Herron v Speirs Group Limited HC Auckland CIV 2006-404-002277

[2008] NZHC 2663

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV 2006-404-002277

UNDER  the Privacy Act 1993

IN THE MATTER OF     an appeal from the Human Rights Review

Tribunal, Decision No. 12/06

BETWEEN  STUART WALTON HERRON Appellant

ANDSPEIRS GROUP LIMITED Respondent

Hearing:         14 August 2008

Appearances: R B Hucker for the Appellant

M D Arthur for the Respondent
R Stevens for the Director of Human Rights Proceedings

Court:            Andrews J

Lay Member, J A Binns
Lay Member, D A Clapshaw

Judgment:      30 October 2008 at 4:00pm

JUDGMENT OF THE COURT [Costs]

This judgment was delivered by me on 30 October 2008 at 4:00pm pursuant to r 540(4) of the High Court Rules

………………………………….. Registrar / Deputy Registrar

Solicitors:           Hucker & Associates, PO Box 3843, Shortland Street, Auckland 1001

Chapman Tripp, PO Box 2206, Auckland 1140

Director of Human Rights Proceedings, PO Box 6751, Auckland 1141

HERRON V SPEIRS GROUP LTD HC AK CIV 2006-404-002277  30 October 2008

Introduction

[1]      On  21  March  2007  we  issued  judgment  on  an  appeal  by  the  appellant, Mr Herron, against a decision of the Human Rights Review Tribunal (the Tribunal). Mr Herron has also appealed against a decision as to costs issued by the Tribunal on

21 December 2006.  A further hearing was allocated on 14 August 2006 to hear that appeal.

Background

[2]      In January 2003 Mr Herron issued proceedings in the Tribunal in respect of a “payment default” listed by the respondent Speirs Group Limited (Speirs) on the “Baycorp” credit reporting agency.

[3]      The Tribunal’s decision was delivered on 30 March 2006.  The Tribunal held that Speirs’ listing the “payment default” was in breach of Principle 8 (IPP8) of the Information Privacy Principles set out in the Privacy Act 1993 (the  Act).   The Tribunal held that Mr Herron had failed to establish that he had suffered harm of any of the kinds listed in s 66(1)(b) of the Act, and that Mr Herron was not entitled to relief against Speirs.  In that judgment, the Tribunal reserved the question of costs.

[4]      On 4 August 2006 the Tribunal issued its interim decision regarding costs.  It held that Speirs was entitled to costs of $3,000 against Mr Herron for the period up to 15 November 2005 and that it was entitled to recover all actual and reasonable solicitor/client costs in respect of the litigation after 15 November 2005.   The significance  of  the  date  15  November  2005  is  that  it  was  the  date  given  for acceptance of an offer conveyed in a Calderbank letter dated 11 November 2005. That letter will be referred to later.

[5]      The parties were directed to make further submissions in respect of costs for the period after 15 November 2005.

[6]      Both Mr Herron and Speirs filed appeals against the Tribunal’s decision of

30 March 2006.  Speirs appealed against the Tribunal’s decision that there had been

a breach of IPP 8 and Mr Herron appealed against the decision that he was not entitled to relief.  We heard that appeal on 11 October and 4 December 2006 and our judgment on the appeals was delivered on 21 March 2007.   For completeness, we note that both appeals were dismissed and we ordered that costs in relation to the appeal were to lie where they fell.

[7]      The Tribunal’s orders as to costs were set out in its final decision delivered on 21 December 2006.  The orders are set out at [10] of that decision.  The Tribunal said:

[10]      We therefore fix our award of costs under s 85(2) of the Privacy Act

1993 in this case at $35,503.82 comprising:

[a]       $3,000.00 as set out at paragraph [15] of the costs decision; and

[b]       $32,503.82 as set out at paragraph [2] above.

[8]      In his notice of appeal against the Tribunal’s decision of 30 March 2006

Mr Herron had included an appeal against the Tribunal’s holding, in its decision of

4 August 2006, that he was to pay Speirs’ “actual and reasonable solicitor/client costs” after 15 November 2005.  However, as the Tribunal’s final costs decision had not been delivered at the time of the first hearing in this court, that aspect of his appeal was not argued.

[9]      The second appeal hearing was therefore allocated for 14 August 2008, to hear Mr Herron’s appeal against the final costs decision.  The appeal concerns only the order as to the period after 15 November 2005.  There was no appeal against the order of costs in the sum of $3,000.00 for the period prior to that date.

