Johnson v Auckland Council
[2013] NZHC 1148
•20 May 2013
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV-2010-404-837 [2013] NZHC 1148
BETWEEN ROSS WAYNE JOHNSON, LINDA JEAN JOHNSON AND FIRST INVESTMENT TRUST LIMITED
Plaintiffs
ANDAUCKLAND COUNCIL Defendant
AND STEPHEN ROY JOHNSTON
Hearing: On the papers at 2 May 2013
Counsel: G B Lewis and L V Chapman for the Plaintiffs S A Thodey and K M Parker for the Defendant I J Thain and C Stacey for the Third Party
Judgment: 20 May 2013
JUDGMENT OF WOODHOUSE J (Costs)
This judgment was delivered by me on 20 May 2013 at 11:30 a.m. pursuant to r 11.5 of the High Court Rules 1985.
Registrar/Deputy Registrar
……………………………………
Solicitors:
Mr G B Lewis / Ms L V Chapman, Grimshaws, Solicitors, Auckland
Mrs S A Thodey / Ms K M Parker, Heaney & Co., Solicitors, AucklandMr I Thain / Ms C Stacey, DLA Phillips Fox, Solicitors, Auckland
JOHNSON V AUCKLAND COUNCIL HC AK CIV-2010-404-837 [20 May 2013]
[1] This judgment determines costs issues arising out of the substantive judgment.1
[2] The broad positions of the parties on costs are as follows:
(a) The plaintiffs seek an order for costs against the defendant, generally on a 2B basis. The essence of the plaintiffs’ claim for costs is a submission that they succeeded.
(b)The defendant Council contends that, as between the plaintiffs and the defendant, there should be no order for costs. The reasons advanced are that there was a settlement offer before the hearing for a sum well in excess of the judgment sum, the plaintiffs succeeded on quantum as to only 30% because of the contributory negligence finding against them, and the plaintiffs did not succeed on the substantial issues that went to a hearing.
(c) The third party, Mr Johnston, having successfully defended the Council’s claim, seeks costs from the Council. The Council contends that Mr Johnston’s costs should be paid by the plaintiffs. That proposition is resisted by the plaintiffs.
The plaintiffs’ claims and the result
[3] The reason for the fundamental difference between the plaintiffs and defendant on the question of costs may be seen from a description of the background to the claim between the plaintiffs and the defendant and the result. This is conveniently provided by reproducing the introduction to the substantive judgment
in respect of the plaintiffs’ claim:
1 Johnson v Auckland Council [2013] NZHC 165.
[1] In April 2009 the plaintiffs purchased a residential property to be occupied as the home of the first two plaintiffs, Mr and Mrs Johnson, and their children.2
[2] Substantial alterations to the house had been carried out before the property was purchased by the plaintiffs. It is not in issue that this work was defective and as a result the house was not weathertight. The plaintiffs now claim from the defendant Council $1.925 million for the cost of repairs and some other sums for consequential losses. The plaintiffs contend that the Council was negligent in carrying out functions under the Building Act
1991. The Council admits that it was negligent in failing to take reasonable steps to ensure that defects in the alteration work were rectified and that the alterations complied with the Building Code, and in issuing a code compliance certificate.
[3] The principal issues that arise for determination between the plaintiffs and the Council are:
(a) Was there contributory negligence by the plaintiffs?
The Council contends that the plaintiffs, before committing themselves to the purchase, failed to make enquiries and take other steps that reasonably prudent people would have taken, generally and in the particular circumstances of this case, and this contributed significantly to any losses they have suffered. The plaintiffs’ response, in considerable measure, is that the argument for the Council amounts to a proposition that the public can no longer rely on code compliance certificates issued by councils and that this is contrary to authority binding on this Court in respect of the obligations of councils in leaky homes cases.
(b) What is the proper measure of damages?
Are the plaintiffs entitled to the cost of the repairs or should damages be assessed as the difference between either the price paid or the market value unaffected by defective construction, and the market value taking account of the defective construction?
(c) What is the quantum of the loss on the correct measure?
[4] The proceeding was issued in February 2010. The Council denied liability until 17 May 2012, being four days before the hearing commenced. Before this the plaintiffs had prepared briefs of evidence directed to the issue of liability as well as to issues of quantum and contributory negligence.
[5] The hearing had been set down for 10 days. In the event it took just over six days.3 The Council succeeded on both of the substantial issues that remained for determination between the plaintiffs and the defendant – contributory negligence and the measure of damages.
