Dobbe v Taylor
[2025] NZHC 830
•9 April 2025
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2021-404-1978
[2025] NZHC 830
BETWEEN RAYMOND HENRY DOBBE and CHD TRUSTEES (DOBBE) LIMITED
Plaintiffs
AND
DOUGLAS OWEN TAYLOR
First Defendant
DTB CONSTRUCTION LIMITED
Second DefendantGWE CONSULTING LIMITED
Third Party
Hearing: 24 February 2025 Appearances:
S E Russell, R F Selby for Plaintiffs
A J B Holmes, D Christoffersen, T J Powell for First and Second Defendants
D S McGill, M K Braddock, T J Lorck for Third PartyJudgment:
9 April 2025
JUDGMENT OF WHATA J COSTS
This judgment was delivered by me on 9 April 2025 at 4.00pm,
pursuant to Rule 11.5 of the High Court Rules.
Registrar/Deputy Registrar Date: ………………………….
Solicitors / Counsel: Russell Legal, Auckland
Meredith Connell, Auckland Duncan Cotterill, Auckland
DOBBE v TAYLOR [2025] NZHC 830 [9 April 2025]
[1] GWE Consulting Limited (GWE) seeks costs from the defendants, Douglas Taylor and DTB Construction Limited (DTB) on an indemnity basis or on an increased costs basis because:
(a)DTB and Mr Taylor brought their claim against GWE in wilful disregard of the known facts and law, based on groundless contentions where the claim was hopeless and bound to fail;
(b)DTB and Mr Taylor unreasonably rejected genuine offers to settle proceedings prior to trial; and
(c)DTB and Mr Taylor’s overall conduct in the proceedings was unfair, causing loss of time to GWE and putting GWE to unnecessary and additional cost.
[2]The defendants say:
(a)GWE is entitled to costs, but that the plaintiffs should be required to meet them.
(b)There is no basis for an award of indemnity costs, but acknowledge settlement offers were made on the eve of trial which may engage r 14.6(3)(b) of the High Court Rules 2016 and provide for an uplift of increased costs from that point onwards. However, there are other relevant but still without prejudice communications with the plaintiffs that bear on the issue of costs, so any final assessment of the third party’s costs should be adjourned pending final resolution of the plaintiffs’ claims.
(c)GWE is entitled to most of its disbursements, subject to review of relevant invoices.
Threshold
[3] The party who succeeds is normally entitled to their costs according to scale.1 That scale is usually 2B, but in complex cases the scale might properly be adjusted in whole or in part to 3B.2 Costs, however, may be increased or decreased depending on, among other things, the conduct of the parties in the litigation including failure to accept a settlement offer.3 Indemnity costs may be issued if for example a party has acted improperly.4 In some cases, costs may be shared where success is shared,5 but success on more limited terms is still success.6 In addition, a successful defendant can expect an unsuccessful plaintiff to meet all the costs of a third party reasonably and justifiably joined by that defendant, unless there is some particular reason not to adopt that approach.7
Argument
[4] GWE claims it is entitled to indemnity or increased costs because the defendants must have known they had no prospects of success in respect of the third party claim, did not take up the Calderbank offers and managed the proceedings in a way that put GWE to unnecessary costs. More specifically:
(a)Mr Taylor knew that GWE was never initially instructed to design the drainage or yard so that it could accommodate containers or a fork hoist, he ignored GWE’s cautions against commencing construction without further testing and design, he did not respond to GWE’s heavy pavement design and did not use it in the final build.
(b)The defendants never adduced evidence to support their claim against GWE and continued to pursue it in the face of the clear evidence that failure had nothing to do with GWE’s advice.
1 High Court Rules 2016, r 14.2.
2 Rules 14.3 and 14.5.
3 Rules 14.6(3)(v) and 14.10.
4 Rule 14.6(4).
5 See, for example, the Court of Appeal’s decision in Packing In Ltd (In Liq) v Chilcott (2003) 16 PRNZ 869 (CA) at [5] per Tipping J.
