IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE	
CIV-2019-404-771
[2020] NZHC 1934	

BETWEEN	REBECCA MARY ANNAN
Plaintiff	
AND	SCOTT JAMES DOUGLAS
First Defendant

CHRISTOPHER JAMES MANSFIELD
Second Defendant	

Hearing:	On the papers	
Appearances:	R O Parmenter for Plaintiff First Defendant in person Second Defendant in person	
Judgment:	5 August 2020	

SUPPLEMENTARY JUDGMENT OF LANG J
[final orders and costs]

This judgment was delivered by me on 5 August 2020 at 11.30 am, pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar Date……………

Solicitors:
Daniel Overton & Goulding, Onehunga R O Parmenter, Barrister, Auckland

ANNAN v DOUGLAS [2020] NZHC 1934 [5 August 2020]

[1]	On 13 July 2020, I delivered a judgment in which I found that payments made by Mr Mansfield to Mr Douglas did not constitute a debt or liability that Ms Annan and Mr Douglas were required to pay in their capacities as trustees of the Fresh Start Trust (the Trust).1 I have now received submissions from all parties in relation to the form of the orders I should make. I also need to determine the issue of costs.

The form of final orders

[2]	In my judgment I set out the directions I was minded to make as follows:2

(a)	The trustees of the Fresh Start Trust are to pay all outstanding debts owed by the Trust; and

(b)	They are then to notionally divide the remaining sum into two equal parts, one to be held to the credit of Ms Annan and the other to be held to the credit of Mr Douglas; and

(c)	From the amount held to Mr Douglas’s credit they are to transfer to Ms Annan an amount equal to one-half of the rental to be paid by  Mr Douglas as required by Clause G(ii) of the settlement agreement; and

(d)	From the amount held to Mr Douglas’s credit they are also to transfer to Ms Annan the sum of $7000 as required by Clause G(iii) of the settlement agreement; and

(e)	From the amount held to Mr Douglas’s credit they are also to transfer to Ms Annan any costs that may be awarded to her in this proceeding; and

(f)	The trustees are then to pay the resulting balance held to the credit of each party into the bank account nominated by each party.

[3]	I invited all parties to make submissions in relation to the proposed directions. Mr Parmenter confirms on behalf of Ms Annan that she is content with the proposed directions set out in my judgment. Both defendants have filed submission indicating that they disagree with some of the directions.

[4]	The submissions filed by the defendants appear to suggest that they consider the sum of $21,600 is still a liability owing by the Trust to Mr Mansfield. My judgment makes it clear that it is not. The trustees are not required to repay that sum to

1	Annan v Douglas [2020] NZHC 1666.
2	At [41]

Mr Mansfield. Nor would Mr Mansfield have any basis for issuing proceedings against Ms Annan in her personal capacity to recover that sum. My judgment confirms that the payments Mr Mansfield made to Mr Douglas were funded by the Blacklime Trust and were designed to compensate Mr Douglas for the fact that his wages from the Blacklime Trust had been reduced. Neither Ms Annan personally nor Ms Annan and Mr Douglas in their capacities as trustees of the Fresh Start Trust have any liability to repay the payments Mr Douglas received from Mr Mansfield.

[5]	Mr Douglas also seems to suggest it is now open to him to revisit the terms of the written agreement the parties entered into following the settlement conference held in the earlier proceeding in this Court. That is not the case. The agreement must now be implemented without alteration.

[6]	I also wish to make it clear to Mr Mansfield that I do not consider the approach he took to his discovery obligations suggests he is in any way dishonest or was intending to mislead the Court. I accept that he did not understand why the amounts paid into his bank account by the Blacklime Trust might be relevant to the issue the Court was required to decide.

[7]	I  have  already  signalled  my  intention  to  proceed  in  accordance  with  Mr Mansfield’s suggestion (supported by Mr Douglas) that it is appropriate to make a specific direction requiring the trustees to distribute the assets of the trust. There is no need for the trustees to pass resolutions or enter into a deed of distribution as would usually be required.

