Remediation (NZ) Limited v Enviro (NZ) Limited

[2023] NZHC 3609

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2021-404-1140

[2023] NZHC 3609

BETWEEN

REMEDIATION (NZ) LIMITED

Plaintiff

AND

ENVIRO (NZ) LIMITED

First Defendant

ENVIRO WASTE SERVICES LIMITED

Second Defendant

Hearing:

On the papers

Appearances:

J W Maassen and M A Black for the Plaintiff

G C Williams, T J Lindsay and MBE Morrison for the Defendants

Judgment:

11 December 2023

JUDGMENT OF GAULT J

(Costs)

This judgment was delivered by me on 11 December 2023 at 3:00 pm pursuant to r 11.5 of the High Court Rules 2016.

Registrar/Deputy Registrar

……………………………………

Solicitors / Counsel:

Mr J W Maassen, Barrister, Wellington

Mr J D Cameron and Ms M A Black (plaintiff’s instructing solicitor), Willis Legal, Napier Mr G Williams, Barrister, Auckland

Mr T J Lindsay and Ms MBE Morrison (defendants’ instructing solicitor), Lindsay & Francis, Auckland

REMEDIATION (NZ) LTD v ENVIRO (NZ) LTD [2023] NZHC 3609 [11 December 2023]

[1]    Following my interlocutory judgment of 23 May 2023 granting the application by the plaintiff (Revital) to recall a witness and file a supplementary brief, and consequently adjourning the trial following the evidence of the health and safety experts for a further hearing, I indicated that costs may be awarded in respect of the extra work required to respond to the supplementary brief or caused by the adjournment and that, if costs could not be agreed, I would receive memoranda and determine costs on the papers.1

[2]The parties were unable to agree costs and filed memoranda.2

[3]    The defendants (Enviro) seek costs and disbursements totalling $79,834.96 comprising:

(a)$11,561.63 in 2B scale costs plus a 50 per cent uplift for the recall and adjournment application;

(b)$8,060.64 in disbursements for the recall and adjournment application;

(c)$52,784.57 in wasted disbursements; and

(d)$7,428.12 in wasted scale costs plus a 50 per cent uplift.

[4]    Revital accepts that an order for wasted costs totalling $10,547.41 is appropriate, comprising:

(a)$4,952.08 for Mr Shaw’s 8 March 2023 brief of evidence;

(b)$4,909.78 for Mr Shaw’s affidavit dated 19 May 2023; and

(c)$685.55 for photocopying and printing.

1      Remediation (NZ) Ltd v Enviro Waste Services Ltd [2023] NZHC 1218 at [26]-[30].

2      There was some delay in receiving the last of the memoranda.

Background

[5]    The background is set out in my interlocutory judgment and need not be repeated. In essence, during the trial Revital acknowledged a gap in its fact evidence underpinning its expert accounting evidence. I considered that the balance of interests favoured leave to recall a witness and file a supplementary brief and consequently an adjournment.

Applicable cost principles

[6]    The applicable costs principles are well settled. The general principle is that costs follow the event, including on interlocutory applications. The position is different where an adjournment is the result of an indulgence, such as the grant of leave to adduce further evidence.

[7]    In addition, the Court has jurisdiction to make an order for wasted costs against a party whose default causes a fixture to be vacated. As Venning J said in Jeffreys v Morgenstern,3 default that leads to vacation of fixtures leads to inconvenience and cost not only to the other parties to that proceeding but to other parties awaiting fixtures in the Court. Fixtures allocated by this Court are commitments of limited judicial and Court resources. Time is booked for the case. Other parties who might otherwise have had their cases allocated hearing time are disadvantaged by default which leads to late vacation of fixtures. Where the Court is required to consider wasted costs, it involves a matter of impression and best judgment of the Court at the time.4 Wasted costs include those incurred for work undertaken that will not have any further benefit to the case of the claimant party, as well as for work that will be duplicated in order to prepare for a trial in the future.5

Costs of the recall and adjournment application

[8]    I consider that Enviro is entitled to costs on the recall and adjournment application despite Revital’s success given that the application was an indulgence in the sense that it was brought about by Revital’s failure to lead fact evidence

3      Jeffreys v Morgenstern [2013] NZHC 1361 at [31].

4      At [34], citing Simpson v Hubbard [2012] NZHC 3020.

5      Burgess v Monk [2015] NZHC 1881 at [15].

underpinning its expert accounting evidence. Scale costs of the application on a 2B basis amount to $7,707.75.

