PVG Securities Trustee Limited v 100 Investments Limited

[2020] NZHC 111

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2018-404-2838

[2020] NZHC 111

BETWEEN

PVG SECURITIES TRUSTEE LIMITED

Plaintiff

AND

100 INVESTMENTS LIMITED

Defendant

Hearing:	On the papers
Judgment:	10 February 2020

JUDGMENT OF HINTON J

[Re Costs]

This judgment was delivered by me on 10 February 2020 at 4:00 pm pursuant to Rule 11.5 of the High Court Rules

…………………………………………………………………… Registrar/Deputy Registrar

Counsel/Solicitors:
Meredith Connell, Auckland

Paul Michalik, Barrister, Wellington

PVG SECURITIES TRUSTEE LTD v 100 INVESTMENTS LTD [2020] NZHC 111 [10 February 2020]

Introduction

[1]                 In my judgment of 31 July 2019,1 I dismissed a claim by the plaintiff (“PVG”) for a declaration that it was entitled to a portion of insurance proceeds received by the defendant (“100 Investments”). Costs ordinarily following the event,2 I stated that the defendant, having succeeded, was entitled to costs.3 The parties were not able to agree costs and filed memoranda.

[2]                 100 Investments seeks an award of indemnity costs against PVG or, alternatively, a 50 per cent uplift on a 2B scale, on the basis that PVG knowingly brought  an untenable claim.  PVG says 100  Investments is entitled to  costs on a  2B scale basis only.

Indemnity or Increased Costs

[3]                 Pursuant to r 14.6(4)(a) of the High Court Rules 2016, a court may order that a party pay indemnity costs if “the party has acted vexatiously, frivolously, improperly, or unnecessarily in commencing, continuing, or defending a proceeding or a step in a proceeding.” Departures from the scale on this basis are “exceptional”; requiring “exceptionally bad behaviour”,4 such as where, as 100 Investments says is the case here, a party has brought proceedings “in wilful disregard of known facts or clearly established law.”5

[4]                 I do not consider PVG knowingly brought a frivolous or vexatious claim. I resolved the parties’ dispute on the straightforward basis of s 183 of the Property Law Act 2007.6 However, as I noted in my judgment,7 the application of s 183 was only obtusely raised by 100 Investments in its lengthy submissions. That provision cannot fairly be said to have been the basis of their defence as might have been expected if the answer were perceived as obvious at the time. It also seems that Mr Francis,

1      PVG Securities Trustee Ltd v 100 Investments Ltd [2019] NZHC 1847, (2019) 20 NZCPR 280.

2      High Court Rules 2016, rr 14.2(1)(a) and 14.2(1)(g).

3 At [44].

4      Bradbury v Westpac Banking Corporation [2009] NZCA 234, [2009] 3 NZLR 400 at [28], referring to Prebble v Awatere Huata (No 2) [2005] 2 NZLR 467 (SC) at [6].

5      At [29], approving Hedley v Kiwi Co-Operative Dairies Ltd (2002) 16 PRNZ 694 (HC) at [11].

6      PVG Securities, above n 1, at [31] and following.

7      At [30]-[31].

counsel for PVG, did raise at least in oral submissions an argument that s 183 did not apply,8 an argument which I accept was made in good faith, and not in disregard of established law. Similarly, while the Court of Appeal’s decision in GP96 Ltd v PVG Securities Trustee Ltd9 may have been of some application in relation to the s 183 ground (which PVG disputes), that case was not heard until well after I heard this matter.

[5]                 Nor do I consider PVG acted frivolously, vexatiously, or otherwise unreasonably by bringing this claim after Thomas J had already determined related proceedings in which similar arguments were made.10 Three points arise. First, 100 Investments is recorded in Thomas J’s judgment as having taken the view that if PVG (in substance) had a claim, then it could “take appropriate proceedings in due course.”11 These are those proceedings. 100 Investments cannot say PVG’s bringing this claim is in itself vexatious. Second, it follows that the dispute as between PVG and 100 Investments is distinct, legally and factually, from that between 100 Investments and its insurer, and Thomas J could not determine those proceedings. Finally, while Thomas J made observations that, with the benefit of hindsight, point to the answer to this case, she did not expressly refer to s 183. Again, I do not consider that, as at the time of the hearing, PVG must be taken to have known its claim was legally or factually untenable.

[6]                 100 Investments points to the fact that Thomas J awarded uplifted costs against PVG in respect of its attempted intervention in the proceeding before her.12 I note the Judge declined to award indemnity costs. The uplift related not to the viability of the arguments presented, but what the Judge considered to be the unreasonable manner and timing of the attempted intervention, which reasonably put 100 Investments to greater than ordinary expense. Similar concerns do not arise in this case.

