Hobbs v Gilbert HC Nelson CIV 1999 442 2

[2005] NZHC 1706

IN THE HIGH COURT OF NEW ZEALAND NELSON REGISTRY

CIV 1999 442 002

BETWEEN  DAVID JOHN HOBBS

Plaintiff

AND  MICHAEL JOHN GILBERT

Defendant

Hearing:         20 April 2005

Further submissions: 27 April 2005

Appearances: J O Upton QC for the Defendant in support

P J Bellamy and M Scally for the Plaintiff to oppose A J D Bamford for Mr J M Fitchett, also to oppose

Judgment:      12 May 2005

JUDGMENT OF WILD J AS TO COSTS

The application

[1]                  By amended application filed on 18 February, the defendant, Mr Gilbert, seeks the following costs orders:

a)Indemnity costs (or if such cannot be had, then increased costs) jointly and severally against the plaintiff and Mr J M Fitchett.

b)The costs of his amended application.

Mr Fitchett was counsel for the plaintiff, Mr Hobbs, in this proceeding at all material times.

HOBBS V GILBERT HC NEL CIV 1999 442 002 [12 May 2005]

[2]The application, as directed against Mr Hobbs, is upon the grounds:

a)Of the complexity and significance of the proceeding to Mr Gilbert (r47(b)).

b)That Mr Hobbs acted improperly or unnecessarily in commencing and continuing the proceeding (r48C(4)(a)).

c)Mr Hobbs failed without reasonable justification to accept a settlement offer made by Mr Gilbert (r 48C(3)(v)).

d)Mr Hobbs attacked Mr Gilbert’s reputation without good cause.

e)Mr Hobbs unduly and without good cause extended the length of the hearing, including the various steps taken by Mr Hobbs subsequent to the hearing.

f)Mr Hobbs alleged perjury on Mr Gilbert’s part without good cause and in ways never specified.

[3]                  The application against Mr Fitchett was based on grounds d), e) and f) above, and upon the additional ground that Mr Fitchett bankrolled or carried Mr Hobbs’ case in circumstances where he had denied on oath that he had done so.

[4]The applications invoke rr 47 and 48C and the Court’s inherent jurisdiction.

The background

[5]                  I gave a judgment on 21 September 2004 deciding three questions which Master Venning had, on 19 October 2000, ordered be determined before trial. In the entitulement to, and in paragraphs [3] to [5] of, my judgment, I set out the unfortunate procedural history of this proceeding. Although it is relevant to this application, I need not repeat that history here.

[6]                  My judgment also, of course, detailed what this proceeding was all about. Again, I need not repeat all that detail here. Very briefly, in this proceeding, Mr Hobbs sought to set aside, on the grounds of duress, a settlement agreement he had entered into with Mr Gilbert in Brisbane, Australia on 4 February 1999. One of the terms of that agreement required Mr Hobbs to discontinue a proceeding which he had brought against Mr Gilbert in this Court. The duress alleged by Mr Hobbs was a threat to him of physical violence if he did not settle, which Mr Hobbs claimed had been made to him by a Mr Finlayson, in the presence and hearing of Mr Gilbert and his wife, Mrs Gilbert, shortly before the settlement agreement was reached.

[7]                  A decision on the duress allegation thus involved, first, a finding as to whether the alleged threat had been made. That finding involved assessing the credibility, on the one hand, of the three witnesses (Mr Gilbert, Mrs Gilbert and Mr Finlayson) who denied that any threat had been made and, on the other hand, that of Mr Hobbs who said it had been.

[8]                  After hearing all that evidence I was left not satisfied that it was more probable than not that Mr Finlayson had made the alleged threat to Mr Hobbs. I held that Mr Hobbs had failed to discharge the onus of proof resting on him.

