Kim v Oh (t/a Kenton Chambers)
[2013] NZHC 2248
•30 August 2013
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV-2012-404-1306 [2013] NZHC 2248
BETWEEN YOUNG KWAN KIM Plaintiff
ANDYOUNG KEUN OH (TRADING AS KENTON CHAMBERS)
Defendant
Hearing: On the Papers
Counsel: J Ropati for Plaintiff
G J Thwaite for Defendant
Judgment: 30 August 2013
JUDGMENT (No.2) OF COOPER J ON COSTS
This judgment was delivered by Justice Cooper on
30 August 2013 at 3.00 p.m., pursuant to r 11.5 of the High Court Rules
Registrar/Deputy Registrar
Date:
Solicitors:
J Ropati, Auckland
G J Thwaite, Auckland
KIM v OH (TRADING AS KENTON CHAMBERS) [2013] NZHC 2248 [30 August 2013]
[1] In my judgment of 30 April 20131 I gave judgment for the plaintiff in the total amount of $79,139. I reserved questions of costs, and stated that if costs could not be agreed I would receive memoranda from the parties.
[2] Costs were not able to be agreed and memoranda were duly filed.
[3] There was a delay in the Registry handing me the memoranda and when they were provided it was not possible for me to consider them immediately due to other commitments. There has, accordingly, been a delay in issuing the judgment and I regret that has occurred.
The plaintiff ’s claim for costs
[4] The plaintiff seeks costs on a category 2 band B basis in the sum of $41,814. In addition, there is a claim for disbursements in the total amount of $12,808.95.
[5] Mr Ropati submits that the plaintiff is entitled to costs as the successful party noting that, in the judgment, I concluded that the defendant had failed to comply with his professional obligations to Mr Kim, that he had failed to comply with a number of rules in the Lawyers and Conveyancers Act (Lawyers: Conduct and Client Care) Rules 2008 and that his conduct was negilgent and in breach of contract.
[6] Mr Ropati also noted that apart from the set-off claim for legal fees on which the defendant had limited success (I allowed the sum of $1,880 out of a claim for
$17,760) and the concession which the plaintiff made reducing his claim from
$117,077 to $89,784 the numerous affirmative defences that had been raised by the defendant were all unsuccessful.
[7] Mr Ropati pointed out that the plaintiff was awarded most of the general damages claimed at the trial, namely $76,316 out of $89,784. Further, the plaintiff had been awarded a sum in relation to its claim for anxiety and distress. Although the claim for exemplary damages failed, Mr Ropati submitted there was an arguable
evidential foundation for the claim to have been brought.
1 Kim v Oh [2013] NZHC 925, [2013] 2 NZLR 825.
[8] The basis upon which the plaintiff’s claim has been calculated under category
2 band B was set out in a schedule attached to Mr Ropati’s submission. A schedule of disbursements was also attached. Apart from minor respects to which I will refer in discussing Mr Thwaite’s submissions, there is no issue about the items in the schedule.
The defendant’s opposition
[9] The defendant submits that the Court should make one of five orders, which
Mr Thwaite set out in an “order of preference” as follows:
(a) Costs should be awarded in favour of the defendant; (b) Costs should lie where they fall;
(c) Costs should be awarded to the plaintiff on a “global approach”;
(d) Costs should be awarded to the plaintiff on the District Court scale;
and
(e) Costs should be awarded to the plaintiff on the High Court scale, but with certain deletions and/or reductions.
[10] The argument that costs should be awarded in favour of the defendant is based on two propositions. The first is that the plaintiff had pursued a claim for exemplary damages which was unsuccessful, and inappropriate. It involved allegations of a very serious kind which were unjustified and had not even been addressed by counsel in his closing address. Further, Mr Thwaite submitted that the pleading had only been maintained for the improper purpose of justifying retention of the claim in the High Court at a time when the claim for compensatory damages had fallen below the limitation on the District Court’s jurisdiction.
[11] An alternative argument that costs should be awarded in favour of the defendant was based on the fact that the plaintiff had abandoned the claim for
$302,628.99:2 it was submitted that this meant that the defendant had successfully challenged that element of the claim.
