THE TRUSTEES OF THE LINK TRUST NO.1 v HAINES & ORS (COSTS) [2023] NZHC 1594

THE TRUSTEES OF THE LINK TRUST NO.1 v HAINES & ORS (COSTS) [2023] NZHC 1594 [26 June2023]IN THE HIGH COURT OF NEW ZEALANDWELLINGTON REGISTRYI TE KŌTI MATUA O AOTEAROATE WHANGANUI-A-TARA ROHECIV-2021-485-459[2023] NZHC 1594BETWEEN THE TRUSTEES OF THE LINK TRUSTNO.1, presently being CISCA FORSTERand HARRY MEMELINKPlaintiffsAND QUENTIN STOBART HAINESFirst DefendantBPE TRUSTEES (NO.1) LIMITEDSecond DefendantEASTLIGHT ASSET TRADING NO.5LIMITEDThird DefendantSTOBART HOLDINGS LIMITEDFourth DefendantCIV-2021-485-457BETWEEN THE TRUSTEES OF THE LINK TRUSTNO.1, presently being CISCA FORSTERand HARRY MEMELINKPlaintiffsAND STOBART HOLDINGS LIMITEDDefendantOn the papers:Counsel: D Livingston for PlaintiffsJD Dallas for First, Second and Third DefendantsA O'Connor for Fourth DefendantJudgment: 26 June 2023JUDGMENT OF CHURCHMAN J[COSTS]Introduction[1] On 23 March 2022, I declined the applicants' applications for a caveat not tolapse, and for an interim injunction preventing the fourth respondent, Stobart HoldingsLtd (Stobart), from dealing with a residential property near Ōtaki.1 On 6 May 2022, Igranted costs on this decision in favour of the respondents, calculated on a 2B basiswith an uplift of 50 per cent on the basis that there was no evidential basis for theserious allegation of fraud made against the respondents.2[2] On 22 April 2022, the applicants made an interlocutory application seeking:(a) leave to appeal the interlocutory application for an injunction;(b) a stay in respect of CIV-2021-485-457 to sustain the caveat, pendingthe determining of an appeal to the Court of Appeal; and(c) an order that costs in CIV-2021-485-457 and CIV-2021-485-459remain reserved until the determination of the appeal.[3] On 3 June 2022, I declined the application as to a stay and leave to appeal.3 Ireserved costs on that decision.4[4] On 31 May 2022, the applicant trust was placed into receivership by order ofthe High Court.5 On 6 July 2022, the director of one of the respondents, StobartHoldings Ltd (Stobart), received a letter from Westpac Bank enclosing an invoice forlegal costs incurred of $1,410. I understand that Stobart deposited sufficient fundsinto the nominated bank account and Westpac subsequently deducted those fees fromthe account as advised.1 Forster v Haines [2022] NZHC 549.2 Trustees of the Link Trust No 1 v Haines [2022] NZHC 957.3 Forster v Stobart Holdings Ltd [2022] NZHC 1304.4 At [42].5 Body Corporate 81012 v Memelink [2022] NZHC 1244.[5] The respondents now seek costs of $17,925, calculated on a 2B basis with anuplift of 50 per cent and with an allowance of two days for preparation for the hearingto account for time counsel spent liaising between each other, as well as disbursementsof $160. In addition, the respondents seek, in respect of Stobart specifically, an orderfor the sum of $1,410 on an indemnity basis for costs already paid by Stobart forWestpac's legal fees.[6] The applicants in response seek that the costs award against them be a total of$7,170, calculated on a standard 2B basis without any uplift and without any costsawarded in respect of the preparation for hearing step, plus total disbursements of$110.Discussion[7] There are effectively two aspects of the costs in respect of which the partiesdiffer, namely whether an uplift is warranted and whether costs for an additional stepin the form of preparation for hearing is appropriate to account for time counsel spentliaising between themselves.Uplift[8] The respondents submit that costs on the present interlocutory matters shouldbe calculated on a 2B basis with an uplift of 50 per cent. This is on the basis that theapplicants in support of both interlocutory applications have continued to advancewhat the respondents say are unsubstantiated allegations of fraud against all of therespondents, and previous costs orders in this matter have proceeded on this basis, thatis, 2B with an uplift of 50 per cent. The respondents say advancing such allegationsof fraud for a further time warrants such an uplift and is worthy of criticism.[9] The applicants submits that costs should be calculated on a standard 2B basis,without any uplift. They say the leave application had merit and if increased costswere awarded against parties seeking leave to appeal a decision in respect of fraud,this would create a chilling factor on appeals.