Li v Li
[2017] NZHC 2984
•4 December 2017
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2016-404-090 [2017] NZHC 2984
BETWEEN XING LI
Plaintiff
AND
YUE LI
First DefendantJING CHEN Second Defendant
YHUA LU
Third DefendantXIAOAN CHEN Fourth Defendant
CIV-2015-404-3185
BETWEEN PING LUI Plaintiff AND
YUHUA LU First Defendant
Continued over page…
Hearing: On the papers (Submissions 24 and 30 November 2017) Appearances:
N J Scampion for the Plaintiffs
WGC Templeton for the DefendantsJudgment:
4 December 2017
COSTS JUDGMENT OF MUIR J
This judgment was delivered by me on Monday 4 December 2017 at 4.00 pm pursuant to Rule 11.5 of the High Court Rules.
Registrar/Deputy Registrar Date:…………………………
LI v LI [2017] NZHC 2984 [4 December 2017]
XIAOAN CHEN Second Defendant
JING CHEN Third Defendant
YUE LI
Fourth Defendant
Counsel/Solicitors:
N J Scampion, Barrister, Auckland
WGC Templeton, Barrister, Auckland
[1] On 20 September 2017 I delivered a judgment declining the defendants’ application for an order debarring Ms Royal Reed, solicitor, from acting for the plaintiffs’ in the proceedings.
[2] At the conclusion of the judgment I awarded costs to the defendants on a 2B
basis, inviting memoranda if they could not be settled by agreement.
[3] Extensive memoranda have now been filed. The parties cannot agree on an appropriate 2B calculation and the plaintiffs further seek an uplift on whatever sum is ultimately assessed to be payable.
Preliminary issue
[4] My judgment makes a determination as to costs which the defendants say is final. As the plaintiffs point out, however, r 14.8(2) gives the Court power to vary an order if satisfied that it should not have been made. If the plaintiffs can now satisfy me that the original order was inappropriate I have jurisdiction therefore to reconsider it. In this case one of the grounds on which the application for increased costs proceeds is unreasonable failure to accept an offer without prejudice save as to costs of which I was unaware in making my costs order. If satisfied that the failure was unreasonable then this would be one example of where the r 14.8(2) jurisdiction was appropriately engaged.
[5] I consider the correct approach is therefore to fix costs on a 2B basis and then consider whether the original 2B order or some different order should have been made.
2B costs
[6] The parties are in agreement in respect of the application of steps 23 (filing opposition), 24 (preparation of written submissions) and 26 (appearance at hearing). On a 2B basis the total award for these steps is $6,355.50.
[7] In addition the plaintiffs claim for three memoranda on the basis of 0.4 a day each by analogy with step 11 (filing memoranda for first or subsequent case
management conference or mentions hearing) and 2.5 days for preparation of affidavits.
[8] In respect of interlocutory applications Schedule 3 does not provide specific allocations for memoranda or for affidavit preparation. That being the case, r 14.5 provides that a reasonable time is to be determined by analogy or, if no analogy can be usefully made, the time should be assessed according to what was likely to be required for the particular step.
[9] The three memoranda comprise:
(a) A brief joint memorandum regarding counsel availability and the need to reschedule the fixture.
(b) Two memoranda invited by me during the hearing.
[10] I do not allow for the memoranda filed in response to my inquiries. There is no analogy to be had with step 11 and the memoranda were of and incidental to the hearing. The first (31 August) covered matters relating to disclosure of documents raised by me in argument and which counsel considered he needed to confirm instructions on. The second (19 September) was in response to my inquiry whether Ms Reed wished to reflect on the oral argument before confirming her intention to appear at any ultimate trial.
[11] In respect to the brief joint memorandum again there is no useful analogy with the Schedule. On the basis of the time likely to be required for the particular step, 0.2 of a day would be a generous allocation.
[12] In terms of preparation of affidavits I am unpersuaded that step 30 (preparation of briefs or affidavits for trial) is an appropriate analogy. This was an interlocutory application. The scope of the evidence was narrow and quite unlike that typically engaged in a trial. Two modest affidavits were filed, one of six pages, by Ms Reed and one of two pages by her Practice Manager. The balance of what Mr Scampion
refers to as Ms Reed’s “83 page affidavit” was exhibits including relevant trust documents and agreements.
[13] Based on what was likely to be required for this step I consider a 1.5 day allocation appropriate.
