Lifestyles Investment Group v Coral Investments Securities Limited (struck off)
[2017] NZHC 2122
•1 September 2017
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV-2015-404-2352 [2017] NZHC 2122
BETWEEN LIFESTYLES INVESTMENT GROUP
Plaintiffs
AND
CORAL INVESTMENTS SECURITIES LIMITED (STRUCT OFF)
Former First Defendant TONY NOEL LUSBY Second Defendant
MACQUARIE BANK LIMITED and MACQUARIE INVESTMENT MANAGEMENT LIMITED
Hearing: On the papers Counsel:
M C Black and J Waugh for plaintiffs
A M Callinan and N M Blomfield for third defendantsJudgment:
1 September 2017
JUDGMENT OF KATZ J [Costs]
This judgment was delivered by me on 1 September 2017 at 3:00pm
Pursuant to Rule 11.5 High Court Rules
Registrar/Deputy Registrar
Solicitors: Devonport Law, Auckland Simpson Grierson, Auckland Witten-Hannah Howard, Auckland
LIFESTYLES INVESTMENT GROUP v CORAL INVESTMENTS SECURITIES LIMITED [2017] NZHC 2122 [1 September 2017]
Introduction:
[1] On 17 July 2017 I dismissed the plaintiffs’ application for review of Associate Judge Sargisson’s judgment staying these proceedings pursuant to s 24 of the Trans-Tasman Proceedings Act 2010.1 I reserved leave for the parties to file memoranda in the event that counsel were unable to agree on costs. Agreement was not reached and the issue of costs must now be determined.
Costs on the stay application
[2] Macquarie was successful in its stay application before Associate Judge Sargisson. The plaintiffs failed to overturn that decision on review. Macquarie requests that I determine costs in respect of the stay application heard by the Associate Judge, as well as the costs of the review application before me. The plaintiffs, however, submit that costs on the stay application are more appropriately determined by Associate Judge Sargisson:
The plaintiffs submit there are good reasons for this to occur because that hearing involved a number of different factors that were not the focus of the Review hearing. Submissions were made on other topics and extra time spent, over for example the National Business Review’s request to be heard over publication issues. In addition, and for reasons that were addressed at some length before the Associate Judge, she considered the parties respective entitlements at that hearing over which jurisdiction to apply to be fairly and evenly balanced.
[3] Although not cited by either of the parties, r 14.9 of the High Court Rules provides that the usual course is for costs to be determined by the Judge who presided over the matter:
14.9 Costs may be determined by different Judge or Associate Judge
Costs may be determined by a Judge or an Associate Judge other than the one who heard the matter to which the costs relate, if he or she is not available conveniently to make the determination.
(Emphasis added).
1 Lifestyles Investment Group v Coral Investments Securities Ltd [2017] NZHC 1639 at [61].
[4] It is generally desirable that the Judge who decided a matter also determine the costs arising from it.2 Venning J commented on r 14.9 generally in My Virtual Home International Ltd (in rec) and (in liq) v Ngati Tama Custodian Trustee Ltd:3
[6] Mr Phillips next challenges whether it is appropriate that I deal with the issue of costs. He obviously does not accept the decision the Court made. There is, however, no reason for me not to deal with the issue of costs. That is the usual course. It is inevitable following litigation that the unsuccessful party will be aggrieved to a greater or lesser degree by the outcome. However, it is the duty of the trial Judge who has heard and determined the application to deal with the costs of the application, rather than to pass that burden to another judicial officer: Bahai v Rashidian & Anor. This is confirmed by r 14.9 which records that costs may be determined by a Judge other than the one who heard the matter to which the costs relate, if he or she is not available conveniently to make the determination.
(Footnotes omitted).
[5] I accept the plaintiffs’ submission that the appropriate course is for the costs of the stay application to be determined by Associate Judge Sargisson. Her Honour will be most familiar with the conduct of that hearing. There is no suggestion that she is not conveniently available. I see no reason not to follow the presumption in r
14.9 that the Judge who determined the substantive matter should also determine costs.
Costs on the review application
[6] It is common ground between the parties that costs should be awarded to Macquarie (as the successful party) on a 2B basis. However, the plaintiffs dispute that Macquarie should be awarded costs for:
(a) second counsel;
(b)a memorandum dated 8 September 2016 regarding limitation undertaking; and
(c) a memorandum dated 7 December 2016 requesting timetabling orders.
2 McGechan on Procedure (looseleaf ed, Thomson Reuters) at [HR14.09.01].
3 My Virtual Home International Ltd (in rec) and (in liq) v Ngati Tama Custodian Trustee Ltd HC Auckland CIV-2009-443-548, 16 September 2011.
Second counsel
[7] Macquarie submits that costs for second counsel should be awarded given the complexity and significance of the proceeding. The plaintiffs, however, dispute the appropriateness of such an award. The plaintiffs submit that the nature of the application and the fact that only one counsel was necessary to advance the argument (as occurred) weigh against an award of costs for second counsel.
