Little v Jull

[2014] NZHC 871

IN THE HIGH COURT OF NEW ZEALAND NAPIER REGISTRY

CIV-2010-441-713 [2014] NZHC 871

BETWEEN

ROBERT STANLEY LITTLE

First Plaintiff

NARELLE LINDA LITTLE Second Plaintiff

PENELOPE JANE CHOTE Third Plaintiff

LYNETTE ALISON MOGEY and

JOHN VICTOR MOGEY Fourth Plaintiffs

AND

ALBERT EDWARD GEORGE JULL Defendant

Hearing:	On the papers
Counsel:	J Toebes and J Grant for Plaintiffs M Macfarlane for Defendant
Judgment:	30 April 2014

JUDGMENT OF WILLIAMS J (COSTS)

[1]      On 26 November 2013, I delivered judgment in favour of the four plaintiffs.1

Costs were reserved.

Costs calculated under District Court or High Court Rules?

[2]      The defendant submits pursuant to r 14.13 of the High Court Rules that costs should be calculated under the District Court Rules.

1 Little & Ors v Jull [2013] NZHC 3123.

[3]      Rule 14.13 provides:

14.13   Proceedings within jurisdiction of District Court

Costs ordered to be paid to a successful plaintiff must not exceed the costs and disbursements that the plaintiff would have recovered in the District Court if the proceeding could have been brought there, unless the court otherwise directs.

[4]      The defendant submits that while it was “sensible” that the proceedings were heard together as one, they are four separate actions each claiming an amount within the civil jurisdiction limit ($200,000) of the District Court.2

[5]      In addition, the defendant submits that in any case the proceeding “did not demand the attention of the High  Court” because there was no public or  other important aspect to the issues being dealt with.

[6]      The plaintiffs respond that at the date of the amended statement of claim (i.e. the  date  that  the  fourth  plaintiffs  were  joined  to  the  proceedings)  the  total amount claimed including interest was “just in excess” of $200,000.   Further, an investment  by the fourth  respondents  was  not  pursued  upon  discovery of some materials from the Waipawa Holdings Limited (WHL) liquidation.  The Court’s final judgment  sum  was  lower  because  the  amount  payable  to  the  plaintiffs  was discounted to reflect some inter-account transactions and the payment received by the plaintiffs from the WHL liquidators (10.53 per cent).

[7]      The plaintiffs submit that the matter was complex and that it was “simply a matter of coincidence” that the sum subject to the claim was a small part of the more than $8.4 million in subscriptions to WHL.  They say this case was the first time the issue of a resigning director’s civil liability under s 37(6) of the Securities Act 1978 for subscriptions made less than two months before he resigned has been “squarely addressed” by the courts.  It follows that the matter is of public importance due to the number of failed finance companies in New Zealand in recent years that operated

without registered prospectuses.

2 District Courts Act 1947, ss 29 and 34.

[8]      In general r 14.13 will apply where the plaintiff could have proceeded in the District Court.   Costs would then normally be awarded at the District Court level unless there is some reason for departing from that approach.  The purpose of this rule is to encourage litigants to proceed in the District Court in proper cases in order to minimise costs.3    The rule expressly retains the court’s general discretion as to costs by allowing the court to direct that costs should be calculated on a High Court scale  for  cases  that  are  within  the  jurisdiction  of  the  District  Court  but  are nevertheless properly tried in the High Court.

[9]      According to the Court of Appeal in Fuehrer v Thompson relevant factors are:4

(a)       the amount of the claim and judgment;

(b)      the nature and complexity of the proceeding;

(c)       the type of issues, both factual and legal, raised by the pleadings; (d) whether the case raises matters of public or other importance; and

(e)       the parties’ approach to the litigation, in particular whether it has been

responsible.

[10]     As for (a), it is established that the original amount claimed was “just over” the $200,000 District Court limit at the date of the amended statement of claim before the plaintiffs decided not to pursue an investment by the fourth plaintiffs. The judgment totalled $101,026.77, an amount well within District Court jurisdiction.

[11]     As for (b)-(c), Asher J’s comments in Sanson v Parval Marketing Ltd are helpful.5   He said:6

3 Killalea v In Print Publishing Co Ltd [1966] NZLR 70 at 71 (SC).

4 Fuehrer v Thompson [1981] 1 NZLR 699 at 701 (CA).
5 Sanson v Parval Marketing Ltd HC Auckland CIV 2006-404-7231, 7 July 2008.

