Sixtus v Kidd
[2015] NZHC 3246
•16 December 2015
IN THE HIGH COURT OF NEW ZEALAND INVERCARGILL REGISTRY
CIV-2015-425-000073 [2015] NZHC 3246
BETWEEN DOUGLAS MARTIN SIXTUS
Appellant
AND
CHARLES EDWARD FRANCIS KIDD Respondent
Hearing: (On the papers) Appearances:
B Nettleton for Appellant
S Nicol for RespondentJudgment:
16 December 2015
JUDGMENT OF DUNNINGHAM J
[1] This is an appeal of a District Court decision as to costs. The key issue centres on how the transitional provisions of the District Court Rules 2014, (“the
2014 rules”) should be interpreted and applied. The appellant says the District Court Judge was wrong to assume the time allocations and increased daily recovery rates introduced in the 2014 rules, applied to steps taken after 1 July 2014 in these proceedings. Instead he submits that, on a correct interpretation of these provisions, he should only be required to pay the respondent costs determined in accordance with the time allocations and daily recovery rates in the District Court Rules 2009 (“the 2009 rules”).
Background
[2] The substantive proceeding was filed in 2013 and was allocated a short trial on 24 June 2014. The 2014 rules came into force a few days later, on 1 July 2014. The substantive judgment was delivered on 30 June 2015. The defendant, Mr Kidd,
was the successful party.
SIXTUS v KIDD [2015] NZHC 3246 [16 December 2015]
[3] The costs judgment was subsequently given by Judge Callaghan on
27 July 2015.1 His Honour held that costs were to be calculated on a 2B basis (which was uncontroversial) and using the time allocations and daily recovery rates specified in the 2009 and 2014 rules respectively, depending on whether the relevant step in the proceeding was taken before or after 1 July 2014.
Grounds of appeal
[4] In his notice of appeal filed on 21 August 2015, the appellant relied on three grounds of appeal, namely that:
(a) the transitional provisions of the District Court Rules 2014 require costs for this proceeding to be governed solely by the 2009 Rules;
(b)the respondent should not have been allocated costs for an adjournment he had sought; and
(c) the respondent should not have been allocated costs for his written submissions given the rules provided for no such allowance.
[5] On 5 October 2015 the respondent conceded ground two of the appeal. However, he maintains his opposition to the other two grounds of appeal, contending that the 2014 rules apply to the determination of costs and that, regardless of which rules are taken to apply, the respondent (as defendant in the substantive proceeding) was entitled to an allowance for the preparation of written submissions.
Which rules apply to the determination of costs?
The submissions
[6] Schedule 1 of the 2014 rules contains the transitional provisions to govern the change from the 2009 rules to the 2014 rules.
[7] The appellant says the matter is dealt with entirely by cl 9 of Schedule 1 of the 2014 rules. That provision reads:
1 Sixtus v Kidd [2015] NZDC 12883.
9. Proceeding with trial pending
A proceeding in respect of which the Court has allocated a short trial, simplified trial or full trial before the commencement of these rules continues to be subject to the 2009 rules until a final judgment has been given in the proceeding.
[8] Here the proceeding had been allocated a short trial on 24 June 2014, a week before the 2014 rules came into force. As such, the appellant submits that cl 9 disposes of the matter and the 2009 rules including the costs provisions, ought to apply until final judgment.
[9] In reply, the respondent cites cl 17 of the transitional provisions. That clause provides:
17. Time allocations
(1) Costs in a proceeding commencing after the coming into force of these rules must be determined in accordance with these rules.
(2) Costs in a proceeding commenced before the coming into force of these rules must be determined, -
(a) In the case of a step in the proceeding taken before the coming into force of these rules, in accordance with the 2009 rules;
(b) In the case of a step in the proceeding taken after the coming into force of these rules, in accordance with these rules.
(3) For the purposes of subclause (2) a step in the proceeding described in the first column of the table in Part 2 of this schedule is taken on the date appearing opposite that step in the second column of that table.
[10] Specifically the respondent submits that cl 17(2)(b) covers the present situation. Here the proceedings were undoubtedly commenced before the 2014 rules took effect. While a reference to cl 9, without more, would seem to result in the
2009 rules applying to such proceedings without exception, he argues that cl 17(2) displaces that general rule for the purposes of calculating costs. That is, when determining costs, the 2009 rules apply to steps taken in that proceeding before
1 July 2014 and, for steps taken after that date, the 2014 rules apply.
[11] The appellant, in response, proposes that a restrictive interpretation should be given to cl 17 and that it should be “subordinated” to cl 9. In support of his view that cl 9 takes precedence over cl 17 he argues that there has been a “material
change” to the short trial procedure under the 2014 Rules. Specifically, the
2014 Rules require affidavits of evidence, whereas previously short trials only required “will say” statements and, they now require production of a bundle of documents for trial, whereas formerly those were not required.2 He submits that because the appellant and respondent have engaged in a form of short trial which is “structurally different to the format and nature of a short trial under the District Court Rules 2014”, it follows that it cannot have been intended that costs
should be calculated under the 2014 rules. Indeed, he goes so far as to suggest that if this were the case, the successful party would “effectively [gain] a windfall by being awarded costs which have been allocated in anticipation of a distinct and more altered process”.
