Backhaus v Baker - [2017] NZHC 3271

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV 2014-404-1006 [2017] NZHC 3271

BETWEEN
MARK DANIEL BACKHAUS, LINDA

BACKHAUS, MAX DANIEL BACKHAUS AND ERICA ANNE BACKHAUS

Plaintiffs

AND

CHRISTOPHER BAKER First Defendant

ANDREW DAVID SIMKIN Second Defendant

GRANT THORNTON NEW ZEALAND Third Defendant

Hearing: On the papers

Counsel:

J S Cooper QC for Plaintiffs
Self-represented First Defendant
M D OʼBrien QC for Third Defendant

Judgment:

20 December 2017

COSTS JUDGMENT OF PETERS J

This judgment was delivered by Justice Peters on 20 December 2017 at 3.15 pm pursuant to r 11.5 of the High Court Rules

Registrar/Deputy Registrar
Date: ...................................

Solicitors: Heimsath Alexander, Auckland
Claymore Partners Limited, Auckland

Counsel: J S Cooper QC, Auckland
M D O’Brien QC, Auckland

Copy for: First Defendant

BACKHAUS v BAKER [2017] NZHC 3271 [20 December 2017]

[1] This judgment determines costs and disbursements as between the plaintiffs and the first defendant, Mr Baker.

Introduction

[2] In my judgment of 30 June 2017, I held that Mr Baker was liable to the plaintiffs in respect of the $400,000 loss they suffered on the “Trident investment” but was not liable for all or part of the “Moneylink loan” of $200,000.1

[3] I also held that the third defendant, GTNZ, was liable for $200,000 of the same loss on Trident and a proportion of the Moneylink loan. The plaintiffs and GTNZ have recently resolved all issues between them, including costs.

[4] I also ordered Mr Baker (and GTNZ) to pay interest calculated in accordance with the Judicature Act 1908 rate prevailing from time to time and running from the date proceedings were served,2 which the plaintiffs calculate to have been 4 September
2014.3

Mr Simkin

[5] Mr Simkin, the second defendant, settled with the plaintiffs prior to trial for

$60,000. This judgment determines how that sum is to be applied.

Costs

[6] As the unsuccessful party, Mr Baker is required to bear the costs and disbursements the plaintiffs incurred in their proceeding against him. The issue is not liability, but quantum.

[7] By memorandum dated 2 August 2017, the plaintiffs sought orders for costs, including awards of indemnity alternatively increased costs, against each of GTNZ
and Mr Baker.

1 Backhaus v Baker [2017] NZHC 1507.
2 At [241].
3 Plaintiffs’ Memorandum as to costs dated 2 August 2017.

[8] GTNZ took issue with various aspects of the plaintiffs’ claims and a substantial error in the plaintiffs’ claim for a particular disbursement. This led to further memoranda, including a revised schedule of disbursements from the plaintiffs dated
19 September 2017.

[9] As I have said, the plaintiffs and GTNZ have recently reached a resolution of the issues between them. Mr Baker, however, did not respond to any of the plaintiffs’ memoranda. Accordingly, by minute dated 8 December 2017, I asked Mr Baker to ensure that he filed and served any response that he wished to make to the plaintiffs’ memoranda by 2 pm, 13 December 2017. Mr…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2017] NZHC 3271
Decision Date: 20 December 2017

CaseChat Overview and Summary

The High Court of New Zealand Auckland Registry heard a case involving Mark Daniel Backhaus, Linda Backhaus, Max Daniel Backhaus, and Erica Anne Backhaus as plaintiffs, against Christopher Baker as the first defendant, Andrew David Simkin as the second defendant, and Grant Thornton New Zealand as the third defendant. The plaintiffs sought compensation for a $400,000 loss on the "Trident investment" and a $200,000 loan from "Moneylink". The court had to decide on the legal issues surrounding the liability of the defendants for the plaintiffs' losses and the quantum of costs incurred by the plaintiffs.

The primary legal issue was whether Christopher Baker, the first defendant, was liable for the losses suffered by the plaintiffs. The court had previously ruled that Baker was liable for the $400,000 loss on the Trident investment but not for the Moneylink loan. The court also ruled that the third defendant, Grant Thornton New Zealand (GTNZ), was liable for part of the loss on the Trident investment and a proportion of the Moneylink loan. The plaintiffs and GTNZ subsequently resolved their issues, including costs. The court ordered Baker and GTNZ to pay interest on the judgment sum, running from the date the proceedings were served. The second defendant, Simkin, settled with the plaintiffs for $60,000, and the court had to determine how this sum should be applied.

In its reasoning, the court held that as the unsuccessful party, Baker was required to bear the costs and disbursements incurred by the plaintiffs. The court considered the plaintiffs' claims for indemnity and increased costs against Baker. The court found that although Baker's conduct as a financial advisor was deficient, it did not warrant an award of indemnity costs. The court also found that Baker did not contribute unnecessarily to the time or expense of the proceeding, and therefore, there was no basis for an order of increased costs. The court ultimately decided that Baker should pay the plaintiffs' costs on a 2B basis and disbursements, taking into account the reductions in costs and disbursements that would have resulted if the proceeding had been confined to the Trident investment.

The court ordered Baker to pay the plaintiffs a total of $405,808, which includes the judgment sum of $400,000, interest in accordance with the judgment, and a deduction of $60,000 for the settlement funds paid by Simkin. The court also ordered Baker to pay the plaintiffs' costs of $64,663 and disbursements of $50,485.73.

Orders