Peters v Bennett
[2020] NZHC 1734
•17 July 2020
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2018-404-001122
[2020] NZHC 1734
BETWEEN WINSTON RAYMOND PETERS
Plaintiff
AND
PAULA BENNETT
First Defendant
PETER HUGHES
Second DefendantANNE MERRILYN TOLLEY
Third DefendantTHE ATTORNEY GENERAL sued on
behalf of the MINISTRY OF SOCIAL DEVELOPMENT
Fourth Defendant
BRENDAN BOYLE
Fifth Defendant
Hearing: (On the papers) Judgment:
17 July 2020
COSTS JUDGMENT OF VENNING J
This judgment was delivered by me on 17 July 2020 at 2.15 pm, pursuant to Rule 11.5 of the High Court Rules.
Registrar/Deputy Registrar
Date……………
Solicitors: Clifton Killip Lyon, Auckland
Kiely Thompson Caisley, Auckland Crown Law, Wellington
Counsel:B Henry/S Singh Auckland B Gray QC, Auckland
V Casey QC, Wellington
PETERS v BENNETT [2020] NZHC 1734 [17 July 2020]
Introduction
[1] In a judgment delivered on 20 April 2020 the Court dismissed Mr Peters’ claims for damages and declarations.1 Costs were reserved. The parties have been unable to agree on costs. Counsel have exchanged memoranda.2
[2] The first and third defendants seek scale costs calculated on a combination of categories 2B and 3B. They seek costs plus disbursements in the sum of $133,821.26.
[3] The second, fourth and fifth defendants (the Crown defendants) seek costs on a partial indemnity basis of $645,166.39, including disbursements or, in the alternative, scale costs calculated on a combination of 2B and 3B, amounting to
$233,516.11 (including disbursements).
[4] The plaintiff resists the imposition of an order for costs. He submits that costs should lie where they fall. Alternatively, costs should be limited to scale costs on a 2B basis. The plaintiff calculates the first and third defendants costs and disbursements on a 2B basis as amounting to $101,897.26 and the costs of the Crown defendants to scale to be $173,663.11 (including disbursements).
Principles
[5] While all matters in relation to costs are at the discretion of the Court the discretion is to be exercised in accordance with the general principles and rules in Part 14 of the High Court Rules. An unsuccessful party should normally pay costs: HCR 14.2(a). Predictability and consistency in the determination of costs is an important consideration: HCR 14.2(g).
1 Peters v Bennett [2020] NZHC 761.
2 First and third defendants, dated 2 June 2020 and reply 8 July 2020;
Second, fourth and fifth defendants, dated 2 June 2020 and reply 10 July 2020; Plaintiff, dated 3 July 2020.
Preliminary matters
[6] The plaintiff’s principal submission is that no costs should be awarded as all defendants were funded by the Crown and these proceedings involved a matter of public interest.
[7] The fact that all defendants are funded by the Crown is of itself not a relevant consideration in relation to the issue of costs in this particular case. As Ms Casey QC submitted, generally the fact the defendants are funded by the Crown is not relevant to the question of whether costs should follow the event or not. Crown litigation is conducted with public money.
[8] Further, as Mr Gray QC submitted, it is accepted practice and entirely appropriate for the Crown to seek costs when it successfully defends civil litigation. There are numerous instances where costs have been awarded in favour of the Crown.3 That approach applies equally to costs met by the Crown, in this case in relation to the costs of the first and third defendants that were paid pursuant to an indemnity. The fact that costs are sought by the Crown or by defendants indemnified by the Crown is no reason for the normal costs rules not to apply.
[9] Mr Henry also submitted that costs ought not to be awarded because the case involved a matter of public interest. Mr Henry relies on HCR 14.7(e).4 He submitted the matter was of genuine public interest because he had stated in opening for the plaintiff that the declaration of a breach of privacy was the most important remedy he was seeking and this was an area rarely considered by the Courts. Also, the privacy rules around the use of information by Ministers and the Ministry of Social Development’s disclosure of private information to elected politicians was to the forefront of these proceedings. Mr Henry submitted these raised very important public issues.
