Lee v Whangarei District Council
[2016] NZHC 560
•5 April 2016
IN THE HIGH COURT OF NEW ZEALAND WHANGAREI REGISTRY
CIV-2014-488-94 [2016] NZHC 560
BETWEEN OLIVIA WAI YEE LEE
Plaintiff
AND
WHANGAREI DISTRICT COUNCIL Defendant
ROBIN FREDERICK LITTLEJOHN Third Party
On thepapers: Appearances:
Plaintiff in person
F Divich and H Waldron for Defendant
A G Jackson for Third PartyJudgment:
5 April 2016
COSTS JUDGMENT OF ASSOCIATE JUDGE R M BELL
This judgment was delivered by me on 5 April 2016 at 11:00am
pursuant to Rule 11.5 of the High Court Rules
…………………………………………………….
Registrar/Deputy Registrar
Solicitors:
Heaney & Partners (F Divich/H Waldron) Auckland, for Defendant
Perkinson Law (S W Perkinson) Whangarei, for Third Party
Counsel:
Anthony G Jackson, Whangarei, for Third Party.
LEE v WHANGAREI DISTRICT COUNCIL [2016] NZHC 560 [5 April 2016]
[1] On 10 November 2015 I gave summary judgment to the Whangarei District Council against Ms Lee and awarded it costs. The parties have not agreed on costs. Memoranda have been filed. I decide costs on the papers, after asking for further submissions on some aspects.
[2] Ms Lee has filed an appeal against my summary judgment. She submits that I should not decide costs until the Court of Appeal has given its decision on her appeal against my judgment. The fixing of costs should not be deferred. In general, the fixing of costs should be expeditious.1 A decision on costs will not stand in the way of Ms Lee running her appeal against my judgment. It will also give her the opportunity to ask the Court of Appeal to review my costs decision, if she considers it to be wrong. Invariably there are difficulties in determining costs long after a decision has been given.
[3] Ms Lee also submits that I should not fix costs against her because of her poor financial position and because of the hardship she would suffer in having to pay costs. Such considerations are generally irrelevant under the principles in r 14.2 of the High Court Rules. The District Council submitted that the court should exercise its discretion under r 14.6 to award increased costs. On that, Ms Lee’s status as a litigant in person is to a certain extent relevant, and I take that factor into account in considering the council’s application for increased costs. But those considerations do not apply to deprive the council of costs altogether.
[4] Mr Littlejohn, the third party, appeared at the hearing of the council’s summary judgment application but did not otherwise take an active part in that application. With the failure of Ms Lee’s case against the council, the council’s third party claim against Mr Littlejohn has fallen by the wayside. Counsel for Mr Littlejohn has advised that he does not seek costs. It is accordingly not necessary
to consider where the burden of any costs claimed by the third party should fall.
1 High Court Rules, r 14.2(g).
[5] The proceeding is category 2 under r 14.3. For the calculation of scale costs under rr 14.4 and 14.5, the council claims $48,159.00. It claims category B for all steps except inspection of the plaintiff’s documents for which it claims category C. Ms Lee challenges some of the steps claimed by the council.
[6] For step 13, appearance at first and subsequent case management conferences, the council has claimed for four conferences at .4 days, at $3,184.00. Ms Lee correctly points out that the correct claim on a category B basis is .3 of a day. The amount allowed for this step is $2,388.00.
[7] The council has claimed for issuing a notice requesting further and better particulars of the statement of claim - one day at $1,990.00. Ms Lee challenges that, and suggests that step 3 “reply” applies. Schedule 3 does not have a step for such notices. Relying on r 14.5(1)(b) the council proposes step 16, “notice to answer interrogatories”. The analogy is appropriate. A claim of one day is allowed.
