SURVEY NELSON LIMITED V THE DIRECTOR OF MARITIME NEW ZEALAND HC WN CIV-2011-485-391

SURVEY NELSON LIMITED V THE DIRECTOR OF MARITIME NEW ZEALAND HC WN CIV-2011-485- 391 19 August 2011IN THE HIGH COURT OF NEW ZEALANDWELLINGTON REGISTRYCIV-2011-485-391UNDER An application for review under Part 1 ofthe Judicature Amendment Act 1972AND UNDER Part 30 of the High Court RulesIN THE MATTER OF Maritime Transport Act 1994BETWEEN SURVEY NELSON LIMITEDFirst PlaintiffAND TERENCE MOWAT REYNOLDSSecond PlaintiffAND JEAN REYNOLDSThird PlaintiffAND WILLIAM DIXONFourth PlaintiffAND THE DIRECTOR OF MARITIME NEWZEALANDDefendantHearing: On the papersCounsel: H A Cull QC for PlaintiffsM T Scholtens QC for DefendantJudgment: 19 August 2011 at 12:30 PMI direct the Registrar to endorse this judgment with a delivery time of 12.30pm on the 19th day of August 2011.COSTS JUDGMENT OF MACKENZIE J[1] In my judgment dated 24 March 2011, I reserved costs and invited memoranda. Counsel for the plaintiffs has subsequently filed a memorandum seeking indemnity costs and counsel for the defendant has filed a memorandum in response opposing indemnity costs and submitting costs on a 2B basis are appropriate.[2] The situations in which a party may be ordered to pay indemnity costs are specified in r 14.6(4) of the High Court Rules which provides as follows:The court may order a party to pay indemnity costs if—(a) the party has acted vexatiously, frivolously, improperly, or unnecessarily in commencing, continuing, or defending a proceeding or a step in a proceeding; or(b) the party has ignored or disobeyed an order or direction of the court or breached an undertaking given to the court or another party; or(c) costs are payable from a fund, the party claiming costs is a necessary party to the proceeding affecting the fund, and the party claiming costs has acted reasonably in the proceeding; or(d) the person in whose favour the order of costs is made was not a party to the proceeding and has acted reasonably in relation to it; or(e) the party claiming costs is entitled to indemnity costs under a contract or deed; or(f) some other reason exists which justifies the court making an order for indemnity costs despite the principle that the determination of costs should be predictable and expeditious.[3] The principles upon which increased or indemnity costs are to be awarded were considered at some length by the Court of Appeal in Bradbury v Westpac Banking Corporation.1 In the course of its discussion that Court said:2[27] The distinction among our three broad approaches – standard scale costs, increased costs and indemnity costs – may be summarised broadly:(a) standard scale applies by default where cause is not shown to depart from it;(b) increased costs may be ordered where there is failure by the paying party to act reasonably; and1 Bradbury v Westpac Banking Corporation [2009] 3 NZLR 400 at [24]-[29].2 At [27] and [29].(c) indemnity costs may be ordered where that party has behaved either badly or very unreasonably.[29] We therefore endorse Goddard J's adoption in Hedley v Kiwi Co- operative Dairies Ltd (2002) 16 PRNZ 694 at para [11] of Sheppard J'ssummary in Colgate-Palmolive Co v Cussons at pp 232 – 234. While recognising that the categories in respect of which the discretion may be exercised are not closed (see r 14.6(4)(f)), it listed the following circumstances in which indemnity costs have been ordered:(a) the making of allegations of fraud knowing them to be false and the making of irrelevant allegations of fraud;(b) particular misconduct that causes loss of time to the court and to other parties;(c) commencing or continuing proceedings for some ulterior motive;(d) doing so in wilful disregard of known facts or clearly established law; or(e) making allegations which ought never to have been made or unduly prolonging a case by groundless contentions,summarised in French J's ―hopeless case test.[4] It is clear from the words of r 14.6 that the conduct which falls to be assessed in determining whether indemnity costs should be granted is conduct which relates to the proceeding in which the order is sought. The matters which are relied upon by the plaintiffs as justifying an award of indemnity costs in this case do not relate to the actions of the defendant in this proceeding. Most of them go to the acts or omissions of the defendant in complying with the order made by the Court of Appeal in the earlier proceeding. These all occurred before the issue of this proceeding. Because these are separate proceedings, I consider that the only matters which may properly be taken into account in considering the present application are matters which relate to the conduct of this proceeding by the defendant.[5] On the basis, I consider that the matters relied upon in the submissions of counsel for the plaintiffs under the headings -(a) Letter of 23 December addressed to all customers at Survey Nelson Limited;(b) Process imposed by Director for reissue of delegations;(c) Failure to reinstate Survey Nelson to Maritime NZ websitedo not fall to be considered on the present application.[6] Another matter which is relied upon by the plaintiffs is its claim that:The Director forced Survey Nelson to bring enforcement proceedings to obtain the relief that had been order by the Court of Appeal[7] I commented in my judgment on the question of whether the relief sought in respect of the approval should more appropriately have been the subject of an application to the Court of Appeal.3 The Supreme Court subsequently commented on that issue in its judgment refusing leave to appeal delivered on 2 June 2011.4Counsel also relies upon non-payment of costs in the Court of Appeal. I do not consider that any actions of the defendant which relate to the way in which the judgment of the Court of Appeal was given effect can justify an award of indemnity costs in this proceeding.[8] The further matters relied upon, under the head ―Reliance on hearsay evidence and subsequent refusal to acknowledge error, do relate to this proceeding.The plaintiffs claim that the Director relied on inaccurate hearsay statements in her affidavit evidence, and failed to correct the position when the inaccuracy was pointed out. I did not need, in my substantive judgment, to make any factual findings on the matters raised. I do not consider it appropriate to address these issues now. It is sufficient to observe that the circumstances are not, on my assessment, within any of the categories described in [29] of Bradbury v Westpac.5 I do not consider that the defendant can be said to have acted vexatiously, frivolously, improperly or unnecessarily in defending the present proceeding, in terms of r 14.6(4)(a). The defendant has not ignored or disobeyed any order or direction of this Court in terms of paragraph (b). There was a dispute as to what was required by the order made by the Court of Appeal. That was a matter which could have been3 Survey Nelson Ltd v The Director of Maritime New Zealand HC Wellington CIV-2011-485-391,24 March 2011 at [17].4 The Director of Maritime New Zealand v Survey Nelson Ltd [2011] NZSC 61, 2 June 2011 at [7].5 Bradbury v Westpac, above n 1.the subject of an application to the Court of Appeal. The fact that it has been brought before this Court does not bring the matter within the scope of paragraph (b). Nor do I consider that it constitutes a reason justifying this Court making an order for indemnity costs under paragraph (f).[9] For these reasons, I do not consider that grounds have been made out for an award of indemnity costs.[10] The plaintiffs are entitled to a single award of scale costs against the defendant, on a 2B basis. Counsel for the defendants calculates costs on that basis at $23,688. I award that sum, plus disbursements to be fixed by the registrar if necessary."A D MacKenzie J"Solicitors: Dawson & Associates, Nelson for Plaintiffs(Counsel Instructed: Helen Cull QC)Crown Law Office, Wellington for Defendant(Counsel Instructed: Mary Scholtens QC)