Holt v Demetriades

[2021] NZHC 2437

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2019-404-1961

[2021] NZHC 2437

BETWEEN

BRENT ROBERT HOLT

Plaintiff

AND

DEMETER (DIOMITRA) MAXINE DEMETRIADES

First Defendant

DIAMOND SECURITY DEVELOPMENT

Second Defendant

Hearing:	On the papers
Appearances:	TJP Bowler for the Plaintiff RS Pidgeon for the Defendant
Judgment:	16 September 2021

JUDGMENT OF FITZGERALD J

[As to costs]

This judgment was delivered by me on 16 September 2021 at 3.30pm, pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date……………………..

To:       T Bowler, Auckland

R Pidgeon, Auckland

HOLT v DEMETRIADES [2021] NZHC 2437 [16 September 2021]

Introduction

[1]                 In September 2019, Mr Holt commenced proceedings against Ms Demetriades and a company named Diamond Security Development Ltd (Diamond Security).   Ms Demetriades was the sole director and shareholder of Diamond Security. Mr Holt discontinued his proceedings on 25 March 2021. Ms Demetriades now seeks costs of approximately $37,000.

Background

[2]                 Mr Holt and Ms Demetriades were in a relationship. Mr Holt’s statement of claim says they separated in 2007.1 Mr Holt’s claims are not pleaded in a particularly clear way, but as I understand matters, he alleges that in 2008, arrangements were agreed between himself and Ms Demetriades which ultimately resulted in funds advanced by him being used by Ms Demetriades in connection with a property which, by the time the proceedings had been commenced, was owned by Diamond Security. Mr Holt alleged that as a result of the monies advanced by him, he acquired a beneficial and equitable interest in the property, and was thereby entitled to a share of the net sale proceeds from that property. In the alternative, he alleged that the monies advanced were a loan and should be repaid.

[3]                 To protect his position, Mr Holt lodged a caveat over the relevant property. This caveat was eventually removed, however, and the property was sold. Mr Holt alleged that he made demand for what he says was his share of the sale proceeds but has not received anything.

[4]                 Ms Demetriades denied Mr Holt’s allegations. She said that arrangements in relation to the property (and another property, both of which had been jointly owned by the parties at separation) reflected an agreed division of their relationship property pursuant to a formal relationship property agreement.2 She said that the monies paid by Mr Holt reflected matters such as advance payment of child support obligations, repayment of a loan and rental payments. Ms Demetriades also pleaded as an

1      Ms Demetriades’ statement of defence says the parties separated in 2004.

2      It seems that given the passage of time, a copy of that agreement is no longer available.

affirmative defence that Mr Holt’s claims were an abuse of process, in that the amount she owed Mr Holt had already been considered and determined in the context of    Mr Holt’s application for administrative review of  his  child  support  obligations. Ms Demetriades also said that the claims (relating to events taking place some 10 to 11 years prior to the proceedings having been commenced) were time-barred, either by application of the Limitation Act 1955 or by analogy. Ms Demetriades also pleaded laches, given the suggested delay in Mr Holt bringing the proceedings.

[5]                 Mr Holt had not, by the time of discontinuing the proceedings, filed a reply to Ms Demetriades’ defence or affirmative defences. The second defendant did not file a statement of defence. Indeed, it appears from the papers that the second defendant was removed from the Companies Register some time ago (though when is not clear from the materials before the Court). It does not appear that an application had been made for it to be restored to the Register so that that the claims against it could be pursued.

[6]It is also relevant to note two further points at this stage:

(a)First, it appears that steps were initially taken by Ms Demetriades to apply for security for costs, though agreement was reached that Mr Holt would pay $15,000 by way of security into his solicitor’s trust account, so that application was not required. It is not clear from the papers filed whether that amount remains in Mr Holt’s solicitors’ trust account.

(b)Second, the parties had previously engaged in earlier litigation in relation to the caveat discussed at [3] above.3 In a case management memorandum filed in these proceedings in March last year, counsel for Mr Holt stated that it had been agreed by the parties in the context of the caveat proceedings that the net proceeds from the sale of the properties in issue would be retained in the trust account of Rennie Cox, Ms Demetriades’ former solicitors. Counsel for Mr Holt advised that at that time, he was awaiting confirmation as to whether those funds remained in Rennie Cox’s trust account. Confirmation that the funds

3      Holt v Demetriades CIV-2019-404-1550.

had been disbursed from trust was provided to Mr Holt’s counsel in June 2020.

