Nellies v Mark

[2023] NZHC 1526

IN THE HIGH COURT OF NEW ZEALAND BLENHEIM REGISTRY

I TE KŌTI MATUA O AOTEAROA TE WAIHARAKEKE ROHE

CIV-2018-406-010

[2023] NZHC 1526

BETWEEN

IAIN ANDREW NELLIES as liquidator of PMT 2010 Limited (in liquidation)
Plaintiff

AND

PETER MARK and

JEANETTE PATRICIA MARK

Defendants

CIV-2021-406-13

BETWEEN

PMT 2010 LIMITED (in liquidation) First Plaintiff

IAIN ANDREW NELLIES as liquidator of PMT 2010 Limited (in liquidation)

Second Plaintiff

AND

PETER MARK and

JEANETTE PATRICIA MARK
First Defendants

WISHEART MACNAB & PARTNERS TRUSTEE COMPANY LIMITED and

DAVID JOHN PAUL as trustees of the Mark Family Trust

Second Defendants

Hearing:	On the papers
Appearances:	D P MacKenzie for Plaintiffs P Morten for Defendants
Judgment:	19 June 2023

JUDGMENT OF ASSOCIATE JUDGE SKELTON

[Costs]

NELLIES v MARK [2023] NZHC 1526 [19 June 2023]

Introduction

[1]        In a judgment dated 22 March 2023,1 Associate Judge Johnston dealt with two interlocutory applications relating to leave to amend pleadings and further discovery and made timetabling directions. The issue of costs was reserved. Counsel, having been unable to agree on costs, have now filed memoranda.

Legal principles

[2]        The principles governing the award of costs are well established.2 Questions of costs are ultimately a matter of discretion, the overall objective being to achieve an outcome that best meets the interest of justice. However, the discretion is not unfettered; it is qualified by the applicable costs rules, rr 14.2–14.10 of the High Court Rules 2016, and must be consistent with established principles.

[3]        The general principles in relation to determination of costs include that the party who fails should pay costs to the party who succeeds, and costs should be assessed by applying the appropriate daily recovery rate to the time considered reasonable for each step reasonably required in relation to the proceeding or interlocutory application.3

[4]        Rule 14.8 of the High Court Rules governs costs on interlocutory applications. It provides as follows:

14.8     Costs on interlocutory applications

(1)Costs on an opposed interlocutory application, unless there are special reasons to the contrary,—

(a)must be fixed in accordance with these rules when the application is determined; and

(b)become payable when they are fixed.

1      Nellies v Mark [2023] NZHC 584.

2      High Court Rules 2016, r 14.1; Manukau Golf Club Inc v Shoye Venture Ltd [2012] NZSC 109, [2013] 1 NZLR 305 at [7] and [16]; Glaister v Amalgamated Dairies Ltd [2004] 2 NZLR 606 (CA) at [21]–[24] and [28]; and Mansfield Drycleaners Ltd v Quinny’s Drycleaning (Dentice Drycleaning Upper Hutt) Ltd (2002) 16 PRNZ 662 (CA) at [27].

3      High Court Rules, r 14.2(1).

(2)Despite subclause (1), the court may reverse, discharge, or vary an order for costs on an interlocutory application if satisfied subsequently that the original order should not have been made.

(3)This rule does not apply to an application for summary judgment.

[5]Rule 7.77(8) covers costs in relation to an amended pleading:

(8) If an amended pleading has been filed, the party filing the amended pleading must bear all the costs of and occasioned by the original pleading and any application for amendment, unless the court orders otherwise.

[6]        In contrast to r  14.8, there is no  presumption that costs will be  fixed under   r 7.77(8) when the application for leave to amend is determined.4 However, in this case, there is no reason why the costs of the application for leave (as opposed to any costs of and occasioned by the original pleading) cannot be dealt with now.

Parties’ positions

[7]        The first defendants seek costs on a 2B basis for their success on the discovery application. Associate Judge Johnston made an order for further discovery in the terms sought by the first defendants. The first defendants submit that the plaintiffs were on notice about the defendants’ view that initial discovery was inadequate. They say that no special reason exists in terms of r 14.8(1) of the High Court Rules to deny costs.

