Chesterfields Preschools Limited (in liquidation) v Sisson

[2017] NZHC 553

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

CIV-2016-409-000040 [2017] NZHC 553

BETWEEN

CHESTERFIELDS PRESCHOOLS

LIMITED (IN LIQUIDATION) Plaintiff

AND

THERESE ANNE SISSON Defendant

COMMISSIONER OF INLAND REVENUE

Intervener

Hearing:	17 March 2017
Appearances:	B M Russell and K M Kendrick for Plaintiff T A Sisson - the Defendant in Person S Kinsler and P J Shamy for Commissioner of Inland Revenue
Judgment:	24 March 2017

JUDGMENT OF GENDALL J [As to Costs]

Introduction and background

[1]      This judgment relates to costs on this proceeding CIV-2016-409-40.

[2]      The hearing of the substantive matter in this proceeding commenced before me on 13 February 2017 along with several other matters involving the plaintiff Chesterfields   Preschools   Ltd   (In   Liquidation)   (Chesterfields),   the   defendant Therese Anne  Sisson  (Ms  Sisson),  the  intervener  the  Commissioner  of  Inland Revenue (the Commissioner), the Official Assignee (the OA) and IAG New Zealand

Limited (IAG).

CHESTERFIELDS PRESCHOOLS LTD (IN LIQUIDATION) v SISSON [2017] NZHC 553 [24 March 2017]

[3]      That  hearing  continued  until  16  February  2017  (the  fourth  day  of  the hearing).  On that date all matters including the present proceeding were concluded with Ms Sisson as defendant consenting to orders against her sought by Chesterfields as Plaintiff in this proceeding -40, and by Ms Sisson discontinuing related proceedings   which   were  the  subject   of  the   hearing  CIV-2016-409-185   and proceeding CIV-2016-409-304.   In addition, Ms Sisson’s review of a judgment of Associate Judge Osborne striking out a further proceeding CIV-2016-409-637 was dismissed.

[4]      Turning now to the proceeding the subject of the present costs judgment CIV-

2016-409-40), on 16 February 2017 I gave an oral judgment.   In that judgment I noted at para [1] that at 10:45 a.m. that day, the Court had received a consent memorandum signed by all parties including Ms Sisson which stated:

1.By   consent,   the   plaintiff,   defendant,   and   intervener   in   this proceeding (CIV-2016-409-40) seek judgment in terms of the relief sought in the first cause of action in the plaintiff’s second amended statement of claim dated 8 August 2016.

2.The parties seek a timetable for the filing of submissions on the question of costs and allocation of a short fixture.

[5]      In this proceeding, Chesterfields had sought a range of orders including an order vesting a property at 854 Colombo Street, Christchurch, (the property), of which  Ms  Sisson  was  the  named  registered  proprietor,  and  certain  insurance proceeds  relating  to  this  property,  in  Chesterfields.    Ms  Sisson  as  defendant contended that the property and the insurance proceeds were held by her in trust for a family trust run for her immediate family, the Anolbe Family Trust, as beneficial owner.   The Commissioner as intervener is the principal creditor in Chesterfields liquidation and was joined to this proceeding for the purpose of providing evidence and submissions which could assist the Court to determine the application before it.

[6]      Following  the  consent  memorandum  noted  at  para  [4]  above,  I  entered judgment in favour of Chesterfields against Ms Sisson (whose earlier opposition was now withdrawn) and made orders vesting the Colombo Street property, the existing insurance proceeds and any and all residual entitlements under insurance policies relating to the property in Chesterfields pursuant to the provisions of the Trustee Act

1956.  Earlier freezing orders made by this Court were also lifted along with an order that a caveat on the title to the property be removed.

[7]      In doing so, in my 16 February 2017 judgment at para [3](f) (as part of the relief sought by Chesterfields in its first cause of action at (f) and agreed to by Ms Sisson in the consent memorandum) I made a further order by consent in the following terms:

(f)       Costs and disbursements are awarded with respect to this proceeding against the defendant Ms Sisson in favour of the plaintiff Chesterfields Preschools Limited (In Liquidation) and the intervener the Commissioner of Inland Revenue. The amount of such costs and disbursements is to be determined by this Court subsequently as noted below.

[8]      Then I set out a timetable for the filing of submissions on the question as to the quantum of these costs and directed the allocation of a short fixture to deal with that matter.

[9]      Written submissions followed.  They were filed by counsel for Chesterfields, by counsel for the Commissioner, by Ms Sisson personally and by her husband/partner or former husband/partner David John Hampton (Mr Hampton) who appeared as a McKenzie Friend for Ms Sisson at the substantive hearing.

