Craig v Keith
[2017] NZHC 2664
•31 October 2017
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV2015-404-002831 [2017] NZHC 2664
IN THE MATTER OF the Family Proceedings Act 1980 BETWEEN
CRAIG Appellant
AND
KEITH Respondent
Hearing: On the papers Judgment:
31 October 2017
COSTS JUDGMENT OF DUFFY J
This judgment was delivered by me on 31 October 2017 at 4.30 pm pursuant to
Rule 11.5 of the High Court Rules.
Registrar/ Deputy Registrar
Solicitors/Counsel:
Anderson Creagh Lai, Auckland
Grove Darlow, AucklandV A Crawshaw, Barrister, Auckland
Jo Hosking, Barrister, Remuera
CRAIG v KEITH [2017] NZHC 2664 [31 October 2017]
Introduction
[1] Mr Craig and Ms Keith were formerly in a relationship but are now separated. On 25 July 2017, I allowed Mr Craig’s appeal against a decision of the Family Court awarding Ms Keith spousal maintenance.1 The core issue on appeal was whether the Judge was correct to find the de facto relationship was one of short duration. I allowed the appeal, but remitted the matter to the Family Court for reconsideration.
[2] Mr Craig now seeks costs in respect of the appeal. Ms Keith opposes his costs application, arguing that no costs award should be made against her or alternatively that the costs award should be less than what Mr Craig claims.
Background
[3] Ms Keith and Mr Craig met in August 2009 and conceived a child together shortly afterwards. They became engaged in September 2009 and moved into a rented apartment together in April or May 2010. They separated in February 2013, and Ms Keith applied for spousal maintenance in March 2013. The core issue was whether or not the relationship was one of short duration (i.e. less than three years).
[4] Judge Burns found that it was not a relationship of short duration.2 He did not make an exact finding as to when a qualifying de facto relationship commenced, but he commented on each of the indicia in s 2D(2) of the Property (Relationships) Act 1976 (PRA) and further noted his view that Mr Craig misrepresented the evidence in his desire to get the relationship under three years. Judge Burns ordered that Mr Craig pay past and future spousal maintenance to Ms Keith. Judge Ellis subsequently ordered that the payment was to be made as a lump sum of
$398,770.55, but there was a stay on enforcement for six months.3
[5] On appeal I set aside that decision. I found that the character of the parties’
relationship prior to May 2010, when they began living in the apartment together,
1 Craig v Keith [2017] NZHC 1720.
2 Keith v Craig [2015] NZFC 8512.
3 Keith v Craig [2016] NZFC 10269.
was difficult to define. A sexual relationship and even the conception of children are not necessarily indicative of a mutual commitment to a shared life. Judge Burns’ assessment of the s 2D(2) indicia did not necessarily point against or in favour of a qualifying de facto relationship. Nor did my own analysis of those indicia persuade me the parties were in a qualifying de facto relationship in the period between September 2009 and up to February 2010. Further, Judge Burns’ finding that Mr Craig had misrepresented the position was not supported by evidence or clear reasoning. Nor was it raised by the opposing party before or during the hearing, meaning that Mr Craig did not have a chance to respond to that allegation. I concluded that the Judge took an unfounded adverse view of Mr Craig which may have influenced his other assessments, and I therefore set aside the whole decision.
[6] Because I was not in a position to form a definite view as to the credibility and reliability of the witnesses, I remitted the matter to the Family Court to be decided again.
Submissions
Appellant
[7] Mr Craig now seeks costs in respect of the appeal. Ms Hosking for Mr Craig relies on the principle that costs follow the event, pointing out that Mr Craig succeeded on appeal.
