Bangma v Bangma

[2020] NZHC 3204

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE

CIV-2019-409-000155

[2020] NZHC 3204

IN THE MATTER

of claims of breach of fiduciary duty and duty of care by the trustees and executors of the Estate of JACOB BANGMA

BETWEEN

JOHN CHARLES ANDREW BANGMA

Plaintiff

AND

PAUL MARTIN DAVID BANGMA and MICHAEL JOHN FRENCH

Defendants

Hearing:

19 November 2020

Counsel:

B Nevell and S M D Guest for Plaintiff

J R Pullar and A E Kennerley for first-named Defendant C M N Milne for second-named Defendant

Judgment:

7 December 2020

COSTS JUDGMENT OF ASSOCIATE JUDGE PAULSEN

This judgment was delivered by me on 7 December 2020 at 11.00 am pursuant to Rule 11.5 of the High Court Rules

Registrar/Deputy Registrar Date:

BANGMA v BANGMA Costs Judgment [2020] NZHC 3204 [7 December 2020]

The claim for costs

[1]        By a judgment of 18 August 2020, I determined applications by the plaintiff for further and better discovery and challenges to privilege asserted by the defendants in their affidavits of documents (the applications).1

[2]        This judgment concerns costs on those applications. I received written submissions and conducted a short telephone conference on 19 November 2020.

Background

[3]        The plaintiff made the applications during the COVID-19 lockdown. Amended applications were served on 8 May 2020. Both defendants opposed the applications. Written submissions were later exchanged. The applications were set down for hearing on 4 August 2020.

[4]        During the afternoon of 3 August 2020 (the day prior to the hearing), the plaintiff’s counsel filed a memorandum advising that the application for particular discovery was abandoned for all except three categories of documents. For those three categories, it was acknowledged the documents sought were not relevant to issues raised by the plaintiff’s pleadings. There was an indication a further amended statement of claim would be filed. The challenge to privilege was similarly abandoned for all but one category of document.

[5]        The remaining matters were heard by me on 4 August 2020. On 18 August 2020, I issued my judgment:

(a)dismissing the application for particular discovery; and

(b)holding that privilege was, in principle, available for the category of documents challenged by the plaintiff, but reserving my decision pending inspection of those documents.

1      Bangma v Bangma [2020] NZHC 2080.

[6]        On 8 September 2020, the defendants submitted the documents for which privilege was maintained to the Court for my review. Notwithstanding their claim to privilege the defendants voluntarily disclosed several email chains to the plaintiff and, accordingly, the documents I had to review were few in number.

[7]        On 11 September 2020, I issued a minute stating that I was satisfied that the documents were subject to privilege under s 54 of the Evidence Act 2006 and did not need to be produced for the inspection of the plaintiff.

The position of the parties

[8]        The defendants both claim costs from the plaintiff on a scale 2B basis together with a 50 per cent uplift. They argue they were successful and scale 2B costs are appropriate due to the nature and complexity of the proceeding.

[9]        The claim for a 50 per cent uplift is made on the basis the plaintiff caused the defendants to incur unnecessary legal expenses because:

(a)the plaintiff filed the applications without any consultation with the defendants, or any attempt to deal with matters by consent;

(b)they were put to the expense of opposing the applications and preparing submissions in circumstances where the plaintiff abandoned the applications in respect to all but three discovery categories and one category of privilege;

(c)for the three categories for which the applications were maintained, the plaintiff acknowledged those categories were not relevant on the current pleadings and there was no basis for seeking particular discovery of those documents;

(d)the plaintiff was ultimately not successful in his applications.

[10]      The plaintiff submits the applications were reasonably brought, that costs should be reserved pending the hearing of the substantive proceeding and, in any event, increased costs should not be awarded.

Principles

[11]      All matters of costs are discretionary. The Court’s discretion in awarding or refusing costs must be exercised on a principled basis. The determination of costs, so far as possible, should be both practicable and expeditious.2

[12]      Under r 14.8 of the High Court Rules 2016, costs on an opposed interlocutory application must, unless there are special reasons to the contrary, be fixed when the application is determined and become payable when they are fixed.

