Billington v Morton
[2018] NZHC 2530
•28 September 2018
NOTE: PURSUANT TO S 169 OF THE FAMILY PROCEEDINGS ACT 1980, ANY REPORT OF THIS PROCEEDING MUST COMPLY WITH SS 11B, 11C AND 11D OF THE FAMILY COURT ACT 1980. FOR FURTHER INFORMATION, PLEASE SEE align="center">NOTE: PURSUANT TO S 35A OF THE PROPERTY (RELATIONSHIPS) ACT
1976, ANY REPORT OF THIS PROCEEDING MUST COMPLY WITH SS 11B,
11C AND 11D OF THE FAMILY COURT ACT 1980. FOR FURTHER INFORMATION, PLEASE SEE THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2018-404-751 [2018] NZHC 2530
BETWEEN MALCOLM HAROLD BILLINGTON
Appellant
AND
DEBRA CHARLOTTE MORTON First Respondent
AND
WILSON McKAY TRUSTEE COMPANY LIMITED
Second Respondent
Hearing: 19 September 2018 Appearances:
S R Mitchell for Appellant
K Swadling for First RespondentsJudgment:
28 September 2018
JUDGMENT OF NICHOLAS DAVIDSON J
A. INTRODUCTION
[1] Under the costs regimes which apply in New Zealand, parties risk incurring orders for increased costs where their case is unmeritorious, or they conduct their case in an unnecessarily protracted or disordered way.
BILLINGTON v MORTON [2018] NZHC 2530 [28 September 2018]
[2] This judgment concerns an appeal against a costs judgment of the Family Court by which the appellant, Mr Billington, was ordered to pay costs in the sum of
$50,000.00.1 This reflected Scale 2B costs of $33,820.00, and an uplift for the lack of
merit in Mr Billington’s case.2
[3] Mr Billington appealed the substantive judgment to the High Court. By Minute of 7 December 2017, Muir J recorded that the parties had “sensibly agreed to resolve the appeal”, and said:
This is on terms which involve departures from the division of property and mechanisms of distribution ordered by the Family Court in its judgment dated
16 June 2017. They have entered into a formal memorandum of consent which will be annexed to this Minute.
[4] The Minute went on to record elements of the settlement reached, but not in a comprehensive way. The Judge recognised the efforts of the parties and counsel to reach what he called a “highly desirable outcome”, in the context of there being two children of the relationship.
[5] Costs were then determined by the Family Court Judge on 28 March 2018.
In essence Mr Billington says, through his counsel Mr Mitchell, that the Judge did not follow the prescribed route to determine whether an uplift in costs was warranted, and failed to have regard to the fact of, and terms of, the settlement.
[6] Ms Swadling for the respondent opposes any relief on this costs appeal but accepts that if it is successful, the outcome should be determined by this Court rather than by referring the matter back to the Family Court. Ms Swadling also sought leave to bring a cross-appeal out of time as the costs judgment did not on its face award disbursements to the respondent, to which she says the respondent was entitled.
Grounds of appeal
[7] The appellant pleads that judgment was wrong in finding:
1 Morton v Billington [2017] NZFC 4183 [28 March 2018].
2 Morton v Billington [2017] NZFC 4183 [16 June 2017].
(a)That the resolution of matters by consent in the High Court was not a relevant factor in the assessment of costs;
(b) That in considering all the circumstances an uplift of costs from the
Schedule was appropriate;
(c)That there was jurisdiction for the claim for occupation rental by the respondent;
(d)That the proceedings in the Family Court were conducted in such a manner that an award of costs was justified.
[8] The principles on appeal are well settled. The appellant bears the onus of satisfying the Court that it should differ from the decision under appeal, and only then should the Court interfere with it. The Court must make its own assessment of the merits of the case. Because costs in the end are discretionary, the costs judgment should stand unless the Court acted on a wrong principle, took into account an irrelevant matter, or was plainly wrong.
B. BACKGROUND
Substantive judgment
[9] The 56 page judgment concerned multiple issues about the division of relationship assets, valuation of property and pension schemes, compensation for disparity in income and living circumstances, provision from the Billington Dromorne Trust pursuant to s 182 of the Family Proceedings Act 1980 (“FPA”), the payment of occupational rental by Mr Billington for his rent-free occupation of the Trust property, division of investment properties at Silverdale and Wainui, compensation to Ms Morton for a period when the investment properties were untenanted, child support, and Mr Billington’s claim to a share of a “retention bonus” received by Ms Morton.
