Koyama v Southern Response Earthquake Services Limited
[2015] NZHC 1134
•26 May 2015
IN THE HIGH COURT OF NEW ZEALAND DUNEDIN REGISTRY
CIV-2014-412-202 [2015] NZHC 1134
BETWEEN TATSUHIKO AND AIKO KOYAMA
Appellants
AND
SOUTHERN RESPONSE EARTHQUAKE SERVICES LIMITED Respondent
Hearing: 26 May 2015
(On the papers)
Date:
26 May 2015
JUDGMENT OF MANDER J
[1] In my judgment of 23 March 2015, I declined the appellants’ further application for an extension to comply with an unless order made on 12 March
2015.1 As a result of the failure by the appellants to comply with the unless order by
the stated deadline of 5.00 pm on 20 March 2015, their appeal was struck out.
[2] The respondent now makes application for costs, both in relation to the appeal and its successful application for an unless order made in the wake of the appellants’ non-compliance with the Court’s procedural orders for the hearing of the appeal.
The respondent’s application
[3] In reliance on r 14.6 of the High Court Rules, the respondent seeks to invoke the Court’s jurisdiction to order an unsuccessful party to pay indemnity or increased costs. It is the respondent’s submission that the appellants conduct contributed
unnecessarily to the time and expense of the proceeding after they breached the
1 Koyama v Southern Response Earthquake Services Ltd [2014] NZHC 537.
KOYAMA v SOUTHERN RESPONSE EARTHQUAKE SERVICES LIMITED [2015] NZHC 1134 [26 May
2015]
timetabling orders and refused to remediate the situation, instead seeking a stay of their own appeal.
[4] Costs are sought on a 1B scale basis for all steps taken in relation to the appeal until 9 February 2015. Indemnity costs are sought for all subsequent steps. Disbursements are also sought. In total the respondent seeks $12,009.
[5] Under r 14.6(4)(b), the Court may order a party to pay indemnity costs if that party has ignored or disobeyed an order or direction of the Court. It is incontestable that the appellants failed to comply with the timetable directions made by Gendall J on 17 December 2014. The procedural history leading to the making of the unless order was set out in my minute of 13 March 2015. For convenience, I repeat that history:
[2] By a minute of 17 December 2014, Gendall J set this appeal down for a half day hearing in the Dunedin High Court on 1 April 2015. Security for costs on the appeal were set at $660, and that amount was to be paid by the appellants within 10 working days. Leave was granted for the appeal to be brought out of time, and timetable directions made. These included a requirement that within 10 working days, the appellants file and serve points on appeal that clearly state the issues on appeal. Other timetable directions of the usual type were also made.
[3] On 14 January 2015, the appellants filed a memorandum which sought a stay of the appeal proceeding. This was dealt with by Gendall J in a minute of 9 February 2015. He ruled that no stay of the appeal would issue and that the appeal hearing should proceed without delay. At that time, Gendall J observed in his minute that the timetable directions which he had issued in his minute of 17 December 2014 (and to which no objection had been raised at the time) remained to be complied with. Gendall J also observed that the appellants had still to pay security for costs on the appeal of $660 as he had earlier ordered.
[4] A renewed application for a stay by the appellants was dealt with by Gendall J in his minute of 16 February 2015. He again declined to stay the hearing of the appeal and confirmed the fixture for 1 April 2015. Notwithstanding these rulings, the appellants made a further request for a stay of the proceeding, filed a complaint against Gendall J with the Judicial Conduct Commissioner, and requested that he recuse himself from any further involvement. In a minute of 23 February 2015, Gendall J declined to recuse himself, however, in light of the complaint, chose to stand aside to allow further directions in respect of this matter to be considered by another Judge.
[5] In the wake of Gendall J’s minute of 23 February, a further memorandum was filed by the appellants requesting a stay of the proceedings. The Court also received the respondent’s application for an
unless order against the appellants, based on their failure to pay the required scheduling fee, to pay security for costs, and file their points on appeal.
[6] I dealt with these matters in a minute of 26 February 2015. The appellants’ request for a stay of proceeding was declined. In respect of the application for an unless order, I observed that the appellants were clearly, on the face of the record, in breach, and that it would be necessary to convene a telephone conference in order to provide the appellants an opportunity to explain their non-compliance. Mindful of the hearing of the appeal being set for 1 April 2014, I noted the obvious urgency associated with addressing the appellants’ defaults.
