Roebuck v Liddle
[2023] NZHC 2841
•10 October 2023
IN THE HIGH COURT OF NEW ZEALAND NAPIER REGISTRY
I TE KŌTI MATUA O AOTEAROA AHURIRI ROHE
CIV-2021-441-74
[2023] NZHC 2841
BETWEEN JASON GREGORY ROEBUCK and VICTORIA ANN ROEBUCK
First PlaintiffsJASON GREGORY ROEBUCK, VICTORIA ANN ROEBUCK and
PETER ROEBUCK as trustees of the Tahi Trust
Second PlaintiffsAND
ROBERT JAMES LIDDLE
First Defendant
AMANDA ELIZABETH LIDDLE
Second DefendantHASTINGS DISTRICT COUNCIL
Third DefendantSIGMA CONSULTING ENGINEERS LIMITED
Fourth DefendantREDHEAD ARCHITECTURE LIMITED
Fifth DefendantFORMWORKS HB LIMITED
Sixth DefendantHARDCORE CONCRETE LIMITED
Seventh DefendantM J FOGARTY PAINTING & DECORATING LIMITED
Eighth Defendant
WYNANDS MASONRY LIMITED
Ninth Defendant
ROEBUCK v LIDDLE [2023] NZHC 2841 [10 October 2023]
REALDEAL ROOFING LIMITED
Tenth Defendant
HAWKES BAY MEMBRANE SOLUTIONS LIMITED
Eleventh Defendant
MITCHELL LEITZ
Twelfth Defendant
WYNANDS MASONRY (2015) LIMITED
Thirteenth Defendant
ANTHONY JOHN MICHAEL WYNANDS
Fourteenth Defendant
GA SCARFE BUILDER LIMITED
Fifteenth Defendant
GRAHAM ALAN SCARFE
Sixteenth Defendant
Hearing: On the papers Appearances:
J L Bates for Plaintiffs
J K Goodall KC and S P Farnell for Third Defendant
No appearance by or for First, Second or Fourth to Sixteenth Defendants
Judgment:
10 October 2023
JUDGMENT OF ASSOCIATE JUDGE SKELTON
[Costs]
[1] The plaintiffs applied for orders that the third defendant’s statement of defence be struck out, or alternatively, for leave to apply for summary judgment against the third defendant.
[2] In my judgment dated 15 June 2023, I dismissed the plaintiffs’ application for an order that the third defendant’s deponents in respect of the application for strike out
appear for cross examination.1 I reserved costs pending the outcome of the substantive application.2
[3] Subsequently, as recorded in my minute dated 22 June 2023,3 the plaintiffs discontinued their application for strike out of the third defendant’s statement of defence, or alternatively, for leave to apply for summary judgment.
[4] I directed that the parties were to attempt to agree on the costs. However, if the parties could not agree, then memoranda were to be filed and the costs would be dealt with on the papers. The parties have been unable to agree on costs and memoranda have been filed.
Legal principles
[5] Costs are ultimately a matter of the Court’s discretion, the overall objective being to achieve an outcome that best meets the interest of justice.4 That discretion is qualified by the applicable costs rules, contained in pt 14 of the High Court Rules 2016. The primary principle applying to the determination of costs is that costs follow the event – meaning that a party who is unsuccessful pays costs to a party who is successful.5
[6] The Court may order a party to pay increased costs where that party has contributed unnecessarily to the time or expense of the proceeding or a step in it.6 Increased costs may be awarded where there is a failure by the paying party to act reasonably.7 An example is failing, without reasonable justification, to accept an offer of settlement whether in the form of an offer under r 14.10 or some other offer to settle or dispose of the proceeding.8
1 Roebuck v Liddle [2023] NZHC 479 at [36].
2 At [37].
3 Roebuck v Liddle HC Wellington CIV-2021-441-74, 22 June 2023 (Minute of Associate Judge Skelton).
4 High Court Rules 2016, r 14.1; Manukau Golf Club Inc v Shoye Venture Ltd [2012] NZSC 109, [2013] 1 NZLR 305 at [7] and [16]; Glaister v Amalgamated Dairies Ltd [2004] 2 NZLR 606 (CA) at [21]–[24] and [28]; and Mansfield Drycleaners Ltd v Quinny’s Drycleaning (Dentice Drycleaning Upper Hutt Ltd) (2002) 16 PRNZ 662 (CA) at [27].
