Spring v Browne
[2023] NZHC 2581
•15 September 2023
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV 2021-404-000992
[2023] NZHC 2581
UNDER the Defamation Act 1992 IN THE MATTER OF
a claim for injurious falsehood
BETWEEN
MARC ROBERT SPRING
Plaintiff
AND
CORY DAVID BROWNE
First Defendant
GLENN CHARLES TULLOCH
Second Defendant
Hearing: On the papers Counsel:
M R Spring, Plaintiff in person J D Evans for the Defendants
Judgment:
15 September 2023
JUDGMENT OF TAHANA J
(Costs)
This judgment was delivered by me on 15 September 2023 at 2.00pm Pursuant to Rule 11.5 of the High Court Rules
…………………………
Registrar/Deputy Registrar
Solicitors/Counsel:
Hayman Lawyers, Wellington Copy to:
Mr Spring (Plaintiff)
SPRING v BROWNE (Costs) [2023] NZHC 2581 [15 September 2023]
Introduction
[1] The plaintiff failed in his claims against the defendants.1 I indicated that the successful party would ordinarily be entitled to costs on a category 2B basis together with disbursements. I granted leave to the parties to file costs memoranda if they were unable to agree costs.2
[2] The parties have been unable to agree, and the defendants now seek indemnity costs and disbursements of $60,191.97 (including GST) plus $1,725.00 for the costs of this application. Alternatively, the defendants seek increased costs as determined by the Court. Counsel estimate that costs under category 2B amount to $35,850.00.
[3]The defendants also seek an order that costs be paid within seven days.
[4] The plaintiff says that costs on a category 2B basis are appropriate and that the defendants are not entitled to claim indemnity or increased costs. The plaintiff also says the defendants’ counsel has miscalculated the 2B costs and the costs of this application should lie where they fall.
Analysis
Increased or indemnity costs
[5] Costs are at the discretion of the Court. The Court may award increased costs or indemnity costs in the circumstances specified in r 14.6(3) and (4) of the High Court Rules 2016:
(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
(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
1 Spring v Browne [2023] NZHC 1173 at [58].
2 At [59].
(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.
[6] The party seeking increased or indemnity costs bears the onus of convincing the Court to award them.3 It is therefore for the defendants to satisfy the court that increased or indemnity costs should be awarded.
[7]In Minister of Education v James Hardie, Fitzgerald J observed:4
It is, in my view, becoming increasingly common for successful parties in commercial litigation … to seek increased and/or indemnity costs. That is often on the basis the party has been successful, but without detailed or significant analysis of why the other party’s conduct appropriately falls within those relatively limited circumstances in which increased and indemnity costs are appropriate.
[8] The above passage indicates the importance of setting out the basis for increased costs and establishing that any increase is appropriate.
[9] The defendants rely on r 14.6(4)(a) and say that Mr Spring acted vexatiously, frivolously, and unnecessarily in commencing and continuing with the proceeding. The defendants refer to the initial statement of claim seeking damages of
$1,500,000.00 (subsequently reduced in an amended statement of claim). While the quantum of damages initially claimed is excessive, that alone does not establish that Mr Spring was acting vexatiously or frivolously.
[10] Prior to issuing proceedings, on 26 May 2021, Mr Spring wrote to each of the defendants asserting that their comments were false when they had stated that he did not have authorisation to use the company’s MotorWeb login on 14 February 2020. Mr Spring requested that each defendant withdraw the “false comment” and that if they did not do so by 5 June 2021, he would consider the false comment to be malicious and he would prosecute accordingly. Neither defendant responded and the plaintiff filed his claims. The fact that Mr Spring had been provided login details indicates that he was not acting vexatiously but out of concern that the police may have been provided with false information. That had led to a search warrant being executed on his property.