[12] Finally, in his reply submissions, the appellant submits that the words “in accordance with these rules” in cl 17(2)(b) mean that costs in a proceeding which commences before 1 July 2014 can only be governed by the 2014 rules, so far as the other 2014 rules allow. In this case, cl 9 of the 2014 rules prevents this proceeding from having costs determined under 2014 rules because it stipulates that, once a trial has been allocated before 1 July, the 2009 rules apply “until a final judgment”.
Which clause prevails for the purpose of the calculation of costs awards?
[13] Looked at in isolation, cl 9 and cl 17 appear to contain competing provisions as to which rules apply to the determination of costs in a proceeding such as the current one, where a short trial has been allocated prior to the 2014 rules come into force. The question is whether the rules should be interpreted so that cl 9 prevails entirely and all issues, including costs, are determined by the 2009 rules, or whether cl 17 provides an exception to cl 9, for the limited purpose of determining costs.
[14] As with any question of legislative interpretation, it is clear that such provisions should be interpreted, “from its text and in the light of its purpose”. That
is enshrined in s 5(1) of the Interpretation Act 1999.
2 Rule 2.4.5 under the 2009 Rules cf Rule 10.4 under the 2014 Rules.
[15] The general purpose of the change to the rules is articulated in the explanatory note to the 2014 rules. In summary, it says the amendments were to address “widespread dissatisfaction with the operation of the forms under the 2009 rules” while retaining the positive features of the 2009 rules, being the options of short trials, simplified trials and full trials, and the use of judicial settlement conferences. However, it sheds no light on the interrelationship between cl 9 and cl 17.
[16] Given that the issue is not resolved by reference to stated purpose of the
2014 rules, it is necessary to turn to the “indications provided in the enactment” including the surrounding text and the organisation and formal transitional provisions, and then checking the outcome of the competing proposed interpretations for practicality and workability, in order to discern their intended application.3
[17] While the usual position is that legislative changes have no application to proceedings which are underway when the changes come into force,4 that is not necessarily the case when the changes are to procedure rather than to substantive rights.5 It is clear that the transitional provisions in this case provide for the
2014 rules to apply to existing litigation at specified stages in the proceedings. While, in a case such as this, where a trial is pending, the 2009 rules continue to apply until final judgment has been given, other transitional provisions in the
2014 rules specify a change to the 2014 rules at earlier stages of the proceedings. These include:
(a) proceedings which started under the 2009 rules, but where a mode of trial has not been allocated or it has not been the subject to a judicial settlement conference, will go to a first case management conference under the 2014 rules and be dealt with under those rules thereafter;6
(b) where an application for summary judgment has been made under the
2009 rules, then the 2009 rules will continue to apply until the
3 Interpretation Act, s 5(2).
4 In Re Yarrell (Deceased), Dickinson v Yarrell [1956] NZLR 739 (SC) per Gresson J.
5 See for example, the discussion in R Carter Burrows Finn and Carter Statute Law in
New Zealand, (5th ed Lexis Nexis, Wellington, 2015) at 625.
6 See clauses 1 and 2.
summary judgment application is decided, and at that point, if the proceedings continue, it will be under the 2014 rules;7
(c) where a judicial settlement conference has been ordered, but has not taken place, the 2014 rules apply to the judicial settlement conference and to the stages thereafter;8
(d)where a final judgment has been given (whether before, on, or after the commencement of the 2014 rules) from that point forward, (for example for the purpose of enforcement), the 2014 rules apply;
(e) where proceedings have been transferred to the High Court, or where they have been allocated a short trial, simplified trial or full trial, then they continue to be subject to the 2009 rules until a final judgment has been given;9
(f) in any other case (although it is not obvious what cases would not be covered by the preceding clauses) a proceeding started under the
2009 rules, that is not completed before the commencement of the
2014 rules, simply switches to the 2014 rules.10
[18] It can be seen from this that, in general, the transitional provisions seek to switch existing proceedings to the 2014 rules as soon as that can be reasonably done, with the main exception being when a trial has already been allocated, but has not been completed. Clause 17 was introduced after the draft rules containing these provisions had twice been sent out for consultation, because there is no equivalent to
cl 17 in the draft versions of the District Court Rules.11 This suggests that the
existing transitional provisions either did not address costs, or, if they did, cl 17 was intended to override that so that the changes to the time allocations and daily
recovery rates would apply to all steps taken after the commencement of the
7 Clause 3.
8 Clauses 5 and 6.
9 Clauses 7 and 9.
10 Clause 12.
11 Being the versions which accompanied the Rules Committee Consultation Papers of
16 December 2012 and 1 November 2013.
2014 rules notwithstanding that procedurally the litigation was still governed by the
2009 rules. This is the approach argued for by the respondent.
