Hyndman v Walker

[2019] NZHC 3021

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE

CIV-2015-485-709

[2019] NZHC 3021

BETWEEN

IAN BRUCE HYNDMAN

Plaintiff

AND

ROBERT BRUCE WALKER

Defendant

On the papers

Counsel:

J Moss and H M Weston for Plaintiff

R J B Fowler QC and S B McCusker for Defendant

Judgment:

20 November 2019

JUDGMENT OF THOMAS J (COSTS)

[1]    Mr Hyndman sued Mr Walker for misuse of his private information obtained from a laptop Mr Walker acquired in his role as liquidator of several companies of which Mr Henderson, an associate of Mr  Hyndman, was  formerly a director.   On   3 September 2019, I issued my decision dismissing Mr Hyndman’s claims in breach of confidence, invasion of privacy, misfeasance in public office, breach of statutory duty and contempt of court.1

[2]    I said Mr Walker was entitled to some measure of costs.2 The parties have been unable to resolve costs between themselves.

[3]    The parties agree the proceeding is appropriately categorised on a 2B basis and there is no objection to certification for second counsel. As in relation to

1      Hyndman v Walker [2019] NZHC 2188.

2 At [114].

HYNDMAN v WALKER [2019] NZHC 3021 [20 November 2019]

Mr Henderson’s costs, there is a dispute as to the proper allocation of costs between the two proceedings. For the reasons explained in my costs decision for the Henderson proceeding, I consider it appropriate to allocate 20 per cent of the hearing time to this proceeding.3 On that basis, Mr Walker’s costs on a scale 2B basis amount to $33,935.

Mr Walker also claims disbursements totalling $2,007.73.4

[4]    These costs were calculated on the basis of the daily recovery rates and time allocations in schs 2 and 3 of the High Court Rules 2016 as they stood prior to the High Court Amendment Rules 2019, which came into force on 1 August 2019, after all steps in this proceeding had been taken.5 Steps taken during the time this proceeding was transferred to the  District  Court  between  27  January  2016  and 15 December 2016 were calculated on the basis of the District Court Rules 2014.

Calderbank offers

[5]    Mr Walker seeks a 50 per cent uplift in costs on the basis that Mr Hyndman failed, without reasonable justification, to accept two offers of settlement in the form of Calderbank letters.6

[6]    On 4 April 2018, Mr Walker’s solicitors wrote to Mr Hyndman’s solicitors offering $10,000 in full and final settlement of the proceeding and all related claims that might have been brought by Mr Hyndman. The offer was made without prejudice save as to costs and was open for acceptance until 13 April 2018.

[7]    In response, on 24 April 2018, Mr Hyndman’s solicitors made a counter offer of $10,000 for damages and $5,000 plus GST for costs. The offer required Mr Walker to provide an acknowledgement of invasion of privacy in simple words to be agreed between the parties at a later stage. The offer was made without prejudice save as to costs and was open for acceptance until 1 May 2018.

3      Henderson v Walker [2019] NZHC 3020 at [4].

4      Where the disbursements relate to the hearing they are, fairly in my view, allocated 50 per cent to the Henderson proceeding and 50 per cent to the Hyndman proceeding.

5      See FM Custodians Ltd v Pati [2012] NZHC 1902 at [30]–[39].

6      High Court Rules 2016, r 14.6(3)(b)(v).

[8]    On 14 May 2018, Mr Walker’s solicitors replied that Mr Walker was prepared to agree to “the essential terms of that offer” but that it would be necessary to agree on the terms of the acknowledgment at the same time as payment terms. Mr Walker proposed to settle for a total payment of $15,750 and an acknowledgment in the following terms:

Mr Walker acknowledges that the documents provided for inspection to the defendants in the Walker v Forbes proceeding (CIV-2012-409-2486) in February 2016 included documents which were not relevant in that proceeding, and which contained information relating to Mr Hyndman. These documents ought not to have been provided to the defendants in that proceeding.

Any information about the “existence and terms” of the settlement was to be kept confidential and not disclosed to any person except to the extent necessary to allow enforcement of the settlement. Mr Hyndman could also disclose the information to a legal advisor “with a clear and legitimate need to use the information”. The offer was made without prejudice save as to costs and was open for acceptance until 21 May 2018. This offer too was rejected by Mr Hyndman.

