Lifestyles Investment Group v Coral Investments Securities Limited

[2017] NZHC 2226

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2015-404-002352 [2017] NZHC 2226

BETWEEN

LIFESTYLES INVESTMENT GROUP

Plaintiffs

AND

CORAL INVESTMENTS SECURITIES LIMITED

First Defendant

AND

TONY NOEL LUSBY Second Defendant

AND

MACQUARIE BANK LIMITED AND MACQUARIE INVESTMENT MANAGEMENT LIMITED

Third Defendants

On thepapers:	31 August 2017
Appearances:	M C Black and J Waugh for the Plaintiff A M Callinan and N Blomfield for Third Defendants
Judgment:	14 September 2017

COSTS JUDGMENT OF ASSOCIATE JUDGE SARGISSON

This judgment was delivered by me on 14 September 2017 at 3.30 p.m. pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date.......................................

Solicitors:

Simpson Grierson, Auckland
Devonport Law, Auckland

M Black, Auckland

LIFESTYLES INVESTMENT GROUP v CORAL INVESTMENTS SECURITIES LTD [2017] NZHC 2226 [14 September 2017]

Introduction

[1] In my judgment of 15 November 2016, I made orders staying this proceeding under the Trans-Tasman Proceedings Act 2010.1

[2]      The plaintiffs, called the Lifestyles Investment Group, applied to review that judgment.   On 8 August 2017, Katz J declined the review application — so the “stay” orders stand.   Her Honour also directed that two matters be referred back to me for determination:

(a)       The question of costs; the defendants, the Macquarie parties, claim costs against the plaintiffs on a 2B basis.

(b)A matter on which I had reserved leave — the time within which the plaintiffs are required to file any proceeding in Australia.

[3]      The parties have filed memoranda on these two matters in accordance with

Katz J’s directions.

Costs

[4]      It is trite law that costs are in the overall discretion of the court but the court is to be guided by the principles set out in the High Court Rules.  The starting point is the presumption that costs follow the event: r 14.2(a).

[5]      In reliance on that presumption, the Macquarie parties claim costs of and incidental to the stay application on a 2B basis.   But the plaintiffs say that in the circumstances of this case the fair and just result is for the court to exercise its discretion under r 14.7 to decline to make an order for costs.  The plaintiffs submit that costs should lie where they fall; or in the alternative, that the quantum claimed is excessive.

[6]      The issue for determination is whether there are sufficient grounds to rebut the statutory presumption that costs follow the event.  None are sufficient to rebut the presumption in my view.

[7]      The plaintiffs rely on statements in my 15 November judgment, for instance where I say “my present impression is that costs should lie where they fall”.  In that judgment, I also acknowledge that the merits are finely balanced and that “there are no overwhelming factors that justify strong bias in favour of either court so as to tip the balance one way or the other”.  It is only “in the final analysis” that the balance tips towards the defendants.

[8]      All of this is of some moment when it comes to the issue of costs, but my comments as to costs were plainly not intended to be determinative, and I needed to hear from counsel before reaching a firm view.  It is also correct that the case was finely balanced; this too is a relevant factor. Yet as counsel for the Macquarie parties convincingly submits, such factors are not uncharacteristic features of Trans-Tasman cases.  Counsel cited Fraser v Fraser as a case in point.2

[9]      Counsel for the plaintiffs also stresses the significant public interest in the subject matter of the judgment.   There will often be a public interest in judicial statements that clarify the law in the context of Trans-Tasman proceedings, and I accept this is a relevant consideration.

[10]     But on careful reflection I do not consider this ground — by itself or in combination with the other grounds — sufficient to rebut the presumption.   The plaintiffs would have been alive to the risk they would fail in their opposition to a stay, and if so, that they would likely to face a costs award.

Quantum

[11]     I turn then to the issue of quantum.

[12]     The first ground for challenge relates to the time taken up with the hearing. The question is whether allowance should be made for 1.5 days as claimed, or

0.75 of a day as submitted by counsel for the plaintiffs, or indeed something in between.

[13]     Item  42  of  Schedule  3  of  the  High  Court  Rules  provides  that  the  time allowance for appearing at the hearing of a defended application for sole or principal counsel is “the time occupied by the hearing measured in quarter-days”.  However, allowances for this and other steps in the schedule are subject to the Court’s overarching discretion: rule 14.1.

[14]     It is unnecessary to set out at length the respective parties’ submissions.   I simply note two reasons why I consider the plaintiffs are right to say there should be a reduced time allowed for the hearing:

(a)      The hearing of the application itself should not have taken more than a day.  The fact that the hearing took longer is in part attributable to the fact that a fair amount of time was spent at the hearing on an application by the media for access to the Court’s file.  As counsel for the plaintiffs submits, such time should not be sheeted home to the plaintiffs.    The  argument  was  principally  one  for  the  Macquarie parties in resisting the media’s application; and it was an argument they needed to put to the court irrespective of the plaintiffs’ position on the application.

(b)The extra length required for the hearing is also attributable in part to the lengthy submissions made on behalf of the Macquarie parties. The submissions were very carefully prepared and presented, and no doubt this reflected the importance of the matter to the Macquarie parties.  But in fairness to the plaintiffs, the detail and length of those submissions were to some extent disproportionate to the matters in issue.  To that extent, I do not consider the costs should be borne by the plaintiffs.