[9]                  I then went on to hold that the evidence indicated overwhelmingly that, even if the alleged threat had been made, it was not the threat which had influenced Mr Hobbs to agree to settle with Mr Gilbert. I held that what influenced him to settle was the certainty of losing the business relationship he had with a financial organisation called Imperial Consolidated if he did not settle. In my judgment I detailed the evidence supporting that. It included three facts which have featured in the argument on this application. The first was that, after returning to Nelson from Australia five days after entering into the settlement agreement, Mr Hobbs, after informing his solicitor of the threat, instructed him to discontinue the proceeding, and a notice of discontinuance was duly filed. The second was that Mr Hobbs then continued to operate his financial advisory business, in particular continuing to do business with Imperial Consolidated. Mr Finlayson, who had allegedly made the threat to Mr Hobbs, was the head of Imperial Consolidated’s Australian operation, and Mr Hobbs obviously needed to continue doing business with Mr Finlayson. The

third, and comparatively minor, point, was that Mr Hobbs sent flowers to Mr Finlayson’s wife about two months after the alleged threat, when a child was born to the Finlaysons.

[10]              About six weeks after I gave judgment, on 3 November 2004, Mr Hobbs discontinued this proceeding.

Jurisdiction

[11]              No jurisdictional problems arise in relation to the application against Mr Hobbs.

[12]              For Mr Fitchett, Mr Bamford accepted that the Court has jurisdiction to order Mr Fitchett personally to pay some or all of Mr Gilbert’s costs: Harley v McDonald [2002] 1 NZLR 1 (PC); Gordon v Treadwell Stacey Smith [1996] 3 NZLR 281 (CA). However, by careful reference to what the Privy Council said in Harley, the House of Lords’ subsequent observations in Medcalf v Weatherill [2002] UKHL 27 and the judgment of this Court in Baxter v RMC Group PLC & Ors O’Regan J 9.9.03, HC Auckland CP262/01, Mr Bamford sought to remind me of the limitations upon that jurisdiction, and the caution with which it should be exercised. I will return to Mr Bamford’s submissions in dealing with the application against Mr Fitchett.

[13]              For Mr Hobbs, Mr Bellamy raised two further points relevant to jurisdiction. First, he submitted that decreased/increased complexity and significance goes to categorisation and cannot be “recycled” under r48C(3)(b): Wellington International Airport Ltd v Commerce Commission (2003) 16 PRNZ 530. Secondly, he accepted that no previous indication given by the Court as to the level or incidence of costs was binding when the Court came, subsequently, to fix costs: Kolmar Investments Ltd v R Hannah & Co. Harrison J 24.11.04 HC Auckland CIV 2002 404 1861.  These points are interrelated. As to the first, the point I was attempting to make in Wellington International Airport (at paragraph [13] of my judgment) was that added complexity and significance is relevant to the categorisation of a proceeding for costs purposes, and should not then be double-counted under r48C(3)(b). Mr Bellamy’s reference to Kolmar was in the context of his acceptance that previous costs

decisions in this proceeding do not bind me in selecting an appropriate category and bands. I respectfully agree with the view Harrison J expressed in Kolmar.

Application against Mr Fitchett

[14]              Although this was not Mr Upton’s starting point, I will make it mine. The decision as to whether, and if so to what extent, Mr Fitchett should personally meet Mr Hobbs’ costs will I think make it easier to deal with the remaining aspects of the application.

[15]              To have any prospect of success in this proceeding, Mr Hobbs had to persuade me that his evidence about the threat he alleged Mr Finlayson had made to him was to be preferred to Mr Gilbert’s evidence. I do not overlook that Mrs Gilbert and Mr Finlayson might also give evidence (and in fact did). But for different reasons both those witnesses were in difficult positions, Mr Finlayson because he allegedly had threatened to kill Mr Hobbs if he did not settle with Mr Gilbert.

[16]              An obvious trial tactic for Mr Fitchett, as Mr Hobbs’ counsel, was to seek to discredit Mr Gilbert. Mr Fitchett deposes that he appreciated this from the outset  and so advised Mr Hobbs. Mr Hobbs, in his supplementary affidavit, confirms that advice.

[17]              Subject to the principles limiting evidence on collateral questions, Mr Fitchett was entitled to try to establish that Mr Gilbert had been untruthful on other occasions, as a basis for submitting that his account of what happened in Brisbane on 4 February 1999 should not be believed.

[18]Mr Fitchett was entitled to question Mr Gilbert as to:

a)The absence from his first List of Documents of 20 July 2000 of his letters dated 23 December 1998 to Messrs Brook, Finlayson and Hubbard.

b)His claim for privilege for the Hubbard letter, and his continuing failure to list the Brook letter, in his second List of Documents of 14 November 2000.

c)Why these letters were not produced for inspection until the morning of trial.

