McDonald v Williams HC Auckland CIV 2011-404-004420
[2011] NZHC 1722
•1 December 2011
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV 2011-404-004420
BETWEEN BRIAN RONALD MCDONALD Appellant
ANDALLEN EDWARD WILLIAMS Respondent
Hearing: 1 December 2011
Counsel: G J Thwaite for the Appellant
R Gordon for the Respondent
Judgment: 1 December 2011
[ORAL] JUDGMENT OF WYLIE J
Distribution:
GJ Thwaite: [email protected]
R Gordon: [email protected]
MCDONALD V WILLIAMS HC AK CIV 2011-404-004420 1 December 2011
[1] This is an appeal against a costs judgment of Judge DM Wilson QC given in the District Court at Manukau on 23 June 2011.
Factual Background
[2] The respondent, Mr Williams, is one of three directors of the company TradeMe Limited. TradeMe owns and operates the online auction website located on the internet at As part of its website’s services, TradeMe provides a community message board for use by its members. The message board is intended to be a convenient forum for members to discuss online topics of general interest.
[3] The appellant, Mr McDonald, is a TradeMe member. So are the second to fourth respondents in the District Court proceedings which were commenced by Mr McDonald under number CIV-2011-092-294 on 2 February 2011. All hold strong, but conflicting views about the David Bain trial. Each party chose to express their views on the TradeMe message board. Mr McDonald took issue with some of the views expressed by the second to fourth respondents. He complained to TradeMe. TradeMe investigated the complaints and in some cases, deleted the internet postings with which Mr McDonald took issue. However, in other cases, the internet postings could not be located or removal was not considered to be appropriate by TradeMe.
[4] Mr McDonald considered that TradeMe’s response was unsatisfactory. He commenced the District Court proceedings I have referred to above. He also filed a supporting affidavit. The proceedings alleged that Mr Williams and the second to fourth respondents had harassed him and he sought an order pursuant to s 9 of the Harassment Act 1997.
[5] Mr McDonald commenced the proceedings himself, and he chose to name
Mr Williams as a respondent, rather than TradeMe.
[6] It is common ground that Mr Williams has never met, spoken to, corresponded with, or had any other contact whatsoever with Mr McDonald. Indeed,
it seems from the papers filed in the District Court that the first time Mr Williams became aware of Mr McDonald was when a process server called at his home to serve him with the Harassment Act proceedings.
[7] On 17 February 2011, counsel for TradeMe filed a memorandum with the District Court. That memorandum recorded that Mr McDonald had named Mr Williams as a respondent rather than TradeMe. The memorandum suggested that this was in error, and requested an order amending the name of the first respondent from Mr Williams to TradeMe Limited.
[8] Mr McDonald resisted that suggestion. He filed a memorandum in response on 18 February 2011 disagreeing that Mr Williams should be removed as a respondent. He asserted that Mr Williams was a director of TradeMe and accordingly, was an appropriate person to answer the application.
[9] On 2 March 2011, TradeMe filed a notice of defence to Mr McDonald’s claim. Inter alia, that notice of defence recorded that Mr Williams had erroneously been named as a respondent. It noted that the affidavit filed by Mr McDonald in support of his application made no mention of Mr Williams and sought relief from the Court only against TradeMe and the second to fourth respondents. A supporting affidavit from a Ms Flowerday, who was legal counsel retained by TradeMe, was filed. That affidavit made it clear that Mr McDonald’s dealings with TradeMe had been exclusively with company employees, and not with Mr Williams.
[10] In response, Mr McDonald filed an amended application for restraining orders against the second, third and fourth respondents. He also sought an interim order against Mr Williams.
[11] On 5 March 2011, Mr McDonald filed a memorandum seeking that Mr Williams should appear before the District Court to be cross-examined in relation to an affidavit Mr Williams had filed. The memorandum asserted that Mr Williams had remained wholly silent in his role as a director of TradeMe, that he had refused to engage in the substantive issues, that he had acted unlawfully and that it was
appropriate for him to appear before the Court and answer Mr McDonald’s
assertions.
[12] The application was set down for hearing and submissions were filed by counsel for Mr Williams on 19 May 2011. Those submissions asserted that Mr McDonald’s allegations against Mr Williams were fundamentally misconceived, and that the same should be dismissed.
[13] By this stage, Mr McDonald had retained counsel. His counsel filed submissions on 24 May 2011 asserting that Mr Williams was susceptible to an order under the Harassment Act and asserting that the evidence was not sufficiently clear to enable the Court to determine the legal liability of Mr Williams.
[14] On 25 May 2011, Mr McDonald filed a notice of discontinuance against Mr Williams on a without prejudice basis. Mr Williams sought costs on the discontinuance. The present appeal is against Judge Wilson’s decision in that regard.
