Chadwick v Parkgrove Mews Limited
[2018] NZHC 248
•28 February 2018
IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY
I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE
CIV-2015-409-000321 [2018] NZHC 248
BETWEEN NORMAN MAURICE CHADWICK
Plaintiff / First counterclaim defendant
AND
PARKGROVE MEWS LIMITED
Defendant and counterclaim plaintiff
AND
NEEVES HOLDINGS LIMITED
Second counterclaim defendant
Hearing: On the papers Judgment:
28 February 2018
JUDGMENT OF NATION J
[1] Parkgrove Mews Ltd (Parkgrove) seeks an order for costs and disbursements on an indemnity or increased basis against the plaintiff, Mr Chadwick. This follows from Mr Chadwick’s discontinuance of his claim just prior to an eight day hearing that was scheduled to begin on 6 November 2017.
Background
[2] Mr Chadwick filed a statement of claim against Parkgrove on 26 May 2015. The statement of claim alleged the parties had entered into an oral contract for the construction of 53 houses in a subdivision. Mr Chadwick advanced four separate causes of action arising out of that contract, namely:
1. a claim for damages in the amount of $480,000 plus GST on the grounds that Parkgrove wrongfully terminated the contract on 18 July 2014 when
CHADWICK v PARKGROVE MEWS LTD [2018] NZHC 248 [28 February 2018]
there were “no objective grounds, or as expressed or otherwise, that entitled the defendant to terminate the contract”;
2. a claim seeking $112,000 plus GST for attendances between November 2011 and April 2013 on a quantum meruit basis;
3. a claim seeking $288,000 for attendances between 15 April 2013 and 18 July 2014 on a quantum meruit basis; and
4. a claim for $420,000 based on the doctrine of promissory estoppel in relation to further work that was to follow the initial subdivision.
[3] The proceeding was set down for trial in March 2017. That trial was abandoned on the first day. Through no fault of Mr Chadwick, his counsel did not and could not appear for him at the trial.
[4] Mr Chadwick instructed new counsel. Through his new lawyers, Mr Chadwick sought and obtained leave to adduce further evidence. They also made alterations to the nature of the claim. Further briefs of evidence were exchanged.
[5] Between 9 and 18 October 2017, there was an exchange of correspondence between the parties’ lawyers with different settlement offers. On Wednesday 25 October 2017, Mr Chadwick’s lawyers advised that Mr Chadwick intended to discontinue his claim and that Mr Chadwick and the company with which he was associated, Neeves Holdings Ltd, no longer intended to defend the counterclaim which had been made against them. They advised that Mr Chadwick intended to file in bankruptcy and Neeves Holdings Ltd sought to be placed in liquidation. On 30 October 2017, Mr Chadwick filed with the High Court a notice of discontinuance of his claim against Parkgrove. The notice also purported to discontinue his and Neeves Holdings Ltd’s defence to the counterclaim.
[6] In a telephone conference of 1 November 2017, Mr Parker, who had previously been solicitor and counsel for Mr Chadwick and Neeves Holdings Ltd, advised the Court that Mr Chadwick and Neeves Holdings Ltd intended to file and
serve notices that they intended to act in person, provide a new address for service and file an affidavit proving service of the notice as required by r 5.41(2).
[7] I issued a minute recording this, vacating the hearing set down for 6 November 2017 and timetabling the filing and service of memoranda as to costs if an application for costs was going to be pursued. Parkgrove was directed to file its memorandum by 8 November 2017. Mr Chadwick was to file his memorandum in response by 29 November 2017.
[8] Parkgrove’s counsel filed their memorandum as to costs on 8 November 2017 and, at the same time, emailed a copy of their memorandum to Mr Chadwick. There has been some uncertainty as to when Mr Chadwick filed a response. On 30 November 2017, Parkgrove’s counsel filed a further memorandum advising they had not received any memorandum from Mr Chadwick and asking for costs to be dealt with on the basis of their memorandum without delay. Subsequently, Parkgrove received a copy of Mr Chadwick’s memorandum dated 28 November 2017. It sent a copy of this to the Court. As a result, the Court has detailed memoranda as to costs from both Parkgrove and Mr Chadwick. I deal with costs on the basis of those memoranda.
