Martin v Marsh
[2015] NZHC 416
•10 March 2015
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV-2013-404-4903 [2015] NZHC 416
IN THE MATTER of an appeal under s 39(1)(b) of the
Property (Relationships) Act 1976
BETWEEN
GABRIELLE JOY MARTIN Appellant
AND
BRETT ANTHONY MARSH as administrator of the Estate of LEE CLIFFORD MARSH (Deceased) Respondent
Hearing: (On the papers) Counsel:
B M Ward for Appellant
R C Knight for RespondentJudgment:
10 March 2015
COSTS JUDGMENT OF BREWER J
This judgment was delivered by me on 10 March 2015 at 3:30 pm pursuant to Rule 11.5 High Court Rules.
Registrar/Deputy Registrar
Solicitors: Gellert Ivanson (Auckland) for Appellant
Sean Kelly Lawyers (Auckland) for Respondent
MARTIN v MARSH [2015] NZHC 416 [10 March 2015]
Introduction
[1] Ms Martin did not succeed in a proceeding heard by Judge FJ Eivers in the Family Court at Auckland.1 However, the Judge decided not to award costs against her but, rather, to let costs lie where they fell. Mr Marsh (as administrator of the estate of Mr Lee Marsh) appeals that decision. In his submission, Ms Martin should pay the costs of the estate in the Family Court litigation.
[2] There is also at issue between the parties the costs which should be awarded
in Ms Martin’s unsuccessful appeal to this Court.2
Issues
[3] There are, accordingly, two issues for me to decide:
(a) Was Judge Eivers’s decision not to award costs in the Family Court properly within her discretion?
(b) What costs, if any, should be awarded against Ms Martin in relation to
her unsuccessful appeal of Judge Eivers’s decision?
Was Judge Eivers’s decision not to award costs in the Family Court properly within her discretion?
[4] In deciding not to award costs, Judge Eivers made a decision in the exercise of her discretion. The Supreme Court has confirmed that an appellate Court should not interfere with a costs decision unless satisfied that the Judge acted on a wrong principle, failed to take into account a relevant matter, took account of some irrelevant matter or was plainly wrong.3
[5] Judge Eivers, having identified that costs are at the discretion of the Court and having set out the principles applicable to the determination of costs under the
District Court Rules, declined to order costs for the following reasons:
1 GJM v BM [2013] NZFC 3316.
2 Martin v Marsh [2014] NZHC 2354.
3 Shirley v Wairarapa District Health Board [2006] 3 NZLR 523 (SC) at [15].
(a) Although the legal issues were not complex, the factual matrix of the case was unusual: the parties had once been married and had then resumed a relationship which was not a conventional one;
(b)Some of Ms Martin’s evidence may have been unhelpful, irrelevant or hearsay, but Mr Marsh did not challenge any of it before trial. This could have saved hearing time;
(c) Ms Martin did not contribute unnecessarily to the time and expense of the Court proceeding; and
(d)Ms Martin believed genuinely she had a de facto relationship with the late Mr Marsh. The complexity and diversity of human nature and behaviour needs to be considered in the context of a claim for costs.
Did the Judge act on a wrong principle?
[6] Ms Martin’s claim against the estate of Mr Marsh was brought under the
Property (Relationships) Act 1976, s 40 of which provides:
Subject to any rules of procedure made for the purposes of this Act, in any proceedings under this Act the court may make such order as to costs as it thinks fit.
Despite this apparently unfettered discretion, it is necessarily the law that when it comes to awarding costs the discretion must be exercised in a principled manner.
[7] Traditionally, a general principle applying to relationship property proceedings has been that the parties bear their own costs because the resolution of disputes is something of benefit to both parties and neither side should be regarded as the winner or loser.4 However, since r 207 of the Family Court Rules came into force in 2002, the Courts now treat costs awards in relationship property proceedings
in the same way as in ordinary civil proceedings.5 Keane J in FT v JML identified:6
4 Gerbic v Gerbic (1991) 8 FRNZ 518 (HC) at 542.
5 See, for example, Thompson v Public Trust [2014] NZHC 2434; FT v JML [2012] NZHC 1388; SB v DC HC Auckland CIV-2011-404-1005, 27 October 2011; Radisich v Taylor HC Auckland CIV-2007-404-7578, 16 April 2008; and Anderson v Anderson HC New Plymouth CIV-2004-
443-25, 16 July 2004.