[10] The parties lived together from 1992 until they separated in 2013. The marriage was dissolved in November 2015. The Judge referred to Mr Billington’s
evidence of his contribution being “extraordinary” and his claim to separate property. No contracting out agreement was sought or signed. The Judge had difficulty in determining the extent to which any separate property had been brought into the property relationship pool but if there had been, it flowed into the family home. The
‘family home’ changed as time went on.
[11] Mr Billington’s case for unequal division of relationship property was rejected on the basis that his initial capital contribution was likely to have been a mixture of separate and relationship funds, and the remaining contributions to properties appeared to have come from joint income which was relationship property.
Ms Morton cared for the children and that was an equivalent contribution to earnings by Mr Billington. The circumstances of the marriage were not extraordinary.
[12] Mr Billington claimed compensation for disparity of income and living circumstances but the Judge concluded that there was no nexus between that and the roles held by the parties within their relationship.
[13] As to the investment properties, the Judge concluded that all three should be sold to achieve a clean break between the parties, so neither should have the properties by judgment.
[14] An adjustment between the parties for post-separation contributions was made in favour of Ms Morton, but not to the extent that she sought. However, the Judge found that Mr Billington should account to Ms Morton for child support, and this was ordered on a pragmatic basis.
[15] Ms Morton sought provision from a Trust under s 182 FPA, and the Judge ordered that Mr Billington account to the Trust for his share of proceeds received from the Silverdale properties over a specified period, with two new Trusts to be established on identical terms, neither of the parties to be a beneficiary or to have a power of appointment or removal of trustees.
[16] The Judge found there was no relationship property in a Tower Retention Bonus as it was paid post separation, for ongoing services. There were multiple other issues, less significant, and the Judge invited submissions as to costs, if sought.
[17] Ms Swadling characterises the substantive judgment by saying all but two minor issues went in favour of Ms Morton, and all property claimed by Ms Morton as relationship property was treated as such as a result of a concession made by
Mr Billington. Prior to that he had claimed much of it as separate property.
Mr Billington’s claim for unequal sharing pursuant to s 13 of the Act was unsuccessful, as was his claim for compensation under s 15 of the Act and his claim for unequal division in his favour pursuant to s 182 FPA. The former family home owned by the Trust was directed to be sold and the parties’ pensions were valued in accordance with Ms Morton’s actuary’s values (objected to by Mr Billington). Half of the actuary’s costs were directed to be paid by Mr Billington to Ms Morton. The retention bonus claimed by Mr Billington to be relationship property was held to be Ms Morton’s separate property. The value of Ms Morton’s motor vehicle was accepted by the Court as $29,000.00 not the $31,000.00 contended for by Mr Billington. A term deposit of AUS$25,000.00 denied by Mr Billington was held to exist and to be relationship property. Ms Morton was to be credited with $3,719.15 for her Visa as at separation (conceded by Mr Billington at the hearing).
Settlement of appeal to High Court
[18] The settlement reached on 7 December 2017 has been referred to above.
Mr Mitchell says that many of the findings of the Family Court were “inconsistent” with the settlement reached by the parties, and the Judge should have brought that to account. He submits:
Further, the resolution of matters in the High Court should have been considered by the Family Court as an important factor in its determination. Instead, the Family Court treated the High Court orders as irrelevant.
[19] The lack of any consideration of the settlement is the principal ground for this costs appeal, but if settlement should have been brought to account, its evaluation is another matter.
[20] There is a difference between counsel as to the substance of and reasons for the settlement. Mr Mitchell says it was “far ranging”, going well beyond the Family Court judgment under appeal. He says many findings of the Family Court were inconsistent with the settlement reached by the parties. He says that settlement constituted some success for Mr Billington and should be seen as such for the purpose of a costs award in the Family Court. Overall, he says the settlement was far more satisfactory to the appellant than the judgment of the Family Court.
[21] On the other hand, Ms Swadling, for Ms Morton, says that the settlement is not equivalent to a determination on appeal and otherwise does not bear on the reasons for the substantive judgment, as it was reached on pragmatic grounds. The different versions of the terms of settlement compared with the substantive judgment are discussed further.
