Mosqueira v Garate

[2024] NZHC 1167

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2018-404-000497

[2024] NZHC 1167

BETWEEN

CIRILO EDUARDO SEQUEIROS MOSQUEIRA

by his litigation guardian, Eduardo Sequeiros Garate

Plaintiff

AND

JORGE SEQUEIROS GARATE

Defendant

On the papers
Counsel:	J B Murray for Plaintiff C R Goode for Defendant
Costs Judgment:	10 May 2024

JUDGMENT OF VAN BOHEMEN J

[on costs]

This judgment was delivered by me on 10 May 2024 at 12:30 pm pursuant to r 11.5 of the High Court Rules 2016.

Registrar/Deputy Registrar

……………………………..

Counsel/Solicitors:

Vallant Hooker & Partners, Auckland C R Goode, Auckland

H T Rogers, Auckland

Chambers Craig Jarvis, Auckland

MOSQUEIRA v GARATE [2024] NZHC 1167 [10 May 2024]

[1]                 In my judgment dated 18 December 2023, I dismissed all the claims brought by Eduardo Sequeiros Garate (Eduardo) and his brother, Gabriel Sequeiros (Gabriel), as litigation guardians for their later deceased parents, Cirilo Eduardo Sequeiros Mosquiera (Cirilo) and Flor Sequeiros (Flor), against their brother, Jorge Sequeiros Garate (Jorge) in relation to the transfer to Jorge by Cirilo and Flor of their home at 53 John Davis Road, Mount Roskill, Auckland (John Davis Road).1

[2]                 I also dismissed the counterclaim brought by Jorge, which took up little of the hearing time.2

[3]                 As explained in the judgment, Flor died before the hearing in November and December 2022, with the consequence that Gabriel could no longer be litigation guardian for his mother, although he gave evidence in support of the proceeding, which was continued by Eduardo. Cirilo died between the hearing and the issue of my judgment. However, I considered it was still appropriate to issue my judgment because the outcome of the proceeding would be important to the disposition of the estates of Cirilo and Flor.3

[4]At the conclusion of my judgment, I stated:

[308]    As the successful party, Jorge would usually be entitled to an award of costs. In this case, he might be justified in seeking an uplift on scale costs. However, because, as I understand the situation, Jorge is legally aided, he is not able to seek an award of costs.

[309]    However, if [counsel for Jorge] wish to address me on costs on behalf of Jorge, they may file a memorandum of no more than six pages by 30 January 2024. Any reply on behalf of Eduardo, also of no more than six pages, may be filed by 29 February 2024.

[5]                 Ms Goode, counsel for Jorge, filed a memorandum dated 30 January 2024 in which she submitted that Jorge should be awarded indemnity costs of $153,527.00. That is the amount of legal aid spent in defending this proceeding and which the Legal Services Commissioner has required Jorge to repay in accordance with the Legal Services Act 2011. That amount is secured by a charge against the title to John Davis

1      Mosqueira v Garate [2023] NZHC 3737 [Substantive Judgment].

2      At [304]–[305].

3      At [4]–[5].

Road. Ms Goode also provided a breakdown of scale costs, calculated on a 2B basis, as this proceeding had been previously classified. These totalled $128,254.50 plus

$45,833.19 in disbursements. However, for various reasons, Ms Goode submitted that 2B costs did not adequately reflect the complexity of the proceeding.

[6]                 In a further memorandum dated 31 January 2024, Ms Goode submitted that Jorge should also receive an award of costs to cover the costs of seeking costs.

[7]                 By memorandum dated 4 March 2024, Mr Murray, counsel for Eduardo, accepted that costs awarded should not exceed the actual costs incurred and that, as a general rule, Jorge is entitled to the full sum of the legal aid grant, provided this is the same or less than scale costs. Mr Murray also submitted that the actual costs claimed must still be reasonable. In that regard, Mr Murray took issue with aspects of the legal aid grant, the calculation of scale costs, the costs relating to one witness and the claim for second counsel. He also sought an offset because Jorge was unrepresented when he filed his original statement of defence and because Eduardo had to respond to Jorge’s limitation defence.