[8] Mr Craig seeks costs totalling $21,185.00, itemised as follows:
Item
Activity
Days
Amount
(Category 2 rate: $2,230)
52
Commencement
1
$2,230
54
First Case Management - Preparation
0.4
$892
54
First Case Management - Memorandum
0.4
$892
54
First Case Management – Appearance
0.3
$669
54
Second Case Management –
0.4
$892
Memorandum 54
Second Case Management – Appearance
0.3
$669
54
Third Case Management – Appearance
0.3
$669
55
Preparation of Case on Appeal
2 (3C)
$4,460
56
Preparation of Written Submissions
3
$6,690
57
Appearance – full day hearing
1
$2,230
Total
$21,185.00
[9] The costs sought are calculated on a 2B basis, with the exception of Item 55 (Preparation of Case on Appeal), which is calculated on a 3C basis.4 Ms Hosking submits that this is appropriate as preparation of the High Court bundle was extremely time consuming. In the end it comprised some 19 volumes in total.
[10] Mr Craig also seeks disbursements of $12,824.12, itemised as follows:
Couriers
$40
Photocopying (additional bundles)
$287.60
Binding (additional bundles)
$93.53
Gribble Churton Taylor Ltd (Valuations)
$6,123.75
Mileage Rotorua to Auckland at $0.72 per km
$328.32
Quadrant Hotel
$153.60
Printing (SuperDooper Print Ltd)
$3,337.32
Filing fee (notice of appeal)
$540
Scheduling fee
$640
Hearing fee
$1,280
Total
$12,824.12
4 I note that although Ms Hosking seeks a re-categorisation to 3C for Item 55 and marks Item 55 as 3C in her schedule, the figure appearing for Item 55 in the schedule is in fact calculated on a
2C basis. I take this to be an unintentional error.
[11] Ms Hosking submits that there is no reason why the valuation fees should not be included, as they were part of Mr Craig’s appeal. She attaches invoices for the printing costs with SuperDooper Print Ltd and for the Gribble Churton Taylor Ltd valuations. I note at this point that, looking at the invoices, neither of the sums actually claimed appears to be accurate: the SuperDooper invoice is for $3,377.32 ($40 more than what is claimed), while the Gribble Churton Taylor Ltd invoice is for
$5,980.00 (some $140 less than what is claimed). No explanation is given for these discrepancies.
[12] Ms Hosking also addresses costs in the Family Court. She says that the costs award in favour of Ms Keith in the Family Court cannot stand, given that Mr Craig has succeeded on appeal. She seeks an order that the costs order in favour of Ms Keith (dated 9 March 2016) be set aside. However, she does not seek costs in the Family Court as well as on appeal. Rather, she submits that the appropriate course is for the Family Court to reconsider the issue of costs following the outcome of the rehearing.
Respondent
[13] Ms Crawshaw for Ms Keith submits that the Court should exercise its discretion not to make a costs order against Ms Keith in this case. She accepts that in the case of commercial litigants who are on an equal footing, costs would normally follow the event. However, she submits that that is not the case here: this was a spousal maintenance proceeding where the very reason for making the application was Ms Keith’s inability to meet her own reasonable needs. She receives a Domestic Purposes Benefit and a costs award would result in considerable hardship for her and the children, who remain in her day-to-day care during the school week.
[14] Ms Crawshaw further says that Mr Craig did not make any spousal maintenance payments to Ms Keith following the Family Court order, and submits that his conduct towards Ms Keith throughout the proceedings has been “desultory”. She says that the successful party’s conduct is a factor that can be taken into account in refusing costs.
[15] In the alternative, if costs are to be awarded to Mr Craig, Ms Crawshaw submits that costs should be reduced. In addition to the reasons already stated, she submits that Mr Craig unnecessarily added to the time spent on appeal. She gives the example of his second interlocutory application for leave to adduce further evidence on appeal. That application was made just four days before the appeal hearing, and it was refused.
[16] Ms Crawshaw also objects to the following specific items:
(a) The attempted re-categorisation of Item 55 as category 3C: she notes that Ms Hosking’s memoranda for the case management conferences sought categorisation of the proceedings as 2B. That category was confirmed at a teleconference on 6 March 2017, by which time Ms Hosking would presumably have been aware of the size of the Family Court file.
(b)The inclusion of several case management conferences, most of which were directed due to Mr Craig’s failure to pay spousal maintenance pursuant to the Family Court order. She says that only one case management conference should have been required.
(c) The one-day time allocation for appearance at the appeal hearing (Item 57), when she says that much of that time was spent on Mr Craig’s second (unsuccessful) application to adduce further evidence on appeal.
