Kidd v Van Heeren

[2019] NZHC 2133

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV 2014-404-0725

[2019] NZHC 2133

BETWEEN

MICHAEL DAVID KIDD

Plaintiff

AND

ALEXANDER PIETER VAN HEEREN

Defendant

Hearing:	On the papers
Appearances:	S J Mills QC and B O’Callahan for the Plaintiff R H Anderson for the Defendant
Judgment:	30 August 2019
Reissued:	30 September 2019

JUDGMENT OF JAGOSE J

[Costs]

The judgment was delivered by me on 30 August 2019 at 11.00am.

Pursuant to Rule 11.5 of the High Court Rules

……………………………… Registrar/Deputy Registrar

Solicitors/Counsel:

S J Mills QC, Auckland

B O’Callahan Barrister, Auckland Fee Langstone, Auckland

KIDD v VAN HEEREN [2019] NZHC 2133 [30 August 2019]

[1]                  My judgment of 25 July 2019 – granting Mr Kidd’s application, and therefore dismissing Mr van Heeren’s – expressed at [37] my preliminary view “costs on the present application should be reserved for determination in conjunction with the final accounting”, but reserved costs for determination on short memoranda if counsel differed, as they have done.1

[2]                  Mr Kidd says costs should follow the event, deferral of their determination being inconsistent with the principle such should be predictable and expeditious, and prejudicial to Mr Kidd as adding to the financial pressures borne by him in the course of this protracted proceeding. He claims “very substantial departures from the Band C allowances for specific steps”. He identifies “a comparatively large amount of time was required” for filing the application and its supporting affidavits (step 22),2 claiming 30 days (“based on actual time attendances … incurred by the applicant’s solicitors and counsel”), instead of the allowed 2 days. On the same basis he claims

10.2 days for preparation of written submissions (step 24), instead of the allowed 3 days for each application, and again 6.8 days for preparation of reply evidence (for which no allowance is made). Again, he claims 10.9 days as time incurred for preparation for hearing, beyond that allowed for preparation of submissions. And finally he claims 23.4 days in actual time incurred in preparation of the electronic bundle (step 25), for which 1 day is allowed for each application. The total costs claimed is for 96.4 days, or $318,120.00. Last, he claims $395,855.27 in disbursements on expert witnesses’ invoices.

[3]                  I outlined my approach to time incurred as an analogue for costs in a prior judgment between the parties (and others): in essence, where time reasonably required for any step would substantially exceed the time allocated under band C, increased costs (calculated as an uplift from scale) may be payable.3 I add, generally, costs are in contribution to, not indemnification of, the successful party’s legal expenses. Rather, “an appropriate daily recovery rate should normally be two-thirds of the daily rate considered reasonable for each step”.4 The point is express: the assessment of

1      Kidd v van Heeren [2019] NZHC 1761.

2      Although such only qualifies for band C: High Court Rules 2016 [“HCR”], 14.5(2)(c).

3      Kidd v van Heeren [2018] NZHC 1379 at [6]–[8]; and see HCR 14.6(3)(a).

4      HCR 14.2(1)(d).

what is a reasonable time “should not depend … on the time actually spent by the solicitor or counsel involved … by the party claiming costs”.5

[4]                  Recognising my prior approach, Mr Kidd proposes alternatively, by analogy with the 3C allowance for steps taken in general civil proceedings, 10 days for filing the application and 15 days for preparation for its argument, further uplifted to reflect the additional work involved in submission, reply evidence and electronic bundle. However, that prior approach was motivated by “the nature of the proceeding and the steps taken in it”; that ‘enforcement’ application had more in common with substantive than interlocutory proceedings. Here, the application is much more recognisably interlocutory: seeking Mr van Heeren exercise powers to obtain and provide specified information, for use on final accounting between the parties. The uplift to substantive proceedings is not justified.

[5]                  That essentially is why I took the preliminary view costs should be reserved: I cannot presently determine the ultimate utility of the information sought, or correctness of much of (in particular) Mr Browning’s evidence and Mr Basrur’s endorsement of it. I do not accept Mr Browning’s evidence is conclusive of the incompleteness of Mr van Heeren’s disclosure. At best, it points (as it always did) to absent information. Whether Mr van Heeren’s exercise of his powers to obtain information from the Foundations fills those gaps remains to be seen.

[6]                  For present purposes, the essence of Mr Browning’s evidence materially has not changed since that he gave in South Africa in 2013. Fogarty J made the point, given the scope of that work, “no further work need be done by the plaintiff in the meantime until the defendant has accounted in the manner ordered by this Court”.6 By that, the Judge was recognising Mr Kidd was not required progressively to respond.

