Li v Commissioner of Police
[2022] NZHC 961
•6 May 2022
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2019-404-002225
[2022] NZHC 961
BETWEEN ZHIWEI LI
First Plaintiff
AA TAXATION & ACCOUNTING SERVICE LIMITED
Second Plaintiff
AND
COMMISSIONER OF POLICE
First Defendant
COMMISSIONER OF INLAND REVENUE
Second Defendant
Hearing: On the papers Judgment:
6 May 2022
JUDGMENT OF WYLIE J
[Costs]
This judgment was delivered by Justice Wylie On 6 May 2022 at 3.00 pm
Pursuant to r 11.5 of the High Court Rules Registrar/Deputy Registrar
Date:…………………………
Solicitors/counsel:
Zhang Law/Y Mortimer-Wang, Auckland
Crown Law, Wellington/K Hogan, Auckland Meredith Connell, Auckland
H Lanham and R Langdana, Auckland
LI v COMMISSIONER OF POLICE [2022] NZHC 961 [6 May 2022]
Introduction
[1] I refer to my substantive judgment dated 18 March 2022.1 I declined to grant any of the three declarations sought by the plaintiffs, Mr Li and AA Taxation & Accounting Service Ltd (AA Taxation). I granted two of the four declarations sought by the second defendant, the Commissioner of Inland Revenue (the CIR). I observed that the Commissioner of Police (the COP) and the CIR were the successful parties in the proceedings and that they were entitled to their reasonable costs and disbursements as against Mr Li and AA Taxation.
[2]Counsel have been unable to agree costs and have filed memoranda.
Submissions
[3] The COP seeks costs in the sum of $31,135.05 (exclusive of GST). Costs calculated on a 2B basis in accordance with the High Court Rules 2016 total
$35,160.90 but, in accordance with r 14.2(f), the COP only seeks costs in the sum of
$31,135.05, being the costs actually incurred by him.
[4]The CIR seeks costs on the following bases:
(a)jointly with the COP, $8,126;
(b)separately from the COP, costs of $27,485 and disbursements of
$897.60.
[5] Mr Li and AA Taxation submitted that costs should be calculated on a 2B basis and that only one set of costs should be awarded in favour of both the COP and the CIR. Ms Mortimer-Wang, on their behalf, accepted that costs on a 2B basis have been properly calculated and that they are in the sum of $35,610.90, and that the disbursements claimed by the CIR have also been properly calculated. She nevertheless sought a 25 per cent reduction to reflect the context in which the
1 Li v Commissioner of Police [2022] NZHC 514.
proceedings were brought and argued that the appropriate award should be $26,708.18 for costs and $897.60 by way of disbursements in favour of both the COP and the CIR.
Analysis
[6] Costs are at the discretion of the Court.2 The discretion is not however unfettered. It is qualified by the applicable costs rules and its exercise must be consistent with established principles.3
[7] Relevantly, a party who fails with respect to a proceeding should pay costs to the party who succeeds. Here, as I have already found, Mr Li and AA Taxation failed with respect to their proceeding. They also failed in resisting two of the four declarations sought by the CIR. Ms Mortimer-Wang did not suggest to the contrary.
[8] It was also common ground that costs should be fixed on a 2B basis. Both the COP and the CIR noted that the proceedings were complex and that they raised novel issues. They argued that aspects of the proceeding could properly be fixed on a band C basis; both nevertheless accepted that overall, costs should be fixed on a 2B basis. Ms Mortimer-Wang accepted that this was appropriate. As already noted, there was also no dispute that costs, fixed on a 2B basis, total $35,610.90 and that disbursements of $897.60 have been incurred – at least by the CIR.
[9] The primary point of difference between the parties related to the application of r 14.15. It provides as follows:
14.15 Defendants defending separately
The court must not allow more than 1 set of costs, unless it appears to the court that there is good reason to do so, if—
(a)several defendants defended a proceeding separately; and
(b)it appears to the court that all or some of them could have joined in their defence.