[9]    Enviro seeks increased costs comprising an uplift of 50 per cent on scale costs on the basis that it gave Revital repeated warnings about the insufficiency of its evidence.

[10]   Another general principle is that costs should be assessed by applying the appropriate daily recovery rate to the time considered reasonable for each step reasonably required,6 that is applying the scale in the Rules. However, the Court may order a party to pay increased costs if the party opposing costs has contributed unnecessarily to the time or expense of the proceeding or a step in it by (among other things) taking or pursuing an unnecessary step.7 As the Court of Appeal said in Bradbury v Westpac Banking Corporation, increased costs may be ordered where there is failure by the paying party to act reasonably.8 The onus is on Enviro to persuade the Court that an award of increased costs is justified.

[11]   When seeking an uplift as high as 50 per cent, it is important to keep in mind that scale costs are designed to deliver to the successful party approximately two-thirds of the daily rate considered reasonable once the proceeding has been placed in its appropriate category for complexity and significance and then in the appropriate band for time. Thus, a 50 per cent uplift is effectively making up the final third of reasonable costs. As the Court of Appeal observed in Holdfast NZ Ltd v Selleys Pty Ltd:9

[47] An increase of 50 percent on scale costs should grant the costs-  claiming party a fair recovery for the step unnecessarily forced on it, assuming that the time allocated to the step has been reasonably calculated… Any greater recovery than that would mean that the party paying costs is contributing to the other party’s choice of special counsel.

[12]   I do not consider any such uplift is justified on this application despite Revital’s failure. Enviro refers to ‘repeated warnings’ but has not shown me anything specific enough to characterise this as other than a mistake by Revital’s legal team (involving

6      High Court Rules 2016, r 14.2(1)(c).

7      Rule 14.6(3)(b)(ii).

8      Bradbury v Westpac Banking Corp [2009] NZCA 234, [2009] 3 NZLR 400 at [27].

9      Holdfast NZ Ltd v Selleys Pty Ltd (2005) 17 PRNZ 897 (CA).

a change of counsel which likely contributed). Further, Enviro added to the cost of the application by actively opposing leave. I am not persuaded that increased costs on the recall and adjournment application are appropriate.

[13]   Enviro is entitled to disbursements in relation to the recall and adjournment application as sought, totalling $8,060.64.

Wasted costs

[14]   Enviro properly accepts that only costs wasted as a result of the recall and adjournment application can be awarded. It seeks the costs relating to Mr Shaw’s expert engagement up to and including the adjourned trial. I accept that Enviro has incurred wasted costs in relation to Mr Shaw’s expert engagement. Enviro claims scale costs of $4,952.08 plus a 50 per cent uplift for preparation of Mr Shaw’s brief and preparation for the hearing using a one/seventh proportion of 7.25 hearing days for the May phase of the trial on the basis that Mr Shaw was one of seven witnesses. In the circumstances, that apportionment is reasonable and the proposed scale costs are accepted by Revital. However, I do not consider that 100 per cent of the costs relating to Mr Shaw’s expert engagement up to and including the adjourned trial were wasted.   My best judgment is that 50 per  cent of  those costs were wasted.   Nor am I persuaded that there should be an uplift on the scale costs, essentially for the reasons given in relation to the application.

[15]   I accept that Enviro is also entitled to some allowance for disbursements relating to Mr Shaw’s wasted costs. Again, I do  not consider that 100  per cent of  Mr Shaw’s costs of preparing his brief and attending expert conferral were wasted. My best judgment is that 50 per cent of those costs were also wasted. That does not preclude higher recovery of the relevant disbursements if Enviro is entitled to costs at the conclusion of the proceeding.

Result

[16]Enviro is entitled to costs and disbursements totalling $44,636.71 as follows:

(a)on the recall and adjournment application, Enviro is entitled to 2B costs of $7,707.75 plus disbursements of $8,060.64; and

(b)Enviro is also entitled to wasted costs of $2,476.04 and disbursements of $26,392.28.

Gault J