Gavin v Powell
[2020] NZHC 508
•13 March 2020
IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY
I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE
CIV-2018-409-000272 [2020] NZHC 508
BETWEEN CHARLOTTE TERESA GAVIN
Plaintiff
AND
DANIEL JOHN POWELL
First Defendant
AND
PAUL JOSEPH DORRANCE
Second Defendant
Hearing: On the papers Counsel:
A F Grant and J Moss for the Plaintiff
T C Weston QC and W J Palmer for the Defendants
Judgment:
13 March 2020
JUDGMENT OF NATION J AS TO COSTS
[1] In these proceedings, the plaintiff seeks to have the defendant trustees removed on the basis they have acted in breach of trust, and Mr Dorrance’s appointment as trustee was not allowed according to an earlier judgment of the High Court.
[2] The proceedings had been set down for a substantive hearing to begin on 4 March 2019.
[3] On 20 December 2018, the defendants’ former solicitors, Duncan Cotterill, by memorandum, sought leave for Duncan Cotterill to continue acting as solicitors after a partner in that firm and one of the defendants had filed an affidavit in the proceedings. That application was opposed.
GAVIN v POWELL [2020] NZHC 508 [13 March 2020]
[4] On 23 January 2019, counsel for the plaintiff filed a memorandum suggesting four days would not be long enough for the trial.
[5] On 31 January 2019, counsel for the defendants filed a memorandum as to representation, amended pleadings, trial duration and challenging the admissibility of significant portions of the plaintiff’s evidence.
[6] In a telephone conference on 13 February 2019, it was agreed the substantive hearing would have to be adjourned.
[7] On 22 February 2019, the plaintiff filed an interlocutory application for leave to file an amended statement of claim. That application was opposed.
[8]There was then a hearing on 7 March 2019 to deal with:
(a) the plaintiff’s application to amend the statement of claim;
(b) the defendants’ application for rulings as to the admissibility of evidence in affidavits from and for the plaintiff; and
(c) the application for leave for Duncan Cotterill to continue as solicitors on the record.
[9]The hearing took all of 7 March and until 3.00 pm on 8 March 2019.
[10]In a judgment of 7 June 2019:
(a) I indicated the plaintiff would have leave to amend the statement of claim but adjourned that application for her counsel to finalise the precise form of the statement of claim for which leave would be granted;
(b) I refused leave for Duncan Cotterill to continue as solicitors on the record; and
(c) the defendants were successful in obtaining orders that significant portions of the evidence from and for the plaintiff was inadmissible, effectively requiring the plaintiff to start again in assembling evidence.
[11] In that judgment, I directed memoranda could be filed as to costs if no agreement was reached. Memoranda were subsequently filed but there had been no judgment on the defendants’ application for costs.
[12] In the judgment of 7 June 2019, without real opposition from the defendants, I indicated the plaintiff would be able to file an amended statement of claim but adjourned her application as to that for her counsel to settle on the final form of the proposed amended statement of claim.
[13] In minutes of 12 and 30 July 2019, I made timetabling directions for the plaintiff to provide the defendants’ counsel with the draft amended statement of claim which the plaintiff was intending to file and for the parties to advise the Court by memoranda of any dispute the Court might have to determine as to the form of the proposed amended statement of claim.
[14] With the agreement of both parties, there was a hearing over disputed aspects of the proposed amended pleading on 21 October 2019. I issued a judgment dealing with the matters still in dispute on 14 November 2019 but reissued it on 5 December 2019 correcting a slip.
[15] I did not expressly reserve the issue of costs. The defendants sought leave to make an application for costs. I granted such leave in a minute of 5 December 2019.
[16] Since then, counsel have filed memoranda in support of such a claim for costs and in opposition.
[17]I now deal with the outstanding costs issues on the papers.
Costs arising out of the 7 June 2019 judgment
[18] In this judgment, I ruled substantial portions of the evidence already in affidavits was inadmissible. The plaintiff was effectively directed to start again in presenting evidence in support of her substantive claims.
[19] The defendants say they were successful on the issues which took up the greater proportion of time, both in preparation and at the hearing, so they should be entitled to costs.
