Lewis v JP Morgan Chase Bank N.A. (1996894)
[2020] NZHC 754
•21 April 2020
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2016-404-244
[2020] NZHC 754
BETWEEN ROBERT WADE LEWIS
Plaintiff
AND
JP MORGAN CHASE BANK N.A. (1996894)
Defendant
On the papers: At Auckland Judgment:
21 April 2020
JUDGMENT OF POWELL J
[Costs]
This judgment was delivered by me on 21 April 2020 at 3.30 pm pursuant to R 11.5 of the High Court Rules
Registrar/Deputy Registrar Date:
LEWIS v JP MORGAN CHASE BANK N.A. (1996894) [2020] NZHC 754 [21 April 2020]
[1] On 31 July 2019, I dismissed various claims by Robert Lewis, seeking redress against JP Morgan Chase Bank N.A (“JP Morgan”), his former employer, for misrepresenting his employment history to prospective employers.1 Mr Lewis claimed that JP Morgan had failed to confirm that he had been CEO of JP Morgan’s New Zealand branch in relation to various positions he had applied for at Westpac New Zealand Limited (“Westpac”), and this resulted in him failing to obtain the positions he had sought at Westpac.2
[2] In dismissing all of Mr Lewis’ claims, which included allegations JP Morgan had breached a settlement agreement with Mr Lewis, that Mr Lewis had suffered injurious falsehood as a result of JP Morgan’s failure to confirm his position as CEO,3 and that JP Morgan had made a negligent misstatement to Westpac, I held that JP Morgan had not provided any information regarding Mr Lewis’ job title to Westpac, let alone information that was inaccurate. As a result I concluded “there [could] be no doubt that the reasons for Mr Lewis being unsuccessful in his applications for each of the positions were entirely unrelated to the description of his service with JP Morgan”.4 I also held that JP Morgan was entitled to costs.5 As no agreement has been reached by the parties in regard to costs, JP Morgan has now requested that these be determined.
The position of the parties
[3] JP Morgan seeks scale costs on a 2B basis in the sum of $97,116.50. Mr Lapthorne, for JP Morgan, submits that an application for increased costs would have been justified as Mr Lewis persistently failed to comply with the High Court Rules. However, in the interest of achieving resolution and not incurring further costs, JP Morgan has limited its application to scale costs.
1 Lewis v JP Morgan Chase Bank N.A (1996894) [2019] NZHC 1788.
2 At [4].
3 At [5].
4 At [50].
5 At [53].
[4] Mr Lewis opposes the application and seeks an order that costs are to lie where they fall. He does so on two bases; first that JP Morgan contributed unnecessarily to the time and expense of the proceeding, and secondly, on account of his financial hardship.
Discussion
[5] It is well established that costs ordinarily follow the event so that the loser in civil litigation will pay the winner’s costs according to the scale set out in the High Court Rules 2016.6 Given I found each of Mr Lewis’ claims to be “entirely without foundation”7 there can be no doubt that JP Morgan was the successful party in this case and as a result is on the face of it entitled to costs in accordance with the scale set out in the High Court Rules.8
[6] I agree with Mr Lapthorne’s submission that the proceeding ought to be classified as Category 2 and costs calculated on a 2B basis, noting that the proceedings had in fact been classified as being Category 2 by Associate Judge JP Doogue on 30 May 2016. I am also satisfied the quantum provided by Mr Lapthorne, that being
$97,116.50, represents reasonable scale costs.
[7] Notwithstanding these matters, costs remain at the discretion of the Court and the key question is whether this Court ought to reduce or decline to award scale costs as a result of either or both of the matters raised by Mr Lewis. I shall consider these in turn.
Did JP Morgan contribute unnecessarily to the time and expense of the proceeding?
[8] This Court may refuse to make an order for costs or may reduce the costs otherwise payable if the party claiming costs has contributed unnecessarily to the time
6 Rules 14.2 – 14.5.
7 Lewis v JP Morgan Chase Bank N.A (1996894) [2019] NZHC 1788 at [51].
8 As the proceeding occurred between 11 February 2016 and 2 May 2019, prior to the recent amendments to sch 2 of the High Court Rules 2016 coming into force, the applicable daily recovery rate is $2,230.
or expense of the proceeding by failing without reasonable justification to admit facts.9 Mr Lewis submits that JP Morgan failed to admit the fact that it had provided a reference to Westpac. He relies in particular upon:
(a)A letter from Bell Gully dated 14 September 2010 (“the Bell Gully letter”), in which it stated that “[JP Morgan] proposes that to avoid the risk of this happening again, the parties agree the following…”. With the implication that “this” refers to the provision of a reference to Westpac;
(b)That JP Morgan during earlier litigation in the Employment Relations Authority and Employment Court did not argue that no reference had been provided to Westpac; and
(c)JP Morgan’s amended statement of defence before the Employment Court (“the amended statement of defence”) which stated “[JP Morgan’s] standard statement of service contains only a functional title and this was supplied by [JP Morgan] when requested by prospective employers of [Mr Lewis]”.
