Preston v Preston
[2022] NZHC 1850
•29 July 2022
IN THE HIGH COURT OF NEW ZEALAND TAURANGA REGISTRY
I TE KŌTI MATUA O AOTEAROA TAURANGA MOANA ROHE
CIV-2017-463-30 CIV-2017-463-31
CIV-2017-463-51 [2022] NZHC 1850
BETWEEN KATHERINE ELIZABETH PRESTON AND OTHERS
PlaintiffsAND
GRANT LEE PRESTON AND OTHERS
Defendants
Hearing: On the papers Appearances:
IM Hutcheson for the Plaintiffs JM McCleary for the Defendants
Judgment:
29 July 2022
JUDGMENT NO. 4 OF FITZGERALD J
[As to adjustment to costs following Supreme Court appeal]
This judgment was delivered by me on 29 July 2022 at 4.00pm, pursuant to Rule 11.5 of the High Court Rules.
Registrar/Deputy Registrar
Date……………
Solicitors: Jespersen & Associates, Auckland
Buddle Bentley McCleary Ltd, Whakatane
To: I Hutcheson, Auckland
PRESTON v PRESTON [2022] NZHC 1850 [29 July 2022]
Introduction
[1] I have delivered three prior judgments in these proceedings. In the first, delivered on 18 December 2019, I largely dismissed Mrs Preston’s claims against Mr Preston.1 In the second judgment, delivered on 13 May 2020, I determined costs (on a “proceeding by proceeding” basis).2 Mrs Preston subsequently appealed to the Court of Appeal, and her appeal was largely dismissed, though the Court allowed her appeal in relation to one of the three proceedings which was the subject of the substantive judgment, referred to as the “030 proceeding”.3 As a result, on 25 June 2021, I issued a costs judgement adjusting costs in relation to the 030 proceeding in light of the Court of Appeal’s judgment.4
[2] Following leave being granted, Mrs Preston appealed to the Supreme Court. The appeal was limited to the Court of Appeal’s dismissal of part of Mrs Preston’s appeal to that Court in what is referred to as the “051 proceeding”, namely her claim under s 182 of the Family Proceedings Act 1980 (the FPA). Mrs Preston did not appeal any other aspects of the Court of Appeal’s decision (and Mr Preston did not cross- appeal). In a judgment delivered on 9 November 2021, the Supreme Court allowed Mrs Preston’s appeal, and made orders to the effect that she was to be paid a sum reflecting 15 percent of the equity in Mr Preston’s family trust.5
[3] This judgment accordingly considers the adjustment of costs in the High Court in respect of the 051 proceeding, in light of the Supreme Court’s decision.
The 051 proceeding – a brief summary
[4] The 051 proceeding comprised a collection of claims between the parties under relationship property legislation, and in particular the Property (Relationships) Act 1976 (the PRA) and the FPA. Mrs Preston advanced claims pursuant to s 15 of the
1 Preston v Preston [2019] NZHC 3389 [the substantive judgment]. The claims between the parties spanned three proceedings heard together, which the Court and the parties have referred to as the “030 proceeding”, the “031 proceeding”, and the “051 proceeding”.
2 Preston v Preston [2020] NZHC 957 [the costs judgment].
3 Preston v Preston [2020] NZCA 679.
4 Preston v Preston [2021] NZHC 1536.
5 Preston v Preston [2021] NZSC 154 [the Supreme Court judgment].
PRA (economic disparity), ss 15(a), 9(a) and 17 of the PRA (whether relationship property either sustained or contributed to the increase of value of Mr Preston’s separate property), claims in relation to the division of chattels and, as noted, a claim for relief pursuant to s 182 of the FPA. As mentioned, at first instance and in the Court of Appeal, all of Mrs Preston’s claims in the 051 proceeding were unsuccessful.
