Waipuru Investments Limited v Bishop
[2017] NZHC 2592
•7 July 2017
IN THE HIGH COURT OF NEW ZEALAND PALMERSTON NORTH REGISTRY
CIV-2016-454-000072 [2017] NZHC 2592
IN THE MATTER of section 200 of the Property Law Act
2007
BETWEEN
WAIPURU INVESTMENTS LIMITED First Plaintiff
JOHN ALEXANDER DUNCAN COOPER and W H WILSON LIMITED Second Plaintiffs
AND
RAYMOND VINCENT BISHOP AND LISA GRACE BISHOP
First Defendants
WILLIAM MARK FEARON Second Defendant
ALLIED PETROLEUM (NI) LIMITED Third Defendant
TIL FREIGHTING LIMITED Fourth Defendant
FARMLANDS COOPERATIVE SOCIETY LIMITED
Fifth Defendant
Hearing: 7 July 2017 (Determined on the papers)
Further memoranda received: 21 August 2017 (for Plaintiffs and
Mr Laurenson)Counsel:
R C Laurenson for the Plaintiffs
No representation by or on behalf of the DefendantsJudgment:
7 July 2017
Reissued:
24 October 2017
FINAL JUDGMENT OF ASSOCIATE JUDGE MATTHEWS ON COSTS
WAIPURU INVESTMENTS LTD v BISHOP – REISSUED - 24 October 2017 [2017] NZHC 2592
[1] My original judgment of 7 July 2017 is recalled and is now replaced with this judgment.
[2] The Court issued an interim judgment in relation to costs dated 9 May 2017.
[3] Leave was granted for the solicitors and counsel for the plaintiffs to file further material in support of their clients’ claim for indemnity costs against the defendants. Reference was made to the decision of the Court of Appeal in Black v ASB Bank Ltd, both in the text of the interim judgment and in the reservation of
leave.1
[4] Pursuant to leave reserved, and noting the criteria for the Court to make an objective assessment in relation to indemnity costs as set out in paragraph [80] of the judgment in Black, counsel for the plaintiffs has filed a memorandum dated 9 May to which annexed a good deal more information about the basis upon which costs are claimed.
[5] I have considered the material put before the Court in relation to costs, both initially and by way of counsel’s memorandum dated 29 June. All fees discussed are exclusive of GST.
Solicitors’ fees
[6] I have reviewed the charge-out rates applied by Gillespie Young Watson. I
am satisfied that the charge-out rates for Mr Barnes is appropriate.
[7] I accept that the attendances undertaken by Mr Barnes all related to the application for summary judgment including extensive attendances in relation to the difficulties encountered with service. I am also satisfied that the amount of time he charged for is appropriate. Therefore I accept all charges for Mr Barnes’ attendances
are within the terms of the indemnity.
1 Black v ASB Bank Ltd [2012] NZCA 384 at [77]-[80].
[8] I accept the charge out rate applied by Mr Macdonald.
[9] I do not accept that all the attendances for which Mr Macdonald charged were related to the matters in respect of which indemnity costs may be awarded.
[10] Taking a robust approach to assessment of costs I disallow tax invoice 22007 in its entirety and I disallow one-third of the professional fee charged on tax invoice
23482.
[11] Mr Macdonald instructed Mr Laurenson as counsel on 9 March 2016 according to his phone records.
[12] I have reviewed the description of attendances on the part of Mr Macdonald from the time Mr Laurenson was engaged as counsel to the date of judgment. All his attendances appear to be related to enforcement of the security, and thus within the terms of the indemnity.
[13] I am also satisfied that all his attendances after that date, related to the mortgagee sale of the property, appear again to be within the terms of the indemnity.
[14] I am not satisfied, however, that the time spent by Mr Macdonald and Mr Laurenson in undertaking their work was required. My analysis is later in this judgment.
