Watherston v PGW Rural Capital Limited
[2019] NZHC 1601
•10 July 2019
IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY
I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE
CIV-2018-409-000095
[2019] NZHC 1601
BETWEEN RICHARD JOHN SCOTT WATHERSTON
Plaintiff
AND
PGW RURAL CAPITAL LIMITED
Defendant
Hearing: 9 July 2019 Appearances:
S T Cottrell for Plaintiff
J V Ormsby and S D Campbell for Defendant
Judgment:
10 July 2019
JUDGMENT OF DUNNINGHAM J RE: COSTS
Introduction
[1] On 23 January 2019, I issued a judgment striking out the plaintiff’s claim against the first defendant, PGW Rural Capital Ltd (PGW).1 I reserved costs but expressed the view that PGW would be entitled to 2B costs on the application.
[2] On 2 February 2019, the solicitors for PGW wrote to the plaintiff, Mr Watherston, saying it would be willing to accept payment of costs on the basis indicated by the Court, and set out its calculation of the amount payable, being
$27,875. When no response was received to that letter, PGW filed a memorandum seeking costs on a 2B basis together with disbursements.
1 Watherston v PGW Rural Capital Ltd [2019] NZHC 22.
WATHERSTON v PGW RURAL CAPITAL LIMITED [2019] NZHC 1601 [10 July 2019]
The plaintiff’s position
[3] A memorandum of counsel for Mr Watherston was filed in response to PGW’s costs application. In summary, it rejected the calculation of 2B costs totalling $27,875, saying 2B costs should be “fixed at $16,279, or $17,617 at the most (depending on the position taken on the number of interlocutory applications able to be claimed by the first defendant)”.
[4]The particular items the plaintiff takes issue with are:
(a)the claim for issuing a notice requesting further particulars when this is not an item allowed for under the rules;
(b)the claim for four interlocutory applications, when only one (or at best two), were made;
(c)the claim for the preparation of two sets of written submissions when only one set of submissions was made;
(d)similarly, the claim for preparation of two bundles for hearing when only one bundle was filed; and
(e)the claim for second counsel, saying that the complexity or length of hearing did not justify second counsel.
The defendant’s position
[5] The various disputed matters were responded to by PGW. It says that a claim for issuing a notice requiring further and better particulars should be allowed by analogy with a claim for preparing a notice to admit facts. In particular, it says:
(a)the step is not only contemplated by the High Court Rules 2016 but is a mandatory step to be taken before filing and serving an interlocutory application;2
2 Rule 5.21.
(b)it is a step in the proceeding or is incidental to a proceeding;3
(c)an award of costs for this step is consistent with the principles set out in r 14.2, including r 14.2(1)(c) which provides that 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)the issue of the notice was required and it was responded to “almost in full” by the plaintiff, albeit after an application was made;
(e)the submission for Mr Watherston, taken to its logical conclusion, would preclude the ability to claim for items not listed in sch 3 and would render r 14.5(1)(b) otiose; and
(f)there is some authority supporting the right to make such a claim. For example, in Strathboss Kiwifruit Ltd v Attorney-General an allowance was given for having to respond to a request for further and better particulars,4 and in Tian v Zhang an allowance was given for filing a notice of cross-examination.5
[6] In any event, the Court has a discretion as to whether it awards costs for a particular step which must be exercised in a judicial and principled way in accordance with the High Court costs regime. In PGW’s submission, this supports an allowance being made.
[7] In supporting its claim for costs on four separate interlocutory applications, and the associated submissions and bundles of documents, PGW points out that while presented in one document, four discrete applications were made. These were:
(a)An application for strikeout which progressed to a hearing and was successful.
3 Rule 14.1.
4 Strathboss Kiwifruit Ltd v Attorney-General [2019] NZHC 62 at [35]-[39].
5 Tian v Zhang [2018] NZHC 1701 at [31]-[32].
(b)An application for security for costs. This had not, at the stage of hearing, been resolved, and, given the outcome of the hearing could have made it otiose, it was agreed to defer it.
(c)An application for initial disclosure, which was resolved after filing and before hearing.
(d)An application for further and better particulars which, again, was resolved before hearing and did result in the plaintiff providing further and better particulars.
[8] PGW says that the costs for each application should be allowed as claimed because each of them was a separate invocation of the Court’s jurisdiction. The fact there were four discrete applications in one document did not result in substantial costs savings because, in each case, the application needed to be researched, the facts supporting the application need to be ascertained and deposed to, and each application needed to be drafted, identifying the grounds in support of each application and the authorities relied on.