Analysis
[19] I am satisfied that the respondent’s position is correct and cl 17 should be read as applying to the calculation of costs in any District Court proceeding, notwithstanding the various other provisions in Schedule 1, as to when the shift from the 2009 rules to the 2014 rules takes place. There are several reasons for this.
[20] First I consider there would be no purpose in adding cl 17 to the transitional provisions if, in fact, the previous provisions were also intended to govern when the new time allocation and daily recovery rates were to come into force. This is because clauses 1 to 12 of Schedule 1 comprehensively set out when the transition is to be effected from one set of rules to the other including through the “catch-all” clause at cl 12. If the appellant’s approach was correct, cl 17 would have no function whatsoever. It cannot be that a provision was expressly added to the draft rules when, on the appellant’s reading, it would be entirely redundant.
[21] There is also a logical reason for costs to be calculated using updated time allocations and daily recovery rates for 1 July 2014 onwards. The daily recovery rates are altered by the rules to take account of changes in the New Zealand Producers Price Index.12 There can be no “windfall”, as the appellant claims, if costs recovery is altered to reflect increases in costs which have actually occurred at the point at which the work is undertaken for the successful party.
[22] The fact that the 2014 rules have introduced some changes in procedure which might be reflected in the time allocations in the 2014 rules is irrelevant, as no claim can be made for steps which are not taken and claims made applying schedule time allocations and recovery rates are not intended to reflect the exact time spent, they can never exceed the actual costs incurred, and are still subject to the exercise of
the Judge’s discretion if any real anomaly results.
12 For example, Schedule 5 was again replaced by the District Court’s Amendment Rule 2015 to
increase the rates to take account of such changes since the rates were last adjusted in 2012.
[23] For all these reasons I am satisfied that cl 17 is a standalone provision applying to the determination of costs in these proceedings, and the Judge properly applied its provisions.
Should costs have been awarded for the filing of written submissions?
[24] The second issue is whether the Judge was correct to award costs for the respondent’s preparation of written submissions. The respondent points out that prior to the trial, it was suggested by counsel for the appellant that written submissions be filed after the trial rather than presenting closing submissions at the trial. That was confirmed with the Judge and he made timetabling directions for the filing of written submissions which the parties complied with.
[25] The respondent’s point is simple; as the filing of written submissions was a necessary step in the proceeding taken as a result of a request by the appellant’s solicitor, it is a matter for which costs should appropriately be awarded.
[26] The appellant submits that there is no time allocation provided for in the
2009 rules for written submissions and so this claimed step should not have been allowed. He refers, in support, to the text, Principles of Civil Procedure (3rd Ed, Thomson Reuters, 2012), where the author points out, at 13.25:
The schedule does not allocate time for everything that is done in the course of a proceeding. There is, for example, no allowance for written submissions beyond those included in the preparation for a hearing; nor is there any allowance for correspondence between parties. The idea is to provide a relatively simple way of calculating costs based on certain accepted steps.
Accordingly, he argues that written submissions should be treated as forming part of the preparation for the short trial as allocated in the relevant schedule of the
2009 rules, and should not have been provided for separately, as sought by the respondent.
[27] The respondent relies on his argument that cl 17 determines the calculation of costs after 1 July 2014 and the 2014 rules do now provide a time allocation for this step. However, even if that were not the case, he points out that schedule 3 of the
2009 rules, at allocation 20, provides for “other steps in the proceeding not
specifically mentioned”, with the allocation being “as allowed by Court”. In other words, he submits there was scope for the Judge to award costs for the preparation of written submissions, even under the 2009 rules and, even if those rules applied, the Judge was not wrong to allow costs to be claimed for that step.
Analysis
[28] Given my conclusions on the first issue, which is that the calculation of costs is governed by cl 17(2)(b) of the transitional provisions to the 2014 rules, it is clear that the preparation of written submissions was a step for which a time allocation was given and there can be no suggestion that the Judge was in error in allowing this claim in his award of costs. I accept, too, that there was scope to award costs for the preparation of written submissions under the 2009 rules, but as I have held these do not apply, I need not consider that issue further.
Conclusion
[29] The respondent is successful on both points so the appeal fails. Specifically I
have held that:
(a) the transitional provisions of the District Court Rules 2014 require that costs in this proceeding are determined in accordance with cl 17(2)(b);
(b)as a consequence of (a), and the fact written submissions were prepared for hearing, it was appropriate for the Judge to award costs for this step as provided for under the 2014 rules.
[30] The respondent is entitled to costs on this application. Costs, on a 2A basis, as fixed by the Registrar, are awarded to the respondent.
Solicitors:
French Burt Partners, Invercargill
Preston Russell Law, Invercargill
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