Huljuch v Huljich [2020] NZHC 2682 (17 October 2018)

Last Updated: 17 July 2020

ORDER PROHIBITING PUBLICATION OF THE JUDGMENT AND ANY PART OF THE PROCEEDINGS (INCLUDING THE RESULT) IN NEWS MEDIA OR ON THE INTERNET OR OTHER PUBLICLY AVAILABLE DATABASE UNTIL FURTHER ORDER OF THE COURT.

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

CIV-2014-404-002631 [2018] NZHC 2682

BETWEEN	ELIZABETH HULJICH Plaintiff
AND	CHRISTOPHER PETER HULJICH First Defendant
AND	PETER KARL CHRISTOPHER HULJICH Second Defendant
AND	MICHAEL STEPHEN HULJICH Third Defendant

Hearing:	(On the papers)
Counsel:	Aaron Nicholls for the Plaintiff Daniel McLellan QC, Jenny Cooper QC and Honor Ford for the Defendants
Judgment:	17 October 2018

[COSTS] JUDGMENT OF MOORE J

This judgment was delivered by me on 17 October 2018 at 12:00 pm pursuant to Rule 11.5 of the High Court Rules.

Registrar / Deputy Registrar Date:

HULJICH v HULJICH & ORS [2018] NZHC 2682 [17 October 2018]

Introduction

• [1] Since October 2014 the plaintiff, Elizabeth Huljich, has been engaged in proceedings with two of her sons and a grandson. For several months I have been case managing the proceeding.

• [2] The proceedings have been plagued by chronic failure on the part of the plaintiff to comply with timetabling directions and other Court orders. In a judgment of 24 August 2018, I stated reasonable indemnity costs were appropriate for all steps taken before me to that point.¹ This judgment determines the reasonable costs arising from those steps.

Background

• [3] On 24 May 2018 I granted the plaintiff’s application to adjourn the trial scheduled for 9 July 2018 to 3 December 2018. I also made orders for the filing and service of a sixth amended statement of claim, briefs of evidence, an index of documents for the common bundle, and submissions. These were unless orders; unless the plaintiff complied with my timetabling directions her claim would be struck out.

• [4] Those orders superseded unless orders I had made on 16 May 2018, in which I called for the service of briefs of evidence and an index of documents for inclusion in the common bundle. I made them because I was satisfied on the psychological/psychiatric evidence placed before me that the plaintiff’s presentation was such that it would be unrealistic for her to comply with extended timetabling orders. However, those orders were made against a background of chronic non- compliance. At the telephone conference on 24 May 2018, the plaintiff’s solicitor Mr Nicholls accepted that the time had come for the consequences of further non- compliance to be final, and that an adverse costs award would follow despite the plaintiff’s nominal success. I also made unless orders on 24 July 2018 varying my earlier orders.

¹ Huljich v Huljich [2018] NZHC 2205 at [53].

• [5] The plaintiff failed to comply with the unless orders I issued on 24 May 2018 and 24 July 2018, and accordingly applied for relief against sanction. I heard that application on 17 August 2018 and delivered my judgment on 24 August 2018. I granted relief against the sanction in the unless orders and ordered the plaintiff to provide particulars in a form acceptable to the defendants or file a ninth amended statement of claim by 31 August 2018. I also made directions for the filing of evidence and service of the draft index of the plaintiff’s documents for inclusion in the common bundle.

• [6] As to costs, I found:²

As Mr Katz conceded, it is inevitable there will be costs implications for the plaintiff on these applications. The defendants have already applied for indemnity costs in respect of the steps taken up to 24 May 2018 before me, and now seek indemnity costs for the steps taken to date. Mr Katz submitted an order for increased costs, with an uplift of between 30 and 50 per cent, is appropriate.

I consider that fair and reasonable indemnity costs are appropriate for all steps before me. That is despite the fact the plaintiff has nominally succeeded in this application. The defendants were entirely justified in opposing the application, and the plaintiff’s success is an indulgence. This application has only become necessary as a result of the plaintiff’s non-compliance with a series of court directions. She should bear the costs, despite her success.

