Issued
2013
Decision
17 Dec 2013
Appeal Status
Appealed

Indemnity costs awarded to the Commissioner

2013 case note – CIR applied for and awarded indemnity costs in a case where the proceeding was determined to be unnecessary.

Case
Redcliffe Forestry Venture Ltd v Commissioner of Inland Revenue
Legal terms
Indemnity costs

Summary

The Commissioner of Inland Revenue ("the Commissioner") applied to the Court for indemnity costs in relation to Redcliffe Forestry Venture Ltd v Commissioner of Inland Revenue [2011] 1 NZLR 336 (HC) ("Redcliffe") which was heard in the High Court in 2011 where the plaintiffs alleged that the original Trinity judgment of the High Court (which led to the Supreme Court decision in Ben Nevis Venture Ltd v Commissioner of Inland Revenue [2008] NZSC 115, [2009] 2 NZLR 289 ("Ben Nevis")) should be set aside on the basis that the defendant "presented a false case". The Commissioner sought indemnity costs, increased costs or costs on a 2C basis on the grounds that the plaintiffs' case was vexatious, frivolous or otherwise an abuse of process. The Court determined that the plaintiffs' case was hopeless from the outset and amounted to a collateral attack on the Supreme Court's judgment in Ben Nevis and was unnecessary and improper.

Impact of decision

The decision confirms that the Court may award indemnity costs where a proceeding is unnecessary.

Facts

The case concerns a costs judgment made in regard to Redcliffe which was heard in the High Court in 2011. In Redcliffe the plaintiffs alleged that the original Trinity judgment of the High Court which led to the Supreme Court decision in Ben Nevis should be set aside on the basis that the defendant "presented a false case".

The Commissioner succeeded in the substantive case in the High Court and the Supreme Court. The Supreme Court overturned a decision made by the Court of Appeal in favour of the plaintiffs on the procedural ground that the Commissioner should have applied to strike out the statement of claim rather than protest jurisdiction. The Commissioner sought indemnity costs, increased costs or costs on a 2C basis on the grounds that the plaintiffs' case was vexatious, frivolous or otherwise an abuse of process.

Decision

The Court awarded indemnity costs to the Commissioner.

A Judge has the discretion to award indemnity costs under rule 14.6 of the High Court Rules if the party has acted vexatiously, frivolously, improperly, or unnecessarily in commencing a proceeding.

Rule 14.6(3) states that the Court may award increased costs if the party opposing increased costs has contributed unnecessarily to the time or expense of the proceeding by pursuing an argument that lacks merit.

The Court determined that the plaintiffs' case was hopeless from the outset and amounted to a collateral attack on the Supreme Court's judgment in Ben Nevis.

Justice Brewer found that the proceeding was unnecessary and improper. The proceeding was unnecessary because the Supreme Court had already determined the issues at hand. Further, making a collateral attack on the Supreme Court was improper. However, His Honour could not find an evidential basis for saying that the case was frivolous or vexatious.

His Honour dismissed the plaintiff's argument that indemnity costs could not be awarded because no substantive findings were made in the High Court judgment. His Honour found that if a claim was brought to the Court, the Court had no jurisdiction to hear it, and the circumstances behind the making of the claim led to the conclusion that it was unnecessary and improper, then indemnity costs could be awarded.

High Court Rules