[7]                  Mr Browning also responded to Mr Greyling’s and Mr Hagen’s dispute of his evidence in support of Mr van Heeren’s application to progress taking of a mutual account. But the effective opposition to Mr van Heeren’s application was it was

5      HCR 14.2(1)(e).

6      Kidd v van Heeren [2015] NZHC 517 at [122].

premature, if information remained to be provided by him (as Mr Browning also contended).

[8]                  Mr Reithner’s principal evidence as to Mr van Heeren’s information rights against Gerda and Timbavati under Liechtenstein law was of significant utility on the present application, but his subsequent disputes with Mr Schuur are beyond my jurisdiction. Nonetheless they were valuable in understanding relief in Liechtenstein.

[9]                  Pared to its essence, Mr Kidd’s application was an advance on Fogarty J’s April and December 2015 orders, those based on Mr Browning’s original assessment(s) of the partnership assets’ value, to overcome Mr van Heeren’s progressive contention he had nothing more to give. I therefore take Mr Kidd’s respective application and opposition as a whole. They appropriately are classified Category 3; viewed overall, in the context of the proceeding, I consider a comparatively large amount of time for each step to be reasonable (whether or not any particular step took such).

[10]               However, I do not accept the time required here would ‘substantially exceed’ that allocation. The allocation already has a one-third deduction built in; the ‘time required’ must be understood to add that back in, then substantially to exceed it. Plainly the time discharged on Mr Kidd’s application, and on his opposition to Mr van Heeren’s application, did substantially exceed the 3C allocation. But, with respect for the parties’ diligence, I cannot see anything requiring time that should substantially exceed the grossed-up allocation.

[11]From that perspective, the orthodox calculation of 3C costs here is:

Step	Days
11.	Filing six memoranda for case management conferences7	6
13.	Appearances at two case management conferences	1.4
22.	Filing interlocutory application	2
23.	Filing opposition to interlocutory application	2
24.	Preparation of written submissions (x 2)	6
25.	Preparation of bundle for hearing (x 2)	2
26.	Appearance at hearing of defended application for sole or principal counsel	3
27	Second and subsequent counsel if allowed by court	1.5
29.	Sealing order or judgment	0.2
Total days	24.1
At category 3 daily rate of $3,300	$79,530.00

7      In reply, Mr Kidd does not dispute Mr van Herren’s reduction in the number of claimable memoranda.

[12]               The electronic bundle here was voluminous and, more materially for costs purposes, ran to over 600 hyperlinked documents from a nearly 70-page index. Time reasonably required for production of the bundle would substantially exceed step 25’s one-day allowance. But that allowance is not for compilation of the bundle as such. It is instead to reflect a contribution to the legal professional services required for its making. Legal oversight should have been minimal – identifying the pleadings and affidavits for indexation and hyperlinking, such compilation then not requiring legal professional services – and its expense sufficiently is contributed to by step 25. Mr Kidd’s hybrid concession in reply – to recover the actual time spent on compilation by solicitors at 3C rates, but paralegals’ time by disbursement – does not meet the recoverable scope of legal professional services. Expenses reasonably incurred in compilation, whether by lawyers or paralegals, are recoverable – just not on account of legal professional services.

[13]               Appropriate recovery of the expense of the bundle’s production is – as “an expense paid or incurred for the purposes of the proceeding that would ordinarily be charged for separately from legal professional services in a solicitor’s bill of costs”, comparably with the “expenses of photocopying documents required by these rules”8

– by disbursement. It is immaterial if the expense of photocopying is incurred by lawyers or paralegals.

Result

[14]               I order Mr van Heeren to pay costs to Mr Kidd in the amount of $79,530.00, and disbursements as set out at [15]–[16].

[15]               I approve expenses paid or incurred for production of the electronic bundle as a disbursement for the purposes of the proceeding, and specific to the proceeding and reasonably necessary for the conduct of the proceeding. If such is claimed and verified by Mr Kidd, it is to be fixed by the Registrar in terms of HCR 14.12(2)(d) and (3).

8      HCR 14.12(1) (definition of ‘disbursement’).

[16]               I approve expenses paid or incurred on Mr Reithner’s 25 February, 11 March and 3 July 2019 invoices as disbursements for the purpose of the proceeding, and specific to the proceeding and reasonably necessary for the conduct of the proceeding.

[17]               I reserve legal and direct expenses paid or incurred on and in relation to Mr Browning’s and Mr Basrur’s invoices for determination as costs or disbursements in connection with the determination of costs on the final accounting.

—Jagose J