Gregan v Martin [2012] NZHC 3021 (14 November 2012)

Last Updated: 21 November 2012

IN THE HIGH COURT OF NEW ZEALAND HAMILTON REGISTRY

CIV-2012-419-1254 [2012] NZHC 3021

BETWEEN DENNIS AND ANNE GREGAN Plaintiffs

AND RODNEY JAMES MARTIN AND MARILYN ROSE MARTIN

First Defendants

AND JOHN LARMER Second Defendant

(On the papers)

Counsel: MS McKechnie for plaintiffs

C Muston for first defendants

Judgment: 14 November 2012

JUDGMENT OF ASSOCIATE JUDGE FAIRE [on costs]

Solicitors: Bell & Graham, PO Box 184, Matamata

C Muston, PO Box 1905, Whangarei 0140

GREGAN V MARTIN HC HAM CIV-2012-419-1254 [14 November 2012]

[1] The plaintiffs sought in this proceeding orders:

(a) That the purported appointment of the second defendants as an arbitrator be set aside;

(b) That the first defendants be directed to follow the procedures laid down in clause 39 and 40 of the sharemilking agreement; and

(c) That an injunction do issue restraining the second defendant from embarking on the arbitration.

[2] An application to abridge time for the filing of a statement of defence to seven days was made and was referred to Venning J. On 17 September 2012 he made orders abridging the time for the defendants to file and serve any statement of defence and requiring it to be filed and served seven working days following service. In addition, he directed that a telephone conference be held in the week of 1 October

2012 so that any further directions could be made.

[3] The file was next referred to Lang J as a result of Venning J’s direction. His Honour issued a minute convening a telephone conference with counsel at 9:45am on 5 October 2012.

[4] As a result of his Honour’s minute memoranda were filed by the parties. They were considered by Lang J who recorded the following in a minute dated

5 October 2012:

[2] The first defendants now accept that they did not follow the process required by the share-milking agreement for the appointment of an arbitrator. For that reason, they do not oppose an order being made setting the appointment aside. I make an order accordingly.

[3] the only issue remaining is that of costs. The memorandum of counsel for the plaintiffs contains a claim for costs according to scale, together with an uplift for urgency.

[4] I direct that counsel for the first defendants is to file a memorandum in response within 14 days. Any

memorandum in reply is to be filed and served within seven days thereafter. The file is then to be referred to the Associate Judge, who can determine the issue of costs on the papers.

[5] The file has now been referred to me to consider the question of costs. Memoranda have been filed on the first defendants’ behalf and a reply has been filed on the plaintiffs’ behalf. In addition, I have considered the memorandum of the plaintiffs for the conference on 5 October 2012 which sought costs on a 2B basis plus an uplift for urgency.

[6] Counsel’s calculation based on Category 2 Band B was $6,200, although it was not particularised. He sought an increase to reflect the urgency of the application to a figure of $8,000. He also sought disbursements covering the filing fees and the service fees.

[7] Mr Muston, in his memorandum in opposition:

(a) Accepted that the first defendants should pay costs to plaintiffs;

(b) Submitted that it could be dealt with by junior counsel and on a

Category 1 basis and that Band A should apply for each step; and

(c) Submitted that the total allowance based on that calculation was

$2,508. He drew attention to the fact that no information was available as to the actual costs incurred by the plaintiffs.

[8] In respect of the last matter, I required counsel for the plaintiffs to clarify that the actual costs incurred by the plaintiffs for the services provided by their legal advisers exceed what was sought as a cost order on the plaintiffs’ behalf. I also required confirmation as to the plaintiffs’ position in relation to GST. Mr McKechnie has confirmed that the plaintiffs are registered for GST purposes. Importantly, he has confirmed that the net costs contained in the invoice issued by their legal advisers for the purposes of this proceeding significantly exceeds the amount of costs that he has claimed in the memoranda that have been filed.

The principles applicable in awarding costs

[9] 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.[1] In Mansfield Drycleaners Ltd v Quinny’s Drycleaning (Dentice Drycleaning Upper Hutt) Ltd[2] 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.[3]

[10] 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.

[11] I have considered the proceedings that have been filed and, in my view, this is appropriately a Category 2 and not a Category 1 case. The relief and the circumstances in which the proceeding had to be prepared all justify the conclusion in terms of r 14.3 that this was a proceeding of average complexity requiring counsel of skill and experience considered average in the High Court, thereby fitting within

_{the definition of a Category 2 proceeding. I hold accordingly.}

[12] The next step in the inquiry is to determine the appropriate Band in respect of the items that are applicable in Schedule 3. That makes an allowance collectively for the commence proceeding, receiving instructions, preparing and filing and service of the statement of claim and notice of proceeding, including the preparation of an interlocutory application. I have carefully considered the papers that have been prepared and I consider that Band B in respect of each of the steps that have been taken is appropriate, save for the memorandum filed in support of the interlocutory application which I consider should be allowed on a Band A basis.

[13] It is appropriate that I record that each step taken in this proceeding has been taken subsequent to the amendment to the High Court Rules introduced by r 4 of the High Court Amendment Rules 2012 – SR2012/93, which introduced an amended Second Schedule. That means that the daily rate for a Category 2 case is $1,990.

[14] What is appropriate, having regard to this analysis are allowances calculated by reference to the paragraph numbers in Schedule 3, allowing for the following:

Band Days Cost

_$

1. Commencement of the proceedings

B 3 5,970.00

22. Filing interlocutory application

B .6 1,194.00

24 Preparation of memorandum accompanying interlocutory application

A .5 995.00

_Total $8,159.00

[15] My analysis produces a figure based on Category 2 and with the Band as indicated above which is higher than that contained in the plaintiffs’ memorandum. It is necessary, however, to consider a further aspect. That is whether there should be any uplift. That necessarily requires a consideration of r 14.6. I have given careful consideration to r 14.6 and in particular the grounds set out in r 14.6(3). I am not

satisfied that an additional allowance should be made on account of any of the matters that are referred to in that part of the Rule.

[16] Mr McKechnie sought costs of $8,000 in his memoranda. Having regard to the analysis I have carried out, that figure is appropriate and I adopt it although for different reasons than those advanced by counsel.

[17] I consider that disbursements should be fixed by the Registrar and should necessarily include the filing fees and the reasonable fees as determined by the Registrar in respect of the need to serve the proceedings on the defendants. Accordingly that will be taken into account in the order that is made.

Orders

[18] I order the first defendants pay costs of $8,000 plus reasonable disbursements as fixed by the Registrar.

JA Faire
Associate Judge

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[1] _{Glaister v Amalgamated Dairies Ltd [2004] 2 NZLR 606 at [19].}

[2] Mansfield Drycleaners Ltd v Quinny’s Drycleaning (Dentice Drycleaning Upper Hutt) Ltd (2002)

_{[2002] NZCA 277; 16 PRNZ 662 at 668).}

[3] Above n 1 at 610 [14].