Cleary v Ewart & Ewart

[2017] NZHC 628

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2014-404-001672 [2017] NZHC 628

BETWEEN

WILLIAM GEORGE GRAHAM

CAMERON CLEARY Plaintiff

AND

EWART & EWART Defendant

Hearing:	[On the Papers]
Counsel:	L Herzog for the Plaintiff P M Fee and L H Fraser for the Defendant
Judgment:	4 April 2017

JUDGMENT OF EDWARDS J [re Costs]

This judgment was delivered by Justice Edwards on 4 April 2017 at 11.30 am, pursuant to

r 11.5 of the High Court Rules

Registrar/Deputy Registrar
Date:

Counsel:     L Herzog, Auckland

Solicitors:    Jones Fee, Auckland

CLEARY v EWART & EWART [2017] NZHC 628 [4 April 2017]

Introduction

[1]      By judgment dated 27 January 2017, I dismissed the plaintiff’s claim in this proceeding and directed memoranda to be filed if the parties were unable to agree issues regarding costs.1

[2]      The defendant seeks costs and disbursements in the sum of $71,116.43.  This comprises schedule 2B costs in the sum of $49,402.50 plus a 25 per cent increase on the basis that the proceeding was pursued in a manner that significantly increased the costs incurred by the defendant.   It also comprises disbursements in the sum of

$9,363.30.

[3]      The  issues  in  dispute  have  narrowed  as  a  result  of  the  exchange  of memoranda.  They concern the defendant’s claim for increased costs; an allowance for second counsel; and costs on making the costs application.  Each of these issues is considered below.

Analysis

[4]      The defendants raise a number of grounds which they say warrant an increase in costs.  Not all of those grounds justify an increase in my view.

[5]      For example, the defendant seeks an increase for the plaintiff’s failure to accept undisputed facts.    I agree with Mr Herzog that the points raised by the defendant were matters of defence raised at trial and were determined in the ordinary course.  Findings of fact which result in the evidence of one witness being preferred over that of another witness do not warrant an increase in this case.

[6]      Similarly, the fact that Mr Nolan had formed an opinion based on incomplete documentation was an issue explored in cross-examination, and it did not necessarily

lead to additional costs being unreasonably incurred.

1      Cleary v Ewart & Ewart [2017] NZHC 39.

[7]      However,  in  other  respects,  I  accept  that  the  plaintiff’s  conduct  of  the

litigation did increase costs unnecessarily for the defendant.

[8]      For example, there were a number of un-pleaded allegations raised during the course of the trial.  In particular, there were allegations of delay; an assertion that the defendant wrongly thought gift duty was consideration; and an alternative interpretation of the Option Deed put forward.   That was despite the plaintiff’s pleading going through a number of iterations, and being the subject of two interlocutory orders.

[9]      Similarly, I accept the defendant’s submission that he was put to additional cost by having to  respond to and correct numerous erroneous references to the evidence in the plaintiff’s closing submissions.

[10]     The plaintiff’s failure to confirm whether or not a key witness (Mr Lucas) would be called at trial required the defendant to prepare for both eventualities, and also added unnecessarily to the cost of preparing for trial.

[11]     However, the costs for those steps are already reflected in the defendant’s costs calculations.  In particular, they are reflected in the separate claim for preparing written closing submissions (in addition to preparation and hearing time claimed according to scale), and for second counsel.

[12]     Although I accept that the case was very important for the defendant, I do not consider a claim for second counsel would normally be allowed for a proceeding of this nature.   However, second counsel was warranted in this case in order to deal with the increased preparation and hearing time unnecessarily caused by the plaintiff.

[13]     Accordingly,  the increased costs caused by the plaintiff’s  conduct of the litigation  are  adequately  provided  for  in  the  scale  costs  as  calculated  by  the defendant.

[14]     The increased costs sought by the defendant also comprise an increase for the failure to accept two settlement offers inviting the defendant to discontinue the claim on the basis that no costs would be sought.  The first letter was sent in July 2014, shortly after the statement of claim was filed.   The second letter was sent shortly before trial.  Both letters were sent on a Calderbank basis.  Rule 14.10 allows those offers to be taken into account in assessing costs, with the ultimate impact on the quantum of costs awarded a matter for the Court’s discretion.

[15]     The first letter informed the plaintiff that the proceeding was based on an erroneous interpretation of the Option Deed and the surrounding facts.   That interpretation  was  not  an  issue  at  trial  having  been  resolved  in  an  earlier interlocutory hearing for which the defendant was awarded costs.   The additional costs caused by putting forward a different interpretation at trial have already been addressed above.  I do not consider a separate costs allowance for the first letter is justified.

[16]     The second letter was sent shortly before trial. Acceptance of the offer would have ultimately been more advantageous to the plaintiff in the sense that he would have been relieved of the obligation to pay costs.  But by that stage it must have been clear that the issues were essentially factual in nature and would depend on how the evidence came out at trial.   I do not consider the plaintiff was unreasonable in rejecting such an offer in those circumstances.

[17]     Finally, in relation to costs on the costs application, I consider both parties have had a measure of success in relation to the costs argument, and accordingly the costs of making the costs application should lie where they fall.

[18]     In summary, the defendant’s calculation of scale costs, including the costs for preparing written closing submissions, and for second counsel, reflects a reasonable costs award for the steps taken in the proceeding.

Result

[19]     The defendant is awarded costs in the sum of $49,402.50 plus disbursements in the sum of $9,363.30.

Edwards J