Woolf v Kaye aka Woolf
[2018] NZHC 3196
•6 December 2018
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2015-404-1043
[2018] NZHC 3196
BETWEEN VIRGINIA WOOLF
First Plaintiff
VIRGINIA WOOLF as Executor of the Estate of Noel Bernard Woolf
Second Plaintiff
AND
ALWYN BERNARD KAYE (previously known as ALWYN BERNARD WOOLF)
First Defendant
MARK WILLIAM SYDNEY CLARK as
Executor of the Estate of Violet Isabel Woolf Second Defendant
Hearing: On the papers Appearances:
G A Keene for the Plaintiffs
A Gilchrist and C Fry for the Defendants
Judgment:
6 December 2018
JUDGMENT OF GORDON J
[Costs]
This judgment was delivered by me
on 6 December 2018 at 11 am, pursuant to r 11.5 of the High Court Rules
Registrar/Deputy Registrar Date:
Solicitors: Foy Halse, Auckland
Richard Wood, Auckland
Counsel:G A Keene, Auckland A Gilchrist, Auckland
WOOLF v KAYE [2018] NZHC 3196 [6 December 2018]
Introduction
[1] On 24 August 2018, I gave judgment in favour of the first defendant, Mr Kaye, against the first plaintiff, Ms Woolf.1 I dismissed all of Ms Woolf’s claims in respect of a property which she occupied (and which she continues to occupy pursuant to a stay2 pending her appeal to the Court of Appeal) and whose sole registered proprietor is her brother, Mr Kaye. I made a range of orders relating to the property.3
[2] The parties have been unable to come to an agreement on costs. Mr Gilchrist, on behalf of Mr Kaye, has filed a memorandum seeking costs and disbursements as set out in Annexure A to this judgment.
Principles
[3] Costs are at the discretion of this Court.4 The High Court Rules (the Rules) provide guidance as to how the discretion might be exercised.5
[4] The general principle is that the party who fails with respect to a proceeding should pay costs to the successful party.6 The successful party should be awarded costs on a scale basis.7 But when applying the scale costs regime, the court must consider each formal step individually for the purposes of assessing the appropriate time band. A blanket approach is not appropriate.8
[5] Ultimately, the overriding consideration when exercising the discretion to award costs is that any award ought to do justice between the parties.9
Submissions
[6] Mr Gilchrist submits that if all costs were calculated on a 2B basis, the claim would be $119,305. He says this is the minimum amount that is recoverable.
1 Woolf v Kaye [2018] NZHC 2191.
2 Woolf v Kaye [2018] NZHC 2940.
3 Woolf v Kaye, above n 1, at [381].
4 High Court Rules, r 14.1(1).
5 Rules 14.2-14.7.
6 Rule 14.2(1)(a).
7 Manukau Golf Club Inc v Shoye Venture Ltd [2012] NZSC 109, [2013] 1 NZLR 305 at [8].
8 Paper Reclaim Ltd v Aotearoa International Ltd [2007] NZCA 544 at [35].
9 Packing In Ltd (in liq) v Chilcott (2003) 16 PRNZ 869 (CA) at [5].
Notwithstanding that calculation, he submits that some of the items took more than a normal amount of time and should therefore be categorised on a 2C basis. This produces scale costs of $171,264. To that, Mr Gilchrist adds scale costs of $3,122 on an earlier caveat application, making a total of $174,386.
[7] Mr Gilchrist also seeks indemnity or increased costs on those scale costs on two separate bases. First, he submits that Ms Woolf contributed unnecessarily to the time or expense of the proceeding by failing to comply with the Rules and court orders. Second, he submits that Ms Woolf failed, without reasonable justification, to accept Calderbank offers that were made.
[8] Lastly, Mr Gilchrist submits that a total of $132,663.85 in disbursements should be awarded.
[9] Mr Keene makes specific submissions in response to some of the items claimed.
[10] Mr Keene next submits that it was not unreasonable for Ms Woolf to believe that her claims would succeed. He says that it cannot be said there was never a reasonable prospect of success. Therefore, Mr Keene submits an award of indemnity or increased costs is inappropriate.
[11]Lastly, Mr Keene takes issue with the quantity of the disbursements sought.
Issues
[12]There are three issues I must decide:
(a)Whether any of the identified claims should be categorised on a category 2A or 2C basis rather than 2B;
(b)Whether Mr Kaye is entitled to indemnity or increased costs; and
(c)Whether the disbursements sought are reasonable.
Categorisation
[13] Rule 14.2(1)(c) of the Rules 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”.
[14] In this case, the proceedings have been categorised under category two, and the appropriate daily recovery rate is $2,230. Rule 14.5 then provides:
14.5 Determination of reasonable time
(1)For the purposes of rule 14.2(c), a reasonable time for a step is—
(a)the time specified for it in Schedule 3; or
(b)a time determined by analogy with that schedule, if Schedule 3 does not apply; or
(c)the time assessed as likely to be required for the particular step, if no analogy can usefully be made.
(2)A determination of what is a reasonable time for a step under subclause (1) must be made by reference—
(a)to band A, if a comparatively small amount of time is considered reasonable; or
(b)to band B, if a normal amount of time is considered reasonable; or
(c)to band C, if a comparatively large amount of time for the particular step is considered reasonable.