[10] I accept that there can be a potential for a chilling factor on appeals if anapplication seeking leave to appeal a decision in respect of fraud attracted increasedcosts. However, in the normal run of events such costs can be returned to such a partyseeking leave to appeal if successful in their claim on appeal. The possibility that costsmight be greater if a party continues to make allegations of fraud against another partyin the face of findings by a court to the contrary, is a factor that a party bringing thelitigation will be required to account for in their decision as to whether to bring orcontinue a case alleging fraud in such circumstances.[11] Increased costs in the form of uplifts may be awarded where a party has takenor pursued an argument that lacks merit or unnecessarily contributes to the time andexpense of the proceeding or quantum, or where there is some other reason to justifya court imposing increased costs.6 Such uplifts have been applied in cases where fraudis alleged when there is a lack of substance behind the allegations,7 or if a party makesallegations of fraud knowing them to be false.8 Even allowing that the applicantsmight have been sincere in their continued allegations of fraud, this must be takenagainst the backdrop that the High Court had already found these claims to be entirelyunsubstantiated, and the applicants continued in disregard of this finding.[12] An uplift is generally not to exceed 50 per cent. This is the uplift granted inprevious costs decisions in this matter and I see no reason to depart from such an upliftin this situation. In view of the applicants continuing to allege fraud in the face of thefinding of no evidential basis to support such an allegation, such an uplift isappropriate.Preparation for hearing[13] The respondents acknowledge that although there are four respondents, andcounsel for all four respondents have liaised with each other throughout all steps inthis interlocutory matter, only one set of documents was filed. Accordingly, counsel6 High Court Rules 2016, r 14.6(3)(b) and (d); and see Soshi Gakuen New Zealand Inc v Vo [2020]NZHC 2218 at [17]–[18].7 See for example Baxter v RMC Group PLC HC Auckland CP262/01, 9 September 2003 at [31]and [56], cited in Soshi, above n 6, at [18].8 Bradbury v Westpac Banking Corp [2009] NZCA 234, [2009] 3 NZLR 400 at [29], endorsingHedley v Kiwi Co-operative Dairies Ltd (2002) 16 PRNZ 694 (HC) at [11].for the respondents submits only one order for costs should be made, to be sharedjointly between all of the respondents. This is a sensible approach. However, counselfor the respondents seek an allowance for two days of hearing preparation be allowedto reflect the additional time spent by counsel in liaising throughout this matter,notwithstanding the matter was determined on the papers.[14] The applicants oppose the additional two days sought as "preparation foraffidavit hearing" to reflect the additional time spent by counsel in liaising throughoutthis matter. The applicants say the proceedings were conducted efficiently and anadditional two days is not warranted, particularly given there is no explanationprovided as to how the extra two days of liaising occurred.[15] Rule 14.15 of the High Court Rules 2016 provides that the court must not allowmore than one set of costs, unless there is good reason to do so, if several defendantsdefended the proceeding separately and it appears to the court that all or some of themcould have joined in their defence. As Wylie J stated in Independent Māori StatutoryBoard v Auckland Council:9 The rule suggests a policy which requires the Court to exercise somecaution in awarding costs, without more, in favour of multiple parties,particularly when there is some overlap or community of interest in thelitigation position of the parties seeking costs.[16] The rule was later applied by Wylie J in the costs decision in Li v Commissionerof Police, in which his Honour ordered a single costs order in respect of certain stepsin respect of which he considered the two defendants "could have joined forces andfiled common submissions", but made separate costs orders in respect of othersubmissions made by the defendants which "went beyond those made by the other."10[17] The respondents here have appropriately requested only one set of costs, to beshared jointly between them. The question is whether there should be any furtherprovision granted within that single set of costs to allow for the additional workinvolved in the four parties preparing their responses to the applicants' claims.9 Independent Māori Statutory Board v Auckland Council [2017] NZHC 678 at [8], citing NorfolkTrustee Co Ltd v Tattersfield Securities Ltd HC Auckland CIV-2004-404-3668, 30 March 2005 at[51].10 At [16] and [18].