Flanaghan v Helmore Bowron & Scott - [2018] NZHC 2302

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE

CIV-2015-409-96

[2018] NZHC 2302

BETWEEN
PAUL FLANAGHAN

Plaintiff

AND

HELMORE BOWRON & SCOTT

Defendant

Hearing: 3 September 2018 (On the papers)

Appearances:

A Riches for Plaintiff

M Parker and A Gaborieau for Defendant

Judgment:

3 September 2018

JUDGMENT OF MANDER J

Introduction

[1] On 28 April 2017, I entered judgment for the plaintiff, Mr Flanaghan, in the sum of $143,242, just shy of half the sum sought.1 Reserving costs, I commented that "both parties are entitled to claim some success on the outcome of the proceeding".2

[2] The parties have been unable to agree costs and now seek orders from the Court.

Background

[3] Mr Flanaghan sued his solicitors, the defendants Helmore Bowron & Scott (HBS), claiming they acted negligently and in breach of contractual and fiduciary

1 Flanaghan v Official Assignee [2017] NZHC 833.
2 At [169].

FLANAGHAN v HELMORE BOWRON & SCOTT [2018] NZHC 2302 [3 September 2018]

duties by acting for both him and his accountant, Ms McIntyre, with whom he had also been in a personal relationship. HBS acted for both in relation to two transactions. The first was the joint purchase of a property (the property) by Mr Flanaghan and Ms McIntyre, in respect of which the funds were entirely provided by Mr Flanaghan. The second was a $50,000 bank loan taken out by Ms McIntyre, secured by first charge mortgage against the property and a personal guarantee from Mr Flanaghan.

[4] HBS did not contest a finding that they breached their duties. At trial, the main issue in dispute was whether Mr Flanaghan could prove he had suffered loss as a result of the breaches. Mr Flanaghan maintained that had he been given independent legal advice he would not have entered into the joint property purchase or provided the personal guarantee for the bank loan. I found in favour of Mr Flanaghan in relation to the property purchase, but not the bank loan.

[5] Mr Flanaghan had mixed success in his claims of loss, and also failed in his application to be indemnified by HBS for potential tax losses arising from any future sale of the property.

The positions of the parties on costs

[6] Mr Riches for the plaintiff maintains Mr Flanaghan, while not recovering the full amount of the quantum sought, has broadly been the successful party. He says Mr Flanaghan was substantively successful in recovering his losses, namely the cost of removing Ms McIntyre from the title of the property (including legal fees) and the cost of a settlement with the Official Assignee. He seeks 2B costs of $37,464 and disbursements of $15,777.40.

[7] Mr Parker for the defendant says that in the final outcome both parties had similar success. Mr Flanaghan recovered 49 per cent of the amount he claimed. However, he submits the plaintiff acted unreasonably at and following a settlement meeting before trial, and this "strongly militates against a situation…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Flanaghan v Helmore Bowron & Scott

Details

AGLC: Flanaghan v Helmore Bowron & Scott [2018] NZHC 2302
Case: [2018] NZHC 2302
Decision Date: 3 September 2018

CaseChat Overview and Summary

The case of Flanaghan v Helmore Bowron & Scott involved a dispute between Paul Flanaghan and his former solicitors, Helmore Bowron & Scott (HBS). Mr Flanaghan sought to recover damages for the alleged negligent and fiduciary breaches by HBS in acting for both him and his former partner, Ms McIntyre. The primary issue was whether Mr Flanaghan had suffered loss as a result of the alleged breaches, particularly concerning a joint property purchase and a bank loan guarantee. The court found Mr Flanaghan partially successful, awarding him damages for the property purchase but not for the bank loan guarantee. Following the judgment, both parties sought orders for costs, with Mr Flanaghan claiming 2B costs of $37,464 and disbursements of $15,777.40, and HBS claiming 2B costs of $53,854.50 and disbursements of $23,377.01.

The court examined the legal principles governing costs in New Zealand, emphasizing that the discretion to award costs lies with the court and should be exercised in a manner that is predictable, expeditious, and proportionate to the success of the parties. The court also considered the possibility of awarding increased costs if a party's conduct has contributed unnecessarily to the time or expense of the proceedings. The analysis focused on whether Mr Flanaghan's conduct before and during the trial was unreasonable, potentially justifying an award of increased costs to HBS.

The court found that while Mr Flanaghan was successful overall, his conduct in inflating the claim amount prior to a settlement meeting and insisting on calling his expert witness despite a joint expert report were unreasonable. These actions contributed unnecessarily to the cost of the proceedings. However, the court also noted that HBS's refusal to concede on certain points and its insistence on calling its expert witness added to the expense. Given the mixed success of both parties and their respective contributions to the costs, the court concluded that costs should lie where they fall.

Ultimately, the court ordered that costs were to lie where they fell, including costs on the application for costs. This decision reflected the balanced view that neither party had demonstrated sufficient justification for an award of costs in their favour.

Orders