6 Weaver v Auckland Council [2017] NZCA 330, (2017) 24 PRNZ 379 (CA) at [26].
7 Above n 6, at [43].
(c)Two Calderbank offers were made by GWE on 8 May 2024 (for
$100,000) and on 10 June 2024 (for $50,000) in full and final settlement. The first offer reviewed the evidence, was rationally based and uplifted to $100,000 to account for litigation risk.8 The second offer referred to a “strong indication” from the Court that the claim against GWE would not succeed in the absence of stormwater engineering expert evidence.
(d)As to conduct of the proceedings:
(i)The defendants joined GWE more than two years after the claim was filed with no evident reason that would justify such late joining of the third party.
(ii)The pleadings did not clearly state the basis for the claim against GWE.
(iii)The claim was poorly managed by the defendants with extensive submissions, late evidence and numerous admissibility objections.
(iv)The claim against GWE was never clear, little if any evidence was advanced against GWE and the case against GWE was full of inconsistencies.
[5] The defendants respond that the joinder of GWE was reasonable, necessary and inevitable, and there is nothing to suggest that the defendants’ behaviour was exceptionally bad, flagrant misconduct or of a kind that might usually attract indemnity costs:9
8 GWE also participated in a joint offer to the plaintiffs. I say no more about this offer as parts of it remain subject to privilege.
9 Referring to Bradbury v Westpac Banking Corp [2009] NZCA 234, [2009] 3 NZLR 400 at [28];
AFI Management Pty Ltd v Lepionka & Co Investments Ltd [2018] NZHC 1285.
(a)Despite multiple versions of the pleadings, the plaintiffs never specified when they alleged that the defendants said they agreed to build a yard for a 36 tonne fork hoist.
(b)Given the ongoing ambiguity on this key point, by the time of the Fifth Amended Statement of Claim, the defendants sought leave to join GWE.
(c)A key pleading was that Mr Dobbe made the loading requirements clear during a meeting with Mr Taylor and a representative of GWE. Accordingly, the defendants claim was made on the basis that if they knew the plaintiffs’ requirements, then GWE must have known them as well.
(d)Just because these key allegations were disproven does not make the bringing of the claim against GWE unreasonable, especially given that the plaintiffs continued to allege the T-01 Design was required to be able to accommodate the 36 tonne load.
(e)GWE needed to be represented to refute any claims that there was an initial or any agreement to meet the plaintiffs’ alleged Requirements.
(f)There was evidence GWE knew that the yard was to be used for light industrial activity and expert evidence that the T-01 Design was suitable for use by a 12.5 tonne fork hoist.
(g)There was nothing cynical about the joinder, and the defendants endeavoured to obtain clarity about when the plaintiffs made the Requirements known before joining GWE.
(h)There was no ulterior motive or collateral purpose in joining GWE— they considered that their liability largely turned on what was said at one of the meetings at which a GWE representative was present.
(i)The alignment between GWE and the defendants on the issue of the Requirements did not make the joinder of GWE unreasonable—the defendants had to cover off the possibility of a finding that the plaintiffs’ evidence about what happened was accepted, and if that included acceptance that GWE also knew about the Requirements, then the defendants claim against GWE would have been vindicated.
[6] In relation to the Calderbank offers, the defendants say that they are not in a position to address the Court in respect of a fact specific enquiry as that will involve consideration of Calderbank communications made between the defendant and the third party on the one hand and the plaintiff on the other which remain privileged.
Issues
[7] GWE is entitled to costs. With the benefit of argument, the key issues to be determined are:
(a)Should the costs determination be deferred pending the final outcome of the case between the plaintiffs and the defendants?
(b)Is GWE entitled to indemnity or increased costs?
Timing
[8] I am not satisfied it is necessary to defer the consideration of costs pending the resolution of the case between the plaintiffs and the defendants, and any review of the other negotiations between them. GWE’s Calderbank offers are clear on their face. It is difficult to see why other negotiations should bear on the obvious import of those offers. The offers were not withdrawn or later modified because of those negotiations. Plainly they were not accepted by the defendants. That was their call. They must live with it. To the extent that there may be within those communications a reason to attribute costs liability to the plaintiffs, that can be fairly dealt with at any future costs hearing as between them. It does not need to delay GWE’s claim.
