Mortenson v Tui

[2019] NZHC 1033

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2019-404-14

[2019] NZHC 1033

UNDER

the Property Law Act 2007

IN THE MATTER

of an application for an order for sale under s 339

BETWEEN

PENEUILA MORTENSON

Applicant

AND

HENRY TUI as executor of the will of NAUMALILA LEOTA aka PEPE NAUMALILA TUI

Respondent

Hearing:	On the papers
Counsel:	SC Munro for applicant SI Perese for respondent
Judgment:	13 May 2019

JUDGMENT OF FITZGERALD J

[As to costs]

This judgment was delivered by me on 13 May 2019 at 11.30am, pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date……………

Solicitors:           Galbraiths Lawyers, Auckland

Saseve Solicitors, Auckland (T Saseve)

Mortenson v Tui [2019] NZHC 1033 [13 May 2019]

Introduction

[1]                  In my judgment dated 5 March 2019, I made orders under s 339 of the Property Law Act 2007 for the sale of a property of which the applicant and respondent are co- owners.1 Those orders were in fact made by consent. Having been served with the proceedings, the respondent did not file any opposition and agreed to the property being sold.

[2]                  The applicant now seeks costs in relation to the commencement of these proceedings.

Factual background and costs submissions

[3]                  The background to the proceedings is set out in my substantive judgment.2 But in short, the applicant held the majority share in the property, at 70 per cent. The respondent held the remaining 30 per cent as executor of his late mother’s will, which required he distribute his mother’s estate equally among his siblings. Obviously, the respondent would not be able to do so without the property being sold.

[4]                  The applicant filed an affidavit in support of her application to the effect that she had difficulties communicating and dealing with the respondent (her brother) in order to progress and arrange the sale. She said the proceedings therefore had to be filed as a “last resort”, in response to which the respondent consented to the orders. Counsel for the applicant says that in those circumstances, the proceedings were wholly unnecessary, and costs should follow the event in the ordinary way (on a scale 2B basis).

[5]                  The respondent disputes that the applicant was “forced” to make an application to the Court. In a memorandum filed in opposition to the costs application, the respondent disputes that he had been difficult in terms of communicating on the sale of the property. Counsel for the respondent states that once the application had been served on the respondent, he cooperated fully and promptly, such that a costs award is not necessary.

1      Mortenson v Tui [2019] NZHC 338.

2      At [3]-[8].

Discussion

[6]                  Having considered the matters raised by the parties, I am clear that costs should follow the event in the ordinary way. Ultimately, proceedings were commenced and served, and the applicant has been wholly successful on them. The very fact that the respondent’s consent to a sale only came about in response to formal court proceedings leads me to infer that but for the proceedings, there would have continued to be delays in the sale of the property.

[7]                  In addition, the sworn affidavit material before me (rather than statements in a costs memorandum) indicates there were difficulties in progressing the matter promptly in the absence of court proceedings.

[8]                  I am not persuaded, however, that costs ought to be awarded on a scale 2B basis. The proceedings were extremely straightforward, and the formal court documents are very brief; the affidavit in support is only 10 relatively short paragraphs.

[9]                  I consider these proceedings ought to be categorised as category 1 proceedings, namely being proceedings of a straightforward nature able to be conducted by counsel considered junior in the High Court. In addition, the steps ought to be categorised by reference to Band A. Given the straightforward nature of the proceedings and the appropriately brief materials filed in support, a comparatively small amount of time would have been reasonable.

[10]              There is accordingly a costs order in favour of the applicant against the respondent for those steps set out in  the  applicant’s memorandum on  costs dated  21 March 2019, on a scale 1A basis. This produces a costs award of $2,072. There is also an award of those disbursements claimed in the memorandum totalling $1,055. This produces a total costs and disbursement award of $3,127.

[11]              Counsel for the respondent states that the applicant has not attached to her costs memorandum an invoice of fees actually incurred. He queries whether actual costs would exceed the 2B costs claimed, stating that a party cannot claim costs that have not been billed.

[12]              Invoices of fees actually incurred are not ordinarily produced when scale costs are sought, given actual fees are irrelevant to the scale costs calculation. It is clear, however, that pursuant to r 14.2(1)(f), scale costs cannot exceed actual costs paid. This is referred to as the “non-profit rule”.3

[13]              Plainly if the costs award in favour of the applicant calculated on a scale 1A basis is greater than her actual costs incurred, then only the actual costs would be payable. There is no basis to suggest in this case, however, that the applicant’s actual costs do exceed scale costs on a 1A basis. Further, the courts expect and understand that counsel do not advance scale costs claims on their client’s behalf which exceed actual costs incurred.

Fitzgerald J

3      McGechan on Procedure (online looseleaf ed, Thomson Reuters) at [HR14.2.01(6)].