[7]                 Returning to the present proceedings, after a series of timetable breaches by both parties, on 19 May 2020, Associate Judge Andrew set the matter down for hearing at a four-day trial commencing on 31 May 2021. Mr Holt discontinued his proceedings on 25 March 2021, roughly two months before trial.

The parties’ submissions on costs

Ms Demetriades’ submissions

[8]                 Ms Demetriades  submits that given Mr  Holt  discontinued the proceedings,  r 15.23 of the High Court Rules 2016 is engaged, such that the default position is that Mr Holt ought to pay Ms Demetriades’ costs of the proceedings.

[9]                 Ms Demetriades was initially self-represented. Over the period in which she was self-represented, she consulted with a solicitor at Rennie Cox, including in relation to the preparation of her statement of defence.4 Ms Demetriades seeks the cost of those legal fees (plus disbursements) in full. Those costs are reflected in four invoices: two dated 30 September 2019, one dated 31 October 2019 and  one dated 26 November 2019. These (counsel for Ms Demetriades suggests) total $14,706.29.5

[10]             Ms Demetriades then received a grant of legal aid, and from 6 March 2020 instructed a lawyer. From that point, she claims the actual legal costs and disbursements charged to and paid by Legal Aid, totalling $10,252.60. These are said to be less than those calculated on a scale 2B basis, which counsel for Ms Demetriades says would have been as follows:

4      It appears to be in a form drafted by a legal adviser, but was filed by Ms Demetriades in her personal capacity.

5      The invoices attached to Ms Demetriades’ costs memorandum total only $10,674.01. The invoices, particularly the earlier ones, also appear to cover a number of other attendances by Rennie Cox on Diamond Security and/or Ms Demetriades, not directly connected to steps taken in this litigation. Further, the first invoice is addressed to Diamond Security; the remaining three are addressed to both Diamond Security and Ms Demetriades. It is not clear who paid those invoices.

Step	Step Number	Days	Total
Preparation for first case management conference	10	0.4	$956
Filing memorandum for first or subsequent case management conference	11	0.4	$956
Appearance at mentions hearing	12	0.2	$478
Appearance at first or subsequent case management conference	13	0.3	$717
Preparation for and appearance at issues conference	14	0.5	$1,195
Preparation for and appearance at pre-trial conference	15	0.5	$1,195
List of documents on discovery	20	2.5	$5,975
Inspection of documents	21	1.5	$3,585
Total		6.3	$15,057

[11]On this basis, Ms Demetriades claims costs totalling $24,958.89.

[12]             Ms Demetriades then seeks a 50 per cent uplift on the entire amount, on the basis that Mr Holt’s claim was untenable from the outset, and on the basis that Mr Holt repeatedly breached timetabling orders. Counsel also suggests that Mr Holt acted unreasonably (including in pre-commencement steps), which contributed to increased expense, and that he impliedly admitted that the claim was not tenable by accepting a contract to work in Mongolia at the time of the proceedings.

[13]             Applying the 50 per cent uplift, Ms Demetriades claims total costs and disbursements of $37,438.34. Counsel for Ms Demetriades further submits that without prejudice except as to costs discussions between the parties are not relevant to the determination of costs.

Mr Holt’s submissions

[14]             Mr Holt submits that costs should lie where they fall. He says that the delay in Ms Demetriades seeking costs (submissions on costs on behalf of Ms Demetriades being filed on 4 June 2021, more than two months after the discontinuance) should

weigh heavily in this direction.6 Counsel for Mr Holt further submits that Mr Holt discontinued after learning that the funds previously held by Rennie Cox (referred to at [6](b) above) had been released.

[15]             In  relation  to  the  particular   costs   claimed,   Mr   Holt   submits   that   Ms Demetriades is not entitled to costs for the period when she was unrepresented. Further and in any event, counsel observes that one of the invoices from Rennie Cox is addressed only to Diamond Security, which is now struck off the Companies Register. The others, counsel notes, are addressed to both Ms Demetriades and Diamond Security, and hence should at least be reduced (if they are recoverable at all).

[16]             Mr Holt does not make any particular submissions on the costs claimed for the period Ms Demetriades was represented.

[17]             As to the suggested 50 per cent uplift, Mr Holt denies that his proceedings were so obviously unmeritorious as to attract an uplift to costs. For example, and to the extent the earlier caveat proceedings are relied on in this context, Mr Holt notes that those proceedings were resolved by consent, and that a Law Society complaint made by Ms Demetriades in connection with the lodging of the caveat was declined.