[12] I do not consider that these arguments justify an award of costs in favour of the defendant. The general principle set out in r 14.2(a) of the High Court Rules is that the party who fails “with respect to a proceeding” should pay costs to the party who succeeds. In this case the plaintiff succeeded in its causes of action that the defendant had failed to comply with his professional obligations, had been negligent and in breach of contract.
[13] I accept that the damages awarded were less than sought in the third amended statement of claim. Although the claim had previously sought over $300,000 in damages to reflect the judgment that had previously been entered against Mr Kim in the High Court, the quantum of the claim was appropriately reduced to reflect the fact that the Court of Appeal had delivered judgment in Mr Kim’s favour on
19 December 2012, setting aside the judgment that Mr Lee had obtained against him. The quantum of the claim for negligence and breach of contract was further reduced from $117,077.93 (as it stood when the hearing commenced) to $89,784.63. This second reduction reflected an acknowledgement that Mr Kim could recover from Mr Lee costs awarded in his favour by the Court of Appeal. The circumstances were explained in my substantive judgment at [92].
[14] I do not consider that the reduction of the quantum in successive statements of claim should disentitle the plaintiff to an award of costs to which he would otherwise be entitled. The major reduction simply reflected what the Court of Appeal eventually decided on 19 December 2012. However, the present claim had been commenced on 9 March 2012, and had appropriately sought recovery of the damages award in favour of Mr Lee for which Mr Kim remained liable at the time. That meant that the claim was properly commenced in the High Court. Leaving it in the High Court was in my view understandable especially given the fact that notice of date of hearing had been given to the parties in a letter from the Registrar dated
31 August 2012. I consider that was simply a practical course and, especially given
2 This sum had initially been sought as the amount of Mr Kim’s liability to Mr Lee in the defamation proceedings.
the history of this litigation, it was a responsible decision to leave the matter in this
Court.
[15] Mr Thwaite is, of course, correct that the claim for exemplary damages did not succeed and was not addressed by counsel in closing. I was able to deal with the claim in three short paragraphs of the substantive judgment,3 in which I applied the decision of the Privy Council in Bottrill v A,4 and held that the facts did not disclose “intentional wrongdoing or conscious recklessness”.
[16] In the result, however, the fact that the allegation was made did not add to the length of the trial. The fact that, on the evidence, the claim could not be made out was no doubt why Mr Ropati did not address it in closing. It would have been preferable for it to have been abandoned, but in the end, I do not see this issue as one that should disentitle the plaintiff to an award of damages in his favour.
[17] The second contention made by Mr Thwaite is that costs should lie where they fall. This submission is advanced on an unusual basis. It is said that the plaintiff, Mr Kim, should not have to pay costs to Brookfields, who were his solicitors at relevant times down to 27 March 2013 when Mr Ropati was instructed. Mr Thwaite contends that Brookfields seriously misconducted the case in as much as:
(a) They continued to act, although their fees were a matter of critical evidence.
(b) They had pleaded exemplary damages.
(c) They had wrongly pleaded a claim for $302,628.99 as a financial loss when no such loss had been incurred.
(d) They had failed to include in the pleadings any credit for cost orders
made in the plaintiff’s favour by the Court of Appeal against Mr Lee.
3 Above n 1, at [161]-[163].
4 Bottrill v A [2003] 2 NZLR 721 (PC).
(e) They had kept the case in the High Court when the claim for damages had been reduced, by artificially high figures for exemplary and for general damages ($50,000 was sought under each head).
(f) They thereby avoided the settlement procedures in the District Court which would have followed had the matter been transferred to that jurisdiction.
[18] None of these matters persuades me that it would be appropriate for the Court to order that costs should lie where they fall. Although part of the claim did relate to legal costs incurred by Mr Kim, the quantum of those fees was not seriously in doubt except as to the issue dealt with in the substantive judgment at [167]-[169] for which I made an allowance. Otherwise, Mr Kim incurred a liability to Brookfields for the costs and I held in the substantive judgment that it would not be proper to conclude
that the costs charged by Brookfields for the work they did were excessive.5
[19] I have already discussed and rejected the arguments based on the suggestion that the damages claim should not have extended to the judgment awarded against the plaintiff in favour of Mr Lee, and that the matter should have been transferred to the District Court, and the arguments based on the exemplary damages claim. I also reject them in the present context.
