Vienna Group Limited (in liquidation) v Kerry Logistics (Oceania) Limited
[2023] NZHC 1866
•19 July 2023
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2021-485-336
[2023] NZHC 1866
BETWEEN VIENNA GROUP LIMITED (in liquidation) Plaintiff/Respondent AND
KERRY LOGISTICS (OCEANIA) LIMITED
Defendant/Applicant
Hearing: On the papers Appearances:
D J Cooper KC and S D Campbell for the Defendant/Applicant P C Murray for the Plaintiff/Respondent
Judgment:
19 July 2023
JUDGMENT OF ASSOCIATE JUDGE SUSSOCK
[Costs]
This judgment was delivered by me on 19 July 2023 at 3.30pm pursuant to r 11.5 of the High Court Rules
Registrar/Deputy Registrar
Solicitors:
Fortune Manning, Auckland for the Plaintiff/Respondent Wynn Williams, Christchurch for the Defendant/Applicant
VIENNA GROUP LIMITED (in liq) v KERRY LOGISTICS (OCEANIA) LIMITED [2023] NZHC 1866 [19
July 2023]
Introduction
[1] Kerry Logistics (Oceania) Limited (Kerry Logistics) seeks costs on a 2B basis of $9440.50 plus disbursements of $561.34 following its successful application for leave to appeal my judgment declining its application for strike out and summary judgment.1 Leave to appeal was granted in respect of two issues, referred to in my judgment as the Limitation and Exclusion Points.2
[2] Vienna Group Limited (in liquidation) (Vienna) considers that costs should instead be awarded on a 2A basis. In addition, Vienna submits costs should not be awarded for the memoranda filed on the Limitation Point or the application for recall as Vienna abided the Court’s decision on these issues. Furthermore, Vienna says that if Kerry Logistics had agreed to Vienna’s earlier proposal to resolve the part of the application relating to the stay of costs, submissions on that part and the need for recall could have been avoided.
[3] Vienna attaches a schedule to its submissions proposing that the appropriate costs on a 2A basis together with disbursements are $3,548.84 from which 50 per cent of Vienna’s costs in respect of the application to stay, amounting to $1,135.25, ought to be subtracted, leaving a total to be awarded to Kerry Logistics of $2,413.59.
Relevant costs principles
[4] Rule 14.1 of the High Court Rules 2016 confirms that “all matters are at the discretion of the court if they relate to costs of a proceeding.” The discretion vested by r 14.1 is wide but must be exercised subject to the general principles in r 14.2. The first principle set out in r 14.2(1) is that the party who fails with respect to a proceeding or an interlocutory application should pay costs to the party who succeeds.
[5]The Court of Appeal has confirmed that:3
1 Vienna Group Ltd (in liq) v Kerry Logistics (Oceania) Ltd [2023] NZHC 846.
2 At [1].
3 Packing In Ltd (in liq) v Chilcott (2003) 16 PRNZ 869 (CA) at [6]; and see Emmons Developments New Zealand Ltd v Mitsui Sumitomo Insurance Company Ltd [2020] NZHC 932 at [28]–[29].
Success or failure in this context is better assessed by a realistic appraisal of the end result rather than by focusing on who initiated what step, and the extent to which that step succeeded or failed.
[6]The remaining principles in r 14.2(1) are:
(b)an award of costs should reflect the complexity and significance of the proceeding:
(c)costs should be assessed by applying the appropriate daily recovery rate to the time considered reasonable for each step reasonably required in relation to the proceeding or interlocutory application:
(d)an appropriate daily recovery rate should normally be two-thirds of the daily rate considered reasonable in relation to the proceeding or interlocutory application:
(e)what is an appropriate daily recovery rate and what is a reasonable time should not depend on the skill or experience of the solicitor or counsel involved or on the time actually spent by the solicitor or counsel involved or on the costs actually incurred by the party claiming costs:
(f)an award of costs should not exceed the costs incurred by the party claiming costs:
(g)so far as possible the determination of costs should be predictable and expeditious.
[7] Rules 14.3 to 14.5 provide for the categorisation of proceedings, the appropriate daily recovery rates and the determination of a reasonable time for each step for the purposes of r 14.2(1)(c) by reference to the time specified for each step in schedule 3. A determination of what is a reasonable time for each step must be made by reference to three bands, relevantly here band A “if a comparatively small amount of time is considered reasonable”4 or band B “if a normal amount of time is considered reasonable”.5
[8] Rule 14.7 provides that despite rr 14.2 to 14.5, the court may refuse to make an order for costs or may reduce the costs otherwise payable including where the party claiming costs, although succeeding overall, has failed in relation to a cause of action or issue which significantly increased the costs of the party opposing costs, or where some other reason exists which justifies the court refusing costs or reducing costs
4 High Court Rules 2016, r 14.5(2)(a).
5 Rule 14.5(2)(b).
despite the principle that the determination of costs should be predictable and expeditious.6
What is the appropriate band?
