Raph Engle Concepts Limited v SCL Holdings Limited

[2016] NZHC 1022

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2013-404-3145 [2016] NZHC 1022

BETWEEN

RAPH ENGLE CONCEPTS LIMITED

Plaintiff

AND

SCL HOLDINGS  LIMITED First Defendant

SCL INDUSTRIES LIMITED PARTNERSHIP (in Rec and in Liq) Second Defendant

SYSTEM CONTROLS LIMITED Third Defendant

SCL DESIGN LIMITED Fourth Defendant

SCL INDUSTRIES TECHNOLOGIES LIMITED

Fifth Defendant

Hearing:	On the papers
Counsel:	RJ Hollyman for plaintiff IF Williams for first, third, fourth and fifth defendants
Judgment:	18 May 2016

JUDGMENT OF FAIRE J

This judgment was delivered by me on 18 May 2016 @ 4:45 pm pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date……………

Solicitors:           Metro Law, Auckland

Kemps Weir Lawyers, Auckland

Raph Engle Concepts Limited v SCL Holdings  Limited [2016] NZHC 1022 [18 May 2016]

[1]      Following my judgment for the first, third, fourth and fifth defendants on

24 June 2015 the defendants now seek costs in accordance with the direction given in [100] of that judgment as follows:

The defendants have been successful and ordinarily are entitled to costs.  I propose to give counsel the opportunity of agreeing on costs.  In the event that there is no agreement, memoranda in support, opposition and reply on the question of costs shall be filed and served at seven-day intervals. The memoranda shall be referred to me on receipt for consideration of the appropriate order.

[2]      It is unfortunate that counsel’s memoranda, which were filed in compliance with [100] of my judgment, have only just been referred to me by the Registry.  I understand an apology for that situation has been extended to counsel and the parties by the Registry.

[3]      Counsel  agree  that  the  appropriate  categorisation  for  the  proceeding  is Category 2.  They also agree that the bands for each step “reasonably required in relation to the proceeding or interlocutory application is Band B”.

[4]      The plaintiff’s revised claim for costs and disbursements is made in the reply memorandum and involves a small concession on the amount originally claimed. Because that concession has been made, I will use that as the basis for analysing what is the appropriate award of costs to make.

[5]      This case necessarily involves a consideration in terms of r 14.2(c) of the High Court Rules as to whether each step which is the subject of a claim was reasonably required in relation to the proceeding itself, or an interlocutory step in the proceeding.

[6]      The revised steps for which claims are made by the first, third, fourth and fifth  defendants  are  set  out  in  Schedule  A  for  costs  and  Schedule  B  for disbursements. The two schedules are attached to this judgment.

[7]      The plaintiff takes issue with the following areas which, for convenience,

will be referred to by the box number on the far left side of the defendants’ schedule.

[8]      In summary they are:

(a)      Costs and disbursements actually paid by the second defendant.  The challenge is made to boxes 1 through to 6 in Schedule A;

(b)The defendants’ withdrawn summary judgment application.   The challenge is made in respect of the items in the boxes 7, 8 and 9 of Schedule  A.    The  plaintiff  makes  reference  in  his  comparative schedule to a claim in respect of a bundle for the summary judgment application.  That is not included in Schedule A and therefore is not taken into account.  The plaintiff does make a cross-claim in relation to  summary judgment  and  seeks  costs  against  the  first  defendant based on 3.2 days at $1,990 per day, or $6,368;

(c)       Miscellaneous steps;

(d)A claim for reviewing the common bundle volumes.  I have assumed that this is a claim for a ½ of box 19, or one day that should be deducted from Schedule A; and

(e)      The plaintiff seeks a deduction of any costs ordered based on the fact that the plaintiff was required to prepare for inclusion in the common bundle significant numbers of documents, which were rendered unnecessary because the defendants made late concessions.  In short, the plaintiff claims that it has expended $4,263.79 which it should not have been required to expend.

[9]      A difficulty in analysing this case arises from the fact that the plaintiff’s memorandum contains a schedule that does not specifically address the schedule prepared on behalf of the first, third, fourth and fifth defendants.  What is apparent, however, is that there is no contest as to the claims made in boxes 11, 12, 14, 15, 16,

17, 18, 19, 20 and 21 of Schedule A.  I therefore intend to include those items in the summary which I make.