[5] In the costs judgment, and it not being in dispute, I concluded that Mr Preston was the successful party in the proceedings and made an award of scale costs in his favour on a 2B basis, increased by 20 percent for steps taken after May 2018 (to reflect a without prejudice save as to costs settlement offer made by Mr Preston in May 2018).
[6] I also made an award of disbursements, and while the quantum of the disbursements was not in issue, I agreed with Mrs Preston’s submission that the disbursements should be allocated to the relevant proceeding in which they had been incurred, and that the hearing fee ought to be allocated as between the three proceedings. Excluding expert fees, I awarded disbursements to Mr Preston of $8,589, and recorded the “split” of those disbursements across the three proceedings (in the event any costs orders needed to be revisited as a result of the outcome of an appeal). I also awarded Mr Preston as a disbursement the sum of $34,500 for expert witness fees of Mr Shaw (an accountant), Mr Shaw’s evidence being directed to matters arising in the 051 proceeding.
[7] Following the Court of Appeal’s judgment, I revisited costs in the 030 proceeding. Given the Supreme Court’s judgment did not touch on that proceeding, I need say nothing further about those adjustments.
The parties’ submissions on the adjustment of costs in the High Court in the 051 proceeding
Mrs Preston’s submissions
[8] Mrs Preston’s position is that while she was not successful on all her claims in the 051 proceeding, she was still the successful party overall in that proceeding, relying to authorities to the effect that success on limited terms is still a success.6 On
6 Weaver v Auckland Council [2017] NZCA 330 at [26].
that basis, Mrs Preston is content to adopt as a starting point for a costs award in her favour an amount of $38,661, being that amount calculated in my costs judgment as the scale costs payable by Mrs Preston to Mr Preston in the 051 proceeding. Mrs Preston acknowledges that other than her claim under s 182 of the FPA, she was unsuccessful on her remaining claims made in the 051 proceeding, and proposes that a reduction of 50 percent be made to the scale costs payable to her. On this basis, Mrs Preston seeks an award of scale costs in the 051 proceeding in an amount of
$19,330.50.
[9] In terms of disbursements, and with reference to r 14.12 of the High Court Rules 2016, Mrs Preston refers to authorities and commentary to the effect that expert witness fees (or other disbursements) properly recoverable in a proceeding are not limited to evidence or other costs incurred in relation to particular issues on which the party seeking the disbursement was successful.7 Rather, Mrs Preston submits that r 14.12 provides that a disbursement must, if claimed and verified, be included in the costs awarded if that disbursement is of a class that is approved by the Court for the purposes of the proceeding, specific to the conduct of the proceeding and reasonably necessary for the conduct of the proceeding.
[10] On this basis, Mrs Preston claims expert witness fees of Mr Smith (an accountant) totalling $40,987, but again reduced by 50 percent, resulting in a figure of
$20,493.50. While not expressly stated in her written submissions, I proceed on the basis that the reduction is proposed because Mr Smith’s evidence was primarily directed to the question of economic disparity, a claim on which Mrs Preston failed. In relation to the remaining disbursements, Mrs Preston seeks $4,000 for the hearing fee (that being the amount of the total hearing fee I had allocated to the 051 proceeding in my costs judgment),8 together with an apportionment of three-fifths in relation to binding costs, accommodation for counsel and travel expenses (reflecting my earlier ruling that disbursements should be allocated to the 051 proceeding on the basis that three of the five days of the hearing were occupied by that proceeding).9 Together
7 Including Advicewise People Ltd v Trends Publishing International Ltd [2016] 2999.
8 Cost judgment at [39].
9 At [25(d)].
with Mr Smith’s fees, this brings Mrs Preston’s claim for disbursements in the 051 proceeding to a total of $25,847.07.
