Bowden v Bowden
[2017] NZHC 1841
•4 August 2017
IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY
CIV-2015-409-702 [2017] NZHC 1841
BETWEEN JUDITH ANNE BOWDEN
Appellant
AND
PAUL GORDON BOWDEN Respondent
Hearing: 4 August 2017
(On the papers)
Appearances:
A S Greig for Appellant
A D Marsh for RespondentJudgment:
4 August 2017
JUDGMENT OF MANDER J
Introduction
[1] Ms Judith Bowden (JB) appealed a finding by the Family Court that there were extraordinary circumstances that made equal sharing of relationship property with her deceased partner’s estate repugnant to justice. JB was partially successful, although on the majority of grounds her appeal was dismissed.1
[2] The respondent, Mr Paul Bowden (PB), seeks costs of $7,392.50 which he says are the actual and reasonable costs incurred, and which are lower than scale costs. JB opposes any award of costs. She submits costs should lie where they fall.
Background
[3] JB was the partner of Mr Gordon Bowden for three years and two days, up
until his death in 2012. PB is Gordon Bowden’s son, born of a previous relationship. In his will Gordon Bowden left his estate to PB. The Family Court found the
1 Bowden v Bowden [2016] NZHC 1201, [2017] NZFLR 56.
relationship property consisted of the home the deceased and JB lived in together, with equity of approximately $300,000, and a shared bank account with funds of
$31,655.79. However the Court held that exceptional circumstances were present which made equal sharing of that property repugnant to justice. It ordered that JB be awarded 20 per cent of the relationship property.
[4] I upheld the finding of repugnancy, and the allocation of a 20 per cent share. The Family Court’s findings regarding JB’s obligations as to rent, rates, and insurance for her continued use of the matrimonial home were also upheld. However, I allowed one ground of appeal, finding the ACC payout of approximately $100,000 to be relationship property which JB was entitled to a 20 per cent share.
The Calderbank offer
[5] In the lead up to the initial Family Court hearing, PB made a settlement offer without prejudice save as to costs by which JB would be entitled to a 50 per cent share in the relationship home. The parties would share the costs of engaging a valuer. Following the valuation JB would have the option for 28 days to purchase PB’s half-share. If not exercised, PB would then have a reciprocal right to purchase for the following 28 days. If neither exercised the purchase option, the house would be sold and the proceeds divided equally. The settlement offer also anticipated JB paying 50 per cent of the reasonable market rental for the period of her occupation for the one year after the death of her partner – an amount lower than eventually ordered by the Court.
[6] The offer was made on 2 April 2015 and a response anticipated within seven days. The offer was withdrawn on 7 May after PB became aware of this Court’s decision in Venter v Trenberth, which lent support to PB’s case for a repugnancy
finding.2
2 Venter v Trenberth [2015] NZHC 545, [2015] NZFLR 571.
Submissions on Costs
PB
[7] PB submitted that JB was not, for the most part, successful in her appeal. Applying general costs principles, he submitted the ordinary outcome would be for JB to pay his costs, but with a reduction to reflect her partial success.
[8] However, he further submitted that increased or indemnity costs should be awarded because of JB’s failure to accept the Calderbank offer. The offer, if accepted, would have put JB in a significantly better position than after the Family Court decision and the appeal. He submitted JB acted unreasonably in rejecting the offer, as the law was not uncertain and it was clear her primary challenge was without merit. The offer was made well before the actual hearing and if accepted would have dramatically reduced PB’s costs.
[9] PB also notes the costs he seeks ($7,392.50) are less that than the costs which he would have otherwise been awarded on a 2B basis, which he calculates as being
$9,812 plus disbursements, based on 4.4 days at $2,230 per day. However, PB has not provided a schedule showing how this was calculated, nor the basis on which the actual costs have been arrived at.
JB
[10] Although JB concedes the position has in more recent years changed, she maintains the conventional rule in relationship property cases is that each party bears its own costs. Further, JB’s success on the ACC payment ground it is submitted was significant in monetary terms, and as such it was not unreasonable for her to pursue the appeal on that basis.
[11] JB submitted the Calderbank offer should not be taken into consideration. She noted the offer was withdrawn rather than rejected, and that on it being withdrawn no revised offer was tendered. The letter containing the offer stated “it is patently clear that your client does not have a claim in relation to the ACC payment”, a position which in the end proved not to be correct.
