Downey v Quirk

[2023] NZHC 2810

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE

CIV-2018-409-000737

[2023] NZHC 2810

IN THE MATTER

of the estate of PETER EDWARD CULMER READ

BETWEEN

RICHARD WILLIAM DOWNEY as the

trustee of ST JOHN’S TRUST Plaintiff

AND

TREVOR KINRED QUIRK as trustee and executor of the estate of PETER EDWARD CULMER READ

Defendant

Hearing:

On the papers

Counsel:

R W Downey in person

K W Clay for T K Quirk (proposed Second Defendant), R P Read (proposed Fourth Defendant), G F Rhodes and Independent Trustees (Canterbury) Ltd as trustees of the Resonia Family Trust (proposed Fifth Defendants), Layburn Hodgins Ltd (proposed

Sixth Defendants), and D K Quirk, J B Abbott, D A MacIntyre and S L Tait (proposed Seventh Defendants)

M O Robertson for H van Schreven (proposed Third Defendant)

Judgment:

6 October 2023

JUDGMENT OF ASSOCIATE JUDGE PAULSEN

(Costs)

This judgment was delivered by me on 6 October 2023 at 3.45 pm pursuant to Rule 11.5 of the High Court Rules

Registrar/Deputy Registrar Date:

DOWNEY v QUIRK [2023] NZHC 2810 [6 October 2023]

[1]    On 3 August 2023, I heard an application by Mr Downey for leave to file a third amended statement of claim adding new causes of action and joining six further defendants after the close of pleadings date. The proposed defendants opposed the application.

[2]    Towards the conclusion of the hearing, Mr Downey raised the possibility that he might withdraw the application. I was not prepared to allow him to do so until he had time to consider his position overnight. I reserved my decision on Mr Downey’s application to give him the time to consider the matter, having drawn to his attention the possibility that if he withdrew the application the proposed defendants might seek costs.

[3]    On 4 August 2023, Mr Downey emailed the Court that he wished to withdraw his application as far as the proposed third amended statement of claim sought to add new causes of action and new parties, but he still wished to amend his claim as it related to existing causes of action against the defendant, Mr Quirk (in his capacity as executor of the estate of Peter Read).

[4]    Having received that advice from Mr Downey, I issued a minute recording that his application was withdrawn and directing the filing of submissions on costs. I also made directions concerning the filing of a third amended claim against the defendant in respect to the existing causes of action.

[5]    The directions in relation to costs required the proposed defendants to file their submissions by 11 August 2023, and Mr Downey had until 1 September 2023 to file any reply submissions.

[6]    The proposed defendants filed their submissions seeking costs in accordance with the timetable. Mr Downey did not comply with the timetable, but due to his ongoing health issues he sought and was granted two extensions of time to file his submissions. The second extension gave Mr Downey until 20 September 2023 to file his submissions. Mr Downey did not file his submissions by 20 September. He sent an email to the Court on 21 September 2023 stating that he was unable to address other timetabling directions that have been made and adding:

In regard to my submissions on the costs issue, all I can say at the moment is that I would not have withdrawn my application if I had not been suffering the side-effects of my medication. There were clearly good reasons for the plaintiff trust to join the additional defendants, and had I been allowed a more reasonable period of time to consider the situation, I would have got over my foggy brain from my medication and been able to think more rationally.

[7]    I issued a minute on 25 September 2023 that I was not prepared to  grant    Mr Downey a further extension of time to file his submissions and would issue my decision on costs as soon as possible.

The position of the proposed defendants’ and Mr Downey in relation to costs

[8]    Mr Clay represents the proposed second, fourth, fifth, sixth and seventh defendants. They are collectively seeking costs on a 2B basis with an uplift of 50 per cent.

[9]    The proposed third defendant, Mr van Schreven, is separately represented by Mr Robertson. Mr van Schreven is seeking costs on the same basis as the other proposed defendants.

[10]   Although he has not filed submissions, I am inferring from his recent email that Mr Downey is opposing costs on the basis that his application was meritorious and that the decision to withdraw it was affected by his medication.