Judge Wilson’s Decision
[15] Judge Wilson briefly reviewed the context which I have set out above. He noted r 12.20.5 in the District Court Rules which deals with costs on a discontinuance. He referred to the relevant authorities and noted that the onus is on an applicant to satisfy the Court that the presumption of costs in favour of a respondent should not apply. The Judge carefully went through each of the various submissions advanced on Mr McDonald’s behalf in relation to costs and dismissed each. Reasons were given in each case. He awarded costs to Mr Williams on a 2B basis in the sum of $5,100. In addition, he ordered an uplift of 40 per cent to reflect Mr McDonald’s conduct. The total costs award was $7,140.
The Notice of Appeal
[16] The notice of appeal took issue with a number of comments made by the Judge in the course of his judgment. It also asserted that Mr McDonald’s conduct of the proceedings had been motivated by a good faith and out of concern about his
safety and that of his family. It asserted that Mr McDonald had complied with the procedure envisaged by the Harassment Act.
Submissions
[17] I have heard this morning from Mr Thwaite on behalf of Mr McDonald and from Mr Gordon on behalf of Mr Williams. Both had filed comprehensive written submissions which I have read.
[18] Mr Thwaite emphasised that Mr McDonald’s concern is not so much with the quantum of costs awarded by the Judge, but rather with various comments which the Judge made in the course of his costs award. He advised me that he has managed to effect a settlement with two of the remaining respondents in the District Court proceedings, but that settlement is proving elusive with the last respondent. He did not wish to be left in a position where Judge Wilson’s comments could impact on those proceedings in the event that they continue. In particular, Mr Thwaite took issue with four comments contained in the Judge’s decision. They are contained in [16], [28], [29] and [30]. Mr Thwaite was concerned that those comments might either individually or collectively be seen as suggesting:
(a) that the proceedings under the Harassment Act were misconceived in their totality;
(b)that the Harassment Act was not the appropriate vehicle to challenge the alleged conduct of all of the respondents, and
(c) that inaction cannot amount to harassment under the Act.
[19] Mr Gordon submitted that Mr McDonald’s application for a restraining order against Mr Williams was always going to fail at the first hurdle because Mr Williams had no personal involvement, and because Mr Williams had not actually harassed Mr McDonald in any way. He submitted that Judge Wilson was correct to conclude that Mr McDonald’s case insofar as it concerned Mr Williams was fundamentally misconceived and unmeritorious.
Analysis
[20] Rule 12.20.5 in the District Court Rules is founded on r 15.23 of the High Court Rules. It provides that unless the defendant otherwise agrees, 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.
[21] As Judge Wilson observed, if a party discontinuing the proceedings seeks to displace that presumption, then the onus is on that party to satisfy the Court that the presumption of costs in favour of the respondent should not apply.[1]
[1] Paul v 3PK Ltd HC Auckland CIV 2009-404-3811, 20 June 2008.
[22] While r 12.20.5 is intended to give a certain and predictable outcome upon a discontinuance, it was not in dispute that it can be displaced “if there [are] just and equitable circumstances not to apply it”.[2]
[2] Kroma Colour Prints v Tridonicatco NZ Ltd (2008) 18 PRNZ 973 (CA) at 975.
[23] Here, in my view, Judge Wilson was correct to hold that the presumption contained in r 12.20.5 should apply. Mr McDonald knowingly brought the proceedings under the Harassment Act seeking a restraining order against a person who he had never met, spoken to, corresponded with or had any other contact with whatsoever. There could be no harassment of Mr McDonald by Mr Williams, and Mr McDonald’s argument that Mr Williams’ “inaction” amounted to actual harassment against him was misconceived from the outset. Mr Williams was simply a director of a company providing internet services. The company was a separate legal entity in its own right. It could and should have been cited as a party.
[24] Mr Williams has at no stage asserted that there can be no claim for harassment under the Act in respect of internet communications or conduct. He has simply argued that nothing that he had done as a director of the company could fall
under the provisions of the Harassment Act.
[25] On the facts of this case, I agree with Mr Gordon’s submission that Mr McDonald’s application for a restraining order against Mr Williams was always going to fail at the first hurdle.
[26] An invitation was extended to Mr McDonald at an early stage to substitute TradeMe for Mr Williams as a respondent in the proceedings. Mr McDonald doggedly refused to accept that invitation and he put Mr Williams to costs as a consequence. The futility of the proceedings against Mr Williams was ultimately recognised by Mr McDonald when he received and accepted advice from Mr Thwaite in that regard. However, the reality remains that Mr Williams was required to take a number of steps until that position was belatedly reached.