Costs judgment under appeal
[22] Ms Morton sought costs. For reasons not apparent the costs submissions were not referred to the Judge until March 2018. The Judge contemplated that that may have been because of the appeal, concluded by settlement. Having considered the consent memorandum provided to the High Court on appeal, the Judge said that his substantive determinations, particularly those under ss 13 and 15 of the Property (Relationships) Act (“the Act”), and s 182 FPA, were not affected. The Judge did not draw any inference from ‘adjustments’ agreed as a result of negotiations. He recognised that they were “possibly reached not from a merits basis but from a compromise perspective”.3 He addressed the application for costs on its merits as he determined them.
[23] Jurisdiction as to costs is provided by s 40 of the PRA and Family Court
Rule 207:
40 Costs
Subject to any rules of procedure made for the purposes of this Act, in any proceedings under this Act the court may make such order as to costs as it thinks fit.
207 Costs at discretion of court
(1) The court has discretion to determine the costs of – (a) any proceeding:
(b) any step in a proceeding:
(c) any matter incidental to a proceeding.
(2)In exercising that discretion, the court may apply any or all of the following DCRs, so far as applicable and with all necessary modifications:
(a) 14.2 – principles applying to determination of costs: (b) 14.3 – categorisation of proceedings:
(c) 14.4 – appropriate daily recovery rates: (d) 14.5 – determination of reasonable time:
(e) 14.6 – increased costs and indemnity costs:
(f) 14.7 – refusal of, or reduction in, costs: (g) 14.8 – costs in interlocutory applications:
(h) 14.9 – costs may be determined by different Judge:
(i)14.10 – written offers without prejudice except as to costs:
(j) 14.11 – effect on costs: (k) 14.12 – disbursements.
[24] The Judge was told that Ms Morton’s actual costs were more than $80,000.00, but the costs sought were $66,541.43 to include an uplift over and above scheduled costs pursuant to r 14.6(3) which reads:
(3) The court may order a party to pay increased costs if –
(a)the nature of the proceeding or the step in the proceeding is such that at the time required by the party claiming costs would substantially exceed the time allocated under the band C; or
(b)the party opposing costs has contributed unnecessarily to the time or expense of the proceeding or step in the proceeding by –
(i)failing to comply with these rules or 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, or 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 any 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 the proceeding or participate in the proceeding in the interests of those affected; or
(d)some other reason exists that justifies the court making an order for increased costs despite the principle that the determination of costs should be predictable and expeditious.
[25] Band B costs were $33,820.00. Band C costs were $38,270.00. The Judge referred to the submissions before him:
[20] Mr Mitchell for Mr Billington … referred me to the observations of
Justice Gendall in LRS v JML4 where he observed:
8. … Orders for costs always remain discretionary although the Court of Appeal has recognised that the basic approach in civil matters, where costs follow the event, does not necessarily apply to Family Court Proceedings and no absolute rule can be formulated. Care should still be taken by the Court when declining to award costs in relationship property proceedings, especially where, as appears to be increasingly the case, those proceedings escalate to interlocutory matters involving discovery, interrogatory and inevitably increase legal costs and delays.
9. … The general practice in cases under the Property (Relationships) Act 1976 is that because the process is semi-inquisitorial and designed to benefit both parties by identifying the property entitlements or each in terms of the Act, each party should normally bear his or her own costs.
That, however, assumes that there were issues subject to the legitimate argument which required the Court’s assistance. It also assumes that the proceedings were handled by each side efficiently, economically and honestly.
[21] Mr Mitchell also referred me to the decision of Johnson v Johnson5 where at paragraphs [35] and [38] the Court made the following observations:
[35] Over recent years the principles in relation to property disputes have become more established, and the approach to costs has settled and been made predictable. The development of scales and detailed rules in the District court and High Court rules as to increased or indemnity costs have made calculations more certain.
[36] Therefore the District Court or in this case the High Court regime applies. In applying those principles, there must be a particular recognition of the emotional, and at times complex commercial and legal problems that arise when relationships end. Even reasonable parties in that situation can have difficulty in finding a solution. Nevertheless, when a party takes a significant contested position in property relationship litigation, and can be seen as unsuccessful in that litigation, it can be expected that there will be the same consequences as there would be in a civil litigation.