[8] The council has claimed separately for making its own discovery (step 20), inspecting Ms Lee’s documents (step 21), and inspecting the third party’s documents (step 21). For the last it claims band C, six days, for inspecting Ms Lee’s documents. Ms Lee complains of duplication. I accept the claim for six days to inspect Ms Lee’s documents. Ms Lee disclosed many documents that were poorly listed, poorly labelled, and provided in a muddled manner. Council’s lawyers had to make a number of requests for documents that were missing or incomplete. Carrying out discovery is always a difficult task for a lay litigant. I am satisfied that Ms Lee carried out discovery in a conscientious manner. After all, she provided many documents which the council used in its summary judgment application. But the difficulties in inspection became apparent during case management. In the circumstances of this case, I am satisfied that band C is an appropriate allowance for the time taken to inspect her documents. Equally, I am satisfied that there is no duplication for each of the steps claimed under 20 and 21.
[9] The council has claimed .4 of a day (by analogy with step 11) for filing its memorandum as to costs. That might be appropriate if the council were to recover its costs entirely. As will become apparent, I have disallowed part of the council’s claims. It is more appropriate on this costs application to allow costs to lie where they fall.
[10] Ms Lee also complained about the claim for costs for joining Mr Littlejohn, the third party. That is properly part of the costs the council was put to in the proceeding. Invariably, local authorities seek to join contractors in leaky building proceedings to share any liability. Joinder should be made early rather than
delayed.2 The council is entitled to claim for the costs of joining the third party.
[11] The council has claimed for the costs of sealing the judgment. The judgment has so far not been sealed. Ms Lee will be required to provide the Court of Appeal with a sealed copy of the judgment as part of her appeal.3 It is therefore not necessary for the council to claim it.
[12] Accordingly, the amounts I have disallowed come to $1,990.00. I fix the scale costs at $46,161.00.
Disbursements
[13] The council has claimed disbursements of $4,405.36 relating to the entire proceeding. Ms Lee does not challenge those disbursements. The council will not need to pay the costs of sealing the judgment since Ms Lee will need to seal it. The claim for a research fee properly forms part of the council’s costs of preparing for hearing. In all other respects I allow the disbursements claimed, amounting to
$4,338.11.
[14] The council applied unsuccessfully for security for costs: Lee v Whangarei District Council.4 In dismissing the application I did not make any order as to costs because Ms Lee, as the successful party, did not have a lawyer and could therefore not have costs for herself.5 For its costs, the council does not now make any claim for costs in respect of its unsuccessful security for costs applications. Nor does it concede that there should be any allowance to Ms Lee on account of her success in resisting its application.
[15] There can be asymmetric results in costs on interlocutory applications when one side has a legal representation but the other side does not. If the side with legal representation applies unsuccessfully it may be required to pay the other side’s disbursements, but not costs, even though both sides will have put in work on the application. On the other hand, if the represented party succeeds, it can obtain costs. The represented party does not suffer costs consequences for failing on an interlocutory application but the unrepresented party is made to suffer costs consequences if it fails. Here the parties had divided success on the council’s interlocutory applications.
[16] That lopsided result calls for an adjustment. After all, if two interlocutory applications were heard at the same time, with divided results, the court is likely to rule that costs should lie where they fall, even if one party does not have representation.6 It should not make any difference that the interlocutory applications were heard at different times. Accordingly, under r 14.7(g), I deduct from the costs claimed by the council costs that would be awarded to Ms Lee on the security for
costs application, if she had been legally represented. Those costs are:
4 Lee v Whangarei District Council [2014] NZHC 2989.
5 Commissioner of Inland Revenue v Chesterfield PreSchools Ltd [2010] NZCA 400, (2010) 24 NZTC 24,500 at [162].
6 See my costs decision in Robinson v Whangarei Heads Enterprises Whangarei HC CIV 2013-
488-223, 23 November 2015.
Step 23 Filing opposition to the application or security for costs
.6
Step 24
Preparation of written submissions
1.5
Step 26
Appearance at hearing
.5
That is 2.6 days at $1,990.00 per day which gives a deduction of $5,174.00. When that is taken into account, scale costs are reduced to $40,987.00.