[7] There were difficulties in arranging the telephone conference, the reasons for which I set out in a further minute of 5 March 2015. In the absence of the appellants being willing to make themselves available to be heard on the respondent’s application, I ruled that the matter would have to be dealt with by way of memorandum. I directed the appellants to serve and file any submissions they may wish to make in writing in explanation of their non-compliance by close of business on 11 March 2015, and provided the respondent with an opportunity to reply in writing. I have now received submissions from both parties.
[6] On receipt of the parties’ submissions, I concluded that the appellants had failed to provide any reason for their default. In the absence of any procedural compliance by the appellants in respect of the prosecution of their appeal, I observed that the respondent was prejudiced. The submissions that were filed by the appellants did not provide an explanation for their non-compliance, nor did it provide any reasonable excuse able to be weighed in opposition to the respondent’s application for the unless order.
[7] At no time did the appellants seek to address their defaults. The appellants made successive applications for their appeal to be stayed. Each application was declined. By minute of 17 March, I warned the appellants their appeal was “in jeopardy as a result of their lack of procedural compliance”, and confirmed that the appeal would be struck out if they did not comply by the deadline of the unless order.
[8] The respondent submits that from the point Gendall J declined the appellants’ first application for a stay of the appeal, on 9 February 2015, it was unreasonable for them to continue to seek a stay of proceedings and not comply with the timetable directions. The making of the unless order made no difference to the approach taken by the appellants, who ignored the orders made by the Court and refused to accept the Court’s decision(s) regarding their applications for stay. The application for the
unless order was entirely reasonable in the circumstances, and the making of the order inevitable. It resulted in no change in the appellants’ position.
[9] As an alternative to the Court awarding indemnity costs, the respondent seeks costs on a scale 1B basis for all steps taken in relation to the appeal up until 9
February 2015, with an uplift of up to 50 per cent for all steps thereafter, plus disbursements, totalling $7,430. In the absence of the Court being willing to award either indemnity or increased costs, it seeks costs on a 1B basis, plus disbursements, totalling $5,780.
[10] Rule 14.6(3) allows the Court to order a party to pay increased costs if:
(b) The party opposing costs has contributed unnecessarily to the time or expense of a proceeding or a step in it by –
(i) failing to comply with … a direction of the court; or
…
(d) Some other reason exists which justifies the Court making an order for increased costs despite the principle that the determination of costs should be predictable and expeditious.
[11] The respondent submits that demonstrably the appellants failed to comply with the directions of the Court, and that r 14.6(3)(b)(i) is clearly satisfied. The respondent further submits that the appellants have contributed unnecessarily to the time and expense of the appeal by filing successive applications for a stay, notwithstanding the Court having earlier declined such applications. In that regard, it is noted that Gendall J refused to grant a stay, by minute dated 9 February 2015, yet the appellants went on to formally request, on no less than four further and separate occasions, a stay of their own appeal.
[12] Rather than comply with the unless order, or abandon their appeal, the appellants, on the eve of the triggering of the unless order, made application for an extension of that deadline. Given the proximity of the fixture date to the hearing of the appeal, this essentially amounted to a further application to have their appeal stayed. After the first application for an extension was declined, the appellants filed yet a further application for an extension on the day of the deadline, 20 March.
Further written submissions in relation to the reviewed application were filed on
22 March (two days after the deadline), before a teleconference was held on 23
March.
[13] The respondent makes the point that the filing of those successive applications contributed unnecessarily to the time and expense of the appeal because counsel for the respondent was required to respond to each of the applications and file memoranda, in addition to attending the teleconference.
The appellants’ response
[14] The appellants’ memorandum in reply to the respondent’s costs application largely comprises a chronology starting from receipt of notice of the date for the hearing of the appeal and a notification of the need to pay the scheduling fee and hearing fee by 30 January 2015. Thereafter, there are references to the receipt of the respondent’s application for an unless order and submissions in support, and the filing by the appellants of an appeal to the Court of Appeal against my decision of 23
March declining the appellants an extension of time. In the main, however, most of the narrative concerns the appellants’ dispute with the respondent and EQC, relating to the appellants’ substantive proceeding in the District Court. The appellants repeat allegations of fraud which are irrelevant both to the appeal to this Court, relating as it did to procedural interlocutory decisions, and to the issue of costs arising from the appellants’ non-compliance with this Court’s orders and the making of the unless order.
