BRENT TILLER AND AUCKLAND COUNCIL
[2024] NZHC 3072
•21 October 2024
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2021-404-800
[2024] NZHC 3072
BETWEEN BRENT TILLER
Plaintiff
AND
AUCKLAND COUNCIL
Defendant
Hearing: On the papers Counsel:
A Gilchrist for the Plaintiff
S Quinn and E Manohar for the Defendant
Judgment:
21 October 2024
JUDGMENT OF GORDON J
[As to costs]
This judgment was delivered by me
on 21 October 2024 at 3.30 pm, pursuant to r 11.5 of the High Court Rules
Registrar/Deputy Registrar Date:
Solicitors/Counsel: DLA Piper, Auckland A Gilchrist, Auckland R Kaur, Auckland
TILLER v AUCKLAND COUNCIL [2024] NZHC 3072 [21 October 2024]
[1] The plaintiff, Brett Tiller, brought a proceeding against the Auckland Council (Council) claiming trespass and breach of undertakings. On 18 July 2024, I declined Mr Tiller’s claim (the judgment).1
[2] I reserved costs and observed that, as the successful party, the Council was prima facie entitled to costs. I directed that the parties were to file a joint memorandum if costs were agreed. The parties were to file and serve separate costs memoranda in the event they could not agree.2
[3] The parties have not been able to agree costs. The Council seeks a costs award in the sum of $230,425.32, comprising costs of $141,005.56 (increased from 2B scale costs of $57,539.25), plus $89,419.76 of disbursements.
[4] Mr Tiller accepts his liability to pay costs to the Council. Mr Tiller accepts the Council’s calculation of 2B scale costs (with the exception of two items, discussed below) and does not take issue with certification of second counsel. However, he opposes the award of increased costs over scale, and disputes the quantum for expert witness disbursements claimed by the Council.
Issues
[5]There are four issues I must decide:
(a)What is the correct approach to increased costs?
(b)Should increased costs be awarded?
(c)Are items 16 and 17 of the scale costs claimable by the Council?
(d)Is the quantum of disbursements relating to expert witness fees reasonable?
1 Tiller v Auckland Council [2024] NZHC 1967 [judgment].
2 At [191]–[192].
What is the correct approach to increased costs?
[6] Prior to considering whether it is appropriate to make an award of increased costs, there is a preliminary issue of the correct approach to calculating increased costs.
[7] The award of costs and disbursements is governed by Part 14 of the High Court Rules 2016 (HCR). The Court has a broad discretion to award the costs of a proceeding.3 So far as possible the determination of costs should be predictable and expeditious.4
[8] Mr Quinn, counsel for the Council, submits that increased costs should be awarded on the basis that Mr Tiller unreasonably failed to accept multiple settlement offers on a without prejudice save as to costs basis. Instead of seeking a percentage uplift on scale costs, Mr Quinn submits that costs should be increased to match the Council’s actual, full legal costs from 22 June 2022 (which is the date on which the first offer expired), an amount of $141,005.56. In other words, Mr Quinn is seeking an award of indemnity costs under the guise of increased costs.5
[9] This is not the correct approach for two reasons. First, the quantum of increased costs is calculated by an uplift on scale costs. An order for increased costs is defined as an order “increasing costs otherwise payable under those rules”, those rules being rr 14.2–14.5 which establish the scale.6 The Court is entitled to have regard to the actual time spent on particular steps but not the actual cost incurred.7 As the Court of Appeal held in Holdfast NZ Ltd v Selleys Pty Ltd:8
Where increased costs (as opposed to indemnity costs) are being considered, the focus remains on the notional solicitor or counsel appropriate for the category of proceeding, not the actual solicitor or counsel involved or the costs actually incurred by the party claiming costs.
3 High Court Rules 2016, r 14.1.
4 Rule 14.2(1)(g).
5 Rule 14.6(1)(b).
6 Rule 14.6(1)(a).
7 Kidd v van Heeren [2015] NZHC 3191 at [43].
8 Holdfast NZ Ltd v Selleys Pty Ltd (2005) 17 PRNZ 897 (CA) at [48].
[10] The correct approach to determining increased costs was set out by the Court of Appeal (and summarised in Kidd v van Heeren) as follows:9
(a)categorise the proceeding in terms of r 14.3;
(b)work out a reasonable time for each step either under the schedule or by the application of r 14.6(3)(a);
(c)then apply the appropriate daily rate from (a) to the time calculated under (b); and finally
(d)If any of the grounds in r 14.6(3)(b) apply the Court can impose an uplift from the point reached under the first three steps. It is this uplift that will generally not exceed 50%.