The Council’s application for increased costs
[17] The council seeks increased costs with a 50% uplift under r 14.6(3) but does not seek indemnity costs under r 14.6(4). It says that Ms Lee acted frivolously, improperly and unnecessarily in starting and continuing with her claim against the council because the law as to the six year limitation is clear-cut. It went to great lengths to explain the law to her. There was overwhelming evidence in support of its summary judgment application. The council had additional defences, and warned Ms Lee of the cost consequences. She disregarded its suggestion that she seek professional advice. The council relies primarily on correspondence between its lawyers and Ms Lee between February and April 2015.
[18] In February 2015, the proceeding had already been under way for some time. The first case management conference was on 30 September 2014. I had heard and dismissed the council’s application for security for costs.7 The council had obtained a costs order of $9,488.00 against Ms Lee on the failure of her application to appeal out of time against the decision of the Weathertight Homes Tribunal dismissing her claim in that tribunal.8 The council and other successful respondents in that application had brought bankruptcy proceedings against Ms Lee to enforce the costs orders. In February the council’s lawyers wrote to Ms Lee offering to drop the costs order in return for her discontinuing the proceeding in this court. Ms Lee did not accept the offer. Attempts to negotiate further were rejected.
[19] The council’s lawyers wrote to Ms Lee also inviting her to discontinue the proceedings in letters of 20 March 2015, 22 March 2015, email of 23 March 2015 and letter of 17 April 2015.
[20] The letter of 20 March 2015 set out comprehensively the council’s case with particular reference to the facts why her claim was now time-barred. It also maintained that the council had not breached any duty or caused any loss, and that it would seek increased costs. It advised Ms Lee to obtain professional legal advice. It did not offer anything in return for Ms Lee abandoning the claim.
[21] The letter of 22 March 2015 explained more about the council’s defences.
[22] The letter of 17 April 2015 set out arguments as to causation and contributory negligence. It also set out costs it was likely to seek, which were higher than are claimed now.
[23] On 16 April 2015 I gave leave to the council to apply for summary judgment out of time. The council filed its summary judgment application soon afterwards.
[24] On the face of it, the council’s offer to drop its costs order in return for Ms Lee dropping her claim against the council was a better result for Ms Lee than she has got out of continuing with the claim. She paid the costs yet still lost the substantive case. The council says that that aspect comes within r 14.6(3)(b)(v). The council adds that she pursued the case unnecessarily, given that it was bound to fail.
[25] Whereas she had sometimes had legal assistance in earlier proceedings, in this case Ms Lee did not have professional legal advice and was not represented by a lawyer. While the council’s correspondence to her cannot be faulted for spelling out clearly to her the facts and the law the council would rely on, without legal advice Ms Lee did not appreciate the points the council was making. The council tried to address that difficulty by urging her to obtain legal advice.
[26] There is an explanation for Ms Lee’s failure to take legal advice. By this
stage she had been involved in many legal proceedings, costing many thousands of
dollars. I accept her explanation that she was at the end of her tether and out of funds, and had to manage by herself.
[27] There is a wider context. Even though Ms Lee began this proceeding out of time, she had started another proceeding against the council in time. That was her claim in the Weathertight Homes Tribunal. She applied for an assessor’s report on
12 August 2008. Under s 37 of the Weathertight Homes Resolution Services Act
2006 that counted as the start of a proceeding. Ms Lee brought her claim in the tribunal on 10 March 2010. She had lawyers experienced in leaky building litigation acting for her. On 6 July 2010 the tribunal issued a procedural order 3 under which it decided not to use its power under s 119 of the Weathertight Homes Resolution Services Act to transfer Ms Lee’s claim to the High Court. If it had transferred, Ms Lee could have continued the proceeding in this court without being time-barred. The tribunal also noted that the respondents intended to apply to have Ms Lee’s claim terminated under s 60(5). That provides that an owner may not apply to have an eligible claim adjudicated to the extent that the subject matter of the claim is the subject of an arbitration that has already commenced or the claimant has started proceedings in a court or a disputes tribunal.
