Powerco Limited v Commerce Commission HC Wellington CIV 2008-485-2615

[2010] NZHC 342

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

CIV-2008-485-2615

UNDER  the Commerce Act 1986

BETWEEN  POWERCO LIMITED Plaintiff

ANDCOMMERCE COMMISSION Defendant

CIV-2008-485-2771

UNDER  the Judicature Amendment Act 1972

BETWEEN  POWERCO LIMITED Plaintiff

ANDCOMMERCE COMMISSION Defendant

On the papers

Counsel:         Ms V Heine for Powerco Limited

Mr D Boldt for Commerce Commission

Judgment:      22 March 2010         at 12.45 pm

JUDGMENT OF MALLON J

(Costs)

[1]      This costs judgment arises out of  an appeal  and  judicial review  application

brought by Powerco in respect of an authorisation decision made by the Commerce

Commission.  The appeal and judicial review application were scheduled to be heard

by the  High  Court  over  three  days  from  8  to  10  June  2009.   The  hearing  did  not proceed  because  on  4  June  2009  Powerco  filed  a  notice  of  discontinuance. In February   2010   I   received   a   joint   memorandum   from   the   parties   seeking   a determination  on  costs  together  with  submissions  from  each  party  as  to  what  that determination  should  be. The  sole  issue  that  arises  is  whether  the  Commission

POWERCO LIMITED V COMMERCE COMMISSION HC WN CIV-2008-485-2615  22 March 2010

should be paid costs for hearing preparation over and above the four day allowance provided for in the High Court Rules (Band C, Schedule 3 of the High Court Rules).

[2]      The Commission contends that a 20 day allowance should be made.  It seeks this  because  its  preparation  time  was  “many  times  greater”  than  the  four  day allowance.   The Commission refers to a number of reasons as to why this was so. Importantly,  in  my  view,  they  include  that  the  “breadth  and  complexity  of  these proceedings  and  the  importance  of  the  three-year  decision-making  process  they challenged  required  the  Commission  to  expend  considerable  time  in  preparing  its written   response”   and   that   the   timing   of   the   discontinuance   meant   that   the Commission was preparing up to the eve of the hearing.

[3]      The  Court  may  order  a  party  to  pay  increased  costs  if  “the  nature  of  the proceeding or a step in it is such that the time required by the party claiming costs would substantially exceed the time allocated under Band C” (R 14.6(1) High Court Rules).  Breaking  this  down,  the  rule  is  directed  to  an  increase  where  the  time required  would  substantially  exceed  the  time  allocated  in  Band  C. That  may  be because of the nature of  the proceeding or because of the particular step.   So it is necessary  to  look  at  the  time  in  Band  C  for  the  particular  step.   And  then  to  ask whether, because of the nature of the proceeding or the step, the time required would substantially exceed the time allocated.

[4]      The Band C allocation in Schedule 3, where the hearing does not proceed, for “Defendant’s preparation of lists of issues and  authorities, selecting documents for common bundle of documents, and all other preparation” is four days.   This means that four days is considered a reasonable time for this step in a proceeding where this step will take a comparatively large amount of time (R 14.5(1)(a) and (2)(c) of the High Court Rules).

[5]      The most time intensive part of this in the present case would have been the preparation of submissions. From even a brief  review  of  the  submissions,  it  is apparent that considerably more than four days would have been required to prepare them. Although five grounds of review were pleaded, it appears that they covered the orthodox grounds. I do not see this, or the fact that an appeal was also lodged, as

giving rise to time incurred on this step above and beyond what would ordinarily be reasonable for this step in a proceeding where a comparatively large amount of time would  be  required. The  additional  time  would  have  been  incurred  because  of  the regulatory and economic detail which counsel needed to convey to the Court so that the legal grounds could then be assessed. That was an important part of  the submissions that needed to be made, in a proceeding of importance not least because

of  the  considerable  background  to  it.   Thus,  the  “nature  of  the  proceeding”  was  a reason why the time would have substantially exceeded the four day allocation.

