Beirne v Kidd
[2015] NZHC 3118
•8 December 2015
IN THE HIGH COURT OF NEW ZEALAND INVERCARGILL REGISTRY
CIV-2014-425-124 [2015] NZHC 3118
IN THE MATTER of an appeal against a decision of the
District Court at Invercargill
BETWEEN
GRAHAM HENRY BEIRNE Appellant
AND
CHARLES EDWARD FRANCIS KIDD Respondent
Hearing: 8 December 2015
(On the papers)
Counsel:
W J Hamilton for Appellant
R T Chapman for RespondentJudgment:
8 December 2015
JUDGMENT OF MANDER J
[1] Mr Graham Beirne and Mr Charles Kidd have been embroiled over a dispute regarding alterations Mr Kidd carried out on Mr Beirne’s recreational campervan (RV). Mr Kidd sued for the unpaid portion of the works which he claimed were due and owing. Mr Beirne counterclaimed for sums which he claimed were necessary to rectify deficiencies in Mr Kidd’s work.
[2] In the District Court Mr Kidd was awarded $28,262.06 (including GST). This was after Mr Kidd reduced his claim by the cost of the first damaged windscreen and Mr Beirne had paid $12,832.52, which was not contested as being other than owed for the work completed.1 Mr Beirne was awarded $3,128.62 on his counterclaim of $17,867.48 (including GST). On appeal to this Court, Mr Beirne
was substantially successful.2
1 Kidd v Beirne DC Invercargill CIV-2012-025-513, 7 November 2014.
2 Beirne v Kidd [2015] NZHC 2151.
BEIRNE v KIDD [2015] NZHC 3118 [8 December 2015]
[3] The issue of costs in the District Court and this Court remains outstanding.
High Court costs
[4] The parties are agreed that costs ought to follow the event in Mr Beirne’s favour on the basis he was the substantial victor in this Court. The parties are agreed that costs should be fixed on a 2B basis in the sum of $12,821 together with disbursements in the sum of $1,542. Accordingly, there will be an order awarding Mr Beirne costs on that basis.
District Court costs
[5] The parties have been unable to reach agreement as to the appropriate award of costs in respect of the District Court proceeding.
Jurisdiction
[6] Neither party has identified the juridicial basis for making a costs award in respect of the lower Court hearing the subject of the appeal, nor has any party articulated the relevant principles. This raises two issues:
(a) whether appellate courts possess jurisdiction to make awards of costs in relation to proceedings conducted in the court below in the absence of the issue having been determined before that Court; and
(b)the approach to appellate courts of costs in relation to decisions under appeal.
[7] As to the first question, I am satisfied this Court is possessed of the requisite jurisdiction to make a costs award in respect of proceedings conducted in a court below. Rule 20.19 of the High Court Rules relevantly provides:
20.19 Powers of court on appeal
(1) After hearing an appeal, the court may do any 1 or more of the following:
(a) make any decision it thinks should have been made: (b) direct the decision-maker—
(i) to rehear the proceedings concerned; or
(ii) to consider or determine (whether for the first time or again) any matters the court directs; or
(iii) to enter judgment for any party to the proceedings the court directs:
(c) make any order the court thinks just, including any order as to costs.
…
(4) The court may act under subclause (1) in respect of a whole decision, even if the appeal is against only part of it.
…
[8] Rule 20.19(1) is sufficient to provide jurisdiction to this Court to address the incidence of costs in the District Court. This was the approach taken by Baragwanath J in Waitakere City Council v Brunel in relation to Rule 718A of the predecessor High Court Rules:3
[5] As regards costs in the Environment Court, Mr Williams submitted that this Court lacks jurisdiction to make any such determination and that the decision should be referred back to the Environment Court. He compared the costs power under s 24(13) of the Public Works Act with the broad discretion of the Environment Court under s 285 of the Resource Management Act
1991 and cited the decision of the Supreme Court in Waitakere City Council v Estate Homes Ltd [2007] 2 NZLR 149 at [70]:
In order to decide that it was appropriate to decide outstanding issues in this Court, we would need to be satisfied that they would not turn on questions of specialist judgement concerning facts which the legislature contemplated would be determined on appeal from a local authority by an expert tribunal.
[6] Mr Casey submitted that costs should be determined in this Court under r 718A which states that, having heard an appeal, the Court may either direct the court appealed from to determine any matter the Court directs or itself make any further or other order, including any order as to costs.
[7] I accept Mr Casey's submission. I have decided to exercise the costs discretion both in relation to the Environment Court hearing and in this Court. The advantage of a unified approach in my view outweighs the Environment Court's greater familiarity with events before it. It was necessary in order to determine the appeal to review the transcript of the Environment Court hearing and I have the advantage of that Court's views expressed both in its substantive report and in its costs decision, albeit written on the basis of the respondents' success in that Court.
