Groombridge v Blanche

[2020] NZHC 3032

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2019-404-2033

[2020] NZHC 3032

BETWEEN

HENRY GEORGE JAMES

GROOMBRIDGE by his litigation guardian Pamela Peijie Ma

Plaintiff

AND

ELEANOR BLANCHE

Defendant

Hearing:

On the papers

Counsel:

T Cai for plaintiff

P J Stevenson for defendant

Judgment:

17 November 2020

JUDGMENT OF KATZ J

[Costs]

This judgment was delivered by me on 17 November 2020 at 1:00 pm Pursuant to Rule 11.5 High Court Rules

Registrar/Deputy Registrar

Solicitors:      Douglas Burgess, Auckland

Focus Law, Auckland

Counsel:       P J Stevenson, Barrister, Auckland

GROOMBRIDGE v BLANCHE [2020] NZHC 3032 [ 17 November 2020]

Introduction

[1]                  Eleanor Blanche and Henry Groombridge were married on 13 March 2004. They separated on 14 March 2007, and later divorced. On 11 April 2007, they entered into a relationship property agreement pursuant to the Property (Relationships) Act 1976.

[2]                  In this proceeding Mr Groombridge alleges that that agreement has been breached. He seeks specific performance and damages. Because Mr Groombridge lacks capacity, his current wife, Pamela Ma, has been appointed as his litigation guardian. Ms Blanche applied unsuccessfully to the Court to remove Ms Ma as litigation guardian.1

[3]                  Mr Groombridge, through Ms Ma, now seeks costs on an indemnity basis or, in the alternative, an uplift on 2B scale costs of at least 100 per cent.

[4]                  Ms Blanche submits that 2B scale costs are appropriate. She largely accepts Mr Groombridge’s calculations of 2B scale costs, with the exception of one item. She does not accept that there is any basis for an award of indemnity costs, or any grounds for an uplift.

Are indemnity costs appropriate?

[5]                  Indemnity costs are generally awarded when a party has behaved extremely badly.2 They are exceptional and require exceptionally bad behaviour.3 The bad behaviour must be flagrant to justify the departure from the predictability of the Rules Committee’s costs regime.4 The Court may order indemnity costs if a party acts vexatiously, frivolously, improperly, or unnecessarily in the conduct of a proceeding,

1      Groombridge v Blanche [2020] NZHC 2394. Ms Blanche simultaneously applied for an order for security for costs, but withdrew this three weeks after making it, a week before the hearing.

2      High Court Rules 2016, r 14.6; Bradbury v Westpac Banking Corp [2009] 3 NZLR 400 (CA) at [27]-[28]; Prebble v Huata [2005] NZSC 18, [2005] 2 NZLR 467 at [6].

3      Bradbury v Westpac Banking Corp [2009] 3 NZLR 400 (CA) at [28].

4      Bradbury v Westpac Banking Corp [2009] 3 NZLR 400 (CA) at [28].

or if another reason exists justifying the award.5 The Court of Appeal recently set out the following circumstances in which indemnity costs have been granted:6

(a)   the making of allegations of fraud knowing them to be false and the making of irrelevant allegations of fraud;

(b)   particular misconduct that causes loss of time to the Court and to other parties;

(c)   commencing or continuing proceedings for some ulterior motive;

(d)   doing so in wilful disregard of known facts or clearly established law;

(e)   making allegations which ought never to have been made or unduly prolonging a case by groundless contentions, summarised in French J’s “hopeless case” test.7

[6]                  Ms Cai, counsel for Mr Groombridge, submitted that indemnity (or, alternatively, substantially increased) costs are appropriate for the following reasons:

(a)Ms Blanche applied for an order for security for costs and then abandoned it. The application was made on 13 July 2020. A hearing was set down for 11 August 2020. On 3 August 2020, Ms Blanche discontinued the application, leaving only the application to remove Ms Ma as litigation guardian afoot.

(b)Ms Blanche declined a reasonable offer, putting Mr Groombridge to expense. On 6 August 2020, Mr Groombridge made what is described as an offer to Ms Blanche: if she would withdraw the removal application, then Mr Groombridge would not seek indemnity costs. The offer outlined the case against the removal application, and, in  Ms Cai’s submission, made it “abundantly clear” that the removal application was doomed.

(c)The application for removal was plainly at odds with New Zealand law.