[26] The Judge also referred to what Mr Mitchell said was “an unmerited claim by
Ms Morton for occupational rental”, and said that the occupational rental and rental calculations made in the judgment were part of s 182 FPA considerations of appropriate resettlement of Trust provisions.
[27] Tellingly, the Judge went on to say:
[24] Reviewing my decision, the overriding conclusion I come to is that the approach taken by Mr Billington was so fixed in opposition and reliant on his personal views as to justice without reference to the law, that he progressed to hearing on all issues whereas with appropriate focus on resolution, having received appropriate advice, settlement should have been achieved or at least, if not achieved, significant issue refinement achieved abbreviating significantly the hearing time required.
[28] The Judge reviewed most elements of the parties’ then reviewed the result at paras [24]-[30]:
[29] Ms Morton only failed in respect of two issues that [were] raised at hearing, they being her claim for reimbursement of airfares and her claim for contribution to the cost incurred by her in bringing her United Kingdom pension to New Zealand, both minor issues in the context of the proceedings generally.
[29] He concluded that costs were payable by Mr Billington and adopted Band B, but came to an uplift as he explained:
[35] There is a percentage in my view that must be added for
Mr Billington’s unwillingness to apply his mind to the prospects of success that [he] had (which I have found were minimal) in respect of heads of claims raised by Ms Morton. He put Ms Morton to unnecessary cost.
[36] There is no doubt that when I consider r 14.6(3)(b)(ii) of the District
Court Rules that Mr Billington argued a case that lacked merit.
[37] In the above circumstances, I form the view that an appropriate cost award is one of $50,000.00 and I so order.
[30] I agree with Mr Mitchell that it seems that the Judge has used Band B, and an uplift of 50 per cent, although there is a question as to whether the Judge intended to incorporate disbursements which would have meant a more modest uplift. I return
to this under Outcome and Disposition.
C. SUBMISSIONS ON APPEAL [31]
Counsel engaged with the Court in a most helpful way.
Their careful
submissions are distilled as follows.
Is a settlement relevant to a costs determination such as this?
[32] Mr Mitchell says that the sequence of judgment, settlement, and then the costs judgment, put Mr Billington at a substantial disadvantage. He says the settlement should have been considered by the Family Court as an important factor in its costs determination.
[33] He says the settlement was “substantially different” to the substantive Family Court orders because, amongst other things, the Court’s valuations were not followed for two investment properties, which were ordered to be sold, but retained under the settlement. The parties did not agree “occupation rental” would be paid, contrary to a
finding that Mr Billington pay $94,500.00. The amount to be paid by Mr Billington in connection with leasing of the investment properties was reduced. The Judge thought that the differences between the judgment and the settlement in this respect constituted “adjustment”.
[34] Mr Mitchell says that the Judge did not properly consider the settlement, which when brought to account meant overall Mr Billington “succeeded” in some respects. In essence, this is a submission that the settlement colours the substantive judgment. The first issue on appeal is thus whether terms of a settlement should be brought to account, unlike a judgment of the High Court on appeal which is evaluative of the Family Court’s reasons for judgment.
[35] While Ms Swadling contested the relevance of settlement reached on appeal, there is good reason to accept its potential relevance. For example, a settlement may be reached because one element of the judgment under appeal is obviously unsustainable through factual or legal error. It would be wrong not to bring that to account, to hide behind the judgment on its face. I consider the costs judgment should have addressed the settlement to see whether it was relevant to costs, and indeed the Judge did so, contrary to Mr Mitchell’s submissions.
[36] However, Mr Mitchell’s submissions run into choppier waters, as by their very nature, settlements are often pragmatic, associated with financial or personal weariness or change of circumstances, and the merits may not be brought to bear much at all. The parties to settlement may have very different reasons for reaching settlement, and these may not bear on the merits of the judgment under appeal.
[37] I have no difficulty in concluding that the terms of settlement may in principle bear on the question of costs. However, that is simply to open the door to consideration of the terms of settlement.
How did the settlement alter the terms of judgment?
[38] I asked counsel to confer as to the extent to which the judgment under appeal has “tempered” in favour of Mr Billington by settlement. They did so, and advised as follows.