[15]     In the circumstances I consider an allowance of 1 day will allow a reasonable measure of compensation for the hearing; pursuant to r 14.7 the allowance will be reduced accordingly.

[16]     There  is  a  related  challenge  concerning  the  claim  for  1.5  days  for  the preparation of written submissions.  This is the standard allowance for a Category 2 proceeding in which Band B is applied to the time assessment for the given step.  I see no reason to reduce that allowance.  It is the standard allowance, and it reflects a reasonable measure of compensation to the Macquarie parties for the careful submissions counsel prepared on their behalf.

[17]     The  third  challenge  to  quantum  relates  to  the  two  memoranda.     The Macquarie parties claim these under item 11 of Schedule 1 to the High Court Rules. The standard time allowance is 0.4 of a day for each.  The plaintiffs say the standard allowance is too much.

(a)      I do not accept the plaintiffs’ criticism in relation to the first memorandum.   Though the memorandum covers matters other than the  stay  application,  the  effect  of  the  stay  order  is  to  halt  the New Zealand proceeding (subject to the leave I have allowed).  The standard allowance for the entire memorandum is therefore justified.

(b)But that is not so for the second memorandum.   I accept that there should be a reduction in the time allowance for the second memorandum dated 8 September 2016.   The subject matter of the memorandum concerns the “limitation undertaking”, and it was filed in response to queries I raised at the hearing.   I consider a reduced allowance of 0.2 of a day will afford a reasonable measure of compensation for the defendants.

[18]     The remaining challenge to quantum relates to the Macquarie parties’ claim for second counsel.  I disallow the claim.  The proceeding is, in an overall sense, of average complexity, requiring counsel of skill and experience considered average in the High Court.  The fact that the Macquarie parties chose to instruct two counsel to

appear at the hearing is of course a matter for them, but there is nothing about the nature of the proceeding and the stay application that would justify a claim for two counsel.  I therefore disallow the claim for second counsel.

[19]     I turn then to the final matter for determination.

Time allowed to file proceeding in Australia

[20]     As counsel for Macquarie points out, I stayed the proceeding on terms as follows:

This proceeding is stayed on terms that the plaintiffs may seek an order lifting the stay, in the event that any current defendant pleads limitation defences in an Australian proceeding, being a limitation defence that would not have been available or viable in the present New Zealand proceeding.

[21]     I then added:

It occurs to me that counsel for the parties did not deal with the question of the time within which a proceeding should be commenced in Australia and whether orders relating to that question or related questions may need to be dealt with.  I reserve leave to raise such issues by way of memorandum to be filed and served not later than 12 December 2017.

[22]     Counsel for both sides agree that it is necessary for the Court to make a direction with respect to the time within which the plaintiffs must file proceedings in Australia, if that is what they intend to do.

[23]     Macquarie  seeks  an  order  that  the  plaintiffs  must  file  and  serve  any proceedings in Australia not later than 7 September 2017, being 8 weeks after the release of Katz J’s judgment.   Counsel for Macquarie says that this would be consistent with the undertaking Macquarie gave.

[24]     Counsel for the plaintiffs seeks 4 months, or potentially more, to re-file in Australia on the basis that they first need to make arrangements for a litigation funder.  Macquarie opposes that length of time on the basis that it is not necessary “given that the claim is already well developed” and because Macquarie considers it would be prejudiced by an open-ended timeframe.

[25]     Clearly the order sought by the Macquarie parties is not practicable.  The date they propose has passed already.  The review application has caused time to run on longer than anyone expected and I have not long been seized of the memoranda the parties filed in accordance with Katz J’s directions.  It is reasonable for the extension of time for filing proceedings in Australia to run from the date of this judgment.

[26]     I  accept,  however,  that  4  months  is  not  necessary.    I  consider  that  the plaintiffs ought to be able to get their proceeding filed within 10 weeks of the date of issue of this judgment (that is, on or before Friday 17 November 2017).

Orders

[27]     I     make     an     order     for     costs     against     the     plaintiffs     on     a

2B  basis  (subject  to  the  reductions  I  have  allowed).  The  award  is  $8,697  as calculated in the attached schedule. Additionally, I allow the claimed disbursements of $200.

[28]     The plaintiffs have until 17 November 2017 to file proceedings in Australia, failing which the limited grant of leave to seek to uplift the stay will be deemed

vacated.

Associate Judge Sargisson

SCHEDULE

Number	Description	Days	Amount
8	Notice of appearance with protest to jurisdiction	0.6	$1,338
11	Filing memorandum for first or subsequent case management conference or mentions hearing – joint memorandum dated 8 March 2016 requesting timetabling orders	0.4	$892
11	Filing memorandum for first or subsequent case management conference or mentions hearing – memorandum dated 8 September 2016 regarding limitation undertaking (Band A)	0.2	$446
22	Filing interlocutory application	0.6	$1,338
24	Preparation of written submissions	1.5	$3,345
25	Preparation by applicant of bundle for hearing	0.6	$1,338
42	Appearance at hearing (reduced allowance)	0.75	$1,672.5
7	Filing fee on other interlocutory application	$200
TOTAL COSTS AND DISBURSEMENTS	$10,569.50