5      I omit several other possibilities enumerated by the Rules that are not relevant to this case.

6      Bradbury v Westpac Banking Corp [2009] 3 NZLR 400 (CA) at [29], adopting Goddard J’s adoption in Hedley v Kiwi Co-op Dairies Ltd (2002) 16 PRNZ 694 (HC) at [11] of the Australian rule, as expressed in Colgate-Palmolive Co v Cussons Pty ltd [1993] FCA 801 at [24]. Much of our law in this area is adopted from the Australian courts.

7      This refers to J-Corp Pty Ltd v Australian  Builders Labourers Federated  Union of Workers  (WA Branch) (No 2) [1993] FCA 70. Footnote not in the original.

(d)The evidence cited was irrelevant to Ms Ma’s role as litigation guardian, but instead related to Ms Ma’s role as welfare guardian.

(e)The removal application was brought with an ulterior motive  to  derail the broader case. The  removal  of  Ms  Ma  would  have  left Mr Groombridge with no plausible candidate to act as a litigation guardian, and hence (as I found at [33] of the judgment) would have likely made it impossible for him to pursue the proceeding.8

[7]                  In my view, Ms Blanche’s conduct does not reach the “exceptionally bad” threshold and is therefore not sufficient to justify an award of indemnity costs. Although Ms Blanche was unsuccessful in her application, it was not totally without foundation. Amongst other things, I note that the Family Court was highly critical of Ms Ma’s conduct in related proceedings in that Court, which was relevant as to whether her appointment as litigation guardian in this proceeding was appropriate. I further note that Ms Blanche was acting in accordance with legal advice and appears to have been genuinely concerned that Ms Ma had a conflict of interest.

[8]                  Ms Stevenson’s legal arguments on behalf of Ms Blanche failed by a fairly wide margin. She relied primarily on Canadian cases that operated in a different statutory context. Although the legal arguments were weak, however, and lacked merit, they cannot be described as totally hopeless. The relevant New Zealand authorities were at High Court level and were accordingly not binding on this Court. While Ms Stevenson’s submissions were not ultimately accepted, they were not made in wilful disregard of clearly established law.

[9]                  Taking these various matters into account, I have not been persuaded that indemnity costs are warranted in this case.

What is the appropriate level of 2B scale costs?

[10]              As previously noted, the quantum of 2B scale costs is agreed, with one exception. Ms Blanche objects to meeting the costs of a memorandum filed by Ms Ma

8      Groombridge v Blanche [2020] NZHC 2394.

objecting to the admission as further evidence on appeal of an affidavit sworn by Nicole Evans, Mr Groombridge’s daughter. That affidavit made various criticisms of Ms Ma in her capacity as Mr Groombridge’s welfare guardian.

[11]              I considered that the affidavit was of some, but limited, relevance. I admitted it to the extent that I considered it to be relevant.

[12]              The starting point is the presumption that “the party who fails with respect to a proceeding … should pay costs to the party who succeeds”,9 a robust view of success should be taken, and the presumption should not be too readily displaced. Rule 14.2(g) provides that “as far as possible the determination of costs should be predictable and expeditious.”

[13]              Although it had some (limited) relevance the affidavit also contained considerable material that was not relevant. Ms Ma was therefore entitled to take exception to it and challenge its admissibility. On balance, it is my view that Ms Ma should be entitled to recover costs in respect of the relevant memorandum.

Is an uplift appropriate?

[14]I now turn to consider whether an uplift to scale costs is warranted.

[15]              The relevant rule provides that the Court may order increased costs if a party contributed unnecessarily to the time or expense of the proceeding by failing to comply with the rules, pursing an unnecessary step or meritless argument, failing to accept facts or an argument without reasonable justification, or unreasonably failing to accept a settlement offer.10

[16]              Cost increases above 50 per cent are rare, reflecting that the costs scale in the Rules is set on the basis that it is intended to broadly reflect two-thirds of actual and reasonable costs.

9      High Court Rules 2016, r 14.2(1)(a).

10     High Court Rules 2016, r 14.6.

[17]              As I have noted previously, the  legal  arguments  advanced  on  behalf  of Ms Blanche were weak, albeit not totally hopeless (particularly in the absence of binding Court of Appeal authority on point). By a fairly fine margin, I have concluded that the threshold for an increased costs award is not met.

Result

[18]Mr Groombridge is awarded 2B scale costs in the sum of $8604.00.

Katz J