[15] Mr Keene submits that seven of the items sought should either not be awarded at all or should be categorised under band A of category two. I address each in turn.
Item 11 (Filing memoranda for case management conference)
[16]There were eight telephone conferences.
[17] Mr Keene submits that as three of these conferences were very brief, they should be categorised under category 2A. Mr Gilchrist disagrees. Although those three may have been brief, Mr Gilchrist submits they came about as a result of filing memoranda, in many cases as a result of Ms Woolf’s timetabling defaults.
[18]I accept that category 2B is the appropriate classification.
Items 22, 24 to 26 (Interlocutory applications)
[19] There were two sets of interlocutory applications. The first was an application by Mr Kaye for summary judgment and/or strike out on the grounds of limitation and laches. The second involved a series of interlocutory applications relating to further and better discovery and also security for costs and interrogatories.
[20] Mr Gilchrist seeks costs in respect of both sets of applications. As to the summary judgment and/or strike out application, although Mr Kaye was not successful, Mr Gilchrist submits he was subsequently successful at trial on laches and the issue of limitation was not determined. Therefore, he submits that Mr Kaye should be awarded costs on that application.
[21] Mr Keene, on the other hand, submits that as Ms Woolf’s claim had a reasonable prospect of success, Mr Kaye should have known that the case was not an appropriate one for an application for summary judgment and/or strike out. Mr Keene seeks a costs credit of $13,380 which he submits represents the amount that should have been awarded in favour of the plaintiffs on that application (on a 2C basis).
[22]Rule 14.8 of the Rules governs costs on interlocutory applications:
14.8 Costs on interlocutory applications
(1)Costs on an opposed interlocutory application, unless there are special reasons to the contrary,—
(a)must be fixed in accordance with these rules when the application is determined; and
(b)become payable when they are fixed.
(2)Despite subclause (1), the court may reverse, discharge, or vary an order for costs on an interlocutory application if satisfied subsequently that the original order should not have been made.
(3)This rule does not apply to an application for summary judgment.
[23] Associate Judge Sargisson reserved costs in this case in accordance with the Court of Appeal’s decision in NZI Bank Ltd v Philpott.10
[24] I note the Court of Appeal’s general observations in NZI Bank Ltd v Philpott in the context of a plaintiff’s summary judgment application:11
As with most questions of costs, they should be approached on broad principles. Whilst a defendant may be regarded as successful in one sense in resisting an application for summary judgment, it is of course not a final determination in the proceeding itself. If ultimately the plaintiff does succeed it seems to us in the general run of cases that the defendant should pay for both proceedings, the Court paying particular attention to the reasons why the plaintiff was unsuccessful in the first case. If those reasons include some question of fault on the part of the plaintiff then it may be appropriate to reduce or even eliminate an entitlement to costs for that part of the proceedings so far as the plaintiff is concerned. Where, however, the defendant has raised defences which cannot by their nature be resolved at a summary judgment application but ultimately turn out to have no basis, then costs on both sets of proceedings belong to the plaintiff.
There will be other cases where the plaintiff has embarked on summary judgment proceedings erroneously in the sense that the rules do not allow the summary judgment procedure, or in the certain knowledge that there is a bona fide question of fact or law which can be determined only after a trial. In those circumstances the Court should be able in its discretion to deprive the plaintiff of costs in those unsuccessful and abortive proceedings and award costs to the defendant.
[25] I further note the comments of Davison J in Xiao v Sun in the context of a defendant’s failed summary judgment application:12
[21] In cases where a plaintiff unsuccessfully claims there is no defence, the questions to be tried are brought to the surface in the determination of the summary judgment application. Thus, despite the plaintiff being unsuccessful, the process nevertheless frequently contributes to a more efficient and focussed resolution of the substantive litigation, as a result of having identified the real issues in dispute between the parties. By contrast, a defendant's unsuccessful application claiming that the plaintiff's causes of action cannot succeed, contributes comparatively little to a resolution of the substantive litigation because that unsuccessful outcome says little about whether the plaintiff may ultimately be successful at trial.
10 Woolf v Kaye [2016] NZHC 1628 at [57]; citing NZI Bank Ltd v Philpott [1990] 2 NZLR 403 (CA). The Court of Appeal has since stated that there is no settled practice as to the awarding of costs when a defendant fails to obtain summary judgment. See Miah v National Mutual Life Association of Australasia Ltd [2016] NZCA 590, [2017] 2 NZLR 241 at [61], fn 39.
11 NZI Bank Ltd v Philpott, above n 10, at 405.
12 Xiao v Sun [2016] NZHC 1449.
[26] Associate Judge Bell made similar observations in Commercial Factors Ltd v Meltzer:13
[33] While the general practice is to reserve costs on a plaintiff's unsuccessful summary judgment application, that is not necessarily the case with a defendant's application. The court is reluctant to order costs against an unsuccessful plaintiff because of the difficulty in assessing the ultimate merits of the case at the summary judgment stage. In some cases, defences raised at the summary judgment stage may be shown later to have no foundation. In such cases it would be wrong to award the defendant costs on dismissing the summary judgment application. On the other hand, a defendant is usually able to assess the strength of its case before applying for summary judgment. The usual consequence of costs following the event may apply. That is the case here, where the matter in issue was the interpretation of a written agreement.