3 For example: Ben Nevis Forestry Ventures Ltd v Commissioner of Inland Revenue [2014] NZCA 348; Attorney-General v Hull [2000] 3 NZLR 63; Siemer v Attorney-General [2016] NZSC 75.
4 The Court may refuse … or may reduce … costs … if the proceeding concerned a matter of public interest, and the party opposing costs acted reasonably in the conduct of the proceeding.
[10] However, with respect to those submissions, again I agree with the response on behalf of the defendants. This was a claim brought by Mr Peters personally. He sued for breach of privacy which is by definition an intensely personal matter. Next, it was not in issue that Mr Peters’ personal information should not have been released to the media. The defendants accepted that. They denied that they had been responsible for that breach. Next, while Mr Henry may have submitted the declaration was the most important remedy sought the plaintiff still maintained the claim for damages against the Crown defendants. The damages’ claim against the first and third defendants was only abandoned in closing submissions.
[11] This case does not come within the category of public interest cases such as the cases of New Zealand Maori Council v Attorney-General, or Commerce Commission v Southern Cross Medical Care Society.5 Those cases raised matters of general importance beyond the personal interests of the particular unsuccessful litigant. By contrast, Mr Peters chose to pursue a private claim through the Court. While the case did involve consideration of aspects of the application of the Cabinet Manual, and actions of senior Chief Executives, I do not accept the case raised matters of sufficient public interest, outside Mr Peters’ personal interests, such that costs should not be awarded.
[12] In summary, to this point then, I accept that there is no reason why costs should not follow the event. That leaves the issue of the basis upon which costs are to be quantified.
Indemnity costs
[13] The Crown defendants seek indemnity costs, at least in part. They seek 60 per cent of their reasonably incurred legal costs from 31 July 2018 being the date the plaintiff first raised a pleading of bad faith against the second and fifth defendants, and 80 per cent of the reasonably incurred legal costs from 20 September 2019, (the date
5 New Zealand Maori Council v Attorney-General [1994] 1 NZLR 513; or Commerce Commission v Southern Cross Medical Care Society [2004] 1 NZLR 491. See also New Zealand Climate Science Education Trust v National Institute of Water and Atmospheric Research Ltd [2013] NZCA 555 at [11].
of the plaintiff’s brief of evidence which set out the basis for the allegations of bad faith). That was also the day following the Crown’s Calderbank offer.
[14] Ms Casey submitted the apportionment of costs on that basis represented a reasonable estimate of the costs of responding to the allegations of bad faith in the pleadings and the plaintiff’s later evidence in support of that allegation.
High Court Rule 14.6 as relevant provides:
14.6 Increased costs and indemnity costs
(1)Despite rules 14.2 to 14.5, the court may make an order—
(a)increasing costs otherwise payable under those rules (increased costs); or
(b)that the costs payable are the actual costs, disbursements, and witness expenses reasonably incurred by a party (indemnity costs).
(2)The court may make the order at any stage of a proceeding and in relation to any step in it.
(3)The court may order a party to pay increased costs if—
…
(b)the party opposing costs has contributed unnecessarily to the time or expense of the proceeding or step in it by—
…
(ii)taking or pursuing an unnecessary step or an argument that lacks merit; or
(iii)failing, without reasonable justification, to admit facts, evidence, documents, or accept a legal argument; or
…
(v) failing, without reasonable justification, to accept an offer of settlement whether in the form of an offer under rule 14.10 or some other offer to settle or dispose of the proceeding; or
…
(d) some other reason exists which justifies the court making an order for increased costs despite the principle that the determination of costs should be predictable and expeditious.
(4)The court may order a party to pay indemnity costs if—
(a)the party has acted vexatiously, frivolously, improperly, or unnecessarily in commencing, continuing, or defending a proceeding or a step in a proceeding; or
…
(f)some other reason exists which justifies the court making an order for indemnity costs despite the principle that the determination of costs should be predictable and expeditious.
[16] Indemnity costs will be awarded where a party has behaved badly or very unreasonably or where the misconduct is flagrant.6
[17] Ms Casey submitted that an award comprising a percentage of indemnity costs was appropriate here given Mr Peters’ claim for damages against the Chief Executives was hopeless, was improperly brought and the plaintiff had ignored a Calderbank offer dated 19 September 2019.
