LEE v LEE [2016] NZHC 2357

LEE v LEE [2016] NZHC 2357 [6 October 2016]IN THE HIGH COURT OF NEW ZEALANDROTORUA REGISTRYCIV-2010-463-000430[2016] NZHC 2357BETWEEN ROBERT LEEFirst PlaintiffHELEN HEARDSecond PlaintiffAND GREGORY LEEDefendantHearing: On the papersAppearances: First Plaintiff in personD Chambers QC for DefendantJudgment: 6 October 2016JUDGMENT OF ASHER JThis judgment was delivered by me on Wednesday, 6 October 2016 at 1 pm pursuant to r 11.5 of the High Court Rules.Registrar/Deputy RegistrarSolicitors:Lance Lawson, Rotorua.D Chambers QC, Auckland.Copy to:First Plaintiff.Introduction[1] This is a costs judgment, arising from an unsuccessful strike-out application. The statement of claim contains challenges to transactions where the parents of the sibling plaintiffs transferred shares in a family plastic manufacturing business to theplaintiffs' brother, the defendant Mr G Lee. The claim brought by Mr R Lee and Ms Heard, is that Mr G Lee improperly benefited from the transactions which he procured, by exercising undue influence over their parents, and acting in breach of his fiduciary duties. In doing so he had gained an unconscionable bargain.[2] Mr G Lee applied to strike out the High Court proceedings on the basis they were statute-barred under the Limitation Act 1950 (the 1950 Act) as they had been commenced out of time. Associate Judge Christiansen granted that application.1Mr R Lee and Ms Heard challenged that decision in review proceedings.2 Collins J dismissed that challenge,3 and subsequently declined Mr R Lee and Ms Heard'sapplication for leave to appeal.4[3] Mr R Lee and Ms Heard applied for and were granted special leave by this Court for a second appeal.5 The second appeal was successful and the appeal was allowed.6 The decision striking out the High Court proceeding was quashed. The High Court proceedings are now continuing and a fixture is allocated for next year.[4] After the successful strike-out in the High Court, costs were ordered in favour of the defendant, Mr G Lee.7 Mr R Lee, the first plaintiff, having obtained the reversal of the strike out, has now filed submissions seeking a reversal of the costs order, and for the Court to exercise its discretion to order costs in favour of the plaintiffs. The power to do so is contained in r 14.2(a) and r 14.8(2) of the High Court Rules.1 Lee v Lee [2012] NZHC 3283.2 Under s 26P of the Judicature Act 1908.3 Lee v Lee [2013] NZHC 1069.4 Lee v Lee [2013] NZHC 1820.5 Lee v Lee [2014] NZCA 403.6 Lee v Lee [2015] NZCA 514.7 Lee v Lee [2013] NZHC 1565.[5] Mr R Lee who has filed a submission on behalf of himself and Ms Heard, now seeks costs on a scale 2B basis. The sum he seeks is $22,288.00 which he has set out in a schedule. It includes disbursements.[6] Ms Chambers QC for the defendant does not contest Mr R Lee's entitlementto claim costs now that the strike-out has been reversed. However she challenges the amount of the award. First, she submits a full set of costs is properly calculated at $10,348.00, using the applicable daily rates from 2012-2013 and the time allocations for steps in interlocutory applications. Second, she challenges the quantum of disbursements. Third, she contends Mr R Lee should only be awarded half the set of costs and disbursements because he is not entitled to file submissions on Ms Heard'sbehalf and as such he is the only plaintiff who has sought costs.The quantum of costs[7] There is a dispute between the parties as to the correct quantum. Mr G Lee claims costs on a scale 2B basis, but the calculations he uses appear to be those designated for an originating application. This was not an originating application. An application for strike-out, despite the final consequences if it is successful, is an interlocutory application as defined in r 1.3(1). Therefore the interlocutory applications cost scale applies.8 Ms Chambers has set out a calculation on that basisin schedule "A" to her submissions. It shows a total cost of $10,348.00 on acategory 2B basis.[8] Mr R Lee did not contest the use of the time allocations for interlocutory applications in his subsequent memoranda. However, he submits that the plaintiffs are also entitled to costs for the filing of affidavits in support of the opposition to the strike-out application. He says Mr G Lee wrongly supported the strike-out application with an overabundance of affidavit evidence,9 which required the plaintiffs to file affidavits to rebut that evidence.8 High Court Rules, sch 3.9 Mr R Lee relies on the comment of the Court of Appeal that the necessity and relevance of the affidavit evidence was unclear: Lee v Lee, above n 6, at [20].