[9]    Reasonableness is assessed as at the time the offer was made.7 As this Court outlined in Weaver v HML Nominees Ltd, there are several factors relevant to the reasonableness of an offer, including the size of the offer relative to the actual costs incurred, the amount of the claim, the amount of preparation already undertaken, whether the proceeding concerns an uncertain area of law, whether the parties were in a possession to assess the merits of the claim, the timing of the offer and the conduct of the offeror.8

[10]   Mr Fowler QC, on behalf of Mr Walker, submits the offers were reasonable in amount, contained adequate recognition of Mr Hyndman’s costs to date and were made at a time when most of the preparation for trial had not yet been undertaken.

[11]   Mr Moss submits it was reasonable for Mr Hyndman to reject Mr Walker’s Calderbank offers because they did not include sufficient acknowledgement of what Mr Hyndman perceived to be invasions of his privacy. Although Mr Hyndman failed

7      Samson v Mourant [2016] NZHC 1119 at [44].

8      Weaver v HML Nominees Ltd [2016] NZHC 473 at [31].

to meet the high legal threshold for establishing an invasion of privacy, in Mr Moss’ submission he still achieved some vindication in the sense of proving the factual position that Mr Walker was responsible for the distribution of Mr Hyndman’s private information to third parties. Mr Moss emphasises that Mr Walker’s primary defence at trial was to deny the factual position rather than to acknowledge it and defend the claim on the law.

[12]   In this regard, Mr Moss submits that, not only are increased costs inappropriate, but  Mr Hyndman  should  be  entitled  to  a reduction in  costs  under r 14.7(f)(iii) of the High Court Rules on the basis Mr Walker “contributed unnecessarily to the time or expense of the proceeding” by “failing, without reasonable justification, to admit facts, evidence, or documents”, namely that Mr Walker or his agents distributed Mr Hyndman’s information to third parties.

[13]   I take the view that Mr Walker is entitled to increased costs, but on a lesser basis than would otherwise have been the case. I consider a 20 per cent uplift is appropriate. This recognises the merit to the submissions made on behalf of both parties. Mr Hyndman’s refusal to accept the settlement offers made by Mr Walker was clearly unreasonable. Mr Hyndman could never hope to have achieved damages of

$10,000, even if he had been successful in establishing his claim at trial. The unfortunate truth is, although Mr Hyndman was clearly very upset by Mr Walker’s actions, they were fairly minor in the scheme of things. Moreover, it should have been obvious to Mr Hyndman that his claim could never pass the “highly offensive” threshold for establishing an invasion of privacy. The scope of Mr Hyndman’s private information that Mr Walker had access to was confined and did not include anything noteworthy.

[14]   It is for those reasons that I see Mr Hyndman as being in a very different position  from  Mr  Henderson,  who  was   ultimately   successful  in   his   claim. Mr Hyndman was not entitled to refuse these (frankly generous) settlement offers on the basis he sought vindication because he was not entitled to that vindication as a matter of law. Nor was Mr Hyndman in a position where he was unable to assess the merits of his claim. Although the privacy tort is still a developing area in this country,

Mr Hyndman’s claim fell so clearly short of the highly offensive threshold that its eventual failure should have been apparent from the outset.

[15]   That said, I did find that Mr Hyndman’s personal information had been distributed by agents of Mr Walker and that was a matter for which Mr Walker had to assume responsibility. I agree with Mr Moss that the failure to admit this fact contributed unnecessarily to the time and expense of the proceeding, especially in circumstances where the legal position obviously favoured Mr Walker in any event. Accordingly, Mr Walker lacked reasonable justification for defending the claim on that basis. This ought to be reflected by a reduction in the uplift Mr Walker would otherwise be entitled to for the unreasonable refusal to accept his Calderbank offers.

Particular items claimed

[16]   Mr Hyndman objects to Mr Walker claiming the full amount of five memoranda prepared for case management conferences. He says these were joint memoranda and it is therefore only appropriate for Mr Walker to claim 50 per cent of the time for those items. I agree.

[17]   Similarly, Mr Hyndman objects to Mr Walker claiming $712 for preparing and filing the interlocutory application dated 14 December 2016 to transfer the proceeding to the District Court. Mr Moss explains that he drafted and filed this memorandum and Mr Walker merely consented. Accordingly, he submits this item should be disallowed in full. I agree.

Result

[18]   Mr Hyndman is to pay Mr Walker increased costs of $38,264.40, plus disbursements of $2,007.73.

Thomas J

Solicitors:

Canterbury Legal, Christchurch for Plaintiff

Luke Cunningham Clere, Wellington for Defendant