[11] Second, the threshold for the Court to exercise its discretion to award indemnity costs is much more stringent. Increased costs may be awarded if, as Mr Quinn submits, Mr Tiller failed to accept a settlement offer without prejudice save as to costs without reasonable justification.10 In comparison, indemnity costs may only be ordered if a party has acted “vexatiously, frivolously, improperly, or unnecessarily” during the proceeding.11 The misconduct must be “flagrant”.12 While the Court retains discretion to award indemnity costs for “some other reason”, which could take into account the failure to accept offers without prejudice save as to costs, it is clear from the words of the provision that the threshold for justifying an award of indemnity costs is higher than the threshold for increased costs.13
[12] As is clear from the authorities, actual solicitor costs are not relevant to the calculation of increased costs, and failure to accept offers without reasonable justification is generally not a sufficient reason to award indemnity costs (though neither is the Court’s power to award indemnity costs limited by the making of such an offer).14 The approach taken by Mr Quinn is therefore not correct. As well, the submissions made on behalf of the Council do not address the test for indemnity costs.
9 Kidd v van Heeren, above n 7, at [44], citing Holdfast NZ Ltd, above n 8, at [43]-[47].
10 Rule 14.6(3)(b)(v).
11 Rule 14.6(4)(a).
12 Bradbury v Westpac Banking Corporation [2009] NZCA 234, [2009] 3 NZLR 400 at [28].
13 Rule 14.6(4)(f).
14 Rule 14.11(2)(b).
[13]I refuse the application for what is in reality a claim for indemnity costs of
$141,005.56.
Should increased costs be awarded?
[14] Mr Quinn submits that the Council made the following offers to settle on a without prejudice save as to costs basis, all of which were unreasonably rejected by Mr Tiller:
(a)The first offer was sent on 15 June 2022 and offered a settlement amount of $25,000. The offer expired on 22 June 2022.
(b)The second offer was sent on 16 February 2024 for the settlement amount of $150,000. It did not refer to the Council’s buy-out scheme.15 The offer expired on 23 February 2024.
(c)The third offer was sent on 20 May 2024. The offer was for the settlement amount of $150,000 and explicitly left open the possibility for Mr Tiller to engage with the Council’s buy-out scheme. An email was sent by Mr Quinn on 6 June 2024 extending the deadline for accepting the offer to 7 June 2024, the final day of the hearing.16
[15] Mr Quinn submits that Mr Tiller’s rejection of these offers was unreasonable because the claim was fundamentally flawed from the outset for the reasons that were clearly communicated from date of the first offer, including evidentiary issues, limitation issues, and impropriety of relief sought. Opportunities to address those concerns were not taken. The offer dated 20 May 2024 also expressly set out Mr Tiller’s alternative redress via the Council’s buy-out scheme, which Mr Tiller refused to engage with, even during the hearing.17
15 The scheme allowed Mr Tiller to sell his property to the Council for its market value as at 26 January 2023, less certain fees. Further details of this scheme are set out in [186]–[189] of the judgment.
16 Mr Quinn’s submissions refer to this email as a fourth settlement offer, whereas it is correctly characterised as an extension of time to accept the third offer.
17 As recorded in the judgment at [189].
[16] Mr Tiller’s primary position is that there should be no uplift on scale costs. Mr Gilchrist, counsel for Mr Tiller, refers to r 14.11 of the HCR which makes it clear that an offer to settle and the effect, if any, is at the discretion of the Court. Mr Gilchrist submits that the fact that the offer was more favourable than ultimate recovery is but one consideration.18 Without really developing the point Mr Gilchrist makes the submission that at the time the offers were made it was entirely reasonable for Mr Tiller to reject the offers. He submits that litigants should not be denied their day in court because of the risk of increased costs if they lose, particularly if modest offers are made.
[17] The principles relating to an award of increased costs on the basis of failure to accept an offer made without prejudice save as to costs is succinctly set out by Katz J as follows:19
[30] A successful Calderbank offer does not of itself give rise to an entitlement to increased or indemnity costs, as this remains at the Court’s discretion. There are good policy reasons, however, why the making of a successful Calderbank offer will often lead to an award of increased costs. Regard must be had to the factors in r 14.6, as with any increased costs application. Rule 14.6(3)(b)(v) provides that increased costs may be awarded where a party fails to accept an offer of settlement without reasonable justification with the result that they contribute unnecessarily to the time or expense of the proceeding or step in it. Each case is necessarily fact specific. The assessment of whether increased costs should be awarded, and the extent of any increase, can be impacted by a number of factors. These include (but are not limited to):
(a)the size of the offer relative to the actual costs of counsel;
(b)the amount of the claim;
(c)the reasonable expectations of the party that refuses the offer;
(d)the amount of preparation for trial already undertaken;
(e)whether the proceeding concerns an uncertain area of law;
(f)whether the parties were in a position to assess the merits when the offer was received;
(g)the information available to the party who receives the offer and the extent to which they can to assess the offer.