The costs applications

• [7] Mr McLellan QC and Ms Cooper QC, for the defendants, have filed two costs applications. One pertains to steps taken up to 24 May 2018, the other to steps taken up to 24 August 2018. The total costs, including disbursements, sought for the steps up to 24 May 2018 are $79,609.85. The total costs, including disbursements, sought for the steps between 25 May 2018 and 24 August 2018 are $35,036.18.

Analysis

• [8] Although I did not specify so in my judgment of 24 August 2018, I agree with the defendants that there are two proper bases for an award of indemnity costs: r 14.6(4)(a) and (b) of the High Court Rules 2016 (“the Rules”):

“14.6 Increased costs and indemnity costs

² At [52]-[53].

...

(4) The court may order a party to pay indemnity costs if—

(a) the party has acted vexatiously, frivolously, improperly, or unnecessarily in commencing, continuing, or defending a proceeding or a step in a proceeding; or

(b) the party has ignored or disobeyed an order or direction of the court or breached an undertaking given to the court or another party; or”

• [9] Rather than taking relatively simple steps to prosecute her claims, the plaintiff been preoccupied with, and forced the defendants and the Court to be preoccupied with, resolving various applications for adjournment, compliance and relief. While I granted the adjournment and subsequently relief from sanctions because of concerns about the plaintiff’s capacity, at each step it was made clear that further non- compliance would not be tolerated. That this conduct was repeated on several further occasions constituted an indulgence by the Court which, rather than being met with swift compliance, was answered by further delays which made yet further steps necessary. That background justifies the award of indemnity costs.

• [10] The only issue is quantum. On this subject, Mr Nicholls submits the quantum claimed by the defendants is disproportionate, and that there is no justification for two senior counsel to have been engaged in respect of the adjournment applications.

• [11] On the question of reasonableness, I am guided by the comments of Harrison J in Bradbury v Westpac Banking Corp:³

... the phrase “reasonably incurred” envisages a degree of judicial oversight of awards of indemnity costs. The discretion must be exercised in a manner which delivers a just and fair result. The scales of principle, while finely balanced, are ultimately tipped in B&M's favour by my conclusion that Westpac's fees are of a magnitude which an objective observer would not have expected for this litigation, however egregious the firm's conduct may have been. That observation is not meant as a criticism; the bank is entitled to incur whatever level of legal costs it considers appropriate. But standing back and adopting an overview for the purpose of assessing B&M's liability, I am not satisfied that all Westpac's actual costs were reasonably incurred.

3. Bradbury v Westpac Banking Corp [2008] NZHC 751; (2008) 18 PRNZ 859 (HC) [Bradbury HC] at [205]-[207]. On appeal this finding was not challenged: Bradbury v Westpac Banking Corp [2009] NZCA 234, [2009] 3 NZLR 400 (CA) [Bradbury CA].

... This exercise is quintessentially one of judgment informed by my participation in interlocutory hearings and at trial. It is necessarily imprecise and unscientific but it represents a review of all relevant steps.

I shall approach the assessment in this way. The concept of reasonableness is well known. It is an objective criterion which is necessarily fact and circumstance specific. While the ultimate result must be just and fair for B&M, what is reasonable is to be determined so as not to defeat the purpose and spirit of a rule which provides a right to recover actual costs. Care must be taken not to apply an unduly rigorous measure when acting with the benefit of hindsight, or to subject items of expenditure to an unnecessarily exacting examination. The resulting figure will reflect an overall evaluation of what costs are reasonably incurred.

Steps to 24 May 2018

• [12] Costs in the sum of $48,645.00 in respect of attendances by Mr McLellan, and

$30,243.85 in respect of attendances by Ms Cooper, are claimed. These cover the period 12 February 2018, when the plaintiff first sought an adjournment, to the teleconference on 24 May 2018.

• [13] Mr Nicholls submits that given the quantum, the defendants must be claiming for “wasted costs”; trial steps which will have to be incurred again due to the adjournment, but which are outside the indemnity costs I have awarded. I do not consider my order was confined in that way, but in any event it is plain the costs claimed relate to procedural steps taken before me, namely in response the adjournment application.

• [14] However, I agree with Mr Nicholls that the costs claimed are excessive. The underlying claim is of some complexity. It may well justify the retention of two senior counsel. But the steps taken to respond to the plaintiff’s applications for adjournment and variation of timetabling orders were not complex, and do not justify retention of two senior counsel. They are quintessential interlocutory steps, which did not raise complex or novel points of law and did not require detailed evidence to be considered.

