Rule v Simpson
[2017] NZHC 2596
•24 October 2017
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV-2017-404-000289 [2017] NZHC 2596
UNDER Part 18 of the High Court Rules and the
Declaratory Judgments Act 1908
BETWEEN
MERVYN JOHN RULE Plaintiff
AND
SHERYN ELAINE SIMPSON First Defendant
NIGEL ROBER GERBIC Second Defendant
Hearing: 20 October 2017 (Determined on the papers) Counsel:
D Chambers QC for Plaintiff
R B Stewart QC, B Morley and N Penman-Chambers for First and Second Defendants
Judgment:
24 October 2017
COSTS JUDGMENT OF ASSOCIATE JUDGE MATTHEWS
[1] On 6 September 2017 the Court issued judgment on two interlocutory applications brought by the defendants, first to strike out large parts of the statement of claim and secondly for an order directing that there be a separate trial of a defined issue. Apart from an order being made striking out one allegation in one paragraph of the first amended statement of claim, both applications were dismissed.
[2] The plaintiff now applies for costs. The defendants accept that costs are payable and say that this should be on a 2B basis.
RULE v SIMPSON [2017] NZHC 2596 [24 October 2017]
[3] The plaintiff, however, applies for:
(a) Costs on a 2B basis in respect of notices of opposition filed in respect of each application, and for appearance at the hearing;
(b) Costs on a 2C basis for preparation of submissions; (c) An uplift of costs of 50 per cent.
Should costs be on a 2C basis for preparation of submissions?
[4] Having considered the submissions prepared for the plaintiff I am satisfied that a comparatively large amount of time would have been required for their preparation. This case raises complex issues of both fact and law and it is strenuously opposed. Detailed submissions were prepared across a wide range of legal issues. Counsel for the defendants says that if the plaintiff’s preparation time was increased, this was likely to have been in consequence of the plaintiff substantially reformulating his claim by adding extensive amendments to the pleading as well as new alternative claims and causes of action, shortly before the hearing. Whilst that did occur, I do not accept that that was the reason that the submissions needed to be extensive and I am in no doubt that more time was required for their preparation than would usually be the case on a proceeding with costs assessed on a 2B basis. Accordingly costs will be on a 2B basis except in relation to the preparation of submissions which will be on a 2C basis.
Should there be an uplift in costs?
[5] Rule 14.6(3) provides that a court may order a party to pay increased costs in certain circumstances. Lady Chambers says, first, the nature of these applications was such that the time required by the plaintiff would substantially exceed the time allocated under band C. This ground is not made out. I am satisfied that the time allocation in band B is adequate except in relation to preparation of submissions, as above.
[6] Secondly, counsel says that the defendants have contributed unnecessarily to the time or expense of this proceeding by bringing these applications. Counsel says the strike out application was misconceived as it was without merit and had next to no chance of success given the extensive evidential record already filed, which demonstrated a plainly arguable case, and the paragraphs in dispute were highly relevant to the issues which have to be determined in this case, which concerns what she describes as a complex historic and fact-specific enquiry. If the application to strike out the disputed paragraphs had been successful the only effect would have been to make the defendants worse off in terms of knowing the true nature and details of the claim they are required to face. In this respect counsel referred specifically to paragraph [42] of the substantive judgment.
[7] Thirdly, counsel says that the application to strike out the third to sixth causes of action was based on a fundamental misconception of the knowledge required for breach of trust and knowing receipt. Finally counsel says that there was no proper basis for the serious allegations made by the defendants in the application that the disputed paragraphs were an abuse of process, some were vexatious and prejudicial, and rr 13.8.1 and 13.8.2 of the Client Care Rules were contravened.
[8] The defendants deny that the strike out application was without merit, noting that a day before the application was due to be argued the plaintiff filed an amended statement of claim with substantial amendments to the claim as pleaded previously. Counsel says this step was clearly prompted by a recognition, in the course of preparation for the hearing, that there were deficiencies in the first pleading and that it was vulnerable to the strike out application. Counsel also says that the application was not based on a fundamental misconception of the knowledge required for breach of trust and knowing receipt, and that the plaintiff’s fulsome pleadings were not required as the material pleaded was largely if not entirely lifted from a judgment
already issued.1
[9] Finally, Mr Morley says there was nothing inappropriate about pleading that the disputed paragraphs were an abuse of process and/or vexatious and/or
prejudicial, as these are in fact the grounds for a strike out, and that the references to
1 Gerbic v Gerbic (1991) 8 FRNZ at 518.
the client care rules did not occupy a significant part of the time taken for argument. Counsel says that the application for a separate hearing was properly brought. He denies the plaintiff’s allegation that they are endeavouring to use the proceeding to put the plaintiff to unnecessary expense, or otherwise acting improperly.
