Simpson v Sax

[2015] NZHC 2686

IN THE HIGH COURT OF NEW ZEALAND TAURANGA REGISTRY

CIV-2013-470-493 [2015] NZHC 2686

BETWEEN

LUKE ANDREW SIMPSON

Plaintiff

AND

JANINE DAVINA SAX First Defendant

LUKE ANDREW SIMPSON AND JANINE DAVINA SAX as trustees of the LUKE AND JANINE SIMPSON FAMILY TRUST

Second Defendant

Hearing:	(On the papers)
Counsel:	E M Eggleston for Plaintiff P F Gorringe for First Defendant
Judgment:	30 October 2015
Reissued:	3 November 2015

COSTS JUDGMENT OF BREWER J

This judgment was delivered by me on 30 October 2015 at 3:30 pm pursuant to Rule 11.5 High Court Rules.

Registrar/Deputy Registrar

Solicitors:           Holland Beckett (Tauranga) for Plaintiff

Gina Jansen (Hamilton) for First Defendant

SIMPSON v SAX [2015] NZHC 2686 [30 October 2015]

Introduction

[1]      In my Judgment delivered on 26 June 2015,1 I found that:

(a)      Mr Simpson and Ms Sax  both succeeded in their occupation rent claims against one another.  I set off the amounts against each other and  directed  that  Mr  Simpson  pay  to  Ms  Sax  $12,532.50  in occupation rent.

(b)Mr Simpson was successful in his claims against the Trust for interest on a loan he made to the Trust and for outgoings and repairs he paid in relation to property owned by the Trust.  The Trust owes Mr Simpson a total of $17,302.28.

(c)      Ms  Sax  was  unsuccessful  in  her  claim  against  Mr Simpson  for wrongfully inducing a breach of contract and in her claim against the Trust  for  reimbursement  of  payments  made  in  respect  of  trust property.

[2]      The effect of my Judgment is that, after accounting for the fact that both parties share equally in the liability of the Trust to Mr Simpson:

(a)       Ms Sax receives $3,881.36 ($12,532.50 – ($17,302.28/2)) (b) Mr Simpson receives $8651.14 ($17,302.28/2).

[3]      I held also that costs lie where they fall.  But in a memorandum dated 5 July

2015, Mr Eggleston for Mr Simpson asked for recall of my judgment on the basis that Mr Simpson had made several Calderbank offers to Ms Sax prior to the hearing. I recalled only the part of the Judgment relating to costs so that submissions could be made thereon.

[4]      This Judgment decides the costs to which the parties are entitled.

1      Simpson v Sax [2015] NZHC 1466, [2015] NZAR 1210.

Costs against a person who is legally aided

[5]      Ms Sax was legally aided throughout the litigation.  Section 45 of the Legal Services Act 2011 governs the recovery of costs against a person who is legally aided. An order may not be made against a legally aided person in a civil proceeding unless  the  Court  is  satisfied  that  there  are  exceptional  circumstances.2     A non- exhaustive list of exceptional circumstances is set out in s 45(3).  If the exceptional circumstances threshold is met, then the Court may make a person liable only for an

amount that is reasonable for the aided person to pay having regard to all of the circumstances, including the means of all the parties and their conduct in connection with the dispute.3     If I make a costs order, I must also specify the amount that Ms Sax  would  have  been  ordered  to  pay had  the  rule  in  s 45  not  affected  her liability.4

Do exceptional circumstances exist that make it appropriate for Ms Sax to pay costs?

[6]      As is characteristic of their approach to the proceedings, both Mr Simpson and Ms Sax have filed prolix and repetitive submissions addressing every possible ground in s 45 that constitutes exceptional circumstances.  I am of the view that it is only necessary for me to address one ground, that is:5

[A]ny  unreasonable  refusal  to  negotiate  a  settlement  or  participate  in alternative dispute resolution.

[7]      This was the basis on which I recalled the portion of my Judgment dealing with costs.