3 Strachan v Denbigh Property Ltd HC Palmerston North CIV-2010-454-232, 3 June 2011.
4 Minister of Education v James Hardie New Zealand [2018] NZHC 2960 at [7].
[11] The defendants also refer to the plaintiff’s rejection of two settlement offers and rely on r 14.6(3)(b)(v). This is relevant to the defendants’ request for increased costs.
[12] On 13 July 2021, the defendants invited the plaintiff to withdraw his claims with no issue as to costs asserting that the defendants had expressed their honest belief at the time the statements were made and there was no malice or recklessness. The defendants rejected the assertion that not withdrawing the statements after the police had acted upon them proved malice.
[13] While the July 2021 offer included an offer to settle “without issue as to costs”, thereby removing any costs exposure for the plaintiff, at that time (13 July 2021) the costs exposure was likely to have been minimal. The offer was made prior to the filing of any statement of defence. Further, the invoice of the defendants’ counsel for the period from 1 July to 7 September 2021 was for legal costs of $3,800.00 (plus GST) indicating that the legal costs as at 13 July 2021 were likely to have been a small part of that total.
[14] The defendants again invited the plaintiff to discontinue his claims by letter dated 15 June 2022. The defendants did not deny that the plaintiff was authorised to access the MotorWeb database using the company’s login but asserted that he was not authorised to use it for a purpose that was in breach of the requirements of the New Zealand Transport Agency (NZTA). The defendants sought payment of their then legal fees of $19,750.00. Again, the plaintiff says that the offer simply restated the defendants’ position and was not a genuine attempt to settle the proceeding.
[15] The courts have acknowledged that merely stating a party’s position and offering nothing that would not be available without the settlement offer should not necessarily put a defendant in a stronger position than they would have been in absent the offer.5 I accept that the form of the second offer does not go beyond stating the defendants’ defence. It did not offer any costs relief or address the plaintiff’s concern that he wanted a statement withdrawing any suggestion that he had not been provided
5 Craike v Tilsley [2012] NZHC 2886 at [6].
with login details for MotorWeb. The plaintiff did not act unreasonably in rejecting the offer in those circumstances.
[16] Further, even if there was a basis for increased costs, the court must be satisfied that the costs were “reasonably incurred.”6 The plaintiff submits that the Court cannot determine whether the quantum of indemnity costs is reasonable on the information that has been provided. Mr Spring refers to Muir v Commissioner of Inland Revenue where Faire J said:7
The usual practice is for the party seeking indemnity costs to provide an affidavit which details how the costs were incurred. This affidavit must show:
(a)A breakdown of costs in terms of the [time] spent on the particular litigation;
(b)A breakdown of the hourly rates charged for each litigation;
(c)A specific breakdown of disbursements for each litigation;
(c)Any additional evidence which shows that the rate charged and the work undertaken were reasonable.
Ultimately the Commissioner should show that the quantum of costs it seeks to recover is objectively reasonable for the number of hours spent, the skill of counsel involved and the complexity of the case. What is required is a sufficient description of the work undertaken so that it discloses that it is work reasonably undertaken for the step and which also discloses that the step is a reasonable step taken in relation to the recovery of the outstanding debt in this case. …
[17] No affidavit has been filed in support of the defendants’ application. The invoices simply state a total amount (including GST) for the period of the invoice. In the absence of any information, the Court cannot determine the time taken, the type of work involved or the applicable hourly rate. Further the defendants have claimed GST without any confirmation that they are not GST-registered.
[18] A GST-registered party will generally recover from the Commissioner of Inland Revenue a GST input credit for the GST the party has paid to the solicitor
6 Edel Metals Group Ltd v Geier Ltd [2018] NZCA 494 at [62].
7 Muir v Commissioner of Inland Revenue [2015] NZHC 2855 at [16] (Faire J citing a minute he had issued on 29 May 2014 at [6]–[7]).
representing that party in the litigation.8 If a party is not GST-registered, the GST input credit is not available to the successful party.
