Isolare Investments Limited v Fetherston HC Auckland CIV 2002-404-1791

[2005] NZHC 1248

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2002-404-1791

BETWEEN  ISOLARE INVESTMENTS LIMITED

Plaintiff

AND  DENIS JOHN FETHERSTON & OR

Defendant

Hearing:         Plaintiff 6 May 2005

Defendant 12 May 2005

Appearances: P Grace for Plaintiff

S Judd for Defendant Judgment:  9 June 2005

JUDGMENT OF COURTNEY J AS TO COSTS

Solicitors:           Rice Craig, P O Box 72-440, Papakura

Ladbrooks, P O Box 37-633, Parnell

Counsel:            P Grace, P O Box 2179, Auckland

Fax: [phone] – email – [email protected] S Judd, P O Box 3320, Auckland

Fax: [phone] – email: [email protected]

ISOLARE INVESTMENTS LTD V FETHERSTON & OR HC AK CIV-2002-404-1791 [9 June 2005]

[1]    I have considered the memoranda of each counsel in relation to interest and costs.

Interest

[2]    Mr Grace, for the plaintiff has provided the following interest calculation (which Mr Judd, for the defendants agrees to):

Interest @ 15.75@ on $335,000

from 17 May to 17 August 2001       $ 17,587.50    ($4,396.87 monthly

by 4 months)

Interest @ 15.75% on $385,000 between 17 September 2001 to

17 May 2005-06-07  $266,805.00    ($6,063.75 monthly

by 44 months)

Principal  $385,000.00

Total Principal and Interest as

as at 17 May 2005  $669,392.50

=========

[3]    I accordingly award interest totalling $669,392.50 as per Mr Grace’s memorandum.

Costs

[4]    The plaintiff seeks costs as following the event. Mr Grace calculates costs in accordance with the High Court scale on a 2B basis at $55,052.50. Mr Judd does not take issue with this calculation in his memorandum.

[5]    However the plaintiff seeks increased costs under r 48C. It says that it meets the criteria for increased costs and seeks $100,000 plus disbursements. Mr Grace refers to the actual amount expended by the plaintiff on these proceedings but I do not take account of that figure. Instead I intend to deal with the matter solely by reference to the scale costs and the provision for increased costs under r 48C.

[6]    First, the plaintiff says that the nature of these proceedings are such as to warrant increased costs under r 48C(3)(a). Mr Grace asserts that the scale  of costs  on a 2B basis do not properly reflect the costs incurred in this proceeding and points, as an example, to the fact that scale costs for the summary judgment application which preceded the trial would be only $780. He says that would be  inadequate when one considers that the summary judgment application involved a total of eight affidavits with submissions prepared by plaintiff’s counsel.

[7]    The second ground for seeking increased costs is the delay and consequent costs caused by the defendant’s refusal to comply properly with directions as to trial (r 48C(3)(b)(i)). The plaintiff complains that the defendant seriously delayed the disposal of the proceedings by failing to comply with timetable orders, which increased the cost of the proceedings. Mr Grace points to various delays in relation  to discovery and the defendant’s failure to comply with timetable directions and extensive delay from the late application to joinder third parties. He points to the seriousness of the defendant’s delays as being evidenced by the “unless orders” made by Associate Judge Sargisson on 19 August 2003 and Venning J 8 February 2005.

[8]    Thirdly, the plaintiff says that the defendant’s pursuit of unreasonable or unmeritorious arguments, which continued to change up to and during trial justifies increased costs under r 48C(3)(b)(ii). The plaintiff says that its claim was a straightforward one for debt pursuant to a loan agreement and guarantee, which the defendants unnecessarily complicated through unmeritorious arguments. Mr Grace refers to the changing nature of the defences. He submits that had these defences  and counterclaims not been raised the only costs the plaintiff would have incurred would have been those relating to the summary judgment application.

[9]    Finally, the plaintiff relies on my findings that Mr Fetherston lacked credibility and was obtuse and evasive under cross-examination as bringing the case within r 48C(3)(b)(d). Mr Grace claims that this conduct unnecessarily lengthened the trial from the estimated five to nearly eight days hearing time and demonstrated Mr Fetherston’s deliberately obstructive attitude since the beginning of the proceedings.

Defendant’s Response

[10]   Mr Judd, on behalf of the defendants, submits that costs should be awarded according to scale unless there is a good reason for doing otherwise and rejects the suggestion that there are factors to justify increased costs under r 48C. He says that the case was a simple dispute of fact between three witnesses. There were no difficult questions of law and the nature of the proceedings was not such as  to require extra time to prepare or argue the case.

[11]   In relation to r 48C(3) he specifically rejects the prospect of any factors applying. He says that the defendants were entitled to advance their case that there was a wider agreement and that the money was not paid under the loan agreement. The fact that they did not succeed in that argument and even the adverse credibility findings is a common occurrence in court cases and does not take this case out of the ordinary so as to justify increased costs under r 48C.

[12]   Mr Judd says further that if there have been delays then the costs connected with the relevant applications will reimburse the plaintiff adequately. He gives as an example the costs awards of Associate Judge Sargisson and Venning J which are taken into account in the plaintiff’s schedule.

[13]   Finally, Mr Judd rejects the suggestion that Mr Fetherston’s responses in cross-examination should form the basis for any increased costs. He effectively says that Mr Grace should have asked questions in such a way as to elicit the answers sought and avoid unnecessary repetition and that Mr Fetherston should not bear the sole blame for the length of the cross-examination.

Decision on Costs

[14]   I consider that increased costs under r 48C are justified in this case. In some ways this was a straightforward case. There were no difficult legal issues. The case, as Mr Judd rightly points out, came down to a dispute of fact between three witnesses. I also accept Mr Judd’s submission that the mere fact that one party’s evidence is rejected does not mean that the party should bear increased costs.

[15]   However, Mr Fetherston’s conduct went beyond what a plaintiff ought to accept as part of the normal factual contest that exists in most cases. It went  beyond a party exercising its right to put its own case and failing. Mr Fetherston was  entitled to advance his view of the case (even though, objectively, there was no evidence to support his version). But in doing so he significantly widened the scope of the inquiry and caused the serious overrun in time.

[16]   Most of the evidence and submissions were directed towards the defendants’ assertion that there was a wider agreement and that the monies had not been paid under the loan agreement. Mr Fetherston’s determination to resist the plaintiff’s claim at all costs substantially increased the time it should have taken to resolve this dispute. I do not accept Mr Judd’s implied criticism of Mr Grace’s cross- examination. Mr Fetherston was, as I have already found, an unsatisfactory witness under cross-examination. I reminded him several times during cross-examination to focus on the issue at hand and not to stray unnecessarily beyond the question. The notes of evidence show plainly that Mr Fetherston was a difficult witness to control under cross-examination and I consider that his conduct single-handedly lengthened the trial beyond the estimated time.

[17]   For these reasons, I consider that the defendants fall within r 48C(3)(b)(ii) in taking or pursuing an unnecessary argument that lacked merit. The plaintiff seeks

$100,000 in increased costs in comparison to scale costs of $55,052.50. Although  this is a substantial figure I consider that the circumstances warrant it. I therefore award increased costs of $100,000 plus disbursements.

P Courtney J