[18]             Mr Holt also submits that the timetable breaches relied on were relatively minor, primarily due to issues relating to the COVID-19 lockdowns, and in part due to Mr Holt being based in Western Australia with limited cell phone and internet coverage. Mr Holt also observes that Ms Demetriades also breached the timetable orders. Counsel for Mr Holt suggests that there is no evidence Mr Holt accepted a contract in Mongolia.

[19]             Counsel also refers to without prejudice except as to costs discussions between the parties, noting that Ms Demetriades sought over two million in damages, which made it impossible to settle. That is also said to be a factor justifying an order that costs are to lie were they fall.

6      Counsel relies on BC 348047 v Strata Title Administration Ltd [2012] NZHC 41 at [26].

Discussion

[20]I will divide my analysis into five sections. These are:

(a)whether costs should, in the aggregate, lie where they fall;

(b)whether, and if so to what extent, Ms Demetriades can claim the costs of the legal advice she received while self-represented;

(c)the appropriate scale (or actual) costs for the period in which she was represented;

(d)whether there can or ought to be an uplift; and

(e)if there should be a reduction to any costs award to take into account the “without prejudice except as to costs” efforts to settle.

Should costs lie where they fall?

[21]             The starting position is that pursuant to r 15.23, and unless agreed or ordered otherwise, a discontinuing plaintiff must pay the defendant’s costs of the proceedings.

[22]             As noted, Mr Holt suggests that costs should lie where they fall, including because Ms Demetriades’ costs memorandum was filed two months after the notice of discontinuance. That is somewhat late. It is not, however, exceptionally late, especially given there was no timetabled order for costs memoranda to be filed by a certain date.7 With respect, I do not consider BC 348047 v Strata Title Administration Ltd to stand for the proposition that late filing necessarily means that costs should lie where they fall, as appears to be suggested in counsel for Mr Holt’s costs memorandum. In that case, Lang J observed that the plaintiff had not filed its costs memorandum in accordance with the Court ordered timetable, but despite that, he proceeded to determine the costs issues on the merits. Having done so, the Judge concluded that the interests of justice would be best served if costs were to lie where

7      Noting that the notice of discontinuance simply stated that the parties would seek to agree costs, and if they could not, “the defendants will file a memorandum as to costs”.

the fell. In that context, Lang J made the (passing) observation that “[i]ndeed, I perceive that to have been the plaintiffs’ initial reaction given the fact that they filed their application for costs so late.”8 Accordingly, it is clear from the judgment that the outcome of costs lying where they fell was the result of an assessment of the merits, and not because of the late filing.

[23]             Mr Holt’s counsel also suggests that costs should lie where they fall given  Mr Holt chose to discontinue upon learning that Ms Demetriades’ former solicitors, Rennie Cox, had released the security initially held following the resolution of the caveat proceedings. But as noted at [6(b)] above, Mr Holt was advised of that position in June 2020. He did not discontinue the proceedings until March 2021. The advice as to the status of the funds held by Rennie Cox cannot therefore provide a basis for displacing the presumption under r 15.23.

[24]             I accordingly conclude that it is appropriate for Mr Holt to make a contribution to Ms Demetriades’ costs.

What costs and/or disbursements are claimable while Ms Demetriades was self- represented?

[25]             Counsel for Ms Demetriades suggests that Rennie Cox’s four invoices for legal services are claimable by Ms Demetriades in these proceedings as disbursements. Those invoices are for $2,239, $3,922.28, $3,837.93, and $674.80 respectively. Counsel suggests that these add up to $14,596.29. They do not. As noted earlier, they add to $10,674.01. I proceed on the basis of the lower amount.

[26]             Lay litigants cannot recover costs.9 It is established, however, that they can recover reasonable disbursements.10 There is a suggestion in the case law that the Court should take a “reasonably liberal”11 approach to the assessment of those disbursements. A number of authorities have also concluded that payments to a

8 At [26].

9      McGuire v Secretary for Justice [2018] NZSC 116 at [88].

10     Re Collier (A Bankrupt) [1996] 2 NZLR 438 (CA) at 442.

11     Jagwar Holdings Ltd v Julian (1992) 6 PRNZ 496 (HC) at 499; quoted with approval, among other decisions, Buchanan Construction Ltd v Watson [2020] NZHC 1537.

solicitor for assistance provided to a lay litigant can be claimed by the lay litigant not as “costs”, but as reasonable disbursements actually paid.12

[27]So, for example:

(a)In Working Capital, scale costs for the steps involved would have totalled $3,980. The litigant in person had incurred solicitors’ costs assisting with the litigation totalling $2,277. That sum was awarded as a disbursement.