[8]	The directions I therefore make are as follows:

(a)	The trustees of the Fresh Start Trust are to pay all liabilities owing by the Trust forthwith. For the avoidance of doubt, this does not include the sum of $21,600 that was paid by Mr Mansfield to Mr Douglas; and

(b)	The trustees are then to notionally divide the remaining sum into two equal parts, one to be held to the credit of Ms Annan and the other to be held to the credit of Mr Douglas; and

(c)	From the amount held to Mr Douglas’s credit they are to transfer to Ms Annan the sum of $11,535.71 as required by clause G(ii) of the settlement agreement; and

(d)	From the amount held to Mr Douglas’s credit they are also to transfer to Ms Annan the sum of $7000 as required by Clause G(iii) of the settlement agreement; and

(e)	From the amount held to Mr Douglas’s credit they are also to transfer to Ms Annan any costs that may be awarded to her in this proceeding; and

(f)	The trustees are then to pay the resulting balance held to the credit of each party into the bank account nominated by each party.

(g)	Leave is reserved to both trustees to return to the Court for further directions should any further issue arise that requires the assistance or intervention of the Court.

Costs

[9]	The parties have not been able to reach agreement regarding costs. I do not accept the suggestion by Mr Douglas that the determination of costs should be delayed further. Rule 14.2(1)(g) of the High Court Rules 2016 provides that, so far as is possible, the determination of costs should be predictable and expeditious. I consider the determination of costs in the present case to be straightforward. There is no point in delaying it further.

[10]	I do not consider the fact that the parties could have resolved the dispute by arbitration to be relevant to the issue of costs because neither party applied for the proceeding to be stayed so they could proceed to arbitration. The Court was therefore entitled to proceed on the basis that the parties had agreed their dispute should be determined by it and not by arbitration.

[11]	As I observed in my judgment,3 Ms Annan is entitled to costs because she was the successful party. Rule 14.6(1)(a) provides that the party who fails with respect to a proceeding or an interlocutory application should pay costs to the party who succeeds. Ms Annan is therefore entitled to a joint and several award of costs against Mr Douglas and Mr Mansfield, together with a refund of disbursements she has paid out.

[12]	Furthermore, I do not accept the defendants’ submission that the proceeding should be classified as a Category 1 proceeding for costs purposes. Viewed overall, I consider it was a proceeding raising issues of average complexity. It was not simple or straightforward as the defendants contend. The defendants base their submission on an observation made by Associate Judge Andrew in a Minute dated 24 July 2019 that the dispute “should really be capable of resolution without the Court’s involvement, particularly given the apparent modest sum at stake”. That observation reflects the Associate Judge’s understandable view that the parties should have been able to resolve the dispute without resorting to litigation given the amount in issue. It does not suggest the Associate Judge considered the proceeding was simple or straightforward.

[13]	With some exceptions I accept Mr Parmenter’s submission that costs should be calculated on a Band B basis. The exceptions relate to the following steps, for which I consider costs should be calculated on a Band A basis:

(a)	Commencement of the proceeding – the statement of claim was very simple.

(b)	The document setting out the defence to the counterclaim and reply was likewise very straightforward.

(c)	The Plaintiff’s lists of documents would have taken very little time to prepare.

3	At [43].

(d)	Inspection	of	the	first	defendant’s	documents	was	a	very straightforward exercise.

(e)	The transfer application was likewise straightforward and the Court records show the hearing only occupied a few minutes.

[14]	Taking these factors into account I set out in the Schedule to this judgment the costs to which Ms Annan would ordinarily be entitled.

[15]	I note, however, that the defendants are concerned Ms Annan’s actual costs may be less than the total amount set out in the Schedule. Mr Parmenter has not addressed this issue in his memorandum and I direct that he is to file and serve a further memorandum confirming he has sent Ms Annan invoices for his services that exceed the amount set out in the Schedule.