[18]Ms Casey noted that the allegations included that the Crown defendants:
·engaged in conduct that was a sham;
·acted on the basis of a MSD form that was incomplete and had failed to follow its own processes and procedures;
·acted in contravention of the Cabinet Manual; and
·acted in contravention of the constitutional obligations of political neutrality.
[19] Ms Casey submitted that it was relevant the Court found, in relation to a pleading that the Crown defendants had no purpose to disclose Mr Peters’ payment irregularity other than salacious gossip:
[260] As noted there was no probative evidence led to support that pleading. The proposition was not put to Mr Hughes or to Mr Boyle. The allegations of bad faith should not have been made. The plaintiff presented no evidence of
6 Bradbury v Westpac Banking Corporation [2009] NZCA 234.
any substance to support those claims or other comments that he had publicly made.
…
[262] In the present case, there is no question but that the disclosure to the Ministers was made in good faith. The most relevant case in a privacy context is the case of Ilich v Accident Rehabilitation and Compensation Insurance Corporation.7 In that case, Tompkins J held it would be necessary for a party claiming an absence of good faith to establish the information had been made available “dishonestly or with an ulterior motive”.8 Referring to X v Attorney- General, Tompkins J stated that:9
… information is made available in good faith if it is made available honestly and with no ulterior motive, even though it may be made available negligently.
[263] Rather than bad faith, the evidence of Mr Boyle and Mr Hughes demonstrates their good faith. If necessary, Mr Boyle and Mr Hughes could rely on the statutory immunity in s 86.
[20] Consistent with those findings I accept that there was no basis for the allegations the Chief Executives were motivated by the desire to spread salacious gossip, nor for any other allegations of bad faith against the second and fifth defendants. While the Court did find there was an error within the Ministry in relation to the MSD form in question, as the Court noted, Mr Peters also had to bear some responsibility for the error in the way the form was completed.
Calderbank offer
[21] On 19 September 2019 the Crown defendants made a without prejudice offer save as to costs inviting the plaintiff to discontinue his claim against the second and fifth defendants personally. The letter said that the allegations Mr Hughes and Mr Boyle acted other than in good faith were without foundation and that s 86 of the State Sector Act 1988 applied to both and provide statutory immunity. That is what the Court ultimately found. The failure to accept the offer in the Crown letter on that aspect of the claim supports a partial award of increased costs.
7 Ilich v Accident Rehabilitation and Compensation Insurance Corporation [2000] 1 NZLR 380 (HC).
8 At 383.
9 At 383, citing X v Attorney-General [1994] NZFLR 433 at 435.
[22] In summary, Mr Peters pursued allegations of bad faith against public officials in the public forum of the Court proceedings. Such allegations should not have been made without a proper basis. He also failed to accept a reasonable offer for resolution of part of the proceedings. There should be a cost consequence.
[23] However, although the allegations were improper, the allegations formed a relatively confined part of the plaintiff’s case. They did not occupy a significant part of the Court’s time at the hearing or in the judgment. I do not consider the plaintiff’s case overall can be categorised as having been brought or pursued vexatiously, or improperly, or that Mr Peters generally acted unreasonably in pursuing the proceeding. Rather, Mr Peters raised certain allegations, namely bad faith, that lacked merit. They were not actively supported by evidence. They were readily dismissed. I consider the appropriate costs response is an uplift of 50 per cent on the 2B scale costs as from the date of the Calderbank offer, rather than an award of indemnity costs.
Categorisation of the proceedings
[24] As noted, both the first and third defendants and the Crown defendants argue for a split in the categorisation of the proceedings for category 2 for some steps and category 3 for other steps.
[25]The first and third defendants seek category 3B costs for:
·pleading to the amended statement of claim;
·responding to interrogatories;
·preparing briefs of evidence;
·trial preparation; and
·appearance at trial.
[26] The Crown defendants also suggest that costs on a category 3 basis might be appropriate for the latter stages of the case, namely preparation of briefs and for the hearing and appearance of counsel.