[9] Moreover, whatever potential liability the plaintiffs (if any) may have to the defendants for these costs (including in respect of third party costs), GWE should not be left out of pocket in the meantime. To the extent that the plaintiffs might be liable to the defendant for the third party costs, the evident weakness of the case against GWE by the time of the Calderbank offers will be a strong factor to be weighed when finally costs as between the plaintiffs and the defendants come to be resolved.10 That is another reason not to defer making an award now in favour of GWE.
Indemnity or Increased costs
[10] The case against GWE was always weak. But at the time of joining, it was not completely hopeless. Had the Court accepted Mr Dobbe’s allegation that a GWE representative was present at a meeting when he told them of his Requirements, then it would have been arguable that GWE should have designed to those Requirements or advised Mr Taylor about what was necessary in the early stages of the design and construction.
[11] However, by the time of the first Calderbank offer the prospects of success against GWE were very small, given:
(a)the clear evidence from the documentary record of the instructions initially given to GWE by Mr Taylor which included plans for a car park;
(b)the total absence of evidence identifying any flaws in the designs produced by GWE;
(c)that Mr Taylor knew he did not use the GWE design to construct the yard; and
(d)the expert evidence attributed the cause of failure to DTB.
10 The Court of Appeal in Weaver, above n 6, endorsed the same reasoning in that case at [48].
[12] Each of these matters were laid out in the first Calderbank offer. On that basis the Calderbank offer was clearly reasonable, and conversely by not accepting it, the defendants clearly acted unreasonably and thereby assumed the risk of costs. By the time of the second Calderbank offer, the absence of expert evidence criticising the GWE designs had been highlighted by the Court, further emphasising the weakness of the case against GWE.
[13] But was the case against GWE so hopeless by this stage as to attract indemnity costs? It is necessary to be careful not to apply the benefit of hindsight to come to that conclusion, especially with the full benefit of adverse findings against Mr Dobbe’s claim that he never made his Requirements clear. Relevantly, Mr Dobbe’s evidence about when the Requirements were made known was still to be tested. As noted, had I been satisfied that he did tell GWE of his Requirements at an early meeting, GWE’s failure to advise Mr Taylor of the design requirements for such a build at the outset may have had a bearing on liability or the apportionment of liability had I ultimately found in favour of the plaintiffs’ primary claim. I accept that Mr Taylor’s decision to not use GWE’s 36 tonne design most likely broke the chain of causation, however the prospect of such liability attaching to GWE was not entirely fanciful at the time of the Calderbank offers.
[14] In those circumstances I am not prepared to make an award of full indemnity costs. Nonetheless, this case demands an award of substantially increased costs, given the combination of the inherent weakness of the case against GWE from the outset and the Calderbank offers. Accordingly, an uplift on standard 2B costs by 50 per cent for all attendances is warranted. Finally, there is no scope within the 2B costs allocation for reporting to the insurer, NZI. I therefore see no basis for including those costs within the costs order.
Disbursements
[15] GWE must have its reasonable disbursements. Mr Holmes challenges the costs of Mr Cook’s attendance as excessive (at about $80,000) suggesting that the sum of
$25,000 is sufficient. I requested that Mr Cook file an affidavit as to his costs. I have reviewed that affidavit. I am satisfied that the costs claimed properly relate to the
proceedings and are reasonable. I note for completeness the total invoiced amount calculated by him in his affidavit is $75,368.05 compared to the scheduled sum referred to by counsel of $79,203.55. While listed in his table of invoiced costs, it appears Mr Cook did not include within his arithmetic the quantum for Invoice 55928 of $3,835.00. I am satisfied that the sum of $79,203.55 is the correct amount.
Outcome
[16] For the foregoing reasons I am satisfied that GWE should have their 2B costs uplifted by 50 per cent for all attendances. Second counsel approved. But I do not approve for attendances for reporting to the insurer.
[17]GWE should have their reasonable disbursements as claimed.
[18]If quantum cannot be agreed it shall be fixed by the registrar.
[19] I note for completeness that nothing in this decision should be taken to assume I have reached a view on costs as between the plaintiffs and the defendants. Whether third party costs can be sheeted home to plaintiffs is not a simple matter of identifying whether the case against GWE was hopeless (or not).
Whata J
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