[7]                 For these reasons, I decline to award indemnity costs. I am also not persuaded that I should award increased costs. This was ultimately a straightforward matter

8      Referring to the transcript of the hearing before me at 21-22 and 51-53.

9 [2019] NZCA 325.

10     100 Investments Ltd v IAG New Zealand Ltd [2018] NZHC 3244.

11 At [25].

12     100 Investments Ltd v IAG New Zealand Ltd [2019] NZHC 535, especially at [61] and following.

where both parties made lengthy submissions, which made the hearing more complicated than was necessary. The gravamen of scale costs is the making of a reasonable contribution towards the successful party’s costs in making or defending their claim.13 I am satisfied a reasonable contribution to 100 Investment’s costs, viewed objectively, can be achieved by the award of costs on a 2B basis.

Costs on Interlocutory Applications

[8]                 PVG accepts that costs should be awarded on a 2B basis but submits 100 Investments should not receive costs or disbursements related to PVG’s successful application for an interim injunction, as well as other interlocutory matters which were the subject of joint memoranda.

[9]                 I do not accept that submission. While, as counsel for PVG identifies, the merits of an interlocutory application often differ from the substantive merits of the case,14 that observation is most pertinent where, pursuant to r 14.8, costs on the interlocutory application are fixed at the time the application was determined. That is not the case here. As it is, costs on the whole proceeding fall to be determined after the substantive merits have been assessed. Here, assessing both who won the “principal contests of law and fact” and adopting a “realistic appraisal of the end result”15, 100 Investments has conclusively obtained the overall benefit of the proceeding, and should receive costs on all steps in the proceeding.16 In other words, the merits of PVG’s successful claim for interlocutory relief have ultimately been subsumed by the eventual disposition of the matter in 100 Investments’ favour. It is inappropriate in this case to focus on who initiated each step and who succeeded or failed at each juncture.17 The same is true in respect of the other interlocutory steps in respect of which counsel for PVG raises issues.

13     Glaister v Amalgamated Dairies Ltd [2004] 2 NZLR 606 (CA) at [8]; Mansfield Drycleaners Ltd v Quinny’s Drycleaning Ltd (2002) 16 PRNZ 662 (CA) at [27]-[29]; High Court Rules 2016, rr 14.2(1)(d) and 14.2(e).

14 Chapman v Badon Ltd [2010] NZCA 613, (2010) 20 PRNZ 83 at [12].

15  Lawrence v Glynbrook 2001 Ltd [2015] NZHC 1005 at [8], referring to Phoenix Organics Ltd v  RD 2 International Ltd (No 2) HC Auckland CIV-2005–404–005070, 21 December 2005.

16  See Water  Guard NZ Ltd v Midgen Enterprises Ltd  [2017] NZCA 36 at [13], citing A L Barnes  Ltd v time Talk UK Ltd [2003] EWCA Civ 402, [2003] All ER (D) 391 at [28]; affirmed Midgen Enterprises Ltd v UV Water Systems Ltd [2017] NZSC 68 at [7].

17 Lawrence, above n 15, at [8], referring to Packing In Ltd (in liq) v Chilcott (2003) 16 PRNZ 869 (CA).

Identification of Relevant Steps

[10]              I depart from 100 Investments’ calculation of 2B costs and disbursements in only one respect. While PVG filed both a statement of claim and an amended statement of claim, 100 Investments filed only one statement of defence, which was after the amended statement of claim. However, as PVG points out, 100 Investments claims both 2 days for the commencement of defence,18 which includes a statement of defence, and a further 0.6 days for the filing of its statement of defence in response to the amended statement of claim. The claim for the additional 0.6 days is disallowed.

[11]              It follows that I allow for only 12.95 days. At the applicable daily recovery rate of $2,230,19 this is $28,878.50.

Disbursements

[12]              As to disbursements, the amounts claimed are supported by appropriate invoices. I am satisfied each disbursement was reasonable in amount, reasonably necessary and specific to the conduct of the proceeding.20

Result and Order

[13]              The plaintiff is to pay to the defendant costs in the amount of $28,878.50; together with disbursements in the further amount of $2,642.84. The total amount payable by the plaintiff to the defendant in respect of costs and disbursements is

$31,521.34.

Hinton J

18 High Court Rules 2016, sch 3 item 2.

19 Rule 14.4 and sch 2.  As all  steps in this proceeding were taken prior to the commencement in  force of the High Court Amendment Rules 2019 on 1 August 2019, which amended schs 2 and 3, I have applied the steps and daily recovery rates as applied under the High Court Rules 2019 in force as of 1 January 2018; the Amendment Rules not being retrospective in effect.

20 Rule 14.12(1)-(2).