[20] The plaintiff accepts that the defendants are entitled to 75 per cent of the costs to which they might otherwise be entitled but there is a dispute as to the basis on which costs should be assessed before there is a 25 per cent discount.
[21]The defendants submit:
(a) costs on the application should be categorised on a 3B basis because the complexities of the issues required and benefited from the involvement of senior counsel with specialist skill and experience; and
(b) an uplift of 25 per cent was justified on scale costs calculated on a category 3B basis because a comparatively large amount of time was required to prepare for the hearing and analysing the evidence found to be objectionable and inadmissible, and this would be better recognised through a 25 per cent increase on scale costs calculated on a category 3B basis than adopting a combination of B and C classification.
[22]The plaintiff submits:
(a) the proceeding should be classified as a category 2 proceeding, as was the plaintiff’s successful application for further discovery where she sought and was awarded costs on a 2B basis. The plaintiff submits that award should be treated as if it was a categorisation 2 for the whole proceedings, including the further interlocutory applications, to ensure costs at all stages of the proceedings could be self-calculated and predictable, as the cost rules attempt to facilitate;
(b) the defendants’ application was not of such complexity that it required the engagement of counsel with special skill and experience. Whether it was an application of that sort is to be considered by reference to the application itself rather than the skill and experience of counsel acting, in this case Mr Weston QC for the defendants; and
(c) if the Court considers that a reclassification is not sufficient to recognise the time involved for preparation of written submissions and preparation of the bundle for hearing, then this should be met with a C classification for those two steps rather than an award of increased costs.
[23] I consider it is appropriate to assess costs as to the applications dealt with in my 7 June 2019 judgment on a category 3 basis.
[24] The Court has never fixed category 2 as being appropriate for the whole of these proceedings. The plaintiff was held entitled to costs on her successful application for further discovery on a 2B basis but the issues on that application were reasonably confined and not so complex as to require counsel of greater experience and expertise than would normally be required on such an application. The plaintiff’s applications for leave to amend the claim and Duncan Cotterill’s application for leave to continue as solicitors in the proceedings were also not so complex as to require a category 3 determination. However, justice will be achieved if category 3 is adopted as to all applications that were before the Court but with a 25 per cent discount to recognise the extent to which the plaintiff was successful on the application for leave to amend and her opposition to Duncan Cotterill remaining as solicitors for the defendants.
[25] Category 3 was appropriate for the defendants’ application for orders that substantial portions of the evidence from and for the plaintiff were inadmissible. Ultimately, the defendants were seeking an order that the plaintiff effectively start again in providing evidence to the Court in support of her claim. All parties had incurred significant time and expense in presenting evidence up to that point. Pursuit of the application for rulings as to the inadmissibility of evidence necessitated an exercise in judgment and skill that could be expected of senior counsel but which understandably might not have been available with counsel of lesser experience and expertise. The complexity of issues counsel had to deal with was apparent through the extensive work required of counsel in analysing the extent to which, through evidence, the plaintiff was seeking to relitigate issues which had been determined in the earlier proceedings and the comparison that had to be made of evidence adduced in the current proceedings as against evidence that was before the Court in the earlier
proceedings. There was also a challenge to significant and extensive portions of the evidence on the basis that evidence was provided in ways that were pejorative, expressions of opinion or by way of submission. The challenge to admissibility of that evidence on that basis also required an exercise of judgment and responsibility expected of senior counsel which might not have been available with counsel of lesser experience.
[26] The importance and intellectual demands of the particular litigation was also apparent in the detailed legal submissions in opposition to the application, the extensive reference to authority dealing with res judicata and abuse of process arguments. All of that was reflected in the fact the hearing, which in terms of time was largely taken up with submissions over admissibility issues, was not completed within the initially scheduled one day and continued through until approximately 3.00 pm the following day.