Mr Preston’s submissions
[11] Mr Preston, on the other hand, disputes that Mrs Preston won the principle contests of law and fact in the 051 proceeding. He submits that Mrs Preston succeeded on one distinct cause of action only, being only one of many causes of action pursued by her in that proceeding. On the basis that there were “seven distinct issues” within the 051 proceeding, Mr Preston seeks apportionment in accordance with each party’s success or failure, as the case may be, on an issue by issue (or cause of action by cause of action) basis. Mr Preston submits that Mrs Preston won one-seventh of these actions, or 14.3 percent, while Mr Preston was successful on six-sevenths of the issues, or 85.7 percent. Mr Preston submits that the costs award (including increased costs) awarded for the 051 proceedings in my costs judgment should therefore be apportioned as between Mr Preston and Mrs Preston by reference to these percentage amounts.
[12] In terms of disbursements, Mr Preston submits that the one-seventh or percentage apportionments referred to above should also be adopted in relation to the general disbursements (such as hearing fees and those other disbursements referred to at [10] above). In terms of the disbursement sought by Mrs Preston for Mr Smith’s fees, Mr Preston notes that Mr Smith’s evidence focussed on Mrs Preston’s s 15 claim, which failed. Mr Preston submits that Mr Smith’s evidence was not specific or useful to Mrs Preston’s successful s 182 claim (or the Pauanui beach house breach of contract claim, the subject of the 030 proceeding and on which Mrs Preston was successful in the Court of Appeal). On this basis, Mr Preston submits that Mr Smith’s evidence was either inadequate, off topic or unhelpful, and accordingly none of his fees should be recoverable by Mrs Preston as a disbursement.
[13] Finally, and irrespective of the outcome on costs, Mr Preston seeks recovery of a disbursement paid by him for expert witness fees to Mr Shaw (totalling $34,500). Mr Preston notes that in the context of Mrs Preston’s claims that she had increased or sustained Mr Preston’s separate property, Mrs Preston did not call valuation evidence addressing some aspects of that claim, and rather “borrowed” the evidence of Mr Preston’s expert (Mr Shaw). Mr Preston also notes that Mr Shaw’s evidence was also ultimately adopted by the Supreme Court as the basis for valuation of most of the assets in Mr Preston’s family trust (and in turn, the award to Mrs Preston of an equivalent of 15 percent of that trust). In these circumstances, Mr Preston seeks reimbursement of the expert fees of Mr Shaw in full.
Discussion
[14]The first issue is who was the successful party overall in the 051 proceeding.
[15] I am clear in my view that, following the Supreme Court’s judgment, Mrs Preston was the successful party overall in that proceeding. She brought those proceedings claiming a range of different forms of relief against Mr Preston following the breakup of the parties’ relationship, and the fact that Mrs Preston was not successful on all her claims does not affect her status as the successful party overall. Success on limited terms is still success.10 Ultimately, in the 051 proceeding, Mrs Preston successfully obtained an award of approximately $243,000.11 That is not de minimus success.
[16] Mr Preston’s proposed approach of “slicing up” the proceeding issue by issue (or cause of action by cause of action) is inconsistent with authorities on how the successful party overall is to be determined. Rather, a successful party’s failure “in relation to a cause of action or issue which significantly increased the costs of the party opposing costs” can be taken into account under r 14.7(d) in reducing the costs otherwise payable to the successful party.
10 See, for example, Weaver v Auckland Council [2017] NZCA 330; and Geostel Vision v Oraka Technologies (in liquidation) [2022] NZCA 312.
11 Supreme Court judgment, above n 5 at [81].
[17] I therefore agree with Mrs Preston’s submission that it is appropriate to reduce the costs award in her favour to reflect the fact that she was unsuccessful on the remainder of her claims in the 051 proceeding, and which no doubt significantly increased the costs of Mr Preston. I have considered whether a reduction of more than 50 percent should be made. I do not consider that is necessary and consider the suggested 50 percent reduction to be a responsible and proper approach. The nature of the various claims brought in the 051 proceeding required the evidence to traverse a wide range of factual matters relating to the parties’ relationship overall, as well as the valuation of certain assets and property. In other words, I do not consider that Mr Preston’s costs would have been so significantly reduced had only the s 182 claim been pursued by Mrs Preston that a reduction of more than 50 percent is warranted.
