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Houghton v Saunders

Houghton v Saunders

Case [2019] NZHC 1362 14 June 2019

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IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE

CIV-2008-409-348

[2019] NZHC 1362

BETWEEN
ERIC MESERVE HOUGHTON

Plaintiff

AND

TIMOTHY ERNEST CORBETT SAUNDERS, SAMUEL JOHN MAGILL, JOHN MICHAEL FEENEY, CRAIG EDGEWORTH HORROCKS, PETER DAVID HUNTER, PETER THOMAS and JOAN WITHERS

First Defendants

CREDIT SUISSE PRIVATE EQUITY INCORPORATED

Second Defendant

CREDIT SUISSE FIRST BOSTON ASIAN MERCHANT PARTNERS LP

Third Defendant

Hearing: 30 May 2019

Counsel:

C R Carruthers QC and P A B Mills for plaintiff D J Cooper and S T Coupe for first defendants

J B M Smith QC, A S Olney and C J Curran for second and third defendants

Judgment:

14 June 2019

JUDGMENT OF DOBSON J

[Costs Issues]

HOUGHTON v SAUNDERS [2019] NZHC 1362 [14 June 2019]

Contents

When to reconsider stage one costs? [1]

Supreme Court direction [5]

Should stage one costs be revisited before stage two outcome is known? [8]

Disgorgement of stage one costs paid to the defendants [30]
Costs on plaintiff’s partial success at stage one [41]

Plaintiff’s stage one disbursements [46]

The ATE insurance premium [52]

Security for costs [68]
Security for adjusted outcome of stage one costs [79]

The form of security [86]

Summary [89]
Costs on the applications [91]

Directions on discovery [92]

Further case management/interlocutories [93]

Schedule A - Plaintiff’s claim for costs on stage one, per scale Schedule B - Plaintiff’s claim for stage one disbursements

When to reconsider stage one costs?

[1] Following the partial success achieved by the plaintiff in the Supreme Court, he has applied for orders requiring reimbursement by the defendants of all, or a substantial part, of the costs I ordered in favour of the defendants who had been successful before me on all issues.1 In terms of my costs order, the plaintiff paid a total of $3,780,302 (including a small interest component) to the remaining defendants.2

[2] In addition, the plaintiff has sought a new order for costs in his favour in respect of stage one, to reflect what he treats as a substantial reversal of the outcome in his favour. The amount claimed for stage one costs is some $756,000, before seeking an uplift on the relevant scale costs in the same manner as I allowed in favour of the defendants in my stage one costs judgment. In addition, the plaintiff seeks reimbursement of disbursements totalling $2,568,056. The largest and most contentious component of the disbursement claim is an amount of some
$1.924 million for an after-the-event (ATE) insurance premium.

1 Houghton v Saunders [2015] NZHC 548.
2 A further substantial amount was paid to the then fourth and fifth defendants, but those payments are not in issue as the plaintiff did not succeed on any points on appeal against them.

[3] The defendants oppose any order to disgorge any part of the costs awards paid to them for stage one. They argue that it is premature to treat the effect of the plaintiff’s partial success in the Supreme Court…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Houghton v Saunders

Details

AGLC: Houghton v Saunders [2019] NZHC 1362
Case: [2019] NZHC 1362
Decision Date: 14 June 2019

CaseChat Overview and Summary

In Houghton v Saunders, the High Court of New Zealand revisited the costs awarded in a previous trial between the plaintiff, Eric Meserve Houghton, and various defendants, including Timothy Ernest Corbett Saunders, Samuel John Magill, John Michael Feeney, Craig Edgeworth Horrocks, Peter David Hunter, Peter Thomas, and Joan Withers, as well as Credit Suisse Private Equity Incorporated, Credit Suisse First Boston Asian Merchant Partners LP, and others. The case involved a representative action in relation to claims arising from the collapse of the company Feltex Carpets Limited.

The primary issues before the court were whether the plaintiff should be entitled to a reimbursement of costs previously paid to the defendants, as well as whether the plaintiff should receive an award of costs and disbursements for stage one of the trial. The defendants opposed any reimbursement or new award of costs, arguing that the partial success achieved by the plaintiff in the Supreme Court did not warrant such a reversal of the original costs order. They also challenged the recoverability of certain disbursements claimed by the plaintiff, including an after-the-event (ATE) insurance premium.

The court found that, while it was premature to make a final determination on stage one costs until the outcome of stage two was known, it was appropriate to revisit the stage one costs at this stage due to the cash flow imperative faced by the plaintiff and the significant impact of the partial success in the Supreme Court. The court ordered the defendants to disgorge a total of $783,195.61 of the costs previously awarded to them and granted the plaintiff an award of $449,404.19 in costs and disbursements for stage one.

The court also addressed the recoverability of certain disbursements claimed by the plaintiff, concluding that the ATE insurance premium was not recoverable as it would be unfair for unsuccessful defendants to bear the costs of a successful claimant's insurance against the prospect of their losing. The court further disallowed some components of the plaintiff's claims for disbursements, such as certain accommodation and meal charges, courier charges, and witness expenses.

Finally, the court ordered the plaintiff to provide security for the defendants' costs and disbursements for stage two, as well as security for the contingency of partial repayment to the defendants of the amounts of costs originally awarded to them required to be disgorged, and the new costs entitlement made in favour of the plaintiff. The total sum for security was set at $1,650,000 for stage two costs and disbursements and $930,000 for the contingency of partial repayment.

Orders