Davis v Mancer

[2015] NZHC 3351

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2015-404-000687 [2015] NZHC 3351

BETWEEN

KARLEEN ITA DAVIS

First Plaintiff

TANYA MARIE SMART Second Plaintiff

TONI WILLIAMS MANCER Third Plaintiff

AND

KERRY JOHN MANCER First Defendant

KEITH WILLIAM YOUNG and CAROL ANN CAULFIELD

Second Defendants

On thepapers:
Appearances:	P Craighead for the Plaintiffs No appearance by or on behalf of the First Defendant P Napier for Second Defendants
Judgment:	21 December 2015

JUDGMENT OF WOOLFORD J

This judgment was delivered by me on Monday, 21 December 2015 at 1:00 p.m., pursuant to r 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Solicitors:

Alistaire Hall, Solicitor, Manukau City
Keegan Alexander, Auckland

Counsel:

P Craighead, Manukau City

DAVIS & ORS v MANCER & ORS [2015] NZHC 3351 [21 December 2015]

Introduction

[1]      In  a  judgment  dated  30  November  2015,  I  declined  to  strike  out  an application for a novel duty of care in tort between solicitors for an estate and the beneficiaries of that estate.1    In that judgment, I stated that costs should follow the event.

[2]      However, the second defendants now seek reduced costs, on the basis that the plaintiffs’ success was based on being granted an indulgence in re-pleading their statement of claim, warranting lesser costs.

Submissions

[3]      The defendants submit that in Sew Hoy & Sons Ltd (In Receivership and in Liquidation) v Coopers & Lybrand, the Court of Appeal directed that costs were to be costs in the cause, meaning that the ultimate victor at trial would receive costs rather than costs being granted at the strike-out stage.2

[4]      They further point to Belgrave Finance Ltd (in req and in liq) v Schofield, in which Associate Judge Matthews allowed a modest reduction in costs to account for the direction of the court that a repleading be allowed.3

[5]      However, I note that in Belgrave Finance itself, the Court stated that Sew Hoy, on which the defendants rely here, could not give any assistance in determining the appropriate costs award given it was decided under an old costs regime, and the presumption under the applicable r 14.8(1) was that “costs must be fixed and become payable when fixed, unless there are special reasons to the contrary”.   Associate Judge Matthews therefore rejected submissions based on that case.

[6]      Further, in Belgrave, the Court noted that it is an established principle that “if a pleading can be appropriately amended, amendments should be permitted,” and

stated that defendants should consider this when bringing an application to strike

1      Davis v Mancer [2015] NZHC 3005.

2      Sew Hoy & Sons Ltd (In Receivership and in Liquidation) v Coopers & Lybrand [1996] 1 NZLR

392 at 401.

3      Belgrave Finance Ltd (in rec and in liq) v Schofield HC Auckland CIV-2011-404-3155, 20

November 2012.

out.4   While in that context, the Associate Judge was commenting on the fact that the precise defect with the pleadings had not been identified by the defendants, to allow the plaintiffs to amend their statement of claim, I consider this also applies in general when bringing an application to strike out, particularly given the high threshold and generous approach adopted in strike out proceedings involving novel duties of care.5

The option of allowing the plaintiffs to amend their statement of claim is always

open to the Court.   In a recent case, Collins J considered it was “appropriate to consider an optimistic re-statement of the plaintiff's pleading before determining whether it is capable of strike out”, requiring a consideration of what the plaintiff was attempting to plead.6   This is similar to the approach I adopted in the strike-out application in this case.

[7]      Rule 14.7 governs circumstances in which reduced costs are appropriate.  It states that a court may make an order for reduced costs 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

4      Belgrave Finance Ltd (in rec and in liq) v Schofield, above n 3, at [5], citing Marshall Futures

Ltd v Marshall [1992] 1 NZLR 316.

5      Couch v Attorney General [2008] NZSC 45, [2008] 3 NZLR 75 at [35] – [38].

6      Hsu v Moore Stephens Markhams Ltd [2014] NZHC 961.

(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.

[8]      This  application  would  only fall  under  r  14.7(g).    The  Court  of Appeal approved the general proposition that a grant of an indulgence conventionally made at  the  expense  of  a  costs  award  against  the  party  obtaining  the  indulgence.7

However, in that case the fact that an indulgence had been granted did not automatically render costs appropriate.   The Court considered that assessing entitlement to costs still required a principled application of the rules, weighing up the indulgence received against the success in the litigation and the overall behaviour

of the parties in the litigation.8     The Court of Appeal does not appear to have

7      Cunningham v Butterfield [2014] NZCA 213, (2014) 22 PRNZ 521 at [52].

8      Cunningham v Butterfield, above n 7, at [57] and [58].

foreseen that the grant of an “indulgence” would automatically allow costs to fall to

the party against whom it was granted.

Analysis

[9]      In this case, the plaintiffs were successful and are prima facie entitled to costs.9     However allowing their pleadings to be amended, although not entirely unusual, was to some extent an indulgence of the court.   That term, however, is usually used in cases where leave has been granted to extend the time for filing an application, or relief is being granted in respect of a debt owed, all of which are cases involving some element of excusing the wrongdoing or bad behaviour of one party.10

[10]     In this case, the plaintiffs were not granted an indulgence in the face of bad behaviour.   Both parties conducted the proceeding in a professional and prompt manner.   Costs, which were argued for on the basis that an indulgence had been granted  to  the  other  party  (as  argued  here)  were  denied  in  Queen  Elizabeth  II National Trust v Green Growth No 2 Ltd where both parties had acted reasonably in

necessary proceedings.11

[11]     Given that, I would not exercise my discretion to order reduced costs in this case.  In my view there are no special circumstances here which warrant overriding the general principle that the determination of costs should be predictable and expeditious.

Conclusion

[12]     I order that the plaintiffs are entitled to 2B costs.

……………………………….

Woolford J

9      High Court Rules, r 14.2.

10     See, for example, Smith v Covington Spencer Ltd (No 4) HC Auckland CIV-2005-404-3020, 4

October 2007; Holdgate v Holdgate HC Auckland CP303/96, 24 August 1996; Linwood Food

Bar Ltd v Davison [2015] NZHC 45.

11     Queen Elizabeth II National Trust v Green Growth No 2 Ltd [2015] NZHC 343,