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Court of Appeal of New Zealand |
Last Updated: 3 June 2020
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BETWEEN |
CHRISTINE ANNA ELIZABETH REGAN AND MARK JEFFEREY TUFFIN Appellants |
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AND |
BRYCE BROUGHAM First Respondent RACHAEL CHRISTINA DEY Second Respondent |
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Written Submissions: |
13 and 30 September, 1 October 2019 |
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Court: |
French, Collins and Wild JJ |
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Counsel: |
F A King and M A Thomson for Appellants J K Mahuta-Coyle for First Respondent S A McKenna for Second Respondent |
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Judgment: (On the papers) |
20 May 2020 at 3.00 pm |
JUDGMENT OF THE COURT AS TO COSTS
____________________________________________________________________
TABLE OF CONTENTS
Para
REASONS OF THE COURT
(Given by Wild J)
[1] This judgment deals with applications for costs by the appellants, who are the trustees of the Winchester Trust, and by the second respondent. The application follows the appellants’ successful appeal to this Court.[1]
[2] The judgment ordered the first respondent (we will refer to him as Mr Brougham) to indemnify the appellants for their reasonable costs in this Court, and reserved costs in the District Court and High Court, directing the filing of memoranda. The parties duly filed memoranda. We summarise their opposing positions in [19] to [33] below. Briefly, the appellants seek costs against Mr Brougham, in all three Courts, totalling $249,706.93. Of these $184,517.67 are indemnity costs relating to their claim against Mr Brougham and $33,918 are their scale costs, in the District Court and High Court, of successfully defending Mr Brougham’s counterclaim. The remaining $31,271.26 are costs they incurred before commencing the proceeding in the District Court, together with their costs for work done following this Court’s judgment. The post-judgment work was largely in relation to the present application. The appellants also seek those costs on an indemnity basis. The second respondent applies for an order that Mr Brougham pay her costs of $9,787.52.
[3] Mr Brougham guaranteed a loan of $50,000 made by the appellants to a company of which Mr Brougham was a director. Following the borrower’s default, the appellants called on Mr Brougham as guarantor. He refused to pay: he said the guarantee was unenforceable.
[4] A default judgment, irregularly obtained by the appellants against Mr Brougham in the District Court at Porirua, was subsequently set aside upon Mr Brougham’s application.
[5] The appellants sued Mr Brougham afresh, this time in the District Court at Marton. Mr Brougham counterclaimed upon a constructive trust, for the value of work he alleged he had done on a property owned by the Winchester Trust. Mr Brougham also claimed against the second respondent, alleging that any liability he had as guarantor was shared by her as a co‑guarantor.
[6] Following a three day trial in the District Court at Whanganui, Judge Ross, in a careful judgment delivered on 30 September 2016, dismissed both the claim and the counterclaim, and consequently also Mr Brougham’s claim against the second respondent.[2] The Judge also upheld additional defences by the second respondent.
[7] Judge Ross reserved costs, directing that any party seeking costs file a memorandum within 21 days. Delivery of the judgment coincided with the Judge’s retirement. Costs had not been fixed (we are unsure whether they had been sought) before the Judge’s untimely death in August 2017.
[8] The appellants appealed, and Mr Brougham cross-appealed, to the High Court. Simon France J dismissed both appeal and cross-appeal in a judgment delivered on 24 May 2017.[3]
[9] The appellants’ application to the High Court for leave to bring a second appeal to this Court was dismissed.[4] The appellants then applied to this Court which granted leave on 18 May 2018.[5] This Court’s leave judgment drew the parties’ attention to Bradley West Solicitors Nominee Co Ltd v Keeman,[6] as an authority supporting the enforceability of the guarantee in issue here. That case had not been referred to in the judgment under appeal, nor in the judgment of the District Court.
[10] All matters relating to the costs of and incidental to a proceeding are at the Court’s discretion.[7]
[11] Any order for indemnity costs is limited to the costs and disbursements actually and reasonably incurred by the party entitled to them.[8]
[12] Assessing whether indemnity costs claimed under a contract are reasonable requires the Court to consider:
- (a) whether the tasks undertaken were reasonably necessary; and thus within the contractual indemnity; and
- (b) whether the costs claimed for undertaking those tasks were reasonable, both in terms of the hours expended and the hourly charge rate(s).