[9] In my view Mr R Lee and Ms Heard are entitled to costs of $10,348.00 as setout in schedule "A" to Ms Chambers' submissions. I decline to make an order forcosts in respect of the many affidavits filed. All of the existing affidavits will form part of the evidence for the hearing.10 It is appropriate for the costs associated with these affidavits to be regarded as costs in the substantive proceeding.Disbursements[10] Mr R Lee seeks disbursements of $3,163.10 for filing the notice of opposition and application for review, printing and photocopying, airfares, airport parking, a toll call and a courier fee.[11] Ms Chambers accepts Mr R Lee is entitled to disbursements but submits they are limited to the filing fee and airfares. She argued that the general photocopying, toll calls and courier charges are not verifiably specific to the proceeding.11[12] In my view Mr R Lee and Ms Heard are entitled to the disbursements and expenses claimed. Mr R Lee has overstated the cost of the filing fee for the application for review ($725 rather than $1,350) and there was no filing fee for the notice of opposition at the time of the application,12 but otherwise the amounts setout in the schedule to Mr R Lee's submissions are recoverable. The invoices ofDowthwaite Law verify that the claimed expenses of printing, photocopying, airport parking, toll calls and a courier were incurred specifically for the purposes of the interlocutory application and review. On this basis, disbursements of $2,428.10 should be awarded.The claim on behalf of Mr R Lee and Ms Heard[13] Ms Chambers submitted that Mr R Lee was not entitled to represent the second plaintiff or file submissions on her behalf. He should therefore be entitled to only half of the costs that he seeks for both plaintiffs.10 As I directed in a minute of 1 March 2016: Lee v Lee HC Rotorua CIV-2010-463-430, 1 March 2016 at [3(g)(i)].11 High Court Rules, r 14.12.12 The High Court Fees Amendment Regulations 2011 applied.[14] In my view that is not the correct way to look at the position. Both Mr R Lee and Ms Heard as first and second plaintiffs are entitled to costs, given their success in the Court of Appeal. I do not need to comment on whether Mr R Lee was entitled to file submissions on behalf of Ms Heard, as even assuming that the submissions are only filed on his behalf, the award should be in favour of them both. The costs were incurred by them both as plaintiffs. There was no distinction between them in the various judgments. Having been successful they must be equally entitled to costs. Ms Heard gets the benefit of Mr R Lee's submissions. It would be unfair to depriveher of costs to which she is plainly entitled, just because she had not filed a separate submission.[15] Accordingly I propose making an order of full costs in favour of both Mr R Lee and Ms Heard.Conclusion[16] The plaintiffs, Mr R Lee and Ms Heard, are jointly entitled to costs of$10,348.00, as summarised in the schedule "A" to Ms Chambers' submissions. Theyare also entitled to disbursements of $2,428.10 as I have set out. Mr R Lee originally sought indemnity costs, but he no longer pursues this.[17] He has observed in his submissions that while he does not seek indemnity costs, he may seek a revisiting of the issue before the trial Judge, after various witnesses have been heard. Whether he pursues such an application to have further costs or the costs order reviewed is a matter for him. I make no comment on the question of whether there will be any jurisdiction for the Court to so revisit costs orders that have been made. That is a matter that he will have to deal with if and when it arises.Result[18] The defendant is to pay the plaintiffs' costs in the High Court on a 2B basis,those costs being correctly summarised in Schedule A to Ms Chambers' submissionsof 29 March 2016. They are also entitled to reasonable disbursements of $2,428.10as set out in [12] of this decision.[19] Both parties have had a measure of success in this costs application. There is no cost order made in respect of this decision.Asher J