Haines v Bassett-Burr
[2024] NZHC 425
•1 March 2024
IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY
I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE
CIV-2019-485-315
[2024] NZHC 425
BETWEEN QUENTIN STOBART HAINES
First Appellant
BPE TRUSTEES (NO 1) LIMITED
Second AppellantQUENTIN HAINES PROPERTIES LIMITED
Third AppellantAND
ROY WILLIAM BASSETT-BURR
Defendant
Hearing: On the papers Appearances:
J D Dallas for the Appellants
D G Livingston for the Respondent
Judgment:
1 March 2024
JUDGMENT OF CHURCHMAN J
Introduction
[1] On 24 August 2022, Mr Quentin Stobart Haines, BPE Trustees (No.1) Limited and Quentin Haines Properties Limited (the applicants) filed an application for an order for third-party costs against Mr Roy William Bassett-Burr (the respondent), premised on the respondent’s involvement in issuing five defective statutory demands.
HAINES v BASSETT-BURR [2024] NZHC 425 [1 March 2024]
[2] In a judgment dated 10 November 2022, I granted this application1 and in a later judgment dated 14 December 2022, awarded costs regarding that application to Mr Haines. This decision was successfully appealed by the respondent to the Court of Appeal. In a judgment dated 21 August 2023, the Court of Appeal set aside the order for costs, as the Court found that the respondent should not have been liable to pay costs as a non-party,2 and that the respondent had not abused the statutory demand process by issuing five statutory demands.3 The High Court was directed to revisit the costs award made in the 14 December 2022 judgment.4
[3] Consideration of the costs award was deferred until after an application for recall of the Court of Appeal decision was determined, by minute dated 30 August 2023. On 23 November 2023, Miller J declined the application for recall,5 and so determination of the costs award can now proceed. As the successful party, the respondent is entitled to costs.6
Submissions
Respondent
[4] The respondent submits that the costs previously fixed in the applicants’ favour are now reversed in so far as they apply to the respondent. The respondent seeks costs on a 2B basis with an uplift of 25 per cent. He also seeks that step 23 be awarded on a 2C basis with an uplift of 25 per cent. In total he seeks an award of $17,476.88 plus disbursements of $160.
[5] The respondent seeks increased costs as the applicants have rejected three reasonable Calderbank offers. On 16 September 2022, the respondent offered to let costs lie where they fell. A further offer was made on 21 October 2022 to discontinue the proceedings and limit costs to steps carried out at that date, namely a notice of opposition, with a note that an increase in costs may ultimately be sought if the matter proceeded. Lastly, on 23 October 2023 a final offer was made which included a
1 Haines v Memelink [2022] NZHC 2966.
2 Bassett-Burr v Haines [2023] NZCA 380 at [43]–[44].
3 At [29], [32] and [35].
4 At [44].
5 Haines v Bassett-Burr [2023] NZCA 591.
6 High Court Rules 2016, rr 14.2 and 14.8(1).
10 per cent discount on costs, resulting in a total of $12,583.35 plus disbursements of
$160. Each of these offers are stated to have been ignored by the applicants.
Applicants
[6] The applicants submit that step 23, regarding the filing of the opposition to the interlocutory application, should not be increased to 2C, and argue that it should remain at 2B, resulting in a cost of $1,434 rather than $4,780.
[7] The applicants also contest the inclusion of step 26 for appearance at a hearing for a matter that they argue would usually be decided on the papers.
[8] The applicants oppose the inclusion of the filing of a memorandum regarding fixing costs dated 24 August 2023 (August memorandum) in step 11, as they argue that costs memoranda are not usually claimable unless an interlocutory application has been made to fix costs.
[9] Lastly, the applicants contend that since they had statutory demands issued against them that were found to be inappropriately used, and that they have been put to considerable additional expense by these proceedings, costs should lie where they fall due to the conduct of the respondent in litigation. Alternatively, they submit that a 50 per cent discount should apply to costs. This would result in a total of $4,541 plus $210 in disbursements ($160 filing fee and $50 sealing fee).
Analysis
[10] The starting point is reversal of costs and disbursements, given the Court of Appeal’s decision. As in my prior decision determining these costs, I am satisfied that 2B is the appropriate categorisation for these proceedings. The issues raised are:
(a)whether an increased time allowance for step 23 is justified;
(b)whether step 26 and the August memorandum should be included;
(c)whether a discount or finding that costs lie as they fall is warranted; and
(d)whether a 25 per cent uplift is justified for ignoring Calderbank offers.