[13] Where the quantum of indemnity costs claimed under a contract is challenged, different approaches can be taken:
- (a) First, the Court can itself fix the costs. Because Judges have neither the time nor the inclination to undertake a detailed assessment of the reasonableness of claimed indemnity costs, the Court tends to make a “robust” assessment as to the costs it considers reasonable in the circumstances.
- (b) Alternatively, where the liable party seeks a detailed vetting of the costs claimed, that party can:
- (i) ask the Court to order indemnity costs subject to taxation;
- (ii) seek the claiming party’s agreement to refer the costs claimed to a suitably qualified practitioner to vet their reasonableness;
- (iii) ask the Court to refer the costs invoices to the Law Society under the complaints procedure in s 132(2) of the Lawyers and Conveyancers Act 2006.
[14] The leading case outlining these principles is this Court’s decision in Black v ASB Bank Ltd.[9] The principles are well summarised in McGechan on Procedure.[10]
Application of these principles here
[15] Were Judge Ross still alive, we would direct him to fix costs in the District Court. We are not prepared to impose that task on another Judge of the District Court. None knows anything of this matter.
[16] Equally, we prefer not to impose on Simon France J the task of fixing costs afresh in the High Court. Almost three years have passed since Simon France J delivered his judgment, and he did not have to consider a claim for indemnity costs.
[17] As we mention in [22] below, Mr Mahuta-Coyle asks us to disallow the appellants’ costs in both the District Court and High Court, and either to award indemnity costs in this Court subject to taxation, or refer the appellants’ costs invoices to the Law Society under s 132(2) of the Lawyers and Conveyancers Act. We are not prepared to do that. This matter has been before the Courts since 2012. Taxation or referral to the Law Society would add still further cost and delay for the parties.
[18] For those reasons we are taking the unusual course of ourselves undertaking a detailed consideration of the costs claimed by the appellants in the District Court, High Court and this Court. We repeat, this is an unusual course and is not one intended to set any sort of precedent.
[19] The appellants seek an order that Mr Brougham pay them legal costs totalling $249,706.93 relating to enforcement of the guarantee and Mr Brougham’s unsuccessful counterclaim. Of these $184,517.67 are indemnity costs sought pursuant to cl 12 of the Loan Agreement. The appellants’ submissions of 13 September 2019 contain a detailed breakdown of those costs, and attach invoices supporting the indemnity costs claimed and calculations supporting the claim for scale costs.
[20] These claims may be summarised as follows:
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Legal costs incurred prior to the commencement of the proceeding
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$14,370.01
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(GST incl)
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Accounting firm disbursement
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$1,213.25
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(GST incl)
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Costs said to have been awarded prior to the setting aside of the judgment
obtained by default in the Porirua District Court
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$4,622.70
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Costs on an indemnity basis in the District Court and High Court
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$108,095.92
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(GST incl)
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Scale costs in the District Court on the counterclaim
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$19,100.00
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Scale costs in the High Court on the counterclaim
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$14,818.00
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Costs on an indemnity basis in Court of Appeal (and leave
application)
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$76,421.75
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(GST incl)
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Post judgment costs: costs submissions and interest calculations
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$11,065.30
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(GST incl)
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TOTAL
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$249,706.93
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[21] The appellants, on behalf of the third party, also sought an order that Mr Brougham pay the third party costs of $9,787.52 in the District Court.
[22] Mr Brougham says the appellants should only have costs in this Court, because the arguments they advanced in the District Court and High Court were so untenable that their costs in those two Courts were not reasonably incurred.
[23] Mr Brougham challenges the reasonableness of the $76,421.75 claimed for the costs of this appeal, comparing them with his own costs of $22,695. He asks that the Court either:
- (a) allow these costs subject to taxation; or
- (b) refer the costs to the Law Society under the complaints procedure in s 132(2) of the Lawyers and Conveyancers Act 2006.
[24] As the indemnity costs claimed by the appellants include GST, Mr Brougham also requests that the appellants certify that they have not claimed input credits for that GST.
[25] Mr Brougham’s submissions contain an excellent summary of the legal principles governing indemnity costs. We will revert to aspects of that summary.
[26] In reply submissions on 1 October 2019 the appellants make several points. First, they contend that Mr Brougham’s submission that they should have no costs in the two Courts below is “completely without merit and a non-sensical application of normal costs award that follow the successful party”.
[27] Second, they say the only addition to their case in this Court was their reliance on the Bradley West case which “neither the First Respondent, ... [Judge] Ross, nor ... Simon France J located ... either – and none of the contemporary cases or commentary referred to ...”.
