Howe v Dempsey

[2013] NZHC 3243

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2012-404-3605 [2013] NZHC 3243

BETWEEN  BRUCE WILLIAM HOWE, JENNIFER MARGARET HOWE and MBT LIMITED in their capacities as trustees of ROIDON TRUST

Plaintiffs

ANDPAUL JOHN DEMPSEY Defendant

Hearing:                   On the papers

Counsel:                  H L Thompson and S J Ames for Plaintiffs

D J MacRae for Defendant

Judgment:                5 December 2013

JUDGMENT OF MILLER J (On Costs)

[1]      On 5 September 2013 I delivered judgment in this proceeding, finding for the plaintiffs in their claim for:

a)  interest at the contractual rate for late settlement ($729,437.47);

b)  damages for rates and insurance following delay ($13,935.69);  and c)  interest under the Judicature Act on that sum.

[2]      I found for the defendant on his counterclaim for return of the deposit, and gave a credit for this ($500,100) and interest under the Judicature Act against the total judgment sum he had to pay to the plaintiffs.   Overall the defendant was ordered  to  pay  the  plaintiffs  $258,135.95,  including  interest  ($243,272  without

interest).

HOWE & ORS v DEMPSEY CIV-2012-404-3605 [2013] NZHC 3243 [5 December 2013]

[3]      I indicated I expected counsel to agree on costs, subject to any Calderbank offers.  They have not been able to agree.  The plaintiffs have applied for 2B costs, while the defendant argues that costs should lie where they fall.

[4]      In the Court’s discretion,1  costs may be refused to a successful party which failed without reasonable excuse to accept an offer of settlement.2

[5]      It transpires that settlement offers were made on each side.  The defendant wrote to the plaintiffs on 23 May 2012 offering to settle for a payment of $50,000 by the plaintiffs.  The plaintiffs responded on 24 May 2013, counter-offering to settle for a payment of $250,000 by the defendant.  This figure was made up of a net loss

on resale of $179,024,3  a credit for the deposit the defendant had paid, and  an

addition of $70,976, assumedly for interest and costs in the legal proceeding.

[6]      The plaintiffs  argue  that  they were the successful  party overall,  that  the defendant filed his counterclaim very late, and that significant trial time was taken up on issues on which the defendant was ultimately unsuccessful.  They submit that the defendant would normally be entitled to a 25 per cent discount in the costs award

for  his  successful  counterclaim,4    but  he  unreasonably  refused  to  accept  the

settlement offer so should get nothing.

[7]      The defendant submits that he is entitled to 2B costs on his successful counterclaim.  The  plaintiff  was  not  the  successful  party  overall  –  the  plaintiff claimed $1,039,026, and was actually awarded much less than that. The settlement offer was made only 5 working days before the trial commenced, and at that time the parties’ costs would have been very similar.  In addition, the allowance of $70,976 for interest and costs to be awarded with the judgment was unreasonable, as it did not make allowance for the defendant’s costs or interest which would be awarded to the defendant for the counterclaim, and the actual sum of further costs and disbursements and interest incurred by the plaintiffs would only amount to $15,000.

In total, this allowance should only have been approximately $31,000. Further, the

1      High Court Rules, r 14.11(1).

2      High Court Rules, r 14.7(f)(v).

3      I note that there was once again, as noted in the judgment, an error in calculation of this figure, which should have been $178,926.24.

4      High Court Rules, r 14.16.

judgment sum exceeded the plaintiffs’ offer by just $8,135.95, a negligible sum; this means, according to counsel, that the defendant was not wrong to refuse it.

[8]      In the absence of the plaintiffs’ settlement offer, I would have found that costs should follow the event, with the plaintiffs entitled to costs for their claim and the defendant entitled to costs for his counterclaim (all on a 2B basis). This would suffice to do justice between the parties.

[9]      I do not think it particularly matters how the offer was made up relative to the judgment sum, but I do observe that it gave credit for the deposit.  It exceeded the judgment sum before interest, and was very close to that sum when interest is taken into account.   Importantly, it was made only five working days before trial, on a Friday at 4:53 pm.

[10]     Although the offer was late, and was for a sum a little less than the judgment sum, it was reasonable and I find that the defendant should have accepted it.   A modest allowance should be made by way of deduction from the costs to which the defendant would otherwise be entitled on his counterclaim.   That deduction will reflect hearing costs and some preparation costs.  I fix it at $5,000.

[11]     I do not understand counsel to disagree with one another’s costs calculations otherwise.  Each side may seal judgment for costs accordingly.  The net result is that the plaintiffs will recover $23,287.95.

[12]     The plaintiffs are awarded costs on a 2B basis for their claim.

Miller J

Solicitors:

McMahon Butterworth Thompson, Auckland for Plaintiffs

Morgan Coakle, Auckland for Defendant