Jin v District Court at North Shore

[2013] NZHC 2511

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2012-404-4905 [2013] NZHC 2511

UNDER  the Judicature Amendment Act 1972

BETWEEN  RUJIN JIN

Applicant

AND  DISTRICT COURT AT NORTH SHORE

First Respondent

AND  YASUKI KONISHI and MAKIKO KONISHI

Second Respondents

Hearing:

On the papers

Appearances:

Y Lee for Applicant

DB Hickson for Second Respondents

Judgment:

25 September 2013

JUDGMENT OF KATZ J

(Costs)

This judgment was delivered by me on 25 September 2013 at 4:00 pm Pursuant to Rule 11.5 High Court Rules

Registrar/Deputy Registrar

Counsel:               Y Lee, Takapuna

DB Hickson, Auckland

JIN v DISTRICT COURT AT NORTH SHORE  [2013] NZHC 2511 [25 September 2013]

Introduction

[1]  This proceeding concerns a dispute over a $30,000 deposit paid by Mr and Mrs Konishi, the second respondents, under an unconditional sale and purchase agreement with Ms Jin, the applicant. Mr and Mrs Konishi issued proceedings in the District Court seeking a refund of the deposit. Ms Jin then filed judicial review proceedings challenging various decisions made by the District Court in bringing the matter on for hearing.

[2] The judicial review challenge was dismissed by Wylie J on 19 February 2013. On 18 April 2013, Wylie J ordered Ms Jin to pay indemnity costs to Mr and Mrs Konishi in the sum of $25,568.48. Both judgments are now under appeal. Ms Jin applied to have the District Court proceedings stayed pending determination of the appeal, but that application was dismissed by Wylie J on 20 June 2013.

[3]    On 1 May 2013, Mr and Mrs Konishi served a bankruptcy notice on Ms Jin for the amount of the judgment debt ($25,568.48) with additional costs of $548.00 and a fee of $150.00. Ms Jin later applied to have that bankruptcy notice set aside (“bankruptcy proceedings”). On 7 May 2013, Mr and Mrs Konishi had a charging order registered over Ms Jin’s property in relation to the judgment debt.

[4] On 28 June 2013, Ms Jin’s solicitor (Mr Lee) wrote to Mr and Mrs Konishi’s solicitor (Mr Hickson) advising that his client would satisfy the judgment debt in full provided unequivocal written authority was provided for the removal of the charging order. He advised that he was instructed to pay the amount of the judgment debt into court. Mr and Mrs Konishi’s response was, in effect, that removal of the charging order would not occur unless the debt was paid to them, rather than into Court pending the outcome of the appeals process.

[5] Ms Jin then made a without notice application for an order that the charging order be removed. Courtney J issued a minute on 2 July 2013 noting that there was no apparent reason why the application was made without notice. The matter was listed in the Duty List, Mr and Mrs Konishi were served, and the parties appeared before me as Duty Judge on 8 July 2013.

[6]  Meanwhile, on 3 July 2013 Mr Lee sent Mr Hickson a letter advising that the sum of $26,116.48 had been paid into Mr and Mrs Konishi’s solicitors’ trust account in satisfaction of the charging order. In response Mr Hickson sent Mr Lee a memorandum of consent to discharge the charging order the following day, in a form which could be filed with LINZ (manually) to discharge the charging order.

[7] Ms Jin chose not to register that memorandum and did not withdraw her application to the Court for an order removing the charging order. Rather,  her counsel appeared before me in the Duty Judge List and pursued the application. The reasons advanced for this somewhat surprising course were as follows:

(a)   Mr and Mrs Konishi’s solicitors were not registered for e-dealing. Manual filing of the memorandum provided would cost $176.00 as opposed to the $80.00 cost of e-dealing. A court order would therefore save $96.00 in LINZ filing fees; and

(b)   the discharge could be effected more quickly by e-dealing rather than manual filing.

[8] Given that Mr and Mrs Konishi had already provided Ms Jin with a memorandum of satisfaction of the charging order, which could be submitted for registration at any time, I  dismissed the application and reserved leave to file memoranda as to costs. Mr and Mrs Konishi now seek costs, on an indemnity basis. That application is opposed by Ms Jin.

Mr and Mrs Konishi’s submissions

[9] Mr and Mrs Konishi seek indemnity costs on the basis  that  there  was absolutely no need to put the parties to the expense of a court proceeding primarily, it would seem, to save $96.00. Mr and Mrs Konishi rely on r 14.6(4)(a) (where one of the parties has acted unnecessarily) to seek full solicitor client costs. Their lawyer spent just over 4 hours on the matter.    The total costs sought (including GST) are

$1,239.25. The costs narrations provided are as follows:

(a)Perusing Ms Jin’s application for discharging order, and affidavits and memoranda filed in support.

(b)Attendances on email correspondence with Mr and Mrs Konishi.

(c)Drafting memorandum.

(d)Attendances on email correspondence with Mr Lee, counsel for Ms Jin.

(e)Appearing before Justice Katz in the High Court at Auckland at the hearing of Ms Jin’s application.

(f)Drafting costs memorandum and all attendances incidental thereto.

Ms Jin’s submissions

[10] Ms Jin submits that costs should be reserved pending determination of the appeal. Further, she defends the decision to pursue a Court order and says that the application was not fruitless. Ms Jin submits that, because of the e-dealing system in New Zealand, discharge of charging orders by individuals must be via “Authority and Instruction to Act” (A & I) forms and it was only after counsel for Ms Jin raised this issue in the context of the Court proceedings that counsel for Mr and Mrs Konishi agreed to provide a signed A & I form.