[28] Third, they maintain it was Mr Brougham who caused the “multiple hearings” throughout “multiple courts” and say his attempt to refer the appellants’ legal costs to the Law Society “is simply another attempt to deny and delay his ultimate liability to the appellant”.
[29] Fourth, they draw attention to their offer, on 11 December 2014, without prejudice, to settle their claim for $25,000 with costs to lie where they fell. They attached a copy of the email making that offer.
[30] Fifth, they say Mr Brougham’s attempt to critique the reasonableness of their legal costs “is wrong at law and ... should be disregarded by this [C]ourt”.
[31] Sixth, they point out that Simon France J took the view that 70% of the weight or time spent in the appeals to the High Court was taken up by the appellants’ guarantee claim. In adopting this view for the District Court proceeding, and claiming only 70% of its indemnity costs in that Court, the appellants say they have taken “a generous approach”.
[32] Seventh, they say it is “incorrect” for Mr Brougham to compare his own legal costs with those incurred by the appellants.
[33] Eighth, they advise they have paid all but the two most recent accounts from their lawyers for legal fees and those too are to be paid shortly.
[34] The offer mentioned in [29], while commendable, should not have been drawn to our attention. It was made “without prejudice”. It did not comply with r 14.10 of the District Court Rules (the equivalent of r 14.10 of the High Court Rules). We therefore exclude this offer from our consideration.
[35] We will deal with the claims for costs in the lower courts first, and will take each head of claim in turn.
Initial guarantee enforcement costs, 29 October 2010 to 14 February 2012: $14,370.01 (para 13.1 of appellants’ 13 September 2019 submissions)
[36] This claim is supported by two invoices from the Lower Hutt law firm Thomas Dewar Sziranyi Letts, then one from NRC, and lastly four from the Whanganui law firm Robert Handley & Co.
[37] Each of Mr Dewar’s invoices is addressed to Ms Rachael Dey and is headed “Legal Matter”. There is no indication in that heading, nor anywhere in the narration in the invoices, as to what that legal matter was. We accordingly disallow this part of the claim.
[38] We do not know who NRC was. There is nothing in its invoice to indicate it was a legal firm. Furthermore, its invoice, also addressed to Ms Rachael Dey, is headed “Relationship Matters”. On its face, this invoice appears to relate to the breakdown of Ms Dey’s relationship with Mr Brougham. That is supported by the fact that the invoice is dated 28 February 2011. The evidence in the District Court trial was that Ms Dey and Mr Brougham separated in November 2010. We disallow this part of the claim.
[39] Robert Handley & Co’s four invoices are addressed to the Winchester Trust, and their descriptions indicate they relate to action against the principal debtor B & R Enterprises Limited — to preparing and serving a statutory demand, taking action to liquidate that company and then dealing with the Official Assignee. Mr Mahuta-Coyle concedes this work is within the ambit of cl 12 of the Loan Agreement. We agree and allow this part of the claim, a total of $11,306.26.
Disbursement of Stephen Lace, Chartered Accountant: $1,213.25 (para 13.1.1)
[40] This claim is supported by three invoices addressed to the Winchester Trust from Stephen Lace & Associates Limited, spanning the period March 2013 to August 2016. Two of the invoices relate only to the preparation of interest demands, but the 31 March 2013 invoice also covers preparation of the Trust’s 2011 tax return and “Meetings and General Assistance”. As we do not know what portion of this invoice relates to preparation of the interest demands, we disallow it, but we allow the other two invoices totalling $414. This accords with Mr Mahuta-Coyle’s position.
Porirua District Court costs: $4,622.70 (para 13.2)
[41] This claim is supported by the copies of District Court correspondence and orders comprising attachment “E” to the appellants’ September 2019 submissions.
[42] For three, overlapping, reasons we disallow this claim. First, as the Winchester Trust was “self-represented” during this period, Mr King rightly acknowledged that it cannot claim legal costs. He did that in paragraph 14(b) of his 10 September 2019 letter to Mr Mahuta-Coyle, attachment “A” to his reply submissions.
[43] Second, Mr King states “the [C]ourt awarded costs totalling $4,622.70 ...”. But there is not, amongst the orders in attachment “E”, any costs award(s). On the contrary, as Mr Mahuta-Coyle points out, the Court’s letter to the Trust of 22 March 2013 refers to “the outstanding debt of $79,168.93 including $0.00 solicitors costs”. That is consistent with the Trust being self-represented.
