Aldridge v Holloway
[2021] NZHC 1801
•16 July 2021
IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY
I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE
CIV-2019-409-659
[2021] NZHC 1801
BETWEEN TIMOTHY JAMES ALDRIDGE, MICHELLE PATRICIA ALDRIDGE and ALDRIDGE TRUSTEE
SERVICES LIMITED, as trustees of the ALDRIDGE FAMILY TRUSTPlaintiffs
AND
JAMES ROBERT HOLLOWAY
First Defendant
AND
MBSS LIMITED trading as MAXRaft Second Defendant
Hearing: (Determined on the papers) Counsel:
T J Mackenzie for Plaintiffs
N P Gillies and C A Robertson for Second Defendant
Judgment:
16 July 2021
JUDGMENT OF ASSOCIATE JUDGE LESTER
(Costs)
This judgment was delivered by me on 16 July 2021 at 12.30 pm Pursuant to Rule 11.5 of the High Court Rules
Registrar/Deputy Registrar 16 July 2021
ALDRIDGE v HOLLOWAY [2021] NZHC 1801 [16 July 2021]
[1] On 14 June 2021, I delivered a judgment striking out the only cause of action against the second defendant (MAXRaft).1 The cause of action in negligence was struck out on the basis that MAXRaft did not owe the plaintiffs, the trustees of the Aldridge Family Trust (the Trust), a duty of care because the finding of a duty would have been inconsistent with the contractual structure the Trust chose to put in place.
[2]The judgment concluded by saying:2
[77] Submissions as to costs may be made but if no submissions are made within 10 working days of the date of this judgment then the costs order shall be that MAXRaft is awarded costs on a 2B basis for this application and the proceeding to date along with disbursements as fixed by the Registrar.
[3] Counsel discussed costs following the release of the judgment and, shortly before the expiry of the 10 working days, MAXRaft filed a memorandum seeking increased costs. There appears to be some suggestion by MAXRaft that because the Trust did not reply to those submissions within the 10 working days that the Trust should not be heard on the issue of costs. I do not accept that.
[4] Implicit from the fact that the Trust chose not to file submissions within the 10 working day period is it accepted the default ruling that MAXRaft would be entitled to costs on a 2B basis. While there may have been correspondence between counsel, it was not for the Trust to reply to costs submissions it had not yet received when it was content with the default ruling.
[5] Accordingly, I have considered costs with the benefit of the memoranda filed by both counsel.
MAXRaft’s costs submissions
[6]MAXRaft seeks increased costs on the grounds the Trust:
…contributed unnecessarily to the time or expense of the proceeding by:
1 Aldridge v Holloway [2021] NZHC 1382.
2 Above n 1.
(a)Taking or pursuing an unnecessary step or argument that lacks merit [r 14.6.3(b)(ii) of the High Court Rules 2016];
(b)Failing without reasonable justification to accept an offer of settlement [r 14.6(3)(b)(v)]; or
(c)Some other reason which justifies making an order for increased costs [r 14.6(3)(d)].
[7] MAXRaft’s counsel, Mr Gillies, refers to one example of a case where there was a 50 per cent uplift on 2B costs on the ground that the respondents had taken an unnecessary step by filing a joinder application that lacked merit and caused the applicants unnecessary time and expense.3
[8] In another case referred to by Mr Gillies, an uplift of 25 per cent was upheld by the Court of Appeal on the ground that the plaintiff’s claim was without proper justification due to the allegations in that case being unsupported by the plaintiff’s experts.4
[9] MAXRaft also raises the possibility of indemnity costs. MAXRaft relies on Bradbury v Westpac Banking Corp, where it is said the Court of Appeal endorsed the position that indemnity costs can be awarded where a party continues a proceeding for an ulterior motive or in wilful disregard of known facts or clearly established legal principles, or where a party makes allegations which ought never to have been made or unduly prolongs a case by “groundless contentions”.5
[10]MAXRaft has calculated costs on a 2B basis at $27,004, which comprises
$16,249 for the proceeding and $10,755 for the interlocutory application. Having reviewed the schedule attached to Mr Gillies’ submissions, I am satisfied the 2B costs calculation is accurate.
[11] Again, it is implicit from the Trust not filing a costs memorandum within the 10 working days that the Trust was prepared to accept costs on a 2B basis plus disbursements.