(Citations omitted)
[27] Lastly, I note the following passage of the commentary in McGechan on Procedure:14
Where the defendant applies for summary judgment, the substance of the application is somewhat different from that of a plaintiff’s application. The application is generally in the nature of a strike-out, so is only appropriate in a case where the plaintiff clearly cannot succeed on any cause of action. As a consequence, the courts have tended in many cases to approach the question of costs in the same way as in strike-out applications. If the application fails, there will normally a good argument to award costs to the plaintiff.
[28] In this case, Mr Kaye applied for summary judgment and/or strike out on the following basis:15
[10] Mr Kaye says that there was never any intention to create a contract, nor any interest which could support a trust. He accepts that there may be evidential difficulties in proving this at the summary judgment stage, but says that is of no importance as any relevant breach of contract or of trust could only have happened in 1982 when he first registered the property his name. Accordingly, s 4 of the Limitation Act 1950 applies to block the claim in contract, and the claim in equity is barred either by the Limitation Act directly, by analogy to the contract claim, or by laches.
(Citations omitted)
13 Commercial Factors Ltd v Meltzer [2017] NZHC 30.
14Andrew Beck and others McGechan on Procedure (online looseleaf ed, Thomson Reuters) at [HR12.12.08(6)].
15 Woolf v Kaye, above n 10.
[29] Ultimately, Associate Judge Sargisson declined the summary judgment and/or strike out application.16 She found that it was reasonably arguable that the exception contained in s 4(9) of the Limitation Act 1950 applied to preserve the claim for specific performance in the context of the claim based on breach of contract.17 She also found that it was reasonably arguable that s 21(1)(a) of that Act applied in respect of the separate claims for a constructive trust and a resulting trust.18
[30] Lastly, the Judge accepted that it was “possible that, in the right circumstances, Mr Kaye may be able to establish equitable defence of laches”.19 But she concluded that at that stage of the proceedings, it was not possible to say definitively whether the defence of laches would apply to Ms Woolf’s claim.20
[31] In my view, costs should lie where they fall in respect of the application for summary judgment and/or strike out. I say that for the following reasons.
[32] I accept that if I had been required to decide the case on the basis of the affirmative defence of laches, I would have determined that Mr Kaye had established this defence.21 However, I did not decide whether the claims based on constructive trust and resulting trust would be barred by the provisions of the Limitation Act.22 It cannot be said that Mr Kaye ultimately succeeded on this point.
[33] Furthermore, Mr Kaye’s summary judgment and/or strike out application did not make the substantive proceedings more efficient and it did not help focus the issues. That being said, although the application was unsuccessful, Associate Judge Sargisson accepted that Mr Kaye acted reasonably in seeking summary judgment.23
[34] In respect of Ms Woolf’s claim for a costs credit, she would have failed on the affirmative defence of laches had I been required to decide the case on that basis. Although I did not decide the Limitation Act issue in relation to the constructive trust
16 At [55].
17 At [27].
18 At [39].
19 At [40].
20 At [40].
21 Woolf v Kaye, above n 1, at [379].
22 At [374].
23 Woolf v Kaye, above n 10, at [11].
and resulting trust claims, any limitation issue in relation to breach of contract (which was before Associate Judge Sargisson) was no longer for determination as Ms Woolf withdrew her ‘primary’ claim for breach of contract in closing submissions.
[35] As to the second set of applications, Mr Keene submits these resulted in something “approaching a 50:50 outcome for both parties”. He submits that the plaintiffs were successful on the issue of interrogatories, to have documents that were the subject of redaction provided without redaction, and with regard to Mr Kaye’s application for security for costs. Mr Kaye was successful only on his application for further and better discovery. Mr Keene further submits the time spent on each of the issues was comparable.
[36] Mr Gilchrist submits the vast majority of time related to the application for further and better discovery. He submits that application was necessary due to the inadequacies to that date of the plaintiffs’ discovery. As to interrogatories, he submits that the result was at best a draw; Mr Kaye left the redactions to the Judge and in any event, the documents did not feature as part of the trial. Although Mr Kaye did not succeed on his application for security for costs, later events have demonstrated that Ms Woolf will not be able to pay security for costs.24
[37] In my view, overall, both parties had a measure of success. For that reason, costs should again lie where they fall in respect of these applications.
Items 27 and 35 (Second counsel for interlocutory hearings and substantive hearing)
[38]Ms Fry appeared as second counsel for Mr Kaye throughout the proceedings.
[39] Mr Gilchrist submits this was a “big case” and required two counsel. He says Ms Fry played a large role in the preparation of the electronic bundle and hyperlinking all of Mr Kaye’s evidence, due to delays in the plaintiffs undertaking that task.
[40] Mr Keene submits that there was nothing overly complicated or complex in the litigation.
24See Woolf v Kaye [2018] NZHC 1250. Judgment of Lang J waiving payment of hearing fees. There was also an application by Ms Woolf for legal aid for her appeal to the Court of Appeal.
[41] Having determined that costs on the interlocutory applications should lie where they fall, it follows that the claim for second counsel for the interlocutory hearings (item 27) should also be disallowed.
[42] However, in relation to the substantive hearing, I accept that the presence of second counsel was necessary. This was a case which required management of a large amount of evidence, including expert evidence. I also accept that second counsel for the defendants undertook tasks which would normally have fallen on counsel for the plaintiffs. I certify the costs for second counsel under item 35.
