Secure Financial Services Limited v Nguy

[2017] NZHC 682

IN THE HIGH COURT OF NEW ZEALAND

AUCKLAND REGISTRY

CIV-2015-404-001534

[2017] NZHC 682

BETWEEN

SECURE FINANCIAL SERVICES LIMITED
Plaintiff

AND

JESSE SEANG TY NGUY

First Defendant

MARLI INVESTMENTS LIMITED

Second Defendant

Hearing:	6 April 2017 (teleconference)
Appearances:	S A Grant for Plaintiff P Napier for Defendant
Judgment:	10 April 2017

JUDGMENT OF VENNING J APPLICATION FOR WASTED COSTS

This judgment was delivered by me on 10 April 2017 at 11.30 a], pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date……………

Solicitors:           Bruce Dell Law, Auckland

SECURE FINANCIAL SERVICES LIMITED v NGUY [2017] NZHC 682 [10 April 2017]

Keegan Alexander, Auckland

Copy to:            S A Grant, Auckland

[1]                 The fixture allocated for four days to commence 20 February 2017 was vacated on the first defendant’s application.

[2]                 The application was made on 9 February 2017 as the plaintiff had failed to comply with the pre-trial directions set by Associate Judge Bell on 16 June 2016, notably the requirement that the plaintiff serve its statements of evidence by 18 November 2016. When the plaintiff had not served its witness statements by 9 February 2017 the first defendant applied to vacate the fixture. The plaintiff did not oppose the application for adjournment but opposed the accompanying application for costs.

[3]                 Heath J adjourned the trial in a minute issued on 13 February 2017 but reserved the issue of costs.

[4]                 Counsel for the first defendant has sought a hearing on application for costs. The second defendant has not sought to be heard. Counsel exchanged full submissions and I convened a teleconference.

[5]                 The starting point is that a party in default of a Court timetable which necessitates an adjournment of a fixture will generally be liable to pay the wasted costs of the other party or parties to the proceeding.1

[6]                 The plaintiff does not accept its actions led to the adjournment and opposes the application for costs on the following grounds:

(a)The need for the adjournment arises due to:

(i)the addition of a second defendant on 28 October 2016 due to an argument raised by the first defendant that the plaintiff has not suffered any loss;

1      Highley Ltd v Vodafone New Zealand Ltd HC Auckland CIV-2006-404-2870, 6 September 2011.

(ii)the addition of the new party required further evidence for the plaintiff;

(iii)the first defendant had failed to make full discovery;

(iv)the second defendant discovered further documents on 8 February 2017 which are “likely to have a bearing”;

(v)the evidence may be able to be dealt with by an agreed statement of facts;

(vi)the plaintiff’s expert evidence has not been finalised.

(b)The first defendant will not have wasted any costs.

(c)The plaintiff consented to the proposed adjournment and suggested a split trial. There was no need for the current application

(d)Costs can be dealt with following the substantive hearing.

[7]I deal with the points raised by the plaintiff in opposition to costs.

(a)(i)  The plaintiff’s reliance on the point taken by the first defendant that the plaintiff had failed to establish any loss overlooks that the plaintiff has the obligation to prove its case. It seems from the correspondence annexed to the first defendant’s memorandum that this issue was raised by the first defendant as long ago as August 2015. More fundamentally, if, on reflection, the plaintiff and its advisors took the view it needed to join further parties that is not something which excuses the plaintiff’s failure to comply with the timetable directed by the Court.

(ii)To the extent the plaintiff says its joinder of the second defendant meant it could not complete its evidence by 18

November the onus was on the plaintiff to apply to the Court to vary the order. The plaintiff took no steps to do so but rather breached the order of the Court with no attempt to enlarge or vary the order.

(iii)I note the point made in relation to discovery from the first defendant. That is a relevant factor. However, the email from counsel for the plaintiff which raised the omitted file note was sent on 8 December 2016 three weeks after the date for compliance with the plaintiff’s obligations had passed without any action by the plaintiff. While I accept the first defendant’s failure to provide full discovery is a relevant consideration, it does not excuse the plaintiff’s failure to comply with the timetable for its evidence.

(iv)The second defendant served a brief of evidence on 8 February 2017 including documents for inclusion in the bundle. However from Mr Napier’s submission I understand those documents were largely discovered by the second defendant’s non-party disclosure on April 2016.

(v)While the plaintiff sought to address its default by a proposed agreed statement of facts, again that was not provided for in the directions of the Court. No application to vary or amend those directions was made by the plaintiff. While the second defendant might have agreed to such a course of action, the first defendant was not bound, in the absence of express agreement or direction, to accept an agreed statement of facts procedure.

(vi)To the extent that the plaintiff’s expert evidence was not prepared I repeat the point that no witness statements at all were served by the required date nor was any application made to vary the directions.

(b)The first defendant will inevitably have wasted costs in preparing for trial. As Courtney J noted in Raiser Developments Ltd v Trefoil Properties Ltd:2

[6] Whilst the defendant acknowledges that the work done in preparation for the fixture will ultimately be used when the matter does come to trial, there is an inevitable loss of value of some of the work because of the need to re-evaluate it in the light of amendments made to the plaintiff’s case. In addition, there is likely to be duplication of some tasks.

In this case while the first defendant’s witness statements will be able to be used as a base they will require amendments to respond to the plaintiff’s final witness statements. The first defendant’s preparation for hearing will also need to be reviewed closer to the time of the revised hearing date. I accept, however the force of Ms Grant’s submission that the first defendant would have only incurred limited costs in preparation for the hearing itself. It was obvious there were issues with the hearing.

(c)The first defendant was entitled to pursue an application for costs in light of the plaintiff’s indicated opposition to costs.

(d)In accordance with the rules, costs on an interlocutory application should be dealt with at this stage of the proceeding: r 14.8.

[8]                 I am satisfied that an order for costs in the first defendant’s favour is appropriate, given the plaintiff’s failure to comply with the directions of the Court or to seek to vary the order, which ultimately led to the vacation of the fixture, but it will be limited because of the features of this case.

[9]                 As to quantum, the full costs on a 2B basis for preparation of briefs for the hearing and preparation for the hearing itself would be $12,265. In the present case as best I am able to estimate I consider half of the costs associated with preparation of the briefs and a third of the preparation costs will be wasted and be lost. That amounts

2      Raiser Developments Ltd v Trefoil Properties Ltd HC Auckland CIV-2005-404-5883, CIV-2005- 404-5859, 5 May 2008.

to $5,017.50. However, I am not satisfied an uplift in costs is warranted. While there must also be some sanction for the plaintiff’s failure to seek to address the default and the plaintiff simply ignoring the orders of the Court, that is reflected in the costs award. I also take into account that the first defendant’s discovery was inadequate, and that the plaintiff took steps, on Ms Grant’s submission, to communicate with the fixtures registrar to ensure other cases could use the time.

[10]That leads to a wasted costs award of $5,017.50.

[11]              In addition the first defendant is entitled to the costs of this application. While the plaintiff agreed to the adjournment, the plaintiff refused to accept liability for costs. The application was necessary. The first defendant is entitled to costs on the application on a 2B basis of $5,241 together with a filing fee of $500.

[12]In total the first defendant is to have costs against the plaintiff in the sum of

$10,758.15.

[13]              The costs are payable forthwith. In the event the costs are not paid by 5 May 2017 the first defendant may make an application for the proceedings to be stayed or struck out pending payment.

Venning J