NOTE: PURSUANT TO S 35A OF THE PROPERTY (RELATIONSHIPS) ACT 1976, ANY REPORT OF THIS PROCEEDING MUST COMPLY WITH SS 11B TO 11D OF THE FAMILY COURTS ACT 1980.  FOR FURTHER INFORMATION PLEASE SEE HTTP://WWW.JUSTICE.GOVT.NZ/COURTS/FAMILY- COURT/LEGISLATION/RESTRICTIONS-ON-PUBLICATIONS.

IN THE HIGH COURT OF NEW ZEALAND TAURANGA REGISTRY

CIV-2010-470-000127 [2013] NZHC 615

UNDER	the Property (Relationships) Act 1976 ("the
Act")

IN THE MATTER OF	an appeal pursuant to s 39 of the Act

BETWEEN	M Appellant

AND	S Respondent

Hearing:	27 March 2013 (On the Papers)

Counsel:	N M Pender and P E McMillan for the Appellant
A E Hinton QC and E M Egglestone for the Respondent

Judgment:	27 March 2013

JUDGMENT OF DUFFY J [Re Costs]

This judgment was delivered by Justice Duffy on 27 March 2013 at 1.00 pm, pursuant to
r 11.5 of the High Court Rules

Registrar/Deputy Registrar
Date:

M v S HC TAU CIV-2010-470-000127 [27 March 2013]

[1]       The respondent was successful in this appeal and accordingly seeks costs.  He was also successful in opposing the appellant’s application for leave to appeal to the Court of Appeal and so he seeks costs for that as well.  Subsequently, the matter was heard in the Court of Appeal and that Court dismissed the application for special leave to appeal and the appeal.

[2]       I will deal with each application in turn.

Costs for the appeal

[3]       At an early stage in the appeal, the parties agreed that it should be categorised for costs at category 3.  Given that the parties had agreed this scale, and neither has sought to depart from it, I propose to adopt that category.

[4]       Initially, the point of difference between the parties is twofold.   First, the respondent sought all costs at category 3C, and secondly, he sought a 50 per cent uplift of scale costs.   The appellant contended that not every step in the appeal should be categorised as category 3C and opposed any uplift of costs above scale. The appellant was correct to oppose costs at category 3C being applied across the board.   There is no legal basis for such an approach.   Indeed, in  McLachlan v Mercury Geotherm Ltd (in rec) CA117/05, 4 December 2006, the Court of Appeal, when speaking in terms of category 3C, made it clear that band C is to be applied only where a comparatively large amount of time is considered reasonable for a particular step. At [63] it said:

It  is  only  open  to  a  Judge  to  determine  that  costs  on  a  3C  basis  are appropriate where the Judge is satisfied that every step took a comparatively large amount of time compared with normal.  That will rarely be the case. Although category 3 will apply across the proceedings, individual assessments will be required in respect of different steps.

At [64], the Court of Appeal said that the same was not so when category 2B was awarded across a case “because that is simply a recognition of an average case taking normal amounts of time at every step”.

[5]       The respondent then amended his position by seeking a combination of costs at 3B and 3C, with the procedural steps being calculated on 3B and the substantive

steps being calculated at 3C.  This brought the total scale costs to $39,476.  Then, a

50 per cent uplift of the costs on preparation time for the appeal was sought; this came to $6,255, making the total costs sought $45,731.  In addition, expert witness costs of $1,529.50 and disbursements of $2,177.27 were sought.  The total amount claimed was stated as $49,437.50, which is rounded down from the arithmetical result of $49,437.77.

[6]       There remained a dispute between the parties regarding the claim for costs relating to the appellant’s attempt to adduce fresh evidence on the appeal.  This came after the hearing.   The respondent opposed the attempt.   The parties took their respective steps by filing memoranda in Court.   I determined that fresh evidence should not be filed.  I consider that the issue raised by the appellant was complicated, unnecessary and required the respondent to go to some effort to address it.  It is rare for a party to attempt to adduce fresh evidence in an appeal after the hearing has ended.  I consider that the respondent is entitled to claim for preparation time spent on addressing this issue.  Whilst the matter was not raised formally by an application that in turn called for a notice of opposition, I am satisfied that in substance the memoranda filed by each party encapsulated the time and effort that the preparation of these documents would call for.  Looked at overall, I am satisfied that the costs the respondent seeks for this episode in the proceeding are reasonable.

[7]       The appellant in a later memorandum then disputed the claim for hearing time of three days, asserting that actual time spent was 2.75 days.   However, the Court  record  shows  that  on  the  second  sitting  day  in  Rotorua,  the  hearing commenced at approximately 10.00 hours and ran until 17.53 hours.  There was an interruption in the afternoon as a sentencing took place.  However, counsel in this proceeding were required to be either in court or available for court over the entire day.   Further, the time that was lost in the afternoon was made up by the Court sitting late.   I am satisfied that the respondent is entitled to claim for three days hearing time.

[8]       The next question is whether there should be an uplift of 50 per cent for the preparation time.  This issue should be approached in accordance with the four steps set out in Holdfast NZ Ltd v Selleys Pty Ltd (2005) 17 PRNZ 897 (CA) (“Holdfast”).

[9]       Here,  the  first  two  steps  have  been  taken.    The  proceeding  has  been categorised under r 14.3 of High Court Rules and a reasonable time for each step in the proceeding has been determined under r 14.5.   The third step is for the party seeking an increase to apply under r 14.6(3)(a) for extra time for a particular step. This is what the respondent now seeks in terms of the increase of 50 per cent for preparation time.

[10]     Under r 14.6(3)(a), the Court may order a party to pay increased costs if the nature of the proceeding or step in it is such that the time required by the party claiming costs would substantially exceed the time allocated under band C.