5 High Court Rules, r 14.2(1)(a).
6 Rule 14.6(3)(b).
7 See Bradbury v Westpac Banking Corp [2009] NZCA 234, [2009] 3 NZLR 400 at [27].
8 High Court Rules, r 14.6(3)(b)(v).
[7] The Court may also award the actual costs reasonably incurred by a party (indemnity costs) where a party has behaved either badly or very unreasonably.9 For example, indemnity costs may be ordered if the party has acted vexatiously, frivolously, improperly, or unnecessarily in commencing, continuing, or defending a proceeding or step in a proceeding.10
[8] Rule 14.8 of the High Court Rules provides that costs on an opposed interlocutory application are generally to be fixed in accordance with the rules when the application is determined and become payable when they are fixed.
Which party was successful?
[9] The third defendant seeks 2B scale costs, plus an uplift of 50 per cent for increased costs together with disbursements.
[10] The plaintiffs contend that costs should lie where they fall or be reserved pending the outcome of the trial.
[11] With regard to the plaintiffs’ application for cross examination, the third defendant was clearly the successful party.
[12] With regard to the plaintiffs’ application for strike out or leave to apply for summary judgment, the third defendant relies on r 15.23 of the High Court Rules. This rule provides that:
Unless the defendant otherwise agrees or the court otherwise orders, 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.
[13]This rule applies by analogy to interlocutory applications.11
9 Rule 14.6(1)(b); Bradbury v Westpac Banking Corp, above n 7, at [27]–[28]; and Prebble v Awatere Huata (No 2) [2005] NZSC 18, [2005] 2 NZLR 467 at [6].
10 High Court Rules, r 14.6(4)(a).
11 MV Celebre Ltd v Airwork Flight Operations Ltd [2015] NZHC 1400 at [9]–[10]; and Ip v Ip
[2016] NZHC 528 at [16].
[14] At the commencement of the hearing on 22 June 2023, the plaintiffs sought an adjournment because the third defendant had filed a second supplementary affidavit of documents just prior to the hearing, and the plaintiffs wanted to review the documents in case they were relevant to the application. I directed that the hearing of the application would proceed on 22 June 2023, but would be adjourned part heard to allow the plaintiffs to review the documents and, if necessary, to file and serve any further submissions or put additional documents before the Court. However, the plaintiffs then advised that they wished to discontinue their application.12
[15] Therefore, there is a presumption that the third defendant is entitled to costs unless the Court finds that there are circumstances which make it just and equitable that the presumption should not apply.13
[16] Mr Bates, for the plaintiffs, does not refer expressly to the presumption in r 15.23 in his memorandum. However, he submits that costs should lie where they fall or be reserved on the basis that the general practice in relation to costs in the context of unsuccessful applications for strike out arising from breaches of discovery orders is to award costs in favour of the unsuccessful applicant. Mr Bates relies on sections from the text Disclosure.14
[17] However, the sections cited by Mr Bates appear to be referring to circumstances where an application for strike out has been heard and, although strike out has not been ordered, the Court has imposed conditions on the party who has breached orders or directions in relation to discovery. That is not the position in this case.
[18] Mr Bates also refers to several cases in this regard, in particular Hurley v Valero Energy (Ireland) Ltd.15 In that case, the Court refused to strike out the plaintiffs’ proceedings but awarded costs against the plaintiffs who were in breach of their discovery obligations. Mr Bates submits that Hurley is a good example of a principled
12 Minute of Associate Judge Skelton, above n 3, at [8].
13 See Jessica Gorman and others McGechan on Procedure (online looseleaf ed, Thomson Reuters) at [HR15.23.01].
14 Paul Matthews and Hodge M Malek Disclosure (5th ed, Sweet and Maxwell, London, 2017) at [17.21] and [17.41].
15 Hurley v Valero Energy (Ireland) Ltd [2022] IEHC 651.
approach to awarding costs to an unsuccessful applicant seeking to strike out a claim or defence for non-compliance with discovery orders. However, again, in Hurley, the application for strike out was fully heard and, although the Court refused to order strike out, it made findings against the plaintiffs in respect of their discovery obligations and ordered that the plaintiffs provide an additional affidavit disclosing full details of their disposal or destruction of documents, together with other directions. The Court also found that the plaintiffs had expressly acknowledged that they had undertaken further searches for relevant documents and provided supplemental discovery in response to the defendant’s application for strike out.