[10]     These written submissions were followed by the hearing before me on this costs quantum issue which took place on 17 March 2017.  At that hearing, I heard further oral submissions, and then reserved my decision.

[11]     I have had an opportunity to consider all the written and oral submissions advanced before me, and now give my decision on this issue of costs relating to this present proceeding.

Costs quantum issue

[12]     As the successful parties here, Chesterfields and the Commissioner both seek against Ms Sisson an award of category 2B costs with a 50 per cent uplift and disbursements.

[13]     So far as Chesterfields’ costs are concerned, its counsel has set out in a schedule to his 24 February 2017 written costs submissions the costs sought on a category  2B  basis  both  on  the  substantive  proceeding  here  (and  on  an  earlier summary judgment application which was taken).  This amounts to a total figure of

$61,342.  It includes an allowance for second counsel.  This is claimed on the basis that the litigation had a degree of complexity and required a large amount of documentation (eight volumes of common bundle documents were required together with a further three supplementary volumes of documents which Ms Sisson sought at the hearing).

[14]     On  the  basis  of  these  category  2B  costs   of  $61,342  calculated  by Chesterfields, the 50 per cent uplift it sought amounted to $30,671.  This gave a total claim for uplifted 2B costs of $92,013.  Counsel for Chesterfields has confirmed that the actual costs it has incurred here do exceed the $92,013 figure claimed.

[15]    So far as the Commissioner’s costs and disbursements as Intervener are concerned  here,  a  calculation  of  category  2B  costs  with  a  50  per  cent  uplift amounting to $87,555.38 together with disbursements totalling $4114.15 are claimed by the Commissioner.  These are outlined at Schedule 1 attached to the 27 February

2017 written costs submissions before the Court from counsel for the Commissioner.

[16] The Commissioner’s basic category 2B costs claim here of $58,370.25 includes a claim for the three and a half days appearance by counsel at the hearing from 13 – 16 February 2017. This is on the basis that this appearance is only claimed by the Commissioner in this proceeding -40 (and not in other costs claims by the Commissioner for attendances and work involved in related proceedings) so there is no double recovery. That is appropriate in my view. Also here the allowance for second counsel sought for the 13 – 16 February 2017 hearing and the three quarters of a day aborted trial appearance on 28 November 2016, for the reasons outlined at [13] above, as I see the position, is appropriate.

[17]   In this proceeding, three days’ category 2B costs are claimed by the Commissioner both for preparation for the 28 November 2016 hearing and for preparation for the 13 – 16 February 2017 hearing.  This is on the basis that first, the

28 November 2016 hearing was the subject of a reluctant last minute adjournment on that date at Ms Sisson’s request for medical reasons, secondly, that further work was accordingly required subsequently, and thirdly, that renewed preparation to a similar degree was needed for the February hearing as Ms Sisson continued to insist on pursuing this meritless claim along with the other related proceedings.  In addition and in any event, as I understand the position, the basic category 2B costs claimed here by the Commissioner were less than two thirds of the Commissioner’s actual costs incurred in this proceeding and therefore were well within the two thirds costs- recovery principle accepted in the High Court Rules.

[18] As I have noted at [16] above, basic category 2B costs that are sought here total $58,370.25. The 50 per cent uplift requested on these costs totals $29,185.13. The total uplifted category 2B costs sought by the Commissioner on this proceeding therefore amounts to the $87,555.38 figure I note at [15] above.

[19]     As to disbursements, in addition to normal Court filing fees, reimbursement of accommodation and travel costs are sought by counsel for the Commissioner for hearings which took place in this Court on 19 May 2016, 28 November 2016 and

13 – 16 February 2017.

[20]     The air travel costs for these hearings has been individually itemised and totals $1433.91.  The accommodation costs total $1875.87.

[21]     The total disbursements sought by the Commissioner including Court filing fees therefore totals $4114.15.   This makes a total claim for uplifted costs and disbursements of $91,669.53.

[22]     I note once again as I have outlined at paras [7] and [8] above, that this judgment  is  one  dealing  only  with  issues  over  the  quantum  of  costs  and disbursements  awarded  in  favour of Chesterfields  and  the Commissioner in  my earlier 16 February 2017 judgment in this proceeding.  Clearly, Ms Sisson has been the unsuccessful party here and in terms of r 14.2(a) High Court Rules she, as the party who has failed with respect to this proceeding, is to pay the costs of the successful parties.  The fact too that she may be a self represented or lay litigant in

this case (although previously she was a barrister and solicitor of the High Court of New Zealand) has no bearing here, given that an unsuccessful litigant in person can be subject to the same award of costs as any other party.