[15] The appellants have also submitted that because of their right to appeal the decision of this Court, the respondent’s costs application should be stayed until “the completion of the judicial process in the Court of Appeal”. The appellants submit that the costs application is an abuse of process by the respondent because it was made when it had notice of their appeal to the Court of Appeal. The appellants further submit that the issue of costs should not be determined until they have received information requested from Ministers of the Crown and the respondent regarding their insurance claim, and allegations and issues arising from it which are the subject of litigation in the District Court.
[16] The appellants further submit the costs application constitutes intimidation, and violation of their rights under the New Zealand Bill of Rights Act 1990 (NZBORA), the International Covenant on Civil and Political Rights (ICCPR) and at common law. Further, the cost application by the respondent is said to be a violation of the Crimes Act. Various sections of the Crimes Act are cited, in respect of the allegation that the respondent is seeking to prevent an investigation of alleged crimes of fraud, forgery and perjury.
Decision
[17] The principles to be applied in relation to an application for costs are well- known. Costs are at the discretion of the Court,2 however, there are a number of general principles which will apply when determining such an issue.3 In the ordinary course, costs follow the event. There is an expectation that the party who fails with respect to a proceeding should pay costs to the party who succeeds. There
is to be predictability and consistency in the determination of the fixing and payment of costs in the absence of some reason to the contrary, or justification for departure. The detailed costs rules create a strong implication that costs will be awarded in the normal course of events, and that any departure should constitute a considered and particularised exercise of discretion.4
[18] The starting point in considering the question of costs in the present case is that the proceeding in question was brought by the appellants. It was their appeal from interlocutory procedural rulings by the Dunedin District Court. The appellants’ default arose from their failure to comply with directions made at a case management conference, at which one of the appellants appeared in person as a self- represented litigant. Unusually, the appellants’ response to their non-compliance was to make successive applications for their appeal to be stayed. The first application was refused by Gendall J, by minute of 9 February 2015. There is nothing in the subsequent applications made by the appellants to suggest any previously
unrecognised merit or change in circumstance which required the Court to review its
2 High Court Rules, r 14.1.
3 Rule 14.2.
4 McGechan on Procedure (online looseleaf ed, Brookers) at [HR 14.1.02(1)].
earlier decision(s). The applications were unmeritorious and were dismissed accordingly.
[19] From a review of the history of the matter, it is apparent that the appellants had no intention of complying with the procedural requirements they were obliged to meet in respect of their appeal. The appellants throughout have failed to provide any explanation or excuse for their non-compliance. However, rather than abandon the appeal, the appellants insisted on making successive applications for their appeal to be stayed.
[20] A similar course was adopted in respect of the respondent’s application for an unless order. No attempt was made to comply with their outstanding procedural obligations, nor to explain and provide reasons or excuse for their failure. Rather, successive applications were made for an extension of the deadline of the unless order, which in effect became a de facto application for the appeal to be stayed given the imminent fixture date for the hearing of the appeal. The appellants at no stage indicated when they would comply with their procedural obligations. The appeal was accordingly struck out.
[21] The appellants in the memorandum opposing the costs application, again, fail to address their non-compliance with what was required of them as the appellants in this proceeding. No attempt is made to explain or provide reasons for failing to comply with the orders of Gendall J made at the case management conference in December.
[22] The appellants have submitted that the costs application made in the wake of their filing of a notice of appeal to the Court of Appeal constitutes an abuse of process and, with echoes of their earlier approach to the appeal to this Court, have submitted that the respondent’s cost application be stayed. Apart from the fact that a notice of appeal has been filed, no other reason has been put forward as to why the filing of an appeal should prevent the making of an award of costs in the ordinary way. That fact alone is insufficient to prevent the consideration of an award of costs to a successful party.
[23] I reject the appellants’ submission that the costs application represents intimidation or a breach of the appellants’ rights. Part 14 of the High Court Rules provides a scheme by which costs arising on a proceeding, or a step in that proceeding, are to be assessed and determined as a matter of discretion by the Court. The respondent was, at the appellants’ initiative, required to respond to their appeal, and its application for an unless order, as a result of the appellants’ continuing failure to comply with their procedural obligations, was a step available to the respondent in the face of the appellants’ non-compliance. Similarly, the assertion that the respondent’s application for costs could constitute criminal conduct under the Crimes Act is baseless.