Discussion
[10] So far as the application to strike out the disputed paragraphs is concerned, I conclude that the defendants did contribute unnecessarily to the time to be taken on this case and the expense of bringing it, by pursuing this application. The pleadings concerned were certainly fulsome in the detail given in respect of the allegations made. This is discussed in full in the judgment and I need only repeat here the observation I made at paragraph [36]:
[36] This part of the application by Ms Simpson and Mr Nigel Gerbic is unusual, in that it challenges a large number of paragraphs of the statement of claim as containing too many particulars, and as the Court of Appeal put it in Chesterfields Preschools, strays into setting out the evidence which will be relied on. Whilst the principle stated by the Court of Appeal has long been recognised as a fundamental principle of good pleading, in most cases it is unclear precisely where the line between giving sufficient particulars, on the one hand, and providing so many particulars that they amount to evidence, on the other hand, should be drawn. The majority of cases in relation to adequacy of pleadings that come before this Court are based on contentions that the pleadings do not give sufficient particulars, and further particulars are requested. The skill of the draftsman lies in balancing these competing requirements. I venture the view that it is preferable to err on the side of providing more information than might strictly be required, rather than less, because the latter will inevitably lead to the pleading being inadequate, whereas if the pleading is clear in relation to the causes of action that are brought against the defendants, and relief is clearly sought in relation to each cause of action, it will generally be of assistance to defendants to have early notice in fulsome terms of a plaintiff’s case, even if the hazy line between adequacy and excess is crossed.
[11] This case was materially different from the case relied upon by the defendants, Commissioner of Inland Revenue v Chesterfields Preschools Ltd.2
[12] I accept Lady Chambers’ submission that in relation to the disputed paragraphs, nothing would have been gained by the orders being made. The
2 Commissioner of Inland Revenue v Chesterfields Preschools Ltd [2013] NZCA 53, [2013] 2
NZLR 679.
application was largely, indeed almost completely, a waste of time. Analysis of Chesterfields shows that the pleadings in that case were flawed on a number of grounds that cannot be levelled at the pleadings in this case.
[13] So far as the application to strike out the third to sixth causes of action is concerned, I am not satisfied that this qualifies for an increase from scale fees. The argument was more soundly based than the argument in respect of the disputed paragraphs, though ultimately unsuccessful. There is some force in Lady Chambers’ submission that it need not have been pursued given the amended pleading, but the amendment was made at the last hour. I do not intend to canvass the opposing views of counsel about the legal principles to be applied, as again there is discussion of this in the substantive judgment. It cannot be said in my opinion that bringing this part of the application contributed unnecessarily to the time or expense of the proceeding.
[14] I conclude therefore that in relation to the application to strike out there should be a modest uplift in the scale fees.
[15] I turn to the application for a separate trial. In my opinion this application had not been properly thought through. The principles to be applied by the Court are summarised in the substantive judgment. Reference is also made there to the time which might be expected to be taken in arguing a separate question, as distinct from proceeding to trial. My conclusion on this application is in paragraph [103] of the judgment:
[103] I find that it is not possible to define with precision a demarcation between issues which should be addressed in a first trial, and those left for a second trial; I find that the time that would be saved by proceeding this way would be well outweighed by the difficulties it would cause and the additional time that would be taken by a second trial, which would be inevitable in any event. I do not find any discernible advantages in proceeding as sought.
[16] I conclude in this respect that the defendants have contributed unnecessarily to the time and expense of this proceeding by bringing this application, which had little merit.
[17] In reaching my conclusions I accept the defendants’ contention that there was nothing inappropriate in alleging that the disputed paragraphs were an abuse of process and/or vexatious and/or prejudicial, these being the bases in the Rules for a strike out. I do not think that the references to the Client Care Rules were in order; they were neither necessary nor helpful, and were, as I have found, wrong. For all that, they added little to the case overall and I do not take them into account in assessing additional costs.
Outcome
[18] The defendants will pay costs thus:
(a) In relation to preparation of submissions, costs will be assessed on a 2C
basis;
(b) In relation to other attendances costs will be assessed on a 2B basis;
(c) Once figures have been derived in accordance with (a) and (b), there will be an uplift of 15 per cent on the total;
(d) Disbursements fixed by the Registrar, if not agreed.
J G Matthews
Associate Judge
Solicitors:
Deborah Chambers QC, Auckland Robert Stewart QC, Auckland Hesketh Henry, Auckland
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