[18] There will accordingly be a scale costs award in Mrs Preston’s favour in the 051 proceeding of $19,330.50.
[19] It follows that Mrs Preston is also entitled to her disbursements in the 051 proceeding. I agree with counsel for Mrs Preston’s submission that the general disbursements should be apportioned in that manner set out at [10] above, giving a total of $5,353.57.
[20] There is also no reason why Mrs Preston should not be awarded a disbursement in relation to Mrs Smith’s expert fees. Mr Smith’s evidence was reasonably necessary for the 051 proceedings, and is not to be disallowed simply because it related primarily to issues on which Mrs Preston was not successful.12 Further and in any event, any arguable adjustment to that disbursement is more than adequately accommodated by Mrs Preston’s proposed 50 percent discount. There will accordingly be included in the costs award in Mrs Preston’s favour in the 051 proceeding a disbursement in relation to Mr Smith’s fees in an amount of $20,493.50.
12 Advicewise People Limited v Trends Publishing International, above n 7.
[21] As to Mr Preston’s claim for recovery of Mr Shaw’s expert fees, it would be unusual for an unsuccessful party to nevertheless recover a disbursement from a successful party, and no authorities have been cited for such an outcome. Rule 14.12 provides that qualifying disbursements “must … be included in the costs awarded for a proceeding”, and there are no costs being awarded to Mr Preston in the 051 proceeding. Despite this, I initially gave consideration to whether there should be some recovery by Mr Preston of Mr Shaw’s fees given that Mrs Preston “borrowed” from that evidence to a certain extent, in connection with her claims that her contributions to relationship property had either increased or sustained Mr Preston’s separate property.13 However, on reflection, I do not consider that would be appropriate or principled. First, and as noted, it would mean an unsuccessful party recovering disbursements from a successful party. Second, even if Mrs Preston had called her own evidence on the issues on which she “borrowed” from Mr Shaw’s evidence, it is unlikely Mr Preston would be in any different position. Indeed, he might have been worse off. Mr Smith’s fees might have been larger, and given Mrs Preston was the successful party overall in the 051 proceeding, Mr Preston would be required to meet that (larger) disbursement. And he would still be in a position of having retained and paid Mr Shaw in full. Third, any offset reflecting a “contribution” by Mrs Preston to Mr Shaw’s fees is more than adequately accommodated in any event by the 50 percent reduction to Mr Smith’s fees.
[22] Finally, and for completeness, there was no suggestion by Mr Preston that the May 2018 offer (as discussed in the costs judgment)14 operates to further reduce the costs award in Mrs Preston’s favour in the 051 proceedings.
Result
[23] My earlier costs orders in relation to the 051 proceeding are quashed.15 There is a costs award to Mrs Preston in the 051 proceeding in an amount of $19,331, plus disbursements in the amount of $25,847.07 (as set out in the table at paragraph 33 of Mrs Preston’s cost memorandum dated 27 May 2022).
13 See the substantive judgment, at [128].
14 Costs judgment at [61] to [65].
15 Being scale costs in Mr Preston’s favour of $38,666, plus increased costs of $4,906 and disbursements.
[24] Mrs Preston also seeks costs of dealing with costs. Given I have accepted Mrs Preston’s position on costs, and that the approach taken by her, and in particular the reductions proposed, was responsible, I consider it is appropriate to award costs by way of a further award of one memorandum on a scale 2B basis, being $446.16 I do not consider it is appropriate to make any award for Mrs Preston’s reply memorandum, which was neither lengthy nor timetabled.
Fitzgerald J
16 0.2 of a day at $2,230 per day, based on the daily rates in force at the time of the proceedings.
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6
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