Mayes v Southern Cross Finance Limited

[2014] NZHC 1817

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV2013-404-002797 [2014] NZHC 1817

UNDER

the Credit Contracts Act 1981

BETWEEN

JOHN WILILAM NEWTON MAYES Plaintiff

AND

SOUTHERN CROSS FINANCE LIMITED

Defendant

On the papers
Judgment:	4 August 2014

JUDGMENT OF ANDREWS J [Costs]

This judgment is delivered by me on 4 August 2014 at 2.30pm pursuant to r 11.5 of the High Court Rules.

..................................................... Registrar / Deputy Registrar

MAYES v SOUTHERN CROSS FINANCE LTD [2014] NZHC 1817 [4 August 2014]

[1]      Counsel for the parties have filed memoranda as to costs, as directed at [108]

of my judgment delivered on 29 May 2014.1

[2]      On behalf of Mr Mayes, Mr Holmes submitted that as the successful party, Mr Mayes is entitled to costs.   Costs on a 2B scale totalling $44,377, and disbursements of $2,197.13 are sought.   However, Mr Holmes seeks an order for increased costs in the form of an uplift of 15 per cent above scale, on the basis that SCFL contributed unnecessarily to the time and cost of the proceeding.  Mr Homes further submitted that SCFL had failed to accept a settlement offer which would have led to a better outcome for it.

[3]      For SCFL, Mr Campbell submitted that both parties had each succeeded in part and were thus entitled to costs against the other.   Costs should therefore lie where they fell.  In the alternative, he submitted that the calculation of Mr Mayes’ costs was incorrect in some respects.  Mr Campbell further submitted that Mr Mayes’ entitlement to costs should be reduced to account for the fact that he failed on his first and third causes of action, and only partially succeeded on his second cause of action.  This would lead, he submitted, to an award of $13,731 for costs.  Finally, he submitted that there were no grounds for an increased award of costs.

[4]      The paramount rule on costs is that set out in r 14.1(1), that all matters relating  to  costs  are  at  the  discretion  of  the  Court.    Pursuant  to  r 14.1(2),  all subsequent costs rules are subject to r 14.1(1).  This case was argued and decided on the basis of identified issues, set out at [25] and [36] of the judgment, rather than on the basis of individual causes of action. Accordingly, I do not accept Mr Campbell’s submission that costs should be calculated on the basis of which parties succeeded on individual causes of action.

[5]      While it is correct that Mr Mayes did not succeed on all of his causes of action,  he  did  succeed  in  his  claim  based  on  SCFL’s  failure  to  make  proper disclosure, and the penalties ordered against SCFL will have a substantial effect on the amount to be paid to it.   Further, SCFL has been held to have overcharged

interest in the first year of the loan, and (as was acknowledged in the dying stages of

1      Mayes v Southern Cross Finance Ltd [2014] NZHC 1164.

the hearing) to have wrongly charged substantial costs and fees to the Mayes’ loan account, and to have charged interest on those charges.  I am satisfied that the overall justice of this case is in favour of Mr Mayes and that he is, therefore, entitled to an award of costs.  I make no order for costs in favour of SCFL, so no question of a setoff arises.

[6]      I decline to order SCFL to pay increased costs, as I do not accept that its conduct unnecessarily contributed to the time and expense of the proceeding.  Nor do  I accept that any increase in costs is appropriate on the grounds of SCFL’s rejection of a settlement offer.  On the basis of Mr Holmes’ calculation of the loan balance,  SCFL would  have  been  in  only  a  marginally  better  position  if  it  had accepted the offer.

[7]      I turn now to Mr Campbell’s challenge to the quantum of scale costs.   In

respect of the following items, the claim for costs is to be adjusted:

(a)       Item 2 (“defence to counterclaim”):    the claim is allowed on a 2A

scale, rather than 2B.

(b)      Item 20 (“list of documents on discovery”):  the claim is allowed on a

2A scale, rather than 2B.

(c)       SCFL is allowed a reduction of 0.6 days (on a 2B scale) in respect of

its pleading to Mr Mayes’ amended statement of claim.

[8]      Except as is set out above, I decline to order any of the further reductions sought on behalf of SCFL.

Andrews  J