(d)The inclusion of the valuation costs in the disbursements: Hinton J suggested that valuations for the appeal “must be achievable at relatively low cost”.5 Ms Crawshaw submits that Ms Keith managed to obtain valuations at a lower cost and it would not be fair to require her to repay Mr Craig for his more expensive valuations. She notes
that the valuation evidence ultimately did not feature in the appeal.
5 Craig v Keith [2016] NZHC 2744 at [8].
Costs
[17] The starting point must be that although the Court has discretion in granting costs,6 it is a “fundamental principle” that the successful party is entitled to recover costs.7 In the present case Mr Craig has been successful on appeal. The spousal maintenance order made against him in the Family Court was set aside on appeal.
[18] On 6 March 2017, Hinton J issued a Minute in which she classed the proceedings as category 2. In my view the nature and complexity of the proceedings was such that the proceedings are appropriately categorised as 2B. Mr Craig is therefore prima facie entitled to costs on a 2B basis for the appeal. The costs order made against him in the Family Court should also be quashed, given that the Family
Court’s substantive decision has been set aside on appeal.8
[19] The parties’ submissions raise the following issues:
(a) whether I should reduce or refuse to make a costs award in the circumstances;
(b) whether Item 55 is appropriately re-categorised as 3C;
(c) whether costs should be awarded against Ms Keith in respect of all three case management conferences;
(d) whether a one-day allowance is appropriate for the appeal hearing;
and
(e) the appropriate quantum of disbursements.
Reduction or refusal of costs
[20] As to the first issue, r 14.7 of the High Court Rules 2016 governs refusals of or reductions in costs:
6 High Court Rules 2016, r 14.1.
7 Manukau Golf Club Inc v Shoye Venture Ltd [2012] NZSC 109, [2013] 1 NZLR 305 at [8].
8 See Murray v Morel & Co Ltd [2006] 2 NZLR 366 (CA) at [85].
14.7 Refusal of, or reduction in, costs
Despite rules 14.2 to 14.5, the court may refuse to make an order for costs or may reduce the costs otherwise payable under those rules if—
(a) the nature of the proceeding or the step in a proceeding is such that the time required by the party claiming costs would be substantially less than the time allocated under band A; or
(b) the property or interests at stake in the proceeding were of exceptionally low value; or
(c) the issues at stake were of little significance; or
(d) although the party claiming costs has succeeded overall, that party has failed in relation to a cause of action or issue which significantly increased the costs of the party opposing costs; or
(e) the proceeding concerned a matter of public interest, and the party opposing costs acted reasonably in the conduct of the proceeding; or
(f) the party claiming 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 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, or 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
(g) some other reason exists which justifies the court refusing costs or reducing costs despite the principle that the determination of costs should be predictable and expeditious.
[21] I do not consider that the circumstances of the present case justify refusal of costs or a reduction in costs. Ms Crawshaw says that spousal maintenance proceedings are not ordinary civil proceedings and that this justifies departure from the ordinary principle that costs follow the event. She relies on Clayton v Clayton
for this point,9 but I do not see it as authority for this proposition. The passage from the United Kingdom Supreme Court cited in that judgment does not deal with costs, but rather with the drawing of adverse inferences from the absence of evidence or disclosure.10
[22] Secondly Ms Crawshaw submits that paying costs would cause considerable hardship to Ms Keith, and indeed that she would be unable to meet a costs order. She says that Ms Keith receives a Domestic Purposes Benefit and cares for the two children of the relationship, receiving only $186.20 per month in child support from Mr Craig. I note that these are merely the assertions of counsel; there is no sworn
affidavit from Ms Keith.11 Whilst there is evidence in the substantive proceedings as
to Ms Keith’s limited means, Ms Crawshaw did not direct me to any of it for the purpose of supporting a costs reduction. Accordingly I have not taken it into account.