[27]High Court Rule 14.3 provides for the particular categories:
Category 2 proceedings Proceedings of average complexity requiring counsel of skill and experience considered average in the High Court Category 3 proceedings
Proceedings that because of their complexity or significance require counsel to have special skill and
experience in the High Court
[28] Generally once the proceedings are categorised as category 2 or 3 for costs purposes that categorisation will apply to all steps in the proceeding.
[29] While it is possible to recategorise proceedings during the course of the proceeding, that will only normally be appropriate where there are special reasons such as if the nature of the proceedings has changed or if particularly complex issues arose which had not been contemplated when the proceedings were initially categorised.
[30] In the present case the Court was assisted by senior and experienced counsel for all parties. But it is the nature of the proceeding rather than the identity of counsel which determines the appropriate categorisation of the proceedings. I agree with Mr Henry’s submission that the legal issues raised in the proceeding were not unduly complex. This Court applied the law relating to the tort of privacy as determined by the Court of Appeal. While the issue of res ipsa loquitur was novel in that context the law related to it was not particularly complicated or complex. A large part of the case involved factual discussion about the process of Mr Peter’s application for superannuation.
[31] The appropriate categorisation for the proceeding was category 2 and, subject to the uplift of the Crown defendants’ costs discussed above, that is the appropriate basis upon which costs ought to be fixed. That was the category fixed and applied for
costs on a previous interlocutory hearing.10 The complexity, in the terms of the nature of the proceedings, did not change. Category 2 remained appropriate throughout.
[32] To the extent that some steps in a proceeding might be more complicated or require significantly more time than would be considered normal, the appropriate way to recognise that is to increase the time allowed for that step in the proceeding under the bands provided for in HCR 14.5 rather than by changing the costs category.
[33] Put another way, where more than a normal amount of time is considered reasonable then, rather than seeking to recategorise the nature of the proceedings to category 3, it is more appropriate and consistent with the intent of the rules to apply time band C rather than band B to those particular steps that warrant it.
[34] In my judgment none of the items claimed by the defendants as complex required more than a reasonable amount of time to be spent on them. Time band B is appropriate for all steps.
Quantification
[35] I turn to the remaining issue, quantification of the costs properly payable. Mr Henry submitted that the costs claimed by the defendants should be adjusted as follows:11
a.One full day was allocated to the number of days for preparation for first case management conference. This should have been allocated
0.4 days.
b.33, preparation of briefs, list of issues, authorities, and agreeing common bundle, and 33B, preparation for hearing were each allocated
8.75 days. These have been corrected to 7.25 days.
c.Numbers 34 and 35, for appearances of counsel at the hearing were calculated on 10 day hearing, however the hearing was only 8 days. These have both been corrected to 8 full days for principal counsel, and 4 days for second counsel.
d.The disbursements included witness fees for Murray Campbell. Mr Campbell was not called as a witness and has therefore been removed.
10 Interlocutory judgment on answers to interrogatories, dated 11 October 2019.
11 Memorandum of counsel for the plaintiff in relation to costs, dated 3 July 2020.
[36] I accept the adjustments to the steps taken in the proceeding that Mr Henry has raised in relation to the time allocations at (a), (b) and (c) above. The allowance of eight days of hearing accords with the record on the judgment. The hearing on 14 November (the ninth day) involved suppression issues which were not related to the plaintiff.
[37] The remaining issue is the disbursement claimed by the Crown defendants in relation to the expert witness, Mr Campbell. The Crown defendants briefed Mr Campbell to respond to the proposed evidence Mr Soper was to give in relation to polling data. It was only after he had been briefed that the plaintiff indicated Mr Soper would not give that evidence.
[38] Disbursement is defined in HCR 14.12 as an expense paid or incurred for the purposes of the proceeding. A disbursement must be included to the extent it is approved. I accept it was reasonably necessary for the defendants to brief Mr Campbell and to have him available as a witness. I approve that cost as a disbursement.
Result
[39] The costs and disbursements payable to the first and third defendants on a 2B basis (as adjusted) are: $101,897.26.
[40] The costs to the Crown defendant on a 2B basis with the uplift I have approved above are $150,527.00 together with disbursements of $65,394.11, in total
$215,921.11.
[41]The defendants are to have costs against the plaintiff in the sums stated above.
Venning J
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