New Zealand Trust Corporation Limited v Bonnard Lawson Geneve SA
[2024] NZHC 2076
•30 July 2024
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2020-404-000724
[2024] NZHC 2076
BETWEEN NEW ZEALAND TRUST CORPORATION
LIMITED as trustee of the Elarof Trust, and PASCALE HELOISE SPADONE DE MEURON
PlaintiffsAND
BONNARD LAWSON GENEVE SA
First Defendant
BONNARD LAWSON SARL
Second DefendantYVES NOEL DANIEL GEORGES BONNARD
Third Defendant
CEDRIC CHRISTOPHE AGUET
Fourth Defendant
Hearing: On the papers Appearances:
S Carey for the Plaintiffs
B A Keown / H E Cassone for the Defendants
Judgment:
30 July 2024
COSTS JUDGMENT OF ASSOCIATE JUDGE GARDINER
This judgment was delivered by me on 30 July 2024 at 3.00 p.m. pursuant to Rule 11.5 of the High Court Rules.
Registrar/Deputy Registrar Date.......................................
NEW ZEALAND TRUST CORPORATION LTD v BONNARD LAWSON GENEVE SA & Ors [2024] NZHC 2076 [30 July 2024]
Introduction
[1] In a judgment delivered on 21 March 2024 I dismissed New Zealand Trust Corporation Ltd’s (NZTC) application to set aside the third and fourth defendants’ appearance under protest to jurisdiction.1 This judgment was delivered after the plaintiffs advised that they intended to discontinue their claims against the first and second defendants, and the second plaintiff advised that she intended to discontinue her claim against all the defendants. Consequently, I dismissed the proceeding pursuant to r 6.29(2) of the High Court Rules 2016 (HCR).
[2] I indicated a preliminary view that the defendants should be paid costs on a 2B basis and invited counsel to agree a costs order. They have been unable to reach agreement.
[3]The defendants seek costs of $202,911.76, comprising:
(a)scale costs of $4,302 on a 2B basis for preparation of the first, third and fourth defendants’ notice of appearance under protest to jurisdiction which was filed on 19 April 2021;
(b)disbursements of $8,811.95 for all steps taken to defend the plaintiffs’ claims; and
(c)indemnity costs of $189,797.81 on all steps taken to defend the plaintiffs’ claims after 3 August 2021 when the defendants’ (rejected) offer to agree to the discontinuation of the proceedings with no issue as to costs was made.
[4] The plaintiffs deny that the defendants are entitled to indemnity costs, and say that scale costs on a 2B basis are appropriate, which they calculate to be $22,227.
1 New Zealand Trust Corporation Ltd v Bonnard Lawson Geneve SA [2024] NZHC 607.
Indemnity costs – legal principles
[5]The jurisdiction to award indemnity costs is found in r 14.6 of the HCR:
14.6 Increased costs and indemnity costs
…
(4)The court may order a party to pay indemnity costs if—
(a)the party has acted vexatiously, frivolously, improperly, or unnecessarily in commencing, continuing, or defending a proceeding or a step in a proceeding; or
(b)the party has ignored or disobeyed an order or direction of the court or breached an undertaking given to the court or another party; or
(c)costs are payable from a fund, the party claiming costs is a necessary party to the proceeding affecting the fund, and the party claiming costs has acted reasonably in the proceeding; or
(d)the person in whose favour the order of costs is made was not a party to the proceeding and has acted reasonably in relation to it; or
(e)the party claiming costs is entitled to indemnity costs under a contract or deed; or
(f)some other reason exists which justifies the court making an order for indemnity costs despite the principle that the determination of costs should be predictable and expeditious.
[6] In Bradbury v Westpac Banking Corp, the Court of Appeal endorsed the following (non-exhaustive) list of circumstances in which indemnity costs may be ordered where a party has acted either badly or very unreasonably:2
(a)the making of allegations of fraud knowing them to be false and the making of irrelevant allegations of fraud;
(b)particular misconduct that causes loss of time to the court and to other parties;
(c)commencing or continuing proceedings for some ulterior motive;
2 Bradbury v Westpac Banking Corp [2009] NZCA 234, [2009] 3 NZLR 400 at [29].
(d)doing so in wilful disregard of known facts or clearly established law; or
(e)making allegations which ought never to have been made or unduly prolonging a case by groundless contentions.
Defendants’ claim to indemnity costs
[7] The defendants submit that they are entitled to indemnity costs because the plaintiffs acted vexatiously, frivolously, improperly, or unnecessarily in initiating and continuing their claims against the defendants. That is, they rely on r 14.6(4)(a).
[8] The defendants identify three matters supporting an award of indemnity costs. One, that the plaintiffs did not comply with their duty of full and frank disclosure in the without notice application for leave to serve their claim on the defendants overseas, which the defendants say was obtained on a manifestly inaccurate and incomplete basis. Two, that the defendants invited the plaintiffs to discontinue their claims with no issue as to costs, and the plaintiffs unreasonably rejected the offer (and subsequent offers). Three, that most, if not all, of the plaintiffs’ claims were manifestly inarguable.