3 Baker v Waimakuku Whanau Trust Board Inc HC Napier CIV-2010-441-581, 13 October 2011.
4 Jarden v Lumley General Insurance (NZ) Ltd [2018] NZCA 6.
5 Bradbury v Westpac Banking Corp [2009] NZCA 234 [2009] 3 NZLR 400 at [29], citing
Hedley v Kiwi Co-operative Dairies Ltd (2002) 16 PRNZ 694 (HC) at [11].
[12] Mr Mackenzie, counsel for the plaintiffs, has taken issue with some aspects of the 2B costs calculation, in particular in relation to a 2B allowance being applied to some of the memoranda filed. However, the reality is that with scale costs there are some “unders and overs”. I can understand Mr Mackenzie taking the opportunity to challenge the scale costs claimed given he had to engage with MAXRaft’s application for increased costs. However, if costs are to be restricted to a 2B basis then I accept the calculation tendered by Mr Gillies as being the figure that should be adopted.
[13]The real issue is whether there should be increased or indemnity costs.
Indemnity costs
[14] I do not accept this is a case for indemnity costs. Nothing about the conduct of the proceeding by the plaintiffs or counsel meet the high threshold for such an award.
[15] That the second defendant was joined later on in the proceeding, in my view, is of no moment. Mr Gillies suggests there was something amounting to “collaboration” between the plaintiffs and the first defendant that led to the joinder of the second defendant.
[16] However, I accept Mr Mackenzie’s evidence that it was after the first defendant provided details and factual evidence of the building company’s dealings with the second defendant that the second defendant was joined. I see nothing inappropriate in that.
[17] A review of my judgment of 14 June 2021 might suggest that MAXRaft somewhat “dodged a bullet” by having reached a full and final settlement with the building contractor to whom it subcontracted before the cracking of the concrete floor became apparent. But it can equally be said MAXRaft reached that settlement in reliance on the contractual relationships that existed and was entitled to rely on it.
Increased costs
[18] Mr Gillies applies for increased costs on the basis that MAXRaft should never have been joined to the proceeding. In effect, Mr Gillies says MAXRaft’s earlier correspondence with the plaintiffs’ solicitors (raising arguments which I later accepted) justifies an uplift in costs as it means that, despite being made aware of the difficulties they faced, the plaintiffs pursued an argument that lacked merit, or they failed to accept those arguments and drop their claim which amounted to an unreasonable refusal to accept an offer of settlement.
[19] As to the last item, I accept Mr Mackenzie’s submission that the Court does not place great weight on a “drop hands” offer.
[20] I do not accept the plaintiffs pursued an argument that lacked merit. That may seem somewhat counterintuitive given the plaintiffs’ claim was struck out for not disclosing a reasonable cause of action, but the plaintiffs’ position was supported by authority and appropriate submissions of counsel.
[21] This is not a case where the plaintiffs ignored the arguments raised by the defendants in support of the case that no duty of care arose, rather that the plaintiffs sought to confront and answer those arguments by reference to authority. Again, it does not follow from the fact that I did not accept those points that the plaintiffs’ position warrants an uplift on costs.
Disbursements
[22] The plaintiffs object to travel and accommodation costs for counsel. I consider the travel and accommodation costs are appropriately claimed. There would be no real costs-saving in an agent getting up to speed with the involved issues in this case. The amounts claimed are reasonable.
[23]Accordingly, I approve the disbursements claimed by the second defendant.
Timing of costs
[24] The plaintiffs have appealed the strike out judgment. In the normal course the costs of the strike out proceeding are fixed and payable now.
Costs on the costs application
[25] I award no costs in relation to the fixing of costs. The plaintiffs have by and large been successful in resisting the defendants’ application for an uplift on costs albeit that I did not accept the “line by line” analysis of scale costs proposed by Mr Mackenzie.
[26] Accordingly, there is an award of costs in favour of the second defendant, MBSS Ltd, in terms of Schedule A to the memorandum of counsel for the second defendant dated 28 June 2021, along with the disbursements set out in that Schedule.
Associate Judge Lester
Solicitors:
Trollope & Associates, Christchurch Hesketh Henry, Auckland
White Fox & Jones, Christchurch
Copy to counsel:
T J Mackenzie, Barrister, Canterbury Chambers, Christchurch
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