[13]      Generally, the party who has lost should pay the costs of the party that has won.3 The loser pays costs unless there are exceptional reasons to the contrary.4

[14]      My approach to costs in this case is as follows. The first step is to determine who was the successful party overall. If a party has achieved overall success that party is generally entitled to costs. Once I have determined which party won overall, it is necessary to consider if there are grounds to reduce/refuse or increase costs upon any of the grounds set out in the High Court Rules.5

[15]      Here, there is no argument advanced that costs of a successful party should be reduced or refused but the defendants, claiming success, seek increased costs.

[16]Relevant to this issue, r 14.6 of the High Court Rules provides:

14.6Increased costs and indemnity costs

(1)Despite rules 14.2 to 14.5, the court may make an order ---

(a)      increasing costs otherwise payable under those rules (increased costs); or

2      High Court Rules 2016, r 14.2(1)(g).

3      Rule 14.2(1)(a).

4      Shirley v Wairarapa District Health Board [2006] NZSC 63, [2006] 3 NZLR 523 at [19].

5      High Court Rules, rr 14.6 and 14.7.

(b)     that the costs payable are the actual costs, disbursements, and witness expenses reasonably incurred by a party (indemnity costs).

(2)The court may make the order at any stage of a proceeding and in relation to any step in it.

(3)The court may order a party to pay increased costs if ---

(a)      the nature of the proceeding or the step in it is such that the time required by the party claiming costs would substantially exceed the time allocated under band C; or

(b)     the party opposing costs has contributed unnecessarily to the time or expense of the proceeding or step in it by ---

(i)failing to comply with these rules or with a direction of the court; or

(ii)taking or pursuing an unnecessary step or an argument that lacks merit; or

(iii)failing, without reasonable justification, to admit facts, evidence, documents, or accept a legal argument; or

(iv)failing, without reasonable justification, to comply with an order for discovery, a notice for further particulars, a notice for interrogatories, or other similar requirement under these rules; or

(v)failing, without reasonable justification, to accept an offer of settlement whether in the form of an offer under rule 14.10 or some other offer to settle or dispose of the proceeding; or

(c)      the proceeding is of general importance to persons other than just the parties and it was reasonably necessary for the party claiming costs to bring it or participate in it in the interests of those affected; or

(d)     some other reason exists which justifies the court making an order for increased costs despite the principle that the determination of costs should be predictable and expeditious.

(4)     …

[17]      As noted, both defendants are seeking costs. Rule 14.5 of the High Court Rules is relevant in this context and provides:

14.5Defendants defending separately

The court must not allow more than 1 set of costs, unless it appears to the court that there is good reason to do so, if ---

(a)several defendants defended a proceeding separately; and

(b)it appears to the court that all or some of them could have joined in their defence.

Discussion

Who succeeded overall?

[18]      The defendants were completely successful in their opposition to the applications. The plaintiff’s application for further discovery in respect of all categories of documents was withdrawn or dismissed. The defendants’ claim to privilege for discovery documents was upheld following my inspection of them.

[19]      The plaintiff advances a series of arguments to support a contention that he was successful or, at least, that the applications were necessary despite his lack of success. The arguments lack merit.

[20]      The principal arguments advanced were founded upon an assertion that I made a finding in my judgment that the second named defendant was acting in a conflict of interest situation. I made no such finding and this is now accepted by the plaintiff so the arguments fall away and do not require consideration.

[21]      Then it appears to be suggested that the plaintiff had achieved success because I inspected documents in respect of which the defendants claim privilege. I did inspect the documents because all parties were happy for me to do so. I found that privilege was correctly claimed. There was no success in that for the plaintiff.

