Scandle v Far North District Council [2012] NZHC 1675 (12 July 2012)

Last Updated: 3 August 2012

IN THE HIGH COURT OF NEW ZEALAND WHANGAREI REGISTRY

CIV-2008-488-000203 [2012] NZHC 1675

BETWEEN MICHAEL JOHN SCANDLE Plaintiff

AND FAR NORTH DISTRICT COUNCIL First Defendant

AND CORINA LILI MULLANE AND MICHAEL JAMES MULLANE AS TRUSTEES OF THE MULLANE FAMILY TRUST

Second Defendants

AND MICHAEL JAMES MULLANE Third Defendant

Hearing: 12 July 2012 (On the Papers)

Counsel: J D Turner for the Plaintiff

S A Thodey, F P Divich and S B Mitchell for the First Defendant

Judgment: 12 July 2012

JUDGMENT (NO 2) OF DUFFY J [Re Costs]

This judgment was delivered by Justice Duffy on 12 July 2012 at 4.30 pm, pursuant to

r 11.5 of the High Court Rules

Registrar/Deputy Registrar

Date:

Solicitors: McVeagh Fleming P O Box 300844 Albany 0752 (DX BX10647) for the Plaintiff Heaney and Co P O Box 105391 Auckland City Auckland 1143 (CP18503) for the First Defendant

Copies To: C L Mullane and M J Mullane (Second and Third Defendants) P O Box 923 Kerikeri

0245

_{R C Mark P O Box 172 Kerikeri 0245}

SCANDLE v FAR NORTH DISTRICT COUNCIL and ORS HC WHA CIV-2008-488-000203 [12 July 2012]

[1] Following its success in the substantive hearing of this proceeding, the first defendant sought costs from the plaintiff on the basis of category 2B, plus an uplift of $12,800, which amounted to a claim for an additional three days under scale 2B.

[2] In an interim judgment on costs (Scandle v Far North District Council HC Whangarei CIV-2008-488-203, 31 March 2011), I found that when it came to the claim for increased costs, the first defendant had not approached the claim in a way that accorded with settled legal principle: see [39]-[41]:

[39] I now turn to deal with the first defendant’s application for increased costs to the sum of $12,800. The approach for determining increased costs is set out in Holdfast NZ Ltd v Selleys PTY Ltd [2005] NZCA 302; (2005) 17 PRNZ 897 (CA) (“Holdfast”). The approach involves the following four steps. They are:

a) Categorisation of the proceeding under r 14.3;

2. Identifying a reasonable time for each step in the proceeding under r 14.5;
   

100. As part of the step two exercise, a party can under r 14.6(3)(a) apply for extra time for a particular step; and
     

The applicant for costs should step back and look at the costs award it could be entitled to. If it can argue for additional costs under r 14.6(3)(b), it should do so; but any increase above 50 per cent on the costs produced by steps one and two is unlikely, as the daily recovery rate is two-thirds of the daily rate considered reasonable for the proceedings.

[40] Before any party can ask for an increase above scale, that party must establish that the available scale costs do not cover the time and effort that was spent on the proceeding. In the present case, the first defendant assessed its costs on a category 2B basis and then sought an uplift of three days as an increase over scale costs. Apart from the adjustment I have made for the preparation of witness statements (taking this from category 2B to category

2C), the first defendant has not made any claims based on category 2C. Until the first defendant has shown that the category 2 time bands do not

cover all the costs it should be awarded, I am in no position to assess if costs should be increased in terms of the principles in Holdfast.

[41] I propose to reserve leave for the first defendant to revisit the costs application on the basis of the time bands it has applied. It may be that the additional time it seeks fits within band C. If that is so, the assessment I would then make would be simply based on the appropriateness of a claim for time band C rather than for an increased based on Holdfast. This means that the question of the $12,800 uplift will be deferred. It also means that while I have in principle approved the first defendant’s costs in appendix 1

as presently itemised, the opportunity to revisit the time banding of some items means that no formal findings are being presently made on the amounts the first defendant may recover under appendix 1. This is to allow the first defendant to alter any items it considers should be given time band C. The plaintiff will have the opportunity to address any such alteration if he wishes.

[3] The first defendant was given an opportunity to revisit this issue. Regrettably, when the first defendant did so, the relevant memoranda that the parties filed were not brought to my attention, due to an oversight on the part of the Registry. This has led to a considerable delay in dealing with the outstanding costs issues.

[4] I have now had an opportunity to consider the first defendant’s new memorandum setting out the arguments for an increased award of costs, and the plaintiff’s memorandum in opposition.

[5] There appears to have been a fundamental misunderstanding by the first defendant on the steps it should take to establish an entitlement to increased costs of

$12,800. Rather than approach the issue in accordance with the four steps set out in Holdfast NZ Ltd v Selleys Pty Ltd [2005] NZCA 302; (2005) 17 PRNZ 897 (CA) (“Holdfast”), which is what I had expected the first defendant would do, it has instead simply sought to claim all the steps that it has taken in the proceeding on a category 2C basis. 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”.

[6] I consider that, whatever the skill categorisation might be, when it comes to choice of the applicable time band, there must be something to show that a large amount of time has been spent on a particular step before band C can be applied to it.

[7] As matters stand, I have no explanation to support the contention that each and every step that the first defendant took in this proceeding took so much time that it would warrant time band C being applied to it.

[8] I accept that the nature of the proceeding was such that, in principle, it merited an award of costs that went beyond category 2B. But as I pointed out in the earlier costs judgment, before any adjustment upwards could be made, it was for the first defendant to set out a proper basis for doing so. As noted in the earlier judgment, I could see a basis for increasing the claim for preparation of witness statements from 2B to 2C and, therefore, I was prepared to allow that adjustment. But since I cannot discern from the subsequent memorandum of the first defendant what the basis might be for the other category 2C claims, I propose to disallow them. The first defendant has been given ample opportunity to make its case for an award of costs that represents the time it spent in this proceeding. I am not prepared to extend it a further opportunity to make its case.

[9] I consider, therefore, that, save for the preparation of the witness statements being adjusted to category 2C, the rest of the steps claimed by the first defendant and approved in principle in the first judgment on costs (see [41] therein) will remain at category 2B. Apart from the adjustment for the preparation of witness fees, the costs will be as set out in appendix 1 to the first defendant’s original costs memorandum. This disposes of the first defendant’s application for costs. I leave the arithmetical re-calculation to the first defendant. If a dispute arises regarding the proper outcome of this exercise, the parties have leave to return to Court on this limited issue.

[10] I now turn to deal with the first defendant’s claim for disbursements from the plaintiff. In the first decision on costs, I noted that the disbursements/costs that the first defendant sought were not particularised. The first defendant was given an opportunity to provide those particulars. The second memorandum that the first defendant filed has identified the individual cost items, but there are no invoices to

support them. Before I am prepared to find that the total amount sought ($96,354.64) constitutes reasonably incurred costs, I consider that the first defendant should provide copies of the invoices to the plaintiff and to the Court.

[11] The remaining issue to determine is the appropriate amount of disbursements that the plaintiff is entitled to recover from the second and third defendants. The plaintiff has re-calculated its disbursements in accordance with the directions given in the earlier costs judgment. The re-calculated sum comes to $52,610.92. I am satisfied that this represents a reasonable sum for the plaintiff to recover as disbursements he incurred in this proceeding.

[12] I confirm that the costs the plaintiff is entitled to recover from the second and third defendants is the sum set out in [77] of the earlier costs judgment, being

$43,200.

Duffy J