Lendrum v Northern Presbytery

[2020] NZHC 325

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2019-404-001161

[2020] NZHC 325

BETWEEN

REVEREND DOUGLAS ALEXANDER LENDRUM
Plaintiff

AND

NORTHERN PRESBYTERY

Defendant

On the papers
Judgment:	28 February 2020

COSTS JUDGMENT OF HINTON J

This judgment was delivered by me on 28 February 2020 at 3:00 pm pursuant to Rule 11.5 of the High Court Rules

…………………………………………………………………… Registrar/Deputy Registrar

Counsel/Solicitors:

Integritas, Auckland

Katie Hogan, Barrister, Auckland

LENDRUM v NORTHERN PRESBYTERY [2020] NZHC 325 [28 February 2020]

Introduction

[1]        On the second day of the hearing of a number of interlocutory applications in respect of this matter on 24-25 September 2019, the parties reached a settlement and agreed to discontinue the proceeding. Both parties seek costs.

[2]        I note that the parties’ memoranda refer to the then pendency of an application for civil legal aid by Reverend Lendrum. I have not been advised of the outcome of that application, so I assume it has been resolved in the negative. I proceed on the basis that the Reverend is not an “aided person” for the purposes of the Legal Services Act 2011.

Background

[3]        Reverend Lendrum has been a minister within the Northern Presbytery of the Presbyterian Church of Aotearoa New Zealand for 18 years.

[4]        His claim was that the Northern Presbytery had breached contract in establishing a Commission to enquire into complaints received about him pursuant to the Church’s Book of Order.

[5]        The Reverend claimed the Presbytery was in breach of the rules of the constitution of the Church which was also pleaded as an abusive and improper use of its power to establish a Commission, alleged to be motivated by the desire of some within the Church to quash the Reverend’s apparently divergent views on the best interests of the congregation he leads.

[6]        The Presbytery had fixed a hearing date for the Commission of 31 August 2019 and was, as of 24 June 2019, proposing to issue a Notice of Commission to members of the church’s congregation. The Notice was to set out the matters to be investigated before the Commission and to request information be provided. The Notice stated the Commission would consider:

(a)inadequacy of any kind on the part of the Minister, Rev Lendrum; or

(b)an unacceptably low standard of performance of the responsibilities of Rev Lendrum; and/or

(c)an incompatibility between Rev Lendrum and the congregation, or a sufficiently large proportion of it, such as to seriously affect the harmony of the congregation, or the congregation’s ability to perform its functions as set out in Chapter 5 of the Book of Order.

[7]        The Notice makes it clear that the plaintiff’s position within the Church could potentially be terminated as an ultimate result of the Commission process.

[8]        On 24 June 2019, Davison J granted an ‘interim interim’ injunction preserving Reverend Lendrum’s position pending a two-day hearing of the application for interim injunctive relief. The Judge considered that the Reverend would be prejudiced if the Notice were distributed, given the matters canvassed in the document.1

[9]        The Reverend’s application for interim relief fell to be considered before me at the hearing on 24-25 September 2019, together with interlocutory applications by Northern Presbytery. Altogether I considered 5 interlocutory applications being:

(a)the Reverend’s interim relief application;

(b)the Presbytery’s application to be struck out as a defendant;

(c)the Reverend’s application to join the Presbytery’s Executive Officer as a defendant (which the Presbytery did not oppose);

(d)the Reverend’s application to join the authors of the complaint letters in the event the Presbytery was struck out (which was opposed); and

(e)Northern Presbytery’s application for security for costs should the Reverend be granted legal aid.

[10]      At the outset, I adjourned by consent the hearing of the security for costs application, pending final determination of the Reverend’s application for legal aid.

1      The Judge’s minute did not address the question of costs on the ‘interim interim’ relief application. So far as I can determine, the question has not been raised for determination.

[11]      The hearing commenced with the Presbytery’s application to be struck out as a defendant. Shortly after the luncheon adjournment on the first day, counsel for the Reverend, Mr Pang, withdrew his opposition to that application.

[12]      The hearing then turned to the Reverend’s interim injunction application, with Mr Pang making submissions on the plaintiff’s behalf until shortly after court resumed on 25 September 2019, the second day of hearing.

[13]      I then engaged in a conversation with counsel about the possibility of the Reverend’s using internal processes under the Church’s Book of Order to review the decision establishing the Commission, instead of continuing with the present proceeding. Mr Pang requested a brief adjournment so as to take instructions. Following a 90-minute adjournment, settlement was reached.