Applicable principles on costs

[8]                 As stated by the Supreme Court in Manukau Golf Club Inc v Shoye Venture Ltd and by the Court of Appeal in Bradbury v Westpac Banking Corp, and as reflected in the High Court Rules 2016 (the Rules), it is a fundamental principle that costs follow the event.4

[9]                 While all matters relating to costs are at the discretion of the Court,5 that general discretion is qualified by the specific costs rules in the Rules and is exercisable only in situations not contemplated or not fairly recognised by the Rules. Ordinarily, the loser pays the winner’s costs according to the scale set out in the Rules.6 The scale

4      Manukau Golf Club Inc v Shoye Venture Ltd [2012] NZSC 109, [2013] 1 NZLR 305 at [8]; Bradbury v Westpac Banking Corporation [2009] NZCA 234, [2009] 3 NZLR 400 at [6]; High Court Rules 2016, r 14.2(1)(a).

5      High Court Rules, r 14.1(1).

6      Rule 14.2(1)(a).

reflects the complexity and significance of the proceeding and is assessed at two-thirds of the daily rate considered reasonable in relation to the proceeding.7

[10]             In the circumstances provided for under r 14.6(3) and (4), the Court may either make an order for increased costs or an order for indemnity costs.

[11]             Under r 14.6(3), the Court may order a party to pay increased costs if the party “has contributed unnecessarily to the time or expense of the proceeding” by, for example, “taking or pursuing an unnecessary step or an argument that lacks merit”.8

[12]             Under r 14.6(4), the Court may order a party to pay indemnity costs if the party has “acted vexatiously, frivolously, improperly or unnecessarily in commencing, continuing, or defending a proceeding or a step in a proceeding”.9

[13]             In Bradbury, the Court of Appeal summarised the circumstances where scale costs, increased costs and indemnity costs might be ordered as follows:10

(a)standard scale applies by default where cause is not shown to depart from it;

(b)increased costs may be ordered where there is failure by the paying party to act reasonably; and

(c)indemnity costs may be ordered where that party has behaved either badly or very unreasonably.

Discussion

[14]In my judgment, I recorded that:11

… Eduardo and Gabriel worked for a considerable period to try to undermine the arrangements that Cirilo and Flor had put in place for themselves and for Jorge with respect to John Davis Road. As long as Cirilo and Flor were living with Jorge, they could not make much progress. They then removed Cirilo and Flor from Jorge. When Flor as well as Cirilo, was suffering from dementia, they took steps to have themselves appointed litigation guardians,

7      Bradbury v Westpac Banking Corporation, above n 4, at [6]; Rule 14.2(1)(d).

8      High Court Rules, r 14.6(3)(b)(ii).

9      Rule 14.6(4)(a).

10     Bradbury v Westpac Banking Corporation, above n 4, at [27].

11 Substantive Judgment, above n 1, at [303].

purporting to act in their parents’ interests when, in reality, the interests they were pursuing were their own.

[15]             While that comment was directed to a particular aspect of the evidence, it encapsulates my more general finding that, in bringing this proceeding, Eduardo and Gabriel were pursuing their own interests and not the interests of their parents. They also brought the proceeding in the knowledge that Jorge had limited resources and against a background in which they had profited from Jorge’s lack of sophistication and a readiness to trust his brothers.

[16]             In these respects, I am satisfied that Eduardo and Gabriel behaved poorly and unreasonably and, in terms of r 14.6(4), acted improperly and unnecessarily in commencing and continuing the proceeding.

[17]             For these reasons, I am satisfied that Eduardo, as the remaining active protagonist following Flor’s death, should pay the full costs assessed of Jorge by the Legal Services Commissioner, irrespective of the fact that those costs exceed scale costs calculated on a 2B basis.

[18]             I do not make any of the deductions sought by Mr Murray. The Legal Services Commissioner was satisfied that the costs incurred were warranted. The costs were incurred and met initially from the public purse. I see no reason why this Court should visit those costs on Jorge when, as I have held, Eduardo acted improperly and unnecessarily in commencing and continuing the proceeding.

[19]             For these reasons, I am satisfied that Eduardo should pay Jorge the full sum that the Legal Services Commissioner has required Jorge to repay in respect of the conduct of the substantive proceeding: $153,527.00.

[20]             I do not accept, however, that Eduardo should pay Jorge any costs incurred in preparing the costs application. This is not a situation that merits an award of costs on costs.

Order

[21]             The plaintiff, by his litigation guardian, Eduardo Sequeiros Garate, is ordered to pay the defendant, Jorge Sequeiros Garate, costs of $153,527.00.

G J van Bohemen J