IL FORNO LTD v KLEINE - Costs [2020] NZHC 2730

IL FORNO LTD v KLEINE - Costs [2020] NZHC 2730 [16 October 2020]IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYI TE KŌTI MATUA O AOTEAROATĀMAKI MAKAURAU ROHECIV-2016-404-621[2020] NZHC 2730BETWEEN IL FORNO LIMITEDPlaintiffAND DOUGLAS JAMES KLEINEFirst defendantAND FLOW CONTROL LIMITEDSecond defendantAND ANDREW MICHAEL KLEINECounterclaim defendantHearing: On the papersAppearances: MJW Lenihan for the plaintiff and counterclaim defendantJ G Ussher for the defendant and counterclaim plaintiffJudgment: 16 October 2020Reissued: 19 October 2020JUDGMENT OF JAGOSE J[Costs]This judgment was delivered by me on 16 October 2020 at 2.00pm.Pursuant to Rule 11.5 of the High Court Rules.Registrar/Deputy RegistrarCounsel:MJW Lenihan Barrister, AucklandJ G Ussher Barrister, Auckland[1] My 31 July 2020 judgment – declaring Andrew Il Forno's sole shareholder;upholding Il Forno's claim to $14,815 damages in negligence; ordering thedefendants' delivery up of digital files to Il Forno; and otherwise dismissing all causesof action in both claim and counterclaim – reserved costs for determination onmemoranda for filing on ten and five working day returns.1[2] In its claim, Il Forno seeks mostly 2B (but also 2C for inspection) scale costsof $42,856 plus disbursements of $52,505 on its claim, and of $51,202 plusdisbursements of $31,739 on the counterclaim. It includes in error to claim $2,230costs and $500 disbursements already awarded by Bell AJ,2 which I deduct. I regretthe delay in addressing the parties' timely memoranda; Il Forno's costs claim was notput before me until 5 October 2020 (when I was away on circuit).[3] My 31 July 2020 judgment observed "although Il Forno has achieveda measure of success, no party can claim comprehensively to be successful in theproceeding". Il Forno also had claimed to recover some $43,277 in fees paid toFlow Control; the defendants counterclaimed for a 50 per cent shareholding inIl Forno, and $650,000 in quantum meruit. In the family context to the proceeding,that led me to a preliminary view costs should lie where they fell.3 Il Forno suggests,if any deduction is desirable on account of its partial success, a 25 per cent reductionin scale costs would address that.[4] The defendants propose unspecified reduced costs, predominantly onIl Forno's limited success as measured against its initial $245,667 claim across sixcauses of action, but also on grounds of contended shortfalls in evidence and excessesin process. They also resist disbursements for expert evidence as excessive, and claimeffective success on their counterclaim by reason of my finding "Jim advanced thenecessary $10,000 to Andrew as a loan",4 which Jim proposes to "enforce".[5] Costs otherwise payable may relevantly be reduced if:51 Il Forno Ltd v Kleine [2020] NZHC 1889.2 Il Forno Ltd v Kleine CIV 2016-404-261, 30 November 2018 (minute).3 At [89].4 At [28].5 High Court Rules 2016, r 14.7(d), (f), and (g).although the party claiming costs has succeeded overall, that party has failedin relation to a cause of action or issue which significantly increased the costsof the party opposing costs;the party claiming costs has contributed unnecessarily to the time or expenseof the proceeding or step in it by failing, without reasonable justification,to admit facts, evidence, or documents, or accept a legal argumentsome other reason exists which justifies the court refusing costs or reducingcosts despite the principle that the determination of costs should be predictableand expeditious.[6] The defendants' proposal for reduced costs exaggerates the parties'comparative positions on the proceeding's disposition. Their continued resistance ofliability for their negligent tax work is an exercise in denial. They cannot now be heardto complain of expert expenses or inspection costs incurred by Il Forno essentially byreason of Jim's failure to take reasonable care to maintain Il Forno's financial records.6[7] I expressly did not find Andrew had any liability to Jim in respect of the loan.7Neither is there any declaration in the defendants' favour; nor are judgments orfindings of fact in civil proceedings admissible in other civil proceedings to prove theexistence of facts at issue in the former.8 There is no basis for their assertion "thequantum meruit claim has essentially succeeded on issue"; to the contrary, I held thedefendants had not discharged their onus of proof at all.9[8] I cannot sensibly delineate Il Forno's effort engaged successfully, in obtainingits relief and in opposing the defendants' counterclaim, from that on which it failed.'Comprehensive success' is not the measure of costs: it is instead a burden on "theparty who fails with respect to a proceeding".10 Here, that unmistakably is thedefendants. The extent of Il Forno's failure is not claimed significantly to haveincreased the defendants' costs. Their generalised complaint Il Forno was'continuously unwilling to admit facts' makes little sense given the counterclaim's6 Il Forno Ltd v Kleine, above n 1, at [50]–[55].7 At [67].8 Evidence Act 2006, s 50(1).9 Il Forno Ltd v Kleine, above n 1, at [83]10 High Court Rules 2016, r 14.2(a).failure. Neither does the late appearance of the IRD refund, denying a further topic forcross-examination, offer any foundation for a reduction in costs.[9] Last, having regard for the evidence at trial, I do not consider the experts'invoices to be unreasonable.[10] I order the defendants jointly and severally to pay Il Forno costs in the amountof $91,828, plus disbursements of $83,744.—Jagose J