Ministry of Education v Carter Holt Harvey Limited
[2020] NZHC 608
•23 March 2020
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA
TĀMAKI MAKAURAU ROHE
CIV-2013-404-001899
[2020] NZHC 608
UNDER Consumers Guarantees Act 1993, the Fair Trading Act 1986, the Building Act 2004 BETWEEN
MINISTER OF EDUCATION AND OTHERS
First to Fourth Plaintiffs
AND
CARTER HOLT HARVEY LIMITED
Defendant
AND
AUCKLAND COUNCIL AND OTHER TERRITORIAL AUTHORITIES LISTED IN SCHEDULE 1 TO THE FIRST AMENDED STATEMENT OF CLAIM BY THIRD DEFENDANT AGAINST FIRST TO FIFTIETH THIRD PARTIES
First to Fiftieth Third Parties
Hearing: On the papers Counsel:
NF Flanagan and J Carlyon for plaintiffs
DM Salmon and M Heard for third defendant
Judgment:
23 March 2020
JUDGMENT (8) OF FITZGERALD J
[As to costs of interlocutory applications]
This judgment was delivered by me on Monday, 23 March 2020 at 3 pm pursuant to Rule 11.5 of the High Court Rules.
Registrar/Deputy Registrar Date……………
Solicitors: Meredith Connell, Auckland
LeeSalmonLong, Auckland
MINISTER OF EDUCATION v CARTER HOLT HARVEY LTD [2020] NZHC 608 [23 March 2020]
Introduction
[1] On 31 January 2020, I delivered a judgment on the Ministry’s application for leave to amend its statement of claim (the pleadings application). Save for some aspects of the application to which Carter Holt consented, I declined to grant leave to amend.
[2] In a subsequent judgment dated 4 February 2020, I determined the Ministry’s application for an order that Carter Holt file a list of documents which complied with the requirements of the High Court Rules 2016 (and in particular, the Discovery Protocol at Schedule 9 to the Rules) (the discovery list application). I granted that application.
[3] At the conclusion of each judgment, I encouraged the parties to agree costs. They have not been able to do so, and this judgment accordingly determines costs on the two applications.
[4] The background to these proceedings is set out in earlier judgments in these proceedings and is not repeated here.1
Pleadings application
Parties’ positions
[5] The parties agree that Carter Holt is entitled to scale costs (on a 3B basis) on the pleading application. Carter Holt seeks a total of $11,670.75. The Ministry says Carter Holt’s costs entitlement is $8,846.75. The difference between the two is accordingly $2,824.2 The difference turns on whether Carter Holt is entitled to costs for two memoranda it filed after the hearing of the pleading application, but prior to judgment.
[6] By way of further background, at the conclusion of the hearing of the pleading application, I sought further information from the parties in relation to the history of
1 See, for example, The Minister of Education v James Hardie Ltd [2018] NZHC 1481 at [1] to [21].
2 It is somewhat unfortunate that in a civil proceeding of this sheer scale, the parties have not been able to agree a compromise position on sums in issue of this size.
one aspect of the pleading which was relevant to the application. Carter Holt filed a memorandum addressing that issue, the Ministry filed a memorandum in response and then Carter Holt filed a memorandum in reply. Carter Holt’s position is that because the information was requested by the Court and it has actually incurred the costs associated with these memoranda, it follows that it should be awarded costs in relation to them (by analogy with scale costs awarded for case management memoranda).
[7] The Ministry, on the other hand, says that first, no allowance should be made, given to the extent an analogy is to be drawn, the memoranda supplemented the parties’ written submissions and an allowance for those has already been made. Second, the Ministry says the need to file separate memoranda only arose because the draft joint memorandum prepared by Carter Holt was provided to counsel for the Ministry only a few hours before Carter Holt indicated it would be filed. Third, the Ministry notes there was no timetabling for the filing of Carter Holt’s memorandum in reply in any event.
Discussion
[8] I consider that a costs allowance should be made for the further memoranda. I appreciate that an allowance for written submissions has already been made, but there is no doubt the parties would have incurred additional costs in researching the position and preparing the further memoranda, which arose from a specific request from the Court. And irrespective of the timing of Carter Holt’s draft joint memorandum, given the content of the separate memoranda ultimately filed, it was unlikely a joint position could have been agreed in any event. I therefore agree an allowance by analogy with the rate for a conference memorandum is appropriate.
[9] I do not, however, make an allowance for Carter Holt’s reply memorandum. There was no timetable order for such a memorandum, and leave ought to have been requested in advance of it being filed.
[10] There is accordingly a costs award in favour of Carter Holt on the pleadings application in the sum of $10,258.75.3
3 Being the amount sought by Carter Holt less the cost (on a scale 3B basis) of one memorandum.
Discovery list application
Background
[11] The discovery list application was heard as part of a broader hearing (on 13 and 15 November 2019) which traversed a number of discovery-related issues. The primary focus of that two-day hearing was Carter Holt’s application to set aside a number of litigation privilege claims made by the Ministry, and the Ministry’s application to set aside some of Carter Holt’s litigation privilege claims.