2 High Court Rules 2016, r 14.1.
3 Manukau Golf Club Inc v Shoye Venture Ltd [2012] NZSC 109, [2013] 1 NZLR 305 at [7] and [16].
[10] The aim is to minimise costs by shortening a hearing where a joint defence can reasonably be expected.4 Various principles have been adopted by the Courts, including the following:5
(a)the Court will look in a realistic way at whether the parties have common or overlapping interests, and if so, to what extent. A consideration is the extent to which separate cases were run against and separate relief sought from each defendant, and whether the impact on the defendants of granting that relief would have been identical or different;
(b)The Court can consider whether a conflict of interest was likely in terms of the way the plaintiffs ran their case, and/or whether the defendants’ relationship was such that they were justified in remaining at arm’s length from each other; and
(c)The Court can consider the extent to which one party did or could have relied upon the evidence or submissions of another.
[11] Here, the CIR accepts that a single order for costs is appropriate in respect of the various case management steps which were taken. The COP did not expressly comment on this issue, but it is implicit from the submissions filed that the COP does not agree.
[12] In my view, the stance taken by the CIR is appropriate and responsible. At the case management level, the defendants had a common interest and there was no conflict between their respective positions.
[13] Separate cases were however brought against each defendant. Both were required to file separate statements of defence. Further, both were required to attend to discovery and inspection. Each had to file affidavits from separate deponents of matters within their knowledge. The CIR was not a party to the settlement agreement
4 Andrew Beck (ed) McGechan on Procedure (online looseleaf, Thomson Reuters) at [HR14.15.01].
5 Independent Māori Statutory Board v Auckland Council [2017] NZHC 678 at [9]; and see Beck, above n 4, at [HR14.15.02].
or involved in any of the settlement negotiations. The COP was the only defendant who could provide evidence of what transpired in the proceeds of crime proceedings, in relation to settlement and in relation to its ultimate approval by the Court. The CIR had to provide separate evidence of her involvement, which only commenced in May 2017 when voluntary disclosure was made by Mr Li and AA Taxation. The CIR and her officers were involved in the investigation which led to the amended assessments and separate evidence was required from them in this regard. The CIR was also required to obtain evidence from the Official Assignee to address specific allegations made by Mr Li and AA Taxation against the CIR relating to the role of the Assignee.
[14] I am satisfied that it would not have been possible for either the COP or the CIR to have relied on the evidence of the other alone and that there was no significant duplication in the evidence that was filed.
[15] There was however an overlap in the submissions which were filed. Both the COP and the CIR filed submissions relating to their different roles. Both filed submissions as to the appropriate interpretation of the settlement agreement. There was significant overlap in these submissions and there was no conflict in the positions taken by the defendants.
[16] In my view, r 14.15 should be applied in relation to these aspects of the submissions. The defendants could have joined forces in regards to these issues and filed common submissions. However, other submissions made both by the COP and by the CIR went beyond those made by the other. By way of example, the CIR advanced her own applications for declarations by way of counterclaim and the COP did not address these issues.
[17] Despite Ms Mortimer-Wang’s submissions to the contrary, I can see no reason to reduce the costs otherwise payable. None of the grounds set out in r 14.7 applies. The proceedings had a number of inherent flaws and Mr Li and AA Taxation were largely the authors of their own misfortune. The Court was confined by the proceedings and the resulting judgment was constrained as a result.
[18]In my view:
(a)there should be a single costs order in respect of the various case management steps. These steps, calculated on a 2B basis, attract an award of $8,126 or $4,063 each;
(b)the COP and the CIR should each be entitled to costs, calculated on a 2B basis, in respect of the filing of their respective statements of defence, the listing and inspection of relevant documents, and the preparation and filing of their respective affidavits. These costs, on a 2B basis, total $19,120;
(c)the costs of preparing submissions and appearing at the hearing, assessed on a 2B basis, come to $8,365. Fifty per cent of these costs should be dealt with by way of costs orders in favour of both the COP and the CIR ($2,091.25 each). There should be separate costs orders of
$4,182.50 (being 50 per cent of the total cost incurred on a 2B basis) in favour of both the COP and the CIR; and
(d)the COP and the CIR should each be entitled to the disbursements incurred for filing fees – $469.56 to the CIR for filing her statement of defence and counterclaim, and $110 to the COP for filing his statement of defence. Additional disbursements are claimed by the CIR in the sum of $428.04. I have no information in relation to any additional disbursements incurred by the COP.
[19] Accordingly, I make costs orders against Mr Li and AA Taxation on a joint and several basis as follows:
(a)in favour of the COP: $29,456.75 (being $4,063, $19,120, $2,091.25 and $4,182.50) together with disbursements of $110; and
(b) in favour of the CIR: $29,456.75 together with disbursements of
$897.60.
Wylie J
0
3
0