B v B HC Auckland CIV-2007-404-004717

[2008] NZHC 2387

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2007-404-004717

BETWEEN  B Appellant

ANDB Respondent

Appearances: R C Knight for Appellant

A C M Fisher for Respondent

Judgment:      30 June 2008 at 3:00 pm

JUDGMENT OF COURTNEY J AS TO COSTS

This judgment was delivered by Justice Courtney on 30 June 2008 at 3:00 pm

pursuant to r 540(4) of the High Court Rules

Registrar / Deputy Registrar

Date………………………...

Solicitors:           Ellis Gould, P O Box 1509, Auckland

Fax: [phone]
Simpson Grierson, Private Bag 92518, Auckland

Fax: [phone]

Counsel:             R C Knight, P O Box 2946 Shortland Street, Auckland

Fax: [phone]

A C M Fisher, P O Box 1752 Shortland Street, Auckland

Fax: [phone]

B V B HC AK CIV-2007-404-004717  30 June 2008

Introduction

[1]      Following my judgment 1 May 2008 allowing her appeal, Mrs B now seeks costs.   The proceeding has previously been categorised as 2B for the purposes of costs.   However, Mrs B seeks increased costs above what would otherwise be available on the ground that Mr B contributed unnecessarily to the time and/or expense of the proceeding by:

a)        Failing to comply with directions made by this Court;

b)Failing without reasonable justification to admit facts, evidence or doc or documents or accept the argument that the appellant was entitled to succeed at law;

c)       Failing   without   reasonable   justification   to   accept   an   offer   of settlement to dispose of the proceeding.

[2]      Mr B denies these grounds and says further that Mrs B’s calculation of scale costs should be reduced.

[3]      Increased  costs  are  permitted  in  various  circumstances  at  the  Court’s discretion by Rule 48C.  These circumstances include where a party has contributed unnecessarily to the time or expense of a step in the proceeding by failing to comply with court directions, failing without reasonable justification to accept a legal argument  and  failing  without  reasonable  justification  to  accept  an  offer  of

settlement1.

Failing to comply with directions

[4]      This  ground  related  to  Mr  B’s  application  for  leave  to  adduce  further evidence for the purposes of the appeal.  This application had a long history.  The appeal was filed in August of 2007 but by the time of the allocated hearing date on

11 March 2008 Mr B had engaged new counsel and withdrawn acknowledgements that the appeal was ready for hearing.  Instead, he asserted that his financial position

had deteriorated since the Family Court hearing and sought leave to adduce further evidence on this issue.  One of Mr B’s main assertions was that the dividends that he usually received from C Co Limited, in which he had a substantial interest, would be much less in the coming year.

[5]      Mr B’s application was rescheduled for 29 October 2007 but was not heard on that date either.  The reason is disputed.  Mrs B claims that the material filed in support of the application was inadequate and the Court could not determine the application  then  and  that  further  evidence  filed  for  the  new  hearing  date  on

26 November  2007  was  similarly  inadequate,  resulting  in  Duffy  J  allowing  the evidence on the condition that further evidence be filed to which a copy of the company’s annual accounts for the last three years and preliminary accounts for the current year were to be annexed.

[6]      Mr B on the other hand says that the hearing 29 October 2007 was not vacated  because  of  the  state  of  the  evidence  but  because  Mrs  B  did  not  file documents or submissions (including a notice of opposition) in proper time for Mr B to be aware of the nature of the challenge to his application.  However Mrs B has filed an affidavit by her barrister’s secretary showing that a notice of opposition was filed on 25 October 2007 and served on 26 October 2007.

[7]      It is not the time that it took for Mr B to file the evidence required for the application prior to November 2007 that I consider to be relevant for the purposes of the costs application.  As at 26 November 2007 Duffy J had made a direction that the chief financial officer of C Co Limited, Mr M, should file further evidence in which he was to:

Annexe a copy of the company’s annual account for the last three years, prepared for tax purposes, as well as a set of preliminary accounts for the current financial year ending at a date no later than December 2007.