[24] The appellants’ request that the costs application be stayed until information requested from Ministers of the Crown, and from the respondent, is received repeats the misconceived approach taken by the appellants to delay the hearing of their earlier appeal. The matters raised by the appellants did not bear upon the appeal to this Court, which, as observed, related to interlocutory procedural decisions. Similarly, the requested information is immaterial to the respondent’s application for costs.
[25] The respondent’s entitlement to costs on a 1B basis for all steps taken up to
9 February 2015, being the date when Gendall J refused the appellants’ first application for a stay, is indisputable. The issue that requires closer examination is whether an award for increased or indemnity costs should be made under r 14.6.
[26] As I have noted, an award of indemnity costs can be made where a party has ignored or disobeyed an order or direction of the Court.5 The appellants’ failure to comply with the timetable directions and its procedural obligations was manifest. The default was deliberate and, as I found in my judgment of 23 March 2015, the appellants had no intention of complying. No reason was put forward as to why security of costs and the scheduling fee were not paid, nor why they failed to file their points on appeal as required. The appellants simply ignored previous rulings, and chose to make hopeless successive applications, choosing to ignore the
observations of the Court, which bore on the merit of what they were seeking to
5 High Court Rules, r 14.6(4)(b).
achieve. At no stage did the appellants seek to remedy their defaults or explain them. The precondition for an award of indemnity costs has been established, however, it remains a matter of discretion for the Court.
[27] The alternative basis put forward by the respondent is that increased costs above the scale should be imposed in respect of the period after the appellants’ application for a stay was refused by Gendall J on 9 February. A party may be ordered to pay increased costs if they have contributed unnecessarily to the time or expense of the proceeding by failing to comply with a direction of the Court, or there is some other reason which justifies the Court departing from the normal principle that the determination of costs should be predictable and expeditious.
[28] I am well satisfied that the appellants failure to comply with the Court’s directions have unnecessarily contributed to the time or expense of this matter. The appellants have filed successive applications, either for a stay of their own appeal, or for extensions of the deadline for the unless order. It should be remembered that the making of an unless order is an order of last resort, and the appellants were provided with numerous opportunities to meet their obligations. Their failure to appreciate their responsibility to prosecute their own appeal in accordance with the rules and directions of the Court were ignored. The response by the appellants to an adverse ruling was to make repeated and unmeritorious applications which were required to be responded to by the respondent. I am therefore satisfied that the prerequisites under r 14.6(3), which would warrant an order that the appellants pay increased costs, has been satisfied.
[29] Costs on a 1B basis for all steps taken up until 9 February when combined with indemnity costs for the steps required to be taken by the respondent after that date, being actual costs reasonably incurred, together with the filing fee for the interlocutory application for the unless order, amount to $12,009.
[30] Costs calculated on a 1B basis for all steps, with a 50 per cent uplift taken from 10 February 2015, amounts to $7,430, inclusive of the filing fee disbursement. An award of costs on a 1B basis at the appropriate daily recovery rate of $1,320, in the absence of any uplift, would amount to $5,280.
[31] In my view, the appropriate course is to allow costs on a scale 1B basis for all steps taken in relation to the appeal up until 9 February 2015, with an uplift of
50 per cent for all steps taken thereafter, together with disbursements.
[32] While a sufficient basis for an award of indemnity costs has been established, in the exercise of my discretion, it is my view that an increased award of costs is a more appropriate means to reflect the way in which the appellants’ conduct has contributed unnecessarily to the time and expense of the proceeding. By failing to comply with the directions of the Court and wilfully refusing to accept the Court’s decisions regarding the appellants’ applications for stay or extension of the deadline for the unless order, the appellants repeatedly caused the unnecessary expenditure of time and money. The appellants’ successive and unmeritorious applications and the repetition of argument that accompanied those applications required issues already canvassed to be revisited, and the incurrence of needless time and cost.
[33] Accordingly, I make an order that the appellants are to pay the respondent costs on a scale 1B basis for all steps taken in relation to the appeal up until
9 February 2015, plus an uplift of 50 per cent for all steps taken thereafter, plus disbursements, in the total sum of $7,430. A breakdown of those costs and their calculation is provided in the attached “SCHEDULE 2”, as originally annexed to the respondent’s submissions on costs.
Solicitors:
DLA Phillips Fox, Auckland
Copy to Appellants