Costs as between the plaintiffs and defendant: discussion
Who succeeded?
[6] The foundation for the plaintiffs’ claim is a proposition that “the party who fails with respect to a proceeding should pay costs to the party who succeeds”. This is an accurate statement of the material part of r 14.2(a). However, this is a general principle, not an absolute rule. It is to be read in the light of all of the rules governing costs. The application of the rules has been discussed in numerous cases and the general approach does not need to be repeated here. Although in this case judgment was entered for the plaintiffs, in the circumstances that fact is not in my judgment the critical determinant of success.
[7] The Council’s contributory negligence claim was vigorously resisted by the plaintiffs on issues of fact and a substantial part of the legal submissions for the plaintiffs being that contributory negligence could not be applied in this area of the law as a matter of principle. The plaintiffs were unsuccessful on the law and on the facts. The lack of success on the facts is also relevant to the question as to who should pay Mr Johnston’s costs. The result on the contributory negligence issue was, in a technical sense, reduction of damages otherwise recoverable by the plaintiffs by
70%. I say in a “technical sense” because that is the way in which a successful claim of contributory negligence is given effect. In the present context, dealing with questions of costs, the substance of the result may be described as a conclusion that the plaintiffs were 70% to blame for the loss that arose. It is because it was their own loss that the result is given effect by the reduction.
[8] On the measure of damages the plaintiffs contended that the assessment should be on the basis of the cost of repairs. They claimed the sum of $1.925 million earlier noted. The Council contended for the alternative measure – diminution of value. The Council succeeded on the legal argument that diminution of value was the proper measure. The quantum, before reduction for contributory negligence, being $1,235,000. The overall result, after apportionment for contributory negligence, was judgment for the plaintiffs in a sum of $370,500 compared with a claim for $1,925,000. The end result, in dollar terms, was in substance the result admitted by the Council as a consequence of its admission of liability and its arguments on contributory negligence and the measure of damages. The difference in money terms between the apportionment for the plaintiffs’ responsibility of 75% as claimed by the Council and the judgment for 70% is not material. There were also some minor differences between the plaintiffs’ position and the Council’s position in quantification on a diminution in value basis, but again these differences are not material.
[9] For the plaintiffs, Mr Lewis submitted, in different ways, that success by a defendant on one or more issues, or even success by a defendant on one or more causes of action, is not a basis for refusing costs to a plaintiff who obtains a judgment. For example, there was a submission that there “is no principle by which costs are reduced because the full amount [the plaintiff] claims is not awarded”. That is correct, as a general proposition. By the same token there is no principle to the opposite effect; that is to say, there is no principle that costs should be awarded to a plaintiff obtaining judgment irrespective of the overall outcome compared with what the plaintiff was claiming.
[10] In this case there was success by the Council on issues of substance. And the Council is correct in its submission that the plaintiffs did not succeed on any of the arguments that were before the Court at the hearing. It was the Council that was entirely successful on all of the issues of consequence between the plaintiffs and the Council that were before the Court at the hearing.
Refusal or reduction of costs: rule 14.7
[11] Rule 14.7 outlines circumstances in which the Court may refuse to make an order for costs or may reduce costs. The material parts of this rule are as follows:
14.7 Refusal of, or reduction in, costs
Despite rules 14.2 to 14.5, the court may refuse to make an order for costs or may reduce the costs otherwise payable under those rules if—
…
(d) although the party claiming costs has succeeded overall, that party has failed in relation to a cause of action or issue which significantly increased the costs of the party opposing costs; or
…
(f) the party claiming costs has contributed unnecessarily to the time or expense of the proceeding or step in it by—
…
(ii) taking or pursuing an unnecessary step or an argument that lacks merit; or
(iii) failing, without reasonable justification, to admit facts, evidence, or documents, or accept a legal argument; or
…
(v) failing, without reasonable justification, to accept an offer of settlement whether in the form of an offer under rule 14.10 or some other offer to settle or dispose of the proceeding; or
(g) some other reason exists which justifies the court refusing costs or reducing costs despite the principle that the determination of costs should be predictable and expeditious.
[12] Rule 14.7(d) applies in the circumstances of this case with added force. It applies with added force because, assessing this matter in the round, it could be said that the plaintiffs have not “succeeded” overall. They were successful in establishing liability. This must be given reasonable weight. But their success on liability occurred without need to prove their claim in Court following the Council’s concession. The point in the proceeding at which the concession was made is relevant and a factor that favours the plaintiffs to an extent. But it is far from decisive.
