Hawke's Bay Trustee Company Limited v Judd

[2016] NZCA 434

IN THE COURT OF APPEAL OF NEW ZEALAND

CA45/2015
[2016] NZCA 434

BETWEEN	HAWKE'S BAY TRUSTEE COMPANY LIMITED AND RICHARD WILLIAM HODGKINSON AS TRUSTEES OF THE RICHARD HODGKINSON TRUST Appellants
AND	MICHELLE KERRIAN JUDD Respondent

Hearing:	28 April 2016
Court:	Ellen France P, Harrison and Kós JJ
Counsel:	M E J Macfarlane for Appellants J L Bates for Respondent
Judgment:	12 September 2016 at 2.30 pm

JUDGMENT OF THE COURT

(COSTS)  

The respondent is awarded costs of $11,700 and disbursements of $709.30.

____________________________________________________________________

REASONS OF THE COURT

(Given by Kós J)

1. This judgment addresses whether and to what extent a Calderbank offer made by a successful respondent should affect costs on the appeal. 

2. To orientate matters, we will repeat paragraph 1 of our judgment of 17 August 2016:[1] 

   [1]       Richard Hodgkinson and Michelle Judd were married for six and a half years.  Over that period they lived in a property in Lane Road, Havelock North, which was owned by the Richard Hodgkinson Trust (the Trust).  After the couple separated, Ms Judd made a claim that the Trust held a share in the property on constructive trust for her, reflecting her contributions to the property.  After trial, Williams J found Ms Judd had established a beneficial interest in the property and awarded her $65,000 to reflect her contributions.  The appellants, the trustees of the Trust, appeal against that award.

   [1]Hawke’s Bay Trustee Company Ltd v Michelle Kerrian Judd [2016] NZCA 397.

3. Our judgment upheld the trial Judge and dismissed the appeal.  Costs were reserved because counsel indicated that there had been a prior exchange of correspondence which might affect the usual disposition of such matters.

4. The respondent now seeks costs uplifted from $7,805 for a standard appeal on a band A basis to $14,375 — an increase of some 85 per cent — together with disbursements of $709.30.  The latter sum is not contested.  The uplift is sought under r 53E(2)(b)(iv) of the Court of Appeal (Civil) Rules 2005: i.e. the failure to accept a settlement offer without reasonable justification. 

5. A Calderbank offer to settle the proceeding for $60,000 (plus costs awarded in the High Court) was made by the respondent shortly after the filing of the appeal.  As noted earlier, Williams J awarded $65,000.  As at the date of the offer Judicature Act interest on that sum would be a further $1,083. 

6. The appellant opposes an uplift of costs on the basis that this was “an all or nothing appeal”.  Mr Macfarlane submits that while it was possible the Court might have allowed the appeal only on quantum so as to reduce the award, the notice of appeal was drafted principally to aim at reversing the High Court judgment. 

1. There is one prior decision by this Court under r 53E(2)(b)(iv).  That is Powell v Hally Labels Ltd.[2]  It is not entirely on point; the appeal in that case was not dispositive of the ultimate merits.  In the High Court there are a number of authorities in which increased awards have been made for costs incurred in the period following the making of a Calderbank offer.[3] 

   [2]Powell v Hally Labels Ltd [2015] NZCA 11.

   [3]Hayes v Parlane [2015] NZHC 112 (20 per cent), Norris Ward McKinnon v Kaye [2015] NZHC 2093 (50 per cent); Kelly v Lasque Construction Ltd [2015] NZHC 3368 (20 per cent); Weaver v HML Nominees Ltd [2016] NZHC 473 (50 per cent) and Jurisich v Harris [2016] NZHC 1278 (25 per cent).

2. The appeal here was against a very modest award.  The appeal was arguable, but lacked fundamental merit.  Measured by those yardsticks, refusal to accept the Calderbank offer made by the respondent was unreasonable.  By the same token, it is reasonable that a greater proportion of costs than scale be borne by the appellant in those circumstances.  It is just that the successful respondent receive more than the usual part-contribution to actual costs that the Rules otherwise provide for.  The scale allowance in the Rules is based on two-thirds expected actual and reasonable costs.[4] 

   [4]Court of Appeal (Civil) Rules 2005, r 53A(d); Holdfast NZ Ltd v Selleys Pty Ltd (2005) 17 PRNZ 897 (CA) at [46]–[48].

3. It follows that an increase of 50 per cent above scale would bring the respondent to what roughly should be her actual and reasonable costs.  In this case that would be the appropriate allowance, given the modest award appealed, reasonable settlement offer made, fundamental lack of merit in the appeal itself and the timing of the costs incurred relative to the making of the offer. 

Result

1. The respondent is awarded costs of $11,700, together with disbursements of $709.30. 

Solicitors:
Sainsbury Logan & Williams, Napier for Appellants
Brown & Bates Ltd, Napier for Respondent