Mr Fitchett was entitled to put it to Mr Gilbert that he had wilfully sworn inaccurate lists of documents.

[19]              William Young J’s judgment in the Stewart case (referred to and briefly summarised in paragraph [84] of my judgment of 21 September 2004) provided an entrée for Mr Fitchett to attack Mr Gilbert’s credibility on another basis, this one unrelated to the facts of, or documentation relevant to, this proceeding.

[20]              Mr Upton submitted that Mr Fitchett could not properly have pursued that line of attack, and that Mr Fitchett lacked a proper basis for putting to Mr Gilbert that Mr Gilbert’s 12 January 1998 letter to Imperial Consolidated was a fabrication (created subsequently, and deliberately and carefully back-dated). There were two bases for Mr Upton’s submission:

a)By the start of the hearing before me, Mr Fitchett had further information which ought to have demonstrated to him that the 12 January 1998 letter had not been fabricated.

b)Mr Fitchett knew that Young J had not had the benefit of cross- examination of Mr Gilbert on the circumstances surrounding Mr Gilbert’s 12 January 1998.

[21]I have considered Mr Upton’s submissions. I have read and then re-read:

a)Mr Gilbert’s affidavits of 10 November 2004 in support of this costs application.

b)Mr Hobbs’ affidavits of 17 November 2004 and 10 December 2004 opposing the application.

c)Mr Fitchett’s very detailed and lengthy (105 pages including its exhibits) affidavit of 15 December 2004 opposing this application (and his further affidavit of 11 March 2005 dealing with other aspects).

[22]              Having done so, my view is that Mr Fitchett had a proper basis for putting it to Mr Gilbert, when cross-examining him in this proceeding, that he had acted dishonestly in relation to the 12 January 1998 letter, and untruthfully in his subsequent explanations about it.

[23]              I am not saying that Mr Gilbert did act dishonestly and subsequently tried to cover up that dishonesty with lies. As in my judgment (paragraph [93]), I expressly make no finding about that. This proceeding – including this costs application – was and is neither the necessary nor the appropriate forum for that.

[24]              The principles and considerations for a Court when considering whether to order a barrister personally to pay some or all of the opposing party’s costs have been fairly recently outlined by the Privy Council in Harley v McDonald [2002] 1 NZLR 1 (PC) and in the House of Lords in Medcalf v Weatherill [2003] 1 AC 120 (HL). Both those cases refer to the English Court of Appeal’s earlier judgment in Ridehalgh v Horsefield [1994] Ch 205. Medcalf needs to be read bearing in mind that the United Kingdom has a statutory “wasted costs order” regime, whereas the corresponding jurisdiction of the New Zealand High Court is inherent.

[25]              The constraints on the jurisdiction referred to in paragraph 23 of Medcalf do not apply here since Messrs Hobbs and Fitchett have, between them, informed me as to exactly what instructions the former gave the latter and as to the relevant information Mr Fitchett had when the hearing before me began. Considerations not novel but of fundamental importance, emphasised in Medcalf, are:

a)The advocate’s duty with proper competence to represent his lay client and promote and protect fearlessly and by all proper and lawful means his lay client’s best interests (paragraph 51).

b)That unpopular and seemingly unmeritorious litigants must be capable of being represented without the advocate being penalised or harassed whether by the Executive, the Judiciary or by anyone else. Similarly, situations must be avoided where the advocate’s conduct of a case is influenced not by his duty to his client but by concerns about his own self-interest (52).

c)The consequence that the advocate owes no duty to his client’s opponent; inevitably, the proper discharge by the advocate of his duty to his own client will more often than not be disadvantageous to the interests of his client’s opponent. At times, the proper discharge by the advocate of his duties to his client will be liable to bring him into conflict with the Court.  This does not alter the duty of the advocate.  It may require more courage to represent a client in the face of a hostile Court but the advocate must still be prepared to act fearlessly (53).

d)The jurisdiction must be approached with considerable caution and applied so as not to impinge on the constitutional position of the advocate and the contribution he is required to make on behalf of his client in the administration of civil justice. Unlike the position between the advocate and his own client where the potential for liability will encourage the performance of the advocate’s duty to his client and where the order would be clearly compensatory, the penal jurisdiction to make orders at the instance of and in favour of the opposing party gives rise to wholly different considerations for the advocate. The risk of such an application can, at best, only provide a distraction in the proper representation of his own client and, at worst, may cause him to put his own interests above those of his client (56).

e)The jurisdiction creates satellite litigation which too easily gets out of proportion to the litigation which has spawned it (57).