[9] Mr Lewis says that it was not until 2016 that JP Morgan first denied it had provided a reference to Westpac (following six years of litigation where it had admitted this fact) and by way of letter dated 10 May 2016 Mr Lewis made JP Morgan aware of these prior admissions. However, JP Morgan did not respond to this letter at any point, and in the High Court proceedings argued it had not provided a reference to Westpac.
Discussion
[10] The first of the matters raised by Mr Lewis does not disclose a basis for declining or reducing the amount of costs payable to JP Morgan.
9 Rule 14(f)(iii).
[11] There are three principal reasons for this. The first is that the documents relied on by Mr Lewis do not in fact constitute the type of admission he contends. In particular, although the phrase quoted by Mr Lewis does refer to the need to stop something “happening again” the relevant paragraph reads:
In relation to your allegation of disparagement by the company, [JP Morgan] has explained that omission of the “CEO” title is due to a system limitation in Mumbai which means that the system responds to a certificate of employment request in the usual way by showing the position in which you had been employed (VP sales/TS manager) but not also the regulatory position of CEO. [JP Morgan] proposes that to avoid the risk of this happening again, the parties agree to the following…
[12] There is nothing in this paragraph that is inconsistent with the evidence presented by JP Morgan at the substantive hearing, or indeed the findings in my judgment. The judgment indeed sets out in some detail the problem identified in the Bell Gully letter which was disclosed when Mr Lewis made an enquiry of Access HR in Mumbai. His experience in which he was not able to get Access HR to confirm that he had been the CEO of the JP Morgan New Zealand branch lead to subsequent action taken by JP Morgan to address the issue, as detailed in my judgment. There is however nothing in the paragraph or the letter as a whole that in any way indicates that a representation was made to Westpac or any other third party.
[13] Secondly, it is difficult to place any weight on Mr Lewis’s assertion that in both the Employment Relations Authority and the Employment Court JP Morgan “did not argue that no reference had been provided to Westpac”. The absence of an argument being run, even if correct, is not the same thing as a positive position taken by JP Morgan.
[14] The quoted paragraph of the first amended statement of defence also provides no assistance to Mr Lewis. Again, it was clear from the evidence before me that indeed JP Morgan’s “standard statement of service contains only a functional title”, however, the second part of the statement that the standard statement of service was supplied by JP Morgan “when requested by prospective employers of [Mr Lewis]” does not actually say that the statement was provided to Westpac. As the evidence made clear, JP Morgan’s standard statement of service was never requested by prospective employers of Mr Lewis and as a result it was never supplied to anyone during the
period covered by the substantive proceedings. At best therefore it can be seen that the statement while superficially accurate lacked the particular context of what had occurred in this case.
[15] Even if JP Morgan had taken the position alleged by Mr Lewis it is difficult to see how that can affect JP Morgan’s entitlement to costs at this juncture. Although a change of position was alleged by Mr Lewis’ then solicitors, their letter went on to say that in the event JP Morgan continued “to maintain that it did not provide any reference to Westpac, or any third parties, then Mr Lewis will apply to the Court for orders that evidence of conversations are admissible despite any privilege that might attach to such communications”. In the event, of course, JP Morgan ended up leading the evidence of Westpac witnesses to the effect that no representations of the type alleged by Mr Lewis had been given, and this evidence, coupled with the evidence of the relevant JP Morgan witnesses led me to conclude:10
There were in fact no statements made by JP Morgan with regard to Mr Lewis’ service.
[16] Finally, I note that the alleged change of position occurred only three months after these proceedings were filed in February 2016. To the extent that the position pleaded by JP Morgan took Mr Lewis by surprise given earlier proceedings between the parties it is clear that this issue (which did not elicit a response from JP Morgan) did not delay the proceedings. Instead the proceedings continued on for a further three years prior to trial with Mr Lewis knowing that he would have to prove his claims against JP Morgan including the representations alleged to have been made to Westpac.
