Lorenzen v Cullen
[2012] NZHC 1132
•24 May 2012
IN THE HIGH COURT OF NEW ZEALAND HAMILTON REGISTRY
CIV-2011-419-301 [2012] NZHC 1132
BETWEEN FRANCIS WALTER LORENZEN AND ALEXANDER HENRY LORENZEN Plaintiffs
ANDBRENDAN THOMAS PAUL CULLEN, THOMAS NATHANAEL GIBBONS, JULIE MARGEURITE HARDAKER, PHILLIP GEORGE HARRIS, JOHN GORDON NEVERMAN, GERARD JOHN RENNIE, DONALD MATTHEW SHIRLEY AND AIDAN HENRY CHARLES WARREN
Defendants
(On the papers)
Counsel: DM O'Neill for plaintiffs
MJ Allan for defendants
Judgment: 24 May 2012
JUDGMENT OF ASSOCIATE JUDGE FAIRE [on costs]
This judgment was delivered by me on 24 May 2012 at 4:30pm pursuant to Rule 11.5 of the High Court Rules.
Registrar/Deputy Registrar
Date……………
Solicitors: John Webb, PO Box 132, Hamilton 3240
Kennedys, PO Box 3158, Auckland 1140
LORENZEN V CULLEN HC HAM CIV-2011-419-301 [24 May 2012]
[1] The defendants obtained an order striking out the plaintiffs’ statement of
claim on the grounds that the proceeding was barred by s 4 of the Limitation Act
1950. The result was obtained following two judgments. The first examined the full extent of the application and was delivered on 23 November 2011. The second was issued on 3 April 2012 and followed a request for leave to amend.
[2] I reserved costs to give counsel an opportunity to agree, failing which memoranda were ordered to be filed. Memoranda in support, opposition and reply have been filed as ordered.
[3] The defendants seek costs that are calculated on the basis that this is a Category 2 case. The plaintiffs’ memorandum has been drawn on the basis that the plaintiffs accept that it is a Category 2 case. I proceed on this understanding.
[4] The issues that arise for determination in this costs judgment are:
(a) In respect of the commencement of the proceeding, that is Item 2
Schedule 3 of the High Court Rules, should the Band that applies be
Band C rather than Band B?
(b)Has a correct Band B allowance been made for preparation for the defended hearing, including further memoranda filed? In particular, should an additional .25 of a day be allowed because of the additional work required because of the amendment?
(c) Should increased costs be ordered for some steps pursuant to r 14.6?
[5] A table setting out the defendants’ amended claim for costs is contained in the defendants’ counsel’s reply memorandum and is as follows:
Step in proceeding Allocated Days Amount
$
Commencement of defence by defendant (receiving instructions, researching facts and law, and preparing, filing and
serving statement of defence)
6
(band C)
11,280.00
Filing memorandum for case management conference (3 June 2011
.4 (band B)
752.00
Appearance at case management conference (7 June 2011)
.3 (band B)
564.00
Filing memorandum for case management conference (5 October
2011)
.4
(band B with 50%
uplift)
1,128.00
Appearance at case management conference (11 October 2011)
.3
(band B with 50%
uplift)
846.00
Preparing and filing interlocutory application and supporting affidavits
.6
(band B with 50%
uplift)
1,692.00
Preparation for hearing of defend interlocutory application
.5
(band B with 50%
uplift)
1,410.00
Appearance at hearing of defended interlocutory application
.25
(band B with 50%
uplift)
705.00
Filing memorandum following hearing
(23 January 2012)
.4
(band B with 50%
uplift)
1,128.00
Sealing order or judgment .2
(band B with 50%
uplift)
564.00
Total $20,069.00
[6] The plaintiffs’ response is that the costs that should be allowed should total
$9,588 on the application of Category 2 Band B to each of the steps referred to in the
defendants’ summary.
[7] Rule 14.1 gives the Court a discretion to order costs in relation to a step taken in a proceeding. That discretion is generally to be exercised in accordance with the specific Rules contained in rr 14.2-14.10: Glaister v Amalgamated Dairies Ltd.[1] In Mansfield Drycleaners Ltd v Quinny’s Drycleaning (Dentice Drycleaning Upper Hutt) Ltd it was said of the costs regime contained in what is now rr 14.2-14.10 that:[2]
[1] Glaister v Amalgamated Dairies Ltd [2004] 2 NZLR 606 at [19].
[2] Mansfield Drycleaners Ltd v Quinny’s Drycleaning (Dentice Drycleaning Upper Hutt) Ltd
(2002) 16 PRNZ 662 (CA) at 668.
there is a strong implication that a Court is to apply the regime in the absence of some reason to the contrary
The test to be applied is entirely an objective and not a subjective one. The only reference which it is necessary to make towards actual costs is to be found in r 14.2(f), namely that an award of costs should not exceed the costs incurred by the party claiming the costs: Glaister v Amalgamated Dairies Ltd.[3]
[3] Glaister v Amalgamated Dairies Ltd, above n 1 at 610[14].
[8] Rule 14.2 lists the principles applying to determination of costs. Subrule (a) affirms the principle that the losing party should pay the costs to the successful party. Subrule (b) requires that the costs reflect the complexity and significance of the proceedings and refers specifically, therefore, to the categorisation of a proceeding which is provided for in r 14.3. Subrule (c) requires a consideration of each step for which costs are sought and an application of the daily rate having regard to the appropriate band which is to be applied after a consideration of r 14.5(2) and the Third Schedule to the High Court Rules.
