Shields v Hayward
[2017] NZHC 1216
•6 June 2017
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV-2014-404-828 [2017] NZHC 1216
BETWEEN RUVE ADELE SHIELDS
Plaintiff
AND
CARLA HAYWARD First Defendant
CORBAN REVELL Second Defendant
Hearing: On the papers Appearances:
D A Wood for Plaintiff
First Defendant in person
M C Smith for Second DefendantJudgment:
6 June 2017
JUDGMENT OF LANG J [on costs]
This judgment was delivered by me on 6 June 2017 at 3.30 pm, pursuant to Rule 11.5 of the High Court Rules.
Registrar/Deputy Registrar
Date……………
SHIELDS v HAYWARD [2017] NZHC 1216 [6 June 2017]
[1] On 24 February 2017 I issued a judgment in which I dismissed proceedings brought in the name of the plaintiff against the first and second defendants.1 I am now required to fix costs in relation to the proceeding.
Background
[2] The plaintiff sought an order setting aside the transfer of a property to a trust of which she and her daughter Carla, the first defendant, were beneficiaries. She claimed that she had entered into the transaction in circumstances where she had been subject to undue influence by Carla, and / or that Carla had been guilty of unconscionable conduct towards her. I dismissed both of these claims.
[3] I also dismissed claims against the law firm Corban Revell, who had acted for the plaintiff when she entered into the transactions. The plaintiff alleged that Corban Revell had breached a duty of care to exercise proper skill and competence to ensure that the plaintiff’s instructions were not given as a result of undue influence or unconscionable conduct by Carla. The plaintiff also failed in an alternative claim that Corban Revell had breached a duty to ensure she fully understood the nature and effect of the transaction at the time she undertook it.
The application by Carla for indemnity costs
[4] Carla was not represented by counsel at the trial. Instead she represented herself. She had earlier been represented both in this proceeding and in proceedings in the Family Court by the law firm Price Berridge. She seeks indemnity costs against the plaintiff in the sum of $23,236.69, being the fees charged by that firm between May 2004 and 14 February 2015. Carla attaches copies of invoices from Price Berridge in support of her application.
[5] There are several problems surrounding Carla’s application for indemnity costs. First, the invoices demonstrate that many of the attendances in respect of
which costs are sought relate to proceedings in the Family Court. Those attendances
1 Shields v Hayward [2017] NZHC 261.
fall outside the scope of the current proceeding. Costs incurred in respect of the
Family Court proceeding are not claimable in this proceeding.
[6] In addition, costs in this Court are governed by Part 14 of the High Court Rules 2016. Rule 14.6(4) sets out the circumstances in which the Court may order a party to pay indemnity costs. It relevantly provides as follows:
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) …
(3) …
(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
(b)the party has ignored or disobeyed an order or direction of the court or breached an undertaking given to the court or another party; or
(c)costs are payable from a fund, the party claiming costs is a necessary party to the proceeding affecting the fund, and the party claiming costs has acted reasonably in the proceeding; or
(d)the person in whose favour the order of costs is made was not a party to the proceeding and has acted reasonably in relation to it; or
(e)the party claiming costs is entitled to indemnity costs under a contract or deed; 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.
[7] I accept the plaintiff’s submission that none of the circumstances warranting
an award of indemnity costs has been shown to exist in the present case.
[8] I therefore award Carla costs on a Category 2B basis in respect of all steps taken in the proceeding up until the point where she dispensed with the services of Price Berridge. It appears from Minutes contained on the file that Carla was represented by counsel at all steps taken in the proceeding up to and including the conference scheduled to be held on 1 September 2015 before Associate Judge Doogue. Thereafter she represented herself. Carla is also entitled to disbursements as fixed by the Registrar.
The claim by Corban Revell for increased costs
[9] Corban Revell seeks an award of increased costs against the plaintiff on the following basis:
a.Mrs Shields pursued an argument against Corban Revell that lacked merit.
b. Mrs Shields failed without reasonable justification to accept Corban
Revell’s legal argument as set out in correspondence before trial; and
c.Mrs Shields failed, without reasonable justification, to accept an offer of settlement to dispose of the proceeding.
[10] Corban Revell has produced copies of letters sent between counsel during
2014, 2015, 2016 and 2017 in which Corban Revell set out the reasons why the claim against Corban Revell was bound to fail. Corban Revell offered as early as August 2014 to settle on the basis that it would not seek costs if the plaintiff discontinued her claim at that point. Mr Wood’s responses on behalf of the plaintiff rejecting this and other offers are similarly before the Court.
[11] The Court has the power to require a party to pay increased costs where that party has contributed unnecessarily to the time or expense of a proceeding by pursuing an argument that lacks merit or failing to accept an offer of settlement.2
Corban Revell submits that both grounds have been established against the plaintiff, and that the plaintiff ’s failure to acknowledge the weakness of her position at an early stage should be reflected in an award of Category 2B costs increased by 50 per
cent.
2 High Court Rules, rr 14.6(3)(b)(i) and (v).
[12] Corban Revell’s argument has merit, because it must have been reasonably clear to the plaintiff’s advisers from an early stage that the claim against Corban Revell faced significant factual obstacles. In particular, it was always going to be difficult to establish that Mr Allen of Corban Revell ought to have been alert in July
2012 to the possibility that the plaintiff was a vulnerable person because of mental infirmity when the solicitors subsequently instructed by the plaintiff and her other daughter Sarah in August 2013 did not detect anything amiss. The file note prepared by the plaintiff’s previous solicitor, Mr Jones, in December 2011 also put the plaintiff’s advisers on notice that the plaintiff is likely to have had a genuine reason for wishing to favour Carla to the exclusion of Sarah.
[13] I therefore consider the plaintiff ought to have accepted well before trial that her claim against Corban Revell was unlikely to succeed. For that reason she should have given much more careful consideration at an early stage to the offers of settlement that Corban Revell made rather than attempting to make counter-offers that required Corban Revell to meet her costs. She has been on notice for a considerable period that she would be subject to an application for increased costs if she took the case to trial against Corban Revell.
[14] I do not consider, however, that an increase of 50 per cent is appropriate. I held that Carla was in a position of trust and influence in respect of her mother, and that the transaction called for an explanation. The plaintiff was also not required to accept the draft briefs of evidence of Corban Revell’s witnesses at face value. In particular, the evidence given by Mr Allen did not enjoy support from detailed contemporaneous file notes of the type made by Mr Jones in December 2011.
[15] I consider that an appropriate outcome is for the plaintiff to pay Category 2B costs increased by one-third to reflect the factors to which I have referred. That award applies to all steps taken from 31 August 2014. Corban Revell is also entitled to disbursements as fixed by the Registrar.
[16] I do not consider, however, that allowance should be made for second counsel at trial. By the time of the trial the issues in dispute were clear and they were also relatively straightforward. I therefore decline to certify for second counsel.
[17] The parties should now be in a position to reach agreement regarding the quantum of costs. Should any issue remain in dispute, counsel have leave to file
brief memoranda setting out that issue and I will determine it on the papers.
Lang J
Solicitors:
D A Wood, Auckland
D N Jury, Waitakere
Gilbert Walker, Auckland
Copy to: First Defendant
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