Should any costs order be reduced because of financial hardship to Mr Lewis?
[17] The second ground raised by Mr Lewis is financial hardship. He says that as a result of the publicity arising from the proceedings he has not been employable in the banking sector and has not had any income for the past five years, rendering him unable to pay the costs JP Morgan is seeking. Given the lengthy litigation and the substantial cost of this to him, Mr Lewis says an award of costs against him would be
10 Lewis v JP Morgan Chase Bank N.A (1996894) [2019] NZHC 1788 at [49].
financially devastating and seeks an order that costs lie where they fall or are otherwise reduced.
Discussion
[18] This Court may decline to award costs where the party liable to pay is impecunious.11 In circumstances of impecuniosity there is a preference that evidence of limited financial means be provided in the form of a sworn affidavit.12
[19] Typically, financial hardship will not be an answer to a claim for costs.13 Only in exceptional circumstances will a party’s financial position animate the Court’s discretion to reduce costs.14 This position is driven by the fact that it is “[un] desirable for this Court to make (what will always be essentially arbitrary) adjustments to costs awards to reflect financial circumstances”.15 This position was emphasised by Muir J in Foni v Foliaki, where His Honour declined to reduce an award of costs on account of impecuniosity, and relevantly stated:16
… I consider that abatement of costs awards because of personal circumstances will not typically be justified, having regard to the other more specific provisions of the relevant rules. I consider the discretion should be reserved for exceptional cases…
…although I have considerable sympathy for the circumstances Mr Foni now finds himself in, I do not consider this an appropriate case to reduce costs by some arbitrary amount to reflect his health and finances.
I take into account also the fact that the significant breaches by the plaintiff in compliance with court orders are, as the first defendants submit, likely to have justified an application for increased costs. That these have not been sought by the defendants is itself implicit recognition of the plaintiff’s circumstances.
11 Under 14.2(g) this Court may reduce costs or decline to award costs for “some other” reason beyond those listed in r 14.2(a)-(f) where that reason is capable of justifying refusal. This catch all ground has been interpreted to include financial hardship or impecuniosity. See Craig v Keith [2017] NZHC 2664, [2017] NZFLR 899 at [23]; Chesterfields Preschools Ltd v Commissioner of Inland Revenue [2011] NZCA 640 at [7]; Simister v Tauranga Cruise Tourism Operators Association Inc [2015] NZHC 2133 at [15]; and Howard v Accident Compensation Corporation [2014] NZHC 3141.
12 Foni v Foliaki [2018] NZHC 3126 at [5].
13 At [5].
14 HA v Refugee and Protection Officer [2018] NZHC 1011 at [14].15 At [16].
16 Foni v Foliaki [2018] NZHC 3126 at [11]-[14.
[20] Mr Lewis has provided no evidence to this Court by way of affidavit or otherwise to show that he is currently experiencing or will experience financial hardship. Like Mr Foni, he simply states he is incapable of paying any award of costs, and like Muir J in that case I have a degree of sympathy for Mr Lewis. However, as was noted by Muir J, costs against impecunious plaintiffs must nevertheless be set at a meaningful level17 and an order declining to award costs would be inconsistent with this principle. It would also be inappropriate to reduce costs by some arbitrary amount to reflect financial hardship in circumstances where JP Morgan could have sought increased costs on account of Mr Lewis’ failure to comply with the High Court Rules.18 In this case there can be no doubt the way in which Mr Lewis proceeded significantly increased the costs incurred by JP Morgan defending Mr Lewis’s claims against it. As was the case in Foni, the application for scale costs, as opposed to increased costs, may be seen as sufficient recognition of Mr Lewis’ financial hardship, if any hardship in fact exists.
Conclusion
[21] Having considered carefully the matters raised by Mr Lewis I see no reason to reduce the reasonable costs sought by JP Morgan and to which it is otherwise entitled. I consider the usual rule, that the unsuccessful party is to pay costs, should apply.
Decision
[22]Mr Lewis is to pay costs to JP Morgan in the sum of $97,116.50.
Powell J
17 At [12].
18 As Mr Lapthorne submitted, Mr Lewis failed on numerous occasions to comply with the High Court Rules, including filing five separate briefs of evidence, and in regard to this application filed his submissions in response over a month late with no explanation for such conduct.
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