Increased costs

[16]	Ms Annan seeks a 25 per cent increase in costs to reflect the fact that she contends Mr Douglas and Mr Mansfield maintained an unmeritorious position.

[17]	Rule 14.6(3)(b)(ii) provides that the Court may make an increased award of costs to reflect the fact that a party takes or pursues an unnecessary step or an argument that lacks merit. Rule 14.6(3)(b)(iii) permits increased costs to be awarded where the opposing party fails, without reasonable justification, to admit facts, evidence, documents or to accept a legal argument.

[18]	I do not consider either of these rules is engaged in the present case because the sum of $21,600 appeared in the Trust’s financial statements for several years as a liability owing to Mr Mansfield. Ms Annan signed the financial statements and, in doing so, she must be taken to have accepted them as correct at that time. As I observed in my judgment,4 Ms Annan must face the consequences of her decision. The fact that she signed the financial statements gave the defendants an arguable basis on which to contend the liability existed even though I have now found that it did not.

4	At [20].

Disbursements

[19]	I have asked the Registrar to review the filing fees Ms Annan has paid in relation to this proceeding. The Registrar advises me that Ms Annan paid a filing fee of $540 on the statement of claim rather than $1,350 as claimed by Mr Parmenter.

[20]	The Registrar also advises me that Ms Annan will be refunded the hearing fee of $1,920 because the hearing concluded within one day. The scheduling fee of $640 is unaffected by that fact.

[21]	It follows that Ms Annan is entitled to recover disbursements totalling
$2,026.64 as set out in the Schedule to this judgment.

Orders as to costs and disbursements

[22]	Subject to Mr Parmenter complying with the direction given in [16], the defendants will be jointly and severally liable to pay costs to Ms Annan in the sum of
$25,511.50, together with disbursements of $2,026.64.

Leave reserved

[23]	I would hope that Mr Douglas will now co-operate with Ms Annan in distributing the assets of the Trust forthwith as directed by this judgment. Leave is reserved to both trustees to seek further directions should these be necessary to implement the distribution process.

Lang J

 SCHEDULE

Step No.	Description	Band	Days	Rate	Amount	
1	Commencement of proceeding	A	1.6	1,480	2,368.00	
22	Application for directions as to service	B	.6	2,230	1,338.00	
28	Order without appearance	B	.3	2,230	669.00	
29	Sealing order for directions as to service	B	.2	2,230	446.00	
2	Defence to counterclaim and reply	A	.4	1,480	592.00	
10	Preparation for first conference	B	.4	2,230	892.00	
11	First conference memorandum	B	.4	2,230	892.00	
13	Appearance at first conference	B	.3	2,390	717.00	
11	Conference memorandum 5.9.19	B	.4	2,390	956.00	
20	Plaintiff’s lists of documents	A	.7	1,590	1,113.00	
21	Inspection of first defendant’s documents	A	.5	1,590	795.00	
21	Inspection of second defendant’s documents	B	1.5	2,390	3,585.00	
23	Notice of Opposition to transfer
application	A	.3	1,590	477.00	
11	Memorandum for mention of
transfer application on 30.1.20	A	.2	1,590	318.00	
12	Appearance on 3.2.20	A	.2	1,590	318.00	
32	Preparation for transfer hearing	A	.5	1,590	795.00	
34	Appearance at transfer hearing	A	.25	1,590	397.50	
33	Prepare witness briefs	B	1	2,390	2,390.00	
33A	Prepare bundle	B	.5	2,390	1,195.00	
33B	Preparation for Trial	B	1	2,390	2,390.00	
34	Appearance at Trial	B	1	2,390	2,390.00	
29	Sealing judgment	B	.2	2,390	478.00	
	TOTAL				$25,511.50	

 Disbursements 

Filing fee statement of claim	540.00	
Filing fee application for directions as to service	200.00	
Sealing fee on directions as to service	50.00	
SNAP Printing bundle	546.64	
Scheduling Fee	640.00	
Sealing fee on judgment	50.00	
		
TOTAL	$2,026.64