Russell v Commissioner of Inland Revenue [2013] NZHC 2078 (15 August 2013)

Last Updated: 27 August 2013

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV 2009-404-006653 [2013] NZHC 2078

UNDER the Taxation Review Authorities Act 1994

BETWEEN JOHN GEORGE RUSSELL Appellant

AND THE COMMISSIONER OF INLAND REVENUE

Respondent

Hearing: (On the papers) Appearances: SRG Judd for the Appellant

M J Ruffin and R J Wallace for the Respondent

Judgment: 15 August 2013

_{[INTERIM COSTS] JUDGMENT OF WYLIE J}

This judgment was delivered by Justice Wylie on 15 August 2013 at 4.00 pm

Pursuant to r 11.5 of the High Court Rules

Registrar/Deputy Registrar

_Date:

RUSSELL v COMMISSIONER OF INLAND REVENUE [2013] NZHC 2078 [15 August 2013]

[1] Issuing this interim costs judgment is a matter of some embarrassment.

[2] As long ago as 3 September 2010, I issued a substantive judgment dismissing an appeal brought by Mr Russell against a decision of the Taxation Review Authority. I recorded that the Commissioner, as the successful party, was entitled to reasonable costs and disbursements, and invited Mr Ruffin, as counsel, to file a memorandum in this regard within 10 working days of the date of my decision if the Commissioner was unable to reach agreement with Mr Russell. I gave Mr Russell a further 10 working days to respond.

[3] The Commissioner was unable to liaise with Mr Russell, who was unwell at the time, and to comply with the timetable, on 20 September 2010, Mr Ruffin filed a memorandum seeking costs on a 2B basis, but not specifying the amount sought.

[4] I was unaware that this memorandum had been filed. It was only brought to my attention yesterday.

[5] Mr Russell took no steps.

[6] Nor did registry staff take any steps to pursue Mr Russell. It seems that the Commissioner’s memorandum was simply overlooked. The matter only came to a head when a solicitor employed by the Commissioner sent an email to the Registrar in October 2012. The email queried whether or not I had ever issued a costs judgment. For some reason unknown to me, registry staff in Auckland still did not respond to the matter promptly.

[7] Notwithstanding the quite inordinate delay, it remains my responsibility to make a costs order in regard to this matter.

[8] The Commissioner seeks costs on a 2B basis, together with reasonable disbursements.

[9] Fixing costs on a 2B basis is, in my judgment, eminently fair. The factual and legal arguments were not simple. Counsel of at least average skill and

experience was required, and again, at the very least, normal amounts of time would have been required to deal with each step taken.

[10] The Commissioner also seeks approval for second counsel. In my view, this is also appropriate, given the enormous amount of documentation involved in this matter, and the complexities that that produced. I certify for second counsel.

[11] The category 2 rate was $1,600 until 24 May 2010, and thereafter, until

14 June 2012, $1,880. The High Court Amendment Rules 2010 (SR 2010/88) provided both in reg 5.2 and in Schedule 2, that in relation to the step of preparing for the hearing, the date on which the work was deemed to have been taken was the first day of the hearing. Here, the first day of the hearing was 26 July 2010. It follows that the rate in force between May 2010 and June 2012 applies for both preparation costs, and for the hearing time taken. I record that the hearing lasted five and a half days.

[12] Further, the Commissioner seeks the costs of preparing the common bundle. Those costs will be significant. The bundle comprised 52 Eastlight folders of key documents.

[13] In a minute issued by me dated 3 March 2010, I directed that Mr Russell, as the appellant, was to file and serve the common bundle. I also directed that the costs of photocopying the materials should be met jointly by the parties, and that liability for the costs incurred would be determined when the appeal was heard.

[14] I am advised by Mr Ruffin, who appeared for the Commissioner, that in the event, the photocopying costs were not shared. Rather, they were met by the Commissioner.

[15] The common bundle was necessary for the appeal, and I direct that the costs of photocopying and preparing the bundle should lie with the appellant.

[16] Mr Ruffin did not annex to his costs submissions a schedule of the actual costs claimed by the Commissioner, calculated on a 2B basis. That was

understandable. As noted, the Commissioner’s memorandum was filed to comply with the timetable put in place by me. At that stage, Mr Ruffin anticipated that Mr Russell might agree to 2B costs. He had not, however, been able to get Mr Russell’s formal consent. Mr Russell did not, however, respond and it seems that the matter was never chased up.

[17] Accordingly, I issue this judgment as an interim judgment. I fix costs against Mr Russell and in favour of the Commissioner on a 2B basis, and certify for second counsel. I also direct that the photocopying costs incurred in preparing the common bundle are to be met by Mr Russell.

[18] If the parties are unable to agree on the quantum of costs calculated on this basis, the Commissioner is invited to file and serve a schedule indicating the actual costs claimed. Any such schedule is to be filed and served within 10 working days. Any response from Mr Russell is to be filed and served within a further 10 working

_{days. I will then finalise quantum.}

Wylie J