[19] In the present case, no application has been made by the plaintiffs and no orders have been made against the third defendant for further and better discovery under r 8.19 of the High Court Rules. The plaintiffs’ application for strike out was not heard because it was discontinued on the morning of the hearing. At that time the third defendant had filed and served three supplementary affidavits of documents after the time for compliance with the original discovery order in September 2022. However, unlike the position in Hurley, the third defendant has not expressly acknowledged that it has provided supplementary affidavits in response to the plaintiffs’ application for strike out. The first supplementary affidavit appears to have been filed in order to discover documents that had been provided to the plaintiffs in response to a series of requests under the Local Government Official Information and Meetings Act 1987. The second and third supplementary affidavits appear to have been filed following a further review of documents by the third defendant’s staff to ensure all documents have been discovered in accordance with the third defendant’s continuing obligations in relation to discovery under r 8.18 of the High Court Rules.
[20] With regard to the alternative application for leave to apply for summary judgment, Mr Bates submits that it became clear to the plaintiffs at the commencement of the hearing on 22 June 2023, in light of observations made by the Court, that the application for leave to apply for summary judgment may well not have succeeded if it was pursued further. Mr Bates submits that the abandonment of the application was a pragmatic decision and did not suggest the application was ill-founded or pursued unreasonably to that point. While I accept it may have been a pragmatic decision,
that does not change the fact that the plaintiffs decided to discontinue their application because they came to the view that it may well not have succeeded.
[21] Overall, I am not satisfied that there are circumstances in this case which make it just and equitable that the presumption in r 15.23 of the High Court Rules should not apply. The plaintiffs are required to pay the third defendant’s costs of the applications.
Increased costs
[22]The third defendants seek increased costs on two bases.
[23] First, the third defendants seek increased costs on the basis that the plaintiffs’ applications were entirely without merit and the plaintiffs’ conduct was unreasonable.16
[24] In Ip v Ip, the Court considered an application for increased costs in the context of discontinuance. The Court held that:17
[21] Lack of merit is one of the grounds for an order of increased costs under r 14.6. However, it is difficult to justify an order of increased costs on this basis where the application has been discontinued, since the court has not had an opportunity to assess the merits of the case in a hearing.
[25] In N-Tech Ltd v Abooth Ltd, Kós J cited a number of key cases discussing the effect of unmeritorious claims on an award of increased costs.18 He held:19
[108] It follows from these authorities that increased or indemnity costs may be awarded on the basis of lack of merit, in a case where the trial is not completed, only where the lack of merit is both obvious and incontrovertible. So clearly so that there is no reasonable possibility that the Court might form a different view with the benefit of all the evidence and closing submissions. No difficult or detailed speculation is involved. The claim is and was so flawed that nothing in the evidence and submissions to follow could save it – and the plaintiff has acted unreasonably in bringing or continuing the claim. It is, thus stated, a double hurdle. The first assesses the claim; the second, the claimant’s conduct.
16 Rules 14.6(3)(b)(ii) and (iii) of the High Court Rules.
17 Ip v Ip, above n 11, at [21].
18 N-Tech Ltd v Abooth Ltd [2012] NZHC 1167 at [100]–[107].
19 At [108].
[26] As observed by Duffy J in Ip v Ip,20 although that costs decision arose from a civil trial regarding alleged fraud, the general findings seem equally applicable to an interlocutory application.
[27] The third defendant has set out a number of reasons why it says that the plaintiffs’ claim lacked merit and why the plaintiffs’ conduct in the circumstances was unreasonable. Although, I consider that the plaintiffs faced substantial difficulties with their application for strike out or for leave to apply for summary judgment, I do not consider the very high threshold set out in N-Tech Ltd has been met in this case.
