Cross v Queenstown Lakes District Council

[2016] NZHC 2772

IN THE HIGH COURT OF NEW ZEALAND INVERCARGILL REGISTRY

CIV-2015-425-000097 [2016] NZHC 2772

BETWEEN

ADRIAN JOHN CROSS,

GLADYS SARAH CROSS AND BRONYN MARY TEAT AS TRUSTEES OF THE N R & G S CROSS TRUST Plaintiffs

AND

QUEENSTOWN LAKES DISTRICT COUNCIL

Defendant

Hearing:	On the papers
Counsel:	M R C Wolff & Ms OʼBrien for the Plaintiffs R M Saunders & A Walker for the Defendant
Judgment:	18 November 2016

JUDGMENT OF NATION J

[1]      In a judgment of 20 October 2016, I declined the defendant’s application to strike out the plaintiffs’ statement of claim.   I held that the plaintiffs would be entitled to costs.   There is now a dispute as to what those costs should be.   I am determining that issue, having considered the memoranda filed by counsel for both parties.

[2]      The proceedings have been categorised as 2B.  On that basis, the costs would be $6,913.

[3]      The plaintiffs’ actual costs in relation to the strike out application have been

$24,416.81, including GST.   The plaintiffs submit that they should be entitled to indemnity costs.   Alternatively,  they submit  an  uplift  of  50  per  cent  would  be

appropriate.  On that basis, the amount they seek would be $10,369.50.

CROSS & ORS v QUEENSTOWN LAKES DISTRICT COUNCIL [2016] NZHC 2772 [18 November 2016]

[4]      Mr Wolff, for the plaintiffs, contends that the defendant acted improperly and unnecessarily in continuing with a strike out application after the plaintiffs’ solicitors had, in a letter of 20 June 2016, explained why they considered the plaintiffs had standing to bring the claim.  They also refer to a letter of 19 July 2016 in which they drew attention to the evidential basis on which they contended the plaintiffs had standing, the principles a court would apply in considering a strike out application as

stated in Attorney-General v Prince1  and the further observation of an Associate

Judge of 19 July 2016, that a strike out application will not usually be based on a claimed lack of evidence.

[5]      Ms Saunders, for the defendant, contended the costs should be awarded with no increase.  In support of this, she said the bringing of the application should have come as no surprise given the way in which, from an early date, the defendant had indicated there would be an issue as to whether the plaintiffs had standing to bring the claim.   She contended that the strike out application was appropriate having regard to Mr Andrew Beck’s text book opinion that, if a plaintiff did not have standing required as part of its cause of action, the claim could be dismissed.  She submitted that, where standing was in issue, it was appropriate to challenge that before trial to avoid the risk of a court finding the plaintiffs did have standing at trial. She submitted that it could not be said the defendant’s position was without merit given the Court had not made a determination as to whether the plaintiffs did have standing.

[6]      In  opposing  any  order  for  increased  costs,  Ms  Saunders  contended  the defendant had acted reasonably by bringing the strike out application when it did because the plaintiffs had been given an opportunity to establish standing before bringing the application.  Implicitly, she was submitting they had not done so.

[7]      Ms Saunders also suggested the amount claimed by way of indemnity costs included a claim for work not connected with the strike out application.  In response to that, Mr Wolff filed a brief memorandum saying the amount they were seeking by way of indemnity costs was not the full amount as invoiced but the actual costs in

opposing the strike out application.

1      A-G v Prince [1998] 1 NZLR 262.

[8]      She submitted that other judgments indicate that indemnity costs will be awarded in only truly exceptional circumstances.

Discussion

[9]      The threshold for an award of indemnity costs is a high one.  For such costs to be awarded, a court has to be of the view that a party has behaved “exceptionally badly”.2   That is apparent from the categories of behaviour which have been found to meet that threshold:3

(a)  allegations  of  fraud  knowing  them  to  be  false  and  the  making  of irrelevant allegations of fraud;

(b)  particular misconduct causing loss of time to the Court and to other parties;

(c)  commencing or continuing a proceeding for some ulterior motive;

(d)  doing so in wilful disregard of known facts or clearly established law; or

(e)  making allegations which ought never to have been made, or unduly prolonging  a case by groundless contentions – essentially “the hopeless case” situation.

[10]     I do not consider the defendant’s pursuit of the strike out application was of that  nature.    The  application  was  not  pursued  for  some  ulterior  motive  or  the disregard as to the prospects of success but because of a failure to appreciate how the established principles which a Court would take into account in considering a strike out application would be applied.  That misunderstanding seems to have continued with  the submission  that  the strike out  application  was  appropriate because the plaintiffs’ standing could be an issue and the defendant wished to avoid facing an adverse judgment as to that at trial.  The merits of the application were not increased through the defendant making an issue of the plaintiffs’ standing from early in the

proceedings.

2      Bradbury v Westpac Banking Corp [2009] 3 NZLR 400 (CA) at [27]-[28].

3      Harrison v Auckland District Health Board [2013] NZHC 1770 at [17] per Abbott AJ.

[11]     This was, however, always an application that, on a properly informed basis, had limited prospects of success.   It was brought primarily on the basis that the plaintiffs did not have the evidence to substantiate an allegation they had made in the statement of claim as to how they owned relevant properties.  It was clear, from the accepted principles as stated in Attorney-General v Prince and from the observation made by Associate Judge Osborne, that this was unlikely to be accepted as a basis for strike out.     Andrew Beck, in his text, had pointed out that there would be difficulties in having any issue over standing determined pre-trial.   Furthermore, while it was not necessary for the Court to rule on the particular challenge over standing in the context of a strike out application, information and evidence had been provided as to how the plaintiffs came to be on the title to the property which was sufficient to show that there was strong evidence explaining how all the plaintiffs came to be making the claim which is the subject of the proceedings.

[12]     Because this application for strike out was pursued when the defendant ought to have appreciated that it had little merit and little prospect of success, the plaintiffs are entitled to increased costs.   Consistent with the approach which the Court of Appeal has said should be adopted4, those costs should reflect a 50 per cent uplift on the costs that would have been awarded on a 2B basis.  On that basis, the plaintiffs are entitled to costs in the sum of $10,369.50.

[13]     Counsel for the plaintiffs has filed a memorandum suggesting timetabling directions but also indicating they would be willing to attend a mediation and/or a judicial settlement conference.  These issues should be discussed with counsel in a telephone conference.  The Court has arranged for such a conference to take place with Associate Judge Osborne at 9.30 am on 29 November 2016.

Solicitors:

Grimshaw & Co., Christchurch

Lane Neave, Christchurch.

4      Holdfast NZ Ltd v Selleys Pty Ltd 17 PRNZ 897.