[9] Mr Chadwick has not filed or served the notice required by my minute and r 5.41(2) confirming he is representing himself and Neeves Holdings Ltd, and providing an address for service. He has communicated with the Court using the same email address he used when communicating with Parkgrove’s lawyers on 7 November 2017.
[10] In these circumstances, I dispense with the need for him to comply with my previous direction that he file documents in accordance with r 5.41(2). The Court and the parties are to proceed on the basis Mr Chadwick is representing himself and Neeves Holdings Ltd. All documents to be served on those parties by the Court or other parties may be served by email [email protected]. That is the address for service for Mr Chadwick and Neeves Holdings Ltd for the purpose of these proceedings and the application of the High Court Rules. The earlier address
for service of Parker and Associates, solicitors, is no longer the address for service of the plaintiff or Neeves Holdings Ltd.
[11] Parkgrove does not, currently, seek costs on its counterclaim against Mr Chadwick and Neeves Holdings Ltd. That counterclaim has been adjourned to a conference on 28 February 2018.
[12] Mr Chadwick advised the Court that, on his own application to the Official Assignee, he was declared bankrupt on 14 February 2018.
Legal principles
[13] There is no real dispute as to the principles to be applied. Unless the Court orders otherwise, a plaintiff who discontinues a proceeding must pay costs to the defendant of and incidental to the proceedings up to and including the discontinuance.1
[14] As Mr Chadwick highlighted, where proceedings have been discontinued, the Court will not consider the merits of the respective cases, unless they are so obvious that they should influence the costs outcome.2
[15] The Court will consider the reasonableness of the stance of both parties up to the point of discontinuance and whether it was reasonable for the plaintiff to bring and continue the claim.
[16] The particular rules as to an award of costs where there has been a discontinuance are subject to the Court’s general discretion as to costs in r 14.1 and as to the award of either increased or indemnity costs under r 14.6.
[17] Rule 14.6 permits the Court to order increased costs if the nature of the proceeding or a step in it is such that the time required by the party claiming costs
1 High Court Rules, r 15.23; For further discussion see FM Custodians v Pati [2012] NZHC 1902 at [11].
2 Citing Opus International Consultants Ltd v Colac Bay Vision Ltd [2015] NZHC 1782 at [20]- [24].
would substantially exceed the time allocated in band C,3 or if the party opposing costs has contributed unnecessarily to the time or expense of the proceedings in certain specified ways,4 or some other reason exists which justifies the Court making an order for increased costs, despite the principle that the determination of costs should be predictable and expeditious.5
[18] The Court may order a party to pay indemnity costs if the party has acted vexatiously, frivolously, improperly or unnecessarily in commencing or continuing a proceeding.6 Indemnity costs are only awarded where truly exceptional circumstances exist.
[19] Mr Chadwick referred to statements of principle from McIlroy v New Zealand Act Party, in particular, statements:7
(a) the Court would not make any assessment of the merits of the case when determining costs on a discontinuance;
(b) the strength of the case which has been discontinued is generally not relevant to the issue of costs in any event; and
(c) for costs purposes, a discontinuing plaintiff is effectively treated as an unsuccessful litigant but how unsuccessful a litigant is not the relevant factor.
[20] While McKenzie J made those statements, they were not made in absolute terms and must be applied with regard to the principles which I have set out above, subject to qualification and exception when appropriate.
3 High Court Rules 2016, r 14.6(3)(a).
4 Rule 14.6(3)(b).
5 Rule 14.6(3)(d).
6 Rule 14.6(4)(a).
7 McIlroy v New Zealand Act Party CIV-2003-485-174, 16 December 2005.
Parkgrove’s submissions
[21] Through its memorandum as to costs, Parkgrove has said that its actual costs to 8 November 2017 were $259,860 plus GST and disbursements. In recognition that those costs include time in preparing Parkgrove’s defence on an indemnity basis, they seek 75 per cent of that amount, that is $194,895 plus GST and disbursements as fixed by the registrar, including for 75 per cent of two experts’ costs.
[22] Parkgrove submitted they incurred extra costs because of the disorganised way Mr Chadwick presented his case. They say inadequacies with regard to discovery required them to join another company operated by Mr Chadwick’s son as a party to obtain invoices which that company had issued. Parkgrove asserted there were inadequacies in the way Mr Chadwick prepared bundles of documents for trial, requiring Parkgrove to prepare supplementary bundles. The nature of the claim altered as the case proceeded, particularly so after the new solicitors were engaged.