[10]     The first matter of principle, however, arises from the fact that the first six items in Schedule A are apparently the subject  of bills of cost issued by legal advisers to the second defendant and have been paid for by the second defendant. The  plaintiff’s  position,  however,  is  not  that  these  steps  were  not  steps  that reasonably had to be taken in the proceeding.  The position is that no costs have in fact been incurred in respect of these steps.  That may well be the case.  However, the position of the first, third, fourth and fifth defendants is that they are entitled to recover for these steps because they were steps reasonably taken in the proceeding and because their overall costs of defending the proceeding exceeds the award of costs that they are seeking from the court.

[11]     I am satisfied that the steps covered by items 1 to 6 in Schedule A are steps reasonably taken by them.  They are not barred from recovering those costs by the operation of r 14.2(f). Those items are allowed.

[12]     The second area relates to the summary judgment application made by the first  defendant.   The first  defendant  applied  for summary judgment  against  the plaintiff.    The  issue  was  determined  by  Lang  J  in  a  judgment  delivered  on

13 September 2013.1  The application was declined.

[13]     In a later judgment on the question of costs his Honour said:2

[16]      I have therefore reached the view that the appropriate course of action is to reserve costs at this stage.  Costs on the application for summary judgment can be determined by the trial Judge, who will have a much better grasp of all of the issues to which I have referred. If REC succeeds, one would expect it to receive costs on the withdrawn application for summary judgment.  Whether those costs should be increased may depend upon the trial Judge’s perception as to whether Holdings ought to have readily appreciated that the payments in question were potentially relevant to the present proceeding.

[17]      If Holdings succeeds at trial, it may be able to persuade the Judge that it is entitled to an order for costs on its application for summary judgment  or  that  costs  should  lie  where  they  fall.    Again,  that decision can only be made once all of the relevant facts are known.

1   Raph Engle Concepts Ltd v SCL Holdings Ltd [2013] NZHC 2410.

2   Raph Engle Concepts Ltd v SCL Holdings Ltd [2014] NZHC 1421.

[14]     The first defendant was unsuccessful in the summary judgment application. Unlike a plaintiff’s summary judgment application, where the review of issues may be said to assist an overall determination of the case, I am not satisfied that the defendants’ position justifies any allowance for this failed summary judgment application.  Equally, however, I am not satisfied that the plaintiff should be allowed costs on this failed application.  The appropriate course is to let costs lie where they fall in respect of this application.

[15]     The effect of this ruling is that items 7, 8 and 9 of Schedule A are not approved.

[16]     The miscellaneous steps complaint does not specifically address the items claimed in Schedule A.  The plaintiff’s memorandum acknowledges that the plaintiff was entitled to claim for the memorandum on 29 May.   I have assumed that the memorandum for the mention hearing on 11 July is one of the joint memorandums. I propose to allow ½ of that claimed in Schedule A for box 13, so an allowance of .2 of a day is allowed.

[17]     No issue can be taken with an allowance for the sealing of the judgment. The judgment will ultimately have to be sealed.  Accordingly, I allow the claim in box 22.

[18]     I refer to the common bundle issue.  Despite what is said in the plaintiff’s memorandum, I note the plaintiff’s schedule allows the claim made in item 19 of two days for this and the preparation of the list of issues.  On that basis, it seems only appropriate that I allow item 19 in Schedule A.

[19]     The remaining item relates to a claim for inclusion of additional documents in the common bundle.   I am not prepared to allow any deduction for this. Admittedly, the plaintiff was concerned as to what was required to answer all live issues at the time the bundle was prepared.   I would have expected the plaintiff’s counsel to have engaged with the defendants’ counsel on this matter before the bundles were prepared so that advance warning of what was to be included was to

hand.  That, I am advised, did not occur.  Accordingly, I am not prepared to make

any reduction arising from the plaintiff’s preparation of the common bundle.

[20]     There  remains  the  claim  in  box  23  for  other  steps.     The  plaintiff acknowledges an allowance should be made for written submissions on the amendment to the statement of claim.  I do not have enough material before me to make an assessment of the rest of the claim.  I allow one day for box 23 in Schedule A.

[21]     The effect of the rulings that I have made mean that the first, third, fourth and fifth defendants are entitled to costs calculated on the daily rate of $1,990 and in respect of Schedule A attached to this judgment for boxes 1, 2, 3, 4, 5, 6, half of 10,

11, 12, half of 13, 14, 15, 16, 17, 18, 19, 20, 21, 22 and one day for box 23.  Based on the daily allowance of $1,990, the appropriate quantum of costs is $43,581.

[22]     I am satisfied that the revised claim for disbursements is correct.

[23]     Accordingly, judgment for costs of $43,581 and disbursements of $321.03 is entered against the plaintiff.

JA Faire J

SCHEDULE A

SCHEDULE B