BRIAN DORSET WILKEN NEW AND LISTON TRUSTEE SERVICES (AS THE TRUSTEES OF THE NEW FAMILY TRUST) v STUART ROSS CHARLTON [2021] NZHC 3603

BRIAN DORSET WILKEN NEW AND LISTON TRUSTEE SERVICES (AS THE TRUSTEES OF THE NEWFAMILY TRUST) v STUART ROSS CHARLTON [2021] NZHC 3603 [22 December 2021]IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYI TE KŌTI MATUA O AOTEAROATĀMAKI MAKAURAU ROHECIV-2019-404-2178[2021] NZHC 3603BETWEEN BRIAN DORSET WILKEN NEW ANDLISTON TRUSTEE SERVICES (AS THETRUSTEES OF THE NEW FAMILYTRUST)PlaintiffsAND STUART ROSS CHARLTONFirst DefendantAND MICHAEL BRIAN TIPLADYSecond DefendantAND WAYNE LEONARD BIRCHALLThird DefendantAND SAMUEL GORDON WHITEFourth DefendantAND TCL MANAGEMENT LIMITEDFifth DefendantAND COMPANY 1207753 LIMITED(FORMERLY TEAK CONSTRUCTIONLIMITED)Sixth DefendantAND TEAK CONSTRUCTION GROUPLIMITEDSeventh DefendantAND TEAK PROPERTY AND DEVELOPMENTLIMITEDEighth DefendantAND TEAK MAINTAIN LIMITEDNinth DefendantAND SIX C PROPERTY LIMITEDTenth DefendantHearing: On the papersCounsel: N L K Stone & J E G San Diego for PlaintiffsJ T Burley & K R Narayan for DefendantsJudgment: 22 December 2021JUDGMENT OF PAUL DAVISON JThis judgment was delivered by me on 22 December 2021 at 4pmpursuant to r 11.5 of the High Court Rules.Registrar/Deputy RegistrarSolicitors:Doug Cowan, AucklandMcVeagh Fleming, Auckland[1] On 4 October 2021 I granted an application by the defendants for anadjournment of the trial fixture scheduled to commence on 11 October 2021 anddirected the Registrar to allocate a new fixture, which has since been set for 17 April2023.[2] The defendants now apply for scale 2B costs in the sum of $2031.50 anddisbursements of $500.00 for their successful adjournment application. The plaintiffssay that, at the hearing of the adjournment application, and following an oralapplication by the defendants for an order for costs, I said that costs were reserved inrespect of the adjournment application pending the outcome of the trial. My 4 October2021 minute granting the application for adjournment did not address costs. Theplaintiffs seek indemnity or increased costs for their preparation of writtensubmissions opposing the defendants' application for costs.[3] Having reviewed the Court's audio recording of the 4 October hearing, I notethat at the conclusion of the hearing I said:"I am also not minded to make an order for costs at this stage and will reservethe issue of costs."SubmissionsDefendants[4] Notwithstanding my above statement, the defendants filed submissions oncosts. Mr Burley on behalf of the defendants says that the parties had been engagedin settlement discussions from mid-September 2021 in an attempt to resolve thelitigation by way of private mediation. He says that the parties agreed on a mediatorand dates for conducting the mediation had been circulated.[5] Counsel says that the defendants consider that in-person mediation isfundamental to obtain resolution on all matters, and inquiries were made regarding thepossibility of in-person mediation occurring during COVID-19 Alert Level 3.However, this proposal was rejected by the mediator. With the likelihood of attendingan in-person mediation diminishing — correlating to a diminishing likelihood of"shifting down" alert levels, the defendants anticipated that the trial itself would likelybe adjourned. The fact that the trial involved multiple witnesses, cross-examinationand expert evidence, supported their view. They were of the view that an adjournmentwould allow the parties to focus on organising, preparing for and attending amediation.[6] The defendants submit that they therefore sought the plaintiffs' consent to anadjournment of the trial scheduled to commence on 11 October 2021 on the basis thatthe COVID-19 Alert Level 3 would likely be extended, and for the reasons relating tothe proposed mediation. However, when the plaintiffs would not consent to anadjournment the defendants made the application for adjournment under rule 7.42 ofthe High Court Rules 2016.[7] As the application for an adjournment was opposed by the plaintiffs,appearances were required. This application was successful. The defendants say thatthe costs involved in making the application and the appearance of counsel could allhave been avoided if the plaintiffs had consented to the adjournment. Accordingly, andhaving regard to the likelihood of the trial being adjourned in the COVID-19environment that then existed, the defendants now seek costs on a scale 2B basis anddisbursements as follows:Item Step Allocation Amount22 Filinginterlocutoryapplication0.6 $1,434.0026 Appearance 0.25 $597.50Total 0.85 $2,031.50Step Type AmountInterlocutory applicationfor adjournmentFiling fee $500.00Plaintiffs[8] The plaintiffs' fulsome submissions opposing the costs application cover 17pages exclusive of appendices. The initial portion of their costs memorandum coversthe background of the matter and a chronology surrounding the adjournmentapplication. They submit that the defendants' application for costs is "fundamentallyflawed" on two bases:(a) The High Court has performed its function in respect of the issue ofcosts concerning the application for adjournment of the trial.(b) The plaintiffs' position was reasonable having regard to theunpredictability and uncertainty around COVID-19 lockdowns.