Each of these points has, to a greater or lesser extent, relevance to Mr Gilbert’s application against Mr Fitchett.

[26]              A further submission of Mr Upton’s was that Mr Fitchett was in breach of Rule 8.04 of the Rules of Professional Conduct for Barristers and Solicitors, which provides:

8.04     Rule

A practitioner must not attack a person’s reputation without good cause.

Commentary

…

(3)If necessary, a practitioner must test the instructions which have been given, by independent inquiry, before making such allegations.

…

Mr Upton’s point was that Mr Fitchett had not sought guidance from any other practitioner and ought, ethically, to have done so before attacking Mr Gilbert’s credibility and professional reputation.

[27]              I cannot regard this submission as correct. First, the obligation is in the commentary rather than the rule itself, and is therefore offered by the Law Society as practical guidance in complying with the rule, rather than as an ancillary requirement.

[28]              Secondly, the commentary suggests consultation “if necessary”. I do not think consultation was “necessary” here. There are four points. First, Mr Fitchett  was a practitioner of over 30 years standing. Consultation would be more “necessary” for a junior practitioner than for a senior one, although “running” a matter past a colleague may still be salutary, even for a senior and experienced litigator. Significantly, Mr Fitchett did seek advice from the then President of the District Law Society as to whether he should give Mr Gilbert advance warning of

what he proposed putting to him. Whilst that is not the same thing, it does indicate that Mr Fitchett was concerned to check his ethical obligations in the situation which was about to confront him in Court.

[29]              Secondly, William Young J’s judgment in Stewart provided a basis for Mr Fitchett to challenge Mr Gilbert’s credibility. Young J had expressed a view harshly critical of Mr Gilbert, and it was a judicial view at that.

[30]              Thirdly, the existence of the Stewart judgment also effectively answers Mr Upton’s contention that consultation was necessary because Nelson is a small place, and “outside” objectivity was required.

[31]              The fourth and final point is that, in answer to a question from me, Mr Fitchett said he had, on one occasion, run a difficult problem past a professional colleague. So it could not be said that he was oblivious to the need to take a “sounding” when confronted with a tricky situation or difficult judgment.

[32]              Given his instructions from Mr Hobbs, given the importance (in terms of the prospects of success) of discrediting Mr Gilbert’s evidence about the events of 4 February 1999, given the material he had to work with, in particular the Stewart judgment (and notwithstanding Mr Upton’s submission that the Judge proceeded “on an admittedly incomplete and untested basis with the findings that he made about Mr Gilbert)”, and given the Medcalf considerations, I do not consider that grounds d), e) and f) in Mr Gilbert’s costs application against Mr Fitchett are made out.  Mr  Fitchett pushed his attack on Mr Gilbert’s credibility to the permissible limits, but I do not think he went beyond them.

[33]              Mr Gilbert’s other ground for seeking costs against Mr Fitchett was that he had bankrolled or carried Mr Hobbs in circumstances where he had denied on oath that he had done so. The “bankrolling” ground, which I interpret to be an allegation of maintenance, fails on the evidence. Mr Upton did not pursue this  ground, although he did not abandon it either. Had Mr Fitchett charged in accordance with his time sheets his fee to Mr Hobbs would have been $84,000 GST exclusive. Mr Fitchett charged Mr Hobbs $26,178 GST excluded i.e. 31% of the fee indicated by

his time records. Asked to explain this, Mr Fitchett gave a very long answer, the gist of which was that he thought his performance at trial (as opposed to the interlocutory stages when he had charged full fees) was incompetent. One part of that answer  was:

