Edwards v Bridge

[2019] NZHC 3138

IN THE HIGH COURT OF NEW ZEALAND PALMERSTON NORTH REGISTRY

I TE KŌTI MATUA O AOTEAROA TE PAPAIOEA ROHE

CIV-2018-454-000106

[2019] NZHC 3138

BETWEEN

HEATHA EDWARDS

Appellant

AND

GRAEME BRIDGE

First Respondent

AND

THE REAL ESTATE AGENTS AUTHORITY

Second Respondent

Hearing:

On the papers

Counsel:

A Darroch for the Appellant First Respondent in person

M Mortimer for the Second Respondent

Judgment:

29 November 2019

JUDGMENT OF DOOGUE J

[Costs]

Introduction

[1]                 On 2 September 2019, I issued a judgment in respect of an appeal by Heatha Edwards and a cross-appeal by Graeme Bridge against a decision of the Real Estate Agents  Disciplinary  Tribunal  (the  Tribunal)  in  which  the  Tribunal   ordered   Ms Edwards to pay a sum of $10,000 to Mr Bridge as contribution towards relief from the consequences of her errors and omissions.1 I allowed the appeal and dismissed the cross-appeal.

1      Edwards v Bridge [2019] NZHC 2286.

EDWARDS v BRIDGE [2019] NZHC 3138 [29 November 2019]

[2]                 The parties have been unable to agree on costs. This decision deals with that issue.

Background

[3]                 It is unnecessary for me to outline the entire background to this proceeding. It suffices to say that it first came before a Complaints Assessment Committee (the Committee) which found that Ms Edwards had engaged in unsatisfactory conduct for the purposes of the Real Estate Agents Act 2008 (the Act).2 The Committee censured Ms Edwards and ordered that she undertake further education and pay a fine.3

[4]                 Mr Bridge appealed the Committee’s decision on the ground the fine was inadequate. The Tribunal upheld the Committee’s finding of unsatisfactory conduct but ordered that Ms Edwards also pay a sum of $10,000 pursuant to s 93(1)(f)(ii) of the Act as compensation for her errors and omissions.4

[5]                 Ms Edwards then appealed to this Court. Mr Bridge cross-appealed on the ground the quantum of the compensation ordered by the Tribunal was inadequate. He also sought for the Real Estate Agents Authority (REAA), which had been named in his notice of appeal to the Tribunal and again in Ms Edwards’ notice of appeal to this Court, to be removed as a party from the proceeding. I found that the Tribunal erred in its application of s 93(1)(f)(ii) of the Act and therefore allowed the appeal and consequently dismissed the cross-appeal. I also dismissed Mr Bridge’s application seeking the removal of the REAA as a party.

[6]                 As the successful party, Ms Edwards now seeks costs and disbursements on a 2B basis totalling $16,619.00. This amount comprises $14,798.00 in costs and

$1,821.00 in disbursements, itemised as follows:

Step	Description	Day	Cost
52	Commencement of appeal or cross-appeal	1	$2,230
10	Preparation for first case management	0.4	$892

2      Re Edwards: Decision finding unsatisfactory conduct asking for submission on orders in the matter of Heatha Edwards and Decision taking no further action in the matter of the Agency Complaints Assessment Committee C17911, 28 September 2017.

3      Re Edwards: Decision on orders Complaints Assessment Committee C17911, 13 December 2017.

4      Bridge v Real Estate Agents Authority (CAC 409) [2018] NZREADT 61.

11	Filing memorandum for first or subsequent case management conference	0.4	$892
13	Appearance at first or subsequent case management conference	0.3	$669
55	Preparation of Case on Appeal	1	$2,230
56	Preparation of written submissions	3	$6,690
57	Appearance at hearing as sole or principal counsel	0.5	$1,195
Total	$14,798
Disbursements
Filing Fee – Notice of Appeal	$540
Photocopying and binding	$641
Scheduling fee	$640
Total	$1,821

Principles in respect of costs

[7]                 Costs are at the discretion of the Court.5 The High Court Rules 2016 (the Rules) provide guidance as to how the discretion may be exercised.6 Despite the existence of this discretion, however, the Supreme Court has made it clear that the costs regime within the Rules means “there is a strong implication that a Court is to apply the regime in the absence of some reason to the contrary.”7

[8]                 The “fundamental principle” is that costs follow the event, that is, the party who fails with respect to a proceeding should pay costs to the successful party.8 In addition, the determination of costs should be predictable and expeditious.9

[9]                 While costs generally follow the event, r 14.7 of the Rules provides that the Court may make a reduced award, or refuse to make an order for costs, in certain circumstances. Rule 14.7 relevantly provides:

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

6      Rules 14.2-14.7.

7      Manukau Golf Club Inc v Shoye Venture Ltd [2012] NZSC 109, [2013] 1 NZLR 305 at [7], citing Mansfield Drycleaners Ltd v Quinny's Drycleaning (Dentice Drycleaning Upper Hutt) Ltd (2002) 16 PRNZ 662 (CA) at [27]. See also Shirley v Wairarapa District Health Board [2006] NZSC 63, [2006] 3 NZLR 523 at [19].