[19] The general rule is that award of scale costs is GST neutral, and GST should be omitted from calculations.9 For an increase in costs or indemnity costs, the Court may take into account actual costs incurred, including the GST component however:10
[16] As when awarding increased costs, the Court will proceed on the basis that the successful party is GST-registered and entitled to a GST input credit. Accordingly, a party that is not able to recover GST should inform the Court so that this may be taken into account. This basis ensures double recovery is avoided and puts the onus on the successful party to inform the Court of its inability to recover GST if it wants fully to recover its costs.
[20] In the absence of any confirmation as to the defendants’ respective GST status, it is inappropriate to award GST as it may result in double recovery.
[21] I decline the defendants’ request for increased or indemnity costs. The defendants’ settlement offers simply stated the defendants’ position. The defendants did not engage with the plaintiff’s request to withdraw their comments in circumstances where it would have been consistent with their position to have confirmed to the police that the plaintiff had been provided with login details but had not been authorised to use them contrary to NZTA’s requirements. In the absence of any response to his initial letters, I am not satisfied that the plaintiff was acting vexatiously, maliciously and or unnecessarily despite ultimately being unsuccessful in his claims.
[22]The defendants are therefore only entitled to scale costs.
Calculation of scale costs
[23]The plaintiff says the defendants have calculated the 2B costs incorrectly.
8 Dunedin Catering Supplies v Mr Chips Ltd [2013] NZHC 1815 at [34].
9 Burrows v Rental Space Ltd (2001) 15 PRNZ 298.
10 New Zealand Venue and Event Management Ltd v Worldwide NZ LLC [2016] NZCA 282.
[24] First, the plaintiff says the calculations include $1,434.00 for a security for costs application that was unsuccessful.11 I accept that this cost should be removed.
[25] Second, the plaintiff says the claim for costs for “memorandum for case management” has been double counted so that $956.00 needs to be deducted. The defendants filed more than one memorandum in relation to case management issues (memoranda dated 2 September 2021, 6 April 2022 and 29 October 2022). The defendants are therefore entitled to claim the additional $956.00.
[26] Third, the plaintiff says that the costs for “preparation for an appearance at [pre-trial] conference” should be classified as “appearance at a mentions hearing for case management.” I accept the plaintiff’s submission that this should be reclassified as the pre-trial directions were made on the papers by consent and not at a pre-trial conference. The amount claimed should therefore be reduced by $717.00 to $478.00 (that is, 0.2 x $2,390.00).
[27] Fourth, the plaintiff says the notice to admit facts has been double counted so that the plaintiffs have claimed an additional $1,912.00. There are however, two defendants and each defendant is entitled to claim costs in relation to the time required to review and respond to the notice to admit facts. I therefore reject the plaintiff’s submission.
[28] I note that the plaintiff amended his claim twice and the defendants filed a further first amended statement of defence dated 22 April 2022 and a “third” amended defence dated 2 December 2022. The defendants are entitled to the costs of each of those statements of defence which is $2,868.00 (1.2 x $2,390.00).
[29]Below are the adjustments to the scale costs claimed by the defendants:
Total claimed 35,850 Less security for costs application -1,434 Less reduction for preparation for mentions hearing -717 Plus further statements of defence (x2) +2,868 Total adjusted amount 36,567
11 Spring v Browne [2022] NZHC 247.
[30] Mr Spring says that he will organise to pay costs to the defendants. He maintains that an order for payment within seven days is unnecessary. If Mr Spring is able to pay and given the time since my judgment, I do not consider it unreasonable to require that costs be paid within seven days.
Costs of this application
[31]The defendants also claim the costs of this application.
[32] I have declined to award indemnity costs or any increase in costs other than an increase to reflect the costs associated with filing further statements of defence after the plaintiff’s amendments to his claims. The costs of this application should therefore lie where they fall.
Result
[33]The defendants are awarded costs on a category 2B basis in the amount of
$36,567.00 plus disbursements (excluding GST).
[34]Costs are to be paid within 7 days of the date of this judgment.
[35]The costs of this application are to lie where they fall.
Tahana J
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