HONG v COMMISSIONER OF INLAND REVENUE [2018] NZHC 3077

HONG v COMMISSIONER OF INLAND REVENUE [2018] NZHC 3077 [26 November 2018]IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYI TE KŌTI MATUA O AOTEAROATĀMAKI MAKAURAU ROHECIV 2018-404-0774[2018] NZHC 3077BETWEEN BOON GUNN HONGAppellantAND COMMISSIONER OF INLANDREVENUERespondentHearing: On the papersAppearances: Mr Hong in personM Deligiannis for the respondentJudgment: 26 November 2018JUDGMENT OF JAGOSE J[Costs]This judgment was delivered by me on 26 November 2018 at 3:00 p.m.pursuant to r 11.5 of the High Court Rules 2016.Registrar/Deputy RegistrarParties/Solicitors:Mr B G HongMs M Deligiannis, Crown Law Office, Wellington[1] My 27 September 2018 judgment at [26] proffered the preliminary view theCommissioner was entitled to costs on a 2B basis. That is accepted by theCommissioner, who claims 2B costs of $13,157.00, plus transport and accommodationdisbursements of $813.51.[2] Mr Hong resists the claim and its quantification on multiple grounds.[3] First, in reliance on Commissioner of Inland Revenue v Pemberton andCommissioner of Inland Revenue v New Orleans Hotel (2011) Ltd,1 Mr Hong says theCommissioner is not entitled to recover any costs contribution to expenses incurredon invoices raised by the Crown Law Office, such being "an attempt to circumventthose decisions". Those decisions relate to disqualification from recovery of any costscontribution to the internal expenses incurred by the activity of in-house counsel. Theirreasoning parallels Court of Appeal decisions on the disqualification from recovery ofany costs contribution by unrepresented lawyer litigants.2 The point in all those casesis no legal expenses were incurred by the party claiming costs.[4] Whether or not the earlier Commissioner of Inland Revenue decisions arecorrect, they have no application to the costs sought by the Commissioner here. TheCrown Law Office is a separate entity to the Commissioner; a correlate department ofthe public service to her Inland Revenue Department.3 Only if the public service wasan indivisible whole might Mr Hong's complaint hold water. But it is plain eachdepartment operates independently of the others, subject to the functions, powers andresponsibilities of its "appropriate Minister".4[5] I have no reason to think the Commissioner has not incurred legal expenses,and exceeding the sum of costs claimed. Her counsel could not responsibly make aclaim for costs exceeding the legal expenses incurred.1 Commissioner of Inland Revenue v Pemberton [2018] NZHC 1245, (2018) 28 NZTC 23-064; andCommissioner of Inland Revenue v New Orleans Hotel (2011) Ltd [2018] NZHC 971, (2018) 28NZTC 23-058.2 Joint Action Funding Ltd v Eichelbaum [2017] NZCA 249, [2018] 2 NZLR 70; McGuire vSecretary for Justice [2018] NZCA 37, [2018] 3 NZLR 71.3 State Sector Act 1988, Sch 1.4 Sections 28(7) and 32(1).[6] Second, Mr Hong resists paying for the Commissioner's preparation of the caseon appeal, done by agreement with him. It is too late now to resile from that agreement.It is a step in the appeal taken by the Commissioner, for which she is entitled to claima day's effort, as a reasonable amount of time for the step. HCR 14.2(1)(f)'s principle"an award of costs should not exceed the costs incurred by the party claiming costs"is a universal principle, not to be applied on a step-by-step basis.[7] Third, Mr Hong objects to the Commissioner's claim for expenses incurred inconnection with her external counsel's travel and accommodation. As with thecontribution to her legal expenses, the Commissioner is entitled to recover reasonabledisbursements associated with the proceeding. Transport and accommodationexpenses are such reasonable disbursements, particularly as the Commissioner is (asis any litigant) entitled to her reasonable choice of counsel. There is nothingunreasonable about instructing Wellington counsel for an Auckland hearing, especiallyin the specialised area of tax appeals, even if location otherwise may be material.[8] None of Mr Hong's objections being made out, I order him to pay theCommissioner costs in the amount of $13,157.00, plus disbursements of $813.51.—Jagose J