(b)In Hawkins v Keogh, scale costs would have totalled $6,690, and the litigant in person had incurred legal costs associated with the proceedings of $4,694 (including GST and disbursements). That sum was awarded as a disbursement.

(c)In Knight v Veterinary Council of New Zealand, the litigant in person had incurred legal costs of $1,786.50 in connection with the preparation of an amended statement of claim. That sum was awarded as a disbursement.13

[28]             I accordingly accept that as a matter of principle, costs actually paid by a lay litigant for legal advice received in connection with the relevant proceedings can be claimed in those proceedings as a disbursement.

[29]             There is no clear authority on what constitutes a reasonable disbursement for these purposes. The general rule on disbursements is that to be claimable, a disbursement must be incurred by the claiming party, specific to the conduct of the

12 Knight v Veterinary Council of New Zealand HC Wellington CIV-2007-485-1300, 31 July 2009 at [6]; Working Capital Solutions Holdings Ltd v Pezaro [2014] NZHC 2480 at [15]-[20]; Harrison v Keogh [2015] NZHC 3320 at [10]. I note that the authorities referred to rely on and apply leading English authority, including Malloch v Aberdeen Corp (No 2) [1973] 1 All ER 304 per Lord Reid. But see Sax v Simpson [2017] NZHC 1128 at [9] taking the opposite position, though this appears to have been on the basis the amounts were claimed as costs rather than disbursements, and none of the authorities discussed appear to have been put before the Court.

13 There was no reference to what the equivalent amount would have been on a scale basis.

proceeding, reasonably necessary to the conduct of the proceeding and reasonable in amount.14

[30]             Applying these principles to this case, the first issue faced by Ms Demetriades is that the first invoice issued by Rennie Cox is made out  Diamond  Security  and Ms Demetriades is merely copied in. Given the fees have not, on their face, been charged to Ms Demetriades, I exclude them from my assessment. I observe that in any event, the invoice does not appear to be for work specific to the conduct of these proceedings, but rather relates to the preceding sale of the property in which Mr Holt claimed an equitable interest.

[31]             The remaining three invoices relate to “Claim by Brent Holt” and are made out to both Diamond Security and Ms Demetriades. Ms Demetriades does not provide proof of payment, so it is not clear who paid the invoices. Assuming for present purposes that Ms Demetriades paid these invoices herself (that is, rather than Diamond Security), they are prima facie claimable as disbursements.

[32]             Again, however, not all of the attendances covered by the invoices appear to relate to the proceeding. In particular, only part of the second invoice of 30 September 2019 appears to relate to the drafting of the statement of defence. The third invoice (of 31 October 2019) appears to relate to these proceedings, including preparatory steps for an application for security for costs, drafting a “counterclaim” and other incidental attendances. The fourth invoice (dated 26 November 2019) appears to mainly relate to drafting and finalising the statement of defence.

[33]             Had Ms Demetriades been legally represented from the commencement of the proceedings to March 2020, scale costs would have totalled $4,780.00.15 Excluding the first invoice for the reasons  noted  at  [30]  above,  the  actual  costs  paid  by  Ms Demetriades to Rennie Cox total $8,435.01. It would be inappropriate, in my view, to award as a disbursement higher-than-scale costs to a lay litigant for legal advice.

14 High Court Rules 2016, r 14.12.

15 Scale 2B costs for commencement of defence, the only formal step taken  by Ms Demetriades  while she was unrepresented. Counsel for Ms Demetriades also included in a schedule with his costs submissions the step of pleading in response to an amended pleading. But there was no amended pleading in this case.

That would incentivise the conduct of proceedings by lay litigants (heavily “stage- managed” behind the scenes by a lawyer), by the awarding of indemnity costs by the backdoor. Nevertheless, as the authorities referred to earlier explain, it is helpful to a lay litigant, the Court and ultimately the opposing party, for a lay litigant to seek legal advice on aspects of proceedings. In this case, for example, this led to what was no doubt a more coherent and appropriately drafted statement of defence than if the pleading had been prepared by Ms Demetriades alone. This in turn helps make the issues to be determined clear, which flows into further steps such as discovery and evidence. In addition, and as the authorities note, the fact that a lay litigant is not represented relieves the opposing party (if unsuccessful and ordered to pay costs) from bearing the costs of counsel appearing at conferences and hearings (noting there were none in this case, however, at least while Ms Demetriades was not represented).

