeding or step in it by—
(i) failing to comply with these rules or with a direction of the court; or
(ii) taking or pursuing an unnecessary step or an argument that lacks merit; or
(iii) failing, without reasonable justification, to admit facts, evidence, documents, or accept a legal argument; or
(iv) failing, without reasonable justification, to comply with an order for discovery, a notice for further particulars, a notice for interrogatories, or other similar requirement under these rules; or
(v) failing, without reasonable justification, to accept an offer of settlement whether in the form of an offer under rule 14.10 or some other offer to settle or dispose of the proceeding; or
(c) the proceeding is of general importance to persons other than just the parties and it was reasonably necessary for the party claiming costs to bring it or participate in it in the interests of those affected; or
(d) 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.
[12] Mr Cooper submits that there are three reasons why increased costs are justified:
(a) First, the plaintiffs were unreasonable in refusing to engage with the defendants in respect of the underlying legal position prior to commencing proceedings, despite being invited to do;
(b) Second, the plaintiffs refused to accept the defendants’ position that
the Australian courts are the most appropriate forum; and
(c) Third, the plaintiffs raised irrelevant issues on the application which led to the defendants incurring unnecessary costs in responding to them.
Refusal to engage prior to proceedings
[13] The defendants point to correspondence sent on their behalf on 14 October
2016, setting out why they considered the plaintiffs’ claim lacked merit. Mr Cooper submits that it was expected that the plaintiffs would address the matters raised in that correspondence which would have given the defendants the opportunity to
reconsider their position if necessary, and possibly offer a comprise in settlement. However, apparently this did not happen, as the plaintiffs simply filed and served proceedings.
[14] Mr Andrews notes that for the purposes of r 14.6(3), conduct of a party prior to the commencement of proceedings is not relevant, rather than conduct in the proceedings itself. In this regard, Mr Andrews relies on observations of the Court of Appeal and Supreme Court in Paper Reclaim Ltd v Aotearoa International Ltd, to the effect that conduct prior to the commencement of the proceeding is not misconduct in defending the proceeding or a step in the proceeding itself.2 And, even if there were jurisdiction to take these matters into account, Mr Andrews submits that the plaintiffs cannot be criticised for not engaging prior to the
proceedings being commenced, given the defendants’ correspondence was entirely uncompromising, made no invitation for further correspondence and indicated that unless the claim was to be withdrawn, proceedings would need to be commenced and that the defendants’ solicitors were authorised to accept service of those proceedings.
[15] Taking into account the observations in Paper Reclaim v Aotearoa International Ltd, I do not consider the matters raised by the defendants are relevant to the application for increased costs.
[16] Even if those matters were relevant, as noted at the outset of this judgment, it is not possible on an application for a stay under the Act to determine or comment on the merits of the underlying proceeding. Accordingly, even if there was an alleged “failure” to engage prior to the proceeding being commenced, whether or not that failure to engage was reasonable could only be assessed once the underlying merits have been dealt with. I therefore do not consider this factor to be relevant to whether
increased costs can be awarded in this case.
2 Paper Reclaim Ltd v Aotearoa International Ltd [2007] NZCA 544, [2006] 3 NZLR 188 at [160]; Paper Reclaim Ltd v Aotearoa International Ltd [2007] NZSC 26, [2007] 3 NZLR 169 at [41].
Plaintiffs’ position on stay application
[17] After the proceeding was filed, on 26 January 2017, the defendants’ solicitors corresponded with the plaintiffs’ solicitors, setting out their view why the Australian courts were the most appropriate forum to determine the dispute. That letter made some of the points which I considered relevant in finding that, on balance, the Australian courts were the appropriate forum.
[18] Mr Andrews submits that the refusal to accept the Australian courts were the appropriate forum was not devoid of reasonable justification or entirely lacking in merit, such as might otherwise justify an award of increased costs. Mr Andrews points to the conclusion in my earlier judgment that the matter was finely balanced.
