VICTORIA MARGARET MCEVEDY AND MICHAEL THOMAS MCEVEDY AND MICHAEL THOMAS MCEVEDY and BENJAMIN WILLIAM MCALPINE TOTHILL s AND CATHERINE MCEVEDY and ALEXANDRA RUTHERFORD s AND BENJAMIN WILLIAM MCALPINE TOTHILL AND THE...
[2024] NZHC 2583
•9 September 2024
IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY
I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE
CIV-2021-409-583
[2024] NZHC 2583
BETWEEN VICTORIA MARGARET MCEVEDY
Plaintiff
AND
MICHAEL THOMAS MCEVEDY
First Defendant
AND
MICHAEL THOMAS MCEVEDY and BENJAMIN WILLIAM MCALPINE TOTHILL
Second Defendants
AND
CATHERINE MCEVEDY and ALEXANDRA RUTHERFORD
Third Defendants
AND
BENJAMIN WILLIAM MCALPINE TOTHILL
Fourth Defendant
AND
THE PARTNERSHIP OF DUNCAN COTTERILL
Fifth Defendant
Hearing: On the papers Counsel:
M D Arthur for the Plaintiff
G J Ryan for the First and Third Defendants
A J Gaborieau for the Second and Fourth Defendants P L McKinnon for the Fifth Defendant
Judgment:
9 September 2024
JUDGMENT OF HARLAND J
(as to costs on defendants’ application for security for costs)
MCEVEDY v MCEVEDY [2024] NZHC 2583 [9 September 2024]
Costs on application for security for costs
[1] On 21 December 2023, I issued a judgment dealing with, among other things, an application by the defendants for security for costs against the plaintiff.1 I granted the application upon certain conditions and indicated that costs should follow the event. Memoranda addressing costs have now been filed.
[2] The parties agree that category 2B applies. However, the plaintiff opposes the claim by the defendants that wasted costs can be awarded. There is a dispute about what steps can be claimed and the plaintiff submits that the amount of the costs award should be reduced by at least 10 per cent, given that the Court ordered security for costs to be paid in stages and at a lower quantum.
[3]I have decided to grant the defendants’ application for costs in the sum of
$10,516 plus disbursements of $550 to cover the fees for filing and sealing the judgment. This judgment sets out my reasons for doing so.
The security for costs judgment
[4] After setting out the background to the proceeding and the factual disputes between the parties, I addressed the application for security for costs at paras [40]-[67] of my judgment.
[5] The defendants sought security for costs in the sum of $276,000 in a single lump sum payable up front. A key point for the plaintiff was that ordering security would stifle the claim. She also submitted that the amount sought was excessive.2 The plaintiff offered a charge over her beneficial interest in one-third of the capital of the Connemara Trust (the Trust) as an alternative to security for costs being awarded.
[6] Given that the plaintiff resides overseas and has done so for about 25 years, the threshold for making an order as to security for costs was met. The issue was whether I ought to exercise my discretion to grant the application. I determined that the matters raised by the plaintiff did not militate against my very clear view that she should be required to pay security for costs.3
1 McEvedy v McEvedy [2023] NZHC 3875 at [88]-[90].
2 At [41], the plaintiff’s further grounds of opposition are also set out there.
3 At [58].
[7] The defendants’ proposal amounted to $69,000 per defendant group. After considering like cases, and the reasons advanced, I determined that the sum of $50,000 per defendant group was justified considering the allowance suggested for expert witnesses (to be shared by the defendants). I determined that the security should be paid as follows:4
(a) the sum of $50,000 to be paid by 29 February 2024;
(b) a further sum of $50,000 to be paid following any judicial settlement conference the parties agree to attend;
(c) a further sum of $50,000 to be paid on the close of pleadings date; and
(d) the final sum of $50,000 to be paid 15 working days before commencement of the trial.
[8] I further outlined that the proceedings would be stayed should any of the payments referred to not be made in accordance with my order.5
The defendants’ application for costs
[9]The defendants’ claim for costs amounting to 16.45 days, being the sum of
$39,315.50 on a category B basis, to be divided in accordance with counsel at the hearings as follows:
(a) first defendant - $12,467.83;
(b) second defendants - $12,467.83;
(c) third defendants - $12,467.83; and
(d) Duncan Cotterill - $1,912.
[10] The plaintiff submits that the total claimable costs amount to $18,044.50 but that a 10 per cent discount should be applied so that the total costs payable by her to
4 McEvedy v McEvedy, above n 1, at [65].
5 At [67].
the defendants should be $16,240.05. As outlined above, the disbursements claimed of $550 are not disputed.6
[11] I have outlined briefly in the introduction to this judgment the parts of the application for costs that are opposed by the plaintiff. The judgment focuses on the areas of disagreement.