Category 2C
[43] There are eight separate claims which Mr Gilchrist submits should be categorised under category 2C.25
[44] Mr Gilchrist submits they each took more than a normal amount of time. He submits that certain steps greatly exceeded the time category.
[45] Specifically, Mr Gilchrist says the counterclaim (item 4) was extensive and subsequently successful. He also says discovery (item 20) and inspection (item 21) were very poorly attended to by the plaintiffs, adding significant extra time. Furthermore, he says both the briefs (item 30) and the preparation for the substantive hearing (item 33) were extensive.
[46] Mr Keene is prepared to make some partial concessions. He accepts that an extra day should be added for item 20; an extra 2.5 days for item 21; an extra day for item 30; and the full entitlement for category 2C under item 33.
[47] I accept that these are appropriate concessions apart from the concession in relation to item 30. The defendants’ evidence included expert evidence and was lengthy and detailed. I consider the full entitlement for category 2C is appropriate for item 30. I order that the items are adjusted accordingly.
25 Refer Annexure A.
[48] I do not see a justification for awarding extra time under the other items. In my view, Mr Kaye’s counterclaim was unnecessarily complex and there was significant overlap between the claims. Given I have decided that costs should lie where they fall on the interlocutory applications, Mr Kaye cannot recover in relation to items 17 and 22.
Indemnity or increased costs
[49]Mr Kaye seeks increased costs on two separate bases under r 14.6(3):
(3) The court may order a party to pay increased costs if—
…
(b)the party opposing costs has contributed unnecessarily to the time or expense of the proceeding or step in it by—
(i)failing to comply with these rules or with a direction of the court; or
…
(v) failing without reasonable justification, to accept an offer of settlement whether in the form of an offer under rule 14.10 or some other offer to settle or dispose of the proceeding …
Failing to comply with High Court Rules
[50] Increased costs may be ordered where there is a failure by the unsuccessful party in the proceedings to act reasonably.26 But the failure is only relevant if it contributed to the time or expense of the proceedings.27
[51] In my view, it cannot be said that Ms Woolf failed to act reasonably for the purposes of the proceedings. I accept that there were timetabling defaults, but her performance of her obligations was not to the required level to order increased costs. In any event, Mr Kaye is recovering costs above the category 2B basis for several of the steps to accommodate any extra time that he may have had to spend.
[52]I refuse to order increased costs on this basis.
26 Bradbury v Westpac Banking Corp [2009] NZCA 234, [2009] 3 NZLR 400 at [27](b).
27 Commissioner of Inland Revenue v Chesterfields Preschools Ltd [2010] NZCA 400 at [165].
Settlement offers
[53] Mr Gilchrist submits that while several Calderbank offers were made, there are three letters of settlement that have particular significance:
(a)A letter dated 24 June 2015 – this letter was sent after the caveat lodged by Ms Woolf on the title to the property was sustained and after the statement of defence/counterclaim had been filed. The letter advised that Ms Woolf’s claim was without merit. An offer was made that if Ms Woolf discontinued the proceedings, that would be the end of the matter.
(b)A letter dated 7 December 2017 – there were two alternative offers in this letter which were held open until 11 January 2018:
(i)First, Ms Woolf was able to live in the property until 30 June 2018 (which was worth $19,020 on the figures of Mr Kaye’s valuer, Mr Bates). Upon leaving the property, Mr Kaye would pay her a sum of $340,000. He would not seek any sums from her.
(ii)Or, alternatively, Ms Woolf was able to live in the property until 30 June 2022 (which would amount to a benefit of around
$156,300, if Mr Bates’ 2017 figure of $660 per week was used).
(c)A letter dated 9 April 2018 – this was a final settlement offer that gave Ms Woolf until 4 November 2018 to vacate the property (which was worth $21,120 on Mr Bates’ figures). Upon leaving the property, Mr Kaye would pay her a sum of $60,000. He would not seek any sums from her.
[54] Mr Gilchrist explains that Mr Kaye’s total costs are $532,133.63. The costs incurred from the time of the offer made on 7 December 2017 were $320,854.60, while the costs from the time of the 9 April 2018 offer were $205,935.50.28
[55] Mr Gilchrist therefore seeks scale costs up to and including 7 December 2017 of $97,674, and full indemnity costs for the attendances undertaken thereafter, namely a figure of approximately $320,854.60. This produces an overall figure of
$418,528.60.
[56]In the alternative, Mr Gilchrist seeks an uplift on the scale costs figure of
$171,264 by 100 per cent, making the total costs sought a sum of $342,528.
[57] Mr Gilchrist notes that the plaintiffs’ lead cause of action was withdrawn in closing arguments, and a number of the claims failed by a “wide margin”. He submits it was unreasonable to reject either of the generous offers contained in the letter dated 7 December 2017. Had Ms Woolf accepted the first alternative in that letter, she would have received value of almost $360,000 as opposed to a final judgment (before costs) against her of $273,165.01. He also submits it was unreasonable to reject the offer in the letter dated 9 April 2018.
[58] Mr Keene submits increased costs are inappropriate. He submits it was not unreasonable for Ms Woolf to believe that her claims would succeed.
[59]In Xiao v Sun, I recently summarised the relevant principles:29
[25] … The reasonableness of a party’s rejection of an offer must be assessed at the time the offer was made and declined, not against the subsequent result. It will depend on the circumstances of the case, including the size and timing of the offer, the reasonable expectations of the party refusing the offer and on the parties’ ability, at the time of the offer, to assess the merits of the case.
