Taumarunui Liquor 2007 Limited v Beale HC Palmerston North CIV-2011-454-214

[2011] NZHC 1181

IN THE HIGH COURT OF NEW ZEALAND PALMERSTON NORTH REGISTRY

CIV-2011-454-214

BETWEEN  TAUMARUNUI LIQUOR 2007 LIMITED Applicant

ANDMICHAEL BERNARD BEALE Respondent

Counsel:         P.J. Drummond - Counsel for Applicant

G.A. Paine - Counsel for Respondent

Judgment:      3 October 2011 at 2:30 PM

JUDGMENT OF ASSOCIATE JUDGE D.I. GENDALL

This judgment was delivered by Associate Judge Gendall on 3 October 2011 at 2.30 pm under r 11.5 of the High Court Rules.

Solicitors:           Fegusson, Bhullar & Scott, Solicitors, PO Box 26, Taumarunui

Jacobs Florentine, Solicitors, PO Box 12015, Palmerston North

TAUMARUNUI LIQUOR 2007 LIMITED V MB BEALE HC PMN CIV-2011-454-214 3 October 2011

[1]      On 22 September 2011 an application brought by the applicant, Taumarunui Liquor 2007 Ltd, to set-aside a statutory demand issued by the respondent, Mr Beale was successful in this Court.   At [40] of that judgment I ordered costs in favour of the applicant on a category 2B basis together with disbursements as fixed by the Registrar.

[2]      The present application is a dispute between the parties as to the respondent’s

liability for certain disbursements.  Counsel have filed memoranda on this issue.

[3]      In support of the original application to set-aside the statutory demand, the applicant filed two affidavits from a Mr Geoffrey Henderson and a Mr Dale Henderson (together Messrs Henderson).  Prior to the hearing, Mr Paine, counsel for the respondent, wrote to the applicant’s solicitors on 26 April 2011 requiring Messrs Henderson  to  be  present  at  the  hearing  (his  words  were  ―both  Hendersons  are required on that day and any subsequent days to which the matter may be adjourned for cross-examination‖) for the purposes of cross-examination.  On 2 May 2011 Mr Bhullar  solicitor  for  the  applicant  responded.    He  wrote  that  the  matter  would proceed  on  an  undefended  basis  as  the  respondent  had  not  taken  any  steps  in opposing the applicant’s application.

[4]      Due  to  the  state  of  proceedings,  Messrs  Henderson  did  not  attend  the

hearing’s first call on 5 May 2011.   At that call, the hearing was adjourned to 21

September 2011.  For that date as witnesses specifically required by the respondent for  cross-examination,  Mr  Dale  Henderson  travelled  to  Palmerston  North  from Taupō via road and Mr Geoffrey Henderson travelled from Auckland via air.

[5]      Accordingly, pursuant to the Witnesses and Interpreters Fees Regulations

1974, the applicant says it seeks the following disbursements/fees:

(a)        Schedule, paragraph 3(a) – Dale Henderson	$25.00
(b)        Schedule, paragraph 3(a) – Geoffrey Henderson	$25.00
(c)        Taupo to Palmerston North and return (Dale Henderson) being 484 kilometres @ $0.38c per kilometre [Schedule, paragraph 8(b)]	$183.92

(d)Annual costs of airfare (Geoffrey Henderson) Auckland to Palmerston North and return [Schedule, paragraph 8(a)] it being submitted that an airfare was a reasonably economic way of travel between Auckland and Palmerston North in the one day so as to avoid overnight accommodation …

TOTAL

$341.00

$574.92

[6]      The respondent opposes this and argues that the effect of Mr Bhullar’s letter on  2  May 2011  was  that  Messrs  Henderson  would  not  be  available  for  cross- examination and so the respondent took no further steps with regard to cross- examining the deponents.  Therefore, Mr Paine submits, Messrs Henderson were not required at the 21 September 2011 hearing.  Mr Paine further argues that no formal order  for  their  production  was  made  by the  Court  and  so  it  should  be  for  the applicant to bear the cost.

[7]      In reply, Mr Drummond, for the applicant, submitted that at no point did the applicant’s solicitors advise Mr Paine, or the respondent, that Messrs Henderson would not be available for cross-examination.   The 2 May 2011 letter began: (emphasis mine)

We refer to your letter of 26 April 2011 giving notice pursuant to rules 19.14 and 9.74 of the High Court Rules requiring Messrs G & D Henderson to attend for cross- examination.  Your notice is dependent upon your client electing to take steps in the proceeding. Your client has not taken any steps and therefore the matter will proceed on an undefended basis.

[8]       As to Mr Paine’s argument that no formal order for Messrs Henderson’s production

was made, Mr Drummond argues that r 9.74 does not require any particular order. [9]       Rule 9.74 provides:

9.74 Cross-examination of person who has sworn affidavit

(1)   A party desiring to cross-examine a  person who  has sworn or affirmed an affidavit on behalf of an opposite party may serve on that opposite party a notice in writing (which may be by letter addressed to the opposite party's solicitor) requiring the production of that person for cross-examination before the court at the trial.

