STEPHEN CHARLES PENNEY AND WYLIE PROPERTIES LIMITED AND DAVID KEITH WYLIE AND DONNA MARIA SIMUNOVICH

[2024] NZHC 2779

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2022-404-079

[2024] NZHC 2779

BETWEEN

STEPHEN CHARLES PENNEY

Plaintiff

AND

WYLIE PROPERTIES LIMITED

First Defendant

AND

DAVID KEITH WYLIE

Second Defendant

AND

DONNA MARIA SIMUNOVICH

Third Defendant

Hearing:

On the papers

Appearances:

S R Mitchell KC for plaintiff

S E McCabe for third defendant

Judgment:

26 September 2024

JUDGMENT OF JOHNSTONE J

(costs upon discontinuance against third defendant)

This judgment was delivered by me on 26 September 2024 at 12pm pursuant to r 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Solicitors:

Garry Pollak & Co., Auckland Martelli McKegg, Auckland

PENNEY v WYLIE PROPERTIES LTD [2024] NZHC 2779 [26 September 2024]

[1]                 Following the discontinuance by the plaintiff, Mr Penney, of his claim against the third defendant, Ms Simunovich, she seeks indemnity or uplifted costs, or 2B scale costs calculated at $24,168.88 and disbursements of $1,560.

[2]                 Mr Penney says that only 2B scale costs, calculated at $10,277, should be awarded.

Background

[3]                 Mr Penney was once married to the third defendant, Ms Simunovich. A 13.5-metre launch named Donna Marie (the Boat), formed part of their relationship property.

[4]                 The first defendant, Wylie Properties Ltd (Wylie Properties), owns premises which are used as storage facilities. The second defendant, Mr Wylie, is a director and shareholder of Wylie Properties.

[5]                 In the course of Mr Penney and Ms Simunovich’s separation, she arranged for the Boat to be uplifted and stored at Wylie Properties’ premises. After some years, in October 2014, the division of their relationship property was settled. Steps were taken to implement or confirm Mr Penney’s direct or indirect ownership of the Boat, separately from Ms Simunovich, during 2015. Storage-related charges were brought up to date, to 27 April 2015. However, the Boat has remained at Wylie Properties’ premises, and further storage-related charges were not paid.

[6]                 In December 2021, a notice was published in the New Zealand Herald indicating Wylie Properties’ intention to sell the Boat in the event of a failure by the owner, “understood to be [Mr Penney]”, to pay outstanding charges and to remove the Boat within around two weeks. In early 2022, Mr Penney issued this proceeding acting on his own behalf, alleging conversion and trespass to goods in respect of the Boat by all three defendants, and defamation on the part of the first and second defendants in issuing the notice.

[7]                 Wylie Properties counterclaimed, seeking storage fees and other sums on the basis of breach of contract or bailment. Ms Simunovich applied for summary

judgment to the effect that none of Mr Penney’s causes of action against her could succeed. All three defendants sought orders that Mr Penney provide security for their costs.

[8]                 On 17 April 2023, I heard Wylie Properties’ application for judgment upon its counterclaim by default, and the defendants’ joint application for security for costs, insofar as it remained live in respect of Wylie Properties and Mr Wylie. I dismissed the judgment by default application, but granted the residual security for costs application, by judgment dated 16 May 2023.1

[9]                 In my judgment, I observed that Ms Simunovich’s summary judgment and security for costs applications had also been scheduled for hearing on 17 April 2023, but that Mr Penney had filed a discontinuance on 14 April 2023. I issued directions timetabling the filing of submissions on costs.

[10]             Submissions for Ms Simunovich were filed on 8 June 2023, and for Mr Penney on 18 June 2024, after Ms Simunovich prompted the Registry to seek them.

Ms Simunovich’s position

[11]             Ms Simunovich says that Mr Penney should pay indemnity or at least uplifted costs. At my request, Ms Simunovich’s counsel, Ms McCabe, provided details of  Ms Simunovich’s actual costs, advising by memorandum dated 10 September 2024 that she:

(a)incurred costs pursuant to an invoice in the sum of $26,275.00 including  GST  for  legal   attendances   in   the   period   between   15 February 2022 and 31 August 2022;

(b)incurred disbursements, comprised of $110 for filing her statement of defence, $250 for half of the fee for filing the defendants’ joint application for security for costs, and $1,200 in respect of a total hearing fee of $1,600 (calculated on the basis Ms Simunovich had the

1      Penney v Wylie Properties Ltd [2023] NZHC 1171.

whole of her summary judgment application, and half of the defendants’ security for costs application, for hearing), a total of

$1,560; and

(c)has incurred costs of $9,000 plus GST (which Ms McCabe has agreed to invoice at a reduced rate, albeit the value of her recording time from 1 September 2022 exceeds $17,000).