Fees of Mr Laurenson
[15] Mr Laurenson advises that from the date he was instructed (9 March) to the date the application was lodged at the High Court at Wellington he completed 152 hours of attendances. During that time Mr Macdonald and Mr Barnes completed another 36.8 hours of attendances, with the result that approximately 188 hours of time were expended from the time Mr Laurenson was instructed, to bring the proceeding to the court registry.
[16] Mr Laurenson rendered five accounts recording attendances occupying 214.5 hours. Therefore he charged for a further 62.5 hours from the time of filing to judgment.
[17] Mr Laurenson charged $87,500 plus GST. This equates to a charge out rate on average of $407.92 per hour. I accept this is an appropriate charge out rate.
[18] Mr Laurenson has made available to the Court only brief descriptions of his attendances. He was involved in the preparation of the proceedings including the lengthy and detailed affidavit of Mr J A D Cooper which contains 118 paragraphs. There are 30 exhibits.
[19] Mr Laurenson records that he attended the property. No explanation is given as to why this should occur, nor do I regard it as a necessary step for counsel. I have impliedly accepted that it was necessary for Mr Macdonald as solicitor for the plaintiffs.
[20] The statement of claim, though lengthy, is straightforward and in terms I
regard as standard, and as I would expect for an application of this kind.
[21] One order sought is the right for the plaintiffs to buy the property at auction. This requires Court consent under s 200 of the Property Law Act 2007. There is nothing complicated or unusual about an application for permission to become a purchaser being included with an application for other orders under s 200 of the Property Law Act. There is reference to Mr Laurenson having completed an opinion on this point.
[22] The application for summary judgment is also straightforward and contains a description of the property and a list of orders that I regard as standard, and as I would expect in a matter of this kind.
[23] Overall, therefore, although there is a reasonably substantial factual matrix in the material put before the Court, there is nothing of undue complexity which might indicate a reason for Mr Laurenson having been engaged for nearly 27 eight-hour
working days, in addition to the substantial attendances undertaken by Mr Macdonald. Mr Laurenson has charged for nearly eight of these working days after the papers were complete and filed, yet the application was not defended.
[24] I am not satisfied, therefore, that all the attendances of Mr Laurenson are within the ambit of the indemnity or that those attendances which were within that ambit were completed in a time which could reasonably be expected.
[25] The latter issue requires further examination. First, I refer to the scale of costs provided for by the High Court Rules. This is a category 2 proceeding. Generally, a proceeding of this kind would attract time allocations in band B, as a “normal amount of time”, would generally be considered reasonable. Band C applies “if a comparatively large amount of time for any particular step is considered
reasonable”.2 I have considered whether band C would be appropriate for either the
preparation of the statement of claim, or the preparation of the affidavit of Mr Cooper. The difference between the time allocation in band B and in band C, for preparation of the statement of claim, is considerable. Three days are allowed in band B but 10 days are allowed in band C. I do not consider that this is a case where such a significantly greater time allocation is justified. If assessing costs on scale, I would allow five days for commencement of the proceeding.
[26] In similar vein, I would assess a further three days for preparation of affidavits, giving a total of eight days for the preparation of these documents. Scale does not provide for a time allocation for preparation of affidavits so it is for the Court to make an assessment.
[27] Judging from the file, but without specific input in relation to scale costs from counsel, it appears that costs would be allowed for a first appearance, three memoranda, one memorandum for the purposes of the hearing (for which I would allocate the same time as for a written submission) for the preparation and filing of an interlocutory application, for one appearance at the hearing (one quarter of a day) and for sealing the judgment. All up this would mean that 15.75 days would be
allowed. At the daily fee in Schedule 2 of $2,230, a scale fee of $35,122.50 would be derived.
[28] It is the express intention of the rules that the appropriate daily recovery rate should normally be two-thirds of the daily rate considered reasonable in relation to the proceeding.3 Applying this principle, scale fees at the level I have indicated would generally suggest an actual fee of around $53,000 for the legal work required for this proceeding.
