DEEP & ORS v AUCKLAND GOLD LINE CO-OPERATIVE TAXI SOCIETY LIMITED & ORS [2018] NZHC 1673

DEEP & ORS v AUCKLAND GOLD LINE CO-OPERATIVE TAXI SOCIETY LIMITED & ORS [2018] NZHC1673 [9 July 2018]IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYI TE KŌTI MATUA O AOTEAROATĀMAKI MAKAURAU ROHECIV-2017-404-001516[2018] NZHC 1673BETWEEN RAMAL DEEPFirst PlaintiffSATNAM SINGHSecond PlaintiffSURINDER KUMARThird PlaintiffKAHLON KULVIR SINGHFourth PlaintiffVIPAN KUMARFifth Plaintiff(Continued on next page)AND AUCKLAND GOLD LINE CO-OPERATIVE TAXI SOCIETY LIMITEDDefendantHearing: (On the papers)Counsel: Luke Meys for the PlaintiffsShafraz Khan and Rebecca White for the DefendantJudgment: 9 July 2018[COSTS] JUDGMENT OF MOORE JThis judgment was delivered by me on 9 July 2018 at 4:30 pmpursuant to Rule 11.5 of the High Court Rules.Registrar/ Deputy RegistrarDate:JASVINDER PAL SINGH GILLSixth PlaintiffAMARJEET SINGHSeventh PlaintiffANIL KUMAREighth PlaintiffVIKAS SAHARANNinth PlaintiffKANWAL JIT SINGHTenth PlaintiffPRADEEP KUMAREleventh PlaintiffMANDIP SINGH GILLTwelfth PlaintiffSIKANDERJEET SINGH BAJWAThirteenth PlaintiffIntroduction[1] On 22 March 2018 I considered two interlocutory applications in the plaintiffs'judicial review proceedings; an application by the defendant for strike out and anapplication by the plaintiffs for discovery.1 I dismissed the strike out application aftercounsel agreed to a course involving the filing of a second amended statement ofclaim. I then adjourned the discovery application pending that action.[2] Both the plaintiffs and defendant now seek costs arising out of the hearing.This judgment deals with those applications.Background[3] Thirteen plaintiffs have brought an application for judicial review seeking tochallenge various decisions made by the defendant, an incorporated taxi society namedAuckland Gold Line Co-operative Taxi Society Ltd ("Gold Line"). The plaintiffs werepreviously (and in some cases remain) shareholders in Gold Line, but in recent timestheir relationship with the society has soured.[4] In short the plaintiffs claim the current directors of Gold Line have madevarious ultra vires, unreasonable and procedurally flawed decisions in an effort tosystematically shut them out of Gold Line.[5] The matter came before me on an interlocutory basis. The defendant soughtstrike out of the plaintiffs' amended statement of claim. The plaintiffs opposed thatapplication and sought discovery on the basis of that amended statement of claim.That application was in turn opposed by the defendant.[6] Shortly after the hearing commenced it was clear the strike out application wascapable of resolution. I ordered a brief adjournment to allow counsel to confer; theyreturned with a joint memorandum setting out a proposed resolution that centredaround the withdrawal of the strike out application following the filing of a secondamended statement of claim.1 Deep v Auckland Gold Line Co-operative Taxi Society Ltd [2018] NZHC 499, [2018] NZAR 468.[7] I accepted that resolution. I consequently advised Mr Meys for the plaintiffs Idid not consider I was well-placed to resolve the discovery application until the secondamended statement of claim had been filed. He nevertheless sought to makesubmissions on the application, which I permitted him to do.[8] Having considered his submissions I concluded the discovery application waspremature, namely given Mr Meys' inability to particularise why the discoverycategories were relevant and proportionate in the absence of an up to date statementof claim.The costs application[9] I now have two costs applications before me.[10] The plaintiffs seek costs on a 2C basis, totalling $10,258, as well asdisbursements on the unsuccessful strike out application. Mr Meys submits strike outwas unmeritorious as the core basis was amenability to review, an issue which hasbeen resolved by earlier decisions of this Court. Costs on a 2C basis are sought giventhe large number of plaintiffs and affidavits filed.[11] The defendant itself seeks costs on the strike out application (but on a 2B basis)as well as costs on the discovery application. Disbursements are also sought.Ms White for the defendant submits that when viewed in the round, the defendant isthe more successful party as the withdrawal was conditional on the plaintiffs filing asecond amended statement of claim. He submits the amended statement of claim hadfundamental issues, and the strike out application was necessary to require theplaintiffs to file a streamlined statement of claim.[12] As for the discovery application, Ms White points out the defendant hasincurred costs in responding to the plaintiffs' application. He underlines that Mr Meysinsisted on being heard on discovery even after the filing of a second amendedstatement of claim had been agreed. I adjourned the discovery application, butMs White submits that even if it is subsequently pursued the earlier work undertakenby the defendant will not be relevant, as the application will be based on the secondamended statement of claim.Issues for resolution[13] In order to resolve this application, there are three questions I must answer:(a) Is either party entitled to costs in respect of the strike out application?(b) Is the defendant entitled to costs in respect of the discovery application?