Commissioner of Inland Revenue v Robertson [2018] NZHC 1153 (22 May 2018)

Last Updated: 27 July 2018

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV 2015-406-0015 [2018] NZHC 1153

BETWEEN	COMMISSIONER OF INLAND REVENUE Plaintiff
AND	STUART DOUGLAS ROBERTSON Defendant

Hearing:	[On the papers]
Appearances:	N H Malaro and H M McKee for the Plaintiff A A H Low and T M Kelly for the Defendant
Judgment:	22 May 2018

COSTS JUDGMENT OF JAGOSE J

This judgment is delivered by me on 22 May 2018 at 4.30 pm pursuant to r 11.5 of the High Court Rules.

.....................................................

Registrar / Deputy Registrar

Solicitors:

Meredith Connell, Auckland

Alexandra Low and Associates, Auckland

COMMISSIONER OF INLAND REVENUE v ROBERTSON [2018] NZHC 1153 [22 May 2018]

Costs on the Commissioner’s success at trial

[1] My judgment of 17 April 2018 (reissued on 26 April 2018 to address certain clerical errors) in the Commissioner’s favour took the preliminary view at [62]:

Mr Robertson should also be liable to pay the Commissioner costs calculated on 2B scale, including for second counsel, and actual and reasonable disbursement as certified by the Registrar.

but reserved costs to be determined on the papers, if my preliminary view was not accepted by either party and costs could not otherwise be agreed between them.

—disputed disbursement

[2] The parties accept my preliminary view as to the applicable scale, but Mr Robertson disputes the Commissioner’s entitlement to claim for its expert witness’ attendance at the hearing. Mr Robertson’s counsel, Alexandra Low, says the witness’ attendance was not reasonably necessary for conduct of the proceeding because of Mr Robertson’s concessions, and explains her cross-examination of him was necessary only to ensure the expert was not independently corroborating the Commissioner’s factual witness.

[3] As I said at [35] of the judgment, given Mr Robertson’s concessions, I did not need to rely on the expert witness’ evidence. But that was only in relation to the Commissioner’s claim for repayment under s 301 of the Companies Act 1993. I would nonetheless have required to rely on the evidence to determine Mr Robertson’s culpability alternatively to pay compensation under s 301, which Mr Robertson asserted was the appropriate relief.¹ And I may have required to rely on the evidence had I needed to determine the Commissioner’s claims to recovery under the rule in Re Condon, or as a mistaken payment,² in supplementation of the ‘highest principles’ or ‘unconscionability’ issues supported by the concession.

[4] The surgical approach now sought to be taken by Ms Low to the expert’s involvement also was not so evident in her cross-examination of him. The

¹ See [40]-[42] of my judgment.

² See [52]-[54] of my judgment.

Commissioner is entitled to claim the reasonable cost of its expert witness’ attendance at trial as a disbursement.

—the relevance of Calderbank offers

[5] Ms Low also contends for, but does not further articulate, the relevance of two Calderbank offers in determining the extent of Mr Robertson’s liability to pay costs. She accepts – as neither offer exceeded the judgment obtained by, or was more beneficial to, the Commissioner, or was close to the value or benefit of the judgment
– the offers are not within the HCR 14.11(3) and (4) thresholds.

[6] Nonetheless, the effect the making of an offer under HCR 14.10 has on the question of costs is at the discretion of the Court.³ The Commissioner’s counsel, Nick Malarao, says the offer – of three equal payments over six months, secured over trust property, in sum over $100,000 less than that obtained by judgment – should not be taken into account.

[7] Given the offer’s distance from the value or benefit of the judgment, and the absence of any ground contended for its relevance nonetheless, I disregard the offers.

Earlier costs order

[8] Ms Low also contests calculation of the Commissioner’s earlier claim for costs in relation to a hearing of Mr Robertson’s application for relief from unless orders before Gordon J on 26 February 2018, concluded at noon that day. Mr Robertson paid the costs as calculated by the Commissioner, but reserved “the right to have the quantum of [costs] ... determined at a later date”.

[9] Ms Low says the 2B scale “1.5 days” time allocation claimed for preparation of written submissions is not reasonable, as the Commissioner did not file submissions aimed at the particular application, which was not filed until the day of hearing. She refers to submissions filed the previous day as being in relation to a scheduled case management conference (for which she would allow 0.4 days (presumably under step 11 of the HCR’s Schedule 3)).

³ HCR 14.11(1).

[10] Mr Malarao’s memorandum in reply attached submissions dated 26 February 2018, specifically addressing unless orders. He acknowledges they were filed “in anticipation” of the application, but says they are not fairly or accurately described as a case management memorandum. It is unclear from the parties’ memoranda before me if Ms Low is wrong in disputing the existence of submissions dated 26 February 2018, or Mr Malarao has misunderstood her identification of a document dated the previous day. If the earlier document also exists, the Commissioner does not appear to have claimed for its preparation.

[11] Ms Low also says the hearing, at the end of the duty judge list in which it was called, occupied “no more than 1 hour”, and therefore should only receive a quarter- day time allocation, rather than the half-day claimed from commencement of the list, Mr Malarao contending “etiquette” required hearing at its end. In my view, the strictly correct approach would have been for the Commissioner to claim a quarter-day for the hour’s hearing under step 26, and 0.2 of a day for the list appearance under step 12, of the HCR’s Schedule 3.

[12] In the end, while Mr Robertson is entitled to a credit of 0.05 of a day (or, at 2B scale’s $2,230 daily rate, $111.50), he may also be liable to a further 0.4 of a day (or
$892.00) for the conference memorandum. Ultimately, I exercise my discretion not to adjust the Commissioner’s costs calculation.

[13] Last, Mr Malarao does not respond to Ms Low’s reliance on the principle established at HCR 14.2(1)(f), that “an award of costs should not exceed the costs incurred by the party claiming costs”. I would expect the Commissioner to abide by the principle.

Result

[14] I order Mr Robertson to pay the Commissioner 2B costs, including for second counsel, and disbursements as identified at Schedule A to the Commissioner’s
memorandum dated 2 May 2018. However, if the Commissioner is GST-registered, the disbursements should exclude GST.⁴



—Jagose J

4. New Zealand Venue and Event Management Ltd v Worldwide NZ LLC [2016] NZCA 282, (2016) 23 PRNZ 260 at [17].