Trustees of the Link Trust no.1 v Haines
[2023] NZHC 1594
•26 June 2023
IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY
I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE
CIV-2021-485-459
[2023] NZHC 1594
BETWEEN THE TRUSTEES OF THE LINK TRUST
NO.1, presently being CISCA FORSTER and HARRY MEMELINK
PlaintiffsAND
QUENTIN STOBART HAINES
First Defendant
BPE TRUSTEES (NO.1) LIMITED
Second DefendantEASTLIGHT ASSET TRADING NO.5 LIMITED
Third Defendant
STOBART HOLDINGS LIMITED
Fourth Defendant
CIV-2021-485-457 BETWEEN
THE TRUSTEES OF THE LINK TRUST
NO.1, presently being CISCA FORSTER and HARRY MEMELINK
Plaintiffs
AND
STOBART HOLDINGS LIMITED
Defendant
On the papers: Counsel:
D Livingston for Plaintiffs
JD Dallas for First, Second and Third Defendants A O’Connor for Fourth Defendant
Judgment:
26 June 2023
THE TRUSTEES OF THE LINK TRUST NO.1 v HAINES & ORS (COSTS) [2023] NZHC 1594 [26 June 2023]
JUDGMENT OF CHURCHMAN J [COSTS]
Introduction
[1] On 23 March 2022, I declined the applicants’ applications for a caveat not to lapse, and for an interim injunction preventing the fourth respondent, Stobart Holdings Ltd (Stobart), from dealing with a residential property near Ōtaki.1 On 6 May 2022, I granted costs on this decision in favour of the respondents, calculated on a 2B basis with an uplift of 50 per cent on the basis that there was no evidential basis for the serious allegation of fraud made against the respondents.2
[2]On 22 April 2022, the applicants made an interlocutory application seeking:
(a)leave to appeal the interlocutory application for an injunction;
(b)a stay in respect of CIV-2021-485-457 to sustain the caveat, pending the determining of an appeal to the Court of Appeal; and
(c)an order that costs in CIV-2021-485-457 and CIV-2021-485-459 remain reserved until the determination of the appeal.
[3] On 3 June 2022, I declined the application as to a stay and leave to appeal.3 I reserved costs on that decision.4
[4] On 31 May 2022, the applicant trust was placed into receivership by order of the High Court.5 On 6 July 2022, the director of one of the respondents, Stobart Holdings Ltd (Stobart), received a letter from Westpac Bank enclosing an invoice for legal costs incurred of $1,410. I understand that Stobart deposited sufficient funds into the nominated bank account and Westpac subsequently deducted those fees from the account as advised.
1 Forster v Haines [2022] NZHC 549.
2 Trustees of the Link Trust No 1 v Haines [2022] NZHC 957.
3 Forster v Stobart Holdings Ltd [2022] NZHC 1304.
4 At [42].
5 Body Corporate 81012 v Memelink [2022] NZHC 1244.
[5] The respondents now seek costs of $17,925, calculated on a 2B basis with an uplift of 50 per cent and with an allowance of two days for preparation for the hearing to account for time counsel spent liaising between each other, as well as disbursements of $160. In addition, the respondents seek, in respect of Stobart specifically, an order for the sum of $1,410 on an indemnity basis for costs already paid by Stobart for Westpac’s legal fees.
[6]The applicants in response seek that the costs award against them be a total of
$7,170, calculated on a standard 2B basis without any uplift and without any costs awarded in respect of the preparation for hearing step, plus total disbursements of
$110.
Discussion
[7] There are effectively two aspects of the costs in respect of which the parties differ, namely whether an uplift is warranted and whether costs for an additional step in the form of preparation for hearing is appropriate to account for time counsel spent liaising between themselves.
Uplift
[8] The respondents submit that costs on the present interlocutory matters should be calculated on a 2B basis with an uplift of 50 per cent. This is on the basis that the applicants in support of both interlocutory applications have continued to advance what the respondents say are unsubstantiated allegations of fraud against all of the respondents, and previous costs orders in this matter have proceeded on this basis, that is, 2B with an uplift of 50 per cent. The respondents say advancing such allegations of fraud for a further time warrants such an uplift and is worthy of criticism.
