PMT 2010 Ltd (in liquidation) v Mark
[2022] NZHC 573
•25 March 2022
IN THE HIGH COURT OF NEW ZEALAND BLENHEIM REGISTRY
I TE KŌTI MATUA O AOTEAROA TE WAIHARAKEKE ROHE
CIV-2021-406-000013
[2022] NZHC 573
BETWEEN PMT 2010 LTD (in liquidation) First Plaintiff
MURRAY GEORGE ALLOTT, as liquidator of PMT 2010 LTD (in liquidation)
Second Plaintiff
AND
PETER MARK AND JEANETTE PATRICIA MARK
First Defendant
WISHEART MACNAB & PARTNERS TRUSTEE COMPANY LIMITED AND DAVID JOHN PAUL AS TRUSTEES OF THE MARK FAMILY TRUST
Second Defendants
Hearing: On the Papers Judgment:
25 March 2022
JUDGMENT OF GRICE J
(Costs on joinder of plaintiff amendment statement of claim)
[1]On 11 February 2022, I allowed applications by the plaintiff for:1
(a)The joinder of the liquidator as second plaintiff.
1 PMT 2010 Ltd (in liq) v Mark [2022] NZHC 169 [the substantive judgment] at [117].
PMT 2010 LTD v MARK [2022] NZHC 573 [25 March 2022]
(b)The application of the late knowledge limitation period to the first, second and third causes of action so those were not statute barred.
(c)The application of the limitation period to the amended second cause of action, which is an “ancillary claim” to either or both of the claims pleaded in the amended first and third causes of action. The long stop period had not closed and so the claim was not statute barred.
(d)Leave to file an amended statement of claim.
[2] I noted the application to join a second plaintiff had been necessary due to the omission of the liquidator as a plaintiff when the 2021 proceedings were filed. In addition, I noted an application was necessary due to the long stop limitation period expiring in relation to the second cause of action.2
[3] Counsel have been unable to agree on costs, and the defendant has applied for costs. I have considered the memoranda filed and revised my preliminary view as to costs.
Background
[4] These proceedings had entered a procedural quagmire. The applications dealt with in the judgment of 11 February 2022 were precipitated by a strike out application and an application for summary judgment made by the defendants. These were based on defences raised that the causes of action were time barred and that two causes of action could only be brought by the liquidator and not the company (in liquidation).
[5] In response to those applications the plaintiffs filed a memorandum requesting an order joining Mr Allott, the liquidator, as the second plaintiff, and filed an amended statement of claim (the ASOC) naming Mr Allott as the second plaintiff. The ASOC substituted Mr Allott as the relevant plaintiff in the pleading of the second and third causes of action. These could not succeed if the liquidator was not the plaintiff. The draft ASOC also amended the first cause from an action in conversion to a claim for
2 At [120].
unjust enrichment, which clarified the pleading but did not alter the underlying substance.
[6] The defendants’ application for summary judgment and strike out came before Ellis J for hearing on 20 September 2021. Mr Morten, for the defendants, advised he was forced to seek an adjournment as the plaintiffs had by then taken the position that the ASOC had been filed and was not merely in draft. Mr Morten maintained leave was required to file the ASOC under both r 4.56 and r 7.77 of the High Court Rules 2016. The defendants opposed the grant of leave.3
[7] Ellis J set out what she described as the “rather tortuous background that resulted” in the application being set down.4 She then adjourned or “parked” the strike out application and summary judgment application and made directions, by consent, to deal with an application for leave to file the amended statement of claim, the joinder of the liquidator and the associated limitation arguments.5
Defendants’ application for costs
[8] The defendants point out that under the provision under r 7.77(8), if an amended pleading has been filed, the party filing the amended pleading must bear all the costs occasioned by the original pleading and any application for amendment, unless the Court otherwise orders.
[9] The defendants say that this is an appropriate case for increased costs because the plaintiff contributed unnecessarily to the time and expense of the proceeding by failing to comply with the rules applying to joinder, relying on r 14.6(3)(b)(i).6 In addition, they argue that r 14.6(3)(d) applies in that there is some other reason which exists justifying the increased costs.
[10] The defendants also seek increased costs on the basis that the Limitation Act 2011 matters argued before me were complex. The application under s 50 of the
3 Minute of Ellis J, 20 September 2021 at [28].
4 At [1].
5 At [33].
6 The rules relating to increased costs.
Limitation Act, in particular, was both novel and complicated. Therefore, more than normal preparation time was required, they say.
