Carey's Bay Marine Services Limited v Elwing Discoveries Limited [2022] NZDC 2368 (15 September 2022)

Last Updated: 23 September 2022

IN THE HIGH COURT OF NEW ZEALAND DUNEDIN REGISTRY I TE KŌTI MATUA O AOTEAROA ŌTEPOTI ROHE

CIV-2021-412-112 [2022] NZHC 2368

BETWEEN	CAREY’S BAY MARINE SERVICES LIMITED AND ANOTHER Appellants
AND	ELWING DISCOVERIES LIMITED First Respondent
AND	ARTHUR EDWARD WHITE Second Respondent

Submissions filed:	12 August 2022 and 18 August 2022
Appearances:	L A Andersen KC for Appellants R M Reeve for Respondents
Judgment:	15 September 2022

JUDGMENT OF OSBORNE J

[Costs]

This judgment was delivered by me on 15 September 2022 at 3.30 pm pursuant to Rule 11.5 of the High Court Rules

Registrar/Deputy Registrar Date:

CAREY’S BAY MARINE SERVICES LIMITED v ELWING DISCOVERIES LIMITED [2022] NZHC 2368

[15 September 2022]

Background to an appeal

[1] The respondents, as plaintiffs, pursued proceedings in the District Court for damages in excess of $160,000. Approximately a year later they invited the District Court to transfer the proceedings to the Disputes Tribunal, stating they were willing to abandon aspects of their claims which exceeded $30,000 (representing the limit of the Tribunal’s jurisdiction).

[2] The appellants, as defendants, opposed the transfer request upon the basis the respondents needed to abandon those parts of their claims which exceeded $30,000 (the excess claim) before the claims could be transferred.

[3] A District Court Judge nevertheless transferred the proceedings to the Tribunal. He minuted the file directing the plaintiffs were to file an amended claim reflecting the Tribunal’s jurisdiction within 10 working days.

[4] The respondents filed an amended claim in the Tribunal within the stipulated 10-day period.

[5] The appellants appealed against the transfer direction. They asserted, inter alia, the District Court had lacked jurisdiction to transfer the proceedings when the respondents had not before the point of transfer abandoned the excess claim. By this Court’s judgment, the appeal was allowed — the transfer direction was quashed but directions were made whereby the proceedings would be transferred from the District Court to the Tribunal if the respondents first filed a notice of abandonment.1

[6] In making its orders on appeal, this Court found the appellants’ position in relation to their costs incurred in defending the proceedings in the District Court could be appropriately preserved by additional directions reserving those costs which were then made in the appeal judgment.2

1 Carey’s Bay Marine Services Ltd v Elwing Discoveries Ltd [2022] NZHC 1930.

2 At [55] and [57](d).

[7] In the appeal judgment, costs were determined thus:

• [55] Having regard to the above findings, the appellants have been successful on this appeal. Although (subject to the respondents abandoning their excess claim) there will be a transfer to the Tribunal, the appellants have succeeded inasmuch as there will now be additional directions to preserve the position in relation to costs — should the appellants’ substantive position in response to the claim be vindicated by the Tribunal, they will be able to pursue their District Court costs.
  

Costs

[56] Costs should follow the event on a 2B basis, together with disbursements.

Orders

[57] I order:

...

(e) the respondents are to pay to the appellants the costs of this appeal fixed on a 2B basis together with costs to be fixed by the Registrar; and

... (footnote omitted)

The costs and disbursements calculations

[8] Counsel have agreed that a 2B calculation of costs produces a figure of $14,340 and that the appellants’ disbursements total $1,119.69.3

[9] In relation to the costs figure, Mr Andersen KC has stated that the appellants’ fees actually incurred totalled $8,860 plus GST (comprising $400 solicitor’s fees and

$8,460 counsel’s fees).

[10] Mr Andersen accepts, in application of r 14.2(1)(f) High Court Rules 2016, the amount of costs to be fixed is the lower figure of costs in fact incurred and not the 2B calculation.

3 High Court Rules 2016, Category 2 under r 14.3(1) and band B under r 14.5(2)(b).

The issue for determination

[11] Notwithstanding this Court’s direction that the costs were to be fixed by the Registrar, Mr Reeve for the respondents sought an amended costs order, whereby there would be no order at all in relation to the costs and disbursements of the appeal or, alternatively, there would be an order that the respondents pay only the appellants’ filing fees and other disbursements.