[9] Counsel for Vienna refers to Finewood Upholstery Ltd v Vaughan where Fitzgerald J referred to costs being awarded on a 2A basis.7 I note that this was a provisional view and there was no further discussion as to why band A was considered appropriate even on a provisional basis.
[10] Kerry Logistics refers to a number of decisions where costs for applications for leave to appeal have been granted on a 2B basis.8
[11] As counsel for Kerry Logistics submits, ultimately costs are at the discretion of the Court. Kerry Logistics submits that band B is appropriate for the following reasons:
(a)On the Exclusion Point, the submissions were 11 pages in length and were of an average complexity. In these submissions counsel for Kerry Logistics was required to comprehensively address:
(i)the reasons to consider the appeal in advance of the substantive proceeding;
(ii)the merits of the appeal; and
(iii)the importance of the appeal.
(b)Whilst the Limitation Point was not addressed at the hearing, it needed to be considered by counsel following the minute issued on 24 February 2023 and ultimately formed part of the leave judgment.
6 Rules 14.7(d) and (g).
7 Finewood Upholstery Ltd v Vaughan [2017] NZHC 1679 at [18].
8 Auto Net v Tyler [2021] NZHC 866; Thomas v Accident Compensation Corporation [2013] NZHC 2739; Orix New Zealand Ltd v Pulman HC Auckland CIV-2007-404-5569, 15 October 2008; Mudajaya Corp Berhad v Keng [2019] NZHC 1693; and Hoeberechts v Commissioner of Inland Revenue [2023] NZHC 597.
The memorandum dated 3 March was essentially supplementary submissions, 5 pages in length, and addressed not only the leave to appeal by consent issue but also that leave on the Limitation Point should nonetheless be granted. This entailed submissions on:
(i)the reasoning being inconsistent with the outcome;
(ii)statutory interpretation and application;
(iii)the approach to strike out and summary judgment; and
(iv)the importance of the appeal.
(c)It is highly relevant that costs on the summary judgment and strike out application were determined on a 2B basis.
[12] I consider that band B is appropriate rather than band A as a normal amount of time rather than a comparatively small amount of time would be considered reasonable in these circumstances. As it happens, the appropriate band only affects two of the steps for which costs are claimed: step 22, the filing of the interlocutory application itself and step 24, the preparation of the written submissions. The difference between band A and band B for step 22 is 0.3 versus 0.6 of a day and for step 24, 0.5 versus 1.5 days.
[13] The basis for Vienna submitting that band A is more appropriate for the filing of the application is that no affidavit evidence was filed and so 0.3 of a day is sufficient for this step.
[14] I accept that no affidavit evidence was filed but the issues arising in this proceeding are not issues for which a “comparatively small amount of time is considered reasonable” in my view. At the time of filing the application for leave to appeal, Kerry Logistics did not know what Vienna’s stance would be in response to the application. The application therefore addresses both the Exclusion and Limitation Points carefully and in some detail.
[15] In terms of the claim for costs for preparation of the written submissions, step 24, Vienna submits that by the time the written submissions were filed Kerry Logistics was aware that Vienna was only opposing leave on the Exclusion Point. Vienna says that the written submissions largely involved a restatement of Kerry Logistics’ case on the Exclusion Point and that 0.5 of a day is therefore appropriate for this step.
[16] In circumstances where I directed the parties to file additional submissions on the Limitation Point and where costs are only claimed in respect of those submissions in terms of the filing of a memorandum (step 11), I consider that band B is appropriate for the written submissions as well.
[17] Finally, Vienna says that Kerry Logistics’ claim for the costs of filing and serving a bundle (step 25) ought to be declined because a bundle was not directed to be filed and was unnecessary. If costs are to be awarded, Vienna says 0.4 of a day is appropriate rather than 0.6.
[18] I accept that a bundle of documents was not expressly directed to be provided but the Court does expect a bundle to be provided as they ensure hearings run smoothly. Vienna opposed leave to appeal being granted on the Exclusion Point, necessitating the hearing, and so it is appropriate that Vienna bears the costs arising as a result of that hearing. I therefore allow costs for this step and consider that costs on a 2B basis are appropriate as the bundle contained 18 documents. In addition, no separate disbursement is claimed for photocopying of the bundle.
Does Vienna’s abiding of the Court’s decision affect the costs award?
[19] Vienna submits that it ought not to be liable for costs in relation to the further submissions on the Limitation Point in Kerry Logistics’ memorandum dated 3 March 2023, or the joint memorandum dated 2 May 2023 applying for recall as Vienna abided the decision of the Court on both these points. Vienna says that it did not therefore fail with respect to either and so should not be liable for costs.