[12] Although the discovery list application formed part of the two-day hearing, I delivered a separate (later) judgment on that issue (the challenge to privilege claims needing to be dealt with on a more urgent basis).
The parties’ positions
[13] The Ministry claims scale costs for the filing of an interlocutory application, though accepts that the step for hearing time ought to be reduced, given the discovery list issue took up a relatively small amount of the two-day hearing time. The Ministry has proposed that of the total two-day hearing time, .25 of a day should be allocated to the discovery list issue. On this basis, the Ministry seeks costs of $8,846.75.
[14] Carter Holt, on the other hand, says that given the discovery list issue formed only one part of the Ministry’s broader discovery application, costs should be awarded on the basis of 25 per cent of the total scale costs that would ordinarily attach to steps involved in a defended interlocutory application (being $3,204.50).
Discussion
[15] As noted, the discovery list application was one aspect of a broader interlocutory application. The other aspects of that application sought orders setting aside Carter Holt’s privilege claims over approximately 25 documents. Affidavits were filed in support of the application generally, though there were specific aspects of that evidence directed solely to the discovery list issue (and in particular, Carter Holt’s use of metadata to populate the fields of its discovery list, and the practical issues said to arise as a result).
[16] I agree that the discovery list issue took up a relatively small part of the overall two-day hearing. I consider an allocation of .25 of a day is appropriate
[17] The two orders sought in the Ministry’s 22 October 2019 application were distinct. In theory, therefore, the two orders could have been sought by way of separate interlocutory applications with separate supporting affidavit evidence. But instead, and consistent with the Rules’ emphasis on efficiency, it was clearly appropriate to deal with a number of matters arising on discovery in the one application and at the one hearing. This no doubt gave rise to efficiencies in preparing the interlocutory application and its associated materials.
[18] I therefore consider it consistent with the policy of the Rules, and that costs awards are intended to reflect a reasonable contribution to costs, rather than actual costs incurred, that the Ministry is awarded costs by reference to the filing of a defended interlocutory application, but reduced to reflect the fact that the discovery list issue formed only a part of that application. That the discovery list issue accounted for only .25 of the two-day hearing illustrates the more minor role it played in the overall application.
[19] I am not persuaded however, that an “across the board” reduction of 75 per cent is warranted, as Carter Holt proposed. In cases such as this, where multiple issues are dealt with in one interlocutory application, there is perhaps a greater need than usual to consider costs on a step-by-step basis.4
[20] In this case, that aspect of the step of preparing the interlocutory application itself (step 22) which was directed to the discovery list issue would have been relatively minor. On the other hand, much of the evidence in support of the application was directed to the discovery list issues, and the practical issues said to arise from Carter Holt’s approach. I consider an appropriate reduction to step 22 (which covers both these “sub-steps”) is 50 per cent.
[21] The preparation of written submissions (step 24) was largely devoted to the litigation privilege issues. A reduction of 75 per cent is appropriate. And as already
4 See High Court Rules 2016, r 14.5(1).
noted, an allowance of .25 is appropriate for step 26 (appearance at hearing). I allow for second counsel on the same basis.
[22] I should emphasise that it will not always be appropriate to reduce the costs otherwise awarded for a defended interlocutory application where separate issues have been rolled up into the one application. For example, if several distinct and quite substantive issues have been addressed in the one application and a party is successful on all of them, there may be a case for an increase in scale costs,5 given significantly more work will have been carried out across all issues than is reflected in the assumption of a reasonable contribution to costs of a defended interlocutory application. A party in such circumstances should not be unduly penalised from a costs perspective for taking the (efficient) approach of dealing with a number of separate matters in one interlocutory application. The position will of course vary on a case-by-case basis. This simply reinforces that costs are ultimately at the discretion of the Court, and the approach adopted may vary as between individual steps involved in any application.
[23] In relation to disbursements, had the discovery list application been filed separately, the filing fee would have been paid in any event. Thus it is appropriate it is awarded in full.
[24] On this basis, there is a costs award against Carter Holt in the Ministry’s favour in the sum $3,816.50, as set out in the schedule attached to this judgment.
Result
[25] Netting the two costs awards off against each other, there is a net award in Carter Holt’s favour of $6,442.25.
Fitzgerald J
5 Pursuant to r 14.6(3)(a) or (d).
SCHEDULE
3B Costs Calculation – compliant list
Step
Description
Days
Amount
22
Filing interlocutory application (22 October 2019) (reduced by 50 per cent)
0.3
$1,059.00
24
Preparation of written submissions (6 November 2019) (reduced by 75 per cent)
0.375
$1,323.75
26
Appearance at hearing of defended application for principal counsel (13 and 15 November 2019)
.25
$882.50
27
Second and subsequent counsel if allowed by the court
0.125
$441.25
Total costs:
$3,706.50
Disbursements
1
Filing fee for interlocutory application
$110.00
Total costs and disbursements:
$3,816.50
0