Gairloch Holdings Limited v Tullimore Investments Limited HC Wellington CIV 2010-485-295
[2010] NZHC 1831
•16 September 2010
IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY
CIV-2010-485-295
BETWEEN GAIRLOCH HOLDINGS LIMITED Plaintiff
ANDTULLIMORE INVESTMENTS LIMITED Defendant
Judgment: 16 September 2010 at 4.00 pm
JUDGMENT AS TO COSTS OF ASSOCIATE JUDGE D.I. GENDALL
This judgment was delivered by Associate Judge Gendall on 16 September 2010 at
4.00 pm under r 11.5 of the High Court Rules.
Solicitors: Johnston Lawrence, Lawyers, PO Box 1213, Wellington
Brandons, Lawyers, PO Box 36, Wellington
GAIRLOCH HOLDINGS LIMITED V TULLIMORE INVESTMENTS LIMITED HC WN CIV-2010-485-295
16 September 2010
Introduction
[1] On 4 August 2010, this Court made an order awarding category 2B scale costs in favour of the plaintiff on a discontinued summary judgment application. On
19 August 2010, the Registrar quantified costs in accordance with a schedule provided by the plaintiff at $10,340.00, fixed disbursements at $1,275.00 and sealed the order. The defendant apparently did not receive an opportunity to make submissions or to comment on the plaintiff’s schedule before the order was sealed.
[2] The defendant now seeks review of the Registrar’s assessment of costs. In particular, the defendant objects to the inclusion of three items in the plaintiff’s schedule that it says do not properly reflect the steps taken in the proceeding.
Background
[3] The plaintiff applied for summary judgment against the defendant seeking an order for sale of a property. The application was opposed by the defendant. The first call of the matter was on 12 April 2010. On 19 April 2010, interim orders were made by consent for the sale of the property by public auction and with no reserve price. The auction was successful. At a call-over on 14 June 2010, the application for summary judgment was effectively discontinued.
[4] As I have noted, on 4 August 2010, costs were awarded to the plaintiff on a
2B basis together with disbursements as fixed by the Registrar. The plaintiff subsequently drafted a schedule of costs and disbursements and applied for a sealing order. As I understand it, this schedule was not provided to the defendant. On 19
August 2010, the Registrar sealed the order in accordance with the plaintiff’s schedule for costs of $10,340.00 and disbursements of $1,275.00.
Counsel’s Submissions and My Decision
[5] The defendant now questions three items claimed in the plaintiff’s schedule, namely “preparation for hearing of defended summary judgment application” amounting to $1,880.00, “appearance in Court measured in quarter days when case
set down for hearing” amounting to $470.00, and “obtaining judgment (on costs) without appearance” amounting to $564.00. In respect of the first two items, the defendant submits that this matter was not argued as a summary judgment fixture, and that the only submissions that were prepared by the plaintiff were a one-page memorandum, consisting of two paragraphs, for the call-over hearing on 19 April
2010. The defendant asks that the schedule of costs be “amended” to delete these two items and (for completeness) to add one further call-over in substitution.
[6] In response, the plaintiff submits that it was entirely proper for the Registrar to award costs reflecting that the proceedings were brought as a summary judgment application, and that it would be wrong to treat the third appearance in question as a mere call-over. The plaintiff argues that this third appearance required counsel to prepare factual and legal submissions. Moreover, the plaintiff contends that the schedule reflects the costs actually incurred in bringing the proceeding and that it is irrelevant that the outcome involved orders or directions made consensually.
[7] The defendant further objects to the inclusion of the item described as “obtaining judgment (on costs) without appearance”. The defendant submits that no judgment was provided, and there was no application for costs on this application. The plaintiff simply submits that it is entitled to costs that it incurred in putting the matter before the Court as a summary judgment application.
