Johnson v Jarden Custodians Limited

[2022] NZHC 1817

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

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

CIV-2021-485-508

[2022] NZHC 1817

BETWEEN

MARIA BERNADETTE JOHNSON

Plaintiff

AND

JARDEN CUSTODIANS LIMITED

First Defendant

BRYAN EWART JOHNSON
Second Defendant

DAVID HOUGHTON WALE
Third Defendant

continued….

Hearing:

(On the papers)

Counsel:

P Dalkie for the Plaintiff

R J B Fowler QC for the First to Third Defendants
C M Stevens, T Mijatov for the Fourth to Thirteenth Defendants

Judgment:

27 July 2022

JUDGMENT OF ASSOCIATE JUDGE LESTER

(Costs)

JOHNSON v JARDEN CUSTODIANS LIMITED [2022] NZHC 1817 [27 July 2022]

AND              SIMON ROSS TYLER

Fourth Defendant

RAKAU PROPERTIES LIMITED

Fifth Defendant

JOHN SPROAT

Sixth Defendant

JOHNSON INVESTMENT MANAGEMENT LIMITED

Seventh Defendant

CRAIG BRYAN JOHNSON

Eighth Defendant

TODRICK SIMON A’COURT TAYLOR

Ninth Defendant

TODRICK SIMON

A’COURT TAYLOR, NICOLA TAYLOR AND MICHAEL BRICKE,

as trustees of the T AND N TAYLOR FAMILY TRUST

Tenth Defendants

REGAN JON WOOD

Eleventh Defendant

RICHARD HUDSON

Twelfth Defendant

GRANT RICHARDSON, DAVID ANTHONY CHOTE, JOHN FISO and MICHAEL COPELAND

Thirteenth Defendants

[1]        Following the plaintiff discontinuing this proceeding, the defendants seek that costs be fixed. The plaintiff does not dispute that the defendants are entitled to costs pursuant to r 15.23 of the High Court Rules 2016 (the Rules). The issue is quantum.

[2]        In brief, the plaintiff says this proceeding should be seen as involving a claim for breach of ss 9 and 14 of the Fair Trading Act 1986 and therefore cannot be seen as complex for the purposes of costs. The plaintiff says one award of costs on a 2B basis covering all defendants would be appropriate.

[3]        The defendants say the starting point should be that, other than their application for security for costs, the proceeding should be classified as a 3C proceeding. In support of that submission, the defendants note the statement of claim ran to 98 pages, alleged 19 causes of action and involved 17 individuals or corporations who made up 13 defendants. The solicitor who issued the proceedings said, by a 3 December 2021 memorandum, an amended statement of claim, amended application for summary judgment and possibly further evidence were to be filed. The plaintiff proposed such would be filed by 24 January 2022. Ultimately, no amended pleading was filed but that such was contemplated is not consistent with the plaintiff’s proposition the claim should be viewed as a straightforward one.

[4]        The statement of claim was accompanied by an application for summary judgment supported by 623 pages of evidence. In total, the plaintiff filed seven affidavits, including two of her own; the first being in excess of 350 pages and the second being nearly 70 pages.

[5]        There is an extensive history of litigation between the plaintiff and her ex-husband, one of the defendants, of which this proceeding is but a part. While the defendants make extensive criticism of the plaintiff’s conduct in other litigation, in my view such is of little relevance to the present costs application.

[6]        On 2 February 2022, a notice of change of representation was filed with     Mr Dalkie being instructed. Mr Dalkie had, in anticipation of the notice of change of solicitor, advised defendants’ counsel on 28 January 2022 he had been instructed and was considering the  material  he  had  been  provided  with.  On  1 February 2022 Mr Dalkie advised the Court that he had been instructed to review whether the application for summary judgment or the statement of claim should be amended and in doing so acknowledged: “… the sheer volume of material …”. He also acknowledged the facts were densely stated through affidavits and exhibits and requested an extension of time to finish reviewing the claim, make any amendments and obtain instructions on the same.

[7]        On 9 February 2022, Mr Dalkie filed a further memorandum advising “We do not think a Judge or Associate Judge needs to be concerned with this proceeding at the moment”.

[8]        In a further memorandum of 16 February 2022, Mr Dalkie advised that since his instruction on 25 January 2022 through to recently, he had principally been involved in providing an opinion in respect of the proceeding.

[9]        The solicitors for the fourth to thirteenth defendants in a letter to Mr Dalkie dated 21 April 2022, referred to an oral observation made by Mr Dalkie to the Court that discontinuance of the proceeding reflected his view of the merits of the proceeding. Mr Dalkie has not suggested the 21 April 2022 letter was inaccurate in that regard.

[10]      A category 3 proceeding is one that “[b]ecause of their complexity or significance require counsel to have special skill and experience in the High Court”.1 I am satisfied that this was far from a straightforward claim alleging a breach of the Fair Trading Act as submitted by Mr Dalkie. While the statement of claim does plead breaches of the Fair Trading Act, it also pleads breaches of fiduciary duty, that the plaintiff’s ex-husband purported to sign documents for her and their children without authority, deceit and injurious falsehood. There are also allegations of forgery of documents. On any view of it, the statement of claim raised numerous complicated claims against 13 defendants. It related to events going back to 2012. The sums referred to in the claim are substantial.

[11]      I consider the defendants’ adoption of the highest cost category, 3C for steps other than their own application for security for costs, for which they adopt 3B, is appropriate and I so order.

[12]      That then raises the issue of whether there should be an uplift. The defendants seek a 100 per cent uplift. They also seek two sets of costs given that the first to third defendants were represented by a separate firm of solicitors and senior counsel.

