MUSEUM OF NEW ZEALAND TE PAPA TONGAREWA v KARATAUA [2020] NZHC 1970

MUSEUM OF NEW ZEALAND TE PAPA TONGAREWA v KARATAUA [2020] NZHC 1970 [7 August 2020]IN THE HIGH COURT OF NEW ZEALANDWELLINGTON REGISTRYI TE KŌTI MATUA O AOTEAROATE WHANGANUI-A-TARA ROHECIV-2020-485-134[2020] NZHC 1970BETWEEN MUSEUM OF NEW ZEALAND TE PAPATONGAREWAPlaintiffAND VERA MAXINE KARATAUAFirst DefendantNII TERAUPOKO MILLSSecond DefendantCounsel: J Caird for plaintiffT Carter for first and second defendantsMinute: 7 August 2020Reissued: 18 August 2020COSTS JUDGMENT OF ASSOCIATE JUDGE JOHNSTON[On the papers][1] Early this year the plaintiff, Museum of New Zealand Te Papa Tongarewa,ascertained that a substantial sum of money had been stolen from it. It turns out thatit was stolen by the Museum's (former) Senior Payroll Administrator, the firstdefendant, Ms Vera Karataua. Later, the Museum ascertained that Ms Karataua hadpaid some of the money she stole into an account owned by the second defendant.[2] The Museum ultimately sued both Ms Karataua and the second defendant forthe recovery of the funds. The first step taken by Ms Karataua was the filing andservice of an admission and consent to the entry of judgment. The second defendantfiled and served a statement of defence, essentially saying that she knew nothing ofthe defalcations.[3] The plaintiff has sealed judgment against Mrs Karataua and discontinued itsclaim against the second defendant. The only remaining questions concern costs. TheMuseum seeks costs against Ms Karataua. The second defendant seeks costs againstthe Museum.[4] Counsel have filed memoranda on the basis that these costs applications are tobe determined on the papers.The Museum's claim[5] Ms Karataua is in receipt of legal aid for the purposes of this proceeding. Itappears to be accepted that s 45(2) of the Legal Services Act 2011 therefore preventsthe Court awarding the Museum costs against her, and that all it can do is certify unders 45(5) what costs award would be made but for that bar.[6] It is common ground that the Museum is entitled to a costs award. The issueis quantum. The Museum seeks increased costs. Ms Karataua's position is that thecosts award should be for scale costs on a 2B basis.[7] The basis upon which the Museum seeks increased costs is essentially theegregious nature of Ms Karataua's actions. As a general principle the focus ofapplications under r 14.6(3)(d) and (4)(f) of the High Court Rules 2016 for increasedcosts is the actions of the party in question after the proceeding has been commencedand in relation to the conduct of it. There is authority, all of which seems to be in thecompany winding up area, suggesting that the actions of a party prior to thecommencement of proceedings may be relevant, but, as far as I am aware, only afterthe Court has heard and disposed of a case. I am unaware of any authority that wouldjustify the Court in making an evaluation of the blameworthiness of a party for costspurposes when the Court has not been called upon to adjudicate on the matter. To doso would seem to me to be wrong in principle.[8] As already said, on the Museum commencing this proceeding Ms Karataua'sfirst formal response was to admit liability thus minimising the Museum's costs in theproceeding.[9] In those circumstances, the view I take is that whilst the Museum is entitled toits costs, there is no proper basis for an award of increased costs.[10] But for Ms Karataua's status as a recipient of legal aid, I certify that I wouldhave awarded the Museum scale costs against her on a 2B basis together with suchdisbursements as may be allowed by the Registrar. Mr Caird for the Museum sayscosts on a 2B basis amount to $11,950.00. On Ms Karataua's behalf Mr Carter saysthat Mr Caird's calculation includes costs for two memoranda filed for ateleconference. He says that costs are only recoverable in respect of one of these. Idisagree. The filing and service of both memoranda seem to me to be a legitimatecomponent in the Museum's costs. So the quantum of the costs award would havebeen $11,950 as per Mr Caird's calculations.The second defendant's application[11] The second defendant seeks costs on the basis that the Museum hasdiscontinued its claim against her. The Museum's position is that there should be noaward of costs because it had a legitimate claim.[12] The fact of the matter is that the Museum has not secured judgment against thesecond defendant, and the Court has made no assessment of the case against her. Inmy view, she is entitled to costs on the discontinuance.[13] There is no issue concerning quantum. Rule 14.2 provides that a party canonly secure scale costs if its actual costs exceed the amount of scale costs. The seconddefendant's actual costs do not. Mr Carter says that they come to $2,403.42. That isthe maximum that she can recover.[14] The second defendant will have an award of costs in the sum of $2,403.42together with such disbursements as may be allowed by the Registrar.Associate Judge JohnstonSolicitors:Simpson Grierson, Auckland for plaintiffT Carter Barristers & Solicitors, Wellington for first and second defendants