[9] Rule 14.6 sets out the circumstances where increased or indemnity costs can be awarded. The relevant part of r 14.6 provides:
14.6 Increased costs and indemnity costs
(1) Despite rules 14.2to14.5, the court may make an order—
(a) increasing costs otherwise payable under those rules (increased
costs); or
…
(3) The court may order a party to pay increased costs if—
(a) the nature of the proceeding or the step in it is such that the time required by the party claiming costs would substantially exceed the time allocated under band C; or
(b) the party opposing costs has contributed unnecessarily to the time or expense of the proceeding or step in it by—
(i) failing to comply with these rules or with a direction of the court;
or
(ii) taking or pursuing an unnecessary step or an argument that lacks merit; or
(iii) failing, without reasonable justification, to admit facts, evidence, documents, or accept a legal argument; or
(iv) failing, without reasonable justification, to comply with an order for discovery, a notice for further particulars, a notice for interrogatories, or other similar requirement under these rules; or
(v) failing, without reasonable justification, to accept an offer of settlement whether in the form of an offer under rule 14.10 or some other offer to settle or dispose of the proceeding; or
(c) the proceeding is of general importance to persons other than just the parties and it was reasonably necessary for the party claiming costs to bring it or participate in it in the interests of those affected; or
(d) some other reason exists which justifies the court making an order for increased costs despite the principle that the determination of costs should be predictable and expeditious.
[10] In Holdfast NZ Ltd v Selleys Pty Ltd the Court of Appeal provided guidance on the correct approach where an award of increased costs is sought[4]. Four specific steps require analysis. The first is the establishment of the category for the proceeding. This is Category 2 in this case.
[4] Holdfast NZ Ltd v Selleys Pty Ltd (2005) 17 PRNZ 897 (CA).
[11] The second step requires a consideration of the reasonable time for each step in the proceeding under r 14.5.
[12] The third step requires a consideration of whether any of the steps would substantially exceed the time allocated under Band C.
[13] The fourth step requires one to stand back and look at the costs award and determine whether any of the matters set out in subr (3)(b) can be applied.
[14] I deal with the first issue, namely: what is the appropriate band for the matters referred to in Item 2 of the Third Schedule. That covers:
Commencement of defence by defendant (receiving instructions, researching facts and law and preparing, filing and service statement of defence or notice of opposition).
[15] Counsel for the defendants submit that a comparatively large of amount of time was required because the plaintiffs filed three statements of claim with different allegations as to the particular breaches of contract and duty, all of which had to be considered and responded to. That position came about because, following the filing of the first statement of claim on 8 March 2011, the defendants’ solicitors wrote setting out a basis upon which they alleged that the claim as then pleaded was statute-barred. An offer to resolve the matter without prejudice except as to costs was made. The plaintiffs rejected that position and filed a second amended statement of claim. That was followed by the strike out application that I have determined. It is self-evident from the judgments that I have issued on this matter that the plaintiffs then filed a third statement of claim.
[16] I have given careful consideration to this issue. Costs in relation to amended pleadings are dealt with in r 7.77(8) which provides:
7.77 Filing of amended pleading
…
(8) If an amended pleading has been filed under this rule, the party filing the amended pleading must bear all the costs of and occasioned by the original pleading and any application for amendment, unless the court otherwise orders.
That Rule, in turn, must be considered with Item 3.6 of the Third Schedule of the
High Court Rules which provides:
Allocated days or part days
Band
A
Band
B
Band
C
3.6Pleading in response to other party's amended pleading (payable regardless of outcome except where formal or consented to)
0.3 0.6 2
[17] There has in fact been no specific further pleading here. Whilst I accept there has been some consideration of the new basis, I do not consider that either Item 2 or Item 3.6 or, for that matter r 7.77(8) provide a justification for departing from the allowances set out in the Third Schedule. Accordingly, I reject the first additional claim made by the defendant, and which is the first issue referred to in [4] of this judgment. The allowance for commencement of the defence therefore must be based on two days, ie Band B.
[18] The second issue relates to preparation for the defended hearing. The position adopted by the defendants is an entirely appropriate one. There had to be additional preparation time here because of the amended pleading. In my view, the
.25 day allowance sought by the defendants is appropriate. I intend taking that into account in the final order that I make.
[19] The remaining question is whether increased costs should be made for some of the allowances that apply. No comment is required on the first three steps that I have referred to in [10] of this judgment.
[20] The defendants rely on r 14.6(3)(b) saying that the plaintiffs have unnecessarily contributed to the time or expense of the proceeding by:
(i) …
(ii)Taking or pursuing an unnecessary step or an argument that lacks merit;
…
(v)failing without reasonable justification to accept an offer of settlement whether in the form of an offer under r 14.10 or some other offer to settle or dispose of the proceeding.
[21] This is a case where the defendants fairly and fully put their position to the plaintiffs. The plaintiffs elected to carry on in the face of the advice received from the defendants. I cannot find any reasonable justification for that. Certainly, there was no attempt to mislead the plaintiffs as to the particular line that the limitation defence would follow. I conclude therefore that a case has been made out for increased costs pursuant to r 14.6(3)(5) and in respect of the steps taken in this proceeding from 5 October 2011 onwards and which are set out in the schedule that is contained in [5] of this judgment.
[22] When I apply the determination of the three issues that I have referred to in [4] of this judgment to the schedule contained in [5], the only adjustment that is required to be made is to the first entry in that schedule. That must be reduced from
$11,280 to $3,760, or a reduction of $7,520. When that is applied to the overall total costs set out in the schedule, the costs due is $12,549.
Orders
[23] Accordingly I order that the plaintiffs pay the defendants costs of $12,549 together with disbursements as fixed by the Registrar.
JA Faire
Associate Judge