Opua Coastal Estate Limited (in liquidation) v Mulholland [2014] NZHC 1467 (27 June 2014)

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BETWEEN	OPUA COASTAL ESTATE LIMITED (IN LIQUIDATION) First Plaintiff HENRY DAVID LEVIN and VIVIEN JUDITH MADSEN-RIES Second Plaintiffs
AND	WILLIAM FREDERICK MULHOLLAND First Defendant JOHN LESLIE NORTON Second Defendant

Hearing:	(On the papers)
Counsel:	P C Murray and K H Kuang for Plaintiffs S H Barter and K L Blackmore for Defendants
_Judgment:	_{27 June 2014}

This judgment was delivered by Justice Peters on 27 June 2014 at 11.30 am pursuant to r 11.5 of the High Court Rules

OPUA COASTAL ESTATE LIMITED (IN LIQ) v MULHOLLAND [2014] NZHC 1467 [27 June 2014]

[2] The Plaintiffs seek costs in respect of two distinct but related matters. The first concerns costs arising on two interlocutory applications and the second is for wasted costs, being costs thrown away, or incurred, as a result of an adjournment of the trial date.

[3] This matter was due to go to trial for five days commencing 7 April 2014. On or about 24 January 2014, the Defendants applied for leave to amend their statement of defence. The effect of the proposed amendments was to enlarge the material in issue on affirmative defences pleaded in the defence. Leave was required because the case had been set down for trial. In fact the application was made on the very day that the Plaintiffs were due to be serving their factual and expert evidence.

[4] The Plaintiffs opposed leave to amend being given to the Defendants, an opposition that was only to be expected given the stage of the proceedings. Recognising, however, the possibility that leave would be granted, the Plaintiffs filed an application for amended trial directions.

[5] The applications came before me on 19 February 2014. Counsel for the Plaintiffs was very much opposed to leave being given. Amongst other things he was clear that the amendments would require a postponement of the trial date and indeed greater hearing time than had been allocated.

[6] For his part, counsel for the Defendants (recently instructed), suggested that no adjournment was required and that the parties could still achieve the trial date.

[7] Ultimately, the Plaintiffs decided that they would not object to leave being granted, on the basis that it was better that the Defendants were able to defend the case as they wished, rather than contend at a later date that they had been deprived of an opportunity to do so.

terms of the Defendants’ application (an indulgence they were fortunate to obtain),

vacated the trial on 7 April 2014 and allocated 6 October 2014 as the new date. I

[9] I made these orders on the basis that the Defendants would be required to pay the costs caused by their lateness. Counsel for the Defendants accepted that readily enough at the time, although the tone and content of his recent submissions on costs indicate that the Defendants now wish to resile from that agreement.

[10] I am satisfied that the Plaintiffs are entitled to costs as a matter of principle. I am also satisfied that costs should be resolved now. Counsel for the Defendants proposed that the matter should be delayed, as the Defendants have made a Calderbank offer to the Plaintiffs. I do not consider that affects the matter. It is usually desirable to determine costs as quickly as possible.

[11] The remainder of this judgment concerns quantum. The orders made below follow counsel for the Plaintiffs’ memorandum dated 14 March 2014 and counsel for the Defendants’ dated 21 March 2014.

[12] The Plaintiffs submit that they are entitled to costs on a 2B basis on each interlocutory application, these totalling $11,343. They have attached a schedule to their submissions setting out how this amount is made up.

[13] The Defendants’ first submission is that there is no evidence that the scale costs that the Plaintiffs claim are less than their actual costs. I have no doubt that the Plaintiffs’ actual costs would have exceeded the scale amounts I propose to allow.

[14] Secondly, in [6] and [7] of their memorandum, the Defendants object to some particular items and/or quantum that the Plaintiffs claim.

[15] Having considered the parties’ memoranda, I am satisfied that the Plaintiffs are entitled to the items they seek except the costs sought in respect of the memorandum of counsel dated 28 January 2014 and the preparation of written submissions in support of the application for directions. I accept the Defendants’

submission that the memorandum of 28 January was unnecessary. Moreover, I do not consider that the Plaintiffs were required to prepare a written submission in support of their application for directions.

[16] One item in respect of which the Plaintiffs have claimed costs is a joint memorandum of 11 February 2014. The Defendants contend that item was unnecessary and no sum should be allowed. Counsel for the Defendants signed that memorandum for his clients, so presumably he thought it served a purpose at the time.

[17] The Plaintiffs are entitled to the costs sought, with the exception of those to which I have referred. The Plaintiffs should prepare a revised schedule and submit it to the Defendants, and to the Court if any issues arise or if they wish the order to refer to the particular quantum allowed.

[18] The Plaintiffs seek an award of $18,874.55, being $7,462.50 for wasted legal costs incurred in preparing the Plaintiffs’ briefs, list of issues and the common bundle, and $11,412.05 for wasted disbursements to their expert witness, Mr Christopher Duffy.

[19] As I have said above, the amendments that the Defendants were permitted to make enlarged their defence. This is not a case where a party has changed their position, and thereby wasted prior work by the other party or parties. That said, it is inevitable that a plaintiff’s costs are increased if a defence is expanded at such a late stage. To take an example that arises in the present case, legal advisers will be required to revisit witnesses to obtain their evidence on new matters.

[20] At the date the Defendants sought leave to amend, the Plaintiffs were to serve their briefs of evidence and a proposed index of documents. After that, the Defendants were to serve their briefs and index by 21 February 2014. The Plaintiffs were then to prepare a final index of documents for the common bundle by

28 February 2014 and the common bundle itself by 7 March 2014. The Plaintiffs’

[21] Given this timetable, I accept that the late amendment would have increased the legal costs the Plaintiffs incurred in preparing briefs of evidence and the index.

[22] The authorities cited by the Plaintiffs in their memorandum make it clear that the quantum of an award for wasted costs is a matter of broad impression and judgment.¹

[23] To cover both matters referred to in [21], I award 75 per cent of the costs allowed for the preparation of briefs of evidence, on a 2B basis.

[24] The Plaintiffs also seek some recompense for the expense of their expert witness, Mr Duffy. They advise that Mr Duffy has been engaged to consider whether the Defendants’ have breached one or more of their duties as directors. Mr Duffy will need to revisit his analysis in light of the amended defence, to see whether it still holds good.

[25] The Plaintiffs seek 75 per cent of Mr Duffy’s actual expenditure to date, being $11,412.05. I consider this claim to be excessive. Given that the matter is one of impression, in my view an award of $5,000 is sufficient to cover any additional expense arising from the expert’s reassessment.

[26] I do not consider that any additional award on account of wasted costs is required as I am not satisfied that any other expense or duplication is likely to be occasioned by the late amendments.

[27] The Plaintiffs have also sought costs on this application. They have succeeded in part only. Costs are to lie where they fall.

High Court of New Zealand Decisions

Opua Coastal Estate Limited (in liquidation) v Mulholland [2014] NZHC 1467 (27 June 2014)