Norfolk Nominees Limited v King [2014] NZHC 278 (25 February 2014)

Last Updated: 15 April 2014

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

CIV-2012-409-002082 [2014] NZHC 278

BETWEEN	NORFOLK NOMINEES LIMITED Plaintiff
AND	PAUL ANTHONY KING Defendant

Submissions in Writing:	Plaintiff's memorandum dated 31 July 2013; Email communication from defendant dated 9 August 2013; Defendant's memorandum dated 29 October 2013; Plaintiff’s memorandum dated 20 December 2013
Appearances:	B A Vautier for Plaintiff Defendant (P A King in person)
Judgment:	25 February 2014

JUDGMENT OF ASSOCIATE JUDGE OSBORNE

_{fixing costs and disbursements}

Introduction

[1] By a summary judgment on 5 March 2013,¹ this Court ordered Mr King to vacate his Christchurch property and give possession of it to his mortgagee, Norfolk Nominees.

[2] By a judgment on 20 March 2013, the Court dismissed Mr King’s application for a stay of the summary judgment pending appeal (the stay judgment).²

[3] In the summary judgment, I reserved costs. I observed³ that the contractual entitlement of Norfolk Nominees was correctly identified in the statement of claim

_{arising under a clause in the mortgage documentation, entitling Norfolk Nominees to}

¹ _{Norfolk Nominees Ltd v King [2013] NZHC 398.}

² _{Norfolk Nominees Ltd v King [2013] NZHC 556.}

³ _{Norfolk Nominees Ltd v King, above n 1, at [98].}

NORFOLK NOMINEES LIMITED v KING [2014] NZHC 278 [25 February 2014]

recovery of solicitor/client costs. However counsel at the hearing had not addressed me on the issue of costs and I therefore reserved those.

[4] In the stay judgment, I determined costs at the time. Mr King had accepted at the hearing that if my judgment were to dismiss the application that costs would follow the event and Norfolk Nominees would become entitled to its reasonable solicitor/client costs.⁴ I ordered that the defendant pay the reasonable solicitor/client costs of the plaintiff of and incidental to the application in a sum to be fixed by the Court.⁵ I gave directions as to the filing of submissions.

The costs issues

[5] There are therefore two sets of costs issues to be dealt with in relation to the two judgments:

(a) On the summary judgment – should there be an order as to payment of costs and, if so, on what basis and in what amount?

(b) In relation to the stay judgment, what sum should be fixed as representing the reasonable solicitor/client costs of the plaintiff of the stay application and judgment?

Submissions and material filed

[6] For Norfolk Nominees, Mr Vautier provided with his memorandum three categories of documents.

[7] First, he provided the tax invoices rendered by Glaister Ennor to Norfolk

Nominees between September 2012 and March 2013.

[8] Secondly, he provided a schedule which accurately summarised the fee notes breaking the figures down into fee content, GST content and disbursement content. It was explained that the total fees and disbursements to Norfolk Nominees in the

_{relevant period related not only to the summary judgment proceeding but also to}

⁴ _{Norfolk Nominees Ltd v King, above n 2, at [49].}

⁵ At [52](b).

other ongoing matters between Norfolk Nominees and Mr King, which did not relate directly to the summary judgment proceeding and are therefore not recoverable as costs in this judgment.

[9] Thirdly, therefore, Mr Vautier provided an itemised schedule of attendances of Glaister Ennor with specific relation to the summary judgment proceeding. That four-paged schedule identifies a total fee in relation to this summary judgment proceeding of $38,675 (exclusive of GST and disbursements).

[10] Mr Vautier refers to the contractual arrangements between Glaister Ennor and Norfolk Nominees as permitting Glaister Ennor to include provision for a 6 percent uplift to cover general disbursements and administration costs. Mr Vautier notes also the requirement upon Glaister Ennor to take into account, when setting a fee, the various factors prescribed by Rule 9.1 Lawyers and Conveyancers Act (Lawyers’ Conduct and Client Care Rules 2008).

[11] Having set out those considerations, Mr Vautier submits that the appropriate figure for an award of reasonable solicitor/client costs should be $47,150 (inclusive of GST). That figure represents 106 percent of the fees identified in the Glaister Ennor schedule, together with GST.

[12] In addition Norfolk Nominees seeks disbursements of $2,423.20.

Norfolk Nominees’ contractual entitlement to solicitor/client costs

[13] Mr Vautier invokes r 14.6(4)(e) High Court Rules which entitles the Court to order a party to pay indemnity costs if the party claiming costs is entitled to indemnity costs under a contract.

[14] In making orders of indemnity costs, the Court is permitted to order payment of costs “reasonably incurred” pursuant to r 14.6(1)(b). The Court of Appeal in Frater Williams & Co Ltd v Australian Guarantee Corporation (NZ) Ltd⁶

_{emphasised that the word “reasonable” does not import a discretion in the usual}

⁶ Frater Williams & Co Ltd v Australian Guarantee Corporation (NZ) Ltd (1994) 2 NZ ConvC

191, 873 (CA) at 191, 887.

sense (because a party has already contractually bound itself to pay the other party’s full solicitor/client costs).

[15] The Court is required to make an objective assessment of a number of matters:⁷

(a) what tasks attract a costs indemnity on a proper construction of the contract;

(b) whether the tasks undertaken were those contemplated in the contract;

(c) whether the steps undertaken were reasonably necessary in pursuance of those tasks;

(d) whether the rate at which the steps were charged was reasonable having regard to the principles normally applicable to solicitor/client costs; and

(e) whether any other principles drawn from the general law of contract should in whole or in part deny the claimant its prima facie right to judgment.