[23] Financial hardship is a relevant factor which may be taken into account under r 14.7(g) in exercising the discretion to award costs, but it is not an answer to a claim for a costs award.12 The courts have held that:13
A costs award should be made at a meaningful level, even against an impecunious party, when that party has advanced a case which is poorly pleaded or lacking in merit …
[24] I have found Ms Keith’s arguments on appeal (as to why the Family Court judgment should be upheld) to be lacking in merit. I am not satisfied that costs should be reduced on the grounds of financial hardship in the present case. Rather, I consider that a meaningful costs award should be made in favour of Mr Craig. I further note that there is nothing to inform me that Ms Keith is legally aided, which I would have expected if her financial circumstances were as bad as Ms Crawshaw
submits.
9 Clayton v Clayton [2015] NZCA 30, [2015] 3 NZLR 293.
10 Prest v Petrodel Resources Ltd [2013] UKSC 34, [2013] 2 AC 467 at [45].
11 See Lowe v Auckland Family Court [2017] NZHC 656 at [5] where this was also the case.
12 Chesterfields Preschools Ltd v Commissioner of Inland Revenue [2011] NZCA 640 at [7]; Tuck v Keedwell [2016] NZHC 794 at [11]; Te Whare O Te Kaitiaki Ngahere Inc v West Coast Regional Council [2014] NZHC 2969 at [16]; Simester v Tauranga Cruise Tourism Operators Association Inc [2015] NZHC 2133 at [15].
13 Te Whare O Te Kaitiaki Ngahere Inc v West Coast Regional Council [2014] NZHC 2969 at [16].
[25] Finally, Ms Crawshaw says that Mr Craig’s conduct towards Ms Keith has been “desultory” and that this justifies a reduction in costs. I accept that unreasonable conduct in litigation by the successful party can in some instances warrant a reduction in costs. However, given that I am determining costs on appeal I consider that I am limited to considering Mr Craig’s conduct on appeal, not his conduct in the Family Court proceedings. Ms Crawshaw relies on Mr Craig’s unwillingness to disclose information about his financial affairs, resulting in the Family Court litigation being significantly prolonged. That is not relevant to costs on appeal. As for Mr Craig’s failure to make spousal maintenance payments to Ms Keith, I deal with that below.
[26] For the above reasons, no reduction in costs or refusal of costs is warranted in the present case.
Re-categorisation of Item 55 as 3C
[27] Ms Hosking seeks re-categorisation of Item 55 (Preparation of Case on Appeal) as 3C, despite the appeal as a whole being categorised as 2B. Ms Hosking relies on the fact that the High Court bundles comprised some 19 volumes in total. Ms Crawshaw submits that is a fact of which Ms Hosking should have been aware by 9 February 2017, when she sought categorisation of the proceedings as category 2 in a memorandum prior to the third case management conference. However, that case management conference took place almost five months prior to the hearing of the appeal on 29 June 2017, so I am prepared to accept that Ms Hosking may not yet have been aware of the volume of material she was required to file. Further, I accept that the number of volumes that were filed on appeal meant that a comparatively large amount of time was required to prepare the case on appeal.
[28] However, it has never been clear why 19 volumes of material which encompass evidence not relevant to the appeal were included in the case on appeal. The parties should have taken the time to ensure only material relevant to the appeal was included in the case on appeal. The time spent on what in some respects was a
time wasting exercise provides no basis for an uplift to category 3.14 In my view a categorisation of 2C is appropriate for this step.15
Case management conferences
[29] Mr Craig seeks costs in respect of all three case management conferences. Ms Keith objects, saying costs should be awarded for only one case management conference.
[30] This matter has a long procedural history. The first case management conference took place before Katz J on 9 February 2016, and it was apparent that Mr Craig was having some difficulty making the spousal maintenance payments ordered by the Family Court. Katz J adjourned the appeal for four weeks because counsel for Mr Craig had mistakenly believed she was not required to appear.
[31] The second case management conference took place before Woodhouse J on
8 March 2016. He granted a stay of the appeal pending Mr Craig making outstanding spousal maintenance payments, recording at [3] that Mr Craig had not made any payments under the spousal maintenance order since it was made on 28
October 2015.16
[32] Mr Craig then filed an interlocutory application to adduce further evidence, which was repeatedly delayed but eventually heard by Hinton J on 8 November
2016. She declined the application,17 and awarded costs to Ms Keith in a Minute
issued on 20 December 2016. However, she declined to award costs in respect of the two case management conferences that had already taken place, saying that they
were part of the appeal and not the interlocutory application.