[44] Third, the orders made by the Porirua District Court were first suspended (by Judge Cameron on 4 April 2013), and then set aside (by Judge Atkins on a date not recorded in the Court’s formal order). Nothing in the material provided to us explains the reasons why those orders were set aside, but Mr Mahuta-Coyle submits the appellants had “irregularly obtained default judgment”. We accept this, because Mr Mahuta-Coyle was acting for Mr Brougham, even at that early stage.
Whanganui District Court costs: $78,146.18, being 70% of $111,637.40 (part of para 13.3)
[45] This claim is supported by an invoice dated 9 February 2015 from Mr King, then practising as a barrister in Inglewood, and by 17 monthly invoices from the law firm Dennis King Law Ltd of New Plymouth, spanning the period 24 February 2015 to 30 September 2016. We note two points. First, these 18 invoices are part of the 28 invoices contained in attachment “F” to the appellants’ submissions of September 2019 but they total $155,875.14, not $151,280.75 as summed on the first page of “F”.[11] Second, one of the invoices relating to the District Court, invoice 16909 dated 29 July 2016, is for $4,375.36. But, if the 3.5 hours of time recorded in that invoice is correctly charged, it should be for $980.56 (GST inclusive).
[46] To put the 18 invoices in their context in the proceeding, the appellants filed their statement of claim against Mr Brougham on 25 May 2015, the trial before Judge Ross was on 5, 6 and 7 September 2016, and judgment was delivered on 30 September 2016. So these invoices cover the whole of the proceeding commenced in the Marton District Court, then transferred to the Whanganui District Court for trial.
[47] The appellants claim $78,146.18, which is 70% of their total $111,637.40 legal costs for the Whanganui District Court proceeding. They do this on the basis that Simon France J awarded Mr Brougham 70% of his scale costs on the appellants’ unsuccessful appeal to the High Court. The Judge observed: “The appeal concerning the guarantee was by far the main issue in the appeal ...”.[12]
[48] We do not accept that 70% is a fair assessment of the time, and therefore cost, occupied by the claim on the guarantee in the District Court proceeding. Relevant are these four points. First, in his Notice of 5 September 2016 opposing the filing of an amended defence, Mr King identified five issues for determination at trial. Only the first two involved the claim on the guarantee.
[49] Second, there were two statements of evidence from each of Ms Regan and Ms Dey. Approximately half of these (45 of 100 pages) concerned the claim, the remainder the counterclaim.
[50] Third, the notes of evidence at trial run to 225 pages. The evidence began at 11.54 am on 5 September and was completed at 12.55 pm on 7 September. In short, the evidence occupied most of the three day hearing. We have not scrutinised the whole of the evidence but note:
- (a) a large part of the 73 pages of Ms Regan’s evidence was taken up with cross-examination by Mr Mahuta-Coyle relevant to Mr Brougham’s counterclaim;
- (b) most of the 99 pages of Mr Brougham’s evidence related to his counterclaim;
- (c) most of Ms Dey’s evidence (some 40 pages) related to the claim on the guarantee; and
- (d) all of the 9 pages of evidence from Mr Spooner, valuer, related to the counterclaim.
[51] In short, the majority of the evidence related to the counterclaim rather than the claim.
[52] Fourth, excluding the 18 paragraphs of introduction and background, some 53 paragraphs of the decision of Judge Ross dealt with the claim and the defences to it, and 22 with the counterclaim.
[53] Factoring in those points, we consider a more accurate apportionment of time in the District Court, as between claim and counterclaim, is the converse of that in the High Court: 70% was spent on the counterclaim. That reflects the fact that the hearing in the District Court was substantially an evidential one, whereas the High Court appeal involved legal argument only.
[54] 30% of $111,637.40 is $33,491.22. But even that reduced sum seems to us inexplicably high for a straightforward claim to enforce a guarantee of $50,000. So what is the explanation?
[55] The 18 invoices evidencing the claim for $111,637.40 of legal costs and expenses incurred by the appellants in the District Court proceeding record a total of 354.1 hours of time. This comprises 211.3 hours of what we assume was Mr King’s time (charged at $250 per hour as a barrister, then $380 and subsequently $350 once he joined Dennis King Law), 16.1 hours of someone else’s time charged variously at $280, $230, $220 and $200 per hour, and 126.7 hours of time charged at $180 or $140 per hour.