(2)   The notice must be served, and copies of it filed in the court and delivered to all other parties who have taken any step in the proceeding, not less than 3 working days before the day fixed for the trial.

(3)   The affidavit of a person who is not produced must not be used as evidence unless the evidence is routine, or there are exceptional circumstances, and in either case the court grants leave.

(4)   The party to whom the notice is given is entitled to compel the attendance of the person who has sworn an affidavit for cross-examination in the same way as that party might compel the attendance of a witness to be examined.

[10]     Here, Mr Paine served a notice on the applicant’s solicitors (r 9.74(1)) and filed  a  copy in  this  Court  (r  9.74(2)).    Therefore,  r  9.74  was  clearly  engaged. Further, I do not read Mr Bhullar’s 2 May 2011 letter as suggesting that Messrs Henderson would not be available for cross-examination.  Rather, that unless steps were taken to defend the application, they would not be needed.   The respondent filed his notice of opposition on 3 May 2011 (the final day for filing being 18 April

2011). Mr Paine took no steps in advising the applicant that Messrs Henderson would not be required. And steps were clearly taken by the respondent in the proceeding. The condition contained in the itilicised text at [7] above was therefore fulfilled.

[11]     In Air New Zealand Ltd v Commerce Commission  (2005) 17 PRNZ 786

Rodney Hansen  J  demonstrated that  since 1  February 2003  the  Witnesses’  and Interpreters’ Fees Regulations 1974 have not applied to civil proceedings in the High Court. Item 12 of Schedule 3 which covered disbursements including witnesses' expenses, was revoked by r 23 High Court Amendment Rules (No 2) 2002 (SR

2002/410) and replaced by r 48H: Progressive Enterprises Ltd v North Shore City Council (2005) 17 PRNZ 919 at [22].  Rule 48H has now been replaced by r 14.12, Air New Zealand Ltd v Commerce Commission [2007] NZCA 27, [2007] 2 NZLR

494 at [49]. That approach to r 48H also applies to r 14.12: Marsman v Nijkrake

[2009] NZCA 461, (2009) 19 PRNZ 812 at [10].

[12]     Rule 14.12 of the High Court Rules defines disbursements as:

An expense paid or incurred for the purposes of the proceeding that would ordinarily

be charged for separately from legal professional services in a solicitor’s bill of costs.

[13]     Rule 14.12 goes on to provide an inclusive list of categories recognised as disbursements and in r 14.12(2) specifies:

(2)        A  disbursement must,  if  claimed  and  verified, be  included  in  the  costs awarded for a proceeding to the extent that it is—

(a)        of a class that is either—

(i) approved by the court for the purposes of the proceeding; or

(ii) specified in paragraph (b) of subclause (1); and

(b)        specific to the conduct of the proceeding; and

(c)        reasonably necessary for the conduct of the proceeding; and

(d)        reasonable in amount.

(3)       Despite subclause (2), a disbursement may be disallowed or reduced if it is disproportionate in the circumstances of the proceeding.

[14]      In Russell v Taxation Review Authority (2000) 14 PRNZ 515 Fisher J observed at

[28]:

It must always be open to a party to show that in the circumstances of the particular case an item claimed as a disbursement was specific to the particular litigation, was necessary, would normally be charged to the client as a separate disbursement, and was reasonable in amount…

[15]     Full expenses of witnesses may be claimed, but must be approved under r

14.12.   The question is whether the r 14.12(2) and (3) criteria are met: Air New

Zealand Ltd v Commerce Commission [2007] NZCA 27, [2007] 2 NZLR 494 at [47].

[16] In the present case, the travel costs of Messrs Henderson are certainly an expense paid or incurred for the purposes of the proceeding that would ordinarily be charged for separately from legal professional services in a solicitor’s bill of costs and are therefore disbursements. Further, I am satisfied that given my conclusions at [10] above that Messrs Henderson were clearly required to attend the hearing, as per Mr Paine’s 26 April 2011 letter. Therefore, I consider that the costs were specific to the conduct of the proceeding and were reasonably necessary, and were reasonable in amount. Therefore, the costs of Messrs Henderson’s travel are claimable.

[17]     Given that the Witnesses’ and Interpreters’ Fees Regulations 1974 no longer apply, however, there is no longer an allowance payable to witnesses.  While, in Air New Zealand Ltd v Commerce Commission the Court of Appeal said that an expert witness’ time spent giving evidence, in preparing that evidence, in critiquing other parties’ experts’ evidence to assist counsel to understand the issues and opposing contentions, and in assisting counsel in cross-examination, were all costs reasonably necessary for the conduct of the proceeding, there is no general principle applicable to witnesses generally.  Therefore, that aspect of the applicant’s claim must fail.  As

to the transport costs claimed here, Mr Geoffrey Henderson’s airfares are to be reimbursed as incurred.  As to Mr Dale Henderson’s costs, cl 8 of the Schedule to those regulations does not appear to have been amended since 1988.   I expect, therefore, that if one was to calculate costs on that basis today, a witness would be somewhat out of pocket.   Nevertheless, that is the amount claimed for travel.   I accordingly allow it.

[18]     Disbursements are certified at $524.92.

‘Associate Judge D.I. Gendall’