[39] Ms Swadling says that under the substantive judgment, all but two minor issues went in favour of Ms Morton. She says the settlement did not deal with the issue of costs and Mr Billington knew there was an outstanding application for costs at the time of settlement. It is surprising this was not expressly addressed in the settlement.
[40] Ms Swadling says that because neither party sought the judgment outcome as to valuation and retention of investment properties, and because of delay between the hearing and the settlement, the changes to the judgment outcomes by settlement do not point to any error in the judgment. The settlement with regard to occupation rental and reduction in the sum to be paid for tenanting of investment properties was not an acknowledgment that the judgment was unsustainable or wrong. The settlement went much further than the judgment, including some of the pathways identified, abandoning the creation of any further Trusts, and ending the litigation rather than incurring the future risk of litigation.
[41] Ms Swadling says an adjustment for Mr Billington’s failure to rent out the rental properties was ordered in the sum of $124,415.00 ($745.00 per week less six weeks per year ie an income to Ms Morton). The settlement provided for a fixed capital sum of $55,000.00 by way of compensation, plus an ongoing agreement that one of the properties was to be rented. The rental would initially be shared, but after
1 June 2018 it would be paid fully to Ms Morton if settlement had not yet occurred.
[42] Ms Swadling says the Family Court judgment provided an adjustment for
Mr Billington’s occupation of the family home when dividing the Trust under s 182 FPA in the sum of $94,500.00 ie that a distribution to Ms Morton’s Trust would have an additional $94,500.00 (referred to as “occupation rent”). This was waived under the settlement in its entirety except that in respect both of this property and the personally owned properties an agreement was reached that Mr Billington would be responsible for outgoings on any property which he was occupying. The evidence of the quantum of these outgoings is not before the Court but would impact on the differential. The orders under s 182 FPA provided for the establishment of two new trusts. The settlement position provided for the distributions to be made to the parties personally, without the need to set up new trusts.
[43] The Family Court directed the sale of properties. The parties agreed that while the family home would be sold, the other properties were not to be sold and
Mr Billington would have first option to retain all three properties, but if he was unable to retain all three properties (ie was unable to finance these), Ms Morton would retain one of the Silverdale properties on account of her share of relationship property. There are a number of financial benefits in this arrangement to Ms Morton given that there would be no marketing or agency costs on selling which can be seen as offsetting other benefits foregone.
[44] Ms Swadling accepts some claims by Ms Morton were unsuccessful in the Family Court and were not challenged on appeal. There was no reimbursement of the costs of bringing her pension to New Zealand ($3,775.69) and there was no reimbursement for airfares that Mr Billington had purchased ($2,257.00). CFO Partners Ltd, a company owned by Mr Billington, was held to have no value (Ms Morton claimed $17,950.00).
[45] The settlement also provided for some practical implementation issues and, unusually, reserved leave to return to the High Court for further and better directions as to implementation. Subsequently, pursuant to an application for recall dated
3 July 2017, but not determined until 20 April 2018, the Family Court directed that
Mr Billington should be personally responsible for meeting the independent trustee’s costs of $22,441.00 incurred in having Mr Billington removed as trustee. The effect of this was to increase the payment from the Trust to Ms Morton.
[46] Mr Mitchell says the settlement differs from the Family Court judgment in a number of ways relevant to costs:
(a) Investment Properties
(i) At paragraph 222 Judge Maude ordered the sale of the two
Silverdale investment properties, and the Wainui section.
(ii) Pursuant to the provisions of the Consent Orders
Mr Billington retained all three properties as he had sought in the Family Court.
(b) Failure to Tenant Properties
(i)Judge Maude directed that Mr Billington pay the sum of $745 per week from 1 May 2014 (subject to a deduction of six weeks per annum) to compensate for the loss of rental.
(ii) From 1 May 2014 until 16 June 2017, the date of judgment,
Mr Billington owed 150 weeks at $750, being a total of
$112,500.
(iii) Pursuant to the Consent Order, Mr Billington agreed to pay
$55,000, and the obligation to pay the $112,500 was discharged.
(c) Occupational Rental
(i)On account of occupation of Dromorne Road, Mr Billington was ordered at paragraph 299 of Judge Maude’s decision, to pay the sum of $94,500.00;
(ii)The consent Memorandum specifies that no occupation rental is to be paid, a reduction of the sum of $94,500.