[27] Relevant time allocations on a B and C basis for days or part days would be as follows:
B and C basis
Category B Category C Filing interlocutory application 0.6 2 Preparation of written submissions 1.5 3 Preparation by applicant of bundle for hearing 0.6 1 Appearance at hearing of defended application for sole or principal counsel (the time occupied by the hearing measured in quarter days) 1.75 1.75 Appearance at hearing of defended interlocutory application for second counsel 0.875 0.875
[28] The bands may differ at each step. A blanket assessment for banding does not accord with the rules unless it reflects that the case is an average one requiring a normal amount of time for each step.1
1 Commissioner of Inland Revenue v Chesterfields Preschools Ltd [2010] NZCA 400, (2010) 24 NZTC 24,500 at [161]; Andrew Beck McGechan on Procedure (online loose-leaf ed, Thomson Reuters) at [HRPt14.05.01].
[29] I consider band C categorisation would be appropriate for preparation of written submissions for interlocutory application, the preparation by applicant of bundle for hearing of interlocutory application, and appearance by second counsel at the hearing of defended interlocutory application.
[30] With a category C banding for those steps and a category 3B banding for the filing of the interlocutory application, scale costs would be $22,825.25, a modest amount more than the $21,965 arrived at by the defendants on a total 3B basis but with a 25 per cent uplift. On that basis, the defendants could be awarded costs for slightly more than they asked for. They are thus entitled to costs in the sum they have asked for.
[31] There was no objection to the Court certifying for second counsel. That is appropriate given the category 3 categorisation of the application, the scope of the hearing, the amount of material that had to be considered and the fact the defendant had to deal with supplementary submissions filed after the hearing.
[32] I accordingly certify for second counsel at the hearing. I rule that the defendants are entitled to costs on the interlocutory applications which were the subject of the Court’s judgment of 7 June 2019 in the sum of $16,475 plus disbursements of $110.
Costs on the interlocutory application as to pleadings in the amended statement of claim
[33] Before the Court in March 2009 was a draft amended statement of claim. The plaintiff had filed an application for leave to file that amended statement of claim. Because the earlier scheduled substantive hearing of the proceedings had to be adjourned, the defendants did not maintain an objection to the filing of an amended statement of claim but said the application should remain before the Court until the plaintiff had settled on the form of that draft statement of claim. The defendants were concerned that parts of it could be objectionable because they referred to issues which were resolved in the earlier proceedings. The plaintiff’s counsel, Mr Grant, indicated that certain objections over the evidence could be met with a further amendment to the pleadings.
[34] In my judgment and subsequent minutes, the parties were given the opportunity to provide or consider the plaintiff’s proposed amended statement of claim and to advise the Court if there were issues as to the form of the amended statement of claim which required a determination by the Court.
[35] There were such issues. The parties’ respective positions were comprehensively set out in memoranda of counsel and were the subject of a hearing on 21 October 2019 in which I gave judgment on 14 November 2019, with that judgment also being reissued to correct a slip on 5 December 2019.
[36] In my judgment, I referred to various ways in the then draft amended statement of claim that there were inconsistent pleadings and a failure to differentiate between defendants. I also held that a number of pleadings as to the settlor’s intentions were an attempt to relitigate issues that had been resolved through the earlier proceedings. To allow them to remain would be to permit an abuse of the Court process. I upheld an objection to certain parts of the relief on the basis the relief objected to was being sought for an ulterior purpose and not in connection with what was currently at issue between the parties in these proceedings.
[37] I rejected a complaint from the defendants as to the way the plaintiff had particularised alleged breaches of trustee duties based on information provided previously by a former trustee, Ms Ballinger.
[38] The defendants say, in the consultation process, senior counsel for the defendants had to consider and respond to three versions of the draft amended statement of claim, version two 1 July, version three 21 August and version four 13 September. The defendants say they were successful at all stages in that the input of senior counsel for the defendants led to the plaintiff making certain changes to the draft amended statement of claim. When it was not possible to make further progress, they say their objections were largely upheld by the High Court.
[39] It is submitted for the defendants that the steps initially taken in considering and commenting on draft statements of claim are not steps itemised in sch 3 to the High Court Rules. The defendants submit, applying the principles in rr 14.2(c) and
14.5(b) High Court Rules, the legal work in the consultation process should be considered analogous to item 17 in sch 3, that is, the time required would have been similar to that needed when replying to detailed interrogatories. Counsel’s consideration of version 4 of the amended statement of claim could appropriately be dealt with by way of the step in sch 3 “preparation of written submissions” and appearance at the hearing.