[18] Such an allowance was granted in Houghton v Saunders, where Cooke Jconsidered costs where multiple defendants were involved in successfully defendinginterlocutory applications.11 The plaintiff in that case contended that the applicationsshould have been argued predominantly by one set of defendants with the otherdefendants receiving only a modest additional award for being heard in support.12Cooke J noted the defendants had already partly reflected the application of r 14.15 intheir costs claims to some extent, but considered greater allowance should be madefor the approach taken by the defendants in this regard.13 He considered that thedefendants who took the leading role should be awarded a full set of costs (includingallowance for second counsel), with the supporting defendants being allowed only onecounsel and 50 per cent of the allowance for preparing written submissions.14[19] Similarly, in Lai v Huang the jointly represented defendants were not awardedseparate costs for each of the separate statements of defence and lists of documents,Edwards J considering there did not appear to be any reason why a single statement ofdefence or single list of documents could not have been filed on behalf of all thedefendants.15 Nevertheless, however, she instead allowed a 20 per cent increase on asingle set of costs "to recognise the additional time incurred and complexity involvedin responding on behalf of multiple defendants."16[20] The approach taken by Edwards J in Lai v Huang was then adopted andfollowed by Moore J in Banks v Farmer.17 He awarded the defendants one set of costs,which he then uplifted by 20 per cent to account for there being multiple defendants,namely the additional time incurred and complexity involved in running a case formultiple defendants.18 That figure was then uplifted by 40 per cent, the increased costsprincipally being to recognise the plaintiff's misconduct.1911 Houghton v Saunders [2021] NZHC 3590.12 At [39].13 At [41].14 At [41] and [96(b)].15 Lai v Huang [2020] NZHC 588 at [10].16 At [11].17 Banks v Farmer [2022] NZHC 458.18 At [67].19 At [67].[21] The respondents in this case have claimed two days for preparation for affidavithearing, or $4,780. If this were converted to an uplift on the remaining costs, it wouldequate to an uplift of two-thirds, or 66.66 per cent. This appears to be out of line withthe authorities I have mentioned above, namely Lai v Huang and Banks v Farmer. Iconsider some allowance is warranted to reflect the additional work involved incounsel liaising with each other to prepare a consolidated response to the claims.However, I consider the two days claimed is pitched too high. Instead, I grant anadditional one day under this step, or $2,390, which would equate to an uplift of one-third, or 33.33 per cent of the remaining costs.Indemnity[22] There is little detail provided as to the indemnity in favour of Stobart.However, the applicants do not appear to oppose the indemnity being granted.[23] Accordingly, it is allowed as sought. I order that the applicants are to provideto Stobart specifically the sum of $1,410 to indemnify it for the costs paid to Westpac.Disbursements[24] It is unclear to me why the applicants have removed the $50 sealing fee fromthe allowance for disbursements. Provided that has been paid, the respondents areentitled to it, and the total to be paid to the respondents in respect of disbursements istherefore $160.Conclusion and orders[25] Costs are therefore as set out in the respondents' memorandum, except withonly one day allowed for preparation for affidavit hearing, bringing the costs subtotalto $9,560, which when a 50 per cent uplift is applied brings the total amount of coststo $14,340.[26] I make the following orders as to costs:(a) the applicants are to pay to the respondents collectively $14,340 incosts, plus $160 in disbursements, to be shared equally between the fourof them; and(b) in addition, the applicants are to provide to Stobart specifically the sumof $1,410.Churchman JSolicitors:Livingston & Livingston, Wellington for PlaintiffsIorns Legal, Porirua for Defendants