Hillier v Whitewood

[2019] NZHC 232

IN THE HIGH COURT OF NEW ZEALAND ROTORUA REGISTRY

I TE KŌTI MATUA O AOTEAROA

TE ROTORUA-NUI-A-KAHUMATAMOMOE ROHE

CIV-2017-463-000098

[2019] NZHC 232

BETWEEN

TRACY HILLIER, MURIWAI JONES, DAVE PETERS, ARAPETA MIO and TE AURURANGI DAVIS

Applicants

AND

VINCENT WHITEWOOD,

RAELYN RIKA, GARRY WATSON and STELLA TAKU

Respondents

Hearing:

[On the Papers]

Counsel:

C G Beaumont for the Applicants C M Bidois for the Respondents

R E Schmidt-McCleave for Te Ohu Kai Moana Trustee Ltd

Judgment:

22 February 2019

JUDGMENT OF EDWARDS J

[re Costs]

This judgment was delivered by Justice Edwards on 22 February 2019 at 9.30 am, pursuant to

r 11.5 of the High Court Rules

Registrar/Deputy Registrar Date:

Solicitors:    Te Haa Legal Ltd, Otaki

East Brewster Ltd, Rotorua

R E Schmidt-McCleave, Wellington

HILLIER and ORS v WHITEWOOD and ORS [2019] NZHC 232 [22 February 2019]

[1]                  By judgment dated 9 October 2018, I determined that the Trust Deed for the Ngaitai Iwi Authority did not provide for beneficiaries to remove and appoint trustees outside the three-yearly election process provided for in Part 12 of the Trust Deed.1

[2]                  That judgment answered a preliminary question before trial. Subsequently, the parties agreed that the judgment disposed of the applicants’ substantive claim. Davison J made an order under r 10.19(2)(a) dismissing the whole of the applicants’ claim and entering judgment for the respondents.

[3]                  The respondents seek an award of costs. They seek a 25 per cent uplift from category 2B costs on the basis that the applicants’ claim lacked merit, and the applicants failed to adhere to a settlement agreement in which they agreed not to continue with the substantive proceeding. The uplift is opposed by the applicants.

[4]                  It was agreed that the issue of costs should be determined on the papers. The memoranda subsequently filed have been referred to me for determination.

Legal framework

[5]                  Part 14 of the High Court Rules 2016 governs the award of costs. Rule 14.2 sets out the principles that apply, with the primary principle being that the party who fails with respect to a proceeding or an interlocutory application should pay costs to the party who succeeds.2

[6]                  Rule 14.6(3) sets out the circumstances in which the Court may order a party to pay increased costs. Those circumstances include where the party opposing costs has contributed unnecessarily to the time or expense of the proceeding or step in it by:

(i)failing to comply with these rules or with a direction of the court; or

(ii)taking or pursuing an unnecessary step or an argument that lacks merit; or

(iii)failing, without reasonable justification, to admit facts, evidence, documents, or accept a legal argument; or

1      Hillier and Ors v Whitewood and Ors [2018] NZHC 2623.

2      High Court Rules 2016, r 14(2)(1)(a).

(iv)failing, without reasonable justification, to comply with an order for discovery, a notice for further particulars, a notice for interrogatories, or other similar requirement under these rules; or

…

[7]                  A claim for increased costs is to be calculated on a step by step basis.3 However, where an argument lacked merit, and was inherently unlikely to succeed (as set out in r 14.6(3)(b)(ii)), a claim of increased costs may apply to all steps in the proceeding.4

Should increased costs be awarded?

[8]The respondents seek an award of increased costs on two main grounds:

(a)First, that the substantive claim lacked merit, and never had any real prospect of success; and

(b)Second, that by pursuing the proceeding, the applicants acted in breach of a settlement agreement reached in October 2017 that they would not pursue the substantive claim.

[9]                  As to the first of these grounds, I am not persuaded that the substantive claim lacked merit and was totally hopeless. The preliminary question before trial turned on the interpretation of the Trust Deed. Some of the clauses of that Trust Deed were not well drafted, and, as I noted in my judgment, their meaning was not entirely clear.5 Although the respondents had a strong case, it does not necessarily follow that the applicants’ case was totally devoid of merit.

[10]              Nor am I able to infer from the information before the Court that the substantive proceeding was a “trojan horse”, as counsel for the respondents submits. The applicants agreed to the determination of a preliminary question before trial to avoid the cost of a substantive trial if, as occurred, the preliminary question was determined in the respondents’ favour.

3      Holdfast NZ Ltd v Selleys Pty Ltd (2005) 17 PRNZ 897 (CA).

4      NR v MR [2014] NZCA 623, (2014) 22 PRNZ 635.

5 At [32].

[11]              In addition, the applicants agreed to the determination of the preliminary question on the papers. That approach assisted in mitigating costs. And, the applicants responsibly and pragmatically agreed that the determination of the preliminary question resolved the substantive proceeding completely. Those steps suggest that the applicants acted reasonably in relation to the substantive proceeding, and there is no basis to increase costs from scale.

[12]              The second of the respondents’ grounds is that the applicants acted in breach of a settlement agreement. They allege that the settlement agreement was reached at a hui on 4 October 2017, after proceedings were commenced on 20 September 2017. The respondents say that the parties agreed that they would establish a joint working party to progress the business of the Trust and move towards an AGM and election.

[13]              The applicants dispute this claim. Counsel for the applicants submits that the hui on 4 October 2017 concerned the formation of a working party comprising members from the opposing parties. However, there was a dispute about who was to chair that working party, and the applicants’ concerns were not addressed. In addition, counsel submits that the applicants did not receive a written copy of the terms of engagement, or the scope of the working group, as promised. I infer from these submissions that the applicants contend that a binding agreement not to pursue the proceeding did not come into effect.

[14]              The minutes of the hui on 4 October 2017 record a desire on the part of some of those present to avoid the cost of going to Court. The minutes also refer to the establishment of a working party. However, there is nothing in those minutes to suggest that a concluded agreement was reached at that time.

[15]              I am unable to resolve disputed questions of fact in the context of a costs determination to be made on the papers. In light of the uncertainties around whether there was a concluded settlement agreement, I am not prepared to infer that the respondents were put to unreasonable cost as a result of an alleged breach.

[16]              It follows that there is no basis upon which to award increased costs against the applicants, and the application for a 25 per cent uplift must be declined.

Result

[17]              The respondents are awarded costs on a category 2B basis and reasonable disbursements as fixed by the Registrar. The application for increased costs is declined.

Edwards J