8      High Court Rules 2016, r 14.2(1)(a); Manukau Golf Club Inc v Shoye Venture Ltd, above n 7, at [7].

9      Rule 14.2(1)(g).

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—

...

(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.

Submissions

Ms Edwards

[10]             Ms Edwards seeks costs as the successful party to her appeal. She submits that Mr Bridge is liable for those costs given he was unsuccessful both in respect of the appeal and cross-appeal.

[11]             Ms Edwards submits that if the Court is minded to reduce Mr Bridge’s liability for costs because of his personal circumstances, the REAA should be liable for the balance. This is on the basis that my decision of 2 September 2019 was a “test case” that provided guidance for the regulation and ongoing supervision of real estate agents by the REAA.

Mr Bridge

[12]             Mr Bridge submits that he ought not pay any costs by virtue of the fact he had no option but to defend the proceeding in this Court once he received Ms Edwards’ notice of appeal. In addition, he submits that his personal circumstances are such that he is unable to pay the costs sought by Ms Edwards. Further, his health condition and age mean his financial situation is unlikely to improve.

The REAA

[13]             The REAA opposes any award of costs against it on the basis it abided the Court’s decision and confined its submissions to points of principle. This limited role, it  submits,  does  not  translate into  success  or  failure in  the  ordinary  way under  r 14.2(1)(a). In any case, the REAA’s position on points of principle aligned with that

of Ms Edwards and therefore  the  REAA  submits  that  it  did  not  contribute  to  Ms Edwards incurring any further costs in bringing her appeal to this Court.

Analysis

[14]             At the outset, I note three matters. First, despite Mr Bridge’s submission that Ms Edwards’ costs claim “requires evidential support” and “warrants scrutiny”, I have no doubt that the costs sought by Ms Edwards are reasonable and the nature and complexity of the proceedings was such that the proceedings are appropriately categorised as 2B.

[15]             Second, I do not agree that Mr Bridge “had no option but to respond” to     Ms Edwards’ notice of appeal. He always had the option of abiding the Court’s decision given Ms Edwards would have had to, in any case, show that the Tribunal had erred in some way in order to succeed. Alternatively, Mr Bridge had the option of simply defending the Tribunal’s decision. Instead, he did neither of those things but rather cross-appealed on the basis the Tribunal’s compensatory order was inadequate. As such, whether he was not initially minded to appeal is irrelevant given he ultimately chose to do so.

[16]             Third, I do not consider the proceeding before this Court to have been a “test case”. While I accept that generally an award of costs is not made in test cases,10 I consider that this case involved an exercise of applying settled principles of law to a particular set of facts.11 Although my decision is one of few High Court decisions in a disciplinary jurisdiction largely characterised by Committee and Tribunal decisions, that is not, in itself, sufficient to categorise it as a “test case”.

[17]Accordingly, two questions remain for me to address:

(a)first, the extent to which Mr Bridge’s personal circumstances ought to preclude him from paying Ms Edwards’ costs, or at least from paying the full amount sought; and

10     Securities Commission v Kiwi Co-op Dairies Ltd [1995] 3 NZLR 26 (CA) at 36; Birkdale Service Station Ltd v Commissioner of Inland Revenue [2001] 1 NZLR 293 (CA) at [81].

11     Birkdale Service Station Ltd v Commissioner of Inland Revenue, above n 10, at [85].

(b)second, if Mr Bridge ought not to pay the full amount of costs sought, whether an award should be made against the REAA for the balance.

Mr Bridge’s personal circumstances

[18]             The first question relates to r 14.7(g) of the Rules. In Taylor v District Court at North Shore (No 2), White J said the following in respect of that provision:12

[10] The “catch-all” exception in rule 14.7(g) is broad, but requires identification of a good reason for departing from the general rule that costs should follow the event. Examples may include habeas corpus applications and claims under the New Zealand Bill of Rights Act 1990 ...

