Ruby & Rata Limited v Reed Trustee 2018 Limited

[2024] NZHC 33

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2022-404-724

[2024] NZHC 33

UNDER

Section 313 Property Law Act 2007

BETWEEN

RUBY & RATA LIMITED

Plaintiff

AND

REED TRUSTEE 2018 LIMITED and

ANTHONY PRIVETT REED (as trustees of the Eagle Trust)

Defendants

Hearing:

On the papers

Counsel:

R O Parmenter for Plaintiff

J W Maassen and B D Mead for Defendants

Judgment:

30 January 2024

JUDGMENT OF O’GORMAN J

This judgment was delivered by me on 30 January 2024 at 3 pm pursuant to r 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Solicitors/Counsel:

Graham & Co, Auckland Langford Law, Wellington

R O Parmenter, Barrister, Auckland J W Maassen, Barrister, Wellington

RUBY & RATA LIMITED v REED TRUSTEE 2018 LIMITED [2024] NZHC 33 [30 January 2024]

[1]                 In a judgment dated 30 November 2023, I made declarations in favour of the plaintiff, and recorded that the plaintiff’s claim had succeeded. I said that costs follow the event and set a timetable for the parties to file memoranda for the question of costs and disbursements to be determined on the papers.

[2]The plaintiff seeks costs on a 2B basis in the following amounts:

(a)For steps in the proceeding calculated based on the time allocations set out in sch 3 of the High Court Rules 2016, $38,957.

(b)For various disbursements including court filing fees, discovery, copying and bundle preparation and expert witness fees, $15,028.32.

[3]                 The defendants accept that the plaintiff, as the successful party, is entitled to costs on a 2B basis. However, the following issues are disputed:

(a)The defendants contend that costs should be reduced by two thirds to reflect the plaintiff’s conduct in the proceeding, including allegations of ulterior motives and/or unclear expressions of the purpose of access sought, failure to adduce evidence, and because I did not grant the wider declaration in the prayer for relief.

(b)In respect of the digital discovery bill of $403.66, the defendants say this should be reduced because the files were poorly named and organised, and because production did not comply with the High Court Rules.

(c)The defendants say that the evidence of Mr Bosgra as an expert was not relevant to the proceedings and did not form part of the findings upon which the judgment was issued.

(d)They seek to exclude bundle costs because they say that it was the defendants’ bundle that was relied on by the Court and witnesses, and the need for duplicate bundles was the plaintiff’s fault.

[4]                 I do not accept that there are any grounds for reducing the plaintiff’s entitlements from the default 2B allocations as the successful party. This reflects the fundamental principle applying to the determination of costs in New Zealand that costs follow the event.1 An assessment of which party was “successful” requires both a consideration of which party won the principal contests of law and fact and a realistic appraisal of the end result, rather than focusing on who initiated what step and the extent to which that step succeeded or failed.2 Such assessments are made “in the round” in a way that should not detract from the principle that the determination of costs should be predictable and expeditious.3

[5]                 I have considered the defendants’ arguments for a reduction of costs based on criticisms of how the hearing was conducted and the fact that some of the relief sought was not granted. However, I do not consider that any reduction is justified on those grounds. Overall, my assessment is that it was the defendants’ strategy that significantly contributed to a more lengthy hearing than would otherwise have been required. While the plaintiff did not obtain the broad declaration in the terms sought, the wording was generally consistent with their legal entitlements as a matter of law, as set out in the legal analysis of the judgment. Those issues needed to be addressed anyway to consider the merits of the declaration that was granted, and no material time was wasted as a result. The defendants’ cost arguments are inconsistent with awarding costs to the successful party “in the round”.

[6]                 In terms of bundle preparation, the plaintiff has produced evidence that the disbursements were incurred, and the plaintiff’s bundles were in fact filed and served. The parties blame each other for the duplication that occurred when the defendants also prepared a full bundle of common documents. I do not have sufficient information to determine blame for these inefficiencies. In the circumstances, the general principle applies that the successful party is entitled to recover for this step and related disbursements that were actually incurred.

1      Lawrence v Glynbrook 2001 Ltd [2015] NZHC 1005 at [3], referencing Manukau Golf Club Inc v Shoye Venture Ltd [2012] NZSC 109, [2013] 1 NZLR 305 at [8].

2      At [8], referencing Phoenix Organics Ltd v RD 2 International Ltd (No 2) HC Auckland CIV- 2005-404-5070, 21 December 2005 and Packing In Ltd (in liquidation) v Chilcott (2003) 16 PRNZ 869 (CA).

3      At [18–20], referencing North Shore City Council v Body Corporate 189855 [2010] NZCA 234, (2010) 20 PRNZ 740 at [12].

[7]                 The defendants have not otherwise raised any particular issue with the steps listed in calculations made in the plaintiff’s schedule, and I confirm an award of those costs in the amount sought.

[8]                 I accept that the SLS discovery bill in the sum of $403.66 is claimable in full. It is small for a case of this type. To the extent that the defendants say that discovery was non-compliant, further steps to comply with formalities would have resulted in further disbursement costs and there is no reason to suggest that the scanning and coding that did occur was wasted.

[9]                 On the issue of whether the disbursement costs of Mr Bosgra as expert are claimable, the defendants say that the plaintiff has claimed these on the basis of a notice to admit facts. While there was a notice to admit the facts that Mr Bosgra’s evidence addressed, disbursements on experts are claimable in full anyway (whether or not there is a notice to admit) under r 14.12 so long as they are reasonably necessary for the conduct of the proceeding. As a general principle, the successful party is entitled to recover actual expenses of expert witnesses, even if that evidence is not ultimately helpful or relied on to determine the issues, so long as it was reasonable and relevant for the party to adduce it.4 In this case, the evidence of Mr Bosgra was relevant and reasonably adduced by the plaintiff for matters that I determined in my judgment, so those costs are reimbursable in full. However, there is an issue concerning GST.

[10]             There are GST components included in the Bosgra witness bill, the two SLS bills and the SNAP printing bill. A GST-registered party will generally recover from the Commissioner of Inland Revenue a GST input credit  for  invoices  that  the  GST party has paid. Such a GST input credit is not available to the successful party if it is not GST-registered. In this case I understand that Ruby & Rata Ltd is GST-registered and therefore should have obtained an input credit, in which case those costs are not recoverable from the defendants (this would amount to double counting).5

4      Lun v Kong [2023] NZHC 2256 at [7] and [11], referencing Air New Zealand Ltd v Commissioner of Inland Revenue [2007] 2 NZLR 494, (2007) 18 PRNZ 406 (CA) at [47] and [64].

5      New Zealand Venue and Event Management Ltd v Worldwide NZ LLC [2016] NZCA 282 at [6], referencing Dunedin Catering Supplies v Mr Chips Ltd [2013] NZHC 1815, (2013) 21 PRNZ 798 at [35].

Accordingly,   that   GST   component    should   be    removed    from    the   claimed disbursements.

Result

[11]Accordingly, I award costs on a 2B basis in the sums of:

(a)For steps in the proceeding calculated based on the time allocations set out in sch 3 of the Rules, $38,957 as set out in [2] of the plaintiff’s memorandum.

(b)For disbursements, a sum of $14,114.18, being those set out in [3] of the plaintiff’s memorandum, less the GST components.

[12]             In the event that Ruby & Rata Ltd is not GST-registered and has received no input credit, then GST may be added back by establishing those facts with the Registrar.

O’Gorman J