[8]      Mr M did file an affidavit in  February 2007  but  he  did  not  annexe the accounts that Duffy J had required.  He deposed:

1 Rule 48C(3)(b)(i), (iii) and (v)

Unfortunately our 2007 accounts are not available in the same form as our final accounts at this stage…

However, I have started the 2007 accounts so that they will be available for the court in the appropriate form and will endeavour to file these with the court by 29 February 2008, when Mr B’s reply evidence is due.

[9]      The evidence that Mr M was required to file had not been filed by the date of the appeal, 11 March 2008.  No explanation was provided for why this had not been done and Mrs B’s counsel, Mr Knight, prepared submissions on the basis of the financial information that was available.  It was not until Mr Knight was well into his submissions, which involved an analysis of the available financial information, that Mr B’s counsel sought leave to adduce further evidence on the basis that the accounts then before the Court were no longer accurate.

[10]     The focus of Mr Knight’s submission was that the evidence filed by Mr M did not support Mr B’s assertion that he had received substantially lower dividends from a company he controlled than previously.   Mr Knight relied on the after tax profit shown in the accounts and the declared dividend shown in the balance sheet. However, during argument Ms Fisher submitted that the figure shown on the balance sheet was not correct and that the recently finalised accounts actually showed a dividend figure of about half the figure shown in the accounts before the Court.  I noted at the time (and referred to this fact in my judgment) that Ms Fisher said that neither she nor Mr B had perceived these figures to be particularly important were the ones that would be in issue at the appeal.  This was a comment that I could not understand, given that a major plank of Mr B’s argument as to his financial position rested on the fact that his dividends were less than they previously had been.

[11]     Mr B should have ensured that the further accounts required by Duffy J to be filed were either filed or an explanation given for why they had not been filed.  In the end, this issue did not make any difference because I was able to resolve the issues that arose on the appeal without reference to the financial information.   However, Mr Knight had clearly spent some time preparing submissions on the basis of the financial information that was before the Court, only to be told half way through his submissions that it was incorrect.  These circumstances do justify increased costs.

Failing to accept a legal argument

[12]     This ground seems to be advanced on the basis that Mrs B succeeded on the main legal issue in the appeal.  On the other hand Ms Fisher has submitted that both Mr B and the Family Court relied on the decision in B v M2.  As is apparent from my decision B v M is not authority for the proposition that was being advanced by Mr B. However, in the absence of binding authority on this Court or any full consideration of the point having been given there is no basis for asserting that Mr B failed to

accept a legal argument in any sense that would justify an award of increased costs against him.

The settlement offer

[13]     About a week before the hearing of the appeal Mrs B made a Calderbank offer to Mr B inviting settlement of the appeal by payment to her of $25,000, which she estimated to be the quantum in dispute on appeal.  Mr B refused that offer but counter-offered, proposing an advance of $25,000 on account of her final share in the relationship property and in settlement of the appeal.

[14]     Criticism  of  Mr  B’s  response  to  the  Calderbank  offer  has  to  be  viewed against the basis on which he was assessing his prospects of success on the appeal.  I have already said that he cannot be criticised for not accepting Mrs B’s view of the law.  That being the case, and in view of the fact that he made a counter-offer, I do not consider his response to the Calderbank letter to be such as to justify increased costs.

Should there be deductions from costs awarded to Mrs B?

[15]     In her memorandum on costs Ms Fisher has identified a number of steps that ought to be deducted from the calculation of costs that Mrs B would otherwise be entitled to.  Having considered her reasons and Mr Knight’s response I conclude that there should be a deduction for the claimed appearance at the first case management conference.  However, I allow the other appearances claimed in relation to Mr B’s application to adduce further evidence.  Ms Fisher submits that costs should not be

2 [2005] NZFLR 730 at 779

allowed for these other appearances because leave was ultimately granted.  However, the obtaining of that leave was a drawn out process, substantially because the evidence that Mr B should have provided to the Court in a timely manner was not provided.

Costs calculation

[16]     This proceeding has been categorised as 2B and I do not consider that the calculation of costs should be carried out on any other basis.

[17]     I consider that the costs calculated on a 2B basis should be increased by 10% to reflect the manner in which Mr B dealt with the further evidence.  It is unclear to me from the schedules provided by counsel what the proper calculation should be and I therefore leave that calculation to counsel.  If further direction is necessary it

can be addressed by memoranda.

P Courtney J