Jurisdiction as to costs

[10]     The Tribunal’s jurisdiction to award costs is given in s 85(2) of the Act:

In any proceedings under section 82 or section 83 of this Act, the Tribunal may  award  such  costs  against  the  defendant  as  the  Tribunal  thinks  fit, whether or not the Tribunal makes any other order, or may award costs against the plaintiff, or may decline to award costs against either party.

[11]   The Tribunal had a discretion as to costs.   Mr Hucker appropriately acknowledged that the approach to an appeal against the Tribunal’s exercise of its discretion is the same as in any appeal against the exercise of a discretion.  It must be shown that that the Tribunal acted on a wrong principle, that the Tribunal took into account irrelevant factors or failed to take into account relevant factors, or that the Tribunal was plainly wrong.1

Exercise of the discretion

[12]     Mr Hucker submitted that the Tribunal erred in the exercise of its discretion in a number of respects:

a)       Rather   than   award   indemnity   costs   (that   is   all   reasonable solicitor/client costs) the Tribunal should have applied, by analogy, the District Court scale of costs;

b)The  Calderbank  letter  did  not  provide  grounds  for  an  award  of indemnity costs because:

i)Speirs  had  not  established  that  Mr  Herron  had  not,  in  all, received more than the joint offer made in the 11 November

2005 letter;

ii)The joint offer made in the 11 November 2005 letter was not acceptable as against Speirs alone, and Speirs had made no offer on its own account;

iii)In awarding indemnity costs the Tribunal had failed to take into account the fact that Mr Herron had succeeded to the extent that Speirs was held to have breached IPP8;

iv)The Tribunal had failed to take into account that the Director of Proceedings had exercised the right to appear and be heard,

1           See May v May (1982) 1 NZFLR 165, at 170 (CA)

and  that  Mr  Herron  should  not  be  held  responsible  for additional time required as a result;

v)The  Tribunal  had  failed  to  take  into  account  the  fact  that Mr Herron’s case was not without merit, given the finding that Speirs was in breach of IPP8, and in the light of the fact that the Director of Proceedings’ position was that not only was there a breach of IPP8 but also that the Tribunal ought to make an award of damages.

[13]     We consider these matters in turn.

Policy issues: The Tribunal’s approach to costs

[14] In its judgment of 4 August 2006 the Tribunal referred to the principles usually applied by the Tribunal when considering costs, at [6] – [8]. Those principles may be summarised as follows:

a)       The  discretion  to  award  costs  is  largely  unfettered,  but  must  be exercised judicially;

b)Costs in the tribunal will usually be awarded to follow the event, and quantum   will   usually  be  fixed   so   as   to   reflect   a   reasonable contribution (rather than full recovery) of the costs actually oncurred by the successful party;

c)       The  Tribunal’s  approach to  costs  is  not  much  different  from  that which applies in the Courts although, as there is no formal scale of costs  for  proceedings  in  the  Tribunal  (as  there  is  in  the  Courts), caution needs to be exercised before applying an analysis of what might have been calculated under either the High Court or District Court scales of costs.  Such an analysis can be no more than a guide.

d)An  award  of  costs  that  might  otherwise  have  been  made  can  be reduced if the result has been a part-success, only;

e)       Assessment of costs must take account of the relevant features of each case, but there must be some consistency in the way costs in the Tribunal are approached and assessed;

f)        Offers  of  settlement  “without  prejudice  except  as  to  costs”  are  a relevant consideration.

[15]     At [7] [e] the Tribunal observed that:

…it   is   not   immaterial   that   Parliament   has   conferred   the   particular jurisdictions which the Tribunal exercises in part to protect access to justice for litigants who might otherwise be deterred by the costs and complexities of proceeding in the Courts.

[16]     Mr Hucker submitted that the Tribunal’s award of costs must be in proportion to those which would be awarded in the District Court, and ought not to exceed what are reasonable costs in that court.  Further, he submitted that the Tribunal erred in holding that costs ought usually to follow the event.  He pointed out that s 85(2) of the Act contains no presumption to that effect, such as is provided in r 46(a) of the District Courts Rules and r 47(a) of the High Court Rules.  He submitted that such an approach would further the protection of access to the Tribunal for litigants who might otherwise be deterred by the costs of proceeding to a hearing.

[17]     On behalf of Speirs, Mr Arthur submitted that the policy of protecting access to the Tribunal must be balanced by the policy consideration that (in this case) a defendant should not be burdened by the cost of defending an unmeritorious claim. Further, he noted the Tribunal’s discretion in the matter of costs.

[18]     On behalf of the Director of Proceedings, Mr Stevens submitted that it was appropriate that costs usually (but not necessarily always) follow the event, and that costs ordered should generally be a reasonable contribution.

