Auton v Auton
[2020] NZHC 1250
•8 June 2020
IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY
I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE
CIV-2020-409-000144
[2020] NZHC 1250
BETWEEN ANDREW MYERS AUTON
Applicant
AND
VALERIE BEATRICE AUTON
Respondent
Hearing: Determined on the papers Counsel:
P N Allan for Applicant
H A Evans and S B Henry for Respondent
Judgment:
8 June 2020
COSTS JUDGMENT OF ASSOCIATE JUDGE PAULSEN
This judgment was delivered by me on 8 June 2020 at 2.30 pm pursuant to Rule 11.5 of the High Court Rules
Registrar/Deputy Registrar Date:
AUTON v AUTON Costs Judgment [2020] NZHC 1250 [8 June 2020]
The application for costs
[1] The facts of this case can be found in two judgments. In a judgment of 7 May 2020, I dismissed the applicant’s application to sustain a caveat lodged against a property then owned by the respondent at 47 Aorangi Road, Christchurch. I reserved costs because it was then unknown whether the applicant would be granted legal aid for the proceeding. In a further judgment of 13 May 2020, I discharged an interim order that the judgment of 7 May 2020 be stayed. In relation to that matter, I ordered there would be no costs order.
[2] The applicant has been granted legal aid in this proceeding. Notwithstanding that, the respondent applies for the costs of the proceeding on a 2B basis. The application is opposed by the applicant.
The law
[3] Section 45(2) of the Legal Services Act 2011 (the Act) provides that an order for costs may not be made against a legally-aided person in a civil proceeding unless the court is satisfied there are “exceptional circumstances”.
[4] Under s 45(1) of the Act, the court may make a legally-aided person liable only for an amount that it is reasonable to pay, having regard to all the circumstances including the means of all the parties and their conduct in connection with the dispute.
[5] Under s 45(3) of the Act, there is a list of non-exhaustive factors the court may consider in determining whether there are exceptional circumstances, which are as follows:
(a)any conduct that causes the other party to incur unnecessary cost;
(b)any failure to comply with the procedural rules and orders of the court;
(c)any misleading or deceitful conduct;
(d)any unreasonable pursuit of one or more issues on which the aided person fails;
(e)any unreasonable refusal to negotiate a settlement or participate in alternative dispute resolution; and
(f)any other conduct that abuses the processes of the court.
[6] Under s 45(4) of the Act, any order for costs made against an aided person must specify the amount the person would have been ordered to pay if s 45 had not affected his or her liability.
[7] If, because of s 45 of the Act, no order for costs is made against an aided person, an order may be made specifying that the aided person would have incurred a liability for costs with respect to the proceeding if their liability had not been so affected.1 In such a case, the party thereby prejudiced may, under s 46(1) and 46(2) of the Act, apply to the Legal Services Commissioner for payment of some or all of the difference between the costs actually awarded to that party and the costs that would have been ordered but for s 45.
[8] The issue of what amounts to exceptional circumstances was recently considered in Lowrie v Hutt City Te Awa Kairangi, where Dobson J said:2
The test for exceptional circumstances is a broad one. It takes into account the means of all the parties and their conduct and, to qualify, the circumstances must be “quite out of the ordinary”.3 In Reid v Castleton-Reid, it was noted:4
[52] Subsection 3(d) makes it clear that the issues on which the plaintiff failed must have been such that the legally aided person behaved in an unreasonable fashion. Unreasonable conduct could arise in a number of ways. It might be considered that the plaintiff had acted unreasonably by insisting that a claim be brought in the first place. The court making a decision under s 45(2) would have to try and place itself in the position of the party at the time when the decision was made to initiate or continue a proceeding. Retrospective reasoning based only on the fact that the case turned out to be an unsuccessful one would not be enough on its own
1 Legal Services Act 2011, s 45(5).
2 Lowrie v Hutt City Te Awa Kairangi [2019] NZHC 1030 at [4].
3 Laverty v Para Franchising Ltd [2006] 1 NZLR 650 (CA) at [31], applying Awa v Independent News Auckland Ltd (No 2) [1996] 2 NZLR 184 (HC) at 186.
