Commerce Commission v Lodge Real Estate Limited

[2018] NZHC 1536

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2015-404-003045

[2018] NZHC 1536

BETWEEN

COMMERCE COMMISSION

Plaintiff

AND

LODGE REAL ESTATE LIMITED

First Defendant

cont …/2

Hearing:

[On the papers]

Counsel:

J C L Dixon QC, L C A Farmer and A L McConachy for Plaintiff L J Taylor QC and M a Cavanaugh for First and Seventh

Defendants
D H McLellan QC, M S Anderson and J H Whitehead for Third and Sixth Defendants

Judgment:

26 June 2018

JUDGMENT OF JAGOSE J

[Costs]

This judgment is delivered by me on 26 June 2018 at 11.30 am

pursuant to r 11.5 of the High Court Rules.

.....................................................

Registrar / Deputy Registrar

Counsel/Solicitors:

John Dixon QC, Auckland (Plaintiff) Meredith Connell, Auckland (Plaintiff)

Lesley Taylor QC, Wellington (1st and 7th Defendants) McElroys, Auckland (1st and 7th Defendants)
Daniel McLellan QC, Auckland (3rd and 6th Defendants) Wotton & Kearney, Auckland (3rd and 6th Defendants)

COMMERCE COMMISSION v LODGE REAL ESTATE LTD [2018] NZHC 1536 [26 June 2018]

…/2

LUGTON’S LIMITED

Second Defendant

MONARCH REAL ESTATE LIMITED
Third Defendant

ONLINE REALTY LIMITED
Fourth Defendant

SUCCESS REALTY LIMITED

Fifth Defendant

BRIAN KING

Sixth Defendant

JEREMY O’ROURKE
Seventh Defendant

[1]                 My judgment of 2 November 2017 dismissed the Commerce Commission’s claims against Lodge Real Estate Limited and Monarch Real Estate Limited, and their respective principals, Mr O’Rourke and Mr King.

[2]                 Lodge and Monarch now seek nearly $300,000 each in costs and disbursements from the Commission. That is predominantly in 3C costs, including for second counsel at trial, uplifted by 50% “given the defendants’ Calderbank letter and the overall conduct of the Commission”, and for their costs application.

[3]                 The Commission agrees the proceeding is appropriately categorised 3, but identifies a number of less complex, and some duplicated discovery, steps in the defendants’ calculations of band C time allocations. It says there is no justification here for increased costs, or costs on costs applications. It also seeks to recover its expert’s fee, after I excluded experts’ evidence (as explained at [236]-[238] of my substantive judgment), either by a reduced costs order, or as wasted costs. The Commission calculates net costs and disbursements due Lodge and Monarch to be in the vicinity of $110,000 each.

[4]In reply, Lodge and Monarch maintain their original claim.

[5]                 I do not need to recite the familiar general principles applying to the determination of costs; it is enough to recall “so far as possible the determination of costs should be predictable and expeditious”.1

Lodge and Monarch: time allocations

[6]                 With the exception of their provision of discovery lists, and two inspections of the Commission’s discovery, Lodge’s and Monarch’s costs claims contend every step in the proceeding reasonably consumed “a comparatively large amount of time”.2 Conversely, the Commission would only allow that characterisation of the more significant steps in the proceeding, as the others only reasonably required “a normal amount of time”.3

[7]                 I acknowledge the Commission’s approach, but include within the ‘comparatively large amount of time’ characterisation also the defendants’ preparation of briefs and other documents for trial, and preparation for the 10 August 2017 conference. That is not to be assessed exclusively by reference to their contents, but also to the place they take in what was acknowledged to be a complex proceeding.

[8]                 I doubt the Commission’s contention discovery and inspection allowances are intended to be universal, irrespective of the number of tranches of discovery listed or inspected, but have no particular basis on which to assess what would constitute a reasonable allocation of time. Each Lodge and Monarch claim band B for three lists at 2.5 days each, and four inspections at 1.5 days each. The Commission proposes, under band B, a single 2.5 day allowance under band B for discovery, and a 6 day allowance for inspection under band C. I will allow 2.5 days for discovery – given the parties’ agreement on band B, and the unaltered scope of discovery – and note the parties effectively agree on 6 days for inspection.