[14] In the result, I assess 2B costs at $10,146.50 on the following basis:
Steps Description Days 23 Filing opposition 0.6 24 Preparation of submissions 1.5 26 Appearance at hearing 0.75 Memorandum
Preparation of affidavits
0.2
1.5
Total costs (4.55 days at $2,230 per day) $10,146.50
Are increased costs appropriate?
[15] The plaintiffs say that the application lacked merit, was delayed and tactical and that there was a failure without reasonable justification to accept an offer of settlement. A 50 per cent uplift is sought.
[16] The defendants point to criticisms made by me of Ms Reed in my judgment and say that the offers were “non-offers and on unreasonable terms”.
[17] I accept that there were some aspects of the defendants’ application which contributed unnecessarily to the time and expense associated with its disposition. For example, part of the argument related to the consequences of Ms Reed being called as a witness but, despite the fact that a prior fixture had been allocated for the substantive trial (abandoned because of the interlocutory application), no subpoena had ever been issued against her by the defendants.
[18] In my view also the defendants’ extensive arguments based on the Rules of Conduct and Client Care distracted from the critical issue of whether the future conduct of the proceedings was in any sense compromised by the historical criticisms made.
[19] But on the important points of whether there was a solicitor-client relationship arising out of the initial meeting involving some of the defendants and Ms Reed and whether confidential information was imparted the argument was appropriately focused.
[20] In my view, any uplift warranted on this account would be modest – a maximum of 10 per cent. Nor am I persuaded that the application was simply tactical. It was evident from the affidavits that the defendants had very strong convictions that
Ms Reed bore some element of personal responsibility for the position the wider family now found itself in and that this disqualified her from appearing against them.
[21] As to the plaintiffs’ offers to settle the interlocutory application, these were contained in letters dated 19 May 2017 and 23 June 2017. Both proposed that the application be withdrawn on the basis that the defendants pay costs of $4,460, such sum being calculated by reference to the scale 2B allowance for filing a notice of opposition and supporting affidavits to an originating application (two days). That closely approximates what I have calculated to be an appropriate allowance for the notice of opposition and supporting affidavits.
[22] The second offer included as a term withdrawal of a Law Society complaint. Mr Templeton says that was an attempt to interfere with an independent statutory process and was inappropriate. I focus therefore on the first letter.
[23] This was written contemporaneously with filing and service of the plaintiffs’ notice of opposition and affidavits. It sets out at length the plaintiffs’ key arguments in relation to solicitor-client relationship and alleged breach of confidence. The propositions differ little from those ultimately developed in argument before me and which I accepted. The letter stated that if the offer was not accepted a claim for increased or indemnity costs would be pursued.
[24] The reasonableness of a party’s rejection of an offer under r 14.10 must be assessed at the time of rejection and will depend on the size and timing of the offer, the reasonable expectations of the party refusing it and/or the party’s ability at the time of the offer to assess the merits of the case.1
[25] I accept that the thorough assessment of the merits of the application included in the offer letter (anticipating arguments I ultimately accepted) and its timing (coincident with plaintiffs’ notice of opposition and affidavits) provide some basis for a claim for increased costs.
[26] However, two factors persuade me that I should place reduced weight on this factor. Firstly, there was no (or very little) element of compromise involved in the offer. It was simply a reflection of what would in any event have been the plaintiffs’ costs entitlement if the interlocutory application had been withdrawn at that stage.
[27] Secondly, given the fact that there were four defendants, with emotions clearly running high in a family context, the seven day period for acceptance of the offer was unrealistically short.
[28] I consider there to be greater weight however in the plaintiffs’ submission that the interlocutory application was unreasonably delayed. The proceedings commenced in January 2016. The events on which the application was based occurred in September 2015. The application was not brought until 4 May 2017. The delayed application caused the original trial date to be aborted.2 I accept the inevitable correlation between delay and cost.
[29] Taking all factors into account I am persuaded that an uplift is appropriate and that to the extent my former order did not provide for it, it is appropriately varied under r 14.8(2). But the extent of the uplift I believe should be recognised is appreciably less than the 50 per cent sought. I allow an uplift of 20 per cent making the final award
$12,175.
1 Weaver v HML Nominees Ltd [2016] NZHC 473 at [30].
2 The rescheduled date has likewise had to be aborted as a result of an appeal from my decision.
Result
[30] I award costs against the defendants and in favour of the plaintiffs in the amount of $12,175.
Muir J