[9] The applicants submits that costs should be calculated on a standard 2B basis, without any uplift. They say the leave application had merit and if increased costs were awarded against parties seeking leave to appeal a decision in respect of fraud, this would create a chilling factor on appeals.
[10] I accept that there can be a potential for a chilling factor on appeals if an application seeking leave to appeal a decision in respect of fraud attracted increased costs. However, in the normal run of events such costs can be returned to such a party seeking leave to appeal if successful in their claim on appeal. The possibility that costs might be greater if a party continues to make allegations of fraud against another party in the face of findings by a court to the contrary, is a factor that a party bringing the litigation will be required to account for in their decision as to whether to bring or continue a case alleging fraud in such circumstances.
[11] Increased costs in the form of uplifts may be awarded where a party has taken or pursued an argument that lacks merit or unnecessarily contributes to the time and expense of the proceeding or quantum, or where there is some other reason to justify a court imposing increased costs.6 Such uplifts have been applied in cases where fraud is alleged when there is a lack of substance behind the allegations,7 or if a party makes allegations of fraud knowing them to be false.8 Even allowing that the applicants might have been sincere in their continued allegations of fraud, this must be taken against the backdrop that the High Court had already found these claims to be entirely unsubstantiated, and the applicants continued in disregard of this finding.
[12] An uplift is generally not to exceed 50 per cent. This is the uplift granted in previous costs decisions in this matter and I see no reason to depart from such an uplift in this situation. In view of the applicants continuing to allege fraud in the face of the finding of no evidential basis to support such an allegation, such an uplift is appropriate.
Preparation for hearing
[13] The respondents acknowledge that although there are four respondents, and counsel for all four respondents have liaised with each other throughout all steps in this interlocutory matter, only one set of documents was filed. Accordingly, counsel
6 High Court Rules 2016, r 14.6(3)(b) and (d); and see Soshi Gakuen New Zealand Inc v Vo [2020] NZHC 2218 at [17]–[18].
7 See for example Baxter v RMC Group PLC HC Auckland CP262/01, 9 September 2003 at [31] and [56], cited in Soshi, above n 6, at [18].
8 Bradbury v Westpac Banking Corp [2009] NZCA 234, [2009] 3 NZLR 400 at [29], endorsing
Hedley v Kiwi Co-operative Dairies Ltd (2002) 16 PRNZ 694 (HC) at [11].
for the respondents submits only one order for costs should be made, to be shared jointly between all of the respondents. This is a sensible approach. However, counsel for the respondents seek an allowance for two days of hearing preparation be allowed to reflect the additional time spent by counsel in liaising throughout this matter, notwithstanding the matter was determined on the papers.
[14] The applicants oppose the additional two days sought as “preparation for affidavit hearing” to reflect the additional time spent by counsel in liaising throughout this matter. The applicants say the proceedings were conducted efficiently and an additional two days is not warranted, particularly given there is no explanation provided as to how the extra two days of liaising occurred.
[15] Rule 14.15 of the High Court Rules 2016 provides that the court must not allow more than one set of costs, unless there is good reason to do so, if several defendants defended the proceeding separately and it appears to the court that all or some of them could have joined in their defence. As Wylie J stated in Independent Māori Statutory Board v Auckland Council:9
… The rule suggests a policy which requires the Court to exercise some caution in awarding costs, without more, in favour of multiple parties, particularly when there is some overlap or community of interest in the litigation position of the parties seeking costs.
[16] The rule was later applied by Wylie J in the costs decision in Li v Commissioner of Police, in which his Honour ordered a single costs order in respect of certain steps in respect of which he considered the two defendants “could have joined forces … and filed common submissions”, but made separate costs orders in respect of other submissions made by the defendants which “went beyond those made by the other.”10
[17] The respondents here have appropriately requested only one set of costs, to be shared jointly between them. The question is whether there should be any further provision granted within that single set of costs to allow for the additional work involved in the four parties preparing their responses to the applicants’ claims.
