Henderson v Walker
[2019] NZHC 3020
•20 November 2019
IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY
I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE
CIV-2014-409-45
[2019] NZHC 3020
BETWEEN DAVID IAN HENDERSON
Plaintiff
AND
ROBERT BRUCE WALKER
Defendant
On the papers Counsel:
J Moss and H M Weston for Plaintiff
R J B Fowler QC and S B McCusker for Defendant
Judgment:
20 November 2019
JUDGMENT OF THOMAS J (COSTS)
[1] Mr Henderson sued Mr Walker for misuse of his private information obtained from a laptop (Laptop) Mr Walker acquired in his role as liquidator of several companies of which Mr Henderson was formerly a director. On 3 September 2019, I issued my decision upholding aspects of Mr Henderson’s claims in breach of confidence and invasion of privacy, and ordering Mr Walker to pay $5,000 in damages.1 I dismissed Mr Henderson’s remaining claims in conversion, misfeasance in public office, breach of statutory duty and contempt of court.
[2] I said Mr Henderson was entitled to some measure of costs.2 The parties have been unable to resolve costs between themselves.
1 Henderson v Walker [2019] NZHC 2184.
2 At [321].
HENDERSON v WALKER [2019] NZHC 3020 [20 November 2019]
[3] The parties agree the proceeding is appropriately categorised on a 2B basis and there is no objection to certification for second counsel. Mr Henderson’s costs on a scale 2B basis amount to $43,039.3 Mr Henderson also claims disbursements totalling
$15,431. Mr Henderson shared his legal costs with Mr Hyndman, who brought a similar case that was heard together with his. Mr Henderson’s counsel, Mr Moss, who represented both Mr Henderson and Mr Hyndman, suggests a fair allocation of costs is 80 per cent to Mr Henderson and 20 per cent to Mr Hyndman. He says this is based on how much time was spent on each matter. The above figures are based on that assumption.
[4] I agree with Mr Moss that it is appropriate to allocate 80 per cent of the costs to the Henderson proceeding. Mr Fowler QC submits on behalf of Mr Walker that 60 per cent is more appropriate. My view is that figure overplays the relative time and expense that would have been incurred by the Hyndman proceeding. The factual narrative concerning Mr Henderson’s claim was complex and detailed. By comparison, the relevant events concerning Mr Hyndman were limited in number and peripheral in nature. In my assessment, costs of legal research likely formed a far smaller component of the costs than the factual work. I also note Mr Hyndman did not advance a claim for conversion, so that legal work is solely attributable to Mr Henderson’s claim. Finally, an 80/20 split corresponds with the time spent on each claim at the hearings before me.
Calderbank offers
[5] The central issue of dispute between the parties concerns a series of Calderbank offers exchanged between the parties between April and June 2018. Mr Walker seeks costs on an increased basis from 13 April 2018, the expiry date of his first Calderbank offer.4 Mr Henderson also seeks increased costs as a result of his Calderbank offers.
[6] On 4 April 2018, Mr Walker’s solicitors wrote to Mr Henderson’s solicitors offering $10,000 in full and final settlement of the proceeding and all related claims
3 This amount is said to exclude steps taken prior to March 2017, before which Mr Henderson was representing himself, although I address a discrepancy in this regard at [22] below.
4 High Court Rules 2016, r 14.6(3)(b)(v) and 14.11.
that might have been brought by Mr Henderson. The offer was made without prejudice save as to costs and was open for acceptance until 13 April 2018.
[7] In response, on 24 April 2018, Mr Henderson’s solicitors made a counter offer of $10,000 for damages and $5,000 plus GST for costs. The offer required Mr Walker to provide an acknowledgement of invasion of privacy in simple words to be agreed between the parties at a later stage. The offer was made without prejudice save as to costs and was open for acceptance until 1 May 2018.
[8] On 14 May 2018, Mr Walker’s solicitors replied that Mr Walker was prepared to agree to “the essential terms of that offer” but that it would be necessary to agree on the terms of the acknowledgment at the same time as payment terms. Mr Walker proposed to settle for a total payment of $15,750 and an acknowledgment in the following terms:
Mr Walker acknowledges that the documents provided for inspection to the defendants in the Walker v Forbes proceeding (CIV-2012-409-2486) in February 2016 included documents which were not relevant in that proceeding, and which contained information relating to Mr Henderson. These documents ought not to have been provided to the defendants in that proceeding.
