IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE	
CIV-2014-404-002631
[2019] NZHC 565	

BETWEEN	ELIZABETH HULJICH
Plaintiff	
AND	CHRISTOPHER PETER HULJICH
First Defendant

PETER KARL CHRISTOPHER HULJICH
Second Defendant

MICHAEL STEPHEN HULJICH
Third Defendant	

Hearing:	(On the papers)	
Counsel:	G R Little SC and D B Beard for the Plaintiff
D H McLellan QC, J S Cooper QC and H M Z Ford for Defendants	
Judgment:	25 March 2019	

COSTS JUDGMENT OF VENNING J

This judgment was delivered by me on 25 March 2019 at 4.00 pm, pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date……………

Solicitors:	Nicholls Law Ltd, Auckland
Harmos Horton Lusk, Auckland Counsel:	G Little SC/D B Beard, Auckland
D H McLellan QC/J S Cooper QC, Auckland

HULJICH v HULJICH [2019] NZHC 565 [25 March 2019]

[1]	In the judgment delivered on 20 December 2018 the Court dismissed the plaintiff’s claim, entered judgment for the defendants and reserved the issue of costs.1

[2]	The defendants now seek indemnity costs of $605,820.61, plus disbursements of $43,535.97, in total $649,356.58. In the alternative they seek costs on a 2B scale with 100 per cent uplift totalling $306,492.00, together with the disbursements.

[3]	Counsel for the plaintiff accepts the defendants have endeavoured to take a reasonable approach in the memorandum. However, Mr Nicholls submits the indemnity costs sought are unreasonable in the circumstances. He submits costs should be no more than scale, or if there is to be an uplift, the uplift should be no more than 50 per cent.

[4]	Although Mr Nicholls did not take issue with two senior counsel representing the defendants I record that I accept it was appropriate for the three defendants to have been represented by two senior counsel (as well as to be assisted by one junior counsel). By the time the case came to trial there were 14 causes of action, a number of which were pleaded against all three defendants. The allegations were wide-ranging and historical. While potentially there could have been a conflict between the particular defendants, senior counsel for the defendants were able to share the workload so that there was no duplication of effort and the case was presented efficiently.

[5]	Costs are to be fixed in accordance with Part 14 of the High Court Rules. The principles that have developed in relation to costs are now relatively well established. While the Court retains an overriding discretion in relation to costs2 certainty and the application of the prescribed rules in relation to costs is an important consideration. Departure from scale is limited.

[6]	The rules do, however, provide for departure from scale and for indemnity costs in the circumstances prescribed in r 14.6. As relevant r 14.6 provides:

1	Huljich v Huljich [2018] NZHC 3429.
2	HCR 14.1.

Increased costs and indemnity costs

(1)	Despite rules 14.2 to 14.5, the court may make an order—

…

(b) that the costs payable are the actual costs, disbursements, and witness expenses reasonably incurred by a party (indemnity costs).

…

(4)	The court may order a party to pay indemnity costs if—

(a)	the party has acted vexatiously, frivolously, improperly, or unnecessarily in commencing, continuing, or defending a proceeding or a step in a proceeding; or

(b)	the party has ignored or disobeyed an order or direction of the court or breached an undertaking given to the court or another party; or …

…

(f) some other reason exists which justifies the court making an order for indemnity costs despite the principle that the determination of costs should be predictable and expeditious.

[7]	The defendants submit there are a number of features of the plaintiff’s case which support an award of indemnity costs:

•	An obvious lack of any legal basis for the plaintiff’s claim as is apparent from the judgment.

•	Serious deficiencies in the evidence. The one claim that the Court identified as being capable of responsible pursuit was not supported on the evidence.

•	Allegations of fraud and deceit made without foundation and not pursued in cross-examination of the defendants to whom they applied.

•	The way the plaintiff ran her case gave rise to delay and inefficiency.

•	The plaintiff acted unnecessarily and vexatiously in pursuing the proceeding in the face of repeated and realistic settlement offers.

[8]	In response Mr Nicholls submitted:

•	It was not open for the defendants to rely on the plaintiff’s conduct during the interlocutory stages of the proceedings as a costs award had already been made in favour of the defendants in relation to interlocutory steps.

•	Indemnity costs are an exception to the normal costs regime.

•	The present case could be distinguished from Bradbury v Westpac Banking Corporation.3

•	An award of indemnity costs is not an award of “wasted costs” or of “all costs”.

•	The defendants’ memorandum does not set out how the costs were reasonably incurred.

Decision

[9]	I do accept there is some, limited, force in Mr Nicholls’ submission relating to the interlocutory issues. There has been one substantial prior costs award that addressed some of those issues. On 17 October 2018 Moore J awarded the defendants indemnity costs of $83,681.18 in relation to numerous steps taken in relation to the plaintiff’s defaults and her applications to adjourn the trial. They have been paid. Those defaults by the plaintiff have already been sanctioned by the Court. But the defendants have excluded the costs relating to those steps from the costs sought in this application. The balance of the interlocutory steps have not had costs awarded and are properly for consideration at this time, as are the plaintiff’s other defaults during the interlocutory stages of the proceeding.