If you look at things after July you see there’s very little charge. That’s because if I on the information which I had available to me could not persuade Mr Gilbert to either refuse to answer a question on the ground it would incriminate himself or to acknowledge he had lied in Dunedin, then I, in colloquial language, was a useless solicitor. I can go through if you wish the points including why I made that policy decision that in good conscience I as a professional couldn’t charge additional fees when I couldn’t get Mr Gilbert to admit that …

(My notes of evidence 7/27-34)

[34]              The questions and answers in a quite lengthy cross-examination that followed did not persuade me that Mr Fitchett had “carried” Mr Hobbs. Mr Fitchett explained in some detail why he considered he ought to have been able to get Mr Gilbert to admit that his 12 January 1998 letter was a fabrication, and why he felt unable to charge much when he failed to do so.

[35]              The allegation that Mr Fitchett “carried” or “bankrolled” Mr Hobbs through the proceeding i.e. prosecuted it knowing he would not be paid unless the proceeding succeeded, fails, and I dismiss it.

Application against Mr Hobbs

[36]              I turn now to Mr Gilbert’s application for indemnity, or failing that increased, costs against Mr Hobbs.

[37]              As Mr Upton developed them, the grounds for this application were three fold. First, Mr Upton relied on the complexity and significance of the proceeding to Mr Gilbert. He contended that this was demonstrated by the fact that the Master had ordered that specific questions be determined in a preliminary hearing, and by looking at the proceeding as a whole. This ground invoked r47(b).

[38]              Secondly, Mr Upton submitted that the proceeding should never have been brought in the first place. He submitted that the allegations of duress, repudiation  and lack of consideration were raised as afterthoughts, and never had any realistic prospect of success. This ground invoked r48C(4)(a). Mr Upton supported it by referring to the findings and decisions I had made in my judgment.

[39]              Thirdly, Mr Upton submitted that Mr Hobbs had acted improperly or unnecessarily in continuing the proceeding. This ground invoked rr48C(3)(b)(v) and (4)(a). It rested on settlement correspondence between the parties following Master Venning’s judgment of 19 October 2000. The settlement correspondence had in fact begun earlier, with a letter Mr Gilbert sent Mr Fitchett on 27 April 2000. That letter invited Mr Hobbs to withdraw the proceeding, leaving only the issue of Mr Gilbert’s costs to be resolved. That suggestion was rejected. The correspondence resumed about 17 months later with a letter from Mr Fitchett to Mr Gilbert on 9 October 2001, conveying an offer that Mr Hobbs would discontinue the proceeding if Mr Gilbert did not seek costs and agreed to the security for costs Mr Hobbs had given being returned to Mr Hobbs. There were some other conditions, not presently relevant. Mr Gilbert rejected that offer, countering with a stipulation that Mr Hobbs pay Mr Gilbert’s counsel’s actual fees and disbursements upon a discontinuance. Again, other settlement terms related to Imperial Consolidated were involved. Mr Gilbert repeated his offer to accept a discontinuance upon payment of his counsel’s actual fees and disbursements in a letter of 1 November 2001. On 27 June 2003 (i.e. shortly before the hearings before me began) Mr Fitchett conveyed to Mr Gilbert Mr Hobbs’ offer to discontinue the proceeding if costs could “lie-where-they-fall”. Mr Gilbert rejected that on 2 July 2003. He remained insistent that his costs were either agreed or fixed by the Court. In response to an inquiry from Mr Fitchett as to what costs Mr Gilbert would settle for, Mr Gilbert advised a figure of $65,000 by letter dated 7 July 2003. He mentioned that that was against actual costs then in the vicinity of $100,000. On 23 July 2003 Mr Fitchett countered with an offer to pay

$10,000 costs. Mr Gilbert rejected that on 25 July as being “totally unacceptable”. On 28 July Mr Fitchett again wrote to Mr Gilbert. His letter indicates that he was fortified by his pre-trial preparation, since it contained an offer to settle on the basis that Mr Gilbert paid Mr Hobbs $10,000 damages plus Mr Hobbs’ actual costs (which Mr Fitchett indicated were between $50,000 and $65,000 plus disbursements).

