Kinnon v Hong
[2022] NZHC 3499
•16 December 2022
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2021-404-30
[2022] NZHC 3499
BETWEEN DOUGLAS MURRAY KINNON and
AVRYL MARGARET KINNON as trustees of the Cedar Lodge Trust
Plaintiffs
AND
BOON GUNN HONG
First Defendant/Counterclaim Plaintiff
NOMINEES AND TRUSTEES LIMITED
Second DefendantDOUGLAS MURRAY KINNON
First Counterclaim DefendantJAALA FERNANDE DYER
Second Counterclaim Defendant
Hearing: On the papers Counsel:
MC Nicholls for the Plaintiffs and First and Second Counterclaim Defendants
BG Hong, First Defendant and Counterclaim Plaintiff in person
Judgment:
16 December 2022
COSTS JUDGMENT OF ASSOCIATE JUDGE SUSSOCK
This judgment was delivered by me on 16 December 2022 4pm
pursuant to r 11.5 of the High Court Rules Registrar/Deputy Registrar
Solicitors:
Martin Nicholls Ltd, Kerikeri
Copy to:
Boon Gunn Hong, Auckland
KINNON v HONG [2022] NZHC 3499 [16 December 2022]
Introduction
[1] The plaintiffs and counterclaim defendants (Plaintiffs) apply for costs following their successful opposition to the applications by the defendant and counterclaim plaintiff (Defendant) for leave to proceed with summary judgment applications, for security for costs and in respect of the Plaintiffs’ successful application for further and better particulars.1
[2] The Plaintiffs seek scale costs of $14,220.50 calculated on a 2B basis for all steps except the filing of the Plaintiffs’ opposition to the Defendant’s applications for summary judgment and security for costs which is claimed on a 2C basis.
Relevant costs principles
[3] The starting point is that costs are at the discretion of the Court.2 Although the discretion is wide, it is not unfettered. Rule 14.2 of the High Court Rules 2016 sets out the general principles as follows:
(a)the party who fails with respect to a proceeding or an interlocutory application should pay costs to the party who succeeds;
(b)an award of costs should reflect the complexity and significance of the proceeding;
(c)costs should be assessed by applying the appropriate daily recovery rate to the time considered reasonable for each step reasonably required in relation to the proceeding or interlocutory application;
(d)an appropriate daily recovery rate should normally be two-thirds of the daily rate considered reasonable in relation to the proceeding or interlocutory application;
(e)what is an appropriate daily recovery rate and what is a reasonable time should not depend on the skill or experience of the solicitor or counsel involved or on the time actually spent by the solicitor or counsel involved or on the costs actually incurred by the party claiming costs;
(f)an award of costs should not exceed the costs incurred by the party claiming costs;
(g)so far as possible the determination of costs should be predictable and expeditious.
1 Kinnon v Hong [2022] NZHC 1828.
2 High Court Rules 2016, r 14.1.
[4] The Court has previously determined that the proceeding is category 2 for the purposes of costs as provided for by r 14.3.
[5] Rule 14.5 then provides that a reasonable time for each step is as set out in Schedule 3 of the High Court Rules by reference to three bands, A, B or C depending on whether a comparatively small, normal or large amount of time is considered reasonable for each step.
[6] The Court of Appeal has held that a blanket approach to time bands is neither desirable nor permissible under the Rules.3 However a party contending for a time band other than B must demonstrate why a normal amount of time is not appropriate.4
[7] In determining what is normal in comparison to a comparatively small or large amount of time, the Court may consider:5
(a)the scope of facts that are material to the issue;
(b)the degree of difficulty in identifying the law relevant to the issue; and
(c)the number and complexity of the arguments by both sides applying the law to those facts.
[8] In Minister of Education v James Hardie New Zealand, the Court held that especially in interlocutory applications the focus ought to be on the complexity of the issues and the time involved in formulating arguments, not ordinarily on the length of the written synopsis.6
Discussion
[9] From Mr Hong’s memorandum, it appears he specifically disputes three aspects of the costs sought by the Plaintiffs:
3 Paper Reclaim Ltd v Aotearoa International Ltd [2007] NZCA 544, (2007) 18 PRNZ 743 at [35].
4 Commissioner of Inland Revenue v Chesterfields Preschools Ltd [2010] NZCA 400, (2010) 24 NZTC 24,500 at [161] and [164]; and Holdfast NZ Ltd v Selleys Pty Ltd (2005) 17 PRNZ 897 (CA) at [44].
5 TSB Bank Ltd v Dollimore (no 2) [2016] NZHC 253 at [8]; and Commissioner of Police v Salter
[2021] NZHC 2164 at [10].
6 Minister of Education v James Hardie New Zealand [2018] NZHC 2960 at [16].
(a)that item 23 should be awarded on a 2C rather than a 2B basis;
(b)the length of the hearing; and
(c)the claim for costs in relation to the Plaintiffs’ application for further and better particulars.
[10]I discuss each of these below.
Item 23 — 2C or 2B?
[11] Item 23 in Schedule 3 is for “filing of opposition to interlocutory application”, As set out above, the Plaintiffs claim time Band B for all items except item 23. The Plaintiffs claim Band C for this item which allows two days compared to Band B which only allows 0.6 of a day.