[13] The provisions of r 14.7(f) also apply in different ways. These require noting, although I do not do so on the basis that they warrant undue emphasis. There was, for example, a legal argument for the plaintiffs on the question of contributory negligence which, with respect, was contrary to basic principle. To some extent the same might be said in relation to the legal argument on the measure of damages. Sub-paragraph (iii) does not have any direct application but, as the substantive judgment indicates, there were contentions of fact by the plaintiffs on significant issues which were not correct. Sub-paragraph (v) is relevant to the Council’s settlement offer, a matter discussed below. It is to be noted that this sub-paragraph makes provision for reduction or refusal of costs although the settlement offer may not be in a form prescribed by r 14.10.
[14] Paragraph (g) is relevant because it enables the Court to have regard to relevant circumstances which may not be expressly provided for in considering whether costs should be reduced or refused.4
Plaintiffs’ costs to establish liability
[15] One way of considering the ultimate issue is to consider a relevant counterfactual. If the Council had conceded liability at an earlier stage, and the issues of contributory negligence and the measure of damages had proceeded to trial, the Council would in my judgment have had reasonable grounds to seek to recover costs from the plaintiffs. The entry of judgment in favour of the plaintiffs would in large measure have been a formality, unrelated to matters bearing on the central issue of costs.
[16] What occurred in fact is expenditure of legal costs by the plaintiffs, prior to the hearing, which it may be inferred at least had a material influence on the Council’s decision to acknowledge liability. That cost in considerable measure is reflected in a claim by the plaintiffs’ for additional costs for preparation when
liability was still denied. Those costs, assessed on scale, amount to $15,040
4 See: Kaniere Gold Dredging Ltd v Dunedin Engineering and Steel Co Ltd (1985) 1 NZBLC 102,223 (HC); Clarence Holdings Ltd v Hall CA176/00, 14 May 2001; and Aotearoa Kiwifruit Export Ltd v Southlink Ltd (2006) 18 PRNZ 60.
compared with the total costs claimed by the plaintiffs of $99,544. The sum of
$15,040 is unlikely to represent all of the scale costs incurred by the plaintiffs on the liability question, and part of the disbursements claimed will also relate to the liability issue. The sum of $15,040 is nevertheless indicative of a conclusion, which does not have to be precise, that costs incurred by the plaintiffs in establishing liability, and in doing so without need for a hearing, fell well short of outweighing costs incurred by the Council in establishing, through to trial, the significant issues that it did succeed on.
The distinction between remedies and costs
[17] The plaintiffs submitted, in effect, that the fact that the judgment and damages was reduced by 70% should not affect the assessment of costs. It was submitted that s 3 of the Contributory Negligence Act 1947 “has no application to costs” and that the “law has long recognised the distinction between remedies and costs”. White v Auckland District Health Board was cited.5 As noted in the White case there is a full discussion of the principles and earlier authorities in Television New Zealand Ltd v Keith.6 If the plaintiffs’ point is that the remedy in favour of the Council resulting in reduction of damages by 70% cannot simply be applied to reduce any costs award in favour of the plaintiffs by 70%, then I agree with the thrust of the submission. However, the relevance of the result on a contributory negligence issue is not the precise nature of the remedy to which the Council was entitled, but the fact that they were entirely successful on an issue of substance.
Conclusion related to relative success
[18] In a case such as this, where there has been substantial success for the plaintiffs, achieved in the way already outlined, and substantial success for the Council achieved following a hearing in which the Council’s substantive contentions were vigorously resisted by the plaintiffs, the question of costs cannot be assessed in
some carefully measured arithmetical way.7
5 White v Auckland District Health Board [2008] NZCA 451, [2008] ERNZ 635.
6 Television New Zealand Ltd v Keith [1994] 2 NZLR 84 at 86-88.
7 See Packing In Ltd v Chilcott (2003) 16 PRNZ 869 (CA).
[19] Taking account of all of the matters referred to up to this point I am satisfied that there should be no award of costs or disbursements in favour of the plaintiffs against the Council.
Effect of settlement offer
[20] The discussion to this point has not taken any account of the settlement offer from the Council. If this is brought into the assessment it is in my judgment certainly sufficient to justify leaving costs where they lie if the reasons already outlined should be regarded as insufficient for that conclusion. The settlement offer must be assessed in accordance with rr 14.10, 14.11 and 14.7(f)(v). The Council offered $1.5 million in settlement of the claim. This was made on the basis of terms set out in a draft settlement agreement.
