Herron v Wallace

[2016] NZHC 2905

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2013-404-1806 [2016] NZHC 2905

BETWEEN

STUART WALTON HERRON

Plaintiff

AND

WAYNE ANDREW WALLACE First Defendant

SHADES OF AUTUMN LIMITED Second Defendant

BELMONT LIFESTYLE VILLAGES LIMITED

Third Defendant

Hearing:	On the papers
Counsel:	CT Patterson and RA Dellow for plaintiff JWJ Graham and CF Fife for defendants
Judgment:	2 December 2016

JUDGMENT OF FAIRE J

This judgment was delivered by me on 2 December 2016 at 2:30 pm pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date……………

Solicitors:           Skeates Law Ltd, Auckland (G Skeates) Chapman Tripp, Auckland

Herron v Wallace [2016] NZHC 2905 [2 December 2016]

[1]      In my judgment delivered on 12 October 2016 I:1

(a)       Refused  the  defendant’s  application  for  a  recall  of  my  judgment

delivered on 27 May 2016;2

(b)Refused to stay the judgment pending determination of the issues raised by the recall application in a new proceeding; and

(c)      Granted a stay of the judgment subject to conditions which included payment  of  the  judgment  sum  to  the  Registrar  or  a  stakeholder pending appeal.

[2]      I reserved costs and gave directions for the filing of memoranda in the event that counsel could not agree.

[3]      Memoranda have been filed.  There is agreement that the matter in relation to costs be analysed on the basis that there are two applications, namely:

(a)       an application for recall and consequential orders; and

(b)      an application for stay.

[4]      There is disagreement as to whether a solicitor/client cost provision in the contract which was the basis for my substantive judgment of 27 May 2016 applies to costs in relation to these applications.

[5]      I understand that my judgment refusing a recall of the judgment is also the subject of an appeal to the Court of Appeal.

[6]      In  my  judgment  delivered  on  12 October  2016,  I  set  out  the  principles applicable where a claim for solicitor/client costs based on a contractual provision is

made.3

1      Herron v Wallace [2016] NZHC 2427.

2      Herron v Wallace [2016] NZHC 1129.

3 Above n 1, at [31].

[7]      I have reviewed the memoranda filed by the plaintiff seeking indemnity costs of $75,523.73 and the memorandum in opposition by counsel for the defendants.

[8]      I am not satisfied that I can, on the information provided, ascertain what are reasonable costs in terms of the contractual provision and in respect of the applications.

[9]      The plaintiff’s material provides invoices totalling $103,530.41.  In addition, there is provided a document entitled Recall and Stay Application Costs – Invoice – Time record breakdown.  It excludes various sums from the eight invoices leaving a balance of $72,523.73 which, by implication, is the revised amount claimed.  Based on that material I cannot determine the fee earners involved, their rates and, in many instances, what the entry relates to.

[10]     The defendants’ position is that if in fact the matter is to be determined based

on the solicitor/client provision in the contract:

Any plaintiff’s costs within the indemnity must be reasonably incurred – as to which, detailed review of the cost invoices and expert assessment would be required to ensure the fee is fair and reasonable in the circumstances.

[11]     The  plaintiff,  in  the  reply  memorandum,  refers  to  the  Court  of Appeal decision in Frater Williams & Co Ltd v Australian Guarantee Corp (NZ) Ltd4  and submitted that a robust approach is called for.

[12]     I referred to the Court of Appeal’s judgment in the interim judgment I gave on costs on the substantive proceeding on 12 October 2016.5    The Court of Appeal gave clear guidance as to how the robust approach to any assessment of indemnity costs should be undertaken and said:6

… this can not be taken to mandate a discretionary approach akin to a Court's assessment of party and party costs. The object is not to exercise a discretion but rather to assess whether the solicitor-client costs sought are properly attributable to the exercise contemplated in the original contract and are charged for at a level which would be regarded as acceptable in a costs

4      Frater Williams & Co Ltd v Australian Guarantee Corp (NZ) Ltd CA 288/92, (1994) 2 NZ ConvC 191,873 (CA).

5      Herron v Wallace above, n 1.

6      At 191,887.

revision under the Law Practitioners Act. If the result happened to equate with party and party costs according to the scale in the High Court Rules, this could be no more than a coincidence.

The Court of Appeal in fact referred the matter back to the High Court to consider whether it would carry out the assessment or refer the matter to the appropriate District Law Society for assessment under the Law Practitioners Act.

[13]     In  my cost judgment in relation to the substantive proceeding issued  on

12 October 2016 I referred, having regard to the current law, to the three options that are available to the Court.7   That, in fact, led to the third option being adopted in the appointment of an expert.  I had previously directed in that case that the expert might be a person who:

(a) is on the panel of cost assessors for a standard committee with responsibility for investigating fee complaints under the Lawyers & Conveyancers Act 2006; and

(b)is possibly a member of the national standards committee established under reg 12(1) of the Lawyers and Conveyancers Act (Lawyers Complaints Service and Standards Committees Regulations) 2008.

That way a similar analysis by a person appropriately qualified to assist the Court in determining the reasonableness of the costs could be made.

[14]     The problem which confronts me and which is known to counsel and the parties is  the fact  that  I retire as  a High  Court Judge effective at  midnight  on

6 December 2016. The options therefore would appear to be that:

(a)      I do not embark on a judgment for costs at this time and simply leave the matter for determination by another Judge in reliance on r 14.9; or

(b)Adjourn the determination of costs on this particular matter pending determination of the appeals, but reserving leave to apply should the

circumstances change.

7 Above, n1 at [41] — [44].

[15]     I am attracted to the latter position.  If the appeals were successful the whole question of costs would have to be relooked at.  If the appeals are unsuccessful, there will inevitably be further analysis of the incidence of costs, particularly if the Court of Appeal were to conclude, as I have, that the solicitor/client provision applies in respect of costs relating to the appeal.  If that happened, one further total analysis of cost liability on the defendants’ part could be undertaken and reported to the Court by an appropriately appointed expert.

[16]     Accordingly, in the circumstances, I order that the application for costs in relation to the recall and stay applications are adjourned pending further order of the Court.  Leave is reserved to apply to have costs determined either on the conclusion of the appeal or, if the circumstances for any reason change, on the occurrence of

that change of circumstances.

JA Faire J