Wasted costs are not claimable
The arguments for and against
[12] The defendants have claimed costs for the hearing of the application for security for costs that was adjourned on 28 February 2023 by Mander J. This application and the application for preservation orders were adjourned by Mander J as a consequence of the plaintiff’s counsel’s travel arrangements being upset by weather in Christchurch, meaning that the hearing could not proceed. The costs claimed include items 26, 30 and 32 in sch 3 of the High Court Rules 2016 (HCR) and total
$20,912.50.
[13] In their memorandum filed in support of their application for costs, counsel for the defendants advised that they wished to progress with the hearing of the security for costs application alone in the afternoon, with the plaintiff’s counsel being heard via VMR, but this option was opposed by the plaintiff. The defendants note that costs were expressly reserved.
[14]However, Mander J said:
[9] While it is no doubt of considerable frustration to the defendants and a source of inconvenience to counsel, on reflection I did not consider, in fairness to the plaintiff, it was appropriate in the circumstances to proceed to hear only the defendants’ application. A further consideration, which was not raised with counsel but is also a factor, is that ideally both applications should be heard by the one judge. Finding further hearing time for the preservation orders application on the basis it should be heard by the Judge who heard the application for security is likely to be considerably more difficult than finding a fixture that does not carry that need. An earlier hearing is more likely to be able to be provided in the latter situation.
6 Counsel for the plaintiff’s memorandum claims $16,740.05, but this must be a typographical error as a 10 per cent deduction from $18,044.50 is $16,240.05.
[15] Counsel for the defendants accept that the fact the hearing was adjourned was not the fault of the plaintiff but, equally, they highlight no fault lies with them either. The defendants were ready to proceed and say they incurred the cost of counsel being present on 28 February 2024 at the commencement of both the morning and afternoon sessions to address the Court on whether the hearing should proceed. Counsel for the defendants submit that an award of costs for the wasted time on 28 February is necessary to avoid the defendants being saddled with significant costs for the wasted day in respect of applications on which they ultimately prevailed. Those costs are claimed on the basis that counsel for the second defendants lost one day because of the need to travel to Christchurch from Queenstown to appear at the hearing, and other counsel submit they lost at least two hours of productive time as a result of attendance at and travelling to court.
[16] Counsel for the plaintiff submits that wasted costs are not justified or, if they are, only the appearance time is claimable. Counsel for the plaintiff emphasises the following points:
(a) assessing reasonable time spent on a matter does not depend on the actual time spent or costs incurred, meaning wider travel costs are not recoverable under the HCR;7
(b) wasted costs can only be awarded for costs truly wasted, meaning that less than two hours may be actually incurred as that was the time spent appearing; and
(c) the time spent preparing for a hearing is not properly claimable on interlocutory applications, so cannot be considered as wasted costs.
Discussion
[17] Wasted costs are granted where a party’s default has caused the wasted costs.8 In Jeffreys v Morgenstern, the Court said:9
7 High Court Rules 2016, r 14.2(1)(e).
8 Jeffreys v Morgenstern [2013] NZHC 1361 at [31]; Marley New Zealand Ltd v Skellerup Rubber Services Ltd [2023] NZHC 3040.
9 Jeffreys v Morgenstern, above n 8, at [31].
[31] I turn to consider the issue of wasted costs. It follows from my discussion above I accept the plaintiffs’ submission that the trial was vacated because of the defendants’ default. The plaintiffs have inevitably incurred wasted costs as a result of that. This Court has jurisdiction to make an order for wasted costs. As this Court has previously observed in the case of Fu Hao Construction Ltd v Landco Albany Ltd default that leads to vacation of fixtures leads to inconvenience and costs not only to the other parties to that proceedings but to other parties awaiting fixtures in the Court. Fixtures allocated by this Court are commitments of limited judicial and Court resources. Time is booked for the case. Other parties who might otherwise have had their cases allocated hearing time are disadvantaged by default which leads to late vacation of fixtures.
(footnote omitted).
[18] Both sets of parties incurred costs due to counsel for the plaintiff being unable to travel in person to the hearing for reasons beyond his control. However, even though the plaintiff offered to proceed to conduct the hearing of both applications via VMR, this was not possible due to the lack of available time. Further, the plaintiff’s submission in relation to costs is not entirely correct. The plaintiff agreed to proceed with the security for costs application on conditions which were set out in Mander J’s minute:
[3] Mr Carey set out in an email the concerns he held with proceeding with the security for costs application as proposed. I set out his email so it is on the record:
1. I am concerned that the plaintiff could be disadvantaged if the defendants succeed on their security for costs application before the plaintiff’s preservation application is decided. Not only would the requirement to pay security likely impact on the plaintiff’s ability to progress her preservation order application, but the likelihood of settlement will inevitably reduce: the defendants will have little motivation to do so. That is not a criticism of the defendants, it is a simple practical reality.
2. The concerns that the plaintiff sought to address through preservation orders (and before that, by undertaking) will remain unaddressed.