[23] Parkgrove submits that, if costs are not to be awarded on an indemnity basis, then the starting point should be the schedule on a 2C basis because 2B would not reflect the actual attendances involved, or what they assert was Mr Chadwick’s improper conduct in these proceedings. On a 2B basis, the costs would be $63,945. On a 2C basis, the costs would be $92,935. Although Parkgrove seeks 75 per cent of expert witness expenses paid to two expert witnesses, there is no information in the memorandum as to what those precise costs were.
[24] Parkgrove submits that, if costs are not to be awarded on an indemnity basis, there should be an award of costs on an increased basis with an uplift of 50 per cent on costs of $92,935.
[25] In their memorandum, Parkgrove asserts there was no reasonable basis for Mr Chadwick to issue the proceedings. It says the proceedings were issued on the basis of an allegation that Parkgrove had wrongfully terminated its contract when there were no objective grounds expressed, or otherwise, that entitled it to do so. It says Mr Chadwick had known Parkgrove had grounds to cancel the contract because the builder under the contract would be his son’s company, Chadwick Building Ltd, when in fact the building work was carried out by apprentice builders and not by a
licenced building practitioner, in terms of s 84 Building Act 2004. It says Mr Chadwick knew that the way he had operated was unlawful in that he forged producer statements in the name of his son, who was a licenced building practitioner, so he could obtain code compliance. It argued that the Court should take a sceptical view as to Mr Chadwick’s claims on the quantum meruit basis, suggesting that the hours for which he sought remuneration were inflated. It referred to a Court assessment, made in earlier and unrelated proceedings, as to Mr Chadwick being an unreliable witness.
Mr Chadwick’s submissions
[26] In a lengthy memorandum in response, Mr Chadwick denied the allegations included in Parkgrove’s submissions as to why the claim was always without merit. In doing so, he sought to refer to evidence which he said had been previously provided to the Court. In relation to that, I note the Court has not considered such evidence. It did not have to because Mr Chadwick discontinued the proceedings.
[27] In his memorandum, Mr Chadwick argued that Parkgrove had elected to pursue a claim for indemnity and increased costs against himself only. He suggested this implied that, if Parkgrove’s claim for indemnity and increased costs against him was unsuccessful, it would be entitled to revisit a claim for costs against both Mr Chadwick and Neeves Holdings Ltd. He said this would be in breach of the Court’s directions as to costs and, on that basis, said Parkgrove was not entitled to claim indemnity and increased costs against Mr Chadwick personally.
[28] I reject that submission. At this stage, the costs issue relates to the claim as between Mr Chadwick and Parkgrove only. The counterclaim by Parkgrove against both Mr Chadwick and Neeves Holdings Ltd stands adjourned. The appropriate time for any application to be made for costs in relation to that counterclaim will be when that counterclaim is no longer being pursued. Relevant to that may well be whether Mr Chadwick has filed in bankruptcy and Neeves Holdings Ltd been placed in liquidation, as Mr Chadwick indicated through his former lawyers he anticipated would happen.
[29] Mr Chadwick denies his contract with Parkgrove was on the basis Parkgrove asserts. Mr Chadwick went into considerable detail as to why he had signed producer statements in his son’s name. He claims the forms for signing in his son’s name were prepared by Parkgrove but ultimately says Parkgrove “asked me to get it signed and I would be paid”. He said he did not consider the document to have any status so “I signed my son’s name”. He claimed what happened did not impact on the integrity of the work done and the work passed all local authority and independent certified engineers inspections.
[30] Mr Chadwick said the earlier case referred to by Parkgrove occurred some 31 years ago and was irrelevant.
[31] Mr Chadwick responds to a number of the submissions made by Parkgrove’s counsel by asserting that Parkgrove’s counsel has attempted to mislead the Court to pervert the course of justice and implies that counsel has lied under oath. I do not consider there was any proper basis for those assertions.
[32] In his memorandum, Mr Chadwick objected to the claims for increased costs or, what he described as, extension of time costs. In doing so, he sought again to refer to evidence which, I infer, he says he would have been able to present to the Court if the proceedings had continued, ie discontinuance. The Court is not going to award costs on the basis of evidence that might have been presented for either side unless the circumstances are truly exceptional and the evidence is so compelling and clear that it would require the Court to depart from the normal principles that have to be observed in dealing with costs on a discontinuance. I am not willing to treat this as such a case.
