Justitiae Trustee Company Limited v NZF Nominees Limited

[2020] NZHC 2544

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2019-404-001954

[2020] NZHC 2544

UNDER

Part 18 of the High Court Rules

IN THE MATTER OF

Section 69 Trustee Act 1956

R&A Trust, a trust declared by Deed Poll by R&A Nominees (Anguilla) Incorporated
14 November 2008

BETWEEN

JUSTITIAE TRUSTEE COMPANY LIMITED

Plaintiff

AND

NZF NOMINEES LIMITED

Defendant

Hearing:

[On the Papers]

Counsel:

R B Hucker and M W Swan for Plaintiff S C D A Gollin for Heather Bradbury and De Havilland Investments Ltd

K T Glover for Clayton Bradbury
M V Robinson for Fairlight Forestry Ltd and Clive Bradbury

Judgment:

29 September 2020

JUDGMENT OF EDWARDS J

[re Costs]

This judgment was delivered by me on 29 September 2020 at 3.30 pm pursuant to r 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Counsel:     K T Glover, Auckland

M V Robinson, Auckland

Solicitors:    Hucker and Associates, Auckland Minter Ellison Rudd Watts, Auckland

JUSTITIAE TRUSTEE COMPANY LTD v NZF NOMINEES LTD [2020] NZHC 2544 [29 September 2020]

[1]                  In my judgment dated 9 June 2020, I granted leave to Clayton Bradbury, Heather Bradbury and De Havilland Investments Ltd (DHI) (together, the applicants) to file a statement of defence.1 The parties have been unable to agree costs, and all make a claim, so this judgment now follows.

Which party is entitled to costs?

[2]                  In my judgment I indicated that as the applicants were the successful parties, they were entitled to an award of costs. I also indicated that I would entertain an application by Clive Bradbury and Fairlight Forestry Ltd (FFL) (together, the defendants) who appeared at the hearing.

[3]                  However, Justitiae says it is entitled to costs on the basis that the applicants secured an indulgence by obtaining leave to file a statement of defence. In the alternative, Justitiae says that costs should lie where they fall.

[4]                  I do not consider the grant of leave can be equated to an indulgence in this case. This was not a case of non-compliance with the rules requiring the grant of leave. Nor was it treated as an application to enlarge time to file a statement of defence. The applicants did nothing wrong. They filed appearances reserving rights, and then applied for leave when Justitiae sought judgment by way of formal proof. That is what the rules entitled them to do. The cases relating to costs where an indulgence has been granted have no application to this case.

[5]                  There is no basis to displace the presumption that costs follow the event. The applicants are the successful parties and are entitled to an award of costs. And, for reasons expanded on below, Justitiae’s opposition to leave had implications for the defendants, necessitating their attendance at the hearing. An award of costs in their favour is justified in those circumstances.

How should quantum be calculated?

[6]                  The applicants and the defendants have calculated their costs on a category 3 basis. The proceeding has yet to be categorised for the purposes of costs, with this to

1      Justitiae Trustee Company Ltd v NZF Nominees Ltd [2020] NZHC 1249.

occur at the first case management conference. It is preferable that categorisation occurs at that conference where each party will have an opportunity to be heard on the issue. For the purposes of this costs determination, I have considered the complexity of the application for leave on a standalone basis.

[7]                  On a standalone basis, I consider the application for leave to file a statement of defence was of average complexity, and costs should be assessed on a category 2 basis. This should not, however, influence or dictate the determination of the categorisation of the substantive proceeding.

[8]                  As to the steps in the proceeding, the parties are agreed that the time allocations should be made according to schedule B. I allow for the filing of memoranda (including joint memoranda) as provided for in the applicants’ schedule annexed to their submissions.

[9]                  Although the arguments put forward by the applicants in support of leave were essentially the same, they divided up the presentation of those arguments at the hearing so that any unnecessary repetition was reduced or eliminated. Clayton Bradbury on the one hand, and Heather Bradbury and DHI on the other, are each entitled to an award of costs.

[10]              The next question is whether an uplift should be applied. The applicants and the defendants each seek an uplift of 50 per cent on the grounds that the plaintiff contributed unnecessarily to the time and expense of the proceeding. Eight separate grounds are listed in support of that claim. Most of those grounds would not, on their own, justify an uplift from scale. But, the claims that the plaintiff advanced arguments which plainly lacked merit, appeared to be for an ulterior purpose, and verged on an abuse of process, deserve separate consideration.

[11]              I made comments about Justitiae’s approach to the application in my judgment which are relevant to these grounds for an uplift. I said:

[33]      That brings me to the second major difficulty with Justitiae’s approach. Justitiae’s submissions go well beyond a broad level assessment of the merits of the defence for the purposes of the leave application. Rather, Justitiae seeks to transform the leave application hearing into a ruling on the

merits of the claim. More than that, Justitiae seeks to have the substantive proceeding summarily determined without affording the opportunity to any of the applicants to put forward their defence.

[34]      More concerning again is the fact that the tactic appears to be to secure judgment against the applicants which, because the grounds of defence are the same, may then be used to secure judgment against Clive Bradbury and FFL. In other words, the leave application is being used to pre-empt any decision on the substantive proceeding, without Clive Bradbury and FFL being heard. This approach offends against the cornerstone principle of natural justice, and Justitiae’s tactics in opposing the application for leave for that purpose verge on an abuse of process.

[12]              The advancement of arguments on the merits of the claim were unrelated to the application to be determined, and in that sense, were without merit. They were arguments that contributed unnecessarily to the time and expense of the proceeding, both in terms of written submissions and in hearing time. An uplift for those steps is warranted.

[13]              I also consider an uplift is required to denounce the tactic behind the opposition to the application, which was to have the substantive proceeding determined summarily against the applicants, and then use that to secure judgment against the defendants. That approach necessitated the attendance by the defendants at the hearing to protect their position. For that reason, I consider the defendants are entitled to an award of costs.

[14]              As noted in my judgment, the approach employed by Justitiae offends against the principle of natural justice. I consider it was an improper use of the Court’s rules and, combined with the unmeritorious arguments advanced, justifies an uplift on scale. For the sake of clarification, the uplift does not apply to the costs awarded to the defendants. The consequence of the approach for the defendants is already reflected in the award of costs in their favour.

[15]              That just leaves the question of quantum. Considering all matters in the round, I award a 50 per cent uplift to the applicants’ costs awarded according to scale.

[16]              Finally, and in accordance with the general practice in this Court, I decline to allow the claim for costs on costs.

Result

[17]              Costs and disbursements are awarded to Clayton Bradbury on the one hand, Heather Bradbury and DHI on the other hand, and the defendants.

[18]              Costs are to be calculated on a schedule 2B basis and shall include the claimed steps for filing of memoranda.

[19]              An uplift of 50 per cent shall be applied to the awards made to the applicants, but not to the award in favour of the defendants.

[20]The claim for costs on costs is disallowed.

Edwards J