[40]              Mr Upton’s focus was on the offer Mr Gilbert had made back on 27 April 2000: an offer to accept a withdrawal of the proceeding on the basis that the only issue would be what costs Mr Hobbs should pay Mr Gilbert. Mr Upton submitted that this offer was well justified and reasonable on the basis of what Master Venning had said in his judgment. He pointed out that the offer was long before William Young J delivered his judgment in the Stewart case – on 18 December 2001.

[41]              Mr Upton then made a detailed submission that the allegations Mr Hobbs made of perjury and fabrication of documents were not justified, either in relation to the discovery documentation (referred to in paragraph [18]a) to c) above) or Mr Gilbert’s 12 January 1998 letter to Imperial Consolidated.

[42]              The essence of the submission in relation to the discovery documentation was that, given what had actually happened, it was untenable (Mr Upton referred to “an unbridgeable gap”) for Mr Hobbs to argue that Mr Gilbert had knowingly misled the Master.

[43]              The submissions relating to the 12 January 1998 letter were much more detailed. They focused on the subsequent letter of 20 March 1998 from Imperial Consolidated to Mr Gilbert which enclosed “revised” documentation for three contracts (obviously, Mr Upton submitted, to replace the contracts Mr Goodwin had signed on 12 January 1998), and on Mr Goodwin’s confirmation that he had signed the original documents on 12 January 1998. Mr Upton made the further points that the allegation of fabrication after the Stewart case in an attempt to recover Mr Gilbert’s position was never specifically put to Mr Gilbert in cross-examination, and that Mr Fitchett himself acknowledged (in his 17 November 2003 memorandum)  that Mr Gilbert’s 12 January 1998 letter was certainly in existence by April/May 1999 at the latest. I do not intend to be drawn further into these aspects. I resisted that in my judgment, and I resist it also in deciding this costs application.

[44]              Finally, Mr Upton submitted that Mr Hobbs had unduly extended the length of the hearing. He referred to the aborted hearing before Durie J on 19 September 2001 and to the “massive amount” of material Mr Hobbs had placed before me at the hearing, very little of which was referred to in any way.

[45]Mr Bellamy’s submissions for Mr Hobbs can be summarised thus:

a)2B costs are appropriate. That was the categorisation applied to interlocutory steps. Further, the case involved the application of settled principles of law to a disputed but relatively simple set of facts in respect of two causes of action involving modest sums of money. Post the Stewart judgment, Mr Bellamy accepted that this proceeding had more potential significance for Mr Gilbert and allowed that it was open to the Court to find category 3 costs appropriate from that point onward. Overall, he submitted that an increase to category 3 costs  was appropriate if I considered there was any merit in Mr Gilbert’s application.

b)Any departure from scale must be on a properly explained and principled basis: Glaister v Amalgamated Dairies Ltd (2004) 16 PRNZ 1047.

c)Neither of the grounds on which Mr Gilbert sought increased costs had been made out.  The first was an unreasonable failure to settle.  An analysis of the settlement correspondence did not bear that out. The parties had exchanged settlement offers over a considerable period. However, their positions were so far apart that  no compromise ever resulted. There had been no refusal to enter into settlement discussions, which was one of the reasons which had persuaded Harrison J to award increased costs in Kolmar Investments Ltd v R Hannah & Co. (cited above, in paragraph [13]). The second ground was that Mr Hobbs had made unjustified allegations against Mr Gilbert of perjury and fabrication of documents. This ground could only succeed if Mr Gilbert could demonstrate that the allegations made were either not supported by the facts or the attempt to introduce collateral facts was fundamentally flawed and could not succeed. Mr Gilbert cannot do that. The submissions Mr Upton has made on his behalf about the lack of a factual basis are made with the benefit of a hindsight analysis of all the relevant documentation.