[33] In his memorandum, Mr Chadwick made no submission as to the appropriateness of the claim made regarding the payment of experts’ costs as a disbursement but with a 25 per cent deduction on account of some of that expense being incurred in relation to the counterclaim. He did not suggest the costs for those experts were excessive or that their involvement had been unnecessary.
Discussion
[34] Because these proceedings, by reason of the discontinuance, never proceeded to a hearing, the parties’ conduct in relation to the proceedings has to be considered primarily with regard to the pleadings. In his original claim, Mr Chadwick claimed Parkgrove had wrongfully terminated its contract with the plaintiff through a notice of 18 July 2014 on the basis Mr Chadwick had failed to give priority to completing houses on two parts of Parkgrove’s land and because of his aggressive behaviour in withdrawing labour for alleged non-payment by Parkgrove of invoices for work which his company had done.
[35] In its notice of defence, Parkgrove claimed it had lawfully repudiated the contract on 18 July 2014 and said its notice of that date outlined in detail Mr Chadwick’s conduct which it claimed gave Parkgrove the right to terminate.
[36] In asserting that Mr Chadwick must have known he had no prospect of succeeding with the proceedings that had originally been filed, Parkgrove relied, to a large extent, on information which it says became available through the proceedings. A number of those matters were not referred to specifically in the notice of termination of 18 July 2014. This is apparent from a letter of 18 October 2017 from Parkgrove’s solicitors to the then solicitors for Mr Chadwick. That letter was associated with a proposal that matters be resolved on the basis all claims and counterclaims are discontinued, Mr Chadwick pay the defendants $12,750 and the second counterclaim defendant pay Parkgrove’s legal costs on a 2B basis. The letter was attached to Parkgrove’s memorandum over costs.
[37] Against that background, I am not prepared to deal with costs on the basis that Mr Chadwick began the proceedings or continued with them without any genuine belief that he had a legitimate claim against Parkgrove. The reality however is that, when both parties had exchanged briefs of evidence and were to put their respective arguments to the test through the trial, Mr Chadwick elected to discontinue. While he says the reasons for that related to his health, his decision means the Court has to proceed on the basis Parkgrove was entitled to terminate the contract with Mr Chadwick as it did.
[38] Given the allegations Mr Chadwick made in his memorandum against counsel for Parkgrove, it is significant that, when Mr Chadwick subsequently advised Parkgrove that he would be discontinuing the proceedings, Parkgrove also said:
On Friday 20 October 2017, we were informed by our client that the attached producer statement for the block work for Lot 2 was not signed by Gary Chadwick but was signed by Norm Chadwick. We are instructed that Gary Chadwick had not authorised for Norm Chadwick to sign that document … Our client instructs that he understands from Council that there is a similar producer statement in relation to Lot 1.
There is no dispute that the producer statement had not been disclosed prior to that point.
[39] I have regard to the likely time that would have been involved in briefing witnesses for what would have been a messy building and contractual dispute. It is apparent from Mr Chadwick’s memorandum that Parkgrove would have had to deal with a wide range of serious allegations against Parkgrove’s personnel and a dispute over many aspects and events arising out of the business relationship between the parties.
[40] When the trial was first scheduled to take place, it was on the basis Mr Chadwick would be calling two witnesses and Parkgrove calling six witnesses. For the further hearing, Mr Chadwick served an additional eight briefs of evidence. Parkgrove prepared five briefs of evidence in reply, including those for two expert witnesses. Mr Chadwick responded with a further nine briefs of evidence. In total, there were 27 briefs of evidence.
[41] Parkgrove had to prepare for two trials, the aborted March 2017 trial and then the vacated November 2017 trial.
Conclusion
[42] In these circumstances, I award costs to Parkgrove. These are to be on a 2C basis so the costs will be for $92,935, together with disbursements, on a GST
exclusive basis, as approved by the registrar. Those disbursements will include 75 per cent of Parkgrove’s costs for expert witnesses engaged with the proceedings.
Solicitors:
Duncan Cotterill, Christchurch Copy to: Mr N M Chadwick.
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