6 FT v JML, above n 5, at [32].
But what is at least clear is this. These days the winning party in property relationship cases has a more recognised right to an award on the principle that costs follow the event than was so even a few years ago. Conversely, the losing party’s misconduct may not now need to be so egregious to justify an award.
[8] Judge Eivers gave her reasons for not awarding costs but did not attempt to explain why it would be inappropriate for her to award costs in accordance with the District Court Rules. Most of her reasoning seems to respond to the estate’s submissions that indemnity or increased costs should be awarded. In particular, the Judge did not make reference to rr 4.2 and r 4.7 of the District Court Rules. Rule
4.2(a) provides that “the party who fails with respect to a proceeding or an interlocutory application should pay costs to the party who succeeds”. Rule 4.7 provides the circumstances in which the Court can decide not to award costs. Judge Eivers’s decision needed to be made against the accepted principles relating to costs awards in the District Court Rules, including the principle that costs follow the event. I find that Judge Eivers erred in failing to consider these principles.
Did the Judge fail to take into account a relevant matter?
[9] There are two matters which it is submitted the Judge did not take into account. The first is a Calderbank offer and the second is that this was a claim against an estate which would have to bear the costs even though successful.
[10] The effect of a Calderbank offer on a costs award is a matter for the discretion of the Court.7 Butterworths New Zealand Law Dictionary helpfully defines a Calderbank offer as:8
A written communication between legal representatives in which an offer of settlement is made, the terms of which, in the event that the matter proceeds to trial, are not to be disclosed to the court except on the question of costs.
[11] In this case, the nature of the Calderbank offer does not merit costs being awarded. The Calderbank offer requested that the plaintiff cease bringing proceedings in Court and in return the respondent would agree to costs lying where
they fall. It was issued contemporaneously with five affidavits sworn and filed in
7 District Court Rules 2009, r 4.11.
8 Peter Spiller Butterworths New Zealand Law Dictionary (7th ed, LexisNexis, 2011); see also
Calderbank v Calderbank [1975] 3 All ER 333 (CA).
support of the respondent in response to evidence filed in support of her claims. This was a complex case. The appellant genuinely believed in her claim. The offer was not particularly advantageous to the appellant. She did not unreasonably reject the offer.
[12] The estate provided no authority as to why the fact that this was a claim against an estate should be relevant to a determination of costs. Indeed, in the past, the usual practice has been that where there is a claim against an estate by a person who is acting within the scope of a good claim then the estate should bear the costs.9
Did the Judge take into account some irrelevant matter?
[13] Nothing has been identified and I can see no factor which was irrelevant to the exercise of the discretion.
Was the Judge plainly wrong?
[14] Given that the Judge did not address the principles relating to costs contained in the District Court Rules, I do not believe that her Honour should have simply let costs lie where they fall. This is not a situation where it would be appropriate, under the principles, to refuse to award costs. Examples of appropriate cases include where the Court grants an indulgence,10 the case is brought in the public interest,11
and where the successful party behaves reprehensibly.12
Conclusion
[15] I find that Judge Eivers erred in deciding not to award costs at the Family Court. In the light of the nature of this dispute, it would be appropriate to award costs in accordance with the Schedules of the District Court Rules. Accordingly, I substitute her Honour’s award with an award on a 2B basis determined in accordance
with rr 4.3 to 4.5, which is as follows:
9 See, for example, McGowan v Hamblett HC Auckland CIV-2005-404-5488, 7 September 2006.
10 See, for example, Cunningham v Butterfield [2014] NZCA 213 at [52].
11 See, for example, New Zealand Health New Zealand Inc v South Taranaki District Council
[2014] NZHC 993 at [8]-[10].