[11]     The appeal was factually and legally complicated.  Whilst it was an appeal against a decision to set aside a s 21 agreement under the Property (Relationships) Act 1976, the reality is that the arguments raised by the appellant involved complicated legal arguments relating to the law of trusts and law relating to shielding assets  from  creditors.    It  also  raised  complicated  factual  issues  regarding  the financial viability of the parties and their various commercial ventures.  This was in addition to the usual legal and factual issues concerning appeals of this nature.  Even allowing for the expertise and competence of senior counsel in this field of law, I consider that the respondent’s preparation time would have well exceeded the time provided for under the scale.

[12]     I also consider that the need for such extensive preparation was brought about by the manner in which the appellant approached the appeal.  She challenged most, if not all of the findings by the Family Court, including the view the Family Court Judge had taken of the appellant.   For the respondent to resist an appeal of this nature, he would have had to go back over all the evidential issues that were raised and determined in the Family Court and to be prepared to meet further challenges against them.  I am satisfied that despite the principle that the determination of costs should be predictable and expeditious, this is a case where an order for increased costs above that available under band C for time spent in preparing for the appeal is appropriate.  I also consider that an increase of 50 per cent is appropriate. Thus, I am satisfied that the respondent has established a proper basis for the award of costs that he seeks.

[13]     I am also satisfied that the respondent is entitled to the disbursements he seeks.   Regarding the claim for expert witness fees of the valuers, Hussey & Associates, the respondent submits that the appellant raised issues in the appeal regarding valuation evidence.   Those issues required the respondent’s counsel to confer with the respondent’s valuer.   I recall that valuation issues were one of the complicated factors raised in the appeal.  I am satisfied that the claim for payment of the fee of $1,529.50 is properly made and so I allow that claim.

Costs on application for leave to appeal to Court of Appeal  and to adduce further evidence

[14]     The appellant made two interlocutory applications: for leave to appeal to the Court of Appeal and for leave to adduce further evidence on appeal.   The further evidence attempted to contradict the factual findings in the Family Court and in this Court.   The second application was not dealt with as I considered that whether further evidence was adduced in any appeal heard by the Court of Appeal was a question for that Court to determine.  However, this position was not reached until the hearing so that the respondent would have had to prepare to address this application, as well as the other.  Though given that this issue was addressed at the Court of Appeal hearing, any time spent in preparation for this application would have been covered by the costs award in that Court and the respondent has not sought costs for it.

[15]     The appellant filed extensive grounds for leave to appeal that resembled something like a statement of claim in an administrative law proceeding.   At the same time, the appellant did not identify discrete questions of law of a type that would warrant a second tier appeal.   I can imagine that the respondent found the application difficult to grapple with and, therefore, more time-consuming than would ordinarily be the case with applications of this nature.   Indeed, given the apparent difference between the grounds set out in the appellant’s application for leave and her submission, she was required to elect those on which she relied.  She elected to rely on the matters addressed in her submissions.   They were extensive, running from paragraphs [a] to [j], with one paragraph having five subparagraphs.   I concluded that the appellant was attempting to engage in a further general appeal.

[16]     I note that in the Court of Appeal, the appellant was refused special leave to appeal and the application to adduce further evidence was not, therefore, addressed. In that Court, the respondent was awarded costs for a standard application for leave to appeal on a band A basis.  However, I do not know what the form or substance of the appellant’s application was by that stage.

[17]     Faced with having to deal with the applications that were filed in this Court, the respondent went to considerable time and trouble to oppose them.   Hence, the respondent initially sought costs on a category 3C basis with a 50 per cent uplift. That brought the sum of the costs sought to $79,602.  This is considerably more than the costs for the appeal hearing, even though that hearing took longer to hear and covered more issues.

[18]     The  appellant  opposes  an  award  of  costs  that  is  based  on  category  3C

applying to all steps and with a 50 per cent uplift.

[19]     The respondent then filed an amended application.  This is based on the old recovery rate under the rules which were applicable.  The steps taken for the case management conference are sought at band B and the costs are based on the matter being an interlocutory application.

[20]     The  steps  set  out  in  the  respondent’s  amended  schedule  of  costs  are

appropriate.  But I am not satisfied that any step in this application warrants category

3C.  The appellant’s application for leave to appeal was messy and not well made. This would have made it difficult to deal with but, at the same time, the futility of the application must have been apparent to the respondent.  Thus, in terms of the reasonableness of the steps to be taken in opposing it, I do not consider it would have been as onerous as opposing the appeal.

[21]     The parties have agreed that category 3 applies, and the appellant made no application to depart from this.   Looked at overall, I consider that the appropriate award of costs is one that sees the respondent receive category 3B for the interlocutory applications  as  identified  in  the  appellant’s  schedule  of  costs,  and category 3A for the case management steps as identified in the appellant’s schedule

of costs.  There appears to be no dispute regarding the claim for disbursements of

$222 and, accordingly, that is granted.

Result

[22]     The respondent is awarded costs for the appeal in the sum of $45,731; in addition, expert witness costs of $1,529.50 and disbursements of $2,177.27.   The total sum is $49,437.50.

[23]     The respondent is awarded costs for the application for leave to appeal at a mix of category 3B and 3A as set out in [21] herein.  Disbursements of $222 are also granted.

Duffy J

Counsel:      A  E  Hinton  QC  P  O  Box  4092  Shortland  Street  Auckland  1140  for  the
Respondent

Solicitors:    Franks  and  Ogilvie  P O  Box  10388 The Terrace Wellington  6143  for  the
Appellant
Holland  Beckett  Private  Bag  12011  (DX  HP40014)  Tauranga  Mail  Centre
Tauranga 3143 for the Respondent