[34]             Given some of the invoices presented appear to cover attendances for matters not directly related to the conduct of the proceedings, a reasonable high level and broad brush approach is all that can be taken. And as noted, any award ought not to exceed the equivalent scale costs award had Ms Demetriades been represented. Taking these matters into account, I make an order that Ms Demetriades can properly recover a total of $4,000 paid to Rennie Cox as a disbursement in these proceedings. That order is conditional on Ms Demetriades filing with the Court an affidavit which demonstrates to the Court’s satisfaction that she personally paid at least that amount to Rennie Cox.

[35]To this award can be added the filing fee of $110. This is plainly reasonable.

What costs and disbursements are claimable for the time in which Ms Demetriades was represented?

[36]             As noted earlier, Mr Holt does not take issue with the costs sought under this head.

[37] I note for completeness, however, that the equivalent scale costs award suggested by counsel for Ms Demetriades, and set out in the table at [10] above, is incorrect. There was only one case management conference which counsel attended, and no separate issues conference or pre-trial conference prior to the proceedings

being discontinued. Those steps claimed as 12, 14 and 15 ought therefore to be excluded. Total scale costs on that basis are $12,189.

[38]             Nevertheless, the total costs paid to counsel by Legal Aid are less than scale costs, even on that corrected basis. Those costs are $8,297.50, plus a disbursement of

$1,955.10 for the hire of an e-discovery consultant. This is reasonable. I accordingly approve the costs and disbursements for this period of $10,252.60.

Should there be an uplift?

[39]             The claim for an uplift of 50 per cent on all the costs sought is misconceived. An uplift is not possible in this case (and given it is extremely difficult in the absence of a trial and findings made by the Court on a claim of this type, it is unlikely an uplift would have been appropriate in any event).

[40]             Counsel for Ms Demetriades suggests that the uplift could apply to both periods discussed above, namely when Ms Demetriades was a litigant in person and when she was represented (but in receipt of a grant of legal aid). I disagree. To apply an uplift to either period would lead to over-recovery. Awarding an uplift on the disbursements (relating to Rennie Cox’s fees) would involve awarding more than  Ms Demetriades has actually paid, and thus contrary to r 14.2.1(f) (the “no profit” rule).16 This is why uplifts on costs are applied to the scale costs only, and not also to disbursements. Further, and as counsel for Ms Demetriades expressly notes in his costs memorandum, the costs claimed for the period while Ms Demetriades was in receipt of legal aid are also limited by r 14.2(1)(f) to the total fees payable by Legal Aid to counsel (akin to Ms Demetriades’ actual costs). Again, no uplift is possible.

Should there be a reduction to take into account the without prejudice except as to cost negotiations?

[41]             Counsel for Mr Holt submits that Mr Holt made “extensive efforts” to resolve matters without any need for the parties to file submissions in relation to costs. Counsel attaches to his costs memorandum what is said to be an example of this.

16     Or more than what the court has assessed to be a reasonable amount to have been paid.

[42]             I do not consider these matters warrant a reduction in the costs award to be made to Ms Demetriades.

[43]             While it is said by counsel that Mr Holt made “extensive efforts” to resolve matters, only one example has been put before the Court, and that example involved Ms Demetriades making a settlement offer (on a “without prejudice save as to costs” basis), rather than Mr Holt doing so.17 There is no evidence before the Court of reasonable settlement offers that were made by Mr Holt and which were unreasonably rejected by Ms Demetriades. I therefore decline to reduce costs on this basis.

Result

[44]             Aspects of Ms Demetriades’ costs claims were misconceived. Nevertheless, and bearing in mind the presumption in r 15.23 that a discontinuing plaintiff ought to pay the defendant’s costs of the proceedings, it is appropriate that Mr Holt make a contribution to Ms Demetriades’ costs.

[45]For the reasons set out in this judgment, I make the following orders:

(a)Subject to the filing of an affidavit as to those matters set out at [34] above, and that is accepted by the Court as demonstrating that Ms Demetriades herself, and not Diamond Security, paid at least $4000 towards Rennie Cox’s invoices, I make an award of disbursements to Ms Demetriades of $4000 (relating to Rennie Cox’s fees), plus a $110 filing fee.

(b)I award costs and disbursements to Ms Demetriades for the period while she was represented in an amount of $10,252,60.

17     In that “offer”, Ms Demetriades set out her losses at a little over two million dollars, and understandably, the matter did not settle.

[46]             Taking into account current COVID-19 restrictions, Ms Demetriades’ affidavit to be filed in accordance with [45](a) above is to be filed and served on  or before     7 October 2021 and referred to me on receipt.

Fitzgerald J