Longmann v Hudd

[2013] NZHC 2133

IN THE HIGH COURT OF NEW ZEALAND HAMILTON REGISTRY

CIV-2011-419-1853 [2013] NZHC 2133

IN THE MATTER OF       the Trustee Act 1956

BETWEEN  LAURETTE MARY CHAUVAL LONGMANN

Plaintiff

ANDRAYMOND WALKER HUDD Defendant

Hearing:                   On the papers

Counsel:                  DJ Hayes for plaintiff

AJ Ryan for Chartwell Law Limited, non-party

Judgment:                22 August 2013

JUDGMENT OF ASSOCIATE JUDGE FAIRE [for costs]

This judgment was delivered by me on 22 August 2013 at 4:30pm pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date……………

Solicitors:           Hunwick Law Ltd, Hamilton

Chartwell Law Ltd, Hamilton

LONGMANN v HUDD [2013] NZHC 2133 [22 August 2013]

[1]      The  plaintiff  filed  an  application  on  17 December  2012  seeking  orders pursuant to r 8.21 that three non-parties to this litigation give particular discovery.

[2]      This judgment deals with the question of costs in relation to that part of the application which sought an order as follows:

That Chartwell Law (Lynn Tarrant) provide all documents relating to the sale of the property at 771 Opouteke Road, Pakotai and the Longmann Hudd Family Trust.

[3]      The application was supported by an affidavit by the plaintiff.  Paragraph 4 of that  affidavit  deals  specifically  with  Chartwell  Law’s  position  and  records  as follows:

Chartwell Law was used by the Defendant with regard to the sale of the property at 771 Opouteke Road Pakotai. There was a loss on the sale and the defendant is claiming I should personally pay for some of the loss so I believe  it  is  important  to have  the  full  file  of  information  available.    I understand the defendant is also asserting he did not get legal advice on this transaction.

[4]      Paragraph 5 of that affidavit stated as follows:

I believe the complete file of dealings with the above non-parties is required for these proceedings so as to give a complete picture of the transactions that have occurred.  I do not believe information can be obtained from any other source.

[5]      In this proceeding, the plaintiff and defendant are trustees of the Longmann Hudd Family Trust.  There are a number of issues in respect of the administration of that trust with which the plaintiff and defendant disagree.  The current proceeding is a request to the court to invoke its jurisdiction pursuant to s 64 of the Trustee Act

1956 and, in particular, to direct the trustees to repay in full from funds held in a

solicitors’ trust account a mortgage granted by Westpac Bank.

[6]      Following service of the application on Chartwell Law Ltd and Ms Lynn Tarrant  a notice of opposition  and  affidavit  was  filed by her.    In  that  affidavit Ms Tarrant swore as follows:

2.In the applicant’s affidavit of 14 December 2012 at paragraph 4, the applicant states that the law firm of Chartwell Law acted for the

defendant with regard to the sale of the property at 771 Opouteke

Road Pakotai.

3.The law firm of Chartwell Law did not act for Mr Raymond Hudd the defendant in these proceedings in the sale of the property at

771 Opouteke Road Pakotai.

[7]      The application was the subject of the conference before me on 19 February

2013.  The plaintiff had, prior to that conference, filed an amended application.  The request for disclosure of documents changed.  The plaintiff now sought documents from Chartwell Law’s Ms Lynn Tarrant relating to the firm and her dealings with the defendant and others in regard to the Longmann Hudd Family Trust and in respect of all the proceeds of sale of the property at 771 Opouteke Road, Pakotai.

[8]      At the conference on 19 February 2013, which was effectively the first call of the application for non-party discovery, I gave directions for the filing of a notice of opposition and affidavits in opposition to be the amended application and adjourned it to the chambers list on 18 March 2013.

[9]      An  affidavit  in  opposition  was  filed.    That  affidavit  reported  that  any documents held by Chartwell Law Ltd and Ms Tarrant had, save for one matter, been lost as a result of a computer failure.  Ms Tarrant went on to advise that what she had discovered was that she had charged Mr Hudd for some advice that she had given him.  In addition, there was reference to some trust work, but that was no more than a  few  minutes’ discussion  and  she  says  it  did  not  result  in  her  receiving  any instruction from Mr Hudd, nor did it involve her giving any written advice.   She further advised that the only file that she had ever opened for Mr Hudd had been forwarded to  the defendant’s solicitors  as  a result of instructions received from Mr Hudd.   Those solicitors now hold the file.   The affidavit went on to say that Ms Tarrant did not oppose the amended application but that she reported in her affidavit that she could not provide any further information other than that which was set out in her affidavit.