[11] The defendants sought an uplift of 20 per cent (or alternatively 30%) in respect of the defendant’s reply submissions on the joinder/amendment proceeding (Step 24 in the proceedings).7
[12] The plaintiffs say that these were successful interlocutory applications and the costs should be met by the unsuccessful party.8 In this case, the plaintiff’s applications were entirely successful, and the orders sought were granted over the opposition of the defendant.
[13] The plaintiff noted that r 7.77(8) (amendment of statement of claim) displaced the presumption of costs being paid by the unsuccessful party and required that where an amended pleading was filed, the costs referable to the original (replaced) pleading and to the application for leave are to be met by the party amending, unless the Court orders otherwise. However, the plaintiff pointed out that the rule was silent on when costs are to be fixed and when they are payable. The plaintiff submits that there is good reason for that, as it may be difficult to isolate the wasted costs involved in responding to an original pleading until the amended pleading goes to trial.9 Therefore, the plaintiff says the assessment as to the wasted costs on the amended pleading should be made at the conclusion of the case.
[14] The plaintiff also says that the defendants have failed to make basic concessions such as the inclusion of Mr Allott as a second plaintiff. This drove the need for the “expensive and costly further applications by the plaintiff on which the defendants insisted”.
[15] The plaintiff also produced a letter, marked “without prejudice save as to costs”, suggesting various steps be taken to move the proceedings on and avoid an interlocutory hearing. The letter included the assertion that the plaintiff’s claims were
7 The schedule set out at [24] of the defendant’s memorandum for costs dated 21 February 2022 also seeks a further 20 per cent uplift on Step 24 of $717, making the total with uplift $15,057.
8 High Court Rules 2016, r 14.2(1)(a).
9 Jones v Norterra Rural Resources Ltd [2014] NZHC 2855 at [32].
not time barred and the reasons for that assertion. The plaintiffs suggested that even if they were wrong about the claims not being time barred, those were matters to be resolved at trial.
[16] The plaintiff produced a letter of 17 February 2022 which proposed that the present costs be resolved by letting them lie where they fell because, due to the success of the joinder and limitation arguments, the strike out and summary judgment application which had been filed by the defendants could not now succeed. They were “parked” but, realistically, they would fail.
Analysis
[17] Ellis J put it well when she referred to the tortuous background that resulted in first the adjournment of the strike out and summary judgment application, and then the applications heard by me. However, it is not possible to attribute blame for the development of the proceeding. While it would have been appropriate for the liquidator to have been an original plaintiff and the pleadings were correct in the first version of the statement of claim, it was open to the plaintiff to make the application to join the liquidator, which was successful. The proceedings were not unduly old, although, due to the plaintiff’s non-disclosure, the causes of action arose some time ago.
[18] The principles in relation to settling of costs are set out in the High Court Rules.10 Costs are at the discretion of the Court, but the exercise of that general discretion must be according to the established principles.11 Those principles include the fact that questions of costs are ultimately a matter of discretion, the overall objective being to achieve an outcome that best meets the interests of justice.12 There is also a strong implication that the Court is to apply the costs regime in the Rules, in the absence of some reason to the contrary.13
10 Part 14.
11 High Court Rules, r 14.1.
12 Andrew Beck and others McGechan on Procedure (online looseleaf ed) at [HR14.1.02(1)].
13 Jones v Norterra Rural Resources Ltd, above n 9, at [32].
[19] The general principle in relation to the determination of costs on interlocutory matters is the party who fails with respect to the interlocutory application should pay costs to the party who succeeds.14 Generally, the award of costs should reflect the complexity and significance of the proceeding and that is usually assessed by applying the appropriate daily rate to the time considered reasonable for each step reasonably required in relation to the proceeding or interlocutory application.15 As far as possible, the determination of costs should be predictable and expeditious.16
[20] These proceedings are of average complexity and require counsel of skill and experience considered average in the High Court. That attracts a Category 2 classification in relation to the costs schedule.17 A reasonable time for a step is determined in accordance with sch 3. Band B is applicable if a normal amount of time is considered reasonable for the step.18 In this case, the proceeding in general fit into a Category 2B classification. The plaintiff, however, seeks increased costs on the basis set out above — essentially, due to the complexity and novelty of the Limitation Act arguments.
[21] The costs relate to the applications I dealt with in my judgment of 11 February 2022. I must consider whether it is appropriate to award costs attributable to the ASOC. The application for strike out and summary judgment is “parked” and the grounds for these have largely fallen away but they are not before me. Any application for costs in relation to those matters must be dealt with when those applications are disposed of one way or the other.
[22] Costs were reserved by Ellis J following the case management conference on 20 September 2021. Costs attributable to that conference should also be dealt with as the conference is directly related to the present applications. Having heard the applications, I am in the best position to assess those costs, rather than reserve them until some future time.
