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Accident Compensation Cases

Buis v Accident Compensation Corporation (HC, 19/05/08)

Judgment Text

Andrews J
In my judgment delivered on 2 April 2008, I dismissed the application by the defendant, the Accident Compensation Corporation (“the Corporation”) for an order striking out the proceeding for judicial review filed by the plaintiff (“Mr Buis”). 
At [52] of the judgment, I observed that Mr Buis appeared to be entitled to costs on a 2B basis. 
The Corporation and Mr Buis have not been able to agree on costs. On behalf of Mr Buis, Ms Bedford seeks indemnity costs under r 48C of the High Court Rules or, in the alternative, costs on a 2B basis together with disbursements. The Corporation opposes indemnity costs, and disputes Ms Bedford's calculation of 2B costs. 
Indemnity costs 
The Court's general discretion as to costs is set out in r 46. The general principles to be applied when determining costs are set out in r 47. Generally, costs should be paid by the party who fails to the party who succeeds, should reflect the complexity and significance of the proceeding, and be assessed by applying the appropriate daily recovery rate. 
Rule 48C provides that the Court may order a party to pay “increased” costs (costs above the scale) or “indemnity” costs (actual costs incurred). With respect to indemnity costs, r 48C(4) provides that these may be ordered if: 
“48C Increased costs and indemnity costs 
The Court may order a party to pay indemnity costs if— 
The party has acted vexatiously, frivolously, improperly, or unnecessarily in commencing, continuing, or defending a proceeding or a step in a proceeding; or 
The party has ignored or disobeyed an order or direction of the Court or breached an undertaking given to the Court or another party to the proceeding; or 
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 
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 the proceeding; or 
The party claiming costs is entitled to indemnity costs under a contract or deed; or 
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. ”
The threshold for an award of indemnity costs is high.1
| X |Footnote: 1
See Paper Reclaim Ltd v Aotearoa International Ltd [2006] 3 NZLR 188
Indemnity costs tend to be reserved for cases where truly exceptional circumstances arise.2
| X |Footnote: 2
See Hedley v Kiwi Co-operative Dairies Ltd (2002) 16 PRNZ 694
Ms Bedford submitted that the high threshold of truly exceptional circumstances was met in this case. The matters put forward in support of her submission were: 
The nature of the Corporation's application and the time required to deal with it was such as to substantially exceed the time allowance under the rules; 
The Corporation had contributed unnecessarily to Mr Buis's time and expense in defending the application to strike out in a number of respects, such as: 
Failing to comply with Court directions; 
Applying to strike out then running an argument to support the application that was without merit; 
Failing without reasonable justification to accept Mr Buis's argument that his claim should not be struck out; and 
Failing to settle; 
Mr Buis's proceeding is of general importance; 
The manner in which the Corporation made decisions relating to Mr Buis's compensation claim, and the manner in which it conducted its application to strike out, justified indemnity costs; 
The Corporation acted vexatiously, frivolously and improperly in applying to strike out, then continuing with the application when it should have been obvious it could not succeed. 
I do not accept that the matters referred to by Ms Bedford support an award of indemnity costs. Indeed, were I to accept that they did, then it could almost be said that any unsuccessful strike-out application would lead to an award of indemnity costs. That would plainly not be correct. 
I accept the submission by Mr Barnett, on behalf of the Corporation, that the high threshold of truly exceptional circumstances has not been met in this case. Indemnity costs should be reserved for such cases. I am not satisfied that the Corporation's action in bringing the application to strike-out, then continuing with it to a Court hearing, is one of them. 
Increased costs or 2B costs 
That is not, however, the end of the matter, because Ms Bedford also argued that Mr Buis's claim under category 2B should not be limited to the time allocation set out at 4.11, 4.13, 4.14 and 4.15 of Schedule 3 to the High Court Rules. Essentially, therefore, Ms Beford is seeking increased costs. 
The items in dispute are in relation to two case management conferences, and whether Mr Buis can claim for preparation of a bundle of authorities and statutes, preparation of submissions and research, and travel time under item 11 “other steps in the proceeding not specifically mentioned.” I deal with each disputed item in turn. 
Case management conferences 
Ms Bedford submitted that there have been four conferences, all dealing with the strike-out application. Mr Barnett submitted that only two of them dealt with the strike-out application. 
I have reviewed the Court file for the proceeding. Mr Buis's statement of claim was filed in this Court on 2 August 2007. The Corporation filed an application to strike out on 10 September 2007. Since then, mentions of the proceeding on 2 October and 10 October 2007 were vacated by consent. On 17 October 2007, Mr Buis filed an amended statement of claim. 
At a telephone conference on 2 November 2007, by consent, time-table directions were made as to filing an amended strike-out application and submissions. At a further telephone conference on 7 February 2008, a direction was made for the strike-out application to be set down for hearing. 
Having reviewed the file, I am satisfied that only the telephone conferences of 2 November 2007 and 7 February 2008 related to the strike-out application. Mr Buis's claim under item 4.10 and 4.11 is to be restricted to those two conferences. 
The “item 11” claim 
Under item 4.14 “Preparation for hearing”, Mr Buis is entitled to “the time occupied by the hearing measured in quarter days”. The hearing of the strike-out application occupied one-half day. Accordingly, under item 4.14, Mr Buis is entitled to $800. 
I am satisfied that an allowance of half a day's preparation is inadequate in this instance. It was a matter of some complexity and importance, and required the review of many authorities. I am satisfied that the appropriate award of costs for preparation (both general preparation for hearing and preparation of the bundle of authorities) should be a total of 1.5 days. 
Ms Bedford also seeks, under item 11, an allowance of .4 of a day for six hours of “travel”. As noted earlier, item 11 is “other steps in the proceeding not specifically mentioned”. Plainly, counsel's travel is not a “step in the proceeding.” An order for counsel's travel time cannot be justified under item 11, nor under the more general discretion as to “increased costs” under r 46C. 
Mr Buis is entitled to the costs sought in the amended schedule submitted to the Court on 8 May 2008, with the following exceptions: 
Item 4.11 
.6 of a day rather than 1.2 days 
Item 4.14 
1.5 days allowed rather than .5 of a day 
Item 11 
No costs allowed 
Mr Buis is also entitled to disbursements as fixed by the Registrar. 
Costs on this application 
Ms Bedford also sought costs in the sum of $900 on this application for costs. I am not satisfied that such an award is appropriate. Costs of the parties in relation to their submissions as to costs are to lie where they fall. 
Time-table directions 
Both counsel referred to time-table directions in their costs' memoranda. A separate minute will be issued containing the time-table directions set out in Mr Barnett's memorandum of 29 April 2008, which I understand is agreed between the parties. 

See Paper Reclaim Ltd v Aotearoa International Ltd [2006] 3 NZLR 188
See Hedley v Kiwi Co-operative Dairies Ltd (2002) 16 PRNZ 694

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