[22]      It was also argued the application was necessary because of distrust between the parties and that as a result of making the application, important information was obtained. The existence of distrust between litigants, which is hardly an unusual occurrence, is not justification for making an application lacking merit. The ‘information’ obtained appears to have been the knowledge that documents sought do not exist which did not require an application to be made to the Court. The plaintiff’s lawyers could have obtained that information through correspondence.

[23]      Finally, in this respect, the plaintiff’s counsel in the memoranda filed has spent a great deal of time attempting to either relitigate matters determined in my judgment or seeking further intervention from the Court on discovery issues which are not before the Court and not matters that are relevant to costs on the applications.

Should a decision be reserved?

[24]      The plaintiff argues that costs should be reserved pending the hearing of the substantive proceeding. The argument proceeds on the basis that findings in favour of the plaintiff at trial may ultimately vindicate his decision to bring the application. There is no basis for such a view. The applications lacked merit and that will not change regardless of whether the plaintiff ultimately succeeds on his claim at trial. There is no reason why the usual approach under r 14.8, requiring costs be fixed now, should not apply.

Scale or increased costs?

[25]      Having found the defendants were completely successful, prima facie they are entitled to costs. I accept that an award on a scale 2B basis would generally be appropriate to a matter such as this. The defendants, however, seek increased costs.

[26]       Relevant in this present context is r 14.6(3)(b)(ii). The plaintiff pursued his applications and advanced arguments that unnecessarily added to the defendants’ costs. The plaintiff’s solicitors ought to have given prior notice of the applications to the defendants’ solicitors and endeavoured to reach agreement on matters of concern before resorting to the Court. The applications were poorly conceived. They lacked merit and the plaintiff was totally unsuccessful. Reflecting this lack of merit, they were substantially withdrawn at a very late stage. While no criticism should be made of that decision, the applications were withdrawn too late for the defendants to avoid incurring their costs. Furthermore, it was unfortunate the plaintiff persisted with some aspects of the applications that had little prospect of success. For those reasons, and for the reason that I set out in [29] below, some uplift on costs is appropriate.

One defendant or two

[27]      Both defendants have sought costs. Recently in discussing r 14.15, in Lai v Huang Edwards J said:6

6      Lai v Huang [2020] NZHC 588 citing Independent Māori Statutory Board v Auckland Council

[2017] NZHC 678 at [8].

[9] The rule suggests that Courts should be cautious about awarding costs in favour of multiple parties, particularly where there is some overlap or community of interest in the litigation position of the parties seeking costs.

[28]      While the defendants were represented by different firms of solicitors and prepared their own papers in opposition and submissions, there was substantial overlap in their approach and arguments. This was reflected in the manner in which counsel shared duties in presenting submissions at the hearing. Despite the contention advanced that the defendants’ interests did not completely align justifying the involvement of separate lawyers, I consider the defendants could have co-ordinated their oppositions to the applications.

[29]      I am therefore not prepared to allow separate costs for each defendant. Instead one set of costs will be allowed with a 20 per cent uplift to recognise the entitlement to increased costs and the added complexity that one firm acting for both defendants would have inevitably involved. This is consistent with the approach taken in Lai v Huang. I will also make an allowance for the filing of memoranda in relation to costs.

[30]My calculation of the costs and disbursements payable is as follows:

Item  Time                 Cost

23. Filing opposition to interlocutory application	0.6	$1,434.00
24. Preparation of written submissions	1.5	$3,585.00
26. Appearance at hearing of defended application	0.25	$597.50
11. Filing memoranda in relation to costs (x 2)	0.8	$1,912.00
Subtotal	3.15	$7,528.50
Plus uplift 20%	$1,505.70
Disbursements Filing fee on Notice of Opposition	$110.00
$9,144.20

Result

[31]       The plaintiff is ordered to pay the defendants costs and disbursements in the sum of $9,144.20.

O G Paulsen Associate Judge

Solicitors:

Guest Carter Law Limited (S M D Guest), Dunedin Taylor Shaw, Christchurch

Duncan Cotterill, Christchurch