[11] Ms Jin further submitted that the requirements for an award of indemnity costs have not been met and that the quantum of costs sought was grossly disproportionate to the issues at stake. A number of broader issues were also raised; however, they appeared to relate to the separate bankruptcy proceedings and not to the narrow costs issues before me.

Discussion

[12]     The general principle as to costs is set out in r 14.2(a):

the  party  who  fails  with  respect  to  a  proceeding  or  an  interlocutory application should pay costs to the party who succeeds.

[13] The rules on costs of interlocutory applications are found in r 14.8, which provides in part that:

(1)Costs  on  an  opposed  interlocutory  application,  unless  there  are special reasons to the contrary,—

(a)must be fixed in accordance with these rules when the application is determined; and

(b)become payable when they are fixed.

[14] Ms Jin seeks to have costs stayed pending determination of the appeal. No convincing reason has been put forward as to why that should occur and I decline that request. Mr and Mrs Konishi are entitled to costs, and are entitled to have them fixed now. The only issue is whether they should be scale costs or indemnity costs.

Indemnity and increased costs

[15] Indemnity and increased costs are provided for under r 14.6, the relevant parts of which provide as follows:

14.6     Increased costs and indemnity costs

(1)Despite rules 14.2 to 14.5, the court may make an order—

...

(b)that the costs payable are the actual costs, disbursements, and witness expenses reasonably incurred by a party (indemnity costs).

(2)The court may make the order at any stage of a proceeding and in relation to any step in it.

...

(4)The court may order a party to pay indemnity costs if—

(a)the party has acted vexatiously, frivolously, improperly, or unnecessarily in commencing, continuing, or defending a proceeding or a step in a proceeding; or

...

(f)some other reason exists which justifies the court making an order for indemnity costs despite the principle that the determination of costs should be predictable and expeditious.

[16] Ms Jin’s offer to pay the judgment debt into Court pending the outcome of the appeal,  in lieu  of paying it  to Mr and Mrs  Konishi, was  rejected. Mr and Mrs Konishi were not willing to agree to discharge the charging order in such circumstances. Ms Jin submitted that this justified her decision to bring the interlocutory application. However, the terms proposed by Ms Jin would have effectively amounted to a stay of execution of the costs judgment that Wylie J had ordered. It was unsurprisingly rejected by Mr and Mrs Konishi.

[17] This led to the filing of the interlocutory application, initially without notice, then on a “Pickwick” urgent basis. It was only after Mr and Mrs Konishi had been served with the application that Ms Jin eventually paid the judgment debt to Mr and Mrs Konishi’s solicitors. A memorandum to release the charging order was then immediately provided by Mr and Mrs Konishi. Ms Jin asks that the court infer that the memorandum was only provided because the proceedings had then been served on them. However, in my view, a much more likely motivation is that Ms Jin had finally paid the judgment debt to Mr and Mrs Konishi’s solicitors (rather than into Court, as she had previously suggested). At that stage there was no basis for the continuation of the charging order. Mr and Mrs Konishi clearly recognised that and acted accordingly.

[18] In my view the proceedings were likely unnecessary (and certainly premature) from the outset. At the very least they became so once Ms Jin decided to proceed with her application in the face of a memorandum of discharge having been provided by Mr and Mrs Konishi.

[19] Ms Jin submitted that it was only at the hearing that Mr and Mrs Konishi agreed to provide an A & I form. An A & I form allows the discharge to be dealt with by e-dealing, whereas the only other option was to file the memorandum manually. Counsel for Ms Jin said that manual dealing would have caused delay, whereas counsel for Mr and Mrs Konishi said manual and e-dealing would have taken approximately the same time. Nothing turns on this issue however. Any slight timing difference did not justify the continuation of the court proceedings. The memorandum of consent was provided three or four days prior to the court hearing.

If timing was a critical factor it is surprising that that memorandum was not lodged with LINZ immediately.

[20] Continuing with the interlocutory application in such circumstances was a completely unnecessary step. Mr and Mrs Konishi had provided a memorandum of discharge which could have been registered manually. There is nothing to suggest that they had refused (or would refuse) to provide an A & I form. There was absolutely no opposition to this request at the 8 July 2013 hearing.

[21]    In my view the application falls within the category described by Doogue AJ in Bonney v Cottle as follows:1

That is to say, the party must have continued proceeding in circumstances where it was plainly wrong and lacking in justification to continue the proceedings so that it is reasonable for the party to be ordered to pay all the costs incurred as a result of its misconduct to the other side.

[22] Ms Jin says that the costs sought are grossly disproportionate to the relatively simple matter involved. However, Ms Jin chose to bring this matter to Court. That brings with it the risk of costs awards, and particularly in this case, the risk of indemnity costs for frivolous applications.

[23] As to quantum, Mr and Mrs Konishi have incurred legal costs for 4 hours work, as outlined at [9] above. The material before me indicates that there was a reasonable amount of email correspondence, and the drafting of a number of documents. The only time incurred which may not be recoverable is the drafting and

filing of costs memoranda. The normal principle is that costs are not awarded for the drafting and filing of such documents.2 That principle is clearly appropriate when scale costs are sought but is arguably of less relevance in indemnity cost situations, where proceedings were entirely unnecessary. Nevertheless, I propose to reduce the costs sought by Mr and Mrs Konishi to $1,000, to adjust for this factor.

1       Bonney v Cottle [2012] NZHC 2195 at [32].

2 Ibid, at [33].

Result

[24] The applicant filed, and then pursued, an interlocutory application that was ill-conceived and unnecessary.

[25] The second respondents are entitled to an award of indemnity costs in all the circumstances of this case. I accordingly order that the applicant pay the second respondents costs in the sum of $1,000.

Katz J