[8] I agree with the defendant that the three items in question should not have been included in the order for scale costs. There were three call-overs of this matter, but no hearing of the summary judgment application. The third call-over did not, as submitted by the plaintiff, require the plaintiff to file submissions. An amount of
$376 based on item 4.17 for appearance at the third call over should be added in place of the $470 claim for an item 4.15 appearance at defended hearing. Also, there do not appear to be any submissions on the file in respect of that call-over. In any event, as I understand it, the property had already been sold by that stage, and the only outstanding issue was one of costs. And therefore, there was no judgment obtained as claimed for by the plaintiff. The plaintiff did, however, file a memorandum for the second call-over on 19 April 2010, and it is appropriate that this should be reflected in the costs award by allowing 0.4 days, based on item 4.10,
a figure of $752.00. Overall, the total amount of costs therefore should have been
$9,024.00, as opposed to the $10,340.00 claimed. (This $10,340.00 claim also does not add up. The totals claimed for costs itemised in the plaintiff’s schedule in fact amount to $10,810.00 and not $10,340.00 as stated. Clearly an addition error had occurred.)
[9] The simplest way to record the actual category 2B costs to be awarded here is to re-list the costs schedule now being approved (omitting the three items noted at para [5] above which should not have been included, but adding the items noted at [8] above). I now do so:
COSTS SCHEDULE
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[10] One other matter needs mention here. The parties do not refer in their submissions to the Court to the jurisdictional basis on which the Registrar’s decision could be reviewed in this case. This matter assumes particular importance in this case because the judgment has already been sealed. Moreover, there appears to be some confusion on the issue of whether the Court has jurisdiction to review an order by the Registrar after sealing and, if so, on what grounds.
[11] In Bank of Nakhodka v The Fishing Vessel “Abruka” (1997) 10 PRNZ 659, the Registrar approved a proposed schedule of disbursements by the plaintiff and
sealed the judgment accordingly. The defendant subsequently applied for review of the Registrar’s decision pursuant to r 59 of the then High Court Rules, which provided for review of a “taxation” of costs by the Registrar (r 14.23 of the new High Court Rules is in substantially similar terms). The issue for the Court was whether the Registrar’s order could be reviewed although it had been sealed.
[12] The Court reiterated the principle that “where a judgment has been perfected by sealing and accurately expresses the true intention of the Court, it cannot be set aside or varied on the grounds that it is erroneous” (at 661). However, the Court further considered that the finality rule does not apply where the Registrar overlooks the requirement of giving the party adversely affected the right to be heard, as the Registrar’s decision would then constitute a nullity. In Bank of Nakhodka v The Fishing Vessel “Abruka”, the defendant was given the right to be heard before the Registrar made his decision and the nullity principle therefore did not apply. The Court concluded that it did not have jurisdiction to review the Registrar’s decision.
[13] In IDT Ltd v Bruce (2001) 15 PRNZ 60, the Registrar fixed costs payable to the applicant pursuant to an order, having heard only from the applicant, and sealed the judgment. The respondent subsequently applied for review of the Registrar’s decision pursuant to r 59. Fisher J noted that the Registrar “ought not to have issued a determination of costs without allowing the opportunity for input from both parties” and considered it necessary to approach the Registrar’s determination afresh by way of review (at [4]).
[14] It seems that a contrary approach was taken by Hansen J in Sharma v Wati HC Auckland CIV-2006-404-2976, 14 October 2008, where the Judge dismissed an application for review of a taxation of costs pursuant to r 59, noting that the application was procedurally misconceived because there had been no taxation of costs. The Court had awarded scale costs to the respondent, and the respondent subsequently sealed the judgment, including a schedule of scale costs. It is not clear whether the applicant received an opportunity to comment on the schedule, which comprised costs of three preliminary hearings which did not form part of the Court’s order for costs. The Judge considered that the only possible procedural path was an application for re-call of judgment. But on this it should be noted that there may be
an issue as to the jurisdiction to recall the judgment, given that it had already been sealed: see r 11.9.
