Napier City Council v Stuff Ltd

[2020] NZHC 763

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

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

CIV-2019-485-000526

[2020] NZHC 763

BETWEEN

NAPIER CITY COUNCIL

Plaintiff

AND

STUFF LTD

First Defendant

MARTY SHARPE

Second Defendant

On the Papers
Counsel:	J McBride and C Smith for the Plaintiff RKP Stewart for the Defendants
Judgment:	20 April 2020

JUDGMENT OF DOOGUE J

Introduction

[1]        As the successful party in the litigation, the plaintiff is now entitled to costs.1 The plaintiff seeks costs on a “2B” basis.

[2]        The defendants accept that in light of their consent to the order sought, an award of costs in the plaintiff’s favour is appropriate but argue that an element of the costs claimed is not justified and further that there should be a discount of 25 per cent on costs at scale.

1      High Court Rules 2016, r 14.2(1)(a).

NAPIER CITY COUNCIL v STUFF LTD & ANOR [2020] NZHC 763 [20 April 2020]

Background

[3]        The plaintiff sought and obtained an interim injunction restraining the defendants from publishing confidential and privileged information they had obtained by the plaintiff’s inadvertent publication of the material on its own website. That injunction was ordered by Churchman J on 5 September 2019.

[4]        By consent I granted a permanent injunction restraining the defendants from using   the   confidential   and   privileged    information    for    any    purpose    on 10 February 2020, the day the application was to be heard.

Costs principles

[5]        The High Court Rules prescribe a scheme  for  the  calculation  of  costs.  Rule 14.2 sets out the applicable general principles. While costs are discretionary, any departure from the prescribed costs must be a considered and particularised exercise of the discretion.

[6]        This approach requires an assessment of the complexity of and the time reasonably required for each step of the proceeding.

[7]        Having determined the complexity of the proceeding and the time reasonably required for each step, the Court must then consider whether there are any additional factors which might warrant an increase or reduction in costs.2

Categorisation of the proceedings

[8]        The parties are agreed that this is a Category 2B proceeding, in terms of rule 14.3, with a daily recovery rate of $2,390.00. I consider that is the appropriate categorisation.

Time reasonably required for each step

[9]        The only element of the calculation according to Category 2B with which the defendants take issue is the claim for three days for the commencement of the

proceeding by the plaintiff at $7,170.00 and the filing of the interlocutory application seeking the interim injunction at $1,434.00 on the same day. The defendants say that

$2,390.00 is reasonable and that it represents the actual time it would have taken the plaintiffs to prepare the claim and file the interlocutory application.

[10]      Schedule 3 to the rules allocates a notional “reasonable time” allowance for each step taken in the proceeding. As observed by Toogood J in Wagner v Gill3 the time allocations in Schedule 3 permit the Court to recognise that some interlocutory proceedings are of greater complexity, or are necessarily more time-consuming than others of the same type, depending on the matters in issue in the particular proceeding or interlocutory step.

[11]      It is significant in this case to note that these allowances are not assessed by reference to the time actually taken by the parties’ solicitors. A reasonable time for a step is prescribed by reference to the bands in the rules. Here the plaintiffs are claiming costs at Band B where the steps are said to have taken a “normal” amount of time.

[12]      The defendants, whilst not disputing 2B applies, submit the plaintiff is overreaching in claiming more than one day’s preparation time for the preparation of the statement of claim and the application for the application of interim relief. They submit these could only have been prepared temporally within a day due to the timetable they rely upon.

[13]      I do not agree with their submission. First, the scheme does not prescribe an allowance for actual time taken but for reasonable time taken. Secondly, there undoubtedly would have been preparatory work undertaken that could well and justifiably have been undertaken over the relevant intervening weekend. Such work could not have been claimed had the defendants capitulated earlier in the timeline, but can be rightfully claimed given proceedings did indeed prove necessary. Thirdly, the proceeding concerned sensitive, confidential and privileged information. Fourthly, it was brought under urgency and fifthly it required a careful analysis of relevant legal principles as set out in the plaintiff’s submissions.

[14]      I find that the specific line costs of $7,170.00 for the commencement of the claim and $1,434.00 for filing the interlocutory application for an interim injunction are reasonable costs.

Should there be an uplift in favour of the plaintiff of 25 per cent or should there be a discount of 25 per cent in favour of the defendants?

[15]      Having determined the complexity of the proceeding and the time reasonably required for each step the Court must then consider whether there are any additional factors that might warrant an increase or reduction in costs, under Rules 14.6 and 14.7.

These considerations focus on “reasonableness”.4

[16]      The baseline costs calculated at 2B are $18,044.50. The plaintiff seeks an increase of 25 per cent or $4,511.13 on those baseline costs. The defendants submit that this figure should in fact be deducted from the baseline.

[17]      The plaintiff seeks an increase of 25 per cent beyond “2B”, on the basis that as per High Court Rule 14.6(3)(b) the defendants have contributed unnecessarily to the time and expense of the proceeding by putting the plaintiff to the costs of having to seek urgent interim relief and by raising at a very late stage the issue of public interest in publishing the information at issue. Further, they say that stance was completely without merit as the authorities are unambiguous. “Public interest” arguments are irrelevant once privilege is found to attach to the information in question.

[18]      I accept that the defendants (a well-known media organisation and a highly respected employee journalist) both at all times acted in good faith. I also accept that as soon as counsel had reviewed and provided advice to the defendants on the legal position, the defendants responsibly accepted that legal authority favoured the plaintiff’s argument that public interest does not apply when privilege is found to attach to the information in question.

[19]      Given that assessment, I see no reason to increase the costs in favour of the plaintiff nor decrease them in favour of the defendants.

Disbursements

[20]      For disbursements to be recoverable they must be of a class approved by the Court for the purposes of the proceeding, specific to the conduct of the proceeding, necessary for the conduct of the proceeding, and reasonable.5

[21]      Having considered the disbursements sought, I am of the view that they should be approved in their entirety as they meet the criteria listed in the previous paragraph.

Result

[22]Costs shall issue in favour of the plaintiff as follows:

Standard 2B	$18,044.50
Disbursements
-     Filing fee	$1,347.83
-     Counsel’s travel costs	$1,030.22
Total	$20,422.55

Doogue J

Solicitors:

Rice Speir, Auckland Darroch Forrest, Auckland