1      High Court Rules, s 14.3(1).

Separate costs for the first to third defendants

[13]      Having reviewed all the documents on the Court file, it is apparent that no separate documents were filed on behalf of the first to third defendants. That is not to say that Mr Fowler QC, counsel for the first to third defendants, was not actively involved in the proceeding – he is recorded as attending a telephone conference. The memoranda filed on behalf of the defendants were joint memoranda on behalf of all defendants prepared by DLA Piper, counsel for the fourth to thirteenth defendants (barring one which was prepared just for the fourth to thirteenth defendants). No doubt that achieved efficiencies but, again, no doubt Mr Fowler had input into and had to review and approve the joint memorandum. However, it is clear that the “heavy lifting” in respect of the drafting of documents was undertaken by DLA Piper for the fourth to thirteenth defendants.

[14]      That said, counsel for the first to third defendants had to fully review the substantial statement of claim  along with  the  application for  summary judgment.  It seems pragmatic arrangements were made between counsel to defer the need for filing notices of opposition and affidavits in reply. The timing of those steps broadly coincided with Mr and Mrs Johnson and companies and trusts associated with them, settling other litigation between them. That was a sensible arrangement to avoid unnecessary costs, but in dealing with costs issues in the round it cannot be disputed that the voluminous material filed had to be reviewed and fully understood. There could have been no guarantee at the time the proceedings were filed that pragmatic arrangements in relation to the summary judgment application could be reached.

[15]      From my involvement in other proceedings involving some of the parties to this proceeding, I am aware that Mr Fowler represented parties in those proceedings who were also parties in this proceeding. No issue was taken in those proceedings with the appropriateness of those parties being separately represented.   I conclude   it was appropriate in this proceeding for there to be separate representation for the first to third, and fourth to thirteenth defendants. I recognise pragmatic steps were taken to avoid duplication of costs as between them, but, as I have said, it must be accepted that all counsel involved had to undertake their own review and reach their own view of the proceedings faced by their clients.

Is an uplift warranted?

[16]      The defendants’ costs calculation which, as noted, involves a mixture of 3C and 3B, results in party and party costs of $20,474. A separate award of costs is sought for the two groups of defendants, making the total starting point $40,948. An uplift of 100 per cent from that figure is sought to arrive at a total claim of $81,896. This is said to be less than actual costs.

[17]      2B costs, as suggested by the plaintiff, would be $8,804 including disbursements with Mr Dalkie submitting only one costs allowance is warranted.

[18]      Under r 14.6(3)(a) of the Rules, the Court may order a party to pay increased costs if: “the nature of the proceeding or the step in it is such that the time required by the party claiming costs would substantially exceed the time allocated under Band C” (my emphasis).

[19]      Here, the issue is not whether the particular steps that make up the costs schedule prepared by the defendants are themselves insufficient for the particular steps claimed. The total claimed by the defendants is to a large extent said be justified by the volume and complexity of the material filed at the outset. Rule 14.6(3)(a) supports the proposition that the nature of the proceeding itself is relevant to whether increased costs are appropriate.

[20]      I have already noted that notices of opposition to the application for summary judgment and evidence in reply were not filed by arrangement between counsel. That defendants’ counsel adopted a sensible costs saving approach should not now mean their clients are penalised in respect of costs. To ignore the necessary work undertaken by defendants’ counsel at the outset of the proceeding would not achieve a fair result in respect of costs. It would create a perverse incentive to parties to not adopt pragmatic costs saving arrangements out of a concern that the reality of the work they had to undertake would not be recognised in reaching a fair and reasonable costs outcome.

[21]      Ultimately, as accepted by counsel, all matters in relation to costs are at the discretion of the Court. As McGechan notes, the ultimate objective is to achieve an outcome that meets the interests of justice.2

[22]Rule 14.6(3)(d) permits the Court to order increased costs if:

Some other reason exists which justifies the Court making an order for increased costs despite the principle that the determination of costs should be predictable and expeditious.

[23]      The plaintiff must have known the filing by her of voluminous material in support of an application for summary judgment against multiple defendants would require them to take immediate steps to assess that material. The plaintiff had the benefit of the pragmatic arrangements between counsel already referred to. In my view, the circumstances warrant an uplift to reflect costs caused by the filing of the application even if the time spent in reviewing that material did not result in formal steps being taken because of arrangements between counsel.

[24]      McGechan notes that increases above 50 per cent on scale costs are unlikely given the daily recovery rate is intended to be two-thirds of the daily rate considered reasonable for the particular proceeding.3

[25]      Ultimately, the fixing of an uplift is not an exact science. That said, I adopt the guidance offered by the above passage from McGechan and fix the uplift at 50 per cent to arrive at a total costs award of $61,442 plus the filing fee of $200.

[26]      At the end of the day,  the plaintiff commenced proceedings which involved  a voluminous statement of claim against multiple defendants, pleaded multiple causes of action and sought summary judgment in respect of some of those claims supported by hundreds of pages of evidence. The claim was abandoned with plaintiff’s new

2      Robert Osborne (ed) McGechan on Procedure (online ed, Thomson Reuters) at [HR14.1.02].

3      Robert Osborne (ed), above n 2, at HR14.6.02(2)(a).

counsel apparently sharing the view of the defendants that the proceeding he had inherited was without merit. The overall costs outcome should reflect those circumstances.

Associate Judge Lester

Solicitors:

McDonald Law, Auckland (for Plaintiff)

DLA Piper, Wellington (for First to Thirteenth Defendants)

Copy to counsel:

P Dalkie, Barrister, Auckland (for Plaintiff)

R J B Fowler QC, Barrister, Wellington (for First to Thirteenth Defendants)