[12] JB also asks the Court to note that the rejection of the offer in part reflected a “tactical decision not to pursue a claim… under the Family Protection Act”, and that she is now legally aided and pursuing such a claim before the Family Court.
Relevant principles
[13] The overriding principle is that costs are at the discretion of the Court.3 The general guiding principles to be applied as set out in the High Court Rules are well- known.4 The party who fails with respect to a proceeding should pay costs to the party who succeeds. An award of costs should not exceed the costs incurred by the party and so far as possible their determination should be predictable and expeditious.
[14] Where both parties have enjoyed a measure of success, costs should be awarded on the basis of proportionality of that success.5 In assessing proportionality the correct approach is not to merely tally up the number of issues upon which each party succeeded, but to assess “how the actual conduct of the case differed from that reasonably required to secure the actual result.”6
[15] The Court can award increased costs if the party opposing costs has contributed unnecessarily to the time or expense of the proceeding by taking an unnecessary step, or advancing an argument that lacks merit, or by failing, without reasonable justification, to accept an offer of settlement.7 The court may order a party to pay indemnity costs if a party has acted vexatiously, frivolously, improperly, or unnecessarily in defending a proceeding.8
[16] Rule 14.11 provides that where a written settlement offer without prejudice save as to costs is refused, and the outcome for the refusing party is worse than if it
had been accepted, the party making the offer is prima facie entitled to costs incurred
3 High Court Rules, r 14.1.
4 Rule 14.2.
5 Zondag v Zondag HC Hamilton CIV-2003-419-328, 28 September 2007; Paper Reclaim Ltd v
Aotearoa International Ltd [2007] NZCA 544, (2007) 18 PRNZ 743.
6 TFAC Ltd v David HC Auckland CIV-2006-404-3984, 5 March 2008 at [22].
7 High Court Rules, r 14.6(3).
8 High Court Rules, r 14.6(4).
in the proceeding after the refusal of the offer. However this remains subject to the overriding discretion of the Court.9
Analysis
Was PB the successful party?
[17] The central issue on appeal was whether the District Court Judge was correct to find that equal sharing of the relationship property was in the circumstances repugnant to justice. It was on this point that the lion’s share of JB’s monetary claim was based, and on which the appeal was most focused. JB failed on this ground, and on three of the four other grounds. The ground that she did succeed on, the status of the ACC payout, while a secondary issue was not without significance. However, if JB had been successful on the repugnancy appeal point her share of the relationship property would have risen from approximately $66,000 to some $215,000. The actual outcome of the appeal was that her share rose to approximately $86,000.
[18] JB’s submission that relationship property cases are to be regarded differently and that the usual rule is that costs are to lie where they fall does not stand scrutiny. While this may once have been the case, there is now a significant body of authority that this approach no longer prevails.10 In Thompson v Public Trust Clifford J, after reviewing the relevant authorities, concluded that general costs principles apply unless a good reason exists to depart from those principles.11 No such reason exists in the present case.
[19] PB must be viewed as the successful party on the appeal, and is therefore prima facie entitled to his costs. A discount should apply to reflect JB’s partial success.12 In this case no more than a 20 per cent discount would be warranted. In
terms of monetary success that would represent a generous apportionment.
9 Rule 14.11(1).
10 FT v JML [2012] NZHC 1388; Martin v Marsh [2015] NZHC 416 at [7]; Van Selm v Van Selm
[2015] NZHC 641, (2015) 30 FRNZ 163.
11 Thompson v Public Trust [2014] NZHC 2434 at [4].
12 Paper Reclaim v Aotearoa International Ltd, above n 5.
Should the costs award be uplifted or indemnity costs be awarded?
[20] The case for indemnity costs is not made out. JB was partially successful on her appeal and there is no basis to suggest the appeal was brought “vexatiously, frivolously, improperly, or unnecessarily”. However, an issue remains as to whether there should be an uplift because of JB’s refusal to accept the Calderbank offer before trial.
[21] That the offer was withdrawn rather than rejected does not greatly assist JB. The offer indicated a response was expected within seven days, and was only withdrawn nearly five weeks later. This provided ample opportunity for JB to respond within the period the offer remained available. Her failure to accept within that timeframe for all practical purposes amounts to a refusal. Nor, when regard is had to the ultimate monetary outcome of the appeal, does the fact the letter containing the offer wrongly assessed the ACC point to be untenable assist JB. The letter presented a genuine compromise which in hindsight was generous.