Principles

[11]    The starting point is that all matters of costs are discretionary, but the discretion must be exercised on a principled basis in accordance with pt 14 of the High Court Rules 2016.1 The determination of costs, so far as possible, should be both predictable and expeditious.2 The party that has lost should pay the costs of the party that has won unless there are exceptional reasons to the contrary.3

1      High Court Rules 2016, r 14.1(1).

2      Rule 14.2(1)(g).

3      Rule 14.2(1)(a) and Shirley v Wairarapa District Health Board [2006] NZSC 63, [2006] 3 NZLR 523 at [19].

[12]   In relation to costs on an interlocutory application (which is what I am dealing with here), unless there are special reasons to the contrary costs must be fixed when the application is determined and become payable when they are fixed.4

[13]   The amount of an award of costs is usually determined by applying an appropriate daily recovery rate to the time considered reasonable for each step reasonably required in relation to a proceeding or interlocutory application.5 The applicable daily recovery rates depend upon the nature of the proceeding. This is a category 2 proceeding, being a proceeding of average complexity in the High Court.6 The time allocations for steps in any proceeding or interlocutory application are set out in the sch 3 to the High Court Rules.

[14]   However, the Court may make an order for increased or indemnity costs in circumstances set out in r 14.6, which relevantly provides:

(1)Despite rules 14.2 to 14.5, the court may make an order—

(a)increasing costs otherwise payable under those rules (increased costs); or

(b)that the costs payable are the actual costs, disbursements, and witness expenses reasonably incurred by a party (indemnity costs).

(2)The court may make the order at any stage of a proceeding and in relation to any step in it.

(3)The court may order a party to pay increased costs if—

…

(b)the party opposing 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 with 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, documents, or accept a legal argument; or

4      Rule 14.8.

5      Rule 14.2(1)(c).

6      Rule 14.3.

(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

…

(d) some other reason exists which justifies the court making an order for increased costs despite the principle that the determination of costs should be predictable and expeditious.

(4)The court may order a party to pay indemnity costs if—

…

(d) the person in whose favour the order of costs is made was not a party to the proceeding and has acted reasonably in relation to it; …

My analysis

[15]   The proposed defendants were entirely successful in opposing Mr Downey’s application insofar as it affected them. It follows they are prima facie entitled to their costs.

[16]   This is the case even though Mr Downey chose to withdraw the application following the hearing. By that stage, the proposed defendants had been put to all of the expense of opposing the application, except for making  their  claim  for costs. Mr Downey’s decision to withdraw the application was entirely understandable because the application was not meritorious and in some respects quite improper.

[17]   While Mr Downey says his decision was influenced by medication, it was conveyed to the Court in an email which suggests it was carefully considered and related only to the position of the proposed defendants. In other respects he maintained his application. His email read:

I would like to convey to Your Honour my appreciation for your patience, and the opportunities you gave me to comment on matters raised at yesterday’s hearing.

I wish to confirm to Your Honour that in respect of the plaintiff trust’s application for leave to file a third Amended Statement of Claim (insofar as the joining of new defendants and the addition of the new causes of action are concerned), it is the decision of the plaintiff trust to withdraw those aspects from that application.

For the avoidance of doubt, the plaintiff trust wishes to retain both the updated corrections that were made in the third Amended Statement of Claim filed on 1 June 2023 (that related solely to the causes of action previously specified in the second Amended Statement of Claim), and the additional typos/corrections that were identified in the covering letter emailed to the Court and other parties on 1 June 2023.

If required, the plaintiff trust will provide the Court with a redraft of the third Amended Statement of Claim that encapsulates the changes specified above.

[18]   The next issue is the quantum of the awards that are to be made in the proposed defendants’ favour. Commonly, where an application involves a non-party, they are awarded indemnity costs provided they have acted reasonably. However, the proposed defendants do not seek indemnity costs against Mr Downey. They seek an uplift on scale costs, principally on the basis that an increased award is appropriate because Mr Downey unnecessarily contributed to the time and expense associated with the application by failing to comply with directions of the Court and pursued the application despite it lacking merit.

[19]   In my assessment, the proposed defendants are entitled to increased costs. It is the case that Mr Downey’s application was irregular procedurally. Despite a direction he file an application, Mr Downey sought leave to file his third amended statement of claim informally by memorandum. He later sought to file a further amended pleading, making substantial changes to his earlier draft, in an attempt to fend off legitimate objections raised by the proposed defendants. He also filed an affidavit which was discursive and referred to 13 other affidavits filed in the proceeding on the basis that they were “highly relevant to the plaintiffs’ application” without further explanation. Counsel for the proposed defendants were not familiar with this prolonged proceeding and coming to terms with those affidavits and attempting to identify their relevance would have been a substantial task.