3 Waitakere City Council v Brunel HC Auckland CIV-2006-404-4504, 5 September 2008.
[9] The next issue is how the jurisdiction it to be exercised. Again, r 20.19 is almost a complete answer. Rule 20.19(1)(a) confers on the Court the jurisdiction on appeal to make any order it thinks should have been made in the court or tribunal appealed from. If the Court considers the decision under appeal to be in error, it will ordinarily follow that any costs award will have been based on an incorrect premise.4
[10] The position is explained in relation to the Court of Appeal (Civil) Rules
2005 by the authors of McGechan on Procedure:5
The following represent general approaches taken in determining costs in the High Court. These are, of course, subject to the Court’s discretion and to the circumstances of the particular case:
(a) High Court judgment not disturbed: costs in the High Court are likely to be left to the High Court. Any order already made is unlikely to be varied. If no order has been made, costs will generally be left for the trial Judge to fix.
(b) High Court judgment varied: it then depends on the extent to which the Court has altered the basis of the High Court judgment. If the substantive basis has been overturned, costs consequences are regarded as being at large, and the Court of appeal will consider the case afresh. Thus, if the High Court’s judgment is reversed, the appellant may receive costs both in the Court of Appeal and in the High Court. If the Court of Appeal sees difficulty in fixing costs in the High Court in the changed circumstances, it may refer those back to the High Court to fix. For example, that is likely to occur if the High Court dealt with other aspects (or even other proceedings) which were not the subject of the appeal. If the High Court’s judgment is merely adjusted (for example, its findings of liability are upheld, but its award of damages is reduced), the costs order made by the High Court is likely either to be left unaltered, or at most be somewhat reduced.
[11] Paragraph (b) of the McGechan commentary is relevant for present purposes. This is a manifestation of the principle known as “costs here and below”. This means the appellate Court orders that a successful appellant is to receive costs on the appeal and in the Court below. The rationale for such orders was explained by
Leggatt J in Kuwait Airways Corporation v Iraqi Airways Co and Another (No 2):6
When this court allows an appeal and reverses the order for costs which a judge has made, it is usually demonstrable that the party in the court below
4 See for example Murray v Morel and Co Ltd [2008] NZCA 124.
5 McGechan on Procedure (online looseleaf ed, Brookers) at [CR53J.02]. It is noted that the power under r 53J of the Court of Appeal (Civil) Rules 2005 derives from r 48.
6 Kuwait Airways Corporation v Iraqi Airways Co and Another (No 2) [1994] 1 WLR 985 (CA).
should have won, and that the order for costs should therefore have been in his favour.
[12] But this is not a complete answer. Costs are always at the discretion of the Court. What is required is that the award does justice as between the parties. In determining this issue, the specific costs rules will inform the discretion.
Mr Beirne’s position
[13] Mr Beirne’s analysis of the costs position is straightforward. He submitted that when one steps back and takes a holistic assessment of the District Court and High Court proceeding, he won on seven of the nine items in dispute which went to trial. Mr Beirne therefore seeks scale costs in the sum of $11,625, together with disbursements of $3,558.07.
Mr Kidd’s position
[14] Mr Kidd seeks to take a more nuanced approach to the issue of costs. However, the crux of his argument is that he succeeded in the District Court and that costs should therefore follow the event. Mr Kidd submitted that viewing the overall level of success and failure of each party, he still obtained a net benefit of $9,867.61 as a result of the District Court proceedings. In other words, his total monetary success eclipsed that of Mr Beirne. He seeks costs of $9,300 and disbursements of
$1,183.77. Additionally, there is a claim for interest calculated on the basis of the making and adjustment of awards in his favour.
Calderbank offers/offers without prejudice save as to costs
[15] A series of letters between the parties make it apparent that Mr Beirne never seriously disputed he was liable to Mr Kidd for the work undertaken. The without prejudice save as to costs communications can be summarised as follows:
(a) 8 February 2013: Mr Beirne offers to pay $21,728.25, being the difference between the agreed maximum contract price and Mr Beirne’s counterclaim.
(b) 4 November 2013: Mr Beirne offers to pay $23,000 (including GST,
if any) in respect of Mr Kidd’s claim.
(c) 8 November 2013: Mr Kidd offers to reduce his claim of $45,730.45 (plus GST) by $9,990 (plus GST), which represents the cost of a windscreen not the subject of proceedings. There was therefore an offer by Mr Kidd to settle the claim if Mr Beirne paid $35,830 (including interest and costs).
(d) 13 November 2013: Mr Beirne rejected Mr Kidd’s settlement offer.
The offer of $23,000 was repeated.