(Citations omitted)
28 All figures include GST but not disbursements.
29 Xiao v Sun [2018] NZHC 1334.
[60] I put to one side the letter of 24 June 2015. That was sent just short of three years before the hearing commenced and discovery was not complete. I do not consider it was unreasonable for Ms Woolf not to accept that offer.
[61]The letters dated 7 December 2017 and 9 April 2018 took the form of
Calderbank offers. Ultimately, the effect of these offers is at my discretion.30
[62] I must focus on whether the rejection of the offers contained in those two letters was unreasonable.
[63] In my view, it cannot be said that the rejection of the offer contained in the letter dated 7 December 2017 was unreasonable. Ms Woolf did not have the briefs of evidence for Mr Kaye and his witnesses at that stage. She had no ability to assess the perceived merits of her case against the strength of Mr Kaye’s case.
[64] Objectively, I also do not consider that Ms Woolf’s rejection of the offer contained in the letter dated 9 April 2018 was unreasonable. I accept that at the time the letter was sent, Ms Woolf had received Mr Kaye’s briefs of evidence. Significantly, those briefs included the evidence of Mr Kemp, a forensic accountant. Ms Woolf could see from Mr Kemp’s comprehensive assessment of the financial evidence that she had made a negative contribution to the CBA mortgage. This evidence was unchallenged.
[65] However, it is important to remember that I must assess the reasonableness of the rejection at the time the offer was made. Here, Ms Woolf’s claim was for significantly more than the modest offer of settlement. Furthermore, Associate Judge Sargisson had given a decision based on Ms Woolf’s evidence.31 There were strong statements in support of Ms Woolf’s cause of action based on breach of contract:
[21] In my view, the evidence that Ms Woolf provided was strong enough to cast serious doubt on Mr Kaye’s version of events. Certainly, bearing in mind that on an application for defendant’s summary judgment she need only produce evidence of a serious dispute as to material facts, Ms Woolf has provided enough evidence to suggest that there was an agreement to the effect that she should have a share in the property. Though the terms of a contract
30 See High Court Rules, rr 14.10 and 14.11.
31 Woolf v Kaye, above n 10.
might be difficult to establish absent contemporaneous written evidence of the terms, I consider that there is enough material for the cause of action to survive. Certainly the resulting trust cause of action is arguable. Mr Kaye has not met the standard for summary judgment on the basis of his argument that there was no agreement. Mr Kaye’s concession to that effect is properly made.
[66] Again, it is immaterial that the position changed significantly at the hearing and the claim for breach of contract was abandoned in closing submissions.32
[67]Therefore, I decline to order increased costs on this basis.
Indemnity costs
[68]No detailed submissions were made in relation to indemnity costs.
[69] Nevertheless, I note that the situations listed in r 14.6(4)(c) to (e) do not apply. Mr Kaye must therefore show that Ms Woolf behaved either badly or very unreasonably, for example a breach of confidence or flagrant misconduct.33
[70] I am not satisfied that Ms Woolf’s behaviour comes close to reaching this threshold.
[71]I decline to order indemnity costs.
Disbursements
[72] Mr Kaye seeks a total of $4,477.70 in disbursements in various categories (excluding fees for the two expert witnesses and Mr Kaye’s expenses).
[73]Rule 14.12 of the High Court Rules relevantly provides as follows:
14.12 Disbursements
(1)In this rule,—
disbursement, in relation to a proceeding,—
32Ms Woolf made significant concessions under cross-examination accepting, in effect, that there was no oral family agreement as pleaded.
33 Bradbury v Westpac Banking Corp, above n 26, at [27]-[28].
(a)means an expense paid or incurred for the purposes of the proceeding that would ordinarily be charged for separately from legal professional services in a solicitor’s bill of costs; and
(b)includes—
(i)fees of court for the proceeding:
(ii)expenses of serving documents for the purposes of the proceeding:
(iii)expenses of photocopying documents required by these rules or by a direction of the court:
(iv)expenses of conducting a conference by telephone or video link; but
(c)does not include counsel’s fee.
relevant issue, in relation to a disbursement, means the issue in respect of which the disbursement was paid or incurred.
(2)A disbursement must, if claimed and verified, be included in the costs awarded for a proceeding to the extent that it is—
(a)of a class that is either—
(i)approved by the court for the purposes of the proceeding; or
(ii)specified in paragraph (b) of subclause (1); and
(b)specific to the conduct of the proceeding; and
(c)reasonably necessary for the conduct of the proceeding; and
(d)reasonable in amount.
(3)Despite subclause (2), a disbursement may be disallowed or reduced if it is disproportionate in the circumstances of the proceeding.
…
[74] Some of the disbursements sought fall within the categories in r 14.12(1)(b). Others fall outside those categories and will need to be approved by the Court under r 14.12(2)(a)(i). The Court has a discretion to grant such approval if the following criteria are met:
(a)The disbursement is specific to the conduct of the proceeding;
(b)The disbursement was reasonably necessary for the conduct of the proceeding; and
(c)The disbursement is reasonable in amount.
[75]I will first consider the disbursements which fall within r 14.12(1)(b).