[19]     We can find no error in the Tribunal’s general approach to costs.  We note that the principles for determining costs as set out in the Tribunal’s interim decision of 4 August 2006 were referred to in the judgment of this Court in Haydock v

Sheppard.2   After setting out a summary of the principles, Harrison J observed at [38] that he was satisfied that the principles are “consistent with the broad discretionary powers vested by the statute”.  With respect, we agree.

[20]   In relation to Mr Hucker’s submissions, we note first that it would be inappropriate, and inconsistent with s 85(2) to constrain the Tribunal to costs that would be awarded in the District Court.  Had the legislature intended that to be the case, then s 85(2) would have been framed accordingly.  It was not.  The Tribunal was given a discretion as to costs and, in s 104 of the Act, the power to regulate its procedure as it sees fit.

[21]     Further, the Tribunal appropriately noted the need to exercise its discretion judicially, and the need to take account of the particular circumstances of each case, to protect access to justice for litigants, while recognising the need for some consistency in the way in which costs are approached and assessed.

Should  the Tribunal  have  taken  the  letters  of  11  and  28  November  and  9

December 2005 into account?

[22]     It is necessary to set out some background.  Mr Herron’s proceedings were initially against Speirs, Baycorp and ASB Bank.  The 11 November 2005 letter sent to Mr Herron’s solicitor was from the solicitors for Baycorp, and was sent on behalf of Baycorp, Speirs and ASB Bank.   It was headed “without prejudice, save as to costs” and conveyed an offer on behalf of all three defendants to pay Mr Herron

$15,000.00 in full and final settlement of all claims against all three defendants.  The offer was open for acceptance until midday on 15 November 2005.   The letter concluded by stating that if the offer were not accepted the defendants reserved the right to refer the letter to the Tribunal on the question of costs.

[23]     Mr Herron did not accept that offer as put, although it appears he reached a settlement with ASB Bank.  Neither the Tribunal, nor this court, was given any detail as to that settlement.

2           Haydock v Sheppard HC AK CIV 2007-404-2929, 11 September 2008, Harrison J

[24]     A further letter was sent to Mr Herron’s solicitors on 28 November 2005, again from the solicitors for Baycorp, conveying an offer on behalf of Speirs and Baycorp.   It, too, was headed “without prejudice save as to costs” and concluded with the statement that if not accepted the offerors reserved their right to refer the letter to the Tribunal on the question of costs.  The offer was for $30,000.00.  It was not  accepted,  as  put,  although  it  appears  there  was  a  settlement  with  Baycorp. Again, neither the Tribunal nor this court was given any detail of the settlement reached between Mr Herron and Baycorp.

[25]     On  9  December  2005  Mr  Herron’s  solicitors  wrote  to  Speirs’  solicitors advising that a payment of $30,000.00 by Speirs would be accepted by Mr Herron in settlement. That offer was rejected by Speirs with no counter-offer being made.

[26]     In its 4 August 2006 decision the Tribunal accepted a submission on behalf of Speirs  that  costs  before  and  after  15  November  2005  should  be  considered separately, and that Speirs could rely on the 11 November 2005 letter as being relevant to costs for the period after 15 November 2005.

[27]     The Tribunal concluded, at [23], that Speirs was entitled to indemnity costs (that is, all actual and reasonable solicitor/client costs for that period).  In reaching that conclusion, the Tribunal noted:

a)      There was no satisfactory evidence as to any losses or adverse consequences that might have come within s 88(1)(a) or (b) of the Act.   Accordingly, it was unrealistic for Mr Herron to approach the case on the basis that the Tribunal might award anything under those provisions, much less the significant sum sought by Mr Herron.

b)On any sensible assessment, the only ground on which there was any real possibility of Mr Herron’s receiving an award of damages was under s 88(1)(c) (that is, for humiliation, loss of dignity and/or injury to his feelings).  The Tribunal’s impression was that Mr Herron had never really engaged in an analysis that was informed by the relevant

New Zealand jurisprudence as to what the outcome of any of his claims for damages might be.

c)        Awards under s 88(1)(c) have been modest.  It was highly unlikely the

Tribunal would award damages under s 88(1)(c) in the vicinity of

$15,000.00 or more.

d)Awards under s 88(1) are intended to compensate for harm suffered not to  punish  a  perpetrator  or  enrich  the  complainant  beyond  the required compensation.  Even if the Tribunal had been persuaded that an award should be made under s 88(1)(c) it would need to have taken account of any settlement with Baycorp and ASB Bank before making an award.

e)       In the event, Mr Herron had not succeeded in obtaining any award, of any kind, from the Tribunal.  If Mr Herron had recognised the obvious difficulties with his claim for damages under s 88(1)(a) and (b), and had made anything like a realistic assessment of what he might be awarded under s 88(1)(c) (if successful), it should have been obvious to him that he ought to have settled the claim against Speirs.