Any information about the “existence and terms” of the settlement was to be kept confidential and not disclosed to any person except to the extent necessary to allow enforcement of the settlement. Mr Henderson could also disclose the information to a legal advisor “with a clear and legitimate need to use the information”. The offer was made without prejudice save as to costs and was open for acceptance until 21 May 2018.
[9] On 22 May 2018, Mr Henderson’s solicitors made a final counter offer for the same amount of $15,750. Mr Henderson objected to the inclusion of terms that were not part of the offer he made on 24 April, namely the confidentiality clause. He also objected to the limited scope of the acknowledgement, and proposed the following in its place:
Mr Walker acknowledges that in 2011 he obtained from the Police a personal laptop and a tape drive and in 2011 and 2012 he distributed information and documents from the laptop and/or tape drive to individuals, the IRD, and the
Official Assignees office, without notice to Mr Henderson, and without lawful right to do so.
Mr Walker also acknowledges that in 2016 he provided documents from the laptop and/or tape drive for inspection in the proceeding (CIV-2012-409- 2486) that were personal to Mr Henderson and were not relevant to the proceeding, without notice to Mr Henderson, and without any lawful right to do so.
The acknowledgement was not to be confidential. The offer was made without prejudice save as to costs and was open for acceptance until 29 May 2018.
[10] Finally, on 15 June 2018, Mr Walker’s solicitors repeated Mr Walker’s earlier offer dated 14 May 2018 and extended the deadline for acceptance until 22 June 2018. No reference was made to Mr Henderson’s offer dated 22 May 2018.
[11]None of the offers were accepted.
[12]Rule 14.11 provides the effect of a Calderbank offer on costs:
14.11 Effect on costs
(1)The effect (if any) that the making of an offer under rule 14.10 has on the question of costs is at the discretion of the court.
(2)Subclauses (3) and (4)—
(a)are subject to subclause (1); and
(b)do not limit rule 14.6 or 14.7; and
(c)apply to an offer made under rule 14.10 by a party to a proceeding (party A) to another party to it (party B).
(3)Party A is entitled to costs on the steps taken in the proceeding after the offer is made, if party A—
(a)offers a sum of money to party B that exceeds the amount of a judgment obtained by party B against party A; or
(b)makes an offer that would have been more beneficial to party B than the judgment obtained by party B against party A.
…
[13] Rule 14.11 is an important device to provide defendants with an economic means of limiting their exposure to the risk of litigation costs and to encourage parties
to settle disputes outside court.5 However, as r 14.11(1) makes clear, the Court has a discretion whether to reverse the ordinary rule that costs are awarded to the successful party because of the existence of a rejected Calderbank offer. As the Court of Appeal has recently explained, this discretion is broad, and all relevant circumstances must be considered, including whether rejection of the offer or offers was reasonable.6 Reasonableness is assessed as at the time the offer was made.7
[14] Mr Moss submits that it was reasonable to reject Mr Walker’s Calderbank offers because they did not include an acknowledgement of the main invasions of privacy involving the Laptop. Mr Moss suggests Mr Henderson’s claim was never about the money and emphasises the parties had agreed on the monetary figure in any event. The dispute was about the terms of the acknowledgement and Mr Henderson was within his rights to reject the offer made on 14 May 2018.
[15] Mr Fowler submits the offers were reasonable in amount, contained adequate recognition of Mr Henderson’s costs to date, were made at a time when most of the preparation for trial had not yet been undertaken and adequately recognised Mr Henderson’s desire for vindication. Mr Fowler refers to Bluestar Print Group (NZ) Ltd v Mitchell, where the Court of Appeal minimised the relevance of a desire for vindication and said a “steely” approach to Calderbank offers is required.8 The Court also said monetary compensation “might well be regarded as conveying a distinct element of vindication to the plaintiff”.9
[16] Mr Walker’s Calderbank offers were undeniably for a sum of money that exceeds the amount of the judgment obtained by Mr Henderson, even after factoring in any entitlement to costs Mr Henderson had generated by that stage.10 That said, when viewed in context, I do not consider Mr Henderson acted unreasonably by refusing those offers. First, these offers must be viewed together as a series of counter offers in an attempt to negotiate a settlement rather than in isolation. When seen in
5 Moore v McNabb (2005) 18 PRNZ 127 (CA) at [58].
6 Tower Insurance Ltd v Kilduff [2019] NZCA 82 at [33].
7 Samson v Mourant [2016] NZHC 1119 at [44].
8 Bluestar Print Group (NZ) Ltd v Mitchell [2010] NZCA 385, [2010] ERNZ 446 at [20].
9 At [19].
10 This amount being comparatively small because Mr Henderson was self-represented until March 2017 and most of the costs were incurred after the Calderbank offers were made.
that light, Mr Henderson cannot be said to have acted unreasonably. He continued to attempt negotiation in order to reach a settlement suitable to both parties. In fact, it was Mr Walker who never responded to Mr Henderson’s offer of 22 May 2016.