[56] Only Mr King’s barristerial invoice of 9 February 2015 contains a narration describing the work done. Each of Dennis King Law’s invoices merely records that it is for “all attendances” in the billing period.
[57] Accordingly, we do not know what was being done, nor by whom, during the 354.1 hours (almost 9 solid weeks of work) charged for. In particular, we do not know what time was spent on the claim, and what was being done. That information vacuum has obliged us to consider what costs might reasonably have been incurred in taking the steps necessary to bring the claim on the guarantee. Our time allowances are deliberately rounded and generous, to reflect the contingencies of litigation. We have adopted Mr King’s hourly charge rate, since Mr Mahuta-Coyle does not challenge it. Our summary is this:
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Item
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Explanation
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Time required (hours)
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Amount at $350/hour or $2,500/day (GST excl)
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Preliminaries
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Receiving initial instructions, considering the legal position, exploring
settlement
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5
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$1,750.00
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Pleadings
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This covers the relevant pleadings in tabs 11–24 in volume 1 of the
Case on Appeal
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5
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$1,750.00
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Interlocutories
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Covers steps such as discovery and inspection, although we do not know
what, if any, such steps were required
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5
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$1,750.00
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Preparing evidence
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There were briefs or affidavits of evidence from Ms Regan, Ms Dey, Ms
Regan in reply, and a further brief from Ms Dey. Only about
half of this
evidence related to the claim.
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5
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$1,750.00
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Preparation for trial
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5
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$1,750.00
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Trial
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1½ days (approx. 10 hours)
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$3,500.00
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TOTAL
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35 hours
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$12,250.00
or $14,087.50 (GST incl)
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[58] Even if this summary overlooks some necessary step taken, or is light on one or more of the time allowances, the comparison with the $78,146.18 claimed, and even with the figure of $33,491.22 arrived at in [54] above, is marked.
[59] We reject Mr Mahuta-Coyle’s principal submission that the appellants should be denied their costs in the District and High Courts, because they advanced their case on an incorrect legal basis. He contends the steps they took were therefore not “reasonably necessary” in terms of Black v ASB Bank Limited.[13] Equally, we reject his submission that a correct pleading and presentation of the claim in the District Court would have spared Mr Brougham the two subsequent appeals.
[60] Mr Brougham could have honoured his guarantee at any time after demand was made on him. He has consistently denied liability. That did not change when this Court, in its leave judgment, drew the parties’ attention to the case of Bradley West Solicitors Nominee Co Limited v Keeman.[14] Nor has this Court’s judgment been accepted by Mr Brougham: his appeal to the Supreme Court is for hearing next month.
[61] It was demonstrably necessary for the appellants to sue Mr Brougham, and they needed to do that in the District Court (because the claim was well within the jurisdiction of the District Court). We consider that $14,087.50 (GST inclusive) indemnifies the appellants for their reasonable costs of taking the steps necessary to bring their claim to judgment in the District Court.
[62] The appellants are also entitled to the $400 Court filing fees charged to them in the invoices, and we allow $1,000 of the office expenses also invoiced. Both those sums are GST inclusive.
[63] Mr Mahuta-Coyle has rightly questioned whether the appellants are entitled to legal costs and expenses inclusive of GST. Mr King replies that the Trust “has been liable for GST throughout its engagement of legal services in this proceeding”. That is doubtless correct, but misses the point which is: was the Trust registered for GST at material times, and could it thus claim input credits for the GST components of the legal costs and expenses it incurred? The position as to GST on legal costs is spelt out in this Court’s judgment in New Zealand Venue and Event Management Ltd v Worldwide NZ LLC,[15] and the parties can surely reach agreement on this aspect.
[64] The appellants are also entitled to their scale costs on Mr Brougham’s unsuccessful counterclaim in the District Court. There is no challenge to Mr King’s calculation, so we allow $19,100.
[65] Adopting our assessment that 30% of the time involved in the proceeding in the District Court was spent on the claim, and assuming the scale costs represent two‑thirds of what a competent, efficient practitioner would reasonably charge,[16] then the $12,250 (GST exclusive) indemnity costs we have allowed on the claim is in line with the $19,100 (GST neutral) scale costs on the counterclaim.
[66] Mr Brougham concedes a costs liability of $9,787.52 to the second respondent, Ms Dey, in the District Court. We allow that.
Costs of appeal to High Court: $30,966.42, being 70% of $44,237.74 (part of para 13.3)
[67] We consider the appellants are entitled to costs of their appeal to the High Court because it was the necessary next step if they wished to pursue enforcement of the guarantee.