4 Reid v Castleton-Reid [2016] NZHC 1609 (footnote omitted).
to attract the operation of s 45. It may be influenced too heavily by the advantage of hindsight. In making a decision under s 45(2), proper weight needs to be given to the consideration that the outcome of litigation is inherently a difficult matter to predict.
[53] The court is required to balance giving effect to the objective of the Legal Services Act to promote access to justice against the harm that can be done if a litigant who has been armed by state funding misuses his or her position. Such a person could cause considerable damage to his or her opponent in litigation particularly by bringing complex and expensive litigation which calls for a proportionate expenditure by the opposite party in obtaining assistance in the formulation and advancing of his or her case when it comes to court.
The submissions
[9] The respondent argues that exceptional circumstances exist justifying the court making an award of costs against the applicant for three reasons:
(a)the applicant’s extensive and irrelevant evidence and the unreasonable pursuit of the caveat and stay applications caused the respondent to incur significant unnecessary cost;
(b)the applicant expressly consented, in his application to sustain the caveat and affidavit in support, to an order of costs being made if he was unsuccessful in the proceeding; and
(c)the applicant’s grant of legal aid was made after the proceeding had concluded and after judgment was delivered and an order was sealed.
[10] The respondent has provided a schedule of costs calculated on a 2B basis amounting to $11,950 plus disbursements of $210 and submits that an order the applicant pay those sums is reasonable having regard to all the circumstances, including the means of the parties and their conduct in connection with the dispute.
[11] The applicant submits there are no exceptional circumstances in this case so the threshold for the making of any award of costs against him is not met. He notes that the respondent’s actual costs have not been disclosed and the respondent does not confirm that her actual costs exceed the amount claimed. The applicant accepts the respondent’s calculation of costs on a 2B basis but says that it is not reasonable that
he be ordered to pay those costs as the court must consider the relative financial positions of the parties. The respondent has substantial means and he is a beneficiary with no assets. The applicant does not oppose an order being made specifying that but for the applicant’s grant of aid costs would have been awarded to the respondent for the amount she claims on a 2B basis.
Discussion
[12] As a preliminary matter, immediately following the issue of my judgment of 7 May 2020 the respondent sealed judgment making no mention of costs. Having done so, to now claim costs the respondent should apply to have the judgment corrected pursuant to r 11.10 High Court Rules 2016. As I am satisfied that no costs should be awarded, I am proceeding on the basis that such an order would be made.
[13] In order for there to be exceptional circumstances, I need to be satisfied that there is conduct that is quite out of the ordinary. I am not so satisfied. I will deal with the three grounds advanced by the respondent in support of her claim for costs seriatim.
The applicant’s conduct of the proceeding
[14]In relation to this matter, the respondent alleges that the applicant:
(a)filed extensive and irrelevant evidence;
(b)unreasonably pursued the caveat and stay applications; and
(c)caused the respondent to incur unnecessary costs.
[15] The applicant’s evidence was not extensive. He filed two affidavits. Both were relatively brief. One of the principal weaknesses in the applicant’s case was that his evidence was insufficient and incomplete.5
5 Auton v Auton [2020] NZHC 940 at [28].
[16] It is correct that the applicant’s affidavits contained irrelevant and inadmissible material, but I do not consider these unsatisfactory aspects added substantially to the respondent’s costs.
[17] The respondent considers the applicant’s caveat application was so plainly without merit it should never have been brought. It is easy only with the benefit of hindsight to take that position. The applicant failed to establish an arguable case to an interest in Aorangi Road on the basis he alleged in his caveat. That does not mean he should never have pursued his application.
[18] The applicant had a genuine belief in his entitlement to Aorangi Road. There were discussions between the parties that the applicant would acquire Aorangi Road. The determination of the issue whether those discussions had reached the stage of a concluded agreement required a contextual enquiry.