[22] If accepted, the Calderbank offer would clearly have placed JB in a much better position than she ultimately achieved. This is not in dispute. Instead of approximately $86,000, she would have received approximately $150,000 (plus interest). She would also have had to pay a significantly lower rental for her continued use of the relationship home.
[23] In the circumstances, I do not consider there was reasonable justification for rejecting the offer. The offer remained open even after the Venter v Trenberth decision had become available. While JB was of course entitled to make tactical decisions as to how she pursued her claim, refusing a reasonable and, indeed, generous settlement offer always leaves a party open to the risk of incurring the other party’s costs.
[24] It appears this Court has not previously considered whether the rejection of a Calderbank offer before trial remains relevant to the question of costs on an appeal of the trial decision. The issue has been addressed a number of times in Australia, where the growing consensus appears to be that because a proceeding on appeal
constitutes a new proceeding, a Calderbank offer at trial is not considered to be relevant to the question of costs on the appeal unless the offer has been renewed.13
[25] However, the limited authority suggests the situation is different in this jurisdiction. In Bluestar Print Group (NZ) Ltd v Mitchell, a Calderbank offer had been rejected prior to the hearing of a claim before the Employment Relations Authority.14 The party rejecting the offer was unsuccessful before the Authority, and then partially successful on appeal to the Employment Court. However, the outcome remained less favourable than the rejected offer. On the issue of costs, the
Employment Court refused to take into consideration the Calderbank offer made prior to the hearing of the claim by the Employment Relations Authority. On appeal, the Court of Appeal held that the offer was relevant because it was “more than what [the party] achieved in the Employment Court”.15
[26] Ultimately the question of the effect and influence of a Calderbank offer will remain, as with costs generally, one of discretion. The purpose of recognising Calderbank offers in costs awards is to provide a disincentive to litigate where a reasonable settlement is available. It is difficult to understand why that disincentive should not extend to appellate litigation brought by an unsuccessful party in a bid to be heard further on the same issues argued at first instance, often by way of rehearing, who refused an original offer that could have spared the other party the cost of litigation.
[27] In the present case, no appeal would have been required if the initial settlement offer had been accepted, and the accompanying costs avoided. Having been vindicated in his position before the Family Court, it would appear unrealistic to have expected PB to renew his settlement offer or to make a further offer as if the appeal represented a fresh piece of litigation. As events transpired, the generosity of
the original offer was confirmed by the result of the appeal.
13 Stewart v Atco Controls Pty Ltd (in liq) (No 2) [2014] HCA 31, (2014) 252 CLR 331 at [7]; Trustee for the Salvation Army (NSW) Property Trust v Becker (No 2) [2007] NSWCA 194 at [8]-[9]; Re Baresic v Slingshot Holdings Pty Ltd (No 2) [2005] NSWCA 160.
14 Bluestar Print Group (NZ) Ltd v Mitchell [2010] NZCA 385, [2010] ERNZ 446, see also discussion in Rodkiss v Carter Holt Harvey Ltd [2015] NZEmpC 147, (2015) 10 NZELC 79-
058.
15 At [24].
[28] Finally, JB’s original tactical decision not to pursue a claim against Gordon Bowden’s estate under the Family Protection Act was for her to make. I do not understand how, having made that decision, her choice of action impacts on the consequences of declining the Calderbank offer or the merits of the relationship property litigation she initiated.
[29] Some recognition is required to be afforded to the fact that there was no reasonable justification for JB to refuse the offer although care is required to ensure, having regard to the issue of costs before the Family Court, that this feature of the litigation does not overwhelm the assessment of the merits and outcome of the appeal.
Amount of uplift
[30] If PB’s calculations are correct, the costs actually incurred are lower than the
2B scale costs the Court would otherwise have awarded ($7,392.50 including disbursements as opposed to $9,812.00 plus disbursements). Even with a 20 per cent decrease to scale costs to take into account JB’s partial success, the actual costs are lower than would ordinarily be awarded if the scale had been applied.
[31] Given the artificiality of ascribing values to the respective reduction for the partial success of JB and the uplift for the refusal of the settlement offer, I consider the best way of taking into account JB’s partial success and the effect of the Calderbank offer is to allow PB to recover his actual costs.
Conclusion
[32] Subject to PB providing a schedule that confirms the basis for the figures indicated in his submissions, I award costs to him in the sum of $7,392.50.
Solicitors:
A S Greig, Christchurch
Saunders Robinson Brown, Christchurch
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