Malley & Co v Burgess

[2014] NZHC 2981

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

CIV-2013-409-001385 [2014] NZHC 2981

BETWEEN

MALLEY & CO

Plaintiff/Counter-Claim Defendant/First
Respondent

AND

GARY OWEN BURGESS Defendant/Counter-Claim Plaintiff/Applicant

AND

DISTRICT COURT AT CHRISTCHURCH Second Respondent

AND

LEGAL COMPLAINTS REVIEW OFFICER

Third Respondent

AND

ERNEST JOHN TAIT Fourth Respondent

AND

NEW ZEALAND LAW SOCIETY Intervener

Hearing:	27 November 2014 (On the papers)
Appearances:	G O Burgess (In Person) M Parker for Respondents
Judgment:	27 November 2014

JUDGMENT OF DUNNINGHAM J

[1]      On 2 October 2014, I issued a decision declining Mr Burgess’ application for

judicial  review  in  relation  to  decisions  of  the  District  Court  and  of  the  Legal

Complaints Review Officer.

MALLEY & CO v BURGESS AND ORS [2014] NZHC 2981 [27 November 2014]

[2]      At the end of my decision I reserved costs but indicated that my provisional view was that the defendants1 were entitled to costs calculated on a 2B basis.

[3]      The parties were unable to reach agreement on costs so submissions on the issue of costs were filed by both Mr Burgess and the defendants.   I observe that Mr Burgess’ submissions were not filed in accordance with the timeframes directed but, given no obvious prejudice arises to any party, I have accepted and considered his submissions in reaching my decision.

[4]      The defendants seek  costs calculated in accordance with the High Court Rules costs regime.  Those costs, calculated on a 2B basis, but applying a 20 per cent discount for certain steps in the earlier stages of this proceeding,2  total $39,780.10 plus disbursements of $4,633.02.  The defendants submit that in the circumstances of this case there is no reason to depart from the standard approach to costs.

[5]      Mr Burgess’ submissions on costs can be summarised as follows:

(a)      He is currently seeking leave to appeal my decision out of time.  He considers that the question of costs should be deferred until the outcome of the application for leave to appeal is known.

(b)      Taking into account the provisions of High Court rr 14.1, 14.2 and

14.7(f) and (g), he considers any costs award should be substantially reduced.

(c)      His reasons for saying a reduced costs award is appropriate include: (i)       the defendants advanced arguments which were not sustained;

(ii)costs should be determined globally, depending on the final outcome  of  the  consolidated  proceedings,  of  which  the

application for judicial review was simply one stage;

1      Malley & Co, Ernest John Tait, the District Court at Christchurch and Legal Complaints Review

Officer.

2      As determined by Whata J in his decision on security for costs and related matters:  Burgess v

Malley And Co [2014] NZHC 746 at [24].

(iii)he  had  some  success  in  the  judicial  review  proceedings because of the finding of non-compliance with s 21F of the Property (Relationships) Act 1976 and in regard to Mr Tait’s conduct in certifying the Notice of Claim;

(iv)the respondents have not demonstrated that the costs claimed do  not  exceed  the  costs  actually  incurred  as  required  by r 14.2(f);

(v)the disbursements claimed for travel and accommodation are unreasonable,  because the defendants  could  have  instructed Christchurch counsel; and

(vi)the lawyers acting for both the District Court and the Legal Complaints  Review Officer  were  “acting  as  counsel unlawfully, and lacking independence” and that should be reflected in the appropriate costs award.

The legal principles applying

[6]      The legal principles applying to an award of costs in the High Court are well understood.   Rule 14.1 is paramount.   Costs are at the discretion of the Court. However, the exercise that general discretion is governed by the principles which are set out at r 14.2, which include:

(a)       that the party who fails with respect to a proceeding should pay costs to the party who succeeds;3

(b)costs should be assessed by applying the appropriate daily recovery rate  for  the  time  considered  reasonable  for  each  step  reasonably

required in relation to the proceedings;4 and

3      High Court Rules, r 14.2(a).

4      Rule 14.2(c).

(c)       so far as possible, the determination of costs should be predictable and expeditious.

[7]      In summary, the presumption is that the Courts will apply the regime in the High  Court  Rules  unless  there  is  a  good  reason  to  depart  from  that,  because otherwise the integrity of the costs regime would be undermined.

Are there grounds to depart from the usual principles applying to the determination of costs?

[8]      I am satisfied that the defendants were successful in these proceedings.  Any observations which were made in the decision, which Mr Burgess considers were favourable to him, were not determinative of the outcome and do not warrant an adjustment to the presumption that costs should follow the event.