(e) 3 February 2014: Mr Beirne wrote to Mr Kidd informing that the claim of $30,000 in relation to the reduction in value of the vehicle was being abandoned. Only the counterclaim in respect of damage remained. Because of this, it was apparent there was an undisputed amount of $12,832.52 payable to Mr Kidd by Mr Beirne. A trust cheque account was enclosed.
[16] The short point emerging from this correspondence is that Mr Beirne’s best offer was to pay Mr Kidd the sum of $23,000 in full and final settlement. Putting to one side the issue of interest, following the appeal judgment Mr Kidd achieved success in the sum of $22,700.13 (including GST). This represents the amount paid by Mr Beirne in the sum of $12,832.52, and the adjusted award after the appeal which Mr Kidd was entitled of $9,867.61.
Interest
[17] The discussion concerning the Calderbank offers raises the issue of interest. If Mr Beirne is liable for interest, it means his Calderbank offer was slightly less than the overall success of Mr Kidd. If Mr Beirne is not liable for interest, this would mean his Calderbank offer was greater than the overall success obtained by Mr Kidd.
[18] The interest claimed in this proceeding arises not by virtue of contract, but is rather an invitation that the Court exercise its discretion under s 87 of the Judicature
Act 1908. The applicable principles were recently rehearsed by the Supreme Court in Worldwide NZ LLC v NZ Venue and Event Management Ltd.7 In that case, the essence of the test was articulated as being what the justice of the case requires.
[19] This is not a case, in my view, where interest ought to be awarded. The reasons can be stated briefly:
(a) The true amount of the invoice was genuinely in dispute. This is reflected by the fact Mr Kidd was, at one stage, claiming some
$50,000 (including GST). When his claim was ultimately quantified at the commencement of the trial as being significantly less than that.
(b)Mr Beirne was shown to have been acting reasonably in seeking to challenge aspects of the invoiced sums and attempting to settle the matter, although, similarly, the original counterclaim which included a claim for a reduction in the value of the RV, was ultimately significantly reduced.
(c) Had Mr Kidd taken a more realistic and pragmatic approach to this issue, it is likely the matter could have been settled without the need for litigation. He would not, therefore, have been out of his money.
[20] Thus, while Mr Kidd has been out of his money as a result of this dispute, I do not consider it a case where justice would be best served by an award of interest. The result of this, as I have said, it that the Calderbank offer made by Mr Beirne was marginally greater than the success achieved by Mr Kidd following appeal, but that of itself is not determinative.
Resolution
[21] Both parties can claim some success in the context of a broad assessment of the ligation. It is apparent Mr Beirne effectively achieved an outcome which
reflected his best offer before trial in settlement of the dispute. He won on seven of
7 Worldwide NZ LLC v NZ Venue and Event Management Ltd [2014] NZSC 108, [2015] 1 NZLR
1 at [70] and [76].
nine points ultimately brought, and was mathemetically successful in resisting Mr Kidd’s claim for the outstanding sum. Mr Beirne never denied he was liable to Mr Kidd for work undertaken. Rather, he disputed the amount claimed and sought compensation for his own losses.
[22] Against that, Mr Kidd overall did ultimately obtain an award in his favour, albeit reduced as a result of the appeal. Mr Beirne’s claim as initially conceived included a claim for diminution in the value of the RV which was abandoned, in addition to the claimed damage. That initial approach was not conducive to settlement. Mr Kidd also had some success in resisting Mr Beirne’s counter-claims and establishing liability and quantum.
[23] Ultimately, the combined effect of the hearing at first instance, and the appeal was that Mr Kidd recovered $9,867.61 from Mr Beirne. Examined from Mr Beirne’s perspective, he successfully defended the sum of $12,299.87 which represented the value of that part of his counterclaim on which he succeeded. He had already paid
$12,832.52. These three figures total $35,000 and reflect the totality of Mr Kidd’s
claim as it stood on the eve of the District Court hearing.
[24] Mr Beirne had effectively offered to pay two-thirds of Mr Kidd’s $35,000. By the time of the District Court hearing he had only paid one-third. As is apparent from the foregoing, the net result of the litigation was that, as a result of Mr Kidd persevering in his claim, he established Mr Beirne’s liability to pay a further sum ($9,867.61), although this represented less than half the amount still in dispute between the parties.
[25] Having regard to the mixed overall result of the litigation, when examining matters in the round, I consider the fairest outcome, as it relates to the District Court proceeding, is to let costs lie where they fall.
Outcome
[26] I make the following orders:
(a) Mr Kidd is ordered to pay Mr Beirne costs on appeal in the sum of
$12,821 together with disbursements in the sum of $1,542.
(b)Costs in respect of the District Court proceeding are to lie where they fall.
Solicitors:
Duncan Cotterill, Christchurch
Cruickshank Pryde, Invercargill
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