[8] There is no general rule as to whether costs should be awarded for second counsel in category 2 proceedings. However, in Nomoi Holdings Ltd v Elders Pastoral Holdings Ltd Chambers J considered the appropriate question to be:4
… whether the nature of [the] proceeding, given the way the trial was conducted, was such as to justify requiring the losing party to contribute to the winning party’s cost in having a junior counsel present.
[9] Costs for second counsel are not routinely awarded. Such an award was granted by Associate Judge Matthews in Ballantyne Trustees Ltd v GBR Investment Ltd. However, Ballantyne involved nine causes of action and 139 paragraphs of factual allegations. The pleadings covered a wide range of diverse allegations, the evidence was extensive and would have required meticulous work to present, and the losses claimed were substantial.5 Unsurprisingly it was thought “prudent and acceptable” for the defendants to have engaged more than one counsel. The cost of doing so was properly borne by the plaintiffs in the circumstances of the case.6
[10] In cases of only moderate complexity, however, something more is required to justify an award of costs for second counsel. Dunningham J declined to award such costs in Specialised Structures New Zealand Ltd v Findlater Construction. At issue was whether the matter was sufficiently complex to justify an appearance by second counsel:7
[8] In my view, the issue is finely balanced. I do not accept that, simply because the proceedings are categorised as 2B and therefore of average complexity, there should be no allowance for second counsel. However, I
4 Nomoi Holdings Ltd v Elders Pastoral Holdings Ltd (2001) 15 PRNZ 155 (HC) at [17].
5 Ballantyne Trustees Ltd v GBR Investment Ltd [2017] NZHC 908 at [17]-[20].
6 At [20].
7 Specialised Structures New Zealand Ltd v Findlater Construction Ltd [2016] NZHC 1752 at
[6]-[7].
consider there is some onus on the party applying for costs to demonstrate why the presence of second counsel was warranted in the circumstances. By way of example, it could be because that person had the carriage of some of the arguments, where a range of issues were covered, or because there was a significant burden of document management involved in the hearing and where responsibility for that had been appropriately delegated to second counsel.
[9] In the present circumstances, the matters were of moderate complexity and may have warranted second counsel, but in the absence of any information to support that, I decline to award costs for second counsel.
[11] The subject matter of these proceedings was moderately complex. I have not, however, been persuaded that the costs of engaging second counsel ought to be borne by the plaintiffs. The overall nature and complexity of the proceedings does not justify requiring the plaintiffs contribute to Macqurie’s costs of engaging second counsel.
Limitation memorandum
[12] The plaintiffs dispute an award of costs in respect of a memorandum filed by Macquarie on 8 September 2016, following the hearing before Associate Judge Sargisson but before delivery of the substantive judgment:
The items the plaintiffs do not accept costs are for two 11 items and in particular the first item claimed, for filing a memorandum regarding the limitation or undertaking. Costs in relation to that matter involved issues for which the Associate Judge considered and made directions about and are unrelated to the review hearing.
[13] I accept that costs should not be awarded in relation to this memorandum, in the context of the review application at least. In the memorandum counsel for Macquarie outline details of the undertaking that Macquarie was prepared to provide. The reason for the filing of the memorandum appears to have been to ensure that issues of limitation did not influence Associate Judge Sargisson’s substantive judgment, as she might have considered it under s 24(h) of the Trans- Tasman Proceedings Act. Ultimately the Judge did consider limitation issues, including the undertaking.
[14] Given this context, it would be more appropriate, in my view, for the costs in relation to this memorandum to be considered in the context of the stay application rather than the review hearing.
[15] The plaintiffs also dispute an award of costs in relation to a further memorandum, dated 7 December 2016, following Associate Judge Sargisson’s substantive judgment. The memorandum covers the plaintiffs’ request to file further evidence concerning their ability to fund litigation in Australia; the position of the parties to the proceedings; the possibility of an amended application for review; and a proposed timetable. This is all in respect of the review hearing. The plaintiffs have not pleaded any reason for costs not to be awarded in respect of this memorandum, and I see no reason for costs not to be awarded.
Further directions sought
[16] Counsel for Macquarie submit that further directions are required in relation
to the following issue raised in Associate Judge Sargisson’s judgment:
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.
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 alter than 12 December 2017.
[17] It is clearly more appropriate for that issue to be dealt with by Associate Judge Sargisson, given that it was her Honour who reserved leave for further consideration of the matter.
Result
[18] I direct that costs on the stay application are to be determined by Associate
Judge Sargisson. Any costs memorandum on behalf of Macquarie is to be filed by
8 September 2017 and any memorandum from the plaintiffs in response by
15 September 2017. The memoranda are to also address any further directions sought pursuant to the leave reserved by Associate Judge Sargisson.
[19] In terms of review application, I award costs in favour of Macquarie in the sum of $7,915. That sum takes into account the decision made in this judgment
regarding the disputed items.
Katz J
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