[8]        The plaintiffs seek scale costs on the basis that they succeeded in obtaining leave to file a second amended statement of claim. They say that the Court was doubtful as to whether leave was required. They submit that the defendants would not agree that leave was not required. While the defendants advised that they would not oppose an application for leave, they required the plaintiffs to provide them with a copy of the proposed pleading and an application for leave to amend. That required the plaintiffs to do all the work necessary to file their application. The plaintiffs say that the defendants should have “simply consented” to the filing of the further amended statement of claim.

[9]        The defendants, in reply, dispute the characterisation of their conduct as, in effect, opposing the leave application. The defendants say that the leave application

4      McGechan on Procedure (looseleaf ed, Thomson Reuters) at [HR 7.77.09].

was clearly unopposed and therefore, pursuant to r 7.77(8) the plaintiffs must bear the costs of the application for leave to amend. No reasoned basis exists to depart from that default position.

[10]      The plaintiffs, in reply, say that they do not oppose an award of costs to the defendants with regard to the discovery application, although they oppose the disbursements sought by the defendants. However, they submit that both parties were equally successful and that costs should lie where they fall.

Discussion

[11]      The main issue requiring determination is whether the plaintiffs are entitled to costs on their application for leave to file the amended statement of claim.

[12]       There seems to have been some uncertainty (or at least an absence of agreement between the parties) as to whether leave was required under r 7.77(4),  i.e., whether the new causes of action had arisen since the filing of the original statement of claim.

[13]       I do not consider that the defendants should necessarily have simply consented to the filing of an amended claim without at least having the opportunity to review the proposed amended  claim.  That  is  what  the  defendants’  solicitor  proposed  on  16 February 2023, albeit that the defendants’ solicitor also required the plaintiffs to provide an application for leave to amend. I accept that this required the plaintiffs to incur the cost of preparing the application for leave even if the defendants subsequently consented to leave.

[14]       In the event, the plaintiffs decided to file an application for leave to amend without having first provided the proposed amended pleading and application for leave to amend to the defendants.

[15]      The defendants made it clear that the application was not opposed in their memorandum to the Court dated 6 March 2023. However, the unopposed application was heard on 15 March 2023.

[16]      Although the plaintiffs were successful in obtaining leave to file the further amended pleading, the issue of whether leave was required (the r 7.77(4) issue) was not squarely determined by Associate Judge Johnston. He found that:5

[9]In this case, I can see no basis upon which it would be appropriate for the Court to step in to bar the plaintiffs from exercising their right to amend their pleading.

[10]To the extent that they need it, they will have leave to do so.

[17]      On balance, I think that the plaintiffs should bear most of the costs of their application for leave in accordance with r 7.77(8). However, the defendants should bear the plaintiffs’ costs of preparing the application for leave, because the defendants’ proposal on 16 February 2023 required the plaintiffs to incur this cost even if the defendants subsequently consented to leave and a hearing was avoided. This cost can be recovered from the defendants by deducting the amount of $1,434 (item 22) from the defendants’ claim for costs.

[18]      As noted above, the plaintiffs do not oppose an award of 2B scale costs to the first defendants on their application for further discovery. However, the plaintiffs take issue with the disbursements claimed by the first defendants.

[19]      The plaintiffs say that they should not have to pay the filing fee disbursement claimed by the first defendants because the plaintiffs have an exemption for filing fees under r 6 of the High Court Fees Regulations 2013 where the company in liquidation has no immediately available assets out of which to pay the fees. It is not clear that this exemption applies to liability for a filing fee disbursement incurred by another party. The filing fee is allowed.

[20]      The plaintiffs also take issue with the costs claimed by the defendants for photocopying and printing the bundles. They say that the defendants should, at most, claim costs for providing a copy of the bundles for the Court, but note that the plaintiffs absorbed this cost in-house. I consider that the defendants’ photocopying and printing disbursement is reasonable. The printing disbursement is allowed.

5      Nellies v Mark above n 1.

Result

[21]      The plaintiffs are required to bear the costs of their application for leave to file the further amended statement of claim except for the cost of filing the interlocutory application (item 22).

[22]      The first defendants are entitled to 2B costs in the sum of $6,684 and disbursements in the sum of $734.66.

Associate Judge Skelton

Solicitors:

Clark Boyce, Christchurch for plaintiffs

Wisheart Macnab & Partners, Blenheim for defendants