(h)the timing of the offer;
18 Referring to Woolf v Kaye [2018] NZHC 3196 at [59], citing Xiao v Sun [2018] NZHC 1334.
19 Weaver v HML Nominees Ltd [2016] NZHC 473 (footnotes omitted).
(i)the conduct of the offeror.
[18] Mr Gilchrist is correct when he says the size of the first offer, at $25,000, was modest. The second and third offers, at $150,000, while an increase on the initial offer, was still a relatively modest sum when assessed against the amount of the claim. Mr Tiller sought over $18 million together with interest and costs. That was reduced on the first day of the hearing to around $10.3 million together with interest and costs.20
[19] However, the Court is concerned with the reasonable expectations of the party that refuses the offer. The remedy of $18 million or even just over $10 million was entirely unreasonable, even if Mr Tiller had succeeded on the substance of his claims.21
[20] Turning to the specific settlement offers made by the Council, at the time of the first offer on 15 June 2022, pleadings had been filed and it appears that discovery was likely substantially completed with only minor discovery issues outstanding. However briefs of evidence had not yet been served.
[21] In those circumstances I do not consider it was unreasonable for Mr Tiller to have rejected that settlement offer of $25,000.
[22] By the time of the second settlement offer of $150,000 made on 16 February 2024 discovery was complete but the Council briefs of evidence had not yet been served (Mr Tiller’s briefs were filed shortly after 16 February 2024). Given that Mr Tiller did not have the Council evidence and the full details of the case against him, I do not consider it was unreasonable for him to reject the 16 February 2024 offer.
[23] By 20 May 2024 when the settlement offer for the same amount was made, Mr Tiller had received all the Council briefs of evidence.
[24] Mr Gilchrist reminds the Court of what I said in Woolf v Kaye22 namely that it is important to remember that the Court must assess the reasonableness of the rejection
20 Judgment at [1].
21 Judgment at [150]–[177].
22 Woolf v Kaye, above n 18.
at the time the offer was made.23 As I noted in that case, the losing party’s claim was for significantly more than the modest offer of settlement. However, as noted above, the Court is required to assess the reasonable expectations of the party that refuses the offer. Although the $150,000 that was offered was an insignificant sum as against the amount claimed, the amount claimed was entirely unreasonable. Further, as an aside, I note that in my judgment of Woolf v Kaye which Mr Gilchrist relies on, there was also the factor that in an interlocutory judgment in that case, an Associate Judge had made strong statements in support of the losing party’s cause of action based on that party’s brief of evidence.24 There is not such support here.
[25] I consider that Mr Tiller was well placed to make an assessment of the Council’s offer from the time of the 20 May 2024 offer. I consider his rejection of that offer of $150,000, was unreasonable. That does provide a basis for awarding increased costs by way of an uplift from scale costs. The increase will apply only to steps taken after the date of that offer. The appropriate uplift is 20 per cent.
[26] Accordingly, I uplift steps 33B, 34 and 35 (which are steps taken for preparing for witness hearing and appearances at hearing) by 20 per cent.
Scale costs
[27] The parties agreed in a case management memorandum that a category 2 classification was appropriate for this proceeding. While no band was agreed at the time, Mr Quinn submits, and Mr Gilchrist accepts, that band B is appropriate.
[28] The scale costs of $57,539.25, calculated on a 2B basis, are set out in Mr Quinn’s submissions and are annexed as Appendix A to this judgment. Mr Gilchrist accepts these scale costs are appropriate with the exception of item 16 (notice to answer interrogatories) and item 17 (answer to interrogatories). He submits the following in relation to these items:
(a)the documents to which they relate were neither notices to answer nor answers to interrogatories, but instead related to further particulars;
23 At [65].
24 Woolf v Kaye, above n 18, at [65].
(b)any notice given was informal and not in compliance with r 8.34 of the HCR;
(c)even if they were notices, costs cannot be claimed for both issuing the notice (item 16) and responding to the notice (item 17); and
(d)if these items are to be allowed, their informal nature ought to categorise them as 2A.
[29] The Court has reviewed the two documents for which items 16 and 17 are claimed. They are set out in letter form (as opposed to Form G 35 as required by r 8.34(3) of the HCR), the content refers to further particulars (as opposed to notice to answer or respond to interrogatories), and there is no evidence that any of the answers were verified by way of affidavit. Informal requests for further particulars, which are responded to, are not properly claimable as notice to answer interrogatories.25 Accordingly, I will remove items 16 and 17 from the calculation of scale costs.