[9] If each application had to be presented in a separate document, it would incentivise parties to file multiple separate applications, simply to be able to recover costs on each application, which would be inconsistent with the objective of the High Court Rules to “secure the just, speedy, and inexpensive determination of any proceeding or interlocutory application”.6
[10] The claim for an additional set of submissions and an additional bundle of documents related to the application for security for costs. While not proceeded with at the hearing, the preparation had been incurred and costs should be allowed for this.
[11] Finally, PGW argues this a case where second counsel was warranted. Specifically, PGW submits:
6 Rule 1.2.
(a)The case involved a novel argument that had only been addressed by the Court of Appeal reasonably recently and where the plaintiff was contending that the authority was distinguishable.
(b)Considerable research was required into the relevant cases on the Credit Contracts Act 1981, the Credit Contracts and Consumer Finance Act 2003, and the Parliamentary passage of these laws.
(c)The evidence spanned over 10 years and related to a complex factual matrix.
(d)There were deficiencies with the pleadings.
(e)The hearing was to address four interlocutory applications, albeit with only two still on foot at the date of the hearing.
(f)Although a half day was set down, it ultimately took nearer to a full day with two counsel appearing for Mr Watherston.
Discussion
[12] In respect of the defendant’s claim for costs in relation to preparing the notice requesting further and better particulars, the issue is whether a claim can be made for it under r 14.5(1)(b) and if so, whether a notice to admit facts is the appropriate analogous step.
[13] I accept that the filing of a notice requesting further and better particulars is a step “reasonably required in relation to the proceeding or interlocutory application”,7 as it is the method by which the High Court Rules anticipate that any deficiency in pleadings will be remedied.8 Only where there is default in responding to the notice would the requesting party revert to the Court to order their provision.9 It is clear the further particulars requested in this case were extensive and in my view, the time
7 Rule 14.2(1)(c).
8 Rule 5.21.
9 Rule 5.21(3).
allocation for the issue of a notice to admit facts of .8 of a day is sufficiently analogous to be used in this case. I therefore allow this item in the schedule of costs claimed.
[14] The next issue is whether it is appropriate to claim for four interlocutory applications when they were presented in a single document.
[15] In this regard, I accept the plaintiff’s submission that these were four discrete applications which could have been filed in separate documents and there was no costs saving (except for the filing fee) in presenting them in a single physical document. The discrete nature of each application was confirmed by the fact that two were resolved before hearing, the strikeout progressed to a hearing, and the application for security for costs, while the subject of discussions, was deferred pending the result of the strikeout application. Each application was made in reliance on separate grounds and supporting caselaw, and the affidavit evidence addressed each application under discrete headings. In my view, therefore, each of the applications should be treated as a separate application for the calculation of a costs award.
[16] However, I do not accept that PGW can claim costs for preparing submissions or a bundle for hearing on an application it did not pursue at hearing. While that was a pragmatic decision in the circumstances, it cannot be assumed that a hearing was required or that it would have been successful. Accordingly, costs are not awarded on these two steps.
[17] The final issue is whether this is a case where certification for second counsel is warranted.
[18] In Nomoi Holdings Ltd v Elders Pastoral Holdings Ltd, Chambers J noted that while it would be rare in category 3 cases for the Court to refuse to certify for second counsel, in relation to category 2 proceedings it was difficult to lay down the general rule, except to say that it will generally occur less often than it once did in recognition of modern trial procedures which have reduced the need for second counsel.10
10 Nomoi Holdings Ltd v Elders Pastoral Holdings Ltd (2001) 15 PRNZ 155 (HC) at [16]-[19].
[19] The critical issue is, therefore, whether the case was sufficiently complex to justify certification for second counsel. In this case, while I accept the legal research was reasonably extensive, that is accommodated in the number of steps I have allowed cost recovery for. The hearing itself did not involve examination of witnesses, but simply legal submissions on the two key grounds advanced for the strikeout. While it was advantageous to divide these between two counsel, I am not satisfied that this was a case that required second counsel, and I do not certify for second counsel.
Outcome
[20] The plaintiff is ordered to pay costs to the defendant on a 2B basis, as calculated in the schedule accompanying the memorandum of counsel for the first defendant, but excluding the claim for second and subsequent counsel of $1,115 and allowing only one claim for each of the steps of preparing written submissions and preparing the bundle for hearing (so reducing these claims for these steps by $3,345 and $1,338 respectively). The total award is therefore $22,077 plus disbursements totalling $706.42.
Solicitors:
Shaun Cottrell Law, Christchurch Wynn Williams, Christchurch
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