[8]      Mr Simpson made five offers to Ms Sax to settle (without prejudice save as to costs) at various stages between March 2012 and March 2015.  Four of the offers would have resulted in Mr Simpson and Ms Sax receiving more or less what they actually received in my Judgment.  A more advantageous offer dated 14 February

2014  would  have  seen  Ms  Sax  receive  a  payment  of  around  $27,000  and

Mr Simpson receive around $20,000 from the Trust account.

2      Legal Services Act 2011, s 45(2).

3      Section 45(1).

4      Section 45(4).

5      Section 45(3)(e).

[9]      The rejection of an offer that is worth the same as the result of litigation cannot by itself be unreasonable.  A person has a fundamental right of access to the Courts to obtain what he or she is entitled to under the law.  Generally, litigants will be held to have unreasonably refused to accept a settlement where they would have been in a significantly better position overall had they accepted the offer of settlement.  However, unreasonableness is ascertained taking into account not only the size of the payment, but also the conduct of the recipient of the offer, in particular whether his or her actions contributed unnecessarily to the proceeding.  The size of

the offer in comparison to the actual costs of counsel is relevant also.6   So, there will

be circumstances where a litigant has failed to act reasonably by rejecting an offer which is similar to the recovery which he or she received in the final Judgment.  This is such a case.

[10]     These proceedings were for a relatively small sum of money.  There was no need for them to come before the Court.   Instead of considering Mr Simpson’s multiple and reasonable attempts to settle, Ms Sax chose to launch counter-claims against Mr Simpson, many of which were unmeritorious.  She also filed applications for  a  without  notice  injunction,  discovery,  review  and  strike  out  to  which Mr Simpson  responded,  but  which  she later discontinued.    In  doing  all  of this, Ms Sax unnecessarily prolonged the proceedings and put Mr Simpson to significant expense.    She  caused  Mr  Simpson  to  incur  legal  costs  on  a  2B  scale  of  over

$40,000.00.     I  am  satisfied  that  actual  costs  would  have  been  in  excess  of

$60,000.00.  When the value of the Judgment sum is considered in the light of the expense of the proceedings to Mr Simpson, Ms Sax unreasonably refused to settle. An ordinary litigant who was not legally aided in her position would have been considerably better off accepting the offers of settlement once the actual costs of counsel are taken into account.   Consequently, I find that Ms Sax’s unreasonable

refusal to settle warrants an order for costs being made against her.

6      See by analogy the jurisprudence in relation to the effect that Calderbank offers have on the awarding of increased costs under the High Court Rules: for example, Holdfast NZ Ltd v Selleys Pty Ltd (2005) 17 PRNZ 897 (CA); Gilbert v Shanahan (1997) 12 PRNZ 185 (HC).

What is a reasonable costs order against Ms Sax?

[11]     Mr Eggleston submits that because the claims against the Trust and Ms Sax were successful, costs should be awarded in his favour on the usual basis that costs follow the event.

[12]     Calculated on a 2B basis, Mr Simpson would be entitled to $40,198.00 in costs.  I set out his entitlement in the table below:

Item	Description	Time (in days)	Amount (@ $1,990 per day)
1	Commencement of proceedings by Plaintiff	3	$5,970.00
10	Preparation  for  Case  Management  Conference  on 23 February 2015	0.4	$796.00
11	Filing  memorandum  for  first  Case   Management Conference on 23 February 2015	0.4	$796.00
11	Filing  memorandum  for  callover  before  Associate Judge Bell on 28 April 2015	0.2	$398.00
11	Filing     memorandum     for    Case    Management Conference before Woodhouse J on 29 April 2015	0.4	$796.00
11	Filing memorandum re amended timetable directions on 18 May 2015	0.4	$796.00
12	Appearance at callover on 28 April 2015	0.2	$398.00
13	Appearance  at  Case  Management  Conferences  on 6 December 2013, 23 February 2015, 23 March 2015 and 29 April 2015	1.2	$2,388.00
20	List of documents on discovery	2.5	$4,975.00
30	Plaintiff ’s preparation of affidavits	2.5	$4,975.00
31	Plaintiff ’s preparation of list of issues, authorities and common bundle	2.5	$4,975.00
33	Preparation for hearing	3.0	$5,970.00