Court fees
[76] Mr Kaye seeks a total of $3,090. As I have already determined that costs should lie where they fall in relation to the interlocutory applications, I disallow the fees relating to the interlocutory applications.
[77] I allow the rest of the claim as the fees fall within 14.12(1)(b)(i). That produces a total of $490.
[78]I further allow the sealing fee for the caveat application of $50.
Copying and printing
[79] Mr Kaye seeks disbursements of $1,008.20 for copying and binding in relation to the production of bundles of documents for the interlocutory applications and for conduct money and a service fee.
[80] Because I have determined that the claim for costs on the interlocutory applications should be disallowed, it follows that related disbursements should also be disallowed.
[81] But I allow the claims for conduct money and a service fee. I award $245.50 for those items.
Miscellaneous
[82] Mr Kaye also seeks $329.50 worth of disbursements in relation to additional costs, including library search and courier fees. These amounts are not challenged.
[83] I agree that these claimed disbursements satisfy the test contained in r 14.12(2)(a)(i). I award the sum as sought.
Mr Kaye’s expenses
[84] Mr Kaye seeks between $2,000 and $4,000 (leaving the actual amount to the Court’s discretion) in relation to what he says are significant disbursements he incurred throughout the litigation. In his letter dated 10 September 2018 to Mr Keene (itemising cost claims), Mr Gilchrist explains:
23.My client has also incurred significant disbursements directly relating to the litigation for printing costs, postage and courier fees, notarizing various documents, bank fees added on to the payment of New Zealand costs in bank transfers and computer costs. Whilst, in the absence of agreement, I reserve the right to seek a higher sum, if agreement can be reached for current purposes, my client would limit this claim to $4,000.00. Please advise.
[85]A spreadsheet of these disbursements has been filed with the Court which totals
$6,921. Mr Gilchrist says no supporting documentation beyond the spreadsheet is provided because it was simply not economic to collect all of the various invoices.
[86] Mr Keene notes that there are extensive claims for memory sticks, toner cartridges, back-up data drives, computer repairs, external hard drives, and for Fedex couriers.34 He submits none of these claims is valid without more information, and the large number of claims in the list which are clearly not justified casts a serious doubt as to the bona fides of the whole list.
[87] Apart from the amounts for postage to New Zealand and courier fees (Fedex), it is difficult to assess whether the disbursements were specific to, and reasonably necessary for, the conduct of the proceedings. It is similarly difficult to assess the reasonableness of the amount. There is insufficient information before the Court in that regard. But I allow the postage to New Zealand and Fedex courier fees, which produces a total of $1,288.80.
[88]Otherwise, I disallow the claim.
34 Mr Kaye lives in Canada.
Expert fees
[89] Mr Kaye seeks the sum of $12,331.40 for fees paid to Mr Bates, the registered valuer. He seeks a further $108,933.75 for fees paid to Mr Kemp, the forensic accountant.
[90] A party is generally entitled to recover the actual fees and expenses of its expert witnesses provided they meet the criteria contained in r 14.12(2).35 The Court of Appeal has stated:36
[62] A party can recover in respect of an expert witness only for the time he or she spends giving evidence and the time he or she spends in preparing that evidence. In addition, a party could properly claim for time spent by its expert in critiquing other parties’ experts so as to assist counsel to understand the issues and opposing contentions and to assist counsel in cross- examination. But experts do not draft pleadings and do not write legal submissions. Any claim for time spent on those tasks would not fall within the criteria …
[91] I accept that the evidence was specific to, and reasonably necessary for, the conduct of the proceeding. Mr Bates undertook five separate valuations and completed extensive research as to rental rates over a 36-year period. Mr Kemp provided a comprehensive financial analysis. The evidence of both was valuable and relied upon by the Court in the absence of any competing expert evidence from Ms Woolf.
[92] Mr Kaye supports his claim in relation to Mr Bates by reference to four invoices dated 8 August 2017 ($3,546.40), 1 March 2018 ($600), 20 March 2018 ($600) and 5 June 2018 ($1,835). The first invoice shows that a payment of $5,750 had already been paid by Mr Kaye (it is treated as being credited).
[93] Mr Keene submits that Mr Bates’ fee is excessive when he only addressed two main points, namely the market rental for the property for a period of approximately 30 years and the equivalent of a current valuation. He says an ordinary valuation report would be expected to cost less than $1,000 (there is no evidence in support of that submission) and Mr Bates only gave evidence for less than one hour.
35 Air New Zealand Ltd v Commerce Commission [2007] NZCA 27, [2007] 2 NZLR 494 at [49].
36 Air New Zealand Ltd v Commerce Commission, above n 35.
[94] I accept the fee is reasonable in amount. A letter from Mr Bates’ company dated 4 September 2018 confirms that the rate applied was $300 per hour. There were no additional fees charged for administrative support staff, and more senior valuers charge significantly higher fees. Furthermore, although Mr Bates’ charge out rate increased during the duration of the proceedings, he did not increase his charge out rate in relation to these proceedings. Mr Bates, as a principal of a separate company, has a charge out rate of $310 in respect of work undertaken for that company which is paid by local authorities, district health boards and government departments.
[95]I allow the amount as claimed for Mr Bates.
[96] As to Mr Kemp, Mr Kaye supports his claim by reference to five invoices dated 20 December 2017 ($13,800), 31 January 2018 ($20,527.50), 21 March 2018 ($22,770), 18 May 2018 ($25,745.63) and 24 June 2018 ($26,084.12).