• [15] This finding should not be understood as a criticism of either the defendants, who are entitled to “incur whatever level of legal costs” they deem appropriate,⁴ or

⁴ Bradbury HC, above n 3, at [205].

their counsel, who have at all stages before me acted responsibly. It is merely a reflection of the need for the “ultimate result” to be “just and fair”.⁵

• [16] Counterbalancing that, I am mindful that the calculation of what is just and fair should not defeat the spirit of the indemnity costs rule. As Harrison J acknowledged in Bradbury, any calculation by a sitting Judge is necessarily imprecise and based on their impression of the complexity of the proceeding. I do not propose, nor is it possible for me, to make an accurate determination as to reasonableness. I have not had the benefit of reviewing an affidavit from an expert.⁶

• [17] With that in mind, I proceed as follows. Given my finding that retaining two senior counsel for these interlocutory steps was not required, I fixed reasonable indemnity costs by reference to the costs of one senior counsel; $48,645. That remains a substantial sum for interlocutory steps, but one an objective observer may have expected for this litigation given the fraught nature of the proceeding so far, the nature of the allegations made and the understandable personal importance to the defendants in defending the allegations.

Steps to 24 August 2018

• [18] Costs of $35,036.18 are sought for the period between 25 May 2018 and 24 August 2018 comprise $29,092 for senior counsel, Ms Cooper, $5,198 in respect of second counsel Ms Ford, and $536.13 in respect of steps taken by a junior barrister, Mr Grimmer. $210 in disbursements are also sought.

• [19] Mr Nicholls submits it was unnecessary and unreasonable to engage two extra counsel. I disagree. The costs incurred in respect of steps taken by the two more junior barristers are comparatively modest. More importantly, they reflect reasonable delegation. Presumably, if Ms Cooper had not delegated these steps to Ms Ford and Mr Grimmer, they would have been completed by senior counsel at a substantially higher rate. Viewed in that way, her decision to engage more junior counsel is commendable, and favourable to the plaintiff’s position.

⁵ At [207].

⁶ Bradbury CA, above n 3, at [88].

• [20] In the circumstances of the proceeding as it developed between 25 May and 24 August 2018, I am satisfied these costs were reasonably incurred. As Ms Cooper records in her costs memorandum, the plaintiff filed three amended statements of claim, all of which required comparative analysis with Associate Judge Smith’s orders for provision of particulars. The defendants also applied for strike out on two occasions in response to the filing of the seventh and eighth amended statements of claim, which were both deficient in terms of Associate Judge Smith’s orders, and opposed the plaintiff’s application for relief from sanctions. Each of these steps was responsibly taken, as the orders in my judgment of 24 August 2018 granting the defendants indemnity costs reflect. Each step was responsive to successive failings by the plaintiff over the relevant period.

Should the costs award be subject to an unless order?

• [21] Mr Nicholl accepted at the teleconference of 24 May 2018 that any order for an award of costs should include a direction that costs be paid to the defendants by a nominated date subject to an unless order. The defendants now seek an order that unless all costs be paid within 10 working days, the plaintiffs’ claim will be struck out. In his June memorandum, Mr Nicholls preferred a 20 working day timeframe for compliance. In his memorandum of September, he sought a 35 day timeframe because the plaintiff was admitted to hospital on 2 September 2018 with pneumonia and had only recently been discharged from hospital to a 24-hour respite care facility.

• [22] It is not clear a 35 day timeframe is still necessary. It is now over a month since that memorandum was filed, and there is no indication the plaintiff remains in such a condition.

• [23] However given the quantum of costs I have awarded, I am willing to grant the plaintiff a longer compliance period. I am fortified in this conclusion because I see no prejudice to the defendants in granting the plaintiff 20 working days to comply with this order.

Orders

• [24] The plaintiff is ordered to pay the defendant $83,681.18 in indemnity costs incurred in this proceeding between 12 February 2018 and 24 August 2018.

• [25] Unless these costs are paid within 20 working days of this order, the plaintiff’s claim will be struck out.

Moore J

Solicitors/Counsel:

Mr Nicholls, Auckland

Mr McLellan QC, Auckland Ms Cooper QC, Auckland Ms Ford, Auckland