[19]             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.13 In cases where a party against whom a cost award is sought contests the claim on the basis of limited financial means or financial hardship, there is a preference for evidence of these matters to be provided in the form of a sworn affidavit (where this is not already established in the substantive proceedings).14

[20]             However, there also exist cases which have adopted a different approach.15 For example, in Singh v Immigration and Protection Tribunal, Cooper J observed that consideration of financial circumstances under r 14.7(g) would “create a precedent of potentially very wide application and ultimately would not be justified having regard to the other, more specific provisions of the relevant rules.”16

[21]Subsequently, in Foni v Foliaki, Muir J stated:17

Like Cooper J in Singh, I consider that abatement of costs awards because of personal circumstances will not typically be justified, having regard to the

12 Taylor v District Court at North Shore (No 2) HC Auckland CIV-2009-404-2350, 13 October 2010.

13     Chesterfields Preschools Ltd v Commissioner of Inland Revenue [2011] NZCA 640 at [7]; Brown v The New Zealand Law Society [2018] NZHC 1692 at [9]; Craig v Keith [2017] NZHC 2664, [2017] NZFLR 899 at [23]; 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].

14 Lowe v Auckland Family Court [2017] NZHC 656 at [5]; Craig v Keith, above n 13, at [22].

15 Foni v Foliaki [2018] NZHC 3126; HA v Refugee and Protection Officer [2018] NZHC 1011; BR (Bangladesh) v Chief Executive, Ministry of Business, Innovation and Employment [2018] NZHC 902; Singh v Immigration and Protection Tribunal [2014] NZHC 2065.

16 Singh v Immigration and Protection Tribunal, above n 15, at [9].

17 Foni v Foliaki, above n 15, at [11].

other more specific provisions of the relevant rules. I consider the discretion should be reserved for exceptional cases ...

[22]             In Foni v Foliaki, Muir J adopted Dunningham J’s observation in Te Whare O Te Kaitiaki Ngahere Inc v West Coast Regional Council that:18

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 ...

[23]             What this means is that where the unsuccessful party cannot pay the full amount claimed by the successful party, a “meaningful level” is one within that party’s means to pay. However, where a party appears incapable of making any meaningful payment at all, a “meaningful level” is in fact the full amount sought given it avoids arbitrary reductions in the level of costs sought.

[24]             In light of Mr Bridge’s submissions that his financial situation precludes him from paying costs, I directed Mr Bridge to file a statutory declaration of assets, liabilities and means. A declaration, dated 14 November 2019, was subsequently filed. Mr Bridge included in his declaration additional expenses which he categorised as “commitments”, being expenses primarily in respect of home improvements and health care. If these commitments are taken into account, Mr Bridge’s term deposit (which is his and his wife’s most valuable asset after the couple’s property) is essentially halved.

[25]             In any case, Mr Bridge’s declaration revealed that his ability to meet costs is greater than his submissions suggested. Even if I accept that all declared “commitments” are necessary such that the couple’s term deposit would be substantially reduced, I am satisfied that the couple’s remaining savings are sufficient to both meet Ms Edwards’ costs and the couple’s everyday costs. In other words, I do not consider that an order for costs up to the full amount sought would be unduly onerous on the couple’s financial situation.

18     At [12], citing Te Whare O Te Kaitiaki Ngahere Inc v West Coast Regional Council, above n 13, at [16].

[26]             Accordingly, I do not consider Mr Bridge’s personal circumstances to preclude him from being able to pay costs up to the full amount sought by Ms Edwards.

The REAA’s liability to pay costs

[27]             Mr Bridge’s ultimate liability for costs consequently turns on the extent to which the REAA is liable to contribute to any costs award.

[28]             When dealing with costs, it is necessary to first identify the successful party or parties. This is so because it is uncommon, in the ordinary course, to award costs against such a party.

[29]             In the present proceeding and despite the REAA being named as second respondent, it cannot be properly categorised as an unsuccessful party. This is because the position it advanced on points of principle — advanced in an unpartisan manner and purely to assist the Court — was ultimately the position I was persuaded to follow and aligned with the position advanced by Ms Edwards.

[30]             Mr Mortimer, for the REAA, has referred me to the recent decision of Keene v Legal Complaints Review Officer which, he submits, supports the REAA’s position on costs.19 That case involved an appeal against a decision of the High Court setting aside part of a decision of the Legal Complaints Review Officer and restoring a finding of unsatisfactory conduct made by a Standards Committee of the New Zealand Law Society (NZLS). Relevant to this proceeding is the Court of Appeal’s decision to not order that the NZLS’ costs be paid out of public funds. The Court observed the following:20

However, we consider that this was a case in which it was appropriate for the NZLS to appear and assist the Court, in the same way that the Commerce Commission appears to assist the court in appeals from its decisions. The appearance was an integral aspect of the performance of the NZLS’ regulatory functions.