[14]      I recorded the terms of the settlement in my Minute of 25 September 2019 as follows:

The defendant waives the time limit in r 8.4(2)(c) of the Book of Order for the plaintiff to request a review by the Northern Presbytery Council of the decision […] to establish the Commission.

The timeframe for requesting a review is extended to 20 working days from today […]

Reverend Lendrum has a further right of appeal under r 14.23 from the decision of the Northern Presbytery Council to the General Assembly on the same question of establishment of a Commission.

The Commission proceeding itself will be stayed pending resolution of the internal review and appeal processes.

This proceeding is discontinued under rr 15.19 and 15.20 of the High Court Rules 2016. Leave is granted to discontinue under r 15.20.

The injunction issued by Davison J on 24 June 2019 is lifted.

[15]At the parties’ request, I also reserved the question of costs.

Parties’ Positions as to Costs and Submissions

[16]      The Presbytery, casting itself as the successful party, relies on r 14.2(1)(a) of the High Court Rules 2016 to submit that it is presumptively entitled to costs. It relies further on r 15.23, which provides that:

Unless the defendant otherwise agrees or the court otherwise orders, a plaintiff who discontinues a proceeding against a defendant must pay costs to the defendant of and incidental to the proceeding up to and including the discontinuance.

[17]The Presbytery calculates its entitlement to scale costs on a 2B basis as

$19,252. As it took no steps in respect of the substantive claim, its claim is limited to the interlocutory applications. Also, the Presbytery does not seek costs in respect of the interlocutory applications that it did not oppose and that were adjourned, namely the application to join the Executive Officer and its own application for security for costs.

[18]      Furthermore, as is proper, the Presbytery has identified that, adjusting for GST,2 its actual legal costs were in fact only $17,313.48. As the award of costs cannot generally exceed the costs actually incurred by the party claiming costs,3 the Presbytery confines its claim to this amount, together with disbursements (excluding GST) of $518.50, for a total claim of $17,831.98.

[19]      Reverend Lendrum also seeks an award of costs. On a 2B basis, his claimed costs according to scale are $22,418.20, plus unspecified disbursements. This does include steps in the substantive proceeding. Again, as recovery cannot exceed actual costs, his counsel concedes his proper claim is limited to $13,906.53, together with filing fees. This sum reflects Mr Pang’s agreeing to act for the Reverend at a discounted rate close to the legal aid provider rate.

[20]      The Reverend submits r 15.23 is not engaged and does not aid the Presbytery, relying on MacKenzie J’s comments in Nga v Pauatahanui GS Ltd.4 He further

2      This being the correct approach. See A C Beck and others McGechan on Civil Procedure (looseleaf ed, Thomson Reuters), citing New Zealand Venue and Event Management Ltd v Worldwide NZ LLC [2016] NZCA 282, (2016) 27 NZTC 22-058 as to the GST treatment of costs.

3      High Court Rules 2016, r 14.2(1)(f).

4 [2014] NZHC 3397.

submits the Court should have regard to the defendant’s conduct in precipitating the litigation, and see that as a good reason to grant him costs.5 The conduct he relies on is the Presbytery’s alleged failure to advise the Reverend of his rights under r 8.4 of the Church’s Book of Order to seek review of the Commission decision. This rule, he says, was only promulgated in March 2019 and had not yet been incorporated into the Book of Order when this proceeding was initiated, having rather been published in an annexure to the Book referred to as the Supplementary Provisions.

[21]      The Reverend says the Presbytery did not advise him of his right to seek a review during any of the correspondence precipitating the hearing until well after he was out of time to use that review right. This failure to advise, Mr Pang submits, was part of the Church’s continued misuse of procedures under its Book of Order against the Reverend, grounding a costs award in itself.6 Mr Pang submits that it was reasonable for the Reverend to bring this proceeding in the circumstances as he thought them to be. Until the Reverend became aware of the internal review and appeal procedures, and the Church agreed to allow him an extension of time in using these procedures, he believed that this proceeding was his only source of redress.

[22]      The Presbytery submits that the Reverend’s claimed lack of awareness should not impact on the position as to costs. It says the fact that the Presbytery did not expressly cite r 8.4(2)(c) and the Supplementary Provisions to the Reverend in early correspondence is of no significance. The Reverend’s ignorance of his rights under the Book of Order is not an excuse for his failing to pursue appropriate remedies.

