Erceg v Erceg [2015] NZHC 918 (5 May 2015)

Last Updated: 27 May 2015

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2014-404-002352 [2015] NZHC 918

BETWEEN	IVAN VLADIMIR JOSEPH ERCEG Plaintiff
AND	LYNETTE THERESE ERCEG AND DARRYL EDWARD GREGORY AS TRUSTEES OF THE ACORN FOUNDATION TRUST First Defendants LYNETTE THERESE ERCEG AND DARRYL EDWARD GREGORY AS TRUSTEES OF THE INDEPENDENT GROUP TRUST

Hearing:	On the papers
Judgment:	5 May 2015

_{JUDGMENT OF COURTNEY J}

This judgment was delivered by Justice Courtney on 5 May 2015 at 2.30 pm

pursuant to R 11.5 of the High Court Rules

Registrar / Deputy Registrar

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

ERCEG v ERCEG [2015] NZHC 918 [5 May 2015]

Introduction

[1] In my decision released on 27 March 2015 I dismissed the plaintiff’s application for summary judgment and granted the defendants’ application for summary judgment. The latter rendered the defendants’ strike-out application unnecessary and I dismissed that application. The defendants now apply for costs and the plaintiff accepts that it is appropriate to fix costs at this point.

[2] The contested issues are the classification of the proceeding, whether costs for some steps in the proceeding should be allocated under band C, whether increased costs should be awarded against the plaintiff, whether the costs awarded to the defendants should be decreased and whether the disbursements claimed are reasonable.

[3] Both parties had addressed these issues in memoranda. Mr Hucker filed his memorandum on behalf of the plaintiff outside the time I had allowed. Nevertheless, I accept both his memorandum and that filed by Ms Coumbe QC in reply.

Categorisation of proceeding

[4] Mr Hucker, resisted the proceeding being categorised as Category 3. He does not consider that the proceedings involved such complexity as to justify this step, pointing out that the nature and scope of the Court’s discretion to require the disclosure of documents, while still a developing area of the law, is subject to generally settled principles. In his view the issues were largely factual and the fact that both parties were represented by senior counsel did not, in itself, indicate that Category 3 was justified.

[5] I accept Ms Coumbe’s submission that the proceeding involved conceptually complex legal issues requiring counsel of “special skill and experience in the High Court”.¹ Ms Coumbe identified a number of issues which were particularly complex and for which there was little authority. In particular, the interface between the Court’s supervisory jurisdiction to order disclosure of documents relating to the trust

_{and the provisions of the Insolvency Act 2006, including whether the right of a}

¹ Rule 14.3(1).

beneficiary to seek disclosure of documents constituted property for the purposes of the Insolvency Act and whether, following the winding up of the trusts and Mr Erceg’s discharge from bankruptcy, any residual right existed to seek disclosure of information and documents, were novel and difficult issues. There were few relevant New Zealand cases. The nature and extent of the submissions indicated the need for counsel of special skill and experience in this area of the law.

Band C for some steps or band B for all?

[6] Mr Hucker accepts that the allocation of banding for time assessment is to be applied on a step-by-step basis. However, he resists Ms Coumbe’s submission that the preparation of written submissions and the preparation of the bundle should be calculated on band C. Under band B one-and-a-half days are allocated for the completion of submissions and Mr Hucker considers that to be a reasonable time given the presumption under the rules that time allocations represent approximately two-thirds of the actual time incurred. In comparison band C would allow three days for the preparation of written submissions.

[7] Having carefully reviewed counsels’ written submissions in the course of preparing my judgment I do not accept that band B is a fair reflection of the time required for those submissions. I am satisfied that that step in the proceeding ought to be assessed on band C.

[8] The preparation of the bundle is also sought to be fixed on a band C basis. There were some 45 authorities contained in the casebook and Ms Coumbe submitted that the time required to research and locate the relevant authorities was longer than normal. On this point, however, I accept Mr Hucker’s submission that preparation of the bundle is ancillary to the written submissions and ought not usually require a band C allocation. I therefore direct that the steps in the proceeding will fall within band B save for the preparation of written submissions which will fall within band C.

Increased costs

[9] Ms Coumbe sought to have any costs awarded to the defendants uplifted by

25 per cent to reflect Mr Erceg’s late filing of affidavits, late service of a revised proposed protocol for the inspection of documents and the raising during reply submissions of a significant new argument.

[10] I do not accept that increased costs are justified on the first two issues. It is true that affidavits were filed late. One was accepted without objection. Whilst the late filing of that affidavit required counsel to consider its contents under time pressure before the hearing, I cannot see that that actually added significant time or cost to the defendants. The second affidavit I excluded. Once again, although I accept that it required an urgent consideration of the affidavit I am not satisfied that its contents were such as to cause any or any significant increase in the time spent by the defendants.

[11] The same comments apply to the revised proposed protocol.

[12] I do, however, consider that the argument raised in reply for the first time should attract an additional cost. It is not sufficient for Mr Hucker to say that the defendants’ counsel could have sought a further opportunity to respond after the plaintiff’s reply. The point is that the argument, which related to the nature of Mr Erceg’s interest as a final beneficiary under the trust, was one that counsel was entitled to consider properly before responding. I accept that Ms Coumbe’s additional memorandum dated 8 December 2014 was necessary. To reflect that additional cost I am prepared to allow an increase of ten per cent to the item for preparation of submissions.

Reduction in costs

[13] The plaintiff seeks a reduction in costs to reflect the fact that its late filing of Mr Ayres’ affidavit was only required because of the defendants’ lateness in raising Mr Whales’ investigations in its reply affidavits. Further, he points out that Mr Gregory’s affidavit contained matters that could have been addressed in the original

affidavits filed in support of the application for summary judgment and raised new issues, not solely relating to reply.

[14] I have already declined to visit costs consequences on the plaintiff for the late filing of Mr Ayres’ affidavit and, likewise, do not consider it necessary to reduce the costs allowed to the defendants for matters raised late in relation to their affidavits.

Disbursements

[15] Mr Hucker raises an unspecified objection to the claim for NZLS library costs which he considers “appear to be high”. Without specific criticism, however, I am not prepared to treat the NZLS library fees as unreasonable.

[16] Mr Hucker also resists the expert’s report being included in the disbursements on the basis that it was completed over a year earlier and those costs ought not be borne by the plaintiff. Ms Coumbe has explained that he amount claimed relates only to additional work preparing the affidavit for this proceeding. I therefore allow this item.

Result

[17] I will leave counsel to re-calculate the costs in accordance with this decision. Leave is reserved to file further memoranda if required.

P Courtney J