12 See, for example, Vulcan Steel Ltd v McDermott [2013] NZHC 3232 at [31].
Item Description Days 2 Response or defence by respondent 1.0 9.8 Filing and serving memorandum in anticipation of judicial
conference
0.25 9.9 Appearance at judicial conference 0.3 17.1 Preparation for hearing (twice time occupied by hearing) 8.0 18.1 Appearance at hearing 4.0 18.2 Second counsel 2.0 Total 15.55 days 15.55 @ $1,550 per day $24,102.50
What costs, if any, should be awarded against Ms Martin in relation to her
unsuccessful appeal of Judge Eivers’s decision?
[16] The party who fails with respect to a proceeding should ordinarily pay the costs of the party who succeeds.13 An award of costs should reflect the complexity and significance of the proceeding.14 These proceedings have been categorised as
2B proceedings.15 A costs award on a 2B basis determined in accordance with
rr 14.3 to 14.5 of the High Court Rules would be as follows:
Item Description Days 53 Commencement of response to appeal 0.5 10 Preparation for first case management conference 0.4 11 Filing memorandum for first case management conference 0.4 13 Appearance at first case management conference 0.3 56 Preparation of written submissions 3 57 Appearance at hearing 0.5 58 Second counsel 0.25 Total 5.35 days 5.35 @ $1,990 per day $10,646.50
[17] Because the respondent is successful in its cross appeal, it is also entitled to an additional $1,990 over and above the 2B calculation that being item 52 in Schedule 3 to r 14 (the commencement of a cross appeal).
[18] I am not entirely sure from the submissions on behalf of Mr Marsh whether indemnity costs are claimed in the proceeding before me, in relation to the Family
Court decision, or both. In any case, Mr Marsh relies on the 17 February 2012
13 High Court Rules, r 14.2(a).
14 Rule 14.2(b).
15 Minute of Katz J, 3 December 2013.
Calderbank offer. This offer, as discussed, merely offered to allow costs to lie where they fall if Ms Martin withdrew her case in the Family Court.
[19] Increased costs may be awarded where there is a “failure by the paying party to act reasonably”.16 Specific situations where increased costs can be awarded include where the party pursues a claim that obviously lacks merit,17 and where a person unreasonably fails to accept a settlement offer.18 Indemnity costs will be awarded where a party has behaved very unreasonably.19 Examples include making allegations of fraud known to be false, misconduct causing loss of time, commencing
a proceeding for an ulterior motive, commencing a proceeding in wilful disregard of known facts or clearly established law or making groundless contentions.20
[20] There is no basis for either indemnity costs or for an uplift of costs. Ms Martin’s case did not lack merit and she was entitled to have this Court examine the decision of the Family Court by way of rehearing.
[21] On the other hand, there is no basis in my view for a reduction in costs. Ms Martin argues that Mr Marsh contributed unnecessarily to the time and expense of the proceeding. Ms Martin contends that she tried to negotiate an out of Court settlement with Mr Marsh but that he was unwilling to be reasonable. However, Mr Marsh was successful both at first instance and on appeal. There is no case for reducing costs in this Court.
Decision
[22] I answer the issues as follows:
(a) I find that Judge Eivers’s decision not to award costs against
Ms Martin in the Family Court was not within her discretion. I
substitute her costs award with an award fixed at $24,102.50.
16 Bradbury v Westpac Banking Corp [2009] 3 NZLR 400 (CA) at [27].
17 N-Tech Ltd v Abooth Ltd NZHC [2012] 1167 at [97] and [108].
18 New Zealand Sports Merchandising Ltd v DSL Logistics Ltd HC Auckland CIV-2009-404-5548,
19 August 2010.
19 Bradbury v Westpac Banking Corp, above n 16, at [26].
20 At [29].
(b)I find that costs should be awarded against Ms Martin on the cross- appeal in the sum of $1,990.
(c) I find that costs should be awarded against Ms Martin in relation to her unsuccessful appeal of Judge Eivers’s decision. I fix these costs on a 2B basis at $10,646.50.
[23] I make orders accordingly.
Brewer J
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