[21] The plaintiffs submitted that no effect should be given to the offer in favour of the Council on the question of costs for five reasons. These were, in summary: (1) the offer was made less than two full working days before trial; (2) it was stated to expire the next day; (3) on the day of the offer the Council changed its position by conceding liability; (4) on the same day the Council stated it would be serving revised briefs from two experts; and (5) the terms in the draft agreement were onerous.
[22] Points (3) and (4) do not provide any support for the plaintiffs’ submission on the settlement offer. Point (2) is of marginal relevance because it may readily be inferred that a request for an extension for the purpose of serious negotiations might readily have been granted.
[23] The timing of the offer – point (1) – can have relevance. The plaintiffs referred to two cases, although both involve totally different circumstances and provide no material assistance.8 In my judgment the timing of the offer does not provide grounds for ignoring the offer when considering the question of costs. It
was an offer of a significant sum of money when assessed in relation to the quantum
8 Bloor v IAG New Zealand Ltd HC Rotorua CIV-2004-463-425, 3 February 2011; Strachan v
Denbigh Property Ltd HC Palmerston North CIV-2010-454-232, 3 June 2011.
of the plaintiffs’ claim and with the plaintiffs facing the substantial arguments on contributory negligence and the measure of damages. The reality is that such offers are often made in such cases as this and not long before the scheduled commencement of the trial. The plaintiffs appear to rely simply on the timing of the offer as if that is determinative as a matter of principle. But it is not. The submission in response for the Council also notes that, notwithstanding the plaintiffs’ apparent point of principle related to the timing of the offer, the plaintiffs were able to assess the offer and make a counteroffer. There is also an air of unreality in seeking to place undue weight simply on the timing of a specific offer when it is clear that both parties, represented by experienced solicitors and counsel, would have been weighing issues for an extended period and have been weighing settlement possibilities for a reasonable period of time before the specific offer in question.
[24] The remaining point concerns the terms of the offer. It is unnecessary to summarise the terms objected to. The broad thrust of most of the terms objected to was to seek to protect the Council from new claims against the Council if $1.5 million was paid to the plaintiffs. For example, if the plaintiffs then sued other parties for losses related to construction of the building and those other parties joined the Council. The extent of such protective terms might be a matter for negotiation, but protective measures of this nature in a general sense cannot be described as unreasonable. Mrs Thodey, for the Council, noted that the terms were also standard terms that have been employed by her firm in leaky home cases with those terms being familiar to the equally experienced solicitors for the plaintiffs. The force of the plaintiffs’ submission in this regard is also significantly reduced by the fact that they made a counteroffer to settle for $1.8 million “subject to an agreement being negotiated, which would need to include some amendments to the agreement already provided”.
[25] The settlement offer, standing alone, provides substantial grounds in support of the Council’s submission that the plaintiffs’ application should be declined. It was a significant sum of money in relation to the amount actually sought by the plaintiffs and in circumstances where the plaintiffs, at the time that they received the offer, should have been well aware of the fact that there was a real risk that the Court would find that they were in substantial measure responsible for their own loss. The
latter point is not a retrospective application of the findings in the substantive judgment. At the heart of the findings is a conclusion, in essence, that the plaintiffs knowingly took a risk, or chose to ignore risks that were obvious.
[26] In monetary terms the settlement offer was substantial compared with the actual recovery and compared with costs now sought by the plaintiffs. Judgment was entered for a total of $480,000 inclusive of interest and general damages. That is less than a third of the sum offered in settlement. If the costs and disbursements sought by the plaintiffs, a sum of $255,000 including the hearing costs, are added to the judgment sum of $480,000, the total is still only half the amount the plaintiffs would have got without a hearing.
[27] When the settlement offer is combined with the matters earlier discussed, there is in my judgment more than ample grounds to decline the application.
Third party costs
[28] It is not in issue that Mr Johnston, is entitled to costs. The two issues that do arise concern quantum and whether the costs should be paid by the Council or by the plaintiffs.
Quantum
[29] Mr Johnston seeks costs on a 2B basis apart from costs for answering interrogatories where costs are sought on a 2C basis. The Council challenges quantification in three respects. The plaintiffs did not make submissions on the quantification of Mr Johnston’s costs.
[30] The first item in question is the claim under band C for answering interrogatories. This amounts to four days, compared with 1.5 days under band B. The claim is made on the grounds that there were extensive interrogatories and a comparatively large amount of time was required properly to answer them. The Council simply submitted that Mr Johnston’s answers to the interrogatories “were not unduly complicated and so are appropriately accounted for” under band B. The
submissions for Mr Johnston, particularly the reply, summarise the detail of what was involved. I am satisfied that band C is appropriate. I also note counsel’s advice that the actual time spent by Mr Johnston’s solicitors exceeded four working days.