[28]     The main plank of Mr Hucker’s argument on behalf of Mr Herron was that the offers made to Mr Herron were all joint offers.  There was, he submitted, no offer that was capable of acceptance as against Speirs, alone.   He submitted that the Tribunal ought to have held that, in order to have a Calderbank offer on which it could rely as to costs, Speirs should have made its own independent offer after the offer conveyed in the 11 November 2005 letter was not accepted.   We reject that submission for two reasons.

[29]     First, the 11 November 2005 letter was clearly an offer made by Speirs, Baycorp  and  ASB Bank.    We accept  Mr  Stevens' submission  on  behalf  of  the Director of Proceedings that settlement with some of the defendants is irrelevant to the application  of  the  Calderbank  offer  with  respect  to  another  defendant.    As

submitted by Mr Arthur on behalf of Speirs, the Calderbank offer is to be assessed in the round, in all the circumstances of the case.

[30]     Secondly, the fact that Mr Herron did reach settlement with ASB Bank and then Baycorp is at least an indication that there was, as at 15 November 2005, an offer that was capable of acceptance against any one of the parties on whose behalf it was made.

[31]     Thirdly, we accept Mr Arthur’s submission that in proceedings before the Tribunal, as in any litigation, it is a requirement of fairness that litigants have an economic means of limiting their risk of exposure to the risk of costs, and that the Court should encourage settlement of disputes.3

[32]     We are therefore satisfied that the Tribunal did not err in holding that the letter of 11 November 2005 was relevant to its consideration of costs for the period after 15 November 2005.  We are not persuaded that the Tribunal should have held that Speirs was required to have made a separate offer.

Did the Tribunal err in awarding indemnity costs in favour of Speirs?

[33]     In its 4 August 2006 decision the Tribunal referred to the Court of Appeal’s judgment in Health Waikato v Elmsly4 where it was observed that:

Access to justice and reputational considerations mean that a costs benefit analysis of litigation of this sort cannot be confined solely to economic considerations.   Nonetheless, we think that a more sensible approach by defendants to the making of Calderbank offers and steely responses by the courts where plaintiff do not beat Calderbank offers would be in the broader public interest.

[34]     The Tribunal accepted that the principle expressed in Health Waikato should apply in the present case.

[35]     Mr  Hucker  submitted  that  in  the  event  that  the  Tribunal  took  the  11

November 2005 letter into account as a Calderbank offer, that did not necessarily

3           See Moore v McNabb (2006) 18 PRNZ 127, at [58]

4           Health Waikato v Elmsly [2004] 1ERNZ 172 at 183

mean that indemnity costs should be awarded.  The Tribunal had a discretion as to whether to do so.  Mr Hucker referred us to High Court judgments where it has been stressed that all surrounding circumstances must be considered.5    Mr Hucker also submitted that indemnity costs should only be ordered in exceptional circumstances, or “for cause”6.

[36]     In that respect we accept, as submitted by Mr Arthur, that the Tribunal is not necessarily constrained by those authorities.   Rule 47C(4) of the District Courts Rules and r 48C(4) of the High Court Rules set out the circumstances in which indemnity costs may be ordered.  Neither of those rules applies (except as a guide, only) to the Tribunal’s discretion as to costs.

[37]     We accept that in deciding what costs Mr Herron should be ordered to pay

Speirs, the Tribunal had to consider all the circumstances of the case.

[38]     We are concerned that in reaching its conclusion that it was appropriate to order indemnity costs in respect of the period after 15 November 2005 the Tribunal referred only to the question of an award of damages.  In respect of that period the Tribunal made no reference to the fact that Mr Herron had succeeded in his claim that Speirs had breached IPP8.

[39]     We  accept  Mr  Arthur’s  submission  that  the  Tribunal  referred  to  Speirs’ “mixed success” in its consideration of the period up to 15 November 2005.  It did so at [14] of the 4 August 2006 decision:

[14]     Our assessment of costs to 15 November 2005 is, as Mr Jagose accepts, an assessment on a reasonable contribution basis only.   We also think that this aspect of the costs award should reflect that fact that not all of the defendant’s arguments were accepted; to the contrary, we find that the defendant did contravene Principle 8 in the way in which it set about listing the default on the Baycorp data base.