6 At [5].

Certainly if in a straightforward proceeding the amount recovered is less than the present District Court upper limit of $200,000, the Court might take some persuasion before it ordered High Court costs.

[12]     Further, Woodhouse J in Killalea v In Print Publishing Co noted:7

On the other hand it is not enough to show that a case could have been disposed of satisfactorily in the lower Court; the question is rather whether the case was a proper one to bring in the Supreme Court: see William v Allen (1889) 60 L.T. 103, 104. In the final analysis this problem becomes one of degree.

[13]     More recently in Commission of Inland Revenue v Hayes Associate Judge

Doogue stated:8

Considerations which need to be weighed include whether the claim is one which can be aptly dealt with in the District Court.  Cases which are attended by complexity of factual and legal issues may not be appropriate for the primary court to deal with having regard to the pressure of business in those courts, or perhaps the specialist nature of a proceeding which means that it is outside the scope of the mainstream business which is conducted in the primary court.   The possibility of appeals from the primary court may be another factor which needs to be taken into account.

[14]     This case cannot be classified as “straightforward” by any stretch of the imagination.  It required an analysis of a complex factual scenario and relevant legal principles of securities law, company law, the law of limitations and equity.  It was not  a  ‘run-of-the-mill’  proceeding,  especially  when  these  matters  had  to  be considered together and in the context of multiple plaintiffs.   These issues were properly dealt with by the High Court even if the judgment amount is less than

$200,000.

[15]     As for (d), this case did address an issue of public importance in relation to director liability under s 371(6) of the Securities Act. It was made all the more relevant in New Zealand commerce given the prevalence of finance company collapses in New Zealand (as elsewhere) in recent years.

[16]     As for (e), the defendant submits that no technical point was made of the fact the proceeding comprised four separate actions by different plaintiffs each claiming

7 Killalea v In Print Publishing Co Ltd, above n 3, at 71.

8 Commissioner of Inland Revenue v Hayes [2013] NZHC 3493 at [7].

an amount within the District Court limit because it was “sensible” to hear the claims together and in the High Court.   The defendant has made no objection to the proceedings being conducted in the High Court until now.

[17]     On balance, the fact that the judgment amount is close to the District Court limit of $200,000 is outweighed by the complex nature of the proceeding, the legal questions confronted and the public importance of the case.

[18]     Costs will therefore be calculated on a 2B basis under the High Court Rules.

Substantive claim for costs

[19]     The plaintiffs seek costs and disbursements on the basis of r 14.2(a) of the

High Court Rules which provides:

14.2     Principles applying to determination of costs

…

(a)       the party who fails with respect to a proceeding or an interlocutory application should pay costs to the party who succeeds.

[20]     Although both parties agree that costs should be addressed on a 2B basis, there is some disagreement over the items for which costs should be awarded, the time allocated to certain steps in the proceeding and a number of the disbursements claimed for.

[21]     The following table outlines the items that were contested in the defendant’s memorandum of 5 February 2014, and the plaintiffs’ response in their memorandum of 10 February 2014.  In the second and third columns respectively, I have indicated whether each contested item is allowed and for what reason.

Item contested	Allowed	Reference
Filing and service of amended statements of claim	Yes	Defendant’s argument at [10] of 5 February 2014 memorandum is preferred
Filing and service of one statement of defence, even though defendant	No	Plaintiff’s argument at [13] of 10 February 2014 memorandum

unsuccessful	preferred
Extra hearing day	Yes	Plaintiff’s argument at [15] of 10 February 2014 memorandum preferred
Second counsel	No	Plaintiff’s argument at [17] of 10 February 014 memorandum not accepted
Time allowed for memoranda and appearances totalling 2.6 days	No	Defendant’s argument at [11.1] of 5 February 2014 memorandum is preferred – 1.3 days allowed
Disbursement claim for Mr Edwards	Yes	Plaintiff’s argument at [21]-[22] of 10 February 2014 memorandum preferred
Expense claim for costs of plaintiffs/witnesses	Yes	Plaintiff’s argument at [23]-[25] of 10 February 2014 memorandum preferred

[22]     Based on the allowances in the above table, costs and disbursements claimed relation to the plaintiffs/witnesses, primary counsel and Mr Edwards in the plaintiffs’ memorandum of 15 February 2014 are awarded.

[23]     Costs are awarded on the foregoing basis accordingly.

Williams J