[16] Clause 23(a)(ii) of the mortgage which Mr King granted to Norfolk

Nominees required Mr King to pay to Norfolk Nominees upon demand:

The mortgagee’s legal costs (as between solicitor and client) for:

...

(2) Costs on default: legal services arising from or relating to any default under this mortgage or the enforcement or exercise or attempted enforcement or exercise of any of the mortgagee’s rights, remedies and powers under this mortgage ...

[17] Mr Vautier submits (correctly) that Norfolk Nominees was in its application for summary judgment seeking to enforce and exercise its mortgagee’s rights and remedies. Norfolk Nominees in its statement of claim expressly relied upon its

contractual entitlement to solicitor/client costs. Mr King did not in his arguments in opposition make any submissions as to the inappropriateness of an indemnity costs award.

Mr King’s response on the costs

[18] Mr Vautier filed written submissions as directed in the summary judgment, containing the submissions which I have summarised.

[19] Mr King did not initially file submissions. Instead, after the time directed for the filing of submissions Mr King sent an email to the Court. The gist of the email was that Mr King has made a complaint in relation to “gross overcharging” under the Lawyers and Conveyancers Act 2006. Mr King refers to s 161(1) of the Act which stays proceedings for the recovery of the amount of a subject bill until after a complaint under the Act has been finally disposed of.

[20] On 22 October 2013, I issued a Minute requiring that I be provided with information relating to any complaint filed by Mr King. Mr King provided details by a memorandum dated 29 October 2013.

[21] I have since been provided with a copy of the Notice of Decision of the Auckland Standards Committee 3 dated 20 December 2013. The Standards Committee considered that no further action was appropriate in relation to Mr King’s complaint as to overcharging because the costs in question were matters before this Court and were the subject of orders or determinations of this Court with which the Committee should not interfere.

[22] By a memorandum dated 20 December 2013, to which Mr Vautier attached the Standards Committee decision, Mr Vautier requested that the Court now determine costs which had been the subject of his initial memorandum dated 31 July

2013.

[23] The Court extended further time to Mr King to file any additional memorandum but Mr King did not take that opportunity.

Discussion

[24] The judgment of 5 March 2013⁸ provides a clear indication of the range of arguments which Mr King (through counsel then retained) mustered in order to defeat what I have found to be the entitlements of the plaintiff to possession of a mortgaged property. Mr King raised technical issues in relation to the plaintiff’s rights under the Credit Contracts and Consumer Finance Act 2003 which, though technical, were said to go to the core of entitlements. If the plaintiff had been unsuccessful in obtaining possession by summary judgment, it would have been kept out of its rights as mortgagee for a further significant period while trial was awaited.

[25] I am satisfied that the plaintiff, fully aware of the extent to which Mr King was prepared to go to defeat the plaintiff ’s claims, was entitled to look to its solicitors for a comprehensive approach to meeting all arguments of the nature Mr King had been pursuing and was continuing to pursue. The approach cannot be criticised as a “Rolls Royce” approach to litigation which might be reasonably considered excessive. The approach adopted by the plaintiff through its solicitors was entirely understandable and appropriate to meet anticipated lines of defence.

[26] The plaintiff’s contractual entitlement to solicitor/client costs was self- evidently intended to ensure that the plaintiff would not be left to carry any of its own reasonable solicitor/client costs when attempting to enforce or exercise its mortgagee rights.

[27] On the question of whether the plaintiff’s solicitors were responsible for “overcharging” the plaintiff, I regard the decision of the Standards Committee as neutral. That is because the Standards Committee found that it was for this Court to make the appropriate decision as to the level of costs to be awarded.

[28] One of the reasons Mr King sought to take the solicitor/client costs to the Standards Committee was because he viewed the costs as involving “gross overcharging”.

[29] I have reviewed the detailed time records provided by the plaintiff and do not find any evidence of overcharging, whether gross or otherwise. Mr King, in submissions filed, has not identified by reference to the plaintiff ’s records of charging or otherwise, matters which are said to constitute “gross overcharging”.

[30] I find in the circumstances that there is nothing which would justify the Court in this case in denying the plaintiff its prima facie right to judgment for its full solicitor/client costs and disbursements.

[31] To the extent that the plaintiff sought an order for the GST content of its legal fees such an order is not appropriate. The plaintiff can be taken to be recovering its GST outputs.⁹

[32] I find the solicitor/client costs (exclusive of GST) of $38,675.00 (to 31 July

2013) to be justified, as are the plaintiff’s disbursements (exclusive of GST) of

$2,107.13.

[33] Since July 2013, counsel for the plaintiff has had to file an additional memorandum in relation to costs. Mr Vautier has not identified the level of fee to be charged to the plaintiff for that attendance. Rather than invite further evidence or submission on the matter, it is appropriate to allow for that cost as if it were a memorandum filed for a management conference under Item 11, Schedule 3. I therefore allow $796 for Mr Vautier’s memorandum dated 20 December 2013.

Order

[34] I order:

(a) The defendant is to pay the plaintiff’s costs and disbursements of this proceeding in a total sum of $41,578.13.

Associate Judge Osborne

Solicitors:

Glaister Ennor, Auckland for Plaintiff