[9]Lodge and Monarch do not contest their memoranda (even filed jointly with

the Commission) and responses to the Commission’s amended pleadings generally

1      HCR 14.2(g).

2      HCR 14.5(2).

3      HCR 14.5(2).

only required a reasonable amount of time. Given my adjustments, Lodge and Monarch cannot be described as so successful on their costs application as to justify further costs here.4

[10]              So far as increased costs are concerned, the foundation for the Calderbank offer was Lodge and Monarch’s contention “[t]here was no arrangement or understanding at the 30 September 2013 meeting to vendor fund or to withdraw Trade Me listings”. But I found there was such an arrangement or understanding, to which the defendants (in competition with each other) gave effect. Lodge and Monarch’s success was only in that I also found the arrangement or understanding lacked the requisite effect or purpose, as “say[ing] nothing about the price of [the defendants’] services to vendors”.5 That was not the focus of Lodge and Monarch’s defences, which concentrated instead on the intervening impact of Trade Me’s price rise. Nothing drawn to my attention in the manner of the Commission’s conduct of its case establishes any unnecessary contribution to the time or expense of the proceeding or any step in it.6 I will not uplift costs.

[11]I award Lodge costs as follows:

Step	Days
2.	Commencement of defence by defendant	6.0
9.	Pleading in response to amended pleading7	1.2
11.	Filing memoranda8	3.3
15.	Preparation for and appearance at pre-trial conference	1.0
20.	Lists of documents on discovery	2.5
21.	Inspection	6.0
23.	Filing opposition to interlocutory application.	0.6
30.	Defendant’s preparation of briefs	5.0
32.	Defendant’s preparation of list of issues, authorities, and common bundle	4.0
33.	Preparation for hearing	5.0
34.	Appearance at hearing for principal counsel	11.0
35.	Second counsel	5.5
Total days	51.1
At category 3 daily rate of $3,300	$168,630.00

4      Strata Title Administration Ltd v Body Corporate Administration Ltd [2014] NZCA 96 at [10]- [14].

5 At [231].

6      HCR 14.6(3)(b).

7      30 May 2016 and 15 June 2016.

8      Memoranda of 22 December 2015, 27 April 2016, 31 August 2016, 21 September 2016, 12 October 2016, 10 November 2016, 5 July 2017, 25 August 2017, 30 August 2017, 31 August 2017, 8 September 2017, and 3 November 2017, each allocated band B’s 0.4 day, and the memorandum of 9 June 2016 allocated band C’s 1 day, all half-rated. Lodge’s memorandum of 13 May 2016 allocated band B’s 0.4 day.

[12]I award Monarch costs as follows:

Step	Days
2.	Commencement of defence by defendant	6.0
9.	Pleading in response to amended pleading9	1.2
11.	Filing memoranda10	2.9
15.	Preparation for and appearance at pre-trial conference	1.0
20.	Lists of documents on discovery	2.5
21.	Inspection	6.0
30.	Defendant’s preparation of briefs	5.0
32.	Defendant’s preparation of list of issues, authorities, and common bundle	4.0
33.	Preparation for hearing	5.0
34.	Appearance at hearing for principal counsel	11.0
35.	Second counsel	5.5
Total days	50.1
At category 3 daily rate of $3,300	$165,330.00

Commerce Commission: reduced/wasted costs

[13]              The Commission says it had no choice but to incur its expert’s fee, despite its reservations as to the subject matter’s relevance, because the evidence to which it responded was filed only six weeks prior to trial. But its objections to the evidence were clear from at least about the time of filing its response, three weeks out from trial. Given the Commission’s engagement of its expert was to hedge its objection, the fairer approach is to split the expert’s fee between the three parties – each to bear $29,920.42. I will incorporate that deduction in my orders.

Disbursements

[14]              There appears no dispute as to the sums of disbursements claimed by each Lodge and Monarch. Had there been, I would have required their certification by the Registrar.

Orders

[15]I order the Commission to pay:

(a)$138,709.58 in costs, plus disbursements of $5,818.64, to Lodge; and

(b)$135,409.58 in costs, plus disbursements of $3,641.64, to Monarch.

9      8 June 2016 and 20 June 2017.

10 Memoranda of 22 December 2015, 27 April 2016, 31 August 2016, 21 September 2016, 12  October 2016, 10 November 2016, 5 July 2017, 25 August 2017, 30 August 2017, 31 August 2017, 8 September 2017, and 3 November 2017 each allocated band B’s 0.4 day, and the memorandum of 9 June 2016 allocated band C’s 1 day, all half-rated.

[16]              Last, I regret the delay in issuing this judgment. Although the costs memoranda were filed over the Court’s Christmas/New Year vacation, in accordance with my timetable orders, I was only provided them recently for my decision. In the interests of dispatch, this costs judgment is more cursory than it may otherwise have been.

—Jagose J