Sim v Grant
[2023] NZHC 2691
•26 September 2023
IN THE HIGH COURT OF NEW ZEALAND DUNEDIN REGISTRY
I TE KŌTI MATUA O AOTEAROA ŌTEPOTI ROHE
CIV-2022-412-116
[2023] NZHC 2691
BETWEEN ALEXANDER TURFUS SIM
Plaintiff
AND
DAVID JAMES GRANT
First Defendant
AND
ALEXANDRA STONE QUARRIES LIMITED
Second Defendant
Hearing: On the papers Counsel:
K J Logan for Plaintiff
A J More for First and Second Defendants
Judgment:
26 September 2023
COSTS JUDGMENT OF ASSOCIATE JUDGE PAULSEN
This judgment was delivered by me on 26 September 2023 at 4.00 pm pursuant to Rule 11.5 of the High Court Rules
Registrar/Deputy Registrar Date:
SIM v GRANT [2023] NZHC 2691 [26 September 2023]
Introduction
[1] The plaintiff made an application seeking particular discovery and setting aside claims of confidentiality made by the defendants in their affidavit of documents. Although the application was not formally opposed by the defendants, their counsel had filed a memorandum before the hearing asserting, with respect to the application, that on his instructions everything in the possession of the defendants had been discovered and while not all discovery had been provided in affidavit form, that was to be remedied.
[2] I heard the application on 30 August 2023 and issued a judgment on 31 August 2023 granting the plaintiff an order for particular discovery and adjourning the application to set aside the defendants’ claims to confidentiality pending the filing of the defendants’ further affidavit of documents.1
[3] In respect of costs, the plaintiff sought indemnity or increased costs on the application for particular discovery. I reserved costs for the filing of submissions. Those submissions have now been received.
The plaintiff seeks costs
[4]Counsel for the plaintiff has calculated 2B scale costs as amounting to
$7,528.50. Actual costs in respect to the application total $14,335 plus GST. The plaintiff seeks indemnity costs, but says that if indemnity costs are not awarded he is entitled to a substantial increase on scale costs. The plaintiff also seeks to recover reasonable disbursements incurred on the application.
The defendants’ position
[5] The defendants have not taken issue with the plaintiff’s calculation of scale costs, nor is it suggested the plaintiff’s actual costs are unreasonable. The defendants accept the plaintiff is entitled to costs on the application but say that scale costs are appropriate.
1 Sim v Grant [2023] NZHC 2411.
Some more context
[6] The relevant facts are set out in my judgment of 31 August 2023. I do not intend to recount them in full again here.2 In summary, the parties were ordered to provide standard discovery. The defendants were late filing their first affidavit of documents which was incomplete and did not comply with the listing protocols in the High Court Rules 2016. The plaintiff’s counsel sought to have the defendants address their incomplete discovery and subsequently two further unsworn affidavits of documents were filed by the defendants, which were also incomplete. The plaintiff obtained a timetable for the filing of its application for particular discovery which the defendant did not formally oppose, while at the same time maintaining that discovery had been adequately made. The plaintiff’s counsel, quite rightly, complied with the Court’s directions and prepared fully for the hearing scheduled for 30 August 2023. Shortly before the hearing the defendants disclosed more than 400 further documents and advised a further affidavit of documents would be filed. The further affidavit has now been filed.
The rules
[7] The plaintiff relies on r 14.6 of the High Court Rules which provide the Court with a power to make an order for increased or indemnity costs as follows:
(1)Despite rules 14.2 to 14.5, the court may make an order—
(a)increasing costs otherwise payable under those rules (increased costs); or
(b)that the costs payable are the actual costs, disbursements, and witness expenses reasonably incurred by a party (indemnity costs).
(2)The court may make the order at any stage of a proceeding and in relation to any step in it.
(3)The court may order a party to pay increased costs if—
(a)the nature of the proceeding or the step in it is such that the time required by the party claiming costs would substantially exceed the time allocated under band C; or
2 At [4]–[14].
(b)the party opposing costs has contributed unnecessarily to the time or expense of the proceeding or step in it by—
(i) failing to comply with these rules or with a direction of the court; or
(ii) taking or pursuing an unnecessary step or an argument that lacks merit; or
(iii) failing, without reasonable justification, to admit facts, evidence, documents, or accept a legal argument; or
(iv) failing, without reasonable justification, to comply with an order for discovery, a notice for further particulars, a notice for interrogatories, or other similar requirement under these rules; or
(v) failing, without reasonable justification, to accept an offer of settlement whether in the form of an offer under rule 14.10 or some other offer to settle or dispose of the proceeding; or
(c)the proceeding is of general importance to persons other than just the parties and it was reasonably necessary for the party claiming costs to bring it or participate in it in the interests of those affected; or
(d)some other reason exists which justifies the court making an order for increased costs despite the principle that the determination of costs should be predictable and expeditious.