[17] Secondly, Mr Moss is correct to point out the sticking point of the negotiations was the terms of the acknowledgement. Regardless of whether Mr Henderson’s claim was properly characterised as a monetary claim, it was certainly in large part about the vindication of wrongdoing by Mr Walker. In fact, in relation to privacy, the remedy achieved by Mr Henderson consisted solely of a declaration. In that respect, this case is distinguishable from Bluestar Print Group (NZ) Ltd v Mitchell, where, although the plaintiff said she wished to achieve vindication, it appears from the Court of Appeal’s judgment she had only claimed for damages.11 In those circumstances, the Court’s remark that monetary compensation could be regarded as conveying an element of vindication makes sense. However, where a declaration of wrongdoing is sought as a remedy, it is fair for a plaintiff to insist on an acknowledgment of the same as part of any settlement. That is especially the case for torts concerning dignity, where damages are likely to be low and not representative of the legitimate personal importance of the claim to the plaintiff. Accordingly, although Mr Henderson may have achieved a better monetary outcome by accepting Mr Walker’s offers of settlement, it cannot be said those offers would have been “more beneficial” to Mr Henderson than the declarations (and lesser damages) he ultimately received.
[18] Lastly, in terms of the money, although Mr Henderson ultimately achieved less than the settlement figure, he could not reasonably be expected to have appreciated that likelihood at the time he rejected the offers. Mr Henderson’s claim raised many novel issues, not least of which concerned the quantification of damages for invasion of privacy. As I noted in my judgment, this was the first senior court decision where it was necessary to squarely address the issue of damages in a privacy context. In those circumstances, it was entirely legitimate for Mr Henderson to test the waters on this issue.
11 See Bluestar Print Group (NZ) Ltd v Mitchell, above n 8, at [1].
[19] On the whole, I am not satisfied Mr Henderson acted unreasonably in rejecting the Calderbank offers and, in my view, it would not therefore be appropriate to award costs against Mr Henderson in this proceeding. As a final observation, sight should not be lost of the fact the privacy tort is still in its nascency in this country and it would be unfortunate if development of the law in this area were hindered by punitive costs awards against claimants.
[20] Equally, however, Mr Henderson is not entitled to increased costs because of his Calderbank offers. The application of r 14.6(3)(b)(v) of the High Court Rules to plaintiffs was recently discussed by Cooke J in Mainzeal Property and Construction Ltd (in liq) v Yan (No 2):12
[59] Offers made by successful plaintiffs are in a different category from offers made by unsuccessful defendants that exceed what the plaintiff is entitled to. The latter category is subject to separate rules in rr 14.10 and 14.11 which contemplate that a defendant offering more than the plaintiff is entitled to get costs from the point of the offer. That rationale does not arise in the rejection of offers made by the plaintiffs. A defendant who defends a proceeding is putting the plaintiff to the cost of it, and normally no increased costs are caused because the defendant does not accept an offer to settle for less than is claimed.
[60] The principle in r 14.6(3)(b)(v) recognises, however, there will be situations where the refusal to settle can demonstrate that the party is acting without reasonable justification, and causing unnecessary expense to the claiming party. It has a similar rationale to the other uplift grounds in r 14.6. A plaintiff may offer to accept less than it is entitled to try and convince an obdurate defendant not to put the parties to the cost of a trial, and the failure to accept such an offer may justify an uplift. Without seeking to circumscribe r 14.6(3)(b)(v) that seems to me what the rule is generally directed to.
[21] I am far from satisfied Mr Walker caused unnecessary expense to Mr Henderson in refusing to accept his offers of settlement. As I have said, this was a novel claim, and Mr Walker was entitled to put Mr Henderson to the cost of it.
Reductions in costs
[22] That leaves three issues that might warrant reductions in the costs awarded to Mr Henderson. First, Mr Walker objects to the inclusion of $6,690 for commencement of the proceeding, as Mr Henderson accepts he was self-represented at this stage of
12 Mainzeal Property and Construction Ltd (in liq) v Yan [2019] NZHC 1637.
the proceeding. I agree Mr Henderson cannot claim legal costs for a step taken at the time he was self-represented, so I disallow that amount.