[68] This claim is supported by 10 invoices from Dennis King Law spanning the period 5 October 2016 to 26 May 2017.
[69] Again, to put these in their context, Judge Ross gave his decision on 30 September 2016 and Simon France J delivered his judgment on 24 May 2017, so these invoices cover all of the appeal to the High Court.
[70] The 10 invoices charge 116.8 hours of time. Of this, 69.9 hours is charged at $350 per hour and we assume is Mr King’s time. The remaining 46.9 hours is charged at $200 or $180 per hour.
[71] As with the invoices covering the claim in the District Court, the High Court invoices contain no narration, merely charging for “all attendances” during the billing period.
[72] Interestingly, each invoice is headed “Appeal to High Court – Success Fee Basis”. The submissions did not address the meaning or significance of this. If the arrangement was that the fees would only be payable if the appeal to the High Court succeeded, which it did not, then the question arises: can the appellants properly recover those costs from Mr Brougham? However, in his reply submissions, Mr King assures the Court that these invoices “have been accepted and paid [by] the appellant”, so we proceed on that basis.
[73] As with the claim for indemnity costs in the District Court, we are unable to accept that the steps necessary to bring this appeal required 116.8 hours of time, and consequently that costs of almost $31,000 were reasonably incurred. This was a straightforward appeal. The case on appeal (as opposed to the case on Mr Brougham’s cross-appeal against the rejection of his counterclaim) needed to contain little if anything more than the Loan Agreement and the decision under appeal. No new arguments were advanced.
[74] The time allowances in sch 3 of the High Court Rules indicate the amounts of time reasonably required for the necessary steps:
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Step
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Description
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Days allowed treating the appeal as Band B
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52
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Commencement of appeal
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1.0
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54, 14
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Case management — preparation for and appearance at conference
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0.9
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55
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Preparation of Case on Appeal
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1.0
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56
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Preparation of written submissions
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3.0
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57
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Appearance (Mr King only appeared)
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1.0
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TOTAL
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6.9 days
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[75] If the appeal is treated as Category 2, then scale costs are $16,491 (6.9 times the daily recovery rate of $2,390).[17]
[76] It is generous to treat the appeal as Category 2 and place it in Band B. Given the straightforward nature of the appeal, Category 1 and Band A could be viewed as more appropriate. Factoring all this in, we consider $19,500 inclusive of GST is a generous allowance to the appellants for their unsuccessful appeal to the High Court. We also allow the appellants their filing and hearing fees of $2935 and $500 of the invoiced office expenses. Both those amounts are GST inclusive. That is a total of $22,935 (inclusive of GST).
Costs of Mr Brougham’s cross-appeal to the High Court: $14,818.00 (para 13.3.3)
[77] The appellants are entitled to scale costs on a 2B basis on Mr Brougham’s unsuccessful cross-appeal to the High Court. Although Mr Mahuta-Coyle has not challenged Mr King’s calculation of these, we see some errors in it and allow costs as follows:
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Step
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Description
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Days allowed on Band B basis
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53
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Response to cross-appeal
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0.5
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54, 14
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Case management — preparation for and appearance at conference
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0.9
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56
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Preparation of written submissions
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3.0
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57
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Appearance at hearing
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0.5
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|
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TOTAL
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4.9 days
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[78] Our understanding is that the appellants prepared the case on appeal for both appeal and cross-appeal, but we have already allowed one day for this in assessing costs on the appeal.
[79] 4.9 days at the daily recovery rate of $2,390 is $11,711. We allow that.
Applications for leave to appeal: $28,742.85 (part of para 13.4)
[80] As required, the appellants applied first to the High Court for leave to bring a second appeal. When leave was refused by Simon France J on 6 October 2017, the appellants applied to this Court.
[81] In his leave judgment Simon France J records:[18]
[8] The applicant wishes to argue on a second appeal:
(a) that the analysis in the judgment of the equitable principles is flawed; and
(b) that there is a public interest in the issue of the relationship between these authorities and s 27.
[82] The authorities the Judge refers to had been referred to him when the appeal was argued. So the application to the High Court for leave was a very simple, straightforward application. The Judge heard it by teleconference and gave his judgment later the same day.