[97] The invoices comprehensively break down the work that Mr Kemp undertook. There is a detailed report attached to each one.
[98] Mr Keene accepts that Mr Kemp expended a lot of time on the proceedings, but submits that as the fee is an extremely large amount, it is appropriate for the invoices to be referred to the New Zealand Society of Chartered Accountants as the Court cannot judge its reasonableness.
[99] I consider that the Court is in a position to assess the reasonableness of the claim. A letter from Mr Kemp dated 17 September 2018 confirms that the rate applied was $375 per hour. It records that the rate sits within the mid-range of hourly rates charged for this type of work. Mr Kemp also states that of the total time charged, his view is that $32,625 of that time was incurred as a direct result of the inadequacies of Ms Woolf’s financial evidence, and the nature and timing of discovery of crucial financial records which necessitated certain parts of his analysis to be reworked. Lastly, Mr Kemp explains that he applied a global discount to certain time incurred and charged to Mr Kaye to reflect his prompt payment of invoices and to allow for some administrative type tasks.
[100] I also record that Mr Kemp’s evidence was “detailed, careful and transparent”.37 He undertook a comprehensive analysis of the expenses in relation to the property, reconciling it with Ms Woolf’s own schedules where possible. I was impressed with Mr Kemp’s grasp of detail.38 There was no expert financial evidence filed by Ms Woolf. Mr Kemp effectively started from scratch. Given the quantity of the work required on the part of Mr Kemp, I am satisfied the amount claimed is reasonable.
[101] I note that there has been a slight calculation error in the claim for Mr Kemp’s fees. The total of the invoices at [97] above is $108,927.25. I award that amount.
Conclusion
[102] Mr Kaye is entitled to costs of $121,981 and disbursements of $123,662.45. I set out the costs and disbursements as awarded in Annexure B to this judgment.
[103]I make an order accordingly.
[104]I do not make any order for costs or disbursements on the costs application.
Gordon J
37 Woolf v Kaye, above n 1, at [260].
38 Woolf v Kaye, above n 1, at [260].
Annexure A – Mr Kaye’s claimed costs and disbursements
| Item | Description | Category 2 Daily Rate | Band B | Band C (where departure from band B is sought) | Total |
| 2 | Commencement of defence by defendant | $2,230.00 | 2 | $4,460.00 | |
| 3 | Reply | $2,230.00 | 0.8 | $1,784.00 | |
| 4 | Counterclaim | $2,230.00 | 1.6 | 4.8 | $10,704.00 |
| 9 | Pleading in response to amended pleading (3 x 0.6) | $2,230.00 | 1.8 | 439 | $8,920.00 |
| 10 | Preparation for first case management conference | $2,230.00 | 0.4 | $892.00 | |
| 11 | Filing memoranda for first and subsequent case management conferences (8 x 0.4) | $2,230.00 | 3.2 | $7,136.00 | |
| 12 | Appearance at mentions hearing or callover (4 x 0.2) | $2,230.00 | 0.8 | $1,784.00 | |
| 17 | Answer to interrogatories | $2,230.00 | 1 | 4 | $8,920.00 |
| 18 | Notice to admit facts | $2,230.00 | 0.8 | $1,784.00 | |
| 20 | List of documents on discovery | $2,230.00 | 2.5 | 7 | $15,610.00 |
| 21 | Inspection of documents | $2,230.00 | 1.5 | 6 | $13,380.00 |
| 22 | Filing interlocutory application | $2,230.00 | 0.6 | 2 | $4,460.00 |
| 22 | Filing interlocutory application | $2,230.00 | 0.6 | $1,338.00 | |
| 24 | Preparation of written submissions (2 x 1.5) | $2,230.00 | 3 | $6,690.00 | |
| 25 | Preparation by applicant of bundle for hearing (2 x 0.6) | $2,230.00 | 1.2 | $2,676.00 | |
| 26 | Appearance at interlocutory hearing for principal counsel | $2,230.00 | 2 | $4,460.00 | |
| 27 | Second counsel | $2,230.00 | 1 | $2,230.00 | |
| 29 | Sealing order | $2,230.00 | 0.2 | $446.00 | |
| 30 | Defendant’s preparation of briefs or affidavits | $2,230.00 | 2.5 | 5 | $11,150.00 |
| 32 | Defendant’s preparation of list of issues, authorities, and common bundle | $2,230.00 | 2 | $4,460.00 | |
| 33 | Preparation for hearing | $2,230.00 | 3 | 5 | $11,150.00 |
| 34 | Appearance at hearing for principal counsel | $2,230.00 | 14 | $31,220.00 | |
| 35 | Second counsel | $2,230.00 | 7 | $15,610.00 | |
| Total number of days | 76.8 | ||||
| Sub-total | $171,264.00 | ||||
| Caveat application | |||||
| 10 | Preparation for first case management conference | $2,230.00 | 0.4 | $892.00 |
Mr Kaye limits his claim in step 9 to 4 days rather than 6 days.