[23]      In any case, the Presbytery says, the Book of Order and its Supplementary Provisions were exhibited to the Reverend’s 20 June 2019 affidavit filed in his application for ‘interim interim’ relief, he acknowledged his awareness of the Church’s procedures in that affidavit, he has extensive knowledge of such from his experience in church governance and, on 28 June 2019, the Presbytery wrote advising him of his internal remedies. Similar references were found in documents and affidavits filed on 5 July 2019.

5      Relying on Patel v Macleod [2017] NZHC 990.

6      McDonald v Burns [1940] SC 376 (IH) at 383.

[24]      Mr Pang submits as an alternative that if no clear winner and loser can be established, there ought to be no award of costs at all.

Evaluation

Is the Presbytery entitled to costs on a discontinuance under r 15.23?

[25]      The first question is whether r 15.23 is in fact engaged. The provision, as noted, states that a discontinuing plaintiff must, unless the Court otherwise orders, or the defendant otherwise agrees, “pay costs to the defendant of and incidental to the proceeding up to and including the discontinuance.”

[26]      The Reverend, adopting the language of McKenzie J in Nga v Pauatahanui GS Ltd,7 says that this was not a unilateral discontinuance, but rather that his discontinuance was the formal mechanism by which the settlement reached between the parties during the hearing was given effect. I take this submission to be that, despite the plain language of r 15.23 appearing to apply to all discontinuances, the presumption under that rule should not apply where the discontinuance was not unilateral.

[27]      That is certainly the outcome suggested by Nga. There, shortly before the hearing, counsel filed a joint memorandum advising the parties had agreed on terms obviating the need for a hearing and proposing consent orders to dispose of the proceeding. The Judge endorsed the memorandum “orders by consent accordingly”. Costs were reserved. The respondent then sought costs on the basis the claim had been dismissed, relying on r 15.23 and claiming it was to be treated as the successful party. The applicants opposed the award of costs. The Judge said:

[6] Rule 15.23 is not applicable. That rule applies to a unilateral discontinuance by the plaintiff. That is not the case here. The applicants’ proceedings were dismissed by a consent order. It is often the case, when litigation is settled, that the formal mechanism used to dispose of the proceedings is a discontinuance, or a consent order dismissing the proceedings. When those mechanisms are used, it is not generally appropriate to treat the party whose proceeding is discontinued or dismissed as an unsuccessful party, for costs purposes. The parties should, if costs are in issue, resolve those as part of the settlement.

7      Nga v Pauatahanui GS Ltd [2014] NZHC 3397.

[28]      That decision is not binding on this Court as a matter of authority. However, it appears McKenzie J’s view, at least as to the non-application of r 15.23, is consistent with that taken by other Judges of this Court.8 Given the desirability of the award of costs being predictable and expeditious,9 I will not depart from this apparent trend of authority absent some good reason to the contrary. I see no such reason and none has been advanced in submissions.

[29]      The Presbytery submits rather that Nga is distinguishable on the basis that the discontinuance was unilateral, the Presbytery’s only concession being to waive the time limit preventing the Reverend from making use of internal procedures. The resulting stay of the Commission that was also ordered operated automatically in accordance with the Book of Order, not as a result of a further concession by the Presbytery.

[30]      That, I think, is to privilege form over substance. Whatever the strength of the Reverend’s case, and I return to that below, it is clear that the Reverend’s discontinuances were conditioned on the Presbytery’s agreement to waive the relevant time limit under the Book of Order. It follows that, in the circumstances, applying the above approach, I consider that the presumption under r 15.23 should not apply.

Is there a presumption against costs following a settlement?

[31]That is not the end of the matter, however. Where the presumption under r

15.23 does not apply, there is no presumption that there will instead be no order as to costs in cases where a dispute has settled except as to costs. It would be odd if that were the case especially where parties have expressly reserved costs.

[32]      The “over-riding objective is to do justice between the parties without incurring unnecessary Court time and consequent additional costs.”10 For this reason, where it is obvious who would have won and lost had the matter been taken to conclusion, costs

8      See Kroma Colour Prints Ltd v Tridonicatco NZ Ltd [2008] NZCA 150, (2008) 18 PRNZ 973; FM Custodians Ltd v Pati [2012] NZHC 1902 at [10]-[12]; Opus International Consultants Ltd v Colac Bay Vision Ltd [2015] NZHC 1782 at [20]-[24]; and Yarrall v Earthquake Commission [2016] NZCA 517, (2016) 23 PRNZ 765 at [12].