[29] Secondly, I have considered the fees claimed in the context of claims for award of costs during the ordinary course of the business of the Court. A fee of approximately $53,000 accords with the level of fee that I would consider generally acceptable.
[30] This, however, would be a figure for the attendances of both the solicitors for the plaintiffs, and counsel. In fact, the actual fees are $120,715 for both, which is well over double the amount that might be expected on the assessment I have carried out.
[31] Based on the material produced to the Court on this application it appears that the majority of this excess lies in the amount of time said to have been spent. I derive this conclusion by reference once more to the scale. The daily allowance for a category 2 proceeding is $2,230 per day. If, in accordance with the two-thirds rule, this is elevated to an expected actual cost, it amounts to $3,345 per day. This amounts to $418 per hour, if eight hours are spent in a day. Mr Macdonald charged either $400 per hour or $425 per hour, and Mr Laurenson charged on average
$407.92. Broadly, therefore, the rate at which Mr Macdonald and Mr Laurenson charged are in accordance with Schedule 2. This necessarily means that the difference between costs analysed by reference to the scale, and the actual costs incurred, lies in the number of hours said to have been spent. Given that in assessment of scale fees I have allowed more time than would normally be the case for preparation of the pleadings and the affidavits on a proceeding of this kind, it is difficult to detect where the extra time may have been spent.
[32] This is borne out, too, by the fact that between the time the documents were filed and the hearing, Mr Laurenson has charged for a further 62.5 hours to prepare for an undefended hearing and attend at court. I would have expected approximately
10 hours at most.
[33] For these reasons I cannot be satisfied that all the work undertaken by Mr Macdonald and Mr Laurenson was within the terms of the indemnity. Indeed, I cannot see what Mr Laurenson could have done to occupy the hours for which he has charged. It is necessary for me to consider the fees of Mr Macdonald and Mr Laurenson together because it is the overall fee for which the indemnity is sought. Further, the analysis of the fees by reference to the scale must also be undertaken on a joint basis because the scale applies to attendances overall, and not the attendances of only solicitor or counsel. Having said that, the fees charged by Mr Macdonald for the attendance he has described do not appear to be inexplicable in the way Mr Laurenson’s fees are.
Analysis of outcome
[34] In his memorandum Mr Laurenson advises that the plaintiffs have paid both solicitors and counsel’s fees. He also indicates that the plaintiffs consider it unlikely that they will recover the costs which are ordered under the indemnity. He notes that the defendants have not taken any steps though they were served with the plaintiffs’ costs application as long ago as January 2017, and notified that any memorandum in opposition was to be filed within 15 working days. Mr Laurenson goes on to advise that the plaintiffs do not wish to incur further expenses in relation to the costs of this proceeding, in particular by the Court directing one of the options referred to in Black, and also in the first interim judgment, namely reference to the Law Society, taxation of costs or appointment of counsel to assist. He goes on to invite the Court to “apply a level of costs which in the Court’s estimation it considers reasonable”. He says this would leave open to the defendants the prospect of their challenging any such decision as indicated in Black.
[35] With some reluctance I will proceed as Mr Laurenson requests. I express reluctance because both by analysis and on the basis of considerable experience in
settling issues as to costs, I am firmly of the view that the amount charged to and paid by the plaintiffs significantly exceeds the level of a fee which I consider would be fair and reasonable. This is reflected in the further orders which follow.
[36] I order that the defendants will pay to the plaintiffs the sum of $60,000 together with all disbursements claimed on the fee accounts of the solicitors for the plaintiffs and counsel for the plaintiffs.
[37] I further order that a copy of this judgment is to be forwarded by the solicitors for the plaintiffs to each of the plaintiffs with a letter advising that the Court expressly directed that the judgment be brought to their attention, and informing them of their right under the Lawyers & Conveyancers Act 2006 to refer all the bills of costs to the New Zealand Law Society for review, by way of a
complaint under s 132 of that Act.
J G Matthews
Associate Judge
Solicitors:
Gillespie Young Watson, Lower Hutt
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