[12] The Plaintiffs submit that costs ought to be awarded on a 2C basis for item 23 for the following reasons:
(a)the preparation of affidavits in support of the opposition to interlocutory applications are included within steps 22 or 23 of Schedule 3 of the High Court Rules 2016;7
(b)the facts that were material to the issues relevant to the interlocutory applications were extensive;
(c)the Defendant’s application for summary judgment and security for costs contained a large number of complex legal arguments;
(d)there was considerable difficulty for the Plaintiffs in replying to all of the facts raised by the Defendant;
(e)it is appropriate to apply Band C when an objective assessment of what was required for the Plaintiffs to complete step 23 is made;
7 Tandem Group Ltd v ASB Bank Ltd [2021] NZHC 1135 at [13]–[23].
(f)the learned authors of The Law of Costs in New Zealand, support the view that for applications requiring more than basic affidavits there should be little reluctance in awarding costs at Band C (2 days) for either steps 22 or 23;8 and
(g)the affidavits prepared by the Plaintiffs were considerably more than just basic.
[13] In response the Defendant, Mr Hong, says that the claim for costs on a Band 2C basis is unmeritorious. In Mr Hong’s submission, his affidavit was lengthy because it outlined all that was relevant between the parties. In Mr Hong’s view the Plaintiffs’ affidavits ignored and did not specifically reply to each of his statements. They merely denied all without details or supporting evidence. Mr Hong describes the affidavits in reply to his affidavit as only very basic, 12 pages with exhibits that Mr Hong says had already been included.
[14]I consider that it is appropriate to award costs on a 2C basis for item 23.
[15] As recorded in my judgment, the background to these proceedings is relatively complex. Mr Hong is a former lawyer who has been struck off after being found guilty of three charges of misconduct in relation to his actions in representing the counterclaim defendants. 9
[16] The omnibus interlocutory application filed by Mr Hong and his affidavit in support were very difficult to follow. The discussion of the factual issues in dispute and the counterclaim in the judgment show that the scope of facts that were material to the issues before the Court were extensive. 10
[17] In my view the task of working out the basis for the Defendants’ summary judgment applications would have been comparatively large compared to other interlocutory applications. The degree of difficulty in identifying the law relevant to
8 David Bullock and Tim Mullins The Law of Costs in New Zealand (LexisNexis, Wellington, 2022) at 54-55.
9 Kinnon v Hong [2022] NZHC 1828 at [33].
10 See discussion in original judgment Kinnon v Hong, above n 9, at [33] to [52].
those issues and the number and complexity of the arguments raised by the Defendant would have required significantly more than the normal amount of time.
[18] I consider therefore that it is clearly appropriate for costs to be awarded on a 2C basis in respect of the filing of the opposition and affidavits.
Hearing time
[19] Mr Hong disputes the hearing time claimed of 0.75 of a day on the basis that the hearing finished at 1.40pm and so only 0.5 of a day ought to have been claimed. I accept the claim for 0.75 of a day as, effectively, the first session of the afternoon was required (as counsel for the Plaintiffs set out in his email correspondence with Mr Hong prior to memoranda being filed).
Application for further and better particulars
[20] The final matter that Mr Hong raises is that he abided the decision of the Court in respect of the Plaintiffs’ notice for further and better particulars. Mr Hong submits that costs cannot therefore be awarded against him in respect of his application, referring to Wang v North Shore District Court (No 3).11 In Wang, Woolford J in fact held after discussing a number of earlier judicial review proceedings:12
The inference from the cases discussed above is that where the defendant abides the Court’s decision and does not adopt an unreasonable position, they will not necessarily be required to bear the full costs of court proceedings.
[21] In Kawarau Jet Services Holdings Ltd v Queenstown Lakes District Council, French J, after referring to comments of Chambers J in The Beach Road Preservation Society Inc v Whangarei District Council,13 held:14
[18] In so far as these comments could be interpreted as meaning that a person who abides the decision of the Court can never been liable for any costs, I must respectfully disagree. That would be too absolute a proposition. Ultimately, the task of the Court is to make an assessment of overall justice as between particular parties …
11 Wang v North Shore District Court (No 3) [2015] NZHC 1611, [2015] NZAR 1678.
12 At [26].
13 The Beach Road Preservation Society Inc v Whangarei District Council (2001) 16 PRNZ 13 (HC) at [21].
14 Kawarau Jet Services Holdings Ltd v Queenstown Lakes District Council HC Invercargill CIV- 2008-425-518, 19 May 2009.
[22] This is consistent with r 14.1 of the High Court Rules, that all matters are at the discretion of the Court as they relate to costs. Considering the overall justice as between the parties in this case, if the Plaintiffs had not filed the application for further and better discovery then the appropriate discovery by the Defendant would not have been undertaken. Although Mr Hong submits that he abided the decision of the Court, the discovery application was necessary and took some time to discuss and negotiate with Mr Hong at the case management conference and in the memoranda filed in advance of the conference to reach a practical solution.
[23] In these circumstances I consider it is appropriate for Mr Hong to bear the costs of the filing of the application. Because Mr Hong abided the decision of the Court, it is appropriate for costs to be claimed on a 2B basis. If he had not abided the decision of the Court, an award on a 2C basis may have been more appropriate.
Disbursements
[24] No issue is raised with the disbursements claimed by the Plaintiffs. I consider that they are reasonable and appropriately claimed.
Conclusion
[25] For the reasons set out above, I hold that the costs and disbursements claimed by the Plaintiffs are appropriately claimed and ought to be ordered against the Defendant.
Result
[26] The defendant and counterclaim plaintiff, Mr Hong, is to pay costs to the plaintiffs and counterclaim defendants on a combined 2B and 2C basis in the amount of $14,220.50 plus disbursements of $663.00.
Associate Judge Sussock
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