[23]     I turn now to one issue in the High Court Rules which requires consideration here.   This is the claim which has been made by both Chesterfields and the Commissioner for an increase to category 2B costs.  This is provided for in r 14.6(3) which states:

(3)      The court may order a party to pay increased costs if—

(a)       the nature of the proceeding or the step in it is such that the time required by the party claiming costs would substantially exceed the time allocated under band C; or

(b)       the party opposing costs has contributed unnecessarily to the time or expense of the proceeding or step in it by—

(i)        failing to comply with these rules or with 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, 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 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 it or participate in it in the interests of those affected; or

(d)       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.

[24]     As to this aspect, I am satisfied in terms of r 14.6(3)(b)(ii) that, in bringing and pursuing the present proceeding -40 Ms Sisson acted unreasonably in that her entire claim here lacked merit.   This failure to act in a reasonable manner unquestionably contributed to the time and expense in this proceeding.  As a result Chesterfields and the Commissioner were subject to litigation that should not have been necessary.  The hearing of this litigation lasted in total (with other matters) for some three and a half days and was a proceeding on which ultimately Ms Sisson agreed to judgment being entered against her.   In addition, as I see it, throughout first, Ms Sisson took unnecessary steps in this and the related proceedings bringing and, in spite of warnings, pursuing interlocutory applications that had no chance of success.  And secondly, Ms Sisson failed to abide timetable directions of the Court. The fact too that Ms Sisson pursued a defence in this proceeding that entirely lacked merit was obvious and incontrovertible from the outset.  As I understand it, she was also warned of this throughout, but chose to ignore these warnings.  The 50 per cent uplift from scale which Chesterfields and the Commissioner seek here, in my view, is reasonable in all the circumstances of this case.   Orders to this effect are to follow.

[25]     Turning  lastly  to  the  quantum  of  those  costs  and  disbursements  to  be awarded, the Schedule amounts sought as noted at para [13] above have not been the subject of any comment or question in their submissions on the part of Ms Sisson or indeed Mr Hampton here.   Their respective submissions which entered into considerable detail, simply ignored quantum, and costs issues, and essentially focussed  on  aspects  relating  to  the  validity  of  the  substantive  claim  against Ms Sisson which had been adjudicated upon.

[26]     Here I am satisfied that Ms Sisson did not act reasonably.   In Bradbury v Westpac Banking Corporation1  the Court of Appeal said that increased costs could be awarded where there was a failure by the paying party to act reasonably.  And, in Haydock v Sheppard2  the Court of Appeal awarded an uplift of 50 per cent above scale costs on the basis that the case fell short of being genuinely arguable and that this should have been plain from the outset.   This present proceeding before me

clearly fits into this category.

1      Bradbury v Westpac Banking Corporation [2009] PRNZ 385 at [27].

2      Haydock v Sheppard (HC) Auckland CIV-2009-404-711, 29 January 2010.

[27]     And, on this final quantum question, in any event I am satisfied that the 2B costs claimed with a 50 per cent uplift, first, by Chesterfields totalling $92,013 and, secondly, by the Commissioner totalling $87,555.38 are appropriate and reasonable under all the circumstances that have prevailed in this proceeding.  Awards of costs to this effect are to follow.

[28]     And, with regard to the disbursements claims, insofar as these relate to Court filing fees they are unobjectionable.  With regard to the Commissioner’s claims for travel and accommodation costs for the three hearings noted at para [19] above, I note first that no objection has been taken by Ms Sisson to this claim.  In addition, however, I am satisfied that the air travel and accommodation costs for the Commissioner’s counsel here is appropriate and reasonable.   Disbursement orders are to follow.

Result

[29]     The costs applications on this proceeding -40 by Chesterfields as plaintiff and the Commissioner as Intervener succeed in their entirety.

[30]     Orders are now made as follows:

(a)      Ms Sisson is to pay to Chesterfields costs on this proceeding -40 on a category 2B basis with a 50 per cent uplift totalling $92,013.

(b)Ms Sisson is to pay to the Commissioner costs on this proceeding -40 on a category 2B basis with a 50 per cent uplift totalling $87,555.38 together with disbursements totalling $4114.15.

...................................................

Gendall J

Solicitors:

Lane Neave, Christchurch

Philip Shamy, Christchurch

Meredith Connell, Auckland

Copy to Ms Sisson