[27] In my view, costs on a 2B basis in Mr Williams’ favour were appropriate. Further, an uplift was appropriate. Judge Wilson determined that that uplift should be 40 per cent of the scale costs. That decision was an exercise of the discretion by the District Court Judge. Judge Wilson had the benefit of observing the proceedings before him. It is not apparent to me that the exercise of the discretion was clearly wrong, or that he proceeded on incorrect principles, or that he failed to take into account relevant considerations, or that he took into account irrelevant considerations. Indeed, it seems to me to be an entirely reasonable exercise of the discretion in the circumstances of this case.
[28] The appeal is dismissed.
Costs
[29] Mr Gordon seeks costs in relation to this appeal on a 2B basis. In addition, he seeks that costs should be increased by 50 per cent because a Calderbank offer was sent by Mr Williams to Mr McDonald. That offer was sent on 25 July 2011. Mr Williams offered to accept the sum of $5,100 – which was rather less than the costs award made by Judge Wilson in the District Court – in full and final settlement of all matters outstanding and in settlement of any costs which had been incurred at that stage in relation to the appeal. That offer was acknowledged but not accepted by Mr McDonald. Subsequent offers were made by Mr McDonald, but they were not
accepted by Mr Williams. Those offers required Mr Williams to forego his costs claim in the District Court.
[30] Mr Thwaite on behalf of Mr McDonald referred to the procedure established by the Harassment Act. He submitted that the Act is intended to provide a simple and inexpensive remedy for those who feel that they have been harassed. He noted that the District Court Rules adopt the High Court Rules and submitted that as a consequence, those who come to the District Court can be faced with costs awards considered appropriate in this Court. He submitted that the arguments taken by Mr McDonald on the appeal were appropriate and that they arose because of the “broad language” which he submitted was used by Judge Wilson in his costs award. He submitted that the appeal was brought out of an abundance of caution because the Judge’s comments could have provided a defence to the other respondents. He submitted that costs should lie where they fall.
[31] I do not accept Mr Thwaite’s argument that the District Court’s Costs Rules, insofar as they adopt and refer to the High Court Rules, are inconsistent with the Harassment Act, or that the principles on which the Harassment Act is based should prevail. The District Court Rules provide for lower rates and different time allocations than the High Court Rules. Those rates have been considered to be appropriate to cases brought in the District Court and there is no reason why the Harassment Act should fall outside the District Court’s cost regime. Parties who are successful, or for that matter unsuccessful, in Harassment Act proceedings must be entitled to their costs in the same manner as parties to any other litigation.
[32] Nor do I accept that the appeal was appropriately brought. Judge Wilson’s comments about the application of the Harassment Act where made only in the context of the discontinuance of the proceedings against Mr Williams. They had no wider import.
[33] Mr Williams has been required to take various steps in these proceedings, and in my view, a costs award in relation to this appeal on a 2B basis is appropriate. The more important issue is the effect of the Calderbank offer made by Mr Williams. Offers to settle proceedings are referred to in r 14.10 of the High Court Rules and
their effect on costs is dealt with in r 14.11. The effect of an offer made under r 14.10 is in the Court’s discretion. The fact that an offer is made does not of itself give rise to an automatic entitlement to increased or indemnity costs. Any such entitlement has to be determined under r 14.6.[3]
[3] Oceania Furniture Ltd v Debonaire Products Ltd HC Wellington CIV-2008-485-1701,
16 September 2010 at 41.
[34] Taking into account the decision by the Court of Appeal in Holdfast NZ Ltd v Selleys Pty Ltd,[4] and the provision of r 14.6, in my view, it is appropriate to award increased costs in the present case. The Calderbank offer was generous. It offered to forego the increased costs ordered by Judge Wilson. The concerns expressed by Mr Thwaite on Mr McDonald’s behalf about the language used by Judge Wilson are not borne out in reality. The Judge’s costs judgment was only as between
Mr McDonald and Mr Williams and in my view, it is tolerably clear from reading the judgment that the opinions expressed by the Judge related only to Mr McDonald’s claim as against Mr Williams. In my view, it is appropriate to allow for an increase of 25 per cent above the normal 2B costs which otherwise have been incurred.
[4] Holdfast NZ Limited v Selleys Pty Limited (2005) 17 PRNZ 897.
[35] Accordingly, I award costs to Mr Williams in relation to this appeal on a 2B
basis, plus a 25 per cent increase.
[36] Mr Williams is also entitled to his reasonable disbursements. Mr Gordon has submitted to me that this should include travel costs. I am not persuaded that that is appropriate. The matter could have been dealt with by Auckland counsel; it was relatively straightforward.
[37] In the event that there is any dispute as to disbursements, the same is to be referred to me.
Addendum
[38] For the sake of clarity, and at Mr Thwaite’s request, I record that
Judge Wilson’s costs judgment was only between Mr McDonald and Mr Williams. The comments made by the Judge must be seen in that light. They deal only with the
strength or otherwise of Mr McDonald’s case under the Harassment Act as against
Mr Williams. They have no wider import.
Wylie J
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