[28] Further, it seems to me that the issue of the reasonableness of the plaintiffs’ conduct, particularly in relation to the request for an adjournment and the discontinuance on the morning of the hearing, is bound up with the fact that the third defendant provided a link to additional documents on the afternoon before the hearing, and then filed a second supplementary affidavit of documents on the morning of the hearing. Even though the plaintiffs had been aware that the third defendant was undertaking a further review of documents, and the plaintiffs had the opportunity to pursue their application on the basis that it would be adjourned part heard, it seems to me that the timing of the third defendant’s further supplementary discovery, being just before the hearing, is a factor that should be taken into account in considering the application for increased costs.
[29] Overall, I do not consider this is a case where increased costs are justified on the basis of lack of merit and unreasonable conduct.
[30] The second basis is that the third defendant made two Calderbank offers which the plaintiffs did not accept. As noted above, a failure without reasonable justification to accept an offer of settlement is also grounds for an order for increased costs under r 14.6.21
[31]In the case of a discontinued interlocutory application, it was stated in
Holdfast NZ Ltd v Selleys Pty Ltd that:22
20 Ip v Ip, above n 11, at [22].
21 Rule 14.6(3)(b)(v) of the High Court Rules.
22 Holdfast NZ Ltd v Selleys Pty Ltd (2005) 17 PRNZ 897 (CA) at [29].
…any party seeking increased costs on the basis of the other’s failure “without reasonable justification” to accept a settlement proposal will need to establish clearly that the failure was unreasonable. More evidence than normal is required because the court does not have a definitive judgment against which to contrast the settlement offer. A court cannot assume that a discontinuance is akin to judgment for the defendant…
[32] In this case, the third defendant made two settlement offers on a “without prejudice save as to costs” basis on 1 May 2023 and 16 June 2023. Both offers were directed towards the plaintiffs’ application for strike out or leave to apply for summary judgment, and proposed that the application should be withdrawn and the third defendant would not seek any orders as to costs.
[33] Clearly, the Court did not have the opportunity to hear the parties’ submissions on the plaintiffs’ application and determine the merits. Further, the reasonableness or otherwise of rejecting an offer must be assessed at the time when the offer was made rather than with the benefit of hindsight.23
[34] In the present case, the third defendant’s offers were essentially that the plaintiffs should abandon their application and the third defendant would not seek costs. The offers required the plaintiffs to accept that their application had no merit. The third defendant contends that the ultimate discontinuance of the application should be treated as being akin to judgment for the third defendant and that the failure by the plaintiffs to accept either of the offers was unreasonable. However, in the absence of any definitive judgment on the merits, and again taking into account the circumstances of the discontinuance which is bound up with the further supplementary discovery by the third defendant, I do not consider that this is a case where increased costs are appropriate.
Quantum of costs
[35] I have found that the third defendant is entitled to costs on the plaintiffs’ interlocutory applications and I consider that scale costs on a 2B basis are generally appropriate.
23 New Zealand Sports Merchandising Ltd v DSL Logistics Ltd, HC Auckland CIV-2009-404-5548, 19 August 2010 at [36].
[36] With reference to the third defendant’s schedule of costs and disbursements attached to its memorandum dated 2 August 2023, I am not prepared to allow the first three items relating to applications by the third defendant for extensions of time for filing a notice of opposition. It is not clear to me that the plaintiffs should bear the costs of these applications.
[37] The third defendant has sought band C time allocations for the preparation and filing of its notices of opposition and affidavits. I am satisfied that this is appropriate given the extent of the affidavit evidence filed on behalf of the plaintiffs, and the nature of the allegations made by the plaintiffs, which the third defendant had to fully respond to.
[38] Mr Bates takes issue with the disbursement costs claimed for the expert evidence of Mr Hutt. However, in my view this evidence was necessary in order for the third defendant to properly defend the application for leave to apply for summary judgment, and a party is entitled to recover the reasonable actual fees and expenses of its expert witnesses.24
[39] Taking into account the deductions referred to above, the total costs allowed are $21,271 and disbursements of $7,494.
Result
[40] The third defendant is entitled to costs in the sum of $21,271 and disbursements of $7,494.
Associate Judge Skelton
Solicitors:
Brown & Bates Ltd, Napier for Plaintiffs Rice Spier, Auckland for Third Defendant
24 Jessica Gorman and others, above n 13, at [HR14.12.01(4)(d)].
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