[20] Kerry Logistics relies on Auto Net v Tyler where Mr Tyler sought to argue that Auto Net (the successful party) should only be able to claim for costs that were the result of his opposition and not costs that Auto Net would have incurred regardless of
whether he consented or opposed the application.9 The Court did not accept this argument and held that the approach Mr Tyler contended for was objectionable as contrary to the objective that the determination of costs be predictable and expeditious. To allow such an approach would invite counsel to embark on a granular analysis of costs claims.10
[21] Counsel for Vienna seeks to distinguish Auto Net v Tyler on the basis that Mr Tyler opposed the application for leave to appeal whereas Vienna did not, at least in respect of the Limitation Point. Vienna says it did not therefore cause any costs to be incurred in relation to that part of the application, with the application for leave to appeal the Limitation Point always being necessary for Kerry Logistics. However, as French J held in Kawarau Jet Services Holdings Ltd v Queenstown Lakes District Council, it would be too absolute a proposition for a person who abides the decision of the Court never to be liable for any costs, “ultimately, the task of the Court is to make an assessment of overall justice as between the particular parties.”11
[22] The Court of Appeal referred to the passage from Kawarau Jet with approval in Hong v Deliu before reaching the view that:12
A defendant abiding the outcome may indeed be liable for costs where it is just that it bear some share of the plaintiff’s costs. The threshold for liability is not so high as to require some perversion of justice first. Error causing a need to issue proceedings to vindicate the plaintiff’s rights will suffice to expose an abiding defendant to some liability for costs. The extent of contribution required will depend on the extent of the original error and the reasonableness of the defendant’s conduct thereafter.
[23] The circumstances of this case are very different to Hong v Deliu but it is only because of Vienna’s proceedings that Kerry Logistics was required to seek leave to appeal, for which Kerry Logistics has succeeded. Unlike in the usual application for leave, Vienna abided the Court’s decision on leave on the Limitation Point. While Vienna says this should mean it is not liable for costs, in my view, as noted in the leave decision, the lack of opposition suggests that Vienna may prefer the Limitation Point
9 Auto Net v Tyler, above n 8, at [16].
10 At [19].
11 Kawarau Jet Services Holdings Ltd v Queenstown Lakes District Council HC Invercargill CIV-2008-425-518, 19 May 2009 at [18].
12 Hong v Deliu [2016] NZCA 75, [2016] NZAR 667 at [26].
to be considered by the Court of Appeal now, on a strike out or summary judgment basis. In these circumstances I consider that the overall justice as between the parties is for Vienna to bear the costs of the memorandum on the Limitation Point (dated 3 March 2023) .
The stay of costs argument
[24] Vienna proposes deducting 50 per cent of the costs for steps taken in respect of the stay application on 31 August 2022, when it filed its notice of opposition, on the basis that it succeeded in its position on the stay. Vienna’s notice of opposition simply stated that the costs payable to the respondent in relation to the judgment could be held in a solicitor’s trust account pending the outcome of the application for leave and the appeal. Vienna submits that this is the position that was ultimately agreed and therefore costs ought to be reduced to reflect that.
[25] Kerry Logistics submits that it is not claiming costs for the joint memorandum dated 6 December 2022 recording the parties’ agreement in respect of the stay application filed following the hearing. Counsel for Kerry submits that the stay application was a minimal point of the argument, took only two paragraphs of its submissions and was not argued at the hearing due to the agreement reached between the parties. They therefore submit that no discount is required.
[26] I agree with Vienna that a reduction ought to be made as it was a matter that could have been agreed prior to the hearing.
[27] An issue arose because unfortunately I was not aware at the time that I issued the judgment of the joint memorandum filed following the hearing recording the agreement reached in respect of the stay. A further joint memorandum therefore needed to be filed by the parties seeking a recall of the judgment to correct this.
[28] Vienna’s proposed solution in respect of the application for stay was reasonable and was the position ultimately reached by the parties. The recall application may have been avoided if Kerry Logistics had agreed to this position at the outset. Kerry Logistics seeks costs in relation to the joint memorandum seeking recall of 0.4 of a day, amounting to $956. The recall application also sought correction of one other
point but rather than deducting a portion of the costs from step 24, the preparation of written submissions, and a portion of the costs claimed for the joint memorandum, I consider it is fair to simply deduct any allowance for the joint memorandum filed on 2 May 2023.
Result
[29] Kerry Logistics is awarded costs along with its reasonable disbursements on a 2B basis as claimed except that I decline to award costs for the joint memorandum seeking recall of the judgment (deducting $956) to reflect the fact that the application for a stay ought to have been resolved by consent at an earlier stage.
[30]I therefore fix costs at $8,484.50 plus disbursements of $561.34 for a total of
$9,045.84.
Associate Judge Sussock
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