[12]Ms McCabe calculates Ms Simunovich’s share of scale 2B costs at $24,168.88.

Mr Penney’s position

[13]             Mr Penney accepts that costs are payable upon his discontinuance, in accordance with the presumption set out in r 15.23 of the High Court Rules 2016. However, he submits that scale costs only, of no more than $10,277 should be ordered. He says that his behaviour does not meet the high threshold of unreasonableness required for an order of indemnity costs.

Decision

[14]             Under r 14.6(4)(a), the Court may order a party to pay indemnity costs if the party has acted vexatiously, frivolously, improperly, or unnecessarily in commencing or continuing a proceeding.

[15]             In Ben Nevis Forestry Ventures Ltd v The Commissioner of Inland Revenue, the Court of Appeal found that commencing and continuing a hopeless case would be sufficient, without flagrant misconduct, to justify indemnity costs.2 It observed:3

As Woodward J makes plain, if the case is truly hopeless the action must be presumed to have been commenced for some ulterior motive.4 It is clear from this Court's decision in Bradbury v Westpac Banking Corp that the commencement and continuation of a hopeless case is, potentially, sufficient in itself to justify an award of indemnity costs. The dictum of French J says

2      Ben Nevis Forestry Ventures Ltd v The Commissioner of Inland Revenue [2014] NZCA 348, (2014) 22 PRNZ 322.

3      At [27] citing French J in J Corp Pty Ltd v Australian Builders Labourers Federation Union of Workers (WA Branch) (No 2) (1993) 46 IR 301 (FCA) at 303 and Bradbury v Westpac Banking Corp [2009] NZCA 234, [2009] 3 NZLR 400.

4      Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397 (FCA) at 401.

so unequivocally, and that dictum was adopted by this Court in Bradbury v Westpac Banking Corp.

[16]             In my view, Mr Penney’s case against Ms Simunovich was plainly hopeless, from its commencement in February 2022. That is reflected in the fact that, soon after Mr Penney belatedly instructed counsel, he discontinued his case. As indicated above, Mr Penney was well aware  following  his  relationship  property  settlement  with Ms Simunovich in October 2014 that she would bear no responsibility for the costs of storing the Boat as from April 2015.

[17]             Further, Mr Penney’s discontinuance did not occur until the last working day before a second fixture, set for the hearing of Ms Simunovich’s application for summary judgment, on 17 April 2023. And a significant portion of this delay occurred after the filing of a defence application for summary judgment. As explained in my judgment in respect of the balance of Mr Penney’s proceeding, against Mr Wylie and Wylie Properties, a first hearing of Ms Simunovich’s summary judgment application was fixed for 17 August 2022, alongside a joint defendants’ application for security for costs. Mr Penney did not appear. Instead, shortly before the hearing, Mr Penney filed an affidavit referring to his need, for two reasons, to have more time to prepare submissions: first, the defendants’ submissions were “complex”; and second, his back condition for which he was receiving ongoing treatment, but which was causing him extreme pain.

[18]             Associate Judge Johnston vacated the fixture for the interlocutory applications, and directed that they be allocated a case management conference. At the case management conference on 12 September 2022, Associate Judge Johnston, amongst other things:

(a)having considered written submissions, ordered Mr Penney to pay the defendants’ wasted costs in the sum of $3,520 plus GST; and

(b)debarred Mr Penney from prosecuting his substantive claim pending payment of those costs (that order not being intended to interfere with the defendants’ ability to pursue summary judgment or default judgment).

[19]             Despite the additional time Mr Penney was thus granted, in which he might have reflected on the strength of Ms Simunovich’s defence as set out in the notice of application for summary judgment and supporting affidavit, the discontinuance was not filed for another five months.

[20]             On this basis, I intend to award Ms Simunovich indemnity costs, excluding the sum of $2,024 (being half of the wasted costs award, including GST) from the calculation, intending to avoid double recovery. I consider the amounts outlined by Ms McCabe to reflect a reasonable allocation of actual costs having regard to the time appropriately undertaken in response to Mr Penney’s proceeding, the significance and complexity of the work, and a reasonable hourly rate.5

Result

[21]Mr Penney is to pay Ms Simunovich an award of costs, in the sum of

$34,601.00 including GST, and disbursements in the sum of $1,560.00 including GST.

Johnstone J

5      Edel Metals Group Ltd v Geier Ltd [2018] NZCA 494 at [58], citing Bradbury v Westpac Banking Corp above n 3.