| 11 | Filing memoranda for subsequent case management conference (2 x 0.4) | $2,230.00 | 0.8 | $1,784.00 |
| 29 | Sealing judgment | $2,230.00 | 0.2 | $446.00 |
| Sub-total | $3,122.00 | |||
| Total number of days | 78.2 | |||
| Total costs | $174,386.00 | |||
| Disbursements | ||||
| Filing fee for statement of defence dated February 2016 | $110.00 | |||
| Filing fee for interlocutory application dated February 2016 | $500.00 | |||
| Filing fee for interlocutory application dated May 2017 | $500.00 | |||
| Filing fee for statement of defence dated 31 July 2017 | $110.00 | |||
| Hearing fee for interlocutory application dated 31 July 2017 | $1,600.00 | |||
| Filing fee for statement of defence dated 22 December 2017 | $110.00 | |||
| Sealing fee | $50.00 | |||
| Filing fee for statement of defence dated March 2017 | $110.00 | |||
| Sub-total | $3,090.00 | |||
| Copying for bundles (plus GST): 30 April 2016 | $272.70 | |||
| Binding (plus GST): 30 April 2016 | $36.00 | |||
| Bundle costs (plus GST): 31 May 2016 | $454.00 | |||
| Conduct money: 19 February 2018 | $50.00 | |||
| Service fee: 20 March 2018 | $195.50 | |||
| Sub-total | $1,008.20 | |||
| Library search | $46.00 | |||
| Courier | $226.55 | |||
| Tabs | $5.00 | |||
| USB stick | $51.95 | |||
| Sub-total | $329.50 | |||
| Sealing fee for caveat application | $50.00 | |||
| Sub-total | $50.00 | |||
| Mr Kaye’s expenses | $6,921.00 | |||
| Sub-total | $6,921.00 | |||
| Mr Bates | $12,331.40 | |||
| Mr Kemp | $108,933.75 | |||
| Sub-total | $121,265.15 | |||
| Total disbursements | $132,663.85 |
Annexure B – Costs and disbursements awarded
| Item | Description | Category 2 Daily Rate | Band B | Band C (where departure from band B was sought) | Total |
| 2 | Commencement of defence by defendant | $2,230.00 | 2 | $4,460.00 | |
| 3 | Reply | $2,230.00 | 0.8 | $1,784.00 | |
| 4 | Counterclaim | $2,230.00 | 1.6 | $3,568.00 | |
| 9 | Pleading in response to amended pleading (3 x 0.6) | $2,230.00 | 1.8 | $4,014.00 | |
| 10 | Preparation for first case management conference | $2,230.00 | 0.4 | $892.00 | |
| 11 | Filing memoranda for first and subsequent case management conferences (8 x 0.4) | $2,230.00 | 3.2 | $7,136.00 | |
| 12 | Appearance at mentions hearing or callover (4 x 0.2) | $2,230.00 | 0.8 | $1,784.00 | |
| 18 | Notice to admit facts | $2,230.00 | 0.8 | $1,784.00 | |
| 20 | List of documents on discovery | $2,230.00 | 2.5 | 3.5 | $7,805.00 |
| 21 | Inspection of documents | $2,230.00 | 1.5 | 4 | $8,920.00 |
| 25 | Preparation by applicant of bundle for hearing (2 x 0.6) | $2,230.00 | 1.2 | $2,676.00 | |
| 29 | Sealing order | $2,230.00 | 0.2 | $446.00 | |
| 30 | Defendant’s preparation of briefs or affidavits | $2,230.00 | 2.5 | 5 | $11,150.00 |
| 32 | Defendant’s preparation of list of issues, authorities, and common bundle | $2,230.00 | 2 | $4,460.00 | |
| 33 | Preparation for hearing | $2,230.00 | 3 | 5 | $11,150.00 |
| 34 | Appearance at hearing for principal counsel | $2,230.00 | 14 | $31,220.00 | |
| 35 | Second counsel | $2,230.00 | 7 | $15,610.00 | |
| Total number of days | 53.3 | ||||
| Sub-total | $118,859.00 | ||||
| Caveat application | |||||
| 10 | Preparation for first case management conference | $2,230.00 | 0.4 | $892.00 | |
| 11 | Filing memoranda for subsequent case management conference (2 x 0.4) | $2,230.00 | 0.8 | $1,784.00 | |
| 29 | Sealing judgment | $2,230.00 | 0.2 | $446.00 | |
| Sub-total | $3,122.00 | ||||
| Total number of days | 54.7 | ||||
| Total costs | $121,981.00 | ||||
| Disbursements | |||||
| Filing fee for statement of defence dated February 2016 | $110.00 | ||||
| Filing fee for statement of defence dated 31 July 2017 | $110.00 |
| Filing fee for statement of defence dated 22 December 2017 | $110.00 |
| Sealing fee | $50.00 |
| Filing fee for statement of defence dated March 2017 | $110.00 |
| Sub-total | $490.00 |
| Conduct money: 19 February 2018 | $50.00 |
| Service fee: 20 March 2018 | $195.50 |
| Sub-total | $245.50 |
| Library search | $46.00 |
| Courier | $226.55 |
| Tabs | $5.00 |
| USB stick | $51.95 |
| Sub-total | $329.50 |
| Sealing fee for caveat application | $50.00 |
| Sub-total | $50.00 |
| Mr Kaye’s expenses | $1,288.80 |
| Sub-total | $1,288.80 |
| Mr Bates | $12,331.40 |
| Mr Kemp | $108,927.25 |
| Sub-total | $121,258.65 |
| Total disbursements | $123,662.45 |
2
0
1