Assessment
[9]I deal with the matters raised by the defendants in reverse order.
[10] I do not accept that the plaintiffs’ case was “manifestly unarguable”. Rather, it is clear from the judgment that the plaintiffs’ case was arguable. I will not repeat the findings on each issue, but suffice to say that I found for NZTC on the issues of “a real and substantial connection with New Zealand” and there being “a serious issue to be tried”. However, I found against NZTC on the decisive issue of New Zealand being the appropriate forum for the trial. But even within that issue, NZTC had a measure of success — I concluded that it was doubtful that the exclusive jurisdiction clause in the second power of attorney governing the relationship between the second plaintiff and the third and fourth defendants applied to NZTC’s proceeding.
[11] In relation to the first, third and fourth defendants’ offer to the plaintiffs dated 3 August 2021, the defendants are wrongly conflating the jurisdiction to award indemnity costs under r 14.6(4)(a) of the HCR if a party has acted “vexatiously, frivolously, improperly, or unnecessarily in commencing, continuing, or defending a proceeding”; the jurisdiction to award increased costs under r 14.6(3)(b)(v) if a party has failed, without reasonable justification, to accept an offer of settlement; and the effect on costs when a party has made a “Calderbank offer” provided for in r 14.11.
[12] The offer made on 3 August 2021 was that the first, third and fourth defendants would not seek costs if the plaintiffs discontinued their proceedings. On 17 July 2023, the defendants invited the plaintiffs to withdraw their application to set aside the protest to jurisdiction and discontinue the proceedings.
[13] Neither offer was a “Calderbank offer” to which r 14.11 applies. The defendants did not offer the plaintiffs a sum of money that exceeds the amount of a judgment obtained by the plaintiffs, or make an offer that was more beneficial to the plaintiffs than a judgment obtained by the plaintiffs. Nor does r 14.11(4) apply.
[14]The Court of Appeal in Hira Bhana & Co Ltd v PGG Wrightson Ltd said:3
…where the nature of the offer made is simply a “walk away” proposition, made early in the proceedings, it cannot be the case that the mere fact that the party which rejected the offer subsequently loses means that party is required to pay indemnity costs or increased costs. If that were so, it would mean that the costs regime…would be effectively bypassed in almost all cases where the defendant succeeds…
[15] As the defendants seek indemnity costs, the issue is whether, in terms of r 14.6(4)(a), the plaintiffs acted vexatiously, frivolously, improperly, or unnecessarily in continuing the proceeding after receiving this “walk away” offer. For the reasons given on the preceding issue, I do not consider that they did. There were credible aspects to the plaintiffs’ case for jurisdiction. This was not a case of vexatious, frivolous, or improper conduct, or anything close to it.
3 Hira Bhana & Co Ltd v PGG Wrightson Ltd [2007] NZCA 342 at [26].
[16] Finally, the defendants are exaggerating the extent and gravity of the issues with the plaintiffs’ without notice application for leave to serve overseas. I agree that the plaintiffs should have informed the court of the second power of attorney, even if they did not consider it relevant. But the other matters identified had either not been raised by that stage or were not so clearly relevant to the question of jurisdiction that it was improper of the plaintiffs not to spell them out in the application.
[17] The naming of the first defendant was self-evidently a mistake rather than an act that warrants indemnity costs. In the affidavit of Karen Marshall in support of the plaintiffs’ application for directions in respect of service dated 3 July 2020 the plaintiffs state that it is likely that they will not need to proceed against all defendants once more information was known.
[18] An award of indemnity costs under r 14.6(4)(b) for ignoring or disobeying an order or direction of the court or breaching an undertaking requires deliberate conduct.4 Rule 14.6(4)(a) requires improper conduct. I see no evidence to suggest that the plaintiffs deliberately misled the Court, or otherwise acted improperly, with their application for leave to serve the defendants overseas.
Amount of 2B costs
[19] The plaintiffs dispute two aspects of the defendants’ alternative calculation of 2B costs.
[20] First, that this matter — a one-day hearing on an interlocutory application — is one for which costs of second counsel are justified. I agree that the length and complexity of the hearing did not require second counsel. The defendants’ proposed provision of $1,195 for second counsel is removed.
[21] Second, that the defendants are entitled to three sets of costs for the notice of appearance filed on 19 April 2021 because it was filed on behalf of three defendants. The plaintiffs submit that because the defendants filed one notice of appearance, they should receive a single allocation for this step. While there is merit to that submission,
4 Chesterfield Preschool Ltd v Commissioner of Inland Revenue (2009) 24 NZTC 23,504 (HC) at [3]–[8].
the first defendant, and the third and fourth defendants, advanced slightly different grounds for protest, so I consider an allocation of two sets of costs is appropriate.
Order
[22] I order the plaintiffs to pay the defendants costs on a scale 2B basis of $23,661 and disbursements of $8,811.95.
Associate Judge Gardiner
Solicitors:
Bell Gully, Auckland
Cone Marshall Ltd, Auckland S Carey, Auckland
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