3. I agree that both applications cannot be heard between 2 and 5 pm today. To that end, if only the security for costs application is to be heard today, Ms McEvedy would ask that:
a.If the defendants security for costs application is upheld, and a stay is granted, the stay should not apply to the application for preservation orders, which should proceed as and when an alternative date is available.
b.Any security ordered should not be payable until after the preservation order application is heard; and
c.The Court grants ‘interim interim’ preservation orders over trust capital, preserving that fund until the preservation order application is determined, subject to further order of the Court.
4. The Court accepted that the 2 applications should be heard together. It is submitted that, if that is not to happen, orders as set out at 3 a – c above be made so as not to prejudice Ms McEvedy’s position.
5. The alternative is that both applications be set down on an urgent basis and are both heard at the soonest available date.
[4] The Court reconvened at 2 pm and Mr Carey was able to attend by VMR. Mr Cary advised that, while he could not object to making use of the available hearing time, he insisted the conditions set out at paragraph 3 of his email should be imposed.
[5] In response, Mr Ryan, speaking on behalf of all the defendants, reaffirmed their preference for the security for costs application to be heard. In response to Mr Carey’s proposed conditions attaching to the hearing of that application, or any resulting orders for security to be paid, it was submitted those matters could be taken into account by the Court when considering the merits of the application and any terms that should attach to its granting. The defendants were understandably opposed to any “interim interim” preservation orders being made pending determination of the plaintiff’s application. Cost implications were also noted, which included those of counsel for the second defendants, Ms Gaborieau, who had travelled from Dunedin.
[6] Having heard counsel on the issue, I came to the conclusion that both interlocutory applications should be adjourned. The situation had come about as a result of no discernible fault of the plaintiff (or her counsel) and it had always been anticipated, at least after the refinement of the plaintiff’s preservation application, that the two would be heard together at the same time. This was largely because of the potential implications each may have on the other and the overlapping issues to which they give rise, at least in terms of the respective merits of the parties’ cases, as canvassed in the submissions filed.
[19] Mander J’s assessment of the situation, as outlined in his [6] above is determinative. I decline to award costs for preparation or the appearance on 28 February 2023.
Incorrect/irrelevant steps claim
[20] The parties disagree about what steps can be claimed for interlocutory applications. The plaintiff disputes that the defendants can claim costs under items 30
and 32 of sch 3 relating to “preparing for affidavit hearing”. The plaintiff submits that the allocations under items 30 and 32 do not capture interlocutory hearings but apply to substantive hearings such as judicial review proceedings. Counsel for the plaintiff submitted that, for this reason, the items refer to preparing lists of issues or authorities and agreeing and preparing the common bundle, as well as separately providing for appearing at a hearing. In addition, it was submitted that there would be a doubling up among these steps, for example, item 25 (preparation by applicant of bundle for hearing) and items 31 (additional allowance for whichever party prepared common bundle), or item 26 (appearance at hearing) and item 34 (appearance at hearing).
[21] I agree with counsel for the plaintiff on this point. I decline to include the claim for items 30 and 32 in the award of costs I make.
[22] Further, counsel for the plaintiff submitted that the defendants cannot claim item 28, “obtaining judgment without appearance”, because this interlocutory application involved appearances. I agree with this submission and decline to include item 28 as claimed in the award I make.
10 per cent discount on defendants’ costs is appropriate
[23] Counsel for the plaintiff claims that a discount of 10 per cent is justified because the Court ordered security for costs to be paid in stages and at a lower quantum. Accordingly, the plaintiff submits the defendants’ success was qualified.
[24] I am not persuaded that a 10 per cent discount is justified. The plaintiff opposed any order for security for costs being made and, while offering an alternative (a charge which I found, at law, was not sustainable), she did not suggest the payment of security in instalments, rather, she submitted that any award of security would effectively deny her the opportunity to proceed with her claim.
[25] I am satisfied there is no justification for a reduction in the costs because of the matters the plaintiff raises.
[26]Per the defendants’ schedule, I have decided to award the following costs:
· Item 22: $1,434.
· Item 24: $3,585.
· Item 25: $1,434.
· Item 26: $3,585.
· Item 29: $478.
[27] The defendants have claimed for filing various memoranda in their costs calculations. These are dealt with in my judgment on the application for costs in relation to the plaintiff’s unsuccessful application for preservation orders as per the defendants’ submitted costs schedule.
Result
[28]The plaintiff is ordered to pay the defendants the total sum of $11,066 being:
(a) costs of $10,516; and
(b) disbursements of $550, being:
(i)a filing fee of $500; and
(ii)a sealing fee of $50.
[29]The costs awarded are apportioned as follows:
(a)$2,927.75 to each of the first, second and third defendants.
(b)$1,732.75 to the Duncan Cotterill parties/fourth and fifth defendants.
[30]The disbursements of $550 are payable to the first defendant.
Harland J
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