[15] The Court of Appeal expressed some limited views on this matter in Russell v Russell [2002] 3 NZLR 752. In that case, the Registrar had determined the amount of costs following an order for costs on a category 2B basis and had sealed the judgment on the same day. On an application to review the Registrar’s determination, Baragwanath J in the High Court held that the sealing of the judgment precluded jurisdiction to review the Registrar’s decision. The appellant appealed against both the costs decision and the jurisdictional decision of Baragwanath J.
[16] The Court of Appeal allowed the appeal in relation to the merits of the costs appeal, and thus found it unnecessary “to traverse the relationship between the right to review a Registrar’s decision under R 276 [now r 2.11], on the one hand, and the finality principle once a judgment has been sealed, on the other.” The Court suggested, however, that the topic was one which might usefully be examined by the Rules Committee, and observed that it would be desirable that a week should be allowed between a Registrar’s decision and the sealing of any consequential judgment so that the parties can apply to review the Registrar’s decision prior to sealing (at [19]). It is not clear whether both parties were given an opportunity to be heard, and thus whether the nullity principle may have been applicable here.
[17] The decision was commented on by Andrew Beck (see (2003) NZLJ 320), who noted that it was not surprising that Baragwanath J held that there was no power for the Court to intervene, given that it is well established that, once a decision has been sealed, the only recourse available to the parties is by way of appeal or under the slip rule. He also considered that the problem was a deeper one than that recognised by the Court, as the power to review a Registrar’s decision under r 276 was a very limited one, and there was no power under the rule to review a Registrar’s decision fixing costs pursuant to a direction of the Court. It seems that r
2.11 is now drafted in wider terms, referring to a review of “a Registrar’s exercise of jurisdiction” as opposed to “any decision of a Registrar in exercise of his jurisdiction under rule 270 or rule 271”. However, r 2.11 may still be confined implicitly to the Registrar’s exercise of jurisdiction under Part 2 of the Rules.
[18] I do not consider it necessary in the present case to resolve the jurisdictional basis on which a Registrar’s fixing of costs may ordinarily be reviewed. Having regard to the particular circumstances of this case, I am satisfied that the Registrar’s costs order may be rectified on two alternative grounds: either because the applicant did not receive an opportunity to be heard and the costs order was therefore a nullity, or because the costs order contained an error that can be corrected pursuant to the slip rule in r 11.10. As to the former approach, I note that the Court of Appeal did not refer to the nullity principle in implicitly affirming Baragwanath J’s decision, and I would therefore adopt the approach that was proposed in Bank of Nakhodka v The Fishing Vessel “Abruka”.
[19] Alternatively, I consider that the slip rule is applicable here. There appear to be several cases in which Courts have resorted to the slip rule to rectify an error in costs determinations. In Nomoi Holdings Ltd v Elders Pastoral Holdings Ltd CA79/00, 3 September 2001, the Court of Appeal had mistakenly ordered costs on the basis of a one day hearing, when the hearing had in fact been argued over two days. The Court accepted that the error should be corrected and the costs order was accordingly amended. In Brankin v MacLean HC Christchurch M191/01, 29 March
2004, Hansen J had accidentally omitted experts’ fees and other costs from his costs judgment and considered that he had jurisdiction under the slip rule to deal with these omissions. Similarly, in Nash v Nash (1995) 8 PRNZ 575, the Court of Appeal rectified a costs judgment on the basis that disbursements as fixed by the Registrar omitted court fees and the costs of preparing the case.
[20] As I have noted above at [8] and [9], in my view, there was an error here in calculating the scale costs to be awarded which needs to be rectified either because the earlier costs order was a nullity or because it needs correction under the slip rule r 11.10. On that basis, I conclude that the total amount for 2B costs of $9,024.00 as calculated at [9] above should have been awarded plus the actual disbursements award of $1,275.00.
Conclusion
[21] The order for costs in this proceeding sealed 19 August 2010 is now corrected or rectified by amending the order made to now read:
Costs on a 2B basis are fixed at $9,024.00, with disbursements fixed at $1,275.00 totalling in all $10,299.00.
‘Associate Judge D.I. Gendall’
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