(c) If yes in respect of either question, are there any matters justifying areduction in the quantum awarded?Costs principles[14] While costs are at the discretion of the court,2 there is a longstanding and"fundamental principle" that in all general courts in New Zealand costs should followthe event.3 There is also a strong implication that a Court is entitled to apply thedetailed costs regime provided in the High Court Rules 2016 in the absence of somereason to the contrary.4[15] Despite the usual rule that costs follow the event,5 there are variouscircumstances in which a costs award may be refused or reduced. That includes wherealthough the party claiming costs has succeeded overall, that party has failed inrelation to an issue which significantly increased the costs of the party opposing costs,6or where the party claiming costs has unnecessarily contributed to the time or expenseof the proceeding.7[16] A costs award should reflect the complexity and significance of the proceeding,assessed by applying the appropriate daily recovery rate to the time consideredreasonable for each step reasonably required.8 What is an appropriate daily recovery2 High Court Rules 2016, r 14.1.3 Manukau Golf Club Inc v Shoye Venture Ltd [2012] NZSC 109, [2013] 1 NZLR 305 at [8].4 Mansfield Drycleaners Ltd v Quinny's Drycleaning (Dentice Drycleaning Upper Hutt) Ltd (2002)16 PRNZ 662 (CA) at [27], cited with approval in Manukau Golf Club Inc v Shoye Venture Ltd,above n 3, at [7].5 High Court Rules 2016, r 14.2(a).6 Rule 14.7(d).7 Rule 14.7(f).8 Rule 14.2(b), (c).rate and what is a reasonable time should not depend on the time actually spent, orcosts actually incurred by the party claiming costs.9[17] For the purposes of costs there is no dispute this is a category 2 proceeding,but there is a disagreement as to what amounts to a reasonable time for each step. Asnoted, Mr Meys submits the strike out application falls within band C; i.e. that acomparatively large amount of time for steps taken is reasonable. Ms White submitsto the contrary, that a normal amount of time is reasonable.Costs on the strike out application[18] I accept the plaintiffs are presumptively entitled to costs on the strike outapplication. The application was unsuccessful, and I was able to indicate at an earlystage during the hearing that outcome was likely. The central ground on which strikeout of the entire claim was sought, amenability to review, had been resolved by earlierdecisions of this Court.10[19] But there were extenuating circumstances justifying the application.[20] There were undoubtedly flaws in the claim as then conceived. In an index tomy judgment, I recorded some 29 decisions the plaintiffs alleged had been madeimproperly. At the hearing, even after counsel for the defendant conceded that strikeout was not necessary, he maintained aspects of the claim were not capable of reviewand that a second amended statement of claim streamlining the issues was necessary.Mr Meys' subsequent agreement to file a second amended statement of claim was aconcession that there were defects in the earlier claim; in particular that aspects of itwere not capable of review.[21] The filing of the strike out application takes on a different character in thatlight, in two material ways. First, had an agreement on strike out not been reached, itnevertheless may have succeeded in part, with aspects of the claim being struck out.9 Rule 14.2(e).10 Malhi v Auckland Co-operative Taxi Society Ltd [2014] NZHC 2814, [2015] 2 NZLR 552 andSingh v Auckland Cooperative Taxi Society Ltd [2016] NZHC 642.[22] Secondly, prior to the strike out application being filed, counsel for thedefendant had raised concerns with the amended statement of claim. No progress wasmade. Had a resolution simplifying the plaintiffs' claim been reached at that stage,the application may never have been filed. In that regard I accept, as Ms Whitesubmits, that the strike out application was at least in part a step taken in response tothe obdurate stance taken by the plaintiffs.[23] In that context I am satisfied costs should lie where they fall. While the resultcan be equated with success on the part of the plaintiffs, had the application not beenresolved the defendant may have been successful in part, and the application wasbrought in part response to uncooperative behaviour by the plaintiffs.Is the defendant entitled to costs on the discovery application?[24] Ms White for the defendant also seeks costs on the adjourned discoveryapplication, on the basis it has effectively been adjourned "sine die"; he says it cannotsensibly be resumed until the defendant has had the opportunity to review the secondamended statement of claim and file a defence to it. Ms White submits much of thework undertaken in respect of the plaintiffs' discovery application has been naught,and that costs should accordingly be awarded on a 2B basis. He also underlines thatMr Meys elected to make submissions after I indicated my preliminary view that theappropriate course was to adjourn the application.[25] Despite these points, in my view it would be inappropriate to award costs onthe discovery application at this stage, given it remains unresolved. Success has notfinally been determined.[26] To the extent the application was premature, and unnecessary costs have beenincurred by the defendant, those are matters which should properly be raised followingdetermination. Should the plaintiffs ultimately succeed in their discovery application,it will be open for the defendant to seek a reduction in quantum on this basis.Alternatively, should the defendant succeed, it will be open for the defendant to seekan increase in quantum based on the matters now raised.Quantum[27] On the basis of the foregoing there are no costs to be quantified.[28] But for completeness I record that in the event I had awarded costs on the strikeout application, it would have been on a 2B, not 2C, basis. The number of plaintiffsin this proceeding does not mean a large amount of time needed to be spent on theapplication. This is not a particularly complex matter; the standard 2B categorisationis apposite. Moreover, as Ms White underlines, the scale of actual costs incurred isnot a matter justifying an increase in costs.Result[29] The plaintiffs' application for costs on the strike out application is declined.[30] The defendant's application for costs on the strike out application is alsodeclined.[31] Costs on the strike out application are to lie where they fall.[32] The defendant's application for costs on the discovery application is declinedat this stage, given the discovery application has been adjourned. Costs should befixed once the application has been finally determined, or discontinued, as the casemay be.Moore JSolicitors/Counsel:Neilsons Lawyers, AucklandFortune Manning, Auckland