Gerbic v Smith [2013] NZHC 3302 (10 December 2013)

Last Updated: 5 February 2014

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2012-004-002199 [2013] NZHC 3302

BETWEEN MICHAEL GERBIC Plaintiff

AND ROBERT LESLIE SMITH Defendant

Hearing: (On the papers) Counsel: P Dalkie for Plaintiff

J E M Lethbridge for Defendant

Judgment: 10 December 2013

_{COSTS JUDGMENT OF VENNING J}

This judgment was delivered by me on 10 December 2013 at 4.00 pm, pursuant to Rule 11.5 of the

High Court Rules.

Registrar/Deputy Registrar

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

Solicitors: McDonald Bailey, Auckland

Grove Darlow & Partners, Auckland

Copy to: P F Dalkie, Auckland

GERBIC v SMITH [2013] NZHC 3302 [10 December 2013]

Introduction

[1] On 19 November 2013 on day two of a trial scheduled for five days the plaintiff discontinued in accordance with r 15.19. Costs were reserved to be dealt with by an exchange of memoranda. I have received memoranda from both parties.

[2] For the defendant Ms Lethbridge seeks: (a) indemnity costs; or

(b) increased costs on a 2B basis with a 50% uplift; or

(c) costs on a 2B basis in the High Court.

[3] For the plaintiff Mr Dalkie accepts that costs are payable on the discontinuance but submits they should be paid both at the rate and in accordance with the District Court scale. The plaintiff accepts the disbursements claimed of

$7,533.75 are payable.

Indemnity costs

[4] The defendant has incurred solicitor/client costs of in excess of $73,000. Ms Lethbridge submitted the plaintiff’s case from the outset was misconceived. The allegations that the boat in issue was rotten were without foundation and not supported by the evidence called by the plaintiff. The plaintiff had failed to disclose work he had carried out on the boat. Ms Lethbridge also criticised the general conduct of the plaintiff ’s case through preparation for trial and at trial.

[5] None of the matters that Ms Lethbridge refer to support indemnity costs in accordance with r 14.6(4) of the Rules. Further, I do not accept that in pursuing the case in the way he did the plaintiff acted badly or very unreasonably as discussed in

_{Bradbury v Westpac.}¹

¹ Bradbury v Westpac [2009] NZCA 234; (2009) 19 PRNZ 385 at 27.

Increased costs

[6] Next Ms Lethbridge submitted the defendant was entitled to increased costs under r 14.6(1)(a). The Court may make an order for increased costs in this case if satisfied that the plaintiff contributed unnecessarily to the time or expense of the proceeding or a step in it by failing to comply with rules or directions of the Court.

[7] I accept that the plaintiff failed to comply with the timetable orders of the Court. Indeed the plaintiff presented the Court and the defendant with an amended statement of claim at the outset of the hearing, well after the close of pleadings date. There was also the issue concerning the samples taken from the boat immediately prior to trial. Initially only a limited number of the samples were disclosed. I agree with Ms Lethbridge that there should be some sanction applied to reflect that the plaintiff has failed to comply with the Rules and directions of the Court.

[8] However, I do not accept that the failure is egregious. I do not consider the plaintiff’s actions support the uplift sought by Ms Lethbridge. For the reasons that follow I consider that generally, District Court costs should apply. In the present case I am satisfied it is sufficient sanction for the plaintiff’s actions if the defendant receives costs to scale for each of the steps taken in the proceeding but with the time allowance for those steps calculated in accordance with the time allowance in the High Court for the steps, rather than in the District Court as argued for by Mr Dalkie for the plaintiff.

Scale costs

[9] Mr Dalkie submitted strongly that District Court costs should be applied, both in terms of the rate and the time allocation. He made the point fairly that the plaintiff had commenced these proceedings in the District Court. They were transferred to this Court at the request of the defendant. When initially transferred Associate Judge Sargisson made the point at the initial conference in this Court that:

[2] Category 2 is appropriate for costs purposes with the qualification that the defendant, if successful, should anticipate the possibility that the Court may award costs in his favour in accordance with the District Court scale rather than the High Court scale. This is because the plaintiff seeks relief that is well within the District Court’s jurisdiction and commenced his

proceeding in that Court. The transfer has occurred on the defendant’s

election.

[10] I consider there to be considerable force in that observation. The defendant has been well aware that that was a possible outcome from the time the proceedings were transferred to this Court at the defendant’s election. I do not consider the fact that the plaintiff has amended his claim (to a figure still within the District Court jurisdiction) and has taken other steps in this Court to affect that observation.

Conclusion

[11] In my judgment the fair outcome in this proceeding is to award costs to scale but to allow all the steps in the proceeding to be allocated the time fixed by the High Court scale but with the daily recovery rate the rate in the District Court of $1,550.

[12] That approach recognises that, to the extent the defendant has spent time on the proceedings because of the plaintiff’s default that time is to have the High Court time allocation but it also recognises that these proceedings were originally in the District Court but the defendant chose to transfer them to this Court. From an early stage the defendant was advised that the scale costs in the District Court may be applicable.

Result

[13] The end result is that the defendant is to have costs against the plaintiff in the sum of $32,550 (calculated at 21 days x $1,550) together with disbursements of

_{$7,533.75, in total $40,083.75.}

Venning J