Tandem Group Ltd v ASB Bank Ltd - [2021] NZHC 1135

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2020-004-43

[2021] NZHC 1135

BETWEEN
TANDEM GROUP LIMITED

Plaintiff

AND

ASB BANK LIMITED

Defendant

Hearing: On the papers

Counsel:

J W Turner and J C Waugh for plaintiff

Z G Kennedy and H M Jaques for defendant

Judgment:

20 May 2021

JUDGMENT OF KATZ J

[Costs]

This judgment was delivered by me on 20 May 2021 at 3:30 pm Pursuant to Rule 11.5 High Court Rules

Registrar/Deputy Registrar

Solicitors: Devonport Law Limited
MinterEllisonRuddWatts, Auckland

Counsel: J Turner, Chancery Chambers, Auckland
Z G Kennedy, Barrister, Auckland

TANDEM GROUP LIMITED v ASB BANK LIMITED [2021] NZHC 1135 [20 May 2021]

Introduction

[1] Joe and Zena Clark are longstanding clients of Tandem Group Limited (“Tandem”), an accounting firm. An employee of Tandem, Shaun Quigley, defrauded the Clarks of $200,000. Tragically, when his fraud was discovered, Mr Quigley took his own life.

[2] Mr Quigley’s estate was insolvent, so Tandem repaid the $200,000 owing to the Clarks. In exchange, the Clarks assigned Tandem their interest in any claims against ASB Bank Limited (“ASB”), who had processed the fraudulent cheque. Tandem has since issued this proceeding against ASB. In response, ASB filed an interlocutory application seeking an order for defendant’s summary judgment or, in the alternative, an order striking out one or more of Tandem's causes of action.

[3] On 2 February 2021, I dismissed ASB’s summary judgment/strike out application.1 While Tandem’s case did not appear strong, ASB had failed to establish that Tandem’s causes of action were untenable or unarguable.2

[4] I reserved leave to file memoranda if costs could not be agreed.3 Costs have not been agreed. Tandem seeks costs and disbursements of $24,227.50. ASB contends that the appropriate costs award is $8,173.80. The key issues requiring determination are:

(a)Should costs be fixed and payable, fixed but not payable pending the outcome of the trial, or reserved?

(b)Is Tandem entitled to claim for legal costs incurred in the preparation of the affidavits it filed in opposition to ASB’s application?

(c)Should costs be awarded for second counsel?

(d)Should a disbursement be awarded for the fees of Tandem’s expert banking witness?

1 Tandem Group Ltd v ASB Bank Ltd [2021] NZHC 51.
2 At [66].
3 At [68].

Should costs be fixed and payable, fixed but not payable pending the outcome of the trial, or reserved?

[5] Tandem submitted that costs should be fixed and payable at this stage in respect of ASB’s application on the following basis:

(a)In respect of the strike out aspect of the application, Tandem submitted costs should be fixed and payable at this stage in accordance with r 14.8 of the High Court Rules 2016 (the “Rules”).

(b)In respect of the summary judgment aspect of the application, Tandem submitted costs should be fixed and payable, utilising the Court’s discretion to override the r 14.8(3) exception for summary judgment applications, because:

(i)the general rule is that it is typically appropriate to fix…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2021] NZHC 1135
Decision Date: 20 May 2021

CaseChat Overview and Summary

The case of Tandem Group Limited v ASB Bank Limited was heard in the High Court of New Zealand, Auckland Registry. The case involved a dispute between Tandem Group Limited, an accounting firm, and ASB Bank Limited, following a fraud committed by an employee of Tandem. The key issues that the court had to determine were the appropriate costs to be awarded following ASB’s unsuccessful interlocutory application for summary judgment and/or strike out. The court had to decide whether the costs should be fixed and payable, fixed but not payable pending the outcome of the trial, or reserved. Additionally, the court had to determine whether Tandem was entitled to claim for legal costs incurred in the preparation of the affidavits, whether costs should be awarded for second counsel, and whether a disbursement should be awarded for the fees of Tandem’s expert banking witness.

The court held that the costs for both the strike out and summary judgment applications should be fixed and payable now. The court noted that while ASB was not aware of the existence of disputed facts prior to filing its application, the disputed facts came to light after the application was filed. The court also found that the strike out application and the summary judgment application covered essentially the same ground, and it would be artificial to attempt to allocate costs between the two applications. The court further held that Tandem was not entitled to claim for legal costs incurred in the preparation of the affidavits as the relevant costs were covered by item 23 of sch 3. The court also ruled that there was no exceptional feature justifying a costs allowance for second counsel. Lastly, the court decided that the costs issues relating to Tandem’s expert banking witness should be resolved post trial.

In conclusion, the court awarded Tandem costs on a 2B basis in the sum of $8,173.80. The court found that the costs for both the strike out and summary judgment applications should be fixed and payable now, and that there was no basis for awarding a separate costs allocation for the preparation of Tandem’s affidavits, nor for awarding costs for second counsel. The court further ruled that the costs issues relating to Tandem’s expert banking witness should be resolved post trial.

Orders