William Young J’s trenchant criticisms of Mr Gilbert in his judgment in Stewart provided a legitimate basis for Mr Hobbs to allege that Mr Gilbert had perjured himself on that occasion.

d)Mr Gilbert’s claim to indemnity costs on the basis that Mr Hobbs acted improperly or unnecessarily in commencing or continuing the proceeding and because of his conduct of the case (lengthy cross- examination and introduction of a massive amount of documentation) are not made out. Mr Hobbs accepts that his case was not strong and that its success depended on the Court accepting his evidence over that of three other witnesses. However, his case was not devoid of  any factual foundation or merit, as in Smithkline & Beecham (NZ) Ltd v Minister of Health [Costs] (2002) 16 PRNZ 361 and Hawkins Construction Ltd v Chan 19.4.02 Williams J, HC Auckland CP466/98. In both those cases indemnity costs were awarded, either for the whole or part of the proceeding.

e)Mr Hobbs did not unduly prolong the hearing. Whilst he accepts that, as it turned out, the collateral evidence he adduced or cross-examined on, was not of assistance to the Court, he was entitled to call that evidence, given the importance of witness credibility, in particular that of Mr Gilbert. It is difficult for counsel, let alone a party, to  assess what the Court will make of collateral evidence, but that difficulty cannot be a reason for not calling it at all in an appropriate case.

Decision

[46]              I have a simple, but firm, view about costs in this proceeding. My view is  that the proceeding never had a realistic prospect of success and therefore ought never to have been brought. Even if Mr Hobbs had been able to overcome the initial credibility hurdle (highly unlikely), he would then have faced the further hurdle that his subsequent conduct was altogether inconsistent with the duress he alleged. In short, the proceeding was doomed to fail on the merits and it duly did.

[47]              Mr Hobbs was entitled to bring the proceeding, and to prosecute it in the determined and thorough way he did, including the detailed attempts his counsel made on his behalf to discredit Mr Gilbert. But I take the view that Mr Hobbs must accept the substantial costs consequences of the failure of those endeavours. My view makes it unnecessary to consider Mr Upton’s submission that Mr Hobbs unreasonably failed to settle the proceeding: he ought never to have brought it in the first place.

[48]              From the time Mr Gilbert filed his statement of defence denying the alleged duress, if not from the outset, it must have been evident to Mr Hobbs that Mr Gilbert would strenuously defend the proceeding. Its significance to Mr Gilbert, given the inevitable challenge to Mr Gilbert’s credibility, was obvious. Mr Gilbert  was entitled to equip himself with senior counsel to defend the proceeding, and with it his credibility and professional reputation. I consider that commencement and dogged pursual of a hopeless case (a ground similar to but not quite the same as that contained in r48C(4)(a)) provides the appropriate basis for an award of substantially increased costs against Mr Hobbs.

[49]              Mr Upton’s submissions that Mr Hobbs’ attacks on Mr Gilbert’s reputation, and his allegation that Mr Hobbs alleged perjury on Mr Gilbert’s part without good cause, were primarily criticisms directed at Mr Hobbs’ counsel, rather than Mr Hobbs himself. I accept, of course, that the evidence is that Mr Hobbs instructed Mr Fitchett to make those criticisms. But, as I have said, those attacks were at the limits of what was permissible, but did not quite overstep those limits. They certainly extended the length of the hearings, and the period they spanned.

[50]According to my note of Mr Upton’s submissions, Mr Gilbert claims:

a)Counsel’s fees of $135,920 ($118,460 invoiced, plus a further fee of

$17,460).

b)His own solicitor costs and disbursements on a 2B basis of $40,165 plus a further $9,800, a total of $49,965.

That is a grand total of $185,885. Although counsel has not yet invoiced his further fee of $17,460, I accept it. However, given the past disagreement as to Mr Gilbert’s solicitor’s costs, I cannot consider them beyond the $40,165 which has been itemised. I therefore take as Mr Gilbert’s total actual costs incurred a round

$176,000.

[51]              In my view, Mr Hobbs should meet 85%, or $149,670, of that amount, and he only narrowly escapes an order that he indemnify Mr Gilbert for the full amount.

Result

[52]              The plaintiff is to pay the defendant’s costs in the sum of $149,670. The defendant is to allow credit for the costs already paid by way of payment out to the defendant of the security for costs. In other words, it is only the net balance which is due.

[53]              The defendant’s application that Mr Fitchett personally pay his costs is dismissed. Mr Gilbert is to pay Mr Fitchett’s costs of that unsuccessful application on a 2B basis.

Solicitors:

Fletcher Vautier Moore, Nelson for the Plaintiff M J Gilbert, Nelson for the Defendant

Bamford Law, Nelson for the non-party, J M Fitchett