[20] The next contention is that costs should be set “on a global basis”. Mr Thwaite argues that since the costs sought amount to 56 percent of the judgment sum, they are therefore disproportionate and unreasonable. He draws attention to r 14.7(b), (c) and (g) of the High Court Rules. He submits that a fair fee should be assessed with reference to the maximum recovery sought by the plaintiff. He then notes that at its highest, in the first statement of claim, the plaintiff’s claim was for over $430,000. The costs now sought would have been 9.7 percent of that amount. Applying that percentage to the recovery ultimately obtained in the judgment, fair
costs would be $7,676.
5 Above n 1, at [173].
[21] Rule 14.7(b) refers to the property or interest at stake in the proceeding being “of exceptionally low value”. Rule 14.7(c) raises the question of whether the issues at stake were of little significance. In either case, there can be a reduction in costs. The same can apply where, under r 14.7(g) some other reason exists which justifies the Court in reducing the costs, despite the principle that the determination of costs should be predictable and expeditious.
[22] Once again, I cannot accept Mr Thwaite’s submissions. I would not characterise the matters at stake in the proceeding as being of “exceptionally low value”. Nor would I say that the issues were of little significance. The suggestion in my view is a surprising one, having regard to the findings in the judgment in relation to the professional conduct of the defendant in relation to the plaintiff, his client.
[23] The defendant’s next submission is that costs should not exceed the District Court scale. As I have said above, this claim was properly commenced in the High Court and it was reasonable for it to remain there once the claim was reduced to a level which would have been within the District Court’s jurisdiction. Having regard to the issues raised, in my opinion it was both practicable and reasonable for the claim to be left in the High Court.
[24] The final argument advanced is that any costs in favour of the plaintiff should be less than the full scale. Here Mr Thwaite submits first that the plaintiff cannot recover any sum under step 9 of schedule 3 for amended pleadings. He submits:
Defendant did not file an amended statement of defence. Rather, plaintiff filed an amended statement of claim, and defendant filed a statement of defence thereto, on two different occasions. His claim needs to be reduced by $2,388.
[25] This submission is directed to two claims for $1,194 relating to statements of reply filed by the plaintiff to amended statements of defence filed by the defendant. The statements of reply were dated 31 August 2012 and 3 April 2013 respectively and in each case there is a claim by the plaintiff for costs in accordance with category 2 band B calculated at $1,194.
[26] Mr Thwaite’s submissions overlook the fact that, if a statement of defence asserts an affirmative defence, the plaintiff is obliged by r 5.62 to file and serve a reply. A reply is by definition (r 1.3) a pleading. Step 9 in schedule 3 relates to “pleading in response to amended pleading”. Here, the amended statement of defence that Mr Oh filed on 27 August was in response to an amended statement of claim. But it pleaded 14 affirmative defences, three more than had previously been pleaded. The plaintiff was obliged to file a reply.
[27] Then, in response to the amended statement of claim filed on 18 February
2013, the defendant filed an amended statement of defence in which the number of affirmative defences had swelled to 18. Once again, the plaintiff was obliged by r 5.62 to file a reply. In my view, the sums claimed under step 9 are properly payable.
[28] Mr Thwaite’s second point under this heading is that in any event, the defendant is entitled to costs under step 9 for his statement of defence to each of the two amended statements of claim. Hence he is entitled to a reduction of an amount totalling $2,388. I infer that this submission is based on the wording of step 9 in schedule 3:
Pleading in response to amended pleading (payable regardless of outcome except where formal or consented to).
[29] The wording “payable regardless of outcome…” suggests that costs referable to an amended pleading required under the Rules are payable to the party who has to respond regardless of whether he is successful in the litigation. Here, there is no doubt that the amended statements of defence were appropriately filed. I can envisage cases where conduct of the defendant might have been responsible for the fact that an amended statement of claim was necessary, but there is no suggestion of that kind here.
[30] I conclude therefore that Mr Thwaite is correct in advancing this claim. Formally, the appropriate and practical response is to reduce the costs sought by the plaintiff by the sum of $2,388.
[31] I note that no issue has been taken with any of the disbursements claimed.
Result
[32] As a consequence of the foregoing, I direct that the defendant is to pay the plaintiff:
(a) Costs in the sum of $39,476;
(b) Disbursements in the sum of $12,809 (rounded).
[33] The total costs and disbursements payable to the plaintiff are therefore
$52,285.