[9]      While  I  accept  Mr  Burgess’ submission  that  the  application  for  judicial review was part of a set of related and consolidated proceedings, all relating to a dispute between himself and his former lawyers, including a counterclaim, a claim for fees and an appeal and cross-appeal against decisions of the Court, that does not, in my view, preclude a costs award being made now.   Unless leave is granted to appeal to the Court of Appeal out of time, this is the end of this branch of the litigation, and the presumption in the High Court Rules costs regime is that costs should  be  determined  expeditiously.    If  leave  is  granted,  and  Mr  Burgess  is successful on appeal, then this costs award can be set aside by that Court.

[10]     Furthermore,  to  the  extent  Mr Burgess  characterises  the  application  for judicial review as part of a larger dispute, and where the proceedings on all matters have been consolidated, I consider that the approach in r 14.8 applies by analogy. That rule requires costs on an opposed interlocutory application to be fixed when the application is determined, and to become payable when they are fixed, “unless there are special reasons to the contrary”.   This reflects the reality that the merits of a particular application, and those of the substantive proceedings, may be quite different.

[11]     In the present case, different legal tests apply when assessing the lawfulness of  decisions  on  judicial  review,  from  those  which  will  be  considered  in  the substantive claim and counterclaim being pursued by Mr Burgess and his former law firm.  Success, if that is achieved in his counterclaim, does not necessarily reflect on the merits of these judicial review proceedings.  There are also parties involved in this  aspect  of  the  proceedings  who  will  not  be  involved  in  the  claim  and counterclaim, and they are entitled to have costs issues resolved promptly.

[12]     I do not accept Mr Burgess’ query as to whether the claim for costs exceeds the defendants’ actual costs should be given weight. The costs regime is premised on an assumption that the daily recovery rates will broadly approximate two-thirds of the rates that New Zealand practitioners in the relevant category currently charge to

clients.5    It is well understood by lawyers that a costs award should not exceed the

costs incurred by the party claiming costs.6    I am satisfied it can be assumed that, when an application is made for costs, that party’s lawyer is obliged to ensure the costs award sought does not exceed the actual costs incurred by the party claiming costs.  The party claiming costs should not be required to expressly verify this as a matter of course, and it would only be proper for a party resisting a costs award to raise this if there was some factual basis for suggesting this may not be the case. The present proceedings have been tortuous and vigorously advanced and defended at each stage.   I have absolutely no reason to think that the costs sought exceed the actual costs incurred.  Indeed it is more likely the costs actually incurred far exceed the costs sought.  I therefore reject Mr Burgess’ submission on this issue.

[13]     Similarly,  I do  not  consider  Mr  Burgess’ challenge  to  the  disbursements incurred because the defendants have not appointed Christchurch counsel, has merit. The costs to travel to Christchurch are insignificant in the context of the total costs sought, and I consider it would set an inappropriate precedent to suggest that, in complex  cases  such as  this,  the choice of counsel  should  be restricted  to  local counsel  only.    In  addition,  I  observe  that  the  defendants  dealt  with  the  matter

efficiently by appointing one lawyer to address the respective claims against all of

5      Rule 14.2(d).

6      Rule 14.2(f).

them.  Had that not been done, Mr Burgess would be facing a much more significant application for costs.

[14]     In respect of Mr Burgess’ assertion that the lawyers for the second and third respondents were acting as counsel unlawfully and they lacked independence, there is simply no basis provided to support this allegation.  Furthermore, there is nothing in the way the defendants’ lawyers conducted the litigation which would justify a reduction in the costs awarded to his clients.

[15]     Finally, Mr Burgess submitted that, even if costs were awarded against him now, payment of the costs should be deferred until the substantive applications in relation to the claim for fees and his counterclaim, are determined.

[16]     However, I consider that the presumption that costs will be fixed and paid when the matter is determined, ensures that parties are discouraged from taking unmeritorious steps in the course of extended litigation.   It also ensures that the successful  party  is  not  unreasonably  held  out  of  compensation  for  legal  costs incurred as complex litigation such as this progresses, when they have successfully advanced or defended an argument.  This consideration is even more important in a

case such as this where at least one of those parties7 will not be involved in further

stages in the proceedings.

Conclusion

[17]     In short, none of the matters raised in Mr Burgess’s submissions on costs persuade me that this is a case where there are good reasons from departing from the usual principles which apply to the determination of costs.

[18]     Accordingly, I order:

(a)       the  plaintiff  is  to  pay  the  defendants’ costs,  on  a  2B  basis,  but applying a 20 per cent discount for steps taken in relation to the

application for security for costs, for recall and for extension of time,

7      The Legal Complaints Review Officer.

being    costs   totalling    $39,780.10,   plus    disbursements    totalling

$4,064.19.

Solicitors:

Parker Cowan, Queenstown

Clark Boyce, Christchurch