Disbursements
[30] The Council claims $89,419.76 in disbursements comprised of fees of two expert witnesses and filing fees. Mr Gilchrist accepts that expert witness fees are claimable as disbursements but contends that the fees are disproportionate and not “reasonable in amount” and accordingly should be reduced.26
[31] The Council’s expert witness as to valuation, Evan Gamby, rendered two invoices together amounting to $53,670.50 (inclusive of GST). That sum includes his attendance for the whole of the High Court hearing (from 4 June 2024 to 7 June 2024), despite giving evidence for approximately one hour on the final day.27 Mr Quinn submits that costs incurred for Mr Gamby’s full attendance were necessarily occurred and are reasonably recoverable. Mr Gamby was the Council’s witness as to valuation and his observation of the proceedings was relevant both to the presentation of his
25 Vector Ltd v Utilities Disputes Commissioner [2019] NZHC 862 at [20].
26 High Court Rules, r 14.12(2)(d)-(3).
27 The notes of evidence record Mr Gamby as being sworn in on 10.53 am on 7 June 2024 and the Court adjourning on 12.02 pm that same day.
evidence and to his input for the closing submissions. Further, the time and day Mr Gamby was required to appear was unknown.
[32] Mr Gilchrist submits that Mr Gamby’s fees are unreasonable and should be reduced to no more than $20,000. He makes the following points in support:
(a)Mr Gamby’s hourly rate is not included in the invoices. Assuming an hourly rate of $500, that equates to a claim for 93 hours (before GST and disbursements). This is not reasonable.
(b)Mr Swan, Mr Tiller’s expert witness as to valuation, charged
$12,506.25. Mr Gamby’s fees of $53,670.50 are disproportionate.
(c)Although it is accepted that an expert witness can recover for reasonable waiting time and time spent listening to an opponent’s expert witness, it was not reasonably necessary for Mr Gamby to attend the entire hearing (and for those costs to be passed on to Mr Tiller).
[33] The Council claims $35,529.26 in disbursements in relation to its other expert witness, Maree Gleeson, a stormwater engineer. That amount is the total of Ms Gleeson’s invoices including GST. Mr Gilchrist submits that this fee is unreasonable and the 167 hours billed is disproportionate to the work that was done, namely preparation of her brief and approximately 2.45 hours of attendance in court time. He submits that Ms Gleeson’s fees should be reduced to no more than $15,000.
[34] Both counsel refer to the Court of Appeal’s decision in Air New Zealand Ltd v Commerce Commission.28 There, the Court of Appeal relevantly held:
[62] A party can recover in respect of an expert witness only for the time he or she spends giving evidence and the time he or she spends in preparing that evidence. In addition, a party could properly claim for time spent by its expert in critiquing other parties’ experts so as to assist counsel to understand the issues and opposing contentions and to assist counsel in cross-examination. But experts do not draft pleadings and do not write legal submissions. Any claim for time spent on those tasks would not fall within the criteria…
28 Air New Zealand Ltd v Commerce Commission [2007] NZCA 27, [2007] 2 NZLR 494.
[35] I address the claim for Mr Gamby’s fees. First, it is clear from the judgment of the Court of Appeal in Air New Zealand Ltd v Commerce Commission that any input from an expert witness into closing submissions cannot be claimed.29 Further, while I consider it was proper for Mr Gamby to be present when Mr Swan gave his evidence and was cross-examined, I do not consider there was a need for him to sit through the whole of the proceeding.
[36] There is no dispute about the need for Mr Gamby’s evidence, but taking a broad view of the amount claimed overall, it does seem to be high. I propose to reduce the amount awarded to $25,000, which is approximately half of the amount claimed. It might be said that there is a level of arbitrariness in the figure I have adopted. But I adopt a pragmatic approach to ensure justice between the parties.30
[37]I make a similar reduction to the amount claimed for Ms Gleeson. I consider
$17,000, which is approximately half the amount claimed, is appropriate.
[38]There is no issue with the other disbursements, being for filing fees, totalling
$220.
Result
[39] The amount that can be properly claimed by way of scale costs on a 2B basis is $52,759.25.
[40] Increased costs of 20 per cent on the last three items in the appendix to this judgment to reflect an award of increased costs (uplift of $4,242.25) brings the total costs I will order to the amount of $57,001.50.
[41] There is an adjustment by way of reduction to the expert fees so that the amount awarded is $25,000 for Mr Gamby’s fees and $17,000 for Ms Gleeson’s fees. The total of the disbursements is $42,220.
29 Air New Zealand v Commerce Commission, above n 28.
30 Mahon v Edney [2018] NZHC 1856 at [11] adopting the approach in Xiao v Sun, above n 18, at [77].
Order
[42] I order the plaintiff to pay the sum of $57,001.50 in costs and $42,220 in disbursements (a total sum of $99,221.50) to the respondent.
Gordon J
Appendix A
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