[10]	Next, as Mr Nicholls submits, while indemnity costs are an exception, they are expressly provided for in the rules.

3	Bradbury v Westpac Banking Corporation [2009] 3 NZLR 400.

[11]	Mr Nicholls sought to distinguish Bradbury on the basis that in that case there were two factors supporting the award: first the appellant’s case was hopeless; and the second, that Mr Bradbury and his partner had commenced and continued the proceedings for an improper motive. Mr Nicholls submitted that it could not be said that the plaintiff’s conduct fell within that second type of conduct.

[12]	It is not necessary for each and every one of the factors in r 14.6 to apply to justify an award of indemnity costs. The qualifying criteria may overlap, or there may be more than one present in a particular case. In some cases while only one of the criteria might be present, it may be so significant to justify an award of indemnity costs of itself. A case may be so hopeless that without more indemnity costs might be justified. Alternatively, the plaintiff may have unreasonably rejected a settlement offer which might support an award of indemnity costs, at least from the time the offer was made.

[13]	In my judgment a number of the criteria in r 14.6(4) have been made out in this case. For example, r 14.6(4)(b) applies. The plaintiff failed to comply with orders requiring her to provide particulars. Later, prior to trial, the defendants obtained unless orders requiring the plaintiff to provide an index for the common bundle.

[14]	Rule 14.6(a) and (f) also apply. The plaintiff has acted improperly in pursuing fraud allegations against the first two defendants. The allegations were not seriously pursued at trial and on the evidence were not made out.

[15]	The plaintiff has also acted vexatiously and frivolously by raising additional claims lacking in legal merit and in the way she has pursued a hopeless case. The amended statement of claim in August 2015 added an additional three causes of action and joined Peter Huljich as the second defendant. An allegation of deceit was raised against Christopher and Peter. The fourth amended statement of claim joined Michael Huljich. That statement of claim comprised 13 causes of action, including an allegation of breach of the Fair Trading Act 1986 which was entirely unsustainable. At the outset of the hearing and during counsel’s opening the Fair Trading Act causes of action were abandoned.

[16]	The fifth amended statement of claim on 1 December 2017 pleaded 14 causes of action. For the first time it alleged some sort of agreement to invest the Kiwibank funds once they had been repaid. I accept counsel for the defendants’ submissions, which is apparent from the judgment, that the causes of action the plaintiff added to the pleading and the joinder of Peter and Michael were without merit and were frivolous and vexatious.

[17]	While the original contractual cause of action against Christopher was arguable it was not made out on the evidence. As the Court observed in this case:4

[23]	As a result of the infelicitous pleading there remains a disconnect between the various claims which Elizabeth seeks to pursue, the claims actually pleaded and the relief sought in the various causes of action.

[24]	For the reasons that follow, ultimately that disconnect is of no particular moment as the evidence does not support the basis upon which Elizabeth seeks to pursue the unparticularised and general claims in any event.

[18]	Court resources are scarce. Cases that are frivolous or vexatious draw on those scarce resources. Apart from the parties forced to respond to the frivolous or vexatious proceedings, pursuit of such proceedings impacts on other parties who have cases before the Court. While a party may access the Court and may pursue such proceedings, they should face the cost consequences of pursuing such frivolous and vexatious proceedings.

[19]	Next, the plaintiff also acted vexatiously and unnecessarily in continuing the proceeding after the offer of settlement of the proceedings at the outset (even though made with a denial of liability). On 30 October 2014, less than a month after the plaintiff issued her proceedings on 3 October 2014, (which at that stage were only against the first defendant), the first defendant made an offer to pay the full amount of the claim without admission of liability. The offer was without prejudice except as to costs. It was not accepted and no counteroffer made. That offer was repeated on 17 November 2014. Again, the offer was not accepted. The parties then attended a judicial settlement conference which was adjourned part-way through in April 2017 but the plaintiff refused to return to a reconvened conference.

4	Huljich v Huljich, above n 1.

[20]	In June 2017, with the evolution of the plaintiff’s claim the defendants again renewed the offer to settle the mortgage claim allowing the plaintiff to pursue her remaining claims if she wished to do by paying $300,000 without an admission of liability. A similar offer was made three weeks prior to trial (after deducting the indemnity costs then awarded).

[21]	Finally, despite Mr Nicholls’ submission to the contrary, I accept that the indemnity costs claimed are, in the circumstances, reasonable. The defendants only seek costs for time spent on steps referred to in the schedule to the rules and do not seek costs for meetings, correspondence and advice, except where directly related to such steps. Further, the costs sought are limited to counsels’ costs. They do not include the instructing solicitor’s costs. The defendants do not seek costs in relation to their third party claim against Paul Huljich, which was withdrawn and nor do they seek costs in relation to the joinder of Michael Huljich.

Result/order

[22]	The defendants are to have costs against the plaintiff in the sum of $605,820.61 together with disbursements of $43,535.97.

Venning J