9 Independent Māori Statutory Board v Auckland Council [2017] NZHC 678 at [8], citing Norfolk Trustee Co Ltd v Tattersfield Securities Ltd HC Auckland CIV-2004-404-3668, 30 March 2005 at [51].
10 At [16] and [18].
[18] Such an allowance was granted in Houghton v Saunders, where Cooke J considered costs where multiple defendants were involved in successfully defending interlocutory applications.11 The plaintiff in that case contended that the applications should have been argued predominantly by one set of defendants with the other defendants receiving only a modest additional award for being heard in support.12 Cooke J noted the defendants had already partly reflected the application of r 14.15 in their costs claims to some extent, but considered greater allowance should be made for the approach taken by the defendants in this regard.13 He considered that the defendants who took the leading role should be awarded a full set of costs (including allowance for second counsel), with the supporting defendants being allowed only one counsel and 50 per cent of the allowance for preparing written submissions.14
[19] Similarly, in Lai v Huang the jointly represented defendants were not awarded separate costs for each of the separate statements of defence and lists of documents, Edwards J considering there did not appear to be any reason why a single statement of defence or single list of documents could not have been filed on behalf of all the defendants.15 Nevertheless, however, she instead allowed a 20 per cent increase on a single set of costs “to recognise the additional time incurred and complexity involved in responding on behalf of multiple defendants.”16
[20] The approach taken by Edwards J in Lai v Huang was then adopted and followed by Moore J in Banks v Farmer.17 He awarded the defendants one set of costs, which he then uplifted by 20 per cent to account for there being multiple defendants, namely the additional time incurred and complexity involved in running a case for multiple defendants.18 That figure was then uplifted by 40 per cent, the increased costs principally being to recognise the plaintiff’s misconduct.19
11 Houghton v Saunders [2021] NZHC 3590.
12 At [39].
13 At [41].
14 At [41] and [96(b)].
15 Lai v Huang [2020] NZHC 588 at [10].
16 At [11].
17 Banks v Farmer [2022] NZHC 458.
18 At [67].
19 At [67].
[21] The respondents in this case have claimed two days for preparation for affidavit hearing, or $4,780. If this were converted to an uplift on the remaining costs, it would equate to an uplift of two-thirds, or 66.66 per cent. This appears to be out of line with the authorities I have mentioned above, namely Lai v Huang and Banks v Farmer. I consider some allowance is warranted to reflect the additional work involved in counsel liaising with each other to prepare a consolidated response to the claims. However, I consider the two days claimed is pitched too high. Instead, I grant an additional one day under this step, or $2,390, which would equate to an uplift of one- third, or 33.33 per cent of the remaining costs.
Indemnity
[22] There is little detail provided as to the indemnity in favour of Stobart. However, the applicants do not appear to oppose the indemnity being granted.
[23] Accordingly, it is allowed as sought. I order that the applicants are to provide to Stobart specifically the sum of $1,410 to indemnify it for the costs paid to Westpac.
Disbursements
[24] It is unclear to me why the applicants have removed the $50 sealing fee from the allowance for disbursements. Provided that has been paid, the respondents are entitled to it, and the total to be paid to the respondents in respect of disbursements is therefore $160.
Conclusion and orders
[25] Costs are therefore as set out in the respondents’ memorandum, except with only one day allowed for preparation for affidavit hearing, bringing the costs subtotal to $9,560, which when a 50 per cent uplift is applied brings the total amount of costs to $14,340.
[26]I make the following orders as to costs:
(a)the applicants are to pay to the respondents collectively $14,340 in costs, plus $160 in disbursements, to be shared equally between the four of them; and
(b)in addition, the applicants are to provide to Stobart specifically the sum of $1,410.
Churchman J
Solicitors:
Livingston & Livingston, Wellington for Plaintiffs Iorns Legal, Porirua for Defendants
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