[23] Secondly, Mr Walker seeks a 25 per cent uplift in costs against Mr Henderson for his failure to comply with various timetabling orders. Given that I have declined to award costs to Mr Walker, I have treated this as a request for decreased costs. Rule 14.7(f)(i) and (iv) allow the Court to reduce the costs otherwise payable if the party claiming costs has “contributed unnecessarily to the time or expense of the proceeding” by “failing to comply with these rules or a direction of the court” or by “failing, without reasonable justification, to comply with an order for discovery, a notice for further particulars, a notice for interrogatories, or other similar requirement”.
[24] On 5 March 2015, Associate Judge Osborne (as he then was) directed Mr Henderson to provide within 20 working days further and better particulars of each disclosure by Mr Walker alleged to constitute an invasion of privacy. On 19 May 2015, Associate Judge Osborne recorded in a minute that Mr Henderson had failed to comply and directed him to file amended pleadings no later than 2 June 2015. Mr Henderson filed an amended statement of claim on 2 June but, on 23 June 2015, Associate Judge Osborne held that it still did not comply with the requirements of his judgment dated 5 March 2015. Mr Henderson was directed to file a further amended statement of claim by 14 July 2015. By 18 August 2015, Mr Henderson still had not filed a further amended statement of claim. He was directed to do so by 31 August 2015. Mr Henderson filed the further amended statement of claim on 11 September 2015, although on 4 March 2016, Associate Judge Osborne continued to criticise the particularisation of Mr Henderson’s claim.
[25] It is apparent from this series of events that Mr Henderson contributed unnecessarily to the time of the proceeding by repeatedly failing to comply both with the requirement to provide further particulars and the timetabling orders in respect of providing them. On the other hand, the expenses incurred by Mr Walker as a result appear to have been limited to the preparation of memoranda and appearances at case management conferences. In those circumstances, only a minor reduction in costs is appropriate.
[26] Finally, although Mr Walker does not raise this issue, Mr Moss acknowledges it might be appropriate to decrease Mr Henderson’s costs in light of the failure on his alternative causes of action. That was a proper concession to make. Rule 14.7(d) allows the Court to reduce the costs otherwise payable if the party claiming costs, although having succeeded overall, has “failed in relation to a cause of action or issue which significantly increased the costs” of the other party. As Mallon J explained in Strathboss Kiwifruit Ltd v Attorney-General:13
[12] It is common for a successful party to fail on some aspects of their claim. Whether this should reduce the costs award depends on whether that failure “significantly increased the costs of the party opposing costs.” This requirement ensures that in most cases it is not necessary to dissect the proceeding issue by issue, or cause of action by cause of action, to determine costs. It is only when the party who succeeded overall significantly increased the costs of the unsuccessful party, because of issues or causes of action on which the successful party failed, that any reduction in the costs award is to be made. …
[27] Mr Henderson was ultimately seeking vindication for the misuse of his personal information in one form or another. The various causes of action represented different ways of conceptualising the wrongdoing by Mr Walker. Some of those were successful while others were not, but at the end of the day Mr Henderson was vindicated for the misuse of his information. In those circumstances, any reduction in costs should be small. That said, I am satisfied the plenitude of unsuccessful claims likely increased Mr Walker’s costs to a significant degree. The length of the substantive judgment should be indication enough of that fact. Some discount is therefore appropriate, although this should be small because, as I have already said, the main cost in this proceeding was likely to have been in relation to the factual material rather than the legal research, and the factual material was relevant to all causes of action.
[28] Taking these two issues together, I am satisfied a global discount of 12 per cent is appropriate.
[29] Mr Henderson also requests an uplift in costs as a result of various findings made in the substantive judgment about the propriety of Mr Walker’s conduct. It is,
13 Strathboss Kiwifruit Ltd v Attorney-General [2019] NZHC 62 (footnote omitted).
however, well established the role of costs is not to punish parties for their behaviour outside their conduct of the proceedings.14
Result
[30] Mr Walker is to pay Mr Henderson reduced costs of $31,987.12, plus disbursements of $15,431.
Thomas J
Solicitors:
Canterbury Legal, Christchurch for Plaintiff
Luke Cunningham Clere, Wellington for Defendant
14 Thames-Coromandel District Council v Coromandel Heritage Protection Society Inc [2009] NZCA 204, (2009) 19 PRNZ 365 at [10] and [13].
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