[31] The Council opposes Mr Johnston’s claim for costs for a second counsel. This was on the basis that the “case was not so complicated that it required second counsel”. There is a detailed reply in the further memorandum of Mr Thain and Ms Stacey for Mr Johnston. I do not intend to summarise it. It satisfies me that second counsel for Mr Johnston was justified. I add that the plaintiffs and the Council both engaged two counsel and no issues have been raised in that regard. The consequences for Mr Johnston had he been held liable would have been significant.
[32] The third item challenged by the Council is a claim for preparation and hearing time based on seven days for the hearing, rather than six days. This is accepted by counsel for Mr Johnston although, as earlier noted, the hearing in fact ran into a seventh day for completion of submissions.
[33] The costs to which Mr Johnston is entitled are $62,416. He is also entitled to disbursements of $180.50.
Liability for third party costs
[34] The Council submitted that the plaintiffs should pay Mr Johnston’s costs on
the following grounds, as recorded in the written submission:
(a) The essential thrust of the plaintiffs’ claim was in substance against the third party; or alternatively
(b)The plaintiffs’ claim had the inevitable result of having to join the third party, as the scope of his role and accuracy of his advice had to be determined;
(c) The Council was unable to resolve the credibility issues between the plaintiffs and Mr Johnston without issuing a third party claim; and
(d)The third party claim and the credibility issues between the plaintiffs and the third party occupied a large proportion of the hearing time.
[35] The general rule that the party who fails should pay costs to the party who succeeds applies as between a defendant and a third party. In this case the general rule would require the Council to pay Mr Johnston’s costs. There is no rule directly covering the circumstances in which a plaintiff may be required to pay the costs of a third party. As a consequence the Court’s general discretion in r 14.1 applies with
the ultimate objective being to do justice in all of the circumstances of the case.9
[36] As a matter of principle an order can be made directing a plaintiff to pay the costs of a successful third party notwithstanding the fact that the third party was sued by the defendant, not by the plaintiff. Mr Lewis for the plaintiffs did not argue to the contrary on the point of principle.
[37] The Council referred to discussions of the issue in Money World New Zealand 2000 Ltd v KVB Kunlun New Zealand Ltd10 and Tindall v Far North District Council.11 The broad statement in the Money World case, following reference to earlier authorities, is that an unsuccessful plaintiff may be ordered to pay a third party’s costs if the plaintiff’s claim was effectively against the third party or if the plaintiff’s claim against the defendant had the inevitable result of a third party being
joined. The Council’s arguments were based on these alternatives.
[38] The Council’s first ground is that the plaintiffs’ claim was in substance against the third party. If this was intended to refer to the plaintiffs’ proceeding as a whole then I agree with the plaintiffs that the submission “is without basis and incorrect”. However, if, as seems to be more likely, this was intended to refer to the plaintiffs’ contentions in respect of contributory negligence, then there is some force in the point, but it is well removed from what is referred to in the cases. This is
discussed further below.
9 See Glaister v Amalgamated Dairies Ltd [2004] 2 NZLR 606 (CA) at [21]-[28].
10 Money World New Zealand 2000 Ltd v KVB Kunlun New Zealand Ltd HC Auckland CIV-2003-404-
2542, 23 September 2005 (per Laurenson J), at [26]-[33].
11 Tindall v Far North District Council HC Auckland CIV-2003-488-135, 25 May 2007 (per
Winkelmann J), at [32].
[39] On the alternative ground advanced by the Council, contrary to Mr Lewis’s careful submissions in reply for the plaintiffs, I am satisfied that the joinder of Mr Johnston was a justified and understandable course of action on the part of the Council. Joinder followed positive assertions by Mrs Johnson on oath in answer to interrogatories. This aspect of the case is discussed in the substantive judgment.12
The plaintiffs had asserted, in substance if not in form, that Mr Johnston had been
engaged by them to provide expert advice as to whether there were any problems in the construction of the building and that he had assured the plaintiffs that there were none. If these assertions of fact had been established there would have been, on the face of it, a sound basis for the Council to seek contribution from Mr Johnston.
