Barbalich v Leaders Real Estate (1987) Limited

In the case of Barbalich v Leaders Real Estate (1987) Limited, the plaintiff, Elizabeth Janet Barbalich, sought to recover damages from the defendants, Leaders Real Estate (1987) Limited and Nicholas Liam Denis Reeve, for alleged misrepresentations made during the property tender process. The claim was brought under the Fair Trading Act, with damages of $250,000 sought by the plaintiff. The case was heard by Mallon J in the High Court of New Zealand. The main legal issues in the case were whether the plaintiff's rejection of settlement offers by the defendants warranted an increase in the defendants' costs and whether the defendants' failure to provide full discovery warranted a reduction in the defendants' costs.

The court held that the plaintiff did not act unreasonably in rejecting the settlement offers made by the defendants. The offers were not significantly different from "walk-away" offers and were less than the legal fees the defendants had incurred at the relevant points in the proceeding. The plaintiff's position was based on her honestly held belief that she had been lied to, and she was willing to compromise for less than the amount she had claimed, but only if the defendants acknowledged their fault. The court found that it was not unreasonable for the plaintiff to proceed to trial to have the court determine the credibility and reliability of the parties' evidence.

Regarding the discovery issue, the court found that the defendants' failure to provide full discovery at the outset caused unnecessary additional cost to the plaintiff. The court decided that it was appropriate to reduce the order for costs on this basis, but the reduction sought by the plaintiff was too great. The defendants were entitled to claim for inspecting the plaintiff's documents, but the claim for preparing their list of documents was disallowed as a suitable proxy for the increased costs caused to the plaintiff by the discovery failings.

As a result, the court ordered costs of $34,228 payable by the plaintiff to the defendants. The court found that the defendants were entitled to costs on a 2B basis, but the amount was reduced due to the defendants' failure to provide full discovery at the outset. The court declined the claim for increased costs as the plaintiff was not acting unreasonably in rejecting the settlement offers.