Powerco Limited v Okey [2014] NZHC 1079 (21 May 2014)

Last Updated: 24 July 2014

IN THE HIGH COURT OF NEW ZEALAND PALMERSTON NORTH REGISTRY

CIV 2013-454-000457 [2014] NZHC 1079

IN THE MATTER OF	An application for enforcement of arbitral award as a judgment pursuant to Article 35(1)(b) of Schedule 1 of the Arbitration Act 1996
BETWEEN	POWERCO LIMITED Applicant
AND	RONALD GORDON OKEY First Respondent
	MCKENZIE MCPHAIL CORPORATE TRUSTEES LIMITED Second Respondent

Hearing:	On the papers
Appearances:	A N Isac for the Applicant C M Robertson for the First and Second Respondents
Judgment:	21 May 2014

_{AWARD OF COSTS JUDGMENT OF ASSOCIATE JUDGE CHRISTIANSEN}

This judgment was delivered by me on

21.05.14 at 4:30pm, pursuant to

Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

_{Date...............}

POWERCO LIMITED v R G OKEY [2014] NZHC 1079 [21 May 2014]

[1] The applicant seeks costs in relation to its application to enter the arbitrator’s second interim costs award as a judgment of the Court. Costs are also sought in respect of the respondents’ application for an order refusing to recognise or enforce that award which application has now been abandoned. In that outcome there is now no opposition to the applicant’s application.

[2] The applicant applies for indemnity costs. It says it is entitled to those according to the terms of an easement instrument governing the rights of the parties. Alternatively, it argues the respondents have acted improperly and frivolously in refusing to pay the costs ordered, and then opposing entry of the award as a judgment. The applicant says the defendant’s actions have contributed unnecessarily to the time or expense involved. It also says the respondents’ opposition was legally and factually untenable.

Background

[3] The costs issue focuses upon the arbitrator’s issue of a second interim award on costs on 6 November 2013 in the sum of $110,943.81, together with a further sum of $19,250 being reimbursement of the arbitrator’s costs.

[4] After some delay the respondents paid the applicant two-thirds of the total costs award but refused to pay costs as ordered in the sum of $37,569.66. The respondents considered those costs were in excess of an “agreed rate” set between counsel for the applicant and the arbitrator at the hearing on 18 September 2012.

[5] In response:

a) The applicant filed a further application to enter the second interim costs award as a judgment.

b) The respondents responded by filing their own application with the Court seeking an order declining recognition and enforcement of the award.

c) The applicant filed an opposition and at the same time filed detailed submissions setting out what it considered were the fundamental legal and factual difficulties the respondents’ application faced.

d) The respondents paid the balance of the costs awarded on 7 March

2014. On 8 April 2014 the respondents formally withdrew their application.

Considerations

[6] The respondents opposition to the application for an order entering the second interim costs award as a judgment, together with the respondents own application for an order refusing recognition of that award, appears based upon an allegation by an officer of the first respondent that at the arbitral hearing on 18

September 2012 he heard “a conversation” between the arbitrator and counsel for the applicant, which he said concluded an agreement that the hourly rate for future attendances at the arbitral proceedings chargeable by counsel would be no greater than $265 per hour (plus GST).

[7] There was no other evidence to support that claim. In a written response, the arbitrator rejected it.

[8] It is clear by the terms of the relevant easement instrument that should the matter proceed to arbitration that any question of payment of costs would be calculated on a solicitor client basis.

[9] Rule 14.6(4)(e) of the High Court Rules allows the Court to order the payment of indemnity costs if such is provided for by any contract or deed.

[10] Whilst the terms of the parties easement instrument does not explicitly refer to the costs of enforcement of arbitral awards, the Court accepts the submission for the applicant that there is no principle distinction between a costs award in the arbitration, and a costs award on an application to have that arbitral award entered as a judgment where the respondent has not complied with the award.

[11] The Court agrees in the circumstances of this case the applicant should not be placed in any worse position because of the respondent’s intransigence in complying with the arbitral award and the costs ordered to be paid by it.

[12] Costs including disbursements calculated upon an indemnity basis amount to

$17,882. Costs calculated on a 2B basis, together with disbursements, amount to

$14,754.

Conclusion

[13] The respondents’ opposition to the application for entering of the award as a judgment was misconceived. The application for indemnity costs is supported by reference to the parties’ contractual obligations but also because it appears the respondents have acted improperly and/or have unnecessarily delayed the applicant’s access to the judgment and costs which it was entitled to.

Judgment

[14] Costs upon the applicant’s application for entering of the second interim costs award as a judgment, and upon the respondents’ application in opposition are fixed in the sum of $17,882 (inclusive of disbursements).

[15] No other order for costs shall be made for attendances in connection with arguing the issue of costs dealt with by this judgment.

Associate Judge Christiansen