[12] In the circumstances I have treated Mr Reeve’s brief submissions as in effect a request that I recall the appeal judgment to enable counsel to present the written submissions now made, having regard to the reasoning in and outcome of the appeal judgment.

Should costs lie where they fall?

1. The nature of the outcome on appeal
   

[13] Mr Reeve submits that the outcome on appeal was “in many respects the same as had been in place at the time of the District Court transfer”.

[14] Mr Reeve’s responsibly qualified reference to “in many respects” in important. The appeal judgment, notwithstanding its enabling the respondents to still obtain a transfer to the Tribunal, effected in that event a reservation of the appellants’ costs and disbursements incurred during the District Court proceedings. The costs position had clearly been central to the appellants’ concerns when the respondents were originally seeking transfer and remained central during the appeal hearing.

[15] Furthermore, the defect in the procedure adopted in the District Court, while described as “procedural” by Mr Reeve, was a matter of fundamental importance — there could not be a transfer without a prior abandonment of the excess claim. The respondents at no point during the appeal abandoned their contention that the transfer direction was valid.

[16] In combination, these matters resulted in this Court’s finding that the primary principle that costs must follow the event should apply.4

2. Control of the outcome
   

[17] Mr Reeve has submitted that this Court, in determining costs, should have regard to the fact that the respondents had “no ultimate control over [the] outcome” in relation to the transfer. He referred to the respondents as having “merely requested” a transfer by memorandum, with the District Court Judge then making the transfer direction.

[18] Nothing in that procedure alters the appropriateness of the costs of the appeal following the event. The respondents obtained precisely the transfer directions they sought and thereafter opposed the appeal.

100. The quantum of the costs award
     

[19] Mr Reeve submitted that a total award of $15,459.69 (comprising $14,340 costs and $1,119.69 disbursements) would be out of proportion to the result.

[20] While Mr Reeve’s memorandum was filed before that of Mr Andersen (whereby Mr Andersen disclosed the lower costs quantum of $8,860 plus GST), I infer that Mr Reeve also objects to that lower figure ($8,860) as being “out of proportion”.

[21] Issues of proportionality of costs in most cases are appropriately dealt with, as this Court did in the appeal judgment, by determining the appropriate band (for reasonable time) under r 14.5 High Court Rules in accordance with the appropriate daily recovery rate (in this case the rate for a Category 2 proceeding under r 14.3, as the parties agree applies here).

[22] The fact the lawyers for the appellants were able to conduct the appeal for fees significantly less than those produced by application of the scale is a good indication that the sum the appellants submit should be fixed is proportionate to the work involved on the appeal.

4 High Court Rules, r 14.2(1)(a).

[23] To the extent Mr Reeve may have been focussing his proportionality submission on the subject-matter of a claim within the Tribunal’s jurisdiction, his submission ignores the broader issues which led to the appeal. The appellants had been defending the proceedings in the District Court since November 2020. They had been defending the proceedings on the basis the respondents were claiming more than

$160,000. By the time the proceedings were set down for a two-and-a-half day hearing in the District Court, the respondents had twice amended their statement of claim. The appellants’ District Court (2B) scale costs to the time of the transfer direction were

$11,269, together with Court costs of $400. The appellants’ ability to recover those costs would have been affected by the transfer direction had it stood.

[24] The appeal process was the single means by which the appellants could protect their interests. The respondents, on the other hand, could have offered, short of an appeal hearing, a compromise resolution such as was subsequently represented by the orders made on appeal.

[25] In these circumstances, the costs now sought by the appellants cannot be considered disproportionate.

Outcome

[26] The sum of costs to be fixed in favour of the appellants will accordingly be

$8,860 (representing counsel’s fees and solicitor’s fees as referred to at [9] above). Additionally disbursements will be fixed in the sum sought (referred to at [8] above).

[27] There will not be an order for costs to be paid “plus GST”. The Court proceeds on the basis the successful party is GST registered and entitled to a GST input credit.5

Order

5. New Zealand Venue and Event Management Ltd v Worldwide NZ LLC [2016] NZCA 282, (2016) 23 PRNZ 260 at [7].

[28] I order:

• (a) the costs payable by the respondents to the appellants are fixed in the sum of $8,860; and
  
• (b) the disbursements payable by the respondents to the appellants are fixed in the sum of $1,119.69.
  

Osborne J

Solicitors:

Westgate Harris Lawyers, Dunedin

Counsel: L A Andersen KC, Dunedin Wilkinson Rodgers Lawyers, Dunedin

Counsel: R M Reeve, Barrister, Dunedin