[19] The applicant’s belief that there was a concluded agreement for him to acquire Aorangi Road was incorrect but resulted, in part at least, from the failure of the parties to clearly document both the arrangements concerning the development of Exeter Street and the conclusion of discussions in relation to the applicant acquiring the property. The respondents must share some responsibility for that.
[20] It is important also that the applicant was able to rely on what I consider was a misleading email from the respondent and her husband to the applicant’s lawyer suggesting a concluded agreement to swap Exeter Street for Aorangi Road. Another document suggested the payment of rent to the applicant for Aorangi Road.
[21] The respondent argues that a significant burden was placed on her counsel with submissions on the legal principles and evidence. I do not accept that is an accurate assessment, particularly in relation to the issue of part performance which was largely ignored.
[22] As far as the stay application is concerned, the applicant was plainly entitled to make that application. Had he done so before Aorangi Road was sold the
application would have been argued on its merits and I cannot speculate what the outcome would have been.
Agreement to pay costs
[23] The respondent relies upon paragraph [3]e of the applicant’s notice of application to sustain the caveat and paragraph [35] of the applicant’s first affidavit. Both paragraphs advance the applicant’s argument that the respondent would suffer no harm if the caveat was sustained. Neither is concerned with the payment of costs if the caveat application was dismissed. I therefore reject the respondent’s submission that the applicant agreed to pay costs if unsuccessful.
The timing of the grant of legal aid
[24] There is nothing exceptional in the fact that legal aid was only granted after this proceeding was commenced. The applicant lodged his caveat to protect his position as the respondent intended to sell Aorangi Road. The applicant could not wait for confirmation of the grant of legal aid before issuing this proceeding because the property could (and was) sold before the grant was made.
Other facts
[25] I have dealt with all of the respondent’s arguments and found none of them amount to exceptional circumstances under s 45(2) of the Act.
[26] As far as the other factors set out in s 45(3) are concerned, I am satisfied none of them apply. There was a high degree of compliance with procedural rules and orders and the applicant agreed to an early hearing of the caveat application thereby allowing the sale of Aorangi Road to proceed. There was no opportunity for alternative dispute resolution. I do not consider the applicant conducted himself in a misleading or deceitful manner nor was there conduct that abused the processes of the court.
[27] I have considered whether the applicant’s means are an exceptional circumstance justifying the making of an order of costs. There is a sum held in the trust account of Layburn Hodgins of $338,578 from the development of Exeter Street to which the applicant may have a claim. I do not consider this is a relevant circumstance. In her affidavit, the respondent says that this money is relationship property of the applicant and his former partner and not all his funds to pledge. Layburn Hodgins will not pay the money to the applicant and it is now subject to a restraining order issued by the Family Court. The applicant’s entitlement to the money is not clear.
[28] The respondent’s counsel submits that the applicant is to receive money from his grandfather’s estate from which costs can be paid. There is no evidence of this and, in any event, the amount is not large. The relative circumstances of the applicant and the respondent would not justify me ordering payment of costs on this basis.
The application of s 45 (5)
[29] The applicant does not oppose the court making an order under s 45(5) of the Act and I consider it proper to do so. The applicant accepts the respondent’s calculation of costs on a 2B basis. I am not so satisfied in two small respects. I did not award costs on the stay application and do not revisit that decision. All that was involved from the respondent’s perspective was one short teleconference. I do not accept the claimed title and search fees either. With these adjustments, the respondent’s reasonable costs and disbursements on a 2B basis would amount to
$11,393.
Result
[30] There are no exceptional circumstances justifying the making of an order for costs against the applicant for the purposes of s 45(2) of the Act. I dismiss the respondent’s application for costs.
[31] Under s 45(5) of the Act, I make an order that had it not been for the operation of s 45 of the Act the applicant would have been liable to the respondent for costs of
$11,393.
O G Paulsen Associate Judge
Solicitors:
Patient & Williams, Christchurch Young Hunter, Christchurch
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