(4)The court may order a party to pay indemnity costs if—
(a)the party has acted vexatiously, frivolously, improperly, or unnecessarily in commencing, continuing, or defending a proceeding or a step in a proceeding; or
(b)the party has ignored or disobeyed an order or direction of the court or breached an undertaking given to the court or another party; or
(c)costs are payable from a fund, the party claiming costs is a necessary party to the proceeding affecting the fund, and the party claiming costs has acted reasonably in the proceeding; or
(d)the person in whose favour the order of costs is made was not a party to the proceeding and has acted reasonably in relation to it; or
(e)the party claiming costs is entitled to indemnity costs under a contract or deed; or
(f)some other reason exists which justifies the court making an order for indemnity costs despite the principle that the determination of costs should be predictable and expeditious.
The plaintiff’s submissions
[8] The plaintiff submits that indemnity costs can be appropriately awarded and relies on factors that engage r 14.6(4)(a), (b) and (f) because:
(a)the only sworn affidavit by the plaintiff was plainly inadequate;
(b)the defendants did not remedy their non-compliance with the discovery order for over four months;
(c)the defendants acted improperly in failing to consent to the making of an order for particular discovery, and the position maintained up to the hearing that their discovery was adequate lacked merit;
(d)the defendants have acted inappropriately in that after the application was filed, their counsel indicated that further documents would be obtained from third parties but then changed position;
(e)the defendants’ approach to the application was to cause the plaintiff to incur costs (by failing to accept that an order should be made) while reducing their own costs by not formally opposing the application.
[9] The plaintiff submits that even if indemnity costs are not awarded, a substantial uplift on costs should be awarded because every single ground for doing so in r 14.6(3)(b) are engaged for the same reasons.
The defendants’ submissions
[10] The defendants appear to raise three matters in support of their submission that only scale costs be awarded. First, that the plaintiff was provided with the bulk of the defendants’ discoverable documents prior to the filing of their latest affidavit of documents. That does not alter the fact that the plaintiff was forced to make its application to obtain proper discovery due to the defendants’ failure to comply with the Court’s directions.
[11] Second, the defendants say that the discovered material was voluminous and required significant effort to locate. I do not accept that the discovery that has now been provided is in excess of what is usual for a High Court proceeding. Further, if the defendants required further time to provide discovery, the proper course was to apply for it rather than maintain the position their discovery was complete and put the plaintiff to the time and cost of an unnecessary application.
[12] Third, it is submitted the defendants have not purposely tried to delay the proceedings. That may be correct, but they also did not comply with Court directions concerning discovery and maintained an unreasonable position in relation to their obligations under those directions at the plaintiff’s expense.
My analysis
[13] The question for me is whether I award the plaintiff indemnity costs or increased costs, and the quantum of the awards. There is a high threshold that must be crossed before the Court will order indemnity costs. Generally, it must be shown that a party has behaved very badly or very unreasonably to justify such an award. Further, as such awards depart from the predictability of the costs regime they are considered exceptional.3
[14] Here, there is a strong case for indemnity costs, but that is not an end to the matter. While indemnity costs are determined by reference to actual costs, they must still be reasonable.4 In Bradbury v Westpac Banking Corporation Harrison J said:
[209] There is nothing, however, in r 48C to suggest that the scale is relevant to an award for actual or indemnity costs. In my judgment the appropriate course for assessing what actual costs were reasonably incurred is to
(1) determine whether a particular item of expenditure is reasonably incurred
— for example, preparation of a statement of defence; (2) fix what would be a reasonable allocation of actual costs, measured by reference to an appropriate time taken and allowing for the significance and complexity of the category of work; and (3) quantify the costs by reference to a median hourly rate reasonably applicable to it.
3 Bradbury v Westpac Banking Corporation [2009] NZCA 234, [2009] 3 NZLR 400 at [28].
4 Bradbury v Westpac Banking Corporation (2008) 18 PRNZ 859 (HC).
[15] The amount claimed by the plaintiff as indemnity costs is significant, particularly in the context of what turned out to be an unopposed application, and some of the time would relate to the application challenging confidentiality claims by the defendants, which is not determined. The information provided by the plaintiff is limited to its time records which do not, in my view, provide me with sufficient to make an assessment of reasonable indemnity costs.
[16] In those circumstances, the plaintiff will be awarded scale costs with a substantial uplift which I assess at 50 per cent, given what I consider was a unjustifiable failure by the defendants to comply with their discovery obligations and the maintenance of untenable positions in relation to the plaintiff’s application.
Result
[17] The plaintiff is awarded 2B scale costs on its application for particular discovery in the amount of $7,528.50 as set out in the schedule B to his counsel’s memorandum of 6 September 2023, with a 50 per cent uplift, making a total of
$11,292.75.
[18] The plaintiff is also awarded disbursements as set out in his counsel’s memorandum, which shall include the hearing fee in the event that is actually incurred.
O G Paulsen Associate Judge
Solicitors:
Ross Dowling Marquet Griffin, Dunedin Gallaway Cook Allan Lawyers, Dunedin
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