[40] The defendants seek costs on a 3B basis for the earlier consideration of draft amended statements of claim and preparation of submissions. Mr Weston was involved with those steps but counsel recognises, if a category 3 is appropriate, it has to be because of the complexity and significance of the issues arising on the defendants’ application rather than just the experience and skill of counsel actually involved. The defendants say that was the case here because of the detailed analysis required of the draft pleadings in the context of the earlier judgments of the High Court and Court of Appeal, and the importance of the issues to the parties. Costs were sought on a 2B basis for the hearing on 21 October 2019 at which the defendants were represented by Mr Palmer and the plaintiff by Mr Grant.
[41] The defendants calculated that the amount due in scale costs on that basis would be $10,020. They agreed this sum should be reduced by 25 per cent to recognise that, in certain respects, the defendants were not successful with their objection.
[42]For the plaintiff, counsel submits:
(a) the defendants were less successful than they contend and the allowance on account of that should be for a 33 per cent reduction, not 25 per cent;
(b) the award of costs on a 2B basis on an earlier successful application for further discovery should be treated as a class 2 categorisation of the proceedings as a whole so that any costs should be awarded on a category 2 basis;
(c) consideration of draft pleadings was not analogous to providing answers to interrogatories;
(d) because the rules committee has not provided for consideration of draft pleadings as a step in the proceeding for which there is a time allocation in schedule 3, the rules committee could not have contemplated that a litigant would be compensated for that kind of work. There should thus be no award of costs for it; and
(e) alternatively, if allowance is to be made for the consultation steps, it should be assessed on a 2B rather than 3B basis.
[43] Allowing for a costs award for consideration of earlier versions of the draft amended statements of claim and associated memoranda, the plaintiff suggests the defendants would be entitled to scale costs of $7,170. In their calculations, they include the consideration work as a step 17 item and allow for a 30 per cent reduction for partial success and thus submit the award should be for $5,019.
Analysis
[44] I consider costs should be allowed for consideration of draft amended statements of claim.
[45] Rule 14.5 contemplates that costs might be sought for a reasonable time for a step not included in sch 3, hence the reference to “a time determined by analogy with that schedule”2 and to the time assessed as likely to be required for the particular step, if no analogy can usefully be made.3
[46] In their respective calculations, counsel for both the plaintiff and the defendants referred to one day being a reasonable allowance for the time involved in those steps.
[47] Although Mr Weston was involved in responding to the draft amended statements of claim and the preparation of submissions for the eventual hearing, I consider it appropriate to award costs on a 2B basis for what both counsel have treated as item 17 steps.
2 High Court Rules 2016, r 14.5(1)(b).
3 Rule 14.5(1)(c).
[48] The costs should be assessed on a category 2 basis despite the involvement of Mr Weston in certain steps. For the draft amended pleadings, counsel had the benefit of the judgment of 7 June 2019 in which the Court set out issues that had already been determined and which were not to be the subject of further litigation. The draft pleadings could be considered against all that was said in that judgment.
[49] Not surprisingly, in the absence of senior counsel, Mr Palmer was able to address me on the various issues when the hearing took place.
[50] The defendants’ discount on scale costs of 25 per cent to allow for the extent to which the plaintiff succeeded with some of her arguments was appropriate. The defendants were successful on the issues which required more careful consideration and which took up most of the time with submissions during the hearing.
[51] Accordingly, the defendants are entitled to costs for the various steps as set out in their schedule and the disbursement but on a 2B basis and with a 25 per cent discount.
Solicitors:
A F Grant, Barrister, Auckland J Moss, Barrister, Christchurch
T C Weston QC, Barrister, Tai Tapu Buddle Findlay, Christchurch.
This judgment was delivered by me on 13 March 2020 at 2.00 pm pursuant to Rule 11.5 of the High Court Rules
Registrar/Deputy Registrar Date: 13 March 2020
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