[11] In regard to the increase of step 23 to 2C, as I had previously found, the larger amounts of evidence concerned in these proceedings mean that 0.6 days is an insufficient amount of time to fully assess the material filed.7 The applicants’ argument that the increase in the prior decision was due to the respondent’s poor conduct was a misinterpretation of the judgment. Awarding step 23 at band C is an appropriate recognition of the realities in these proceedings.
[12] In relation to the inclusion of step 26, in my prior judgment I noted that the fact that the respondent sought an in-person hearing for a costs matter was unusual. Generally, such matters are determined on the papers. Consequently, I agree with the applicants that step 26 should not be included in the costs to be awarded. I also accept the applicants’ submission that, other than when there has been an interlocutory application to fix costs, costs on a costs memoranda would not usually be awarded.
[13] A 50 per cent reduction or finding that costs fall where they lie is not appropriate here. The Court of Appeal determined that Mr Bassett-Burr was not guilty of any impropriety in issuing the statutory demands or in failing to move more quickly to have them withdrawn.8 Although the High Court has discretion under r 14.7(g) to reduce costs in exceptional circumstances, the courts have made clear that costs cannot be used to penalise conduct connected to the substantive dispute,9 except for fraudulent conduct which induced the litigation.10 That is not applicable here.
[14] I now turn to the issue of the Calderbank offers. Rule 14.6(3)(b)(v) of the High Court Rules provides that the court may order a party to pay increased costs if that party has contributed unnecessarily to the time or expense of the proceeding by failing, without reasonable justification, to accept an offer of settlement.
7 Haines, above n 1, at [38].
8 Bassett-Burr, above n 2, at [35].
9 Moeke v South Waikato District Council [2019] NZHC 3457 at [2].
10 Scales Trading Ltd v Far Eastern Shipping Co Public Ltd [1999] 3 NZLR 26 (CA).
[15] The factors relevant to determining whether the party unreasonably rejected a settlement order were set out in Weaver v HML Nominees Ltd by Katz J, and include:11
(a)the size of the offer relative to the actual costs of counsel;
(b)the amount of the claim;
(c)the reasonable expectations of the party that refuses the offer;
(d)the amount of preparation for trial already undertaken;
(e)whether the proceeding concerns an uncertain area of the law;
(f)whether the parties were in a position to assess the merits when the offer was received;
(g)the information available to the party who receive the offer and the extent to which they can assess the offer;
(h)the timing of the offer;
(i)the conduct of the offeror;
[16] When the first two offers were made, it was unclear whether the application was to succeed or not, and in fact it appeared the applicants had a good case, particularly as they later went on to succeed at the High Court, and had previously succeeded against the party in 2019.12 It was therefore reasonable that they rejected the offer, as it seemed their claim had merit. In Watts & Hughes Construction Ltd v Biala,13 Cull J stated that where an offer is made early in the proceedings, it is reasonable that the plaintiff would still be assessing the merits of their case and be hopeful of the possibility of obtaining some award. However, the third offer was made after the Court of Appeal ruled against the applicants and directed costs be awarded to
11 Weaver v HML Nominees Ltd [2016] NZHC 473 at [30].
12 Haines v Memelink [2019] NZHC 2169.
13 Watt & Hughes Construction Ltd v Biala [2021] NZHC 290 at [14].
the respondent. The 10 per cent reduction was relatively generous, given the costs accrued up to that point. However, the timing is an issue, as I will discuss.
[17] The respondent proposes an uplift of 25 per cent. In Isaac Construction Company Ltd v Nu-Way Energy (NZ) Ltd14, an uplift of 25 per cent for costs incurred after the offer was made was ordered for unreasonably rejecting a Calderbank offer. In Biala, Cull J held that although it was not unreasonable for the plaintiff to reject the first Calderbank offer made, it was unreasonable to reject the second offer, and an uplift of 25 per cent for costs incurred after second offer was warranted to recognise the defendant’s efforts to settle the litigation prior to hearing. Similarly in Jurisich v Harris, Katz J held that costs should be uplifted 25 per cent due to failure to accept a reasonable offer that would have resolved matters without significant further costs being incurred.15 The case law makes clear that a 25 per cent uplift would be available in this case. However, the offer that was unreasonably rejected was made after all the costs had been incurred. As a result, its refusal did not contribute to the costs of the proceeding. I therefore find that a 25 per cent uplift on the basis of refusing Calderbank offers is not justified.
Conclusion
[18]I award costs to the respondent of $13,264.50 plus disbursements of $160.
Churchman J
Solicitors:
J D Dallas, Wellington for Appellants
Livingston and Livingston, Wellington for Respondent
14 Isaac Construction Company Ltd v Nu-Way Energy (NZ) Ltd [2019] NZHC 92 at [20]–[22].
15 Jurisich v Harris [2016] NZHC 1278 at [35]–[37].
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