5See Diver v Geo Boyes & Co Ltd HC HAM CP58/93 20 May 1998 (Penlington J); ATL Systems  NZ  Ltd  v  ANZ  National  Bank,  HC  AK  CIV 2003  404  3573  1  October  2005 (Winkelmann J) and PGG Wrightson Ltd v Wai Shing Ltd, HC AK CIV 2003 404 6579 25

August 2006 (Keane J)

6           See ATL Systems at [23] and PGG Wrightson at [4]

[40]     Against actual costs incurred by Speirs of approximately $17,000.00 for the period up to 15 November 2005 the Tribunal ordered $3,000.00 as a reasonable contribution.

[41]     However, we also accept Mr Hucker’s submission that a significant portion of the hearing before the Tribunal was occupied by Speirs’ contention that it had not breached IPP8.  He submitted that all of Speirs’ evidence was directed at this aspect of the proceeding.

[42]     We have concluded that the Tribunal should have taken that factor expressly into account, for both the period before and after 15 November 2005.

What is a reasonable costs order for period after 11 November 2005?

[43]     We turn  to  consider whether,  if  it had  taken  its  finding  that  Speirs  had breached IPP8 into account in respect of the period after 15 November 2005, the Tribunal would have awarded indemnity costs in Speirs’ favour.

[44]     We accept Mr Stevens’ submission that proceedings before the Tribunal are not simply about money.  On that basis, Mr Stevens submitted that the 11 November

2005 letter should only have been considered as a basis for awarding indemnity costs if it had included some acknowledgement of a breach and an apology.  Mr Stevens further submitted that the question of the breach of IPP8 was a significant issue at the hearing.

[45]     On the other hand, we accept Mr Arthur’s submission on behalf of Speirs that it is apparent from Mr Herron’s own settlement offer of 28 November 2005 that a monetary payment was of more significance to him than the breach of privacy – he sought only damages, not an acknowledgement of a breach and/or an apology.

[46]     After consideration, we have concluded that to fail to take the finding that Speirs breached IPP8 expressly into account in the order as to costs for the period after 15 November 2005, is inconsistent with the purpose of the Act.  That purpose is

the protection of an individual’s privacy through (ultimately) proceedings before the

Tribunal.

[47]     The finding that Speirs breached  IPP8 was a factor to be considered, in conjunction with all other relevant factors, in approaching the matter of costs.  When that factor is taken into account an award of indemnity costs is no longer appropriate. As the Tribunal noted when setting out the principles to be applied in approaching costs, a reduction in the award of costs that might otherwise have been made is appropriate where there has been a part-success.

A reasonable contribution

[48]     We have considered whether it would be appropriate to remit the question of costs back to the Tribunal for reconsideration of the order as  to  costs  after  15

November 2005.   We have concluded that that course of action would pose an unnecessary burden on the parties and the Tribunal.   This proceeding has been in train since 2003 and it is desirable that there be an end to it.  We therefore turn to consider what would be an appropriate order as to costs.

[49]     In its 21 December 2006 decision the Tribunal considered the reasonableness of the actual solicitor/client costs incurred by Speirs after 15 November 2005, in the sum of $32,503.82.     Its actual costs prior to that date were $16,773.38.   As a “yardstick” for assessing reasonableness the Tribunal set out the actual costs said to have been incurred by litigants in 14 sets of proceedings before the Tribunal between May 2005 and December 2006.  At our request Mr Stevens provided us with copies of the costs decisions in those proceedings.   They demonstrate that the types of hearing before the Tribunal, their duration, and actual costs incurred vary considerably.  The Tribunal concluded that there was no basis on which it could be said that Speirs’ costs were unreasonable.  They were not outside a reasonable range. We have reached the same conclusion.

[50]     The assessment of what is a reasonable contribution that Mr Herron should be required to pay to Speirs will take into account the Tribunal’s findings that there was a breach of IPP8 and that Mr Herron was not entitled to any relief, and that Mr

Herron refused to accept an offer that would have avoided the necessity of a hearing before the Tribunal.

[51]     In this case it is also appropriate to take into account the fact that in the order as to costs up to 15 November 2005, the Tribunal has already given some allowance for the fact that it found that Speirs breached IPP8.

[52]     Taking  all  of  these  matters  into  account  we  have  concluded  that  the appropriate order for costs for the period after 15 November 2005 is that Mr Herron should pay 85% of Speirs’ actual costs after 15 November 2005, that is $27,628.

Result

[53]     The appeal against the Tribunal’s final costs decision is allowed to the extent that costs are fixed at $30,628 comprising $3,000 in respect of the period up to 15

November 2005 and $27,628 for the period after 15 November 2005.

[54]     In respect of the hearing in this Court, costs are to lie where they fall.

Andrews J  J A Binns  D A Clapshaw