(d) Trust owned Property
(i)In addition, significant changes were made to the orders in relation to the trust owned property at Dromorne Road, including a reserve price and agreement as to a method of sale.
[47] For reasons discussed below, I conclude the settlement does not reflect
‘success’ for Mr Billington so as to influence costs awarded by the Judge.
Uplift
[48] Mr Mitchell says relationship property proceedings should be recognised as having a “special nature” but recognises that costs tend to follow the event in such proceedings these days.
[49] He submits that an order for increased costs should be calculated by the principles set out in Holdfast NZ Limited v Selleys Pty Ltd,6 so that the applicant should:
(a) Categorise the proceedings;
(b)Work out a reasonable time for each step in the proceeding (with reference to the daily recovery rates and the time allocations);
(c) Apply for extra time for a particular step as necessary; and
(d)Only after the preceding three steps have been complied with should the applicant step back and consider the amount of costs were received by this process, and then argue for additional costs if it is considered such can be justified;
(e)It is also established that in only the most exceptional of circumstances would an increase of 50% of scale costs be warranted.
[50] He says these steps were not taken by the Judge, and it was not sufficient to simply conclude that Mr Billington failed in most of his arguments before the Court. Not all that he advanced lacked merit, and the hearing was shortened because of the way Mr Billington’s case was presented, including concessions. In essence,
Mr Mitchell says that Mr Billington should be seen as having had some success in the Family Court, with a final ‘satisfactory’ outcome by settlement. He refers to a case where the Court of Appeal stated:7
There are no set guidelines on how costs should be assessed by the initial Court where the initial Court’s ruling has been overturned by an Appellate Court, although the applications appear to have been treated as if the party who successfully appealed had also been successful in the lower Court.
[51] Thus, he submits there were overall mixed results and neither party was
‘successful’ in the Family Court because the decision was “overturned” by the settlement, so each party bore some level of success. He says the Judge failed to address the “marked differences between the settlement and the Family Court judgment” and incorrectly concluded the entire or most by Mr Billington’s case lacked merit.
[52] Ms Swadling submits that the uplift was in the exercise of discretion on a principled basis. That Mr Billington’s case lacked merit in most prospects, she also
refers to what was required for the judgment to be reached. There were four bundles of evidence, detailing the history of the relationship and the properties acquired, and this was the product of the challenge to the presumption of equal sharing. The separate property claims made by Mr Billington failed, as did his pleading of “exceptional circumstances”. The position on s 15 of the Act adopted by Mr Billington required a great deal of evidence. He argued that the three properties in the joint names of the parties were his separate property. His claim to exceptional circumstances was tested and failed against a relationship of more than 20 years.
[53] In addition, Ms Swadling submits there were adverse findings as to
Mr Billington’s credibility. While Ms Swadling also referred to Her Honour Judge Manuel’s Minute of 25 November 2016 which recorded that the appellant declined to agree to joint valuations being obtained, and that may have extended the hearing time to affect costs, I do not bring that to account because it has not been developed in argument and, in my view, is secondary to the issue on appeal.
D. DISCUSSION AND CONCLUSION
[54] The resolution of an appeal by judgment of the High Court, or on further appeal, bears inexorably on costs in the Court(s) appealed from. In the same way, a settlement which concludes such appeal(s), may come to bear on the judgment under appeal, and thus as to costs.
[55] I can find nothing in the settlement to demonstrate that the parties mutually recognised, or should be taken to have accepted, that there was something about the judgment that was wrong. Mr Billington plainly believes that the settlement tempered the judgment, but it is another thing to say that it reflects on the merits of the judgment so as to bear on costs. I cannot find anything to that effect. In principle therefore,
Mr Mitchell is right that if a settlement can be dissected so as to bear directly on the merits of the judgment and the ‘success’ of the parties, then that should be brought to account, but I do not find anything to that effect here.
[56] Thus, the principle thrust of the appeal fails, and the question remains whether the costs judgment otherwise should be upset under established principles, recognising that it is, in the end, an appeal against the exercise of discretion. The reasons expressed
succinctly in the costs judgment are that Mr Billington substantially failed and he pressed arguments that really were not sustainable on the facts, nor at law. He had very limited ‘success’ and the Judge was emphatic about this.