9      High Court Rules 2016, r 14.2(1)(g).

10 Nga, above n 11, at [8].

can be awarded on ordinary principles. Where, however, the position is less clear, and the circumstances are such that it is difficult to assess the merits, it is necessary to accept that the Court has no proper basis on which to decide the issue and must “accept that it is in not a position to make an order about costs at all.”11

[33]      The issue is not an easy one for the Courts. Practically, as the English Court of Appeal has recognised:12

The truth often is that neither side has won or lost. It is also true that a considerable number of cases are settled by the parties in the belief that the terms of settlement represent a victory, or at least a vindication of their position, in the litigation, or in the belief that they have not lost; or, at the very least, in the belief that the other side has not won.

Merits of the parties’ positions

[34]      The Reverend relies on an assertion of having been dealt with sharply by the Presbytery, on the basis of which he says the merits were on his side. He says it was reasonable, at least until the hearing, for him to have come to the Court before making use of the Church’s internal processes.

[35]      I accept the precise procedure that has in the end been used was only newly created at the time the Reverend issued proceedings and was not specifically referred to by the Presbytery in correspondence. However I do not accept the Reverend’s submission. By his own evidence he is a highly experienced member of the Church with experience in governance and conflict resolution procedures within the Church. He adverts to the relevant procedure in his early affidavit evidence.

[36]      I had real doubt as to the merits of the Reverend’s case as pleaded.13 However, I do not consider that I would have a proper basis on which to properly discern the merits of the substantive proceeding which affects the question of costs on the injunction application. The proceeding was resolved at a reasonably early point. I note the Reverend obtained an ‘interim interim’ injunction pending the hearing before me but the applicable threshold there required him to disclose only an arguable case.

11 At [10].

12     BCT Software, above n 14, at [5], adopted Nga, above n 11, at [9].

13     I make no comment whatsoever on his case on review under the Book of Order.

This is a deliberately low obstacle to surmount. The outcome of that application does not assist in assessing the merits of the substantive proceeding.

[37]      I am also mindful of the general policy of the Courts in promoting settlement. While the proceeding settled at a fairly late stage during the interlocutory hearing, the settlement saved the parties a not insubstantial amount of time, effort, and importantly, expense.

[38]      Weighing these factors I decline to make any costs order in respect of the injunction application (including the ‘interim interim’ application).

[39]      The application to join the Executive Officer was un-opposed and the application to join the authors of the complaints as defendants was unlikely to prevail but had taken little time. I have decided to also make no award of costs in respect of those applications.

[40]      Turning to the Presbytery’s application to be struck out as a defendant I consider it is appropriate that the Presbytery should be awarded costs on that application. During the course of the hearing, and before the settlement discussion, the plaintiff withdrew its opposition. While, of course, the Reverend may have elected to do so for any number of reasons, I am sufficiently satisfied it was because the Presbytery’s application was irresistible and, accordingly, that the Presbytery would have prevailed if judgment had issued. That matter had been the subject of full submissions.

[41]      Accordingly, I award the Presbytery costs on a 2B basis in respect of the filing of that application and the preparation of submissions. I also attribute 0.25 days of hearing time to that matter.  This produces an award of $4,800.43.14    I also award

14 I note that the application was filed on 15 July 2019, before the commencement of the High Court Amendment Rules 2019 in force from 1 August 2019. As the Amendment Rules are not retrospective in effect, the applicable daily recovery rate in result of the 0.6 days allocated to that step is $2230. The submissions were filed, and I deem them to have been prepared, and the hearing took place, after 1 August 2019.  Accordingly, the daily recovery rate in respect of the

1.75 days I have allocated to those steps is that applicable under the Amendment Rules – $2390.

disbursements of $434.78 related solely to the filing fee for that application,15 for a total of $5,235.21 on that application.

Result

[42]      The plaintiff’s application for costs is dismissed, while the defendant’s application for costs is allowed in part.

[43]      On the basis that the plaintiff is not an “aided person” for the purposes of the Legal Services Act 2011, he is to pay the defendant Northern Presbytery costs and disbursements in the amount of $5,235.21.

Hinton J

15 These amounts have been stated exclusive of GST in order to maintain consistency with the approach adopted by the Presbytery in submissions. Inclusive of GST, I expressly clarify, the amount awarded would be $5,955.27.