Mahon v Edney
[2018] NZHC 1856
•25 July 2018
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2017-404-993
[2018] NZHC 1856
BETWEEN NEVILLE CHRISTOPHER MAHON
First Plaintiff
CORONATION ROAD HOLDINGS LIMITED
Second PlaintiffAND
TIMOTHY LAIRD EDNEY
First Defendant
THE STATION AT WAITIRI LIMITED
Second Defendant
Hearing: On the papers Counsel:
D J Cooper and A M Glenie for Plaintiffs
D J Chisholm QC and M J W Lenihan for Defendants
Judgment:
25 July 2018
COSTS JUDGMENT OF WHATA J
This judgment was delivered by me on 25 July 2018 at 3.00 pm, pursuant to Rule 11.5 of the High Court Rules.
Registrar/Deputy Registrar Date: ………………………….
Solicitors: Anderson Creagh Lai Limited, Auckland
Brown Partners, Auckland
MAHON v EDNEY [2018] NZHC 1856 [25 July 2018]
[1] In my judgment in this matter, the defendants succeeded in defending a claim to properties, valued at $8 million – $11 million based on an alleged warehousing arrangement.1 In short, I rejected that the defendants agreed to return the properties on specified terms. I proposed costs in favour of the defendants on a 2B basis, less 10 per cent to account for Mr Mahon’s success on a quantum meruit claim.
[2] The parties have now filed submissions. The defendants seek increased costs on a standard 2B costs award of $103,251.98, to a global figure of $150,000. They seek the increase because of Calderbank offers made by the defendants prior to trial. The plaintiffs accept scale costs, except in relation to (a), the request for particulars, and (b), the quantum of disbursements claimed by the defendants’ experts. The plaintiffs claim that the rejection of the Calderbank offer was not unreasonable given, among other things, full discovery about a sale of the affected properties had not been made at the time of the offer.
[3]I deal first with the Calderbank offers. There were two of them, one made on
21 September 2017 which offered $100,000 to the plaintiffs in full and final settlement. The second, dated 2 May 2018, offered “to settle all issues in the proceeding on the basis that both parties walk away from the proceeding with no issue to costs”. I can deal with this aspect summarily. As recently noted by Gordon J in Xiao v Sun:2
[25] Under r 14.6(3)(b)(v), the Court may order a party to pay increased costs if that party failed, without reasonable justification, to accept an offer of settlement. The reasonableness of a party's rejection of an offer must be assessed at the time the offer was made and declined, not against the subsequent result. It will depend on the circumstances of the case, including the size and timing of the offer, the reasonable expectations of the party refusing the offer and on the parties' ability, at the time of the offer, to assess the merits of the case.
[4] In my view, it was not unreasonable for the plaintiffs to reject a Calderbank offer of $100,000 or on a no costs basis in relation to claims for the return of properties valued at about $8 million – $11 million. This was not, for example, a simple contract interpretation case or about quantification of liability. Substantive issues of fact about
1 Mahon v Edney [2018] NZHC 1473.
2 Xiao v Sun [2018] NZHC 1334 at [25].
what was agreed had to be resolved which were not clear-cut and the plaintiffs were reasonably entitled to go to trial in the face of an offer representing only about 0.0125% - 0.009% of the value of its claim.
[5]I allow for the attendances in relation to the request for particulars.
[6] Turning to disbursements, a successful party is entitled to experts’ costs, provided, among other things, the costs are reasonable in amount.3
[7]In the present case, two experts’ fees are disputed:
(a)Mr Burns’ expert witness fee of $17,380; and
(b)Mr Jarvis’ expert witness fee of $28,843.48.
[8] No supporting affidavits have been provided in relation to the reasonableness of claims of this scale and I have considered whether I should afford the parties an opportunity to file evidence as to the reasonableness of the costs claimed. But I am satisfied I should proceed to judgment on costs based on the submissions. In short, the unreasonableness of the disbursements claimed is tolerably clear.
[9] Mr Burns simply provided invoices recording 44 hours of attendance at an agreed rate of $395 per hour. There is no detailed breakdown of attendances. I agree with the plaintiffs’ submissions that, while helpful, the content of his evidence, on the face of it, did not justify a consultancy rate of $395 per hour or in fact 44 hours work. Rather, it was generic evidence dealing with commercial use of warehousing arrangements.
[10] Mr Jarvis provided a summary of his attendances. There is no dispute about the need for his work. However, the quantum of the fees overall appears high. In this regard, I note that Mr Collings, who provided valuation evidence for the plaintiffs, rendered invoices in the amount of $12,894.96. I accept, however, the defendants’ point that the evidence needed to be more comprehensive than Mr Colling’s evidence.
3 High Court Rules 2016, r 14.12(2)(d).
[11] In those circumstances, I reduce the disbursement award in respect of Mr Burns by 50 per cent and Mr Jarvis by 25 per cent. I accept there is a level of arbitrariness to this. But I consider I should adopt a pragmatic approach to ensure justice between the parties.4
[12] Finally, the plaintiffs submit that I should simply make a costs and disbursements order of $75,000. I am not satisfied that is appropriate. Rather, as per my judgment, I make an order for costs and disbursements (subject to the above adjustment), reduced by 10 per cent, to account for the success on the quantum meruit claim. If necessary, the registrar will fix quantum in light of this judgment.
[13] As it was legitimate for the defendants to raise the Calderbank offer issue, I make no order on the costs memoranda.
Quantum meruit
[14] I understand the plaintiffs have accepted the defendants’ offer of $30,000. I therefore say no more about this. I record, however, the defendants’ submission that the quantum meruit claim should be treated as an alternative cause of action. I am not in a position to sensibly resolve this aspect, not having heard full argument on it. My tentative view, for what it is worth, is that a claim in quantum meruit may be separately maintained if orders for specific performance are not available. In any event, as the plaintiffs have appealed my judgment, substantive issues of this kind must now be ventilated in the Court of Appeal.
4 This is consistent with the approach taken by Gordon in Xiao v Sun, above n 2, at [77], cited by the defendants.