[31]             Mr Mortimer submits that despite being a named party, the REAA appeared in the proceeding in this Court in the same capacity as the NZLS in Keene. I agree. In

19     Keene v Legal Complaints Review Officer [2019] NZCA 559.

20 At [95]. The NZLS appeared as intervener in that case.

addition to providing submissions on points of principle, the REAA assisted this Court in understanding its internal structures in a similar manner to the NZLS in Keene. This was very much in line with its function and obligations as a regulator of the real estate industry.

[32]For these reasons, I decline to make an order for costs against the REAA.

[33]             For completeness, however, I note that the REAA submitted that it ought not to pay for costs because it abided the Court’s decision. While abiding the Court’s decision is a relevant factor in respect of costs, it is still possible for costs to be awarded against parties in the REAA’s position.21 As the Court of Appeal stated in Hong v Deliu, a defendant (or respondent) who abides the Court’s decision still puts the plaintiff (or appellant) to the cost of a trial (or appeal), albeit a less strenuous one.22 A similar observation was made by the Supreme Court in Manukau Golf Club Inc v Shoye Venture Ltd:23

If the respondent accepts the judge below was wrong, then it should settle with the appellant or not seek to defend the appeal. In those circumstances, it would avoid liability for costs. Shoye did not adopt that stance in the Court of Appeal. We have seen its submissions. It sought to uphold what the Judge had found in its favour.

[34]             Hong v Deliu concerned a judicial review of a decision of the Lawyers and Conveyancers Disciplinary Tribunal (LCDT). Mr Hong had indicated in the proceedings before the LCDT that he would abide its decision and accordingly did not appear in that proceeding. However, the High Court quashed the LCDT’s decision and remitted it back to the LCDT for reconsideration. Mr Deliu then sought costs against Mr Hong who opposed this claim on the basis he abided the LCDT’s decision. The High Court found for Mr Deliu. The Court of Appeal, however, allowed the appeal in part. The Court found that that although Mr Hong did abide the LCDT’s decision, he had contributed to High Court’s errors and therefore should bear some of Mr Deliu’s costs. A contribution of 50 per cent was deemed appropriate.

21 See, for example, Kawerau Jet Services Holdings Ltd v Queenstown Lakes District Council, HC Invercargill CIV-2008-425-518, 19 May 2009; Wang v North Shore District Council [2015] NZHC 1611, [2015] NZAR 1678 at [26].

22 Hong v Deliu [2016] NZCA 75, [2016] NZAR 667 at [23].

23 Manukau Golf Club Inc v Shoye Venture Ltd, above n 7, at [13].

[35]             Both Shoye and Hong v Deliu were recently considered in McGreevy v CRC Ltd.24 After discussing the principles established by those authorities, Osborne J stated:

[35]      I conclude from consideration of the judgments in Shoye and Hong v Deliu (and other authorities referred to in the latter decision) that the Court, when considering the possible reduction of costs where a defendant or respondent has abided the outcome, will correctly approach the matter in this way:

(a)The Court first, under r 14.3, identifies (if not already identified) categorisation of the proceeding (1, 2 or 3);

(b)A defendants’ or respondents’ abiding of the outcome may then impact on the assessment of costs in one or both of two ways:

(i)Under r 14.5, the appropriate time allocation for each step (Band A, B or C) (under Schedule 3 of the District Court Rules and High Court Rules), especially in relation to preparation of written submissions and appearance, may be set to reflect a less than normal amount of time; and/or

(ii)Under r 14.7(f), it may be appropriate – in recognition of the responsible approach of the defendant/respondent based on broader policy considerations, (whether or not there has been a significant saving of time) – to reduce an otherwise appropriate award.

[36]     It should be noted that r 14.7(f) of the District Court Rules 2014 is identical to r 14.7(g) of the Rules.

[37]     However, it is my view that the principles established in Shoye, Hong v Deliu and McGreevy v CRC Ltd need to be adapted in light of the REAA’s unique position in the proceeding before this Court. Not only did it abide the Court’s decision, its sole purpose for appearing before the Court was to assist it by proffering its interpretation of the relevant legal principles as regulator of real estate agents. This position is materially different to the position taken by Mr Hong in Hong v Deliu which, in the Court of Appeal’s view, still warranted a costs award, albeit a reduced one. The REAA’s specific role in Ms Edwards’ appeal and Mr Bridge’s cross-appeal reinforces my view that it should not bear the burden of any resulting costs.

24     McGreevy v CRC Ltd [2019] NZHC 1143.

Result

[38]     For these reasons, I order that Mr Bridge pay Ms Edwards’ reasonable costs and disbursements on a 2B basis totalling $16,619.00.

Doogue J

Solicitors:

Darroch Forrest, Wellington Meredith Connell, Auckland