[19] I do not consider the fact that the plaintiffs continued to progress their claim in the Auckland High Court, despite those matters set out in the defendants’ correspondence of 26 January 2017, justifies an award of increased costs. It was not in dispute at the hearing that the plaintiffs were entitled to commence in Auckland, both parties accepting that the High Court at Auckland technically had jurisdiction to hear this proceeding. Against that backdrop, this was not a case where it was overwhelmingly clear that the Australian courts were the appropriate forum. On the contrary, I expressly found that the matter was finely balanced.
Irrelevant matters
[20] In respect of the alleged irrelevant matters, this is said to relate to certain evidence concerning the trading of companies in New Zealand, of which the defendants are shareholders and directors. I ultimately found that those matters did not add materially, if at all, to the analysis. I also noted that the companies themselves were irrelevant to the matters in dispute.
[21] Mr Andrews submits that these matters were not wholly irrelevant, and referred to further sections of my judgment to show that the comment that certain matters were “irrelevant” has been taken out of context. Mr Andrews submits that in any event, any time and energy dealing with these particular matters would have been minimal and would not justify increased costs on the overall application.
[22] I accept Mr Andrews’ submission that my comments in this regard have been somewhat taken out of context. The companies are irrelevant to the proceedings. I did not say that the fact the plaintiffs have some continuing connection with New Zealand was wholly irrelevant. I simply found that it did not materially, if at all, advance matters.
[23] Accordingly, I do not consider the three matters raised in support of increased costs, considered in isolation or when taken together, warrant any increase from scale costs.
Disbursements
[24] Mr Andrews also disputes certain disbursements claimed by the defendants, primarily travel and accommodation for Mr Cooper (who is based in Christchurch). Mr Andrews points to Fisher J’s observations in Russell v Taxation Review Authority, to the effect that when dealing with disbursements for out of town counsel, there needs to be some special justification for instructing counsel outside of the Registry in which the proceedings has been filed (at least in order to claim travel costs from
the other party).3
[25] While there is some merit to Mr Andrews’ submissions on this point, I note the defendants had engaged Mr Cooper in relation to the dispute some time before the proceedings had been commenced.4 (The defendants had previously resided in Christchurch, so it may be that they wished to instruct their existing or previous law firm or solicitor.) At the time of the hearing, Mr Cooper was, therefore, already familiar with the matter as the defendants’ solicitor. Given the particularly early
stage of the litigation, I do not think it would be reasonable to expect that Mr Cooper should have instructed Auckland-based counsel to appear in the matter. The time and expense incurred in doing so would likely be much greater than the (modest)
cost of Mr Cooper’s travel and accommodation.
3 Russell v Taxation Review Authority (2000) 14 PRNZ 515 (HC) at [25]. See also Air New
Zealand Ltd v Commerce Commission (2005) 17 PRNZ 786 (HC) at [84] – [87].
4 See, for example, the correspondence sent by the defendants on 14 October 2016 at [14].
Result
[26] There is accordingly an order that the plaintiffs pay the defendants’ costs on
1B basis, as set out in the schedule attached to this judgment. There is also an order for payment of the disbursements sought by the defendants.
[27] On the basis that the plaintiffs have largely been successful on the question of costs, and given my view that the claim for increased costs was largely (if not wholly) without merit, the defendants are to pay the plaintiffs’ costs of preparation of
the costs memorandum, on a 1B basis.
Fitzgerald J
Schedule – Costs on a 1B basis
HCR Sch. 3
Description
Time
(days)
Costs
($1,480 per day)
22
Filing interlocutory application
0.6 days
$888.00
24
Preparation of written submissions
1.5 days
$2,220.00
25
Preparation by applicant of bundle for hearing
0.6 days
$888.00
26
Appearance at hearing of defended application for sole or principal counsel
0.5 days
$740.00
29
Sealing order or judgment
0.2 days
$296.00
Total Costs
$5,032.00
4
0