[57] While the stepped process described in Holdfast was not followed, I have reservations as to how that works in practice in many cases because it is very difficult to know how much time was spent on each issue the subject of judgment, evaluating the extent to which that was properly developed in evidence, and argued. In this case the Judge has taken a rounded approach to the question of uplift, based on the overall failure of Mr Billington, in his various litigation positions. It is essentially the degree of failure of Mr Billington in the substantive judgment which led to the uplift, and his determined pursuit of positions which failed. The Judge concluded that an uplift was warranted because the respondent had to face such unmeritorious positions taken by
Mr Billington and that does not require an item by item assessment as to what costs should have been incurred had the matters been argued in a different way, but rather it is a reflection of the whole case.
[58] I do not see this judgment as a precedent, and indeed, given the discretionary nature of costs decision that could not be the case, but it is a marker for determined and unmeritorious positions adopted in the difficult and often emotional setting which accompanies the end of relationships, but which is in the end largely about contributions to a relationship, and property. If this costs award is a discouragement to litigants pressing legal and evidential positions which lack merit, then that is a good thing.
[59] This judgment stands on a particular footing. In awarding costs, the Courts are required to look at the various issues and assess them for success or failure of the parties, before standing back to look at the ‘overall’ success of the parties. In a case like this when a party is substantially unsuccessful, it becomes more a “standing back” exercise. Uplifts are appropriate where there is substantial failure as the result of an unmeritorious legal and/or factual position adopted. Arguments lost but properly argued are not in this category. Uplift may also apply where a case has been conducted poorly, argumentatively and in a prolonged manner, with prolix and misdirected
submissions. These are observations only, but the instant appeal fits into the category of one party having a marked lack of success in the litigation positions adopted.
E. OUTCOME AND DISPOSITION
[60] There is an oral application for leave to cross appeal against the refusal of there being no award of disbursements as sought. The judgment refers at para [16] to the costs sought for Ms Morton in the sum of $66,541.43 being increased costs over and above the scheduled costs plus disbursements. The Judge did not then address the question of disbursements directly again. He explained the Schedule B costs as constituting appropriate guidance to the Court in the sum of $33,820.00, and then referred to “a percentage in my view that must be added for Mr Billington’s unwillingness to apply his mind to the prospects of success…” in respect of heads of claims raised by Ms Morton. He put Ms Morton to unnecessary costs.
[61] After saying that for the purpose of r 14.63(b)(ii) DCR, Mr Billington argued a case that lacked merit, he said he had formed the view that “an appropriate costs award is $50,000.00…”
[62] I have reflected on the various issues that arise, and have come to the view that leave should be refused for the cross appeal, because while there is no apparent prejudice to Mr Billington, in the sense that Mr Mitchell can argue the point for him, there is too much doubt about what the Judge intended and this should have been resolved before the cross appeal was mounted. I do not know whether the Judge intended to comprehend disbursements in the $50,000.00 costs award. If he did, he did not say so. He may have, by allowing a lesser uplift than sought by counsel for
Ms Morton, and including disbursements of which he knew given the reference above. He may, on the other hand, have decided not to award disbursements, or simply missed that element in reaching judgment.
[63] I am not prepared to guess what the Judge did or did not do, or what was brought to account. I contemplated sending this matter back to the Judge for clarification, and if he intended the costs award of $50,000.00 to be comprehensive of disbursements, I would not disturb that as that is a matter of discretion. Otherwise, if he otherwise overlooked it, or declined to award disbursements as sought, then it
would open up the cross appeal. I do not think this Court should be put to that trouble, nor the Judge, in bringing a cross appeal and leave is refused in that regard.
[64] In the circumstances, I decline to grant leave for the cross appeal.
[65] I uphold the costs uplift. I conclude that the grounds of appeal are not made out for the reasons given above. The appeal is dismissed.
[66] As to costs on this appeal, counsel should consult and if there is no agreement reached, a teleconference m may be arranged through the Registry.
…………………………………………….
Nicholas Davidson J
Solicitors:
Richard S Wood, Auckland
Conveyancing Centre, Auckland
copy to counsel:
K E Swadling, Barrister, AucklandS R Mitchell, Barrister, Auckland
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