IN THE HIGH COURT OF NEW ZEALAND HAMILTON REGISTRY

CIV-2011-019-1186 [2013] NZHC 204

BETWEEN	JOHN KENNETH SLAVICH AND ANTHONY NICHOLAS SLAVICH AS TRUSTEES OF THE KAS FAMIILY TRUST
Plaintiffs

AND	CHRISTOPHER JOHN HUGHES Defendant

Hearing:	On the papers

Counsel:	AJ Nolan for plaintiffs
R Scott for defendant

Judgment:	14 February 2013

JUDGMENT OF ASSOCIATE JUDGE FAIRE [on costs]

Solicitors:	AJ Nolan, PO Box 1268, Hamilton
McElroys, PO Box 835, Auckland 1140

JK SLAVICH AND AN SLAVICH AS TRUSTEES OF THE KAS FAMIILY TRUST V HUGHES HC HAM CIV-2011-019-1186 [14 February 2013]

[1]       I delivered judgment on 22 November 2012 on the defendant’s application for summary judgment against the plaintiffs.   I entered judgment in favour of the defendant.

[2]       In my judgment I recorded the following on costs:

Counsel were in agreement that this is a Category 2 case.  The defendant has been successful.  He is entitled to costs on the application and in respect of the proceeding as this judgment concludes the proceeding.  My preliminary view is that Band B should apply to the steps that have been taken in this proceeding.  Because there has been no detailed analysis of that I give that indication to the parties in the hope that they can agree the quantum of costs. If they cannot agree on the quantum of costs, memoranda in support, opposition and reply shall be filed and served at seven-day intervals and the file shall then be referred to me.

[3]       Counsel and Mr Slavich advise that there has been correspondence but they have been unable to reach agreement on costs.  Memoranda have now been filed on behalf of the defendant and in answer by the plaintiffs and in reply by the defendant. I  take  the  matters  that  are  referred  to  in  those  memoranda  into  account  in determining the question of costs in relation to this proceeding.

The principles applicable in awarding costs

[4]       Rule 14.1 gives the Court a discretion to order costs in relation to a step taken in a proceeding.  That discretion is generally to be exercised in accordance with the specific rules contained in rr 14.2-14.10:  Glaister v Amalgamated Dairies Ltd.    In Mansfield Drycleaners  Ltd v Quinny’s Drycleaning (Dentice Drycleaning Upper Hutt) Ltd  the Court of Appeal said of the costs regime contained in what is now rr 14.2-14.10 that:

there is a strong implication that a Court is to apply the regime in the absence of some reason to the contrary

The test to be applied is entirely an objective and not a subjective one.   The only reference which  it is necessary to make towards actual costs is to be found in r 14.2(f), namely that an award of costs should not exceed the costs incurred by the party claiming the costs: Glaister v Amalgamated Dairies Ltd.

[5]       Rule 14.2 lists the principles applying to determination of costs. Subrule (a) affirms the principle that the losing party should pay the costs to the successful party. Subrule (b) requires that the costs reflect the complexity and significance of the proceedings.   By inference it refers to the categorisation of a proceeding which is provided for in r 14.3.  Subrule (c) requires a consideration of each step for which costs are sought and an application of the daily rate having regard to the appropriate band which is to be applied after a consideration of r 14.5(2) and the Third Schedule to the High Court Rules.

[6]       Counsel for the defendant, in a memorandum in support, has carried out an analysis of the costs that could be ordered based on Category 2 and Band B for each step.   That analysis indicates a figure for costs of $15,721.   In addition, there are disbursements for the filing of the defence of $108.80 and a filing fee on the interlocutory application of $725, which is also claimed.

[7]       The plaintiffs agree with the calculation but say a reduction of one-third should be ordered. The plaintiffs’ reasons are as follows:

(a)       Approximately  one  third  of  the  claims  for  costs  made  by  the defendant  relates  to  a  period  when  the  plaintiff  was  suing  both Mr Hughes and Mr Bridges;

(b)       The  plaintiff  discontinued  against  Mr  Bridges  once  Mr  Bridge’s affidavit deposed the fact that he had no knowledge of the Bank of New Zealand loan and the way in which shares were to be taken up by
the directors;

(c)       As such the plaintiff seeks reduction of the defendant’s quantum of costs taking into consideration that the claim against Mr Bridges was discontinued at an early date which spared the defendant’s insurers the additional costs of defending the claim against him.   The plaintiff proposes this to be one third of the total costs claimed.

[8]       The plaintiffs set out, in their memorandum, reasons why the proceeding was discontinued against Mr Bridges, one of the defendants.   What that analysis overlooks, however, is that what has been claimed is a claim limited entirely to those matters that relate to a proceeding where there is a single defendant.  There is no question of any duplication on account of the fact that there were initially two defendants in this proceeding.   For that reason, as a matter of principle, what the plaintiffs seek is not justified on the facts of this case.

[9]       The  next  matter  that  is  raised  is  the  fact  that  the  plaintiffs  have  laid  a complaint with the Police concerning the content of the affidavits that were filed in opposition to the plaintiffs’ position.  I do not have any material before me that, in my view, justifies any deduction on account of this matter.  I am not in a position to predict the outcome of the plaintiffs’ complaint to the Police Department.

[10]     Rule 14.7 sets out when a reduction in the order which might otherwise apply for costs can be made.  Rule 14.7 provides:

Refusal of, or reduction in, costs

Despite rules 14.2 to 14.5, the court may refuse to make an order for costs or may reduce the costs otherwise payable under those rules if—

(a)        the nature of the proceeding or the step in a proceeding is such that the time required by the party claiming costs would be substantially less than the time allocated under band A; or

(b)        the  property  or  interests  at  stake  in  the  proceeding  were  of exceptionally low value; or

(c)	the issues at stake were of little significance; or

(d)        although the party claiming costs has succeeded overall, that party has failed in relation to a cause of action or issue which significantly increased the costs of the party opposing costs; or

(e)        the proceeding concerned a matter of public interest, and the party opposing costs acted reasonably in the conduct of the proceeding; or

(f)        the party claiming 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 a direction of the court; or

(ii)        taking or pursuing an unnecessary step or an argument that lacks merit; or

(iii)      failing, without reasonable justification, to admit facts, evidence, or documents, or accept a legal argument; or

(iv)       failing, without reasonable justification, to comply with an order for discovery,  a  notice  for  further  particulars,  a  notice  for interrogatories, or other similar requirement under these rules; 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; or

(g)        some other reason exists which justifies the court refusing costs or reducing costs despite the principle that the determination of costs should be predictable and expeditious.

[11]     I have carefully considered each aspect of r 14.7.  I am satisfied that the facts as presented to me do not justify any basis for a reduction in costs.

[12]     The parties have responsibly agreed that this is a Category 2 case.  No issue is taken with the amounts claimed which are based on the Bands which are more particularly set out in the Third Schedule to the High Court Rules.  Bearing that in mind, and the fact that I have ruled that there is no justification for a reduction in the costs claimed, I conclude that the appropriate order is that I order that the plaintiffs pay the defendant’s costs in the sum of $15,721 together with disbursements of
$833.80.  I so order.

JA Faire
Associate Judge