14 Rule 14.3(2) of the High Court Rules provides that “The court may at any time determine in advance a proceeding’s category, which applies to all subsequent determinations of costs in the proceeding, unless there are special reasons to the contrary”. Woolford J observed in Delegat v Norman [2014] NZHC 1099 at [17] that “[the] policy reason for not changing the category part way through a proceeding is that a costs categorisation is likely to have influenced parties’ conduct in the proceeding”.
15 An uplift to Band C is possible provided the parties demonstrate why the normal time for a particular step is insufficient; see Commissioner of Inland Revenue v Chesterfields Preschools Ltd [2010] NZCA 400, (2010) 24 NZTC 24,500 at [161]. I consider that Ms Hosking has done so in the present case.
16 Craig v Keith [2016] NZHC 385.
17 Craig v Keith [2016] NZHC 2744.
[33] A third case management conference took place before Hinton J (by telephone) on 16 February 2017. The appeal was then set down for hearing on 29
June 2017.
[34] In the circumstances I consider that the fact three case management conferences were required was largely the fault of Mr Craig, who had failed to comply with court orders for the payment of spousal maintenance. In that respect I am satisfied he has contributed unnecessarily to the time and expense of the proceeding by failing to comply with a direction of the court, in terms of 14.7(f)(i). Ms Keith should be required to pay costs only in respect of one case management conference.
Allowance for the appeal hearing
[35] Ms Hosking has allowed one day in respect of the appeal hearing in the schedule itemising costs. Ms Crawshaw objects to the allocation of a full day, saying that a portion of the appeal hearing was spent on Mr Craig’s (second) unsuccessful application for leave to adduce additional evidence. However, the matter in fact took up very little time because Ms Hosking quickly abandoned this application at the hearing. I allow a full day for the appeal hearing.
Quantum of disbursements
[36] At [8] of her judgment on the application to adduce further evidence, Hinton J allowed Mr Craig to obtain updating evidence as to the value of six relevant properties:
I proposed to Ms Crawshaw, and she accepts, that updating evidence as to these properties should be able to be adduced. Providing Mr Craig meets (upfront), the cost of updating valuations from the registered valuer or valuers who previously valued these properties on behalf of Ms Keith, those valuations can be adduced. That must be achievable at relatively low cost.
[37] Ms Crawshaw now submits it would be unfair for Ms Keith to be required to pay the cost of obtaining these valuations, when she too obtained valuations and did so at a lower cost. However, Ms Crawshaw has not provided evidence (for example, invoices for the valuations that Ms Keith obtained) to support her allegation that
Mr Craig did not obtain the valuations “at relatively low cost” as directed. In the circumstances I consider Ms Keith must pay the cost of Mr Craig’s valuations. It is not relevant that this evidence ultimately did not feature in the appeal; it did not feature because the matter was remitted to the Family Court and that is not something that was foreseeable at the outset.
[38] I propose to allow $5,980.00 for the Gribble Churton Taylor Ltd valuations, which is the figure that appears on their invoice rather than the figure recorded in Ms Hosking’s disbursements table. On that basis I also allow $3,377.32 for printing, which is the figure that appears on the SuperDooper invoice not the figure that appears in the disbursements table.
[39] The success Mr Craig enjoyed in the appeal also means that the costs order made against Mr Craig in the Family Court is set aside. Costs in the Family Court are remitted. They are to be determined by the Family Court. It is for the Family Court to determine whether costs for the hearing under appeal are available before or following the rehearing of the substantive matter.
Result
[40] Mr Craig is entitled to costs on a 2B basis, with the exception of Item 55 which warrants a 2C categorisation. He is not entitled to costs for the second and third case management conferences.
[41] With these adjustments, total costs come to $18,063.00.
[42] The costs order made in the Family Court for the decision under appeal is set aside and costs in the Family Court are remitted to that Court for determination.
[43] Mr Craig is also entitled to disbursements totalling $12,720.37.
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