[20]   However, I would not award increased costs against Mr Downey on this basis alone because I consider allowance should be made for the obvious practical

difficulties faced by a self-represented litigant attempting to navigate through complex court processes.

[21]   The reason I consider an uplift on scale costs is justified is because the application lacked merit and should not have been made. There are several aspects to this. First, Mr Downey had, well before the close of pleadings date, raised the issue of joining further parties but had not done so. He only attempted to join the proposed defendants upon the close of pleadings with the trial date looming, and in circumstances where he was not ready to proceed to trial on the scheduled dates. I consider there is some merit in Mr Clay’s submission that the application was made for tactical purposes.

[22]   Further, Mr Downey was on notice that the application was unlikely to succeed. In a minute of 21 June 2023, Dunningham J directed an urgent telephone conference to deal with issues raised by Mr Downey’s late filing of the third amended statement of claim and recorded:

… I note that leave is required to file the amended statement of claim naming multiple new defendants and further causes of action. Given the chequered history of this claim and the inevitable risk to a trial date that has already been adjourned there is little prospect of leave being granted. The plaintiff may wish to reflect on this before the parties incur further costs in addressing the issues raised by the plaintiff’s attempt to file a third amended statement of claim.

[23]   I also accept the proposed defendants’ submissions that Mr Downey made allegations of dishonest conduct without a reasonable factual foundation. As an example, he alleged that a settlement agreement in respect to insurance claims may have been a sham and that Mr Quirk may have deliberately failed to disclose the real settlement agreement in this proceeding. That is a most serious allegation, particularly when made against an officer of the Court, and it was made without any factual basis that I can see.

[24]   Finally, the application was entirely unnecessary in my view. Mr Downey’s claim is that he has not been paid for services he rendered to Mr Read during his lifetime. The claim was adequately set out in the second amended statement of claim. The proposed third amended statement of claim would, in my assessment, achieve

little or nothing to advance Mr Downey’s claim, but would substantially add to the costs and complexity of the litigation.

Separate costs awards

[25]   There is a further issue to be addressed which is whether it is appropriate to make separate awards of costs in favour of Mr van Schreven and the other proposed defendants, or whether they should have joined in their defence of the application.

[26]   Mr van Schreven was in a quite different position to the other proposed defendants as he was, and remains, the solicitor on the record for Mr Quirk. He was given leave by Dunningham J to continue to act for Mr Quirk, but not in relation to this application. In his defence of the application, there was clearly the potential for Mr van Schreven’s interests to conflict with those of his client and the other proposed defendants (whether or not they were in fact joined). It was necessary that he be separately represented.

The amount of the awards

[27]   The proposed defendants have provided a calculation of costs on a 2B basis. I accept those calculations, noting that they are generous to Mr Downey in that no costs have been sought for preparing submissions on costs. In the case of Mr van Schreven, his 2B costs total $9,799. In the case of the other proposed defendants, their 2B costs total $8,843.

[28]   For the reasons set out above, I consider all proposed defendants are entitled to an uplift on scale costs. They have sought a 50 per cent uplift, and I can see how that might be justified. However, I am again mindful that some of the criticisms that can be made of Mr Downey are likely to have been contributed to by his lack of understanding of court processes, and also his ill-health. That said, the proposed defendants are entitled to expect some tangible recognition of the unnecessary costs that they have been put to by his application and the manner in which he pursued it. I have decided that an uplift on scale costs of 20 per cent is appropriate.

Result

[29]   The proposed defendants, represented by Mr Clay, are awarded 2B scale costs in the amount of $8,843.00, as set out in the schedule to counsel’s memorandum of 11 August 2023, with a 20 per cent uplift making a total of $10,611.60 together with disbursements as fixed by the Registrar.

[30]   Mr van Schreven is awarded 2B scale costs in the amount of $9,799.00, as set out in schedule A to counsel’s memorandum of 11 August 2023, with a 20 per cent uplift making a total of $11,758.80 together with disbursements of $110.00.

O G Paulsen Associate Judge

Solicitors

GCA Lawyers, Christchurch Clark Boyce, Christchurch