[40] Subject to a question as to the consequence of the fact that liability would have rested with Mr Johnston’s company rather than Mr Johnston personally, failure by the Council to join Mr Johnston as a third party in this proceeding could have had adverse consequences for the Council in relation to any subsequent attempt to recover a contribution from Mr Johnston. To have left that issue at large, rather than by joining Mr Johnston, would have been contrary to the general expectation that all significant issues between all parties relating to claims of this nature should be dealt with in one proceeding so far as reasonably possible. This general expectation is made sufficiently clear by the substantial numbers of defendants and third parties involved in many of the leaky home cases that have been before the Courts.
[41] The conflict of evidence between Mrs Johnson and Mr Johnston was of significance in relation to the question of contributory negligence as well as the question of contribution had there been a finding that Mr Johnston was engaged to advise on the property and had given negligent advice. One of the unusual circumstances of this case, in relation to costs issues, is that the Council’s failure in its claim against Mr Johnston as the third party was material to the Council’s success in establishing that the plaintiffs were in substantial measure responsible for their own loss. One of the plaintiffs’ submissions is that this conflict of evidence could
have been resolved by Mr Johnston being called by the Council as a witness. That is
12 The general discussion in respect of the conflict of evidence between Mrs Johnson and Mr Johnston is at [107]-[125] of the substantive judgment. The point of immediate relevance, including related aspects, is discussed at [118]-[119], including the interrogatory question and the answer.
technically correct. But for reasons already noted it would not in my judgment have been a prudent course for the Council to take in terms of the procedures available in respect of potential third party liability and rights to seek a contribution. The positive assertions of the plaintiffs in respect of Mr Johnston’s responsibilities and advice were causative of the joinder of Mr Johnston and the inaccuracies in the factual assertions of the plaintiffs were causative of Mr Johnston now having an entitlement to recover costs. Of course, technically, the direct cause was the joinder of Mr Johnston by the Council. But issues of this nature are not to be resolved by unduly narrow and technical analysis.
[42] The cases noted above refer to costs of a successful third party being awarded against an unsuccessful plaintiff. As a matter of principle I am not persuaded that these general statements preclude an order that a plaintiff pay some or all of a third party’s costs when there has been judgment for the plaintiff against the defendant. The reasons for this, in the circumstances of this case, should be apparent from the discussion of the issues relating to the costs claim by the plaintiffs against the Council. In the present context – third party costs – the question of success applies to the substantial issue of contributory negligence. On this the plaintiffs were unsuccessful in seeking to resist the Council’s claim. As a consequence of substantial findings of fact leading to the contributory negligence conclusion the Council’s claim against Mr Johnston was in turn dismissed.
[43] These considerations provide a reasonable foundation for considering the possibility of an order that the plaintiffs pay at least some, if not all, of Mr Johnston’s costs. I have recorded these considerations because the answer is not clear cut. An important consideration in support of the Council’s argument is the various matters which led me to prefer the evidence of Mr Johnston on some important issues. However, there are three matters which in the end persuade me that responsibility for Mr Johnston’s costs should remain with the Council.
[44] The first is the general rule; the Council was unsuccessful in its claim against
Mr Johnston.
[45] The second is the point earlier adverted to about Mr Johnston’s company. The plaintiffs point to the conclusion in the substantive judgment to the effect that the claim against Mr Johnston would have been dismissed in any event because “the plaintiffs’ dealings, in a legal sense, were not with Mr Johnston, but with his company JCS Cost Management Ltd”.13 If the findings of fact had been against Mr Johnston, the broad factual foundation for the Council’s claim for contribution would be likely to have been established, but contribution could not have been obtained from Mr Johnston. This, at the least, substantially diminishes the weight to be
attached to the Council’s proposition that Mr Johnston’s joinder was a necessary course of action. And it lends some weight to the plaintiffs’ argument that the matter could have been dealt with, and should have been dealt with, simply by calling Mr Johnston as a witness. The position in this regard would have been different had the Council joined JCS after Mr Johnston filed a defence stating that any liability would be with JCS.
[46] The third consideration comes back to a fundamental point that cannot be ignored. This is that there was substantial negligence on the part of the Council. Notwithstanding that negligence I have concluded that the plaintiffs should bear their own costs. Bringing that fact into account, and weighing it against the fact that there was negligence on the part of the Council, in an assessment of overall justice I do not consider it would be right for the plaintiffs not only to bear their own costs but also to pay some additional costs to a third party.
Result
[47] The plaintiffs’ claim for costs and disbursements against the Council is dismissed.
[48] The Council is to pay Mr Johnston’s costs of $62,416 and disbursements of
$180.50.
Woodhouse J
13 At [189] of the substantive judgment.
3