Museum of New Zealand Te Papa Tongarewa v Karataua

[2020] NZHC 1970

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE

CIV-2020-485-134

[2020] NZHC 1970

BETWEEN

MUSEUM OF NEW ZEALAND TE PAPA TONGAREWA

Plaintiff

AND

VERA MAXINE KARATAUA

First Defendant

NII TERAUPOKO MILLS

Second Defendant

Counsel:

J Caird for plaintiff

T Carter for first and second defendants

Minute:

7 August 2020

Reissued:

18 August 2020

COSTS JUDGMENT OF ASSOCIATE JUDGE JOHNSTON

[On the papers]

[1]    Early this year the plaintiff, Museum of New Zealand Te Papa Tongarewa, ascertained that a substantial sum of money had been stolen from it. It turns out that it was stolen by the Museum’s (former) Senior Payroll Administrator, the first defendant, Ms Vera Karataua. Later, the Museum ascertained that Ms Karataua had paid some of the money she stole into an account owned by the second defendant.

[2]    The Museum ultimately sued both Ms Karataua and the second defendant for the recovery of the funds. The first step taken by Ms Karataua was the filing and service of an admission and consent to the entry of judgment. The second defendant filed and served a statement of defence, essentially saying that she knew nothing of the defalcations.

MUSEUM OF NEW ZEALAND TE PAPA TONGAREWA v KARATAUA [2020] NZHC 1970 [7 August 2020]

[3]    The plaintiff has sealed judgment against Mrs Karataua and discontinued its claim against the second defendant. The only remaining questions concern costs. The Museum seeks costs against Ms Karataua. The second defendant seeks costs against the Museum.

[4]    Counsel have filed memoranda on the basis that these costs applications are to be determined on the papers.

The Museum’s claim

[5]    Ms Karataua is in receipt of legal aid for the purposes of this proceeding. It appears to be accepted that s 45(2) of the Legal Services Act 2011 therefore prevents the Court awarding the Museum costs against her, and that all it can do is certify under s 45(5) what costs award would be made but for that bar.

[6]    It is common ground that the Museum is entitled to a costs award. The issue is quantum. The Museum seeks increased costs. Ms Karataua’s position is that the costs award should be for scale costs on a 2B basis.

[7]    The basis upon which the Museum seeks increased costs is essentially the egregious nature of Ms Karataua’s actions. As a general principle the focus of applications under r 14.6(3)(d) and (4)(f) of the High Court Rules 2016 for increased costs is the actions of the party in question after the proceeding has been commenced and in relation to the conduct of it. There is authority, all of which seems to be in the company winding up area, suggesting that the actions of a party prior to the commencement of proceedings may be relevant, but, as far as I am aware, only after the Court has heard and disposed of a case. I am unaware of any authority that would justify the Court in making an evaluation of the blameworthiness of a party for costs purposes when the Court has not been called upon to adjudicate on the matter. To do so would seem to me to be wrong in principle.

[8]    As already said, on the Museum commencing this proceeding Ms Karataua’s first formal response was to admit liability thus minimising the Museum’s costs in the proceeding.

[9]    In those circumstances, the view I take is that whilst the Museum is entitled to its costs, there is no proper basis for an award of increased costs.

[10]   But for Ms Karataua’s status as a recipient of legal aid, I certify that I would have awarded the Museum scale costs against her on a 2B basis together with such disbursements as may be allowed by the Registrar. Mr Caird for the Museum says costs on a 2B basis amount to $11,950.00. On Ms Karataua’s behalf Mr Carter says that Mr Caird’s calculation includes costs for two memoranda filed for a teleconference. He says that costs are only recoverable in respect of one of these. I disagree. The filing and service of both memoranda seem to me to be a legitimate component in the Museum’s costs. So the quantum of the costs award would have been $11,950 as per Mr Caird’s calculations.

The second defendant’s application

[11]   The second defendant seeks costs on the basis that the Museum has discontinued its claim against her. The Museum’s position is that there should be no award of costs because it had a legitimate claim.

[12]   The fact of the matter is that the Museum has not secured judgment against the second defendant, and the Court has made no assessment of the case against her. In my view, she is entitled to costs on the discontinuance.

[13]   There is no issue concerning quantum. Rule 14.2 provides that a party can only secure scale costs if its actual costs exceed the amount of scale costs. The second defendant’s actual costs do not. Mr Carter says that they come to $2,403.42. That is the maximum that she can recover.

[14]   The second defendant will have an award of costs in the sum of $2,403.42 together with such disbursements as may be allowed by the Registrar.

Associate Judge Johnston

Solicitors:

Simpson Grierson, Auckland for plaintiff

T Carter Barristers & Solicitors, Wellington for first and second defendants