[9] As regards the first, the plaintiffs submit that the correct avenue for thedefendants to overturn the relevant costs decision (made orally) is to appeal thatdecision. Counsel submits that the High Court has now performed its function("functus officio") and the defendants have exhausted their rights in front of the HighCourt for any application for costs arising from the adjournment application. Theplaintiffs state that to revisit my oral decision would be an abuse of process as it wouldrelitigate the existing decision subsuming the general rule of finality.[10] Secondly, the plaintiffs say that while accepting the Court's decision grantingthe application for an adjournment of the 11 October 2021 trial fixture, thereasonableness of their position in opposing the adjournment is a factor to be takeninto account. The plaintiffs say that mediation has already occurred and they areindifferent as to whether it proceeds in person or not. They say that there was greatuncertainty as to the status of the proceeding in the context of changing andunpredictable COVID -19 alert levels, and that the status of the trial ought to havebeen left to the registry.[11] In support of their application the plaintiffs submit that by pursuing anapplication for costs, the defendants are acting "improperly, or unnecessarily in ,continuing, a step in [the] proceeding",1 and that they have "ignored an order ordirection of the court".2[12] The plaintiffs accordingly apply for an order for indemnity costs of $9.008.10against the defendants, and if an order for indemnity costs in their favour is not made,in the alternative they submit that an award of increased costs (25% uplift) of$4,481.25 is appropriate.Approach[13] Matters relating to costs remain at the discretion of the Court.3 However, itmust exercise its discretion on a principled basis.4 The determination of costs, so faras possible, should be both predictable and expeditious.5[14] Rule 14.6(3) of the High Court Rules 2016 relevantly provides:The court may order a party to pay increased costs if—(a) the nature of the proceeding or the step in it is such that the time required bythe party claiming costs would substantially exceed the time allocated underband C;[15] Rule 14.6(4) of the High Court Rules 2016 relevantly provides:The court may order a party to pay indemnity costs if—1 High Court Rules 2016, r 14.6(4)(a).2 Rule 14.6(4)(b).3 Rule 14.1(1).4 Huakiwi Copenhagen Lot 4 Orchard Ltd v Te Moana [2019] NZHC 1582 at [13]. Bi v WestcoastMining Ltd [2020] NZHC 2940 at [14].5 High Court Rules 2016, r 14.2(1)(g).(b) the party has ignored or disobeyed an order or direction of the courtor breached an undertaking given to the court or another party; or[16] Indemnity costs are awarded where a party has behaved either badly or veryunreasonably, for example where their misconduct has been "flagrant".6 As the partyclaiming increased or indemnity costs, the plaintiffs carry the onus of persuading theCourt that an award of indemnity costs is justified.7Discussion[17] The defendants as the successful party in their application for adjournmentwhich was opposed by the plaintiffs, would ordinarily be entitled to costs. However,in my view the issue of costs is more appropriately addressed following trial, and forthat reason at the conclusion of the hearing on 4 October 2021, and having heard thedefendants' oral application for costs, I ruled that costs would be reserved. That wasmy final decision on the matter.[18] Accordingly as I have already determined that costs on the application for theadjournment are reserved, it is not appropriate to determine the issue of costs at thisstage and before determination of the outcome of the proceeding.[19] Although I did not address the issue of costs in my minute of 4 October 2021,at the conclusion of the hearing I had ruled that costs would be reserved, and I did notdirect the parties to file costs memoranda in relation to the adjournment application.If the defendants were in any doubt about the matter following receipt of my Minuteof 4 October 2021, the appropriate course would have been for counsel to file amemorandum with the Court to request clarification of the status of the costs issue.[20] The plaintiffs have not persuaded me that the defendants' actions in applyingfor an order for costs approach the necessary level of "flagrancy" such that they should6 Bradbury v Westpac Banking Corp [2009] 3 NZLR 400 (CA) at [28]; Prebble v Huata [2005]NZSC 18 at [6].7 Strachan v Denbigh Property Ltd HC Palmerston North CIV-2010-454-232, 3 June 2011 at [27].receive indemnity or increased costs with respect to their opposition to this currentcosts application. While the Court has power to award such costs on costs, it isgenerally reluctant to do so,8 and I decline to award the plaintiffs' application forcosts.[21] The issue of costs as regards the defendants' application for adjournment of the11 October 2021 trial is reserved until determination of the proceeding at thesubstantive trial, and costs in relation to the parties respective and current applicationsfor costs are to lie where they fall._____________Paul Davison J8 See for example Jeffreys v Morgenstern [2013] NZHC 1361 at [40]; Epsom Woods Ltd v WaitakereFarms Ltd [2020] NZHC 3137 at [4]; and Combined Property Maintenance Limited v Singh [2021]NZHC 621.