Huang v Luo

[2017] NZHC 3290

IN THE HIGH COURT OF NEW ZEALAND HAMILTON REGISTRY

I TE KŌTI MATUA O AOTEAROA KIRIKIRIROA ROHE

CIV-2015-419-000307 [2017] NZHC 3290

BETWEEN

JIANMING HUANG

Plaintiff

AND

LIN LUO
First Defendant

W & L LIMITED Second Defendant

Hearing:	On the papers
Judgment:	22 December 2017

JUDGMENT OF WYLIE J [Costs]

This judgment was delivered by Justice Wylie

On 22 December 2017 at 11.30am Pursuant to r 11.5 of the High Court Rules Registrar/Deputy Registrar

Date:…………………………

Solicitors/counsel: D Zhang, Auckland

Foster & Milroy, Hamilton

HUANG v LUO [2017] NZHC 3290 [22 December 2017]

Introduction

[1]      On 6 April 2017, I issued an oral judgment in relation to this matter.1   On 27

November, it was brought to my attention that I had not dealt with costs arising out of that oral judgment, notwithstanding that memoranda had been filed by counsel.  For some reason those memoranda had not made their way to me.

[2]      I read the memoranda, and called for further information from the plaintiff. That information has now been provided, and the defendants have responded to it.

Background

[3]      As I recorded in my oral judgment, Sargisson AJ made an order requiring standard discovery by the parties in July 2016. The defendants complied, in that they filed  and  served  an  affidavit  of  documents  by the  required  date.   The  plaintiff considered, however, that that affidavit was deficient, and, in December 2016, he filed an application seeking further and better discovery.  That application was granted by consent by Edwards J on 2 February 2017, but only against the first defendant – Ms Luo.  Ms Luo purported to comply with the application by filing a supplementary affidavit of documents by the due date.   Ms Luo did not, however, discover all documents required to be discovered pursuant to the consent order.

[4]      The  plaintiff  then  applied  for  a  declaration  that  the  defendants  were  in contempt, and for an unless order requiring the defendants to discover the balance of the documents which had not been made available.

[5]      I heard from counsel.   Mr Foster, appearing for Ms Luo, accepted that in various respects the further discovery provided was inadequate, and that Ms Luo had failed to comply with the consent order made by Edwards J.

[6]      In the event, I made an order requiring further and better discovery not only by

Ms Luo, but also by the second defendant.  As a result of the delays by Ms Luo, the

fixture had to be vacated.  I did not, however, find Ms Luo in contempt of Court, for reasons which I set out in my oral judgment.2

Costs application

[7]      The plaintiff seeks costs on an indemnity basis, in the sum of $25,883.35 (GST inclusive).  In the alternative, it seeks costs on a band C basis, together with an uplift by way of increased costs.  The plaintiff provided a copy of the invoice forwarded to him. At my request, Mr Zhang, appearing for the plaintiff, has sought to itemise that invoice, and to explain the various charges made.

[8]      Mr Foster, for the defendants, submits that they did not ignore or disobey any order, and that they can more appropriately be described as having failed to comply fully with the order made by Edwards J.  He also says that the liability should be limited to the interlocutory application made by the plaintiff, and that costs should be calculated in the first instance on a 2B basis. He disputes the claimed need for second counsel, and disputes the basis on which the plaintiff has calculated costs.

Analysis

[9]      Costs of course are at the discretion of the Court — r 14.1 of the High Court Rules 2016. It is common ground that a party who fails on an interlocutory application should pay costs to the party who succeeds.   In this case, the defendants, and in particular the first defendant Ms Luo, failed in that they were ordered to provide further discovery, and an unless order was imposed.  They did not fail fully however, because they were not found to be in contempt.

[10]     The rules provide for the payment of increased and indemnity costs.  Under r 14.6(3), the Court can order a party to pay increased costs where, inter alia, the liable party has failed without reasonable justification to comply with an order for discovery

— r 14.6(3)(b)(iv).  The Court can order a party to pay indemnity costs if the liable party has acted vexatiously, frivolously, improperly or unnecessarily, or has ignored or disobeyed an order or direction of the Court — r 14.6(4)(a) and (b).

[11]     Here, I am satisfied that Ms Luo ignored or disobeyed an order of the Court, and acted improperly. She initially failed to comply with standard discovery. She then failed to comply fully with the consent order made by Edwards J.  The plaintiff’s application was entirely a consequence of Ms Luo’s failures and no adequate explanation was given for the failures. It seems to me that an order for indemnity costs is appropriate.

[12]     I do, however, have reservations about the amount claimed by the plaintiff. The hourly rate charged by the plaintiff ’s legal advisors is not unreasonable — $250 an hour plus GST for Mr Zhang, $200 an hour plus GST for another lawyer who assisted, and $125 an hour plus GST for a third lawyer who assisted.  Nevertheless, the number of attendances, for what was a straightforward matter, seem very high to me. Further, some of the costs claimed relate not to the application filed, but rather to other matters such as inspection and the preparation of briefs.  Those costs are more properly recovered in the substantive proceedings.  Nor am I persuaded that second counsel was required. This was a straightforward matter, which in the event was dealt with by a consent order.

[13]     In my judgment, the costs sought are unreasonably high, and a reasonable observer would not expect that costs in the sum claimed were reasonably incurred.

[14]     I must endeavour to calculate indemnity costs on the basis of a reasonable allocation of actual costs, based on the appropriate time taken, the significance and the complexity of the work, and a median hourly rate reasonably applicable.3

[15]     I have endeavoured to make an assessment based on what is in my view, a reasonable allocation of actual costs.  I make a costs order in favour of the plaintiff, and against both defendants jointly and severally, in the sum of $12,500. This allows for 50 hours at $250 an hour.  I cannot see that more than 50 hours (including travel to and from Hamilton) would have been required to deal with this matter, given its relative simplicity.

[16]     I do not know whether or not the plaintiff is GST registered. In the absence of any further information in that regard, I direct that the indemnity costs I have awarded include GST.

[17]     I record that I would not have been minded to order costs on a band C basis. Had I been awarding costs on a scale basis, I would have calculated costs on a 2B basis, before considering whether or not to increase the amount so calculated.

[18]     The plaintiff is also entitled to its reasonable disbursements.   The amount claimed  is  $784.60.    There  has  been  no  challenge  to  this  figure,  and  I  allow

disbursements in this sum.

Wylie J