14 High Court Rules, r 14.2(1)(a).
15 Rule 14.2(1)(b)–(c).
16 Rule 14.2(1)(g).
17 Rule 14.3(1).
18 Rule 14.5(2)(b).
[23] Interlocutory costs are to be fixed at the time of the application.19 There are no special reasons in this case that this rule should not be followed.
[24] The starting point is that the plaintiff is entitled to costs on the opposed applications, on which it obtained orders in the judgment of 11 February 2022. Therefore, the plaintiff is entitled to costs for the order joining the liquidator as the second plaintiff and in relation to the limitation period matters. The plaintiff does not seek any uplift in those costs, nor do I think an uplift would be justified. While the arguments on s 50 of the Limitation Act are relatively novel, they were not matters which were sufficiently complex in this case to justify an uplift of costs.
[25] However, the failure of the plaintiffs to seek leave to file the ASOC earlier, leaving the filing of a draft to 13 August 2021 when the interlocutory strike application and summary judgment application were due to be heard shortly after, led directly to the wasted costs and the need for further timetabling by Ellis J on 20 September 2021 when she granted the adjournment of the application for summary judgment and strike out.20 Therefore, the defendant is entitled to costs for a half-day case management conference, together with the costs of a memorandum for the conference (if any were filed).
[26] Costs in relation to the application for summary judgment and strike out cannot be determined until those matters are dealt with.
[27] As the material (including affidavits) which had been put together for the strike out application was used in the present application, 50 per cent of the steps attributable to the preparation of that material are allowed by way of costs to the plaintiffs in the present application. The other 50 per cent can be dealt with as costs in the strike out/summary judgment application.
[28] In relation to the costs award for the filing of the amended pleading under r 7.77(8), 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
19 Rule 14.8(1)(a).
20 Minute of Ellis J, above n 3, at [1].
Court otherwise orders. In some cases, it is appropriate to wait until the end of trial to attribute the costs that have been occasioned by the original pleading. In this case, given the complicated procedural background and events leading to the determination of the joinder and limitation issues, it is appropriate that an award of costs be made in relation to the amended pleading now.
[29] The defendants are entitled to costs on all steps in relation to the filing of the amended pleading and refiling of the statement of defence. The application for amendment has been argued and succeeded. Nevertheless, the defendant is entitled to costs on that application. There may be other costs occasioned by the original pleading, separate from the application for amendment, and those costs are most appropriately dealt with at a later date. Nevertheless, there is no reason why the direct costs related to the application I heard should not be awarded in favour of the defendant.
[30] The application for amendment led to the amending of all the causes of action by altering the first and fourth (ancillary) causes of action by the first plaintiff against the first and second defendant in conversion to claims of unjust enrichment. Secondly, the amended pleading added a second and third cause of action by the liquidator in person against the first and second defendants.
[31] The matters were all run together rather than discretely. Insofar as apportionment of the costs between the application for joinder and other applications on the one hand and the application for amendment on the other, I would attribute to the amendment application one quarter of the costs and to the other applications in which the plaintiffs succeeded, three quarters.
[32] I have noted the defendants’ attempts to deal with the procedural matters by agreement but do not consider this requires any special recognition as the plaintiff was entitled to a determination on the issues raised before trial. In addition, the correspondence before the award of costs was sought here shows a willingness by the defendants to discuss the award, which is to be encouraged, but also took into account the applications not yet dealt with. The approach of the defendants in general to find a way to deal with these matters expeditiously and cost efficiently is however noted.
[33] Costs on the strike out and summary judgment application will be dealt with in due course, taking into account the award already made here in relation to 50 per cent apportionment made here toward the materials used in the hearing.
[34] In summary costs are awarded generally on a 2B basis with the following variations:
(a)The plaintiff is awarded costs equivalent to three quarters of the costs which would be attributable to the applications heard on 11 February 2022.
(b)The defendant is entitled to costs for the case management conference, together with costs amounting to one quarter of the costs for the applications heard on 11 February 2022.
(c)The costs award in relation to the preparation of affidavits and related material is to be reduced by 50 per cent to take into account the fact that the material was prepared for the strike out and summary judgment application which will be left to be dealt with when costs of those applications are dealt with.
[35] Costs under r 7.77(8) in relation to the amended pleading are awarded only in relation to the application for amendment, which I have dealt with above, and all other costs of and occasioned by the amended pleading are reserved.
[36] Given the complicated procedural path leading to these applications, I have taken a broad view, but applied established principles, to determine an award of costs properly taking into account the particular circumstances.
Grice J
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