[10]     The matter was next before me in the chambers list on 18 March 2013.   I recorded that it was disappointing that Mr Hayes, counsel for the plaintiff was not present,  although  he  had  notice  of  the  call.    It  was  evident  to  me  from  the

memoranda  that  had  been  filed  that,  in  relation  to  the  non-party  discovery application, no further action was required in respect of it, with the result that I dismissed  the  application  and  reserved  costs.    At  paragraph  4  of  Mr Hayes’ memorandum for the purposes of the chambers list he recorded the following:

Ms Tarrant has now filed a reply affidavit which essentially can be viewed as a discovery affidavit in that it explains why the documents are no longer in existence.  Given that sworn evidence, requiring a discovery affidavit would now appear pointless.

[11]     In  his  memorandum,  Mr Hayes  complains  that  Ms Tarrant  should  have advised in her initial affidavit in opposition of the loss of documentation through the computer  malfunction.    I do  not  accept  that  that  position  would  have  resolved anything necessarily because the application initially proceeded on the basis that the plaintiff alleged that Ms Tarrant had acted on the sale of the property when, clearly, she swore that she had not.

[12]     The non-party, Chartwell Law (Ms Tarrant) seeks to recover the actual costs incurred which total $2,315.65.  That sum, however, includes a GST component of

$296.25 and a disbursement component of $44.40.   The net costs for services performed, therefore, in complying with this request for documentation is $1,975.30.

[13]     It is appropriate that I refer to Schedules 2 and 3 of the High Court Rules. Schedule provides a daily rate for the purposes of Part 14 of the High Court Rules, which deals with costs for Category 2 cases of $1,990.   Schedule 3 sets out the allowances for steps to be taken in relation to proceedings.   Two are relevant in determining this particular application.  The first is Item 23, which deals with the filing of an opposition to an interlocutory application, which I am dealing with here, where the allowance under Category B is .6 of a day.   Item 12 deals with the allowance for appearance at mention hearings and callovers and an allowance of .2 of a day is made.  Mr Ryan, who acted as counsel for the non-party, had two such appearances, being the appearance on 19 February and 18 March 2013.  When the three items are taken together, a daily allowance of $1,990 is justified.   I use that simply as a guide.  The significance is that it, in my view, suggests that the actual profit cost figure of $1,975.30 for the work that was carried out in responding to the request for documents is reasonable.  The fact that a GST component has to be paid

on top of that does not affect the reasonableness of the charge itself.  Likewise, the fact that disbursements were included cannot affect the reasonableness of the charge itself.

[14]     The application was made pursuant to r 8.21 of the High Court Rules.  That rule deals with a particular discovery order that may be justified against non-parties after proceedings have been commenced.   Rule 8.22 makes specific provision for costs on discovery applications made pursuant to r 8.21(2).   The court is given a discretion to order that the party making the application for the order, pay the costs of the person from whom the discovery is sought in whole or in part (including solicitor and client costs) incurred in relation to the application and in complying with any order made on the application.

[15]     There are two steps that must be considered in relation to an application for costs involving a non-party.  The first concerns the costs in relation to the application and the opposition to it.  In respect of this matter, the court’s general discretion as to costs and, in particular, Part 14 of the High Court Rules applies.  That has been the

position historically adopted.[1]

[1] Clear Communications Ltd v Telecom Corporation of NZ Ltd (1994) 8 PRNZ 200.

[16]     In relation to the second step, namely the cost of compliance with an order, the general position is that in the absence of good reason to the contrary, the full reasonable cost of compliance should be recoverable.[2]

[2] Ibid.

[17]     No order against the non-party has, in fact, been made in this case.   The plaintiff, in the end, accepted what was put in Ms Tarrant’s affidavit.  It was accepted by the plaintiff’s counsel as a compliance affidavit rather than an affidavit in opposition.  That is because it answered the concerns that the plaintiff had to obtain documents from a source other than the defendant.

[18]     This case involves a dispute between the plaintiff and defendant.  It does not involve  a  dispute  between  the  plaintiff  and  the  non-party,  Chartwell  Law  Ltd

(Ms Tarrant).    I  consider  that  the  steps  that  were  taken  by  the  non-party  were

reasonable in this case.   It is unfortunate that, in this case, the plaintiff did not, through the plaintiff ’s lawyers, make an inquiry of the non-party in an informal way and not by court application before filing the court application.     Some of what followed could well have been avoided.

[19]     Be that as it may, I am satisfied that both in respect of the application itself, and in respect of the second affidavit which amounts to a compliance affidavit, this is a case where the non-party is entitled to be indemnified for the costs incurred.  I have already found that they are reasonable.

[20]     Accordingly, I order that the plaintiff pay to Chartwell Law Ltd (Ms Tarrant)

costs and disbursements of $2,315.65.

JA Faire

Associate Judge