[83] On a Band A basis, the time allowances in sch 2 of the Court of Appeal (Civil) Rules 2005 for such an application are:
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Description
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Days
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|
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1
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Commencement of application for leave to appeal
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1.0
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4
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Preparation for hearing of defended application
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1.0
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6
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Appearing at hearing of defended application
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0.5
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|
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TOTAL
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2.5 days
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[84] Applying the daily recovery rate of $2,390 for a standard appeal, this totals $5,975.[19] The appellants claim $13,730.85 (GST inclusive), based on four invoices billing a total of 35.1 hours of work, 31.5 of them by Mr King. We have looked through the timesheets attached to the appellants’ submissions in reply. We are unable to accept that 35.1 hours of work and $13,730.85 of costs were reasonably incurred in making the leave application to the High Court. We consider $7,500 (GST inclusive) is generous and allow that. No filing fee was invoiced.
[85] Our view is much the same in relation to the successful leave application to this Court. It involved a re-run of the application made to the High Court. The same scale of costs would apply — so 2.5 days on a Band A basis equating to $5,975. But the appellants claim $15,012 for 54.2 hours of work, 33.6 of them by Mr King. We note that one of the four supporting invoices is discounted by $3,300, so the time spent was considerably more than that charged. That discounting presumably acknowledges that far too much time had been spent.
[86] The amount of $15,012 is not a reasonable claim for the taking of the necessary steps. Given that this was a re-run of the same straightforward application, we consider $7,000 (GST inclusive) is the most that can properly be allowed. Again, we regard that as generous. The appellants are also entitled to the filing fee of $1,100, so the total allowed is $8,100.
Substantive appeal to Court of Appeal: $41,078.90 (part of para 13.4)
[87] This appeal was the third time the appellants had argued their case. When granting leave, this Court had referred the parties to the Bradley West case mentioned in [9] above, as an authority supporting the enforceability of the guarantee in comparable circumstances. The appeal thus involved a well-rehearsed argument which could now be focussed on Bradley West and the other supporting cases. Seven cases are contained in the appellants’ bundle of authorities.
[88] The case on appeal ran to five volumes, but it included all the material that was before the High Court, most of it relating to the counterclaim. On this appeal, the case needed to contain little if anything more than the Loan Agreement and the judgments of the two courts below. The obligations of parties in preparing the case on appeal are set out in r 39 of this Court’s Civil Rules. It does not appear to us that the parties, in particular the appellants, were alive to these obligations.
[89] Intuitively, we would expect the appellants’ actual costs to be roughly twice scale costs at the most. Scale costs for a standard appeal on a Band A basis are:
|
Step
|
Description
|
Days
|
|
14(b)
|
Commencement of appeal following giving of
leave |
0.5
|
|
15
|
Preparation of case on appeal
|
1.0
|
|
17
|
Preparation for hearing of appeal
|
3.0
|
|
18
|
Appearance at hearing of appeal (appellants’ counsel appeared by AVL
from Hamilton)
|
0.5
|
|
|
TOTAL
|
5.0 days
|
[90] At the daily recovery rate of $2,390 per day scale costs total $11,950.
[91] Mr Mahuta-Coyle advises that Mr Brougham’s actual costs of the appeal were $22,695 (GST inclusive). He attaches supporting invoices. He refers to an observation by Dobson J in Williams v Waimate District Council that the costs incurred by the unsuccessful party are a “potentially useful comparator in assessing the reasonableness of costs claimed by a successful party”.[20] Mr King rejected this comparison as “incorrect”. But where, as here, the parties were on opposite sides of a confined argument, we consider Dobson J’s observation is correct.
[92] The appellants claim $41,078.90 for 126.9 hours of work, 61.8 of it by Mr King. Yet again we cannot accept that this is a reasonable claim for the necessary steps. Over three solid weeks of legal work was surely not necessary to file, prepare and argue this appeal in the focussed and efficient manner that both the clients and the Court expect.
[93] We allow costs of $25,000 plus GST, a total of $28,750. The appellants are also entitled to the hearing fee of $2,700, so a total of $31,450.
[94] Before leaving the costs of the appeal to this Court, we mention security for costs. One of the invoices supporting the claim for indemnity costs of the appeal was invoice 0075 dated 5 July 2018 for $6,600 being security paid for this appeal. We have excluded that, for obvious reasons.
[95] The appellants seek repayment of that security, and also of the security they paid into the High Court. That request should be directed to the Registrar of each of those Courts.