34	Appearance at hearing	1.25	$2,487.50
36	Memorandum     for    settlement     conference     on 13 August 2013	0.5	$995.00
36	Appearance at settlement conference on 13 August 2013	1	$1,990.00
36	Memorandum with respect to costs/reply	0.75	$1492.50
Total			$40,198.00

[13]     Mr Simpson would also be entitled to disbursements of $1,079.20.  I set out

this entitlement in the table below:

Item	Amount
Filing fee	$483.40
Binding costs	$200.20
Copying costs	$69.00
Auckland District Law Society Library research costs	$326.60
Total	$1,079.20

[14]     But, I can only make Ms Sax liable for an amount that is reasonable for the aided person to pay having regard to all the circumstances, including the means of all the parties and their conduct in connection with the dispute.

[15]     Ms Sax has provided an affidavit as to her means.  In it she deposes that:

(a)      She is due $12,532.00 from Mr Simpson, set off against her liability to the Trust of $8,651.14.  Therefore she will gain $3,880.86 from the Judgment.

(b)      She has no other assets.

(c)      She receives $355.52 per week through the Sickness and Disability Benefit  from  Work  and  Income  New Zealand.    She  has  no  other income.

(d)Although  she  has  received  $20,000.00  from  Victim  Support,  this amount has since been used to repay a loan she owed to her father’s trust for her legal fees (this is one of many litigations).

[16]     I am not prepared to accept Mr Eggleston’s submission that Ms Sax also has funds available to her through the Peter Sax No 2 Trust and the Trust.  Mr Eggleston has  not  provided  me  with  any  evidence  of  this  nor  sought  to  quantify  her entitlements.  I will not go behind the affidavit that Ms Sax has sworn.

[17]     In the light of Ms Sax’s financial position, it is not possible for her to be liable for costs and disbursements in the amount claimed by Mr Simpson. All he can achieve is a nominal costs payment.  Accordingly, Ms Sax must pay to Mr Simpson

$1,000 in costs.  This takes into account the fact that Ms Sax succeeded in her claim for occupation rent.

[18]     Had it not been for the operation of s 45 of the Legal Services Act 2011, Ms Sax would have been jointly and severally liable with the trustees of the Trust for

$41,277.20.

The Trust’s liability for costs

[19]     Turning to consider the position of the Trust.  The Legal Services Act 2011 does not apply to the Trust and so a costs award may be made against its trustees.

[20]     I note that r 14.14 of the High Court Rules provides that:

The liability of each of 2 or more parties ordered to pay costs is joint and several, unless the court directs otherwise.

[21]     I have concluded that Ms Sax can only pay costs in the order of $1,000. Therefore, I direct that the costs award that the Trust owes to Mr Simpson is owed severally to Ms Sax’s obligation.

[22]     The trustees of the Trust shall be liable to pay half of Mr Simpson’s scale costs and disbursements.  I understand that the present balance of the Trust Fund is

$58,106.27 and so there are funds to meet those costs.

Decision

[23]     Mr Simpson is entitled to costs:

(a)       Ms Sax must pay Mr Simpson $1,000 in costs.

(b)      The Trust must pay Mr Simpson $20,638.60 in costs.

Brewer J

Addendum

[24]     Earlier today, Mr Eggleston for Mr Simpson provided me with a decision of Duffy J7  and a memorandum asking me to set off any costs award made by me against Ms Sax against any entitlements Ms Sax may accrue in the various relationship property proceedings to which Duffy J’s Judgment relates.8

[25]     I will not do that.   I do not think I have jurisdiction and, in any event, it would require re-opening this proceeding.

7      Sax v Simpson [2015] NZHC 1497.

8      Memorandum of counsel for Mr Simpson with respect to costs, dated 30 October 2015.