[6]      As well, because the discontinuance occurred just before the hearing, I accept that  counsel  would  have  been  preparing  right  up  to  the  point  of  discontinuance. Whereas  four  days  might  have  been  more  reasonable  if  the  discontinuance  had occurred  mid-way through  the  post-setting  down/pre-hearing  preparation,  that  was not the case.   Here “the step” covered by the four day allowance covered preparing and finalising the submissions and being ready to present them at the hearing.

[7]      I am therefore satisfied that the Commission has made out a ground on which

I  could  exercise  my  discretion  to  increase  costs.       I  see  no  reason  why  I  should decline to do in this case.   Although the rules are intended to be “self-calculating”, they  do  provide  grounds  on  which  the  usual  calculations  can  be  departed  from. Powerco’s submissions refer to a number of cases but they do not persuade me that increased costs should not be awarded here.  Both Holdfast NZ Limited v Selleys Pty Limited (2005) 17 PRNZ 897 (CA) at [47] and Glaister v Amalgamated Dairies Ltd [2004] 2 NZLR 606 (CA) at [23] recognise that the time allowed for a step may be inappropriate in a particular case. The 50% uplift referred to in Holdfast at [46] to [48]  is  about  not  awarding  more  than  the  underlying  rates  that  the  category  rates (here  category  3)  are  based  on  (since  those  underlying  rates  are  the  deemed reasonable rates) rather than the uplift on the time for a particular step.  The holding in Wellington International Airport Ltd v Commerce Commission [2003] 16 PRNZ 530 (HC) at [13] that the significance and importance to the parties of the proceeding goes to categorisation and “cannot be ‘recycled’” was not concerned with a claim for increased  costs  on  the  basis  that,  because  of  the  importance  of  the  proceeding,  a particular  step  would  take  more  than  the  time  allocated  under  Band  C.   The  other cases are illustrations of the Judge’s exercise of discretion on the particular facts.

[8]      I need to assess what time should be allowed for this step in the place of the four  day  allowance. The  Commission  seeks a 20 day allowance for  reasons  that include that this is less than the actual time and that the agreed timetable allowed 20 days for the Commission to file its written submissions. I am not prepared to allow

20 days on the basis that this was  the  time  allowed  for  filing  submissions. Timetables are intended to provide more than the time that is actually needed so as to ensure  that  the  step  is  completed  within  the  time  agreed  or  ordered. Nor  am  I prepared  to  allow  20  days  on  the  basis  that  more  time  was  actually  taken. An increase in costs can only come into consideration if the time would “substantially exceed” the time allocated under Band C and so it assumes that some additional time above four days is to borne by the party claiming the costs.

[9]      If  four  days  is  usually  considered  reasonable  for  a  proceeding  that  would involve a comparatively large amount of time for that step, then 20 days seems an excessive allowance.   The “long standing principle” that underpins the rules is that costs are to represent a “reasonable contribution” to the costs actually and reasonably incurred  (RA  McGechan  McGechan  on  Procedure  (loose  leaf  ed  Brookers)  at HR14.2.01(4)).  In this case I consider that a reasonable contribution is to double the allowance to eight days.  That allows for some of the additional time to be borne by the  Commission,  such  that  the  increase  allowed  applies  only  to  the  time  that  is “substantially” above the time allocated.  At the category three rate this means costs of $18,960 for this step (as compared with the $47,400 claimed by the Commission and the $9480 which Band 3 allows for).

[10]     Accordingly, on the only issue that remains between the parties I determine that  the  allowance  for  “Defendant’s  preparation  of  lists  of  issues  and  authorities, selecting documents for common bundles, and all other preparation” is eight days.

Mallon J

Solicitors:

PR Taylor/C Tingley, Commerce Commission, Wellington, [email protected]

V Heine, Chapman Tripp, Wellington, victoria,[email protected]