Post judgment costs: $11,065.30
[96] In their reply submissions the appellants claim a further $11,065.30 for the costs of preparing their claim for indemnity costs and calculating the interest due on the loan. The invoice is for 31.9 hours of work, 21.5 by Mr King. Having looked through the supporting timesheets, we allow $10,000 (GST inclusive). We are excluding our estimate of the work which does not come within the costs indemnity.
[97] Mr Brougham is to pay the appellants:
- (a) Costs and disbursements totalling $107,192.76 upon their claim to enforce the guarantee, pursuant to the costs indemnity. This comprises claims 1, 2, 3, 6, 8, 9, 10 and 11 in the attached summary.
- (b) Costs and disbursements of $30,811 upon his counterclaim. This comprises claims 4 and 7 in the attached summary.
[98] Mr Brougham is also to pay the second respondent, Ms Dey, $9,787.52 on his unsuccessful claim against her. This is claim 5 in the attached summary.
|
No
|
References in Appellants’ submissions
|
Description
|
Amount inclusive of GST except the scale
of costs which are GST neutral |
|
1
|
13.9.19 subs
Para 13.1 |
Invoices of Robert Handley & Co, Solicitors
|
$11,306.26 |
|
2
|
Para 13.1.1
|
Invoices of Stephen Lace, Chartered Accountant
|
$414.00 |
|
3
|
Para 13.3
|
Whanganui District Court – appellants’ claim against
Mr Brougham on his guarantee:
- costs (GST Inc) $14,087.50 |
$15,487.50 |
|
4
|
Para 13.3.2
|
Whanganui District Court – scale costs on Mr Brougham’s
counterclaim against appellants
|
$19,100.00 |
|
5
|
Paras 17–19
|
Whanganui District Court – costs on Mr Brougham’s claim
against second respondent
|
$9,787.52 |
|
6
|
Para 13.3
|
Appeal to High Court by appellants:
- costs (GST Inc) $19,500.00 |
$22,935.00 |
|
7
|
Para 13.3.3
|
Mr Brougham’s cross appeal to High Court – scale costs
|
$11,711.00 |
|
8
|
Para 13.4
|
Application by appellants to High Court for leave to bring a second
appeal – costs
|
$7,500.00 |
|
9
|
Para 13.4
|
Application by appellants to Court of Appeal for leave to bring a
second appeal – costs and disbursements
|
$8,100.00 |
|
10
|
Para 13.4
|
Substantive appeal to Court of Appeal – costs and
disbursements
|
$31,450.00 |
|
11
|
|
Post judgment costs: costs submissions and interest calculations
|
$10,000.00 |
Solicitors:
GranthamLaw, Hamilton for the
Appellants
Macalister Mazengarb, Wellington for First Respondent
[1] Regan v Brougham [2019] NZCA 401.
[2] Winchester Trust v Brougham [2016] NZDC 18553.
[3] Regan v Brougham [2017] NZHC 1091 [High Court substantive judgment].
[4] Regan v Brougham [2017] NZHC 2464 [High Court leave judgment].
[5] Regan v Brougham [2018] NZCA 157.
[6] Bradley West Solicitors Nominee Co Ltd v Keeman [1994] 2 NZLR 111 (HC) at 117–118.
[7] District Court Rules 2014, r 14.1; High Court Rules 2016, r 14.1; and Court of Appeal (Civil) Rules 2005, r 53.
[8] District Court Rules, r 14.6(1)(b); High Court Rules, r 14.6(1)(b); and Court of Appeal (Civil) Rules, r 53E(1)(b).
[9] Black v ASB Bank Ltd [2012] NZCA 384 at [77]–[99].
[10] McGechan on Procedure (Looseleaf ed, Thomson Reuters) at [HR14.6.03(3)(e)].
[11] The summed total on the first page of “F” appears to exclude $2395.00 in High Court fees and $2,199.39 in legal fees (noted on the same page).
[12] High Court substantive judgment, above n 3, at [55].
[13] Black v ASB Bank Ltd, above n 9.
[14] Bradley West Solicitors Nominee Co Ltd v Keeman, above n 6.
[15] New Zealand Venue and Event Management Ltd v Worldwide NZ LLC [2016] NZCA 282, (2016) 23 PRNZ 260.
[16] See McGechan on Procedure, above n 10, at [HR14.4.01] for the explanation of this.
[17] High Court Rules 2016, r 14.3 and sch 2.
[18] High Court leave judgment, above n 4.
[19] Court of Appeal (Civil) Rules 2005, r 53C(1)(a).
[20] Williams v Waimate District Council [2013] NZHC 2922 at [84].
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