Marley New Zealand Limited v Skellerup Rubber Services Limited [2013] NZHC 3040 (18 November 2013)

Last Updated: 10 February 2014

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2012-404-001857 [2013] NZHC 3040

BETWEEN MARLEY NEW ZEALAND LIMITED Plaintiff

AND SKELLERUP RUBBER SERVICES LIMITED

Defendant

Hearing: (On the papers)

Counsel: J R Billington QC, R M Gapes and J W S Baigent for Plaintiff

J E Hodder QC and J W J Graham for Defendant

Judgment: 18 November 2013

_{COSTS JUDGMENT OF VENNING J}

This judgment was delivered by me on 18 November 2013 at 12.15 pm, pursuant to Rule 11.5 of the

High Court Rules.

Registrar/Deputy Registrar

Date...............

Solicitors: Simpson Grierson, Auckland

Chapman Tripp, Auckland

Copy to: J R Billington QC, Auckland

J E Hodder QC, Wellington

MARLEY NZ LTD v SKELLERUP RUBBER SERVICES LTD [2013] NZHC 3040 [18 November 2013]

Introduction

[1] In a minute issued on 24 October 2013, I confirmed the adjournment of the fixture in this case which had been scheduled for four weeks to commence on 30

October 2013. At Marley’s request the fixture was vacated for the reasons set out in that minute. Costs were reserved to be dealt with by way of exchange of memoranda on the basis that, as a condition of the adjournment, Marley was to pay a contribution to Skellerup’s wasted costs of preparation of both its legal advisers and experts.

The costs sought

[2] Skellerup now seeks costs in the sum of $34,447.69 calculated as follows:

Wasted legal costs (50% allowance) $25,000.00

Costs on the application to adjourn $3,084.50

Disbursements on the application $95.65

Wasted expert disbursements (50% allowance) $4,684.78

Wasted airfare and accommodation $1,582.76

Total: $34,447.69

Marley’s response

[3] In the reply memorandum filed for Marley, counsel confirms that Marley accepts the costs and disbursements on the application to adjourn, the figures for wasted experts’ disbursements, wasted airfare and accommodation and does not dispute those sums. However, Marley takes issue with the claim for $25,000 for 50 per cent of the wasted legal costs.

Skellerup’s argument

[4] Skellerup supports the claim for $25,000 in the following way. Skellerup’s actual legal costs for the period between 8 October and 23 October, being between finalisation of its briefs and the granting of the adjournment, were in excess of

$90,000 excluding GST and disbursements. For a period of 10 working days Skellerup’s actual legal costs were around $9,000 a day. On that basis counsel submits that Skellerup would potentially lose around $45,000 if one-half of the costs are wasted as a result of the adjournment with the required duplication of effort to gear up again for trial at a later date.

[5] Mr Hodder submits that the High Court scale costs do not adequately reflect the intensity of preparation for a long and complex trial, noting that calculated variously between a 2B basis through to a 3C basis, the resultant costs are between

$9,950 and $26,460. He submits that 3C categorisation of approximately $26,460 is most realistic.

[6] Fifty per cent of these figures and Skellerup’s actual costs produces a range of between $4,975 to $45,000. The mid-point is approximately $25,000 which is, Skellerup submits, a fair outcome. Counsel refers to the decision of Highley Ltd v Vodafone New Zealand Ltd & Anor¹ where a case had to be adjourned part-heard and the Court granted a 50 per cent uplift on a 2B calculation of 10 days’ preparation time making a total of $28,200. Mr Hodder submits that on a similar calculation the

defendant spent 10 working days preparing for trial. If 50 per cent of that time was wasted on a category 3 approach and with a 50 per cent uplift the amount reached is

$22,050 which is broadly consistent with the $25,000 sought.

Marley’s position

[7] Counsel for Marley, however, points out that this case has been categorised as category 2. He submits that, even allowing time band C full scale costs for preparation would amount to $17,910. One-half of that sum, namely $8,955 is the appropriate figure for Skellerup’s wasted costs.

[8] Counsel supports that calculation by reference to the decisions of Fu Hao

_{Construction Limited v Landco Albany and Jeffreys v Morgenstern where the Court}

¹ Highley Ltd v Vodafone New Zealand Ltd & Anor HC Auckland CIV-2006-404-2870, 6

September 2011.

adjourned trials before they commenced.² The Court allowed 50 per cent of the scale costs as the appropriate allowance for wasted costs.

Decision

[9] Costs are at the discretion of the Court.³ While accepting that the determination of costs should be predictable and expeditious⁴ in the present case the costs incurred by Skellerup have arisen in a situation which is generally not contemplated and provided for by the Rules. The Court must fix an award of costs

appropriate in the particular circumstances of the case before it. There is limited assistance to be had from other cases as the situations where cases are adjourned vary considerably.

[10] This was a four week trial involving a claim of in excess of $7 million and expert evidence. The application for adjournment came very late in the piece. As noted in the decision granting the adjournment, the adjournment was granted reluctantly, and on the basis that there would be realistic cost consequences to Marley, given that the adjournment arose as a consequence of Marley’s failure to appreciate the issue taken by Skellerup which had been flagged in Skellerup’s pleading, albeit not apprehended by Marley.

[11] In the circumstances of this particular case I do not consider that one-half of the scale costs, even on a 3C basis, is sufficient to reflect the inconvenience to Skellerup and the wasted costs incurred by it in preparation for the October trial. Nor would a costs award at the level suggested by Marley maintain the credibility of the Court’s processes and authority.

[12] I consider that this is a case where some other reason exists which justifies the Court making an order for increased costs.⁵ While I accept that in the decision granting the adjournment I indicated 50 per cent of the wasted costs might be

_{appropriate I did not address my mind to whether those were actual solicitor/client}

² Fu Hao Construction Limited v Landco Albany HC Auckland CIV-2004-404-6608, 23 May

_{2008; and Jeffreys v Morgenstern [2013] NZHC 1361.}

³ _{High Court Rules, r 14.1.}

⁴ _{High Court Rules, r 14.2.}

⁵ High Court Rules, r 14.63(d).

costs or scale costs. Having regard to the scale costs outcome I do not consider that to be sufficient. In the particular circumstances of this case I accept that a contribution to the wasted legal costs in the sum of $25,000 as sought by Skellerup to be appropriate.

Result

[13] There will be an order for costs in Skellerup’s favour against Marley in the sum of $34,447.69.

Venning J