[28] The tribunal gave a further ruling on 7 March 2013. By this stage, Ms Lee’s litigation with Composite Cladding and Signage Manufacture and Installations Ltd had come to an end, but the award in her arbitration with Rob Littlejohn Builders Ltd had not come out. The tribunal held that the case fell within s 60(5) and terminated Ms Lee’s claim.
[29] In opposition, Ms Lee’s lawyers had submitted that if the tribunal considered that the case came within s 60(5), the appropriate course was to move the proceeding to the High Court under the transfer power in s 119. The council opposed such a transfer. The tribunal accepted the council’s submission and declined to transfer on discretionary grounds.
[30] After the tribunal’s decision, Ms Lee’s lawyers wrote to her, reviewing the position. Amongst the things they advised her on rights of appeal. They also advised her that an alternative to appeal was to start a fresh proceeding in the High
Court. They did not, however, advise her as to the limitation provisions that would apply to a proceeding in this court. It is clear from the letter that Ms Lee owed her lawyers substantial fees. She did not use them after that and I infer that that was because of her financial difficulties.
[31] When Wylie J rejected her application to appeal out of time against the decision of the tribunal, he appreciated that the limitation period had expired.9
[32] The council points out that the advice Ms Lee received from her lawyers in March 2013 that she could begin a fresh proceeding in the High Court was, after all, correct. It suits the District Council now to point out that there could be no objection to Ms Lee starting a proceeding in the High Court during 2013. It suited the District Council in 2010 and 2013 to object to the tribunal proceeding being transferred to the High Court. None of the matters the tribunal took into account in declining to transfer the proceeding to the High Court have figured in this proceeding. Instead, another element has – the limitation bar, a matter that did not apply in the tribunal proceeding and would not have applied if the tribunal proceeding had been transferred to this court. In the tribunal, the council’s approach was to oppose the proceeding being heard in the tribunal, while at the same time objecting to the proceeding being transferred to this court. It apparently accepts now that there would have been no difficulty in the proceeding being transferred to this court. In my view, there is a strong element of gamesmanship in the way that the council has dealt with Ms Lee in opposing a transfer to the High Court, and yet afterwards conceding that the proceeding could properly be brought in this court.
[33] The council’s approach was attritional. Ms Lee was vulnerable to such tactics. She had exhausted her funds and could no longer afford legal advice. By opposing the transfer to the High court under s 119 of the Weathertight Homes Resolution Services Act, the council had contributed to the circumstances where Ms Lee might fail to bring a new proceeding in time.
[34] In my judgment, these factors weaken the council’s claim to increased costs.
9 Lee v Whangarei District Council [2014] NZHC 1002 at [26].
[35] I accept that by the time the council began to consider applying for summary judgment based on the limitation defence, it had spelt out clearly to Ms Lee the reason why her case would fail. Ms Lee’s ability to grasp that fully was no doubt weakened by the absence of legal advice. Nevertheless, she took a calculated risk in continuing with the case in the face of clear notice that the council was confident of success. While the council has a basis for increased costs, it should be moderated by its prior conduct in creating circumstances in which Ms Lee was more likely to drop the ball.
[36] In these circumstances, I award increased costs to the council only in respect of the summary judgment application. I increase costs on the summary judgment application by 25 per cent. The costs for the summary judgment steps (steps 22, 23,
24 and 26) come to $6,368.00. One-quarter of that is $1,592.00.
Result
[37] I calculate the council’s costs as follows:
COSTS according to scale
LESS allowance to Ms Lee on successfully resisting the security for costs application
$46,161.00
$5,174.00
$40,987.00
PLUS increased costs for failure to accept settlement offer and for unreasonably opposing the summary judgment application
PLUS disbursements
$1,592.00
$4,338.11
$5,930.11
TOTAL:
$46,917.11
[38] Accordingly Ms Lee is to pay the council costs of $42,579 plus disbursements of $4,338.11, a total of $46,917.11.
………………………............
Associate Judge R M Bell
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