Sparks v Olliver
[2021] NZHC 3600
•22 December 2021
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2015-404-2828
[2021] NZHC 3600
UNDER the Property (Relationships) Act 1976 IN THE MATTER
of s 182 of the Family Proceedings Act 1980
BETWEEN
SARAH PATRICIA SPARKS
Plaintiff
AND
GREGORY MARTIN OLLIVER
First Defendant
Continued next page)
Hearing: 23 October 2020, 19 March 2021, 28 April 2021.
Further submissions filed 10 & 17 May 2021,
2, 5 & 10 August 2021,
8 December 2021Appearances:
S P Sparks in person
J McCartney QC Amicus Curiae
PJK Spring and K J Ng for First and Second DefendantsJudgment:
22 December 2021
COSTS JUDGMENT OF DUFFY J
This judgment was delivered by me on 22 December 2021 at 4.00 pm pursuant to Rule 11.5 of the High Court Rules.
Registrar/ Deputy Registrar
SPARKS v OLLIVER [2021] NZHC 3600 [22 December 2021]
/2
BANKHOUSE TRUST LIMITED (as
trustee of the BANKHOUSE TRUST) Second Defendant
AUCKLAND WEST LEGAL SERVICES LIMITED, BAILEY TRUSTEE SERVICES LIMITED and THE GLOVER
FAMILY TRUST LIMITED (as trustees of the GLOVER TRUST)Third Defendant
CAPITAL INVESTMENTS TRUST
LIMITED (as trustee of the CAPITAL INVESTMENTS TRUST)
Fourth DefendantTHE BBG TRUST LIMITED (as trustee of the BBG TRUST)
Fifth Defendant
OLLIVER TRUSTEE LIMITED (as trustee of the OLLIVER FAMILY TRUST)
Sixth Defendant
THE PHOENIX TRUST LIMITED (as
trustee of the PHOENIX TRUST) Seventh Defendant
[1] The substantive hearing of this proceeding commenced on 11 July 2017 and was adjourned part heard. The proceeding was scheduled to resume on 10 June 2019. However, there were settlement discussions throughout 2018 and 2019. The resumed hearing was further adjourned to 15 June 2020. However, on 19 May 2020 the plaintiff, Sarah Sparks, filed a notice of discontinuance. This was done without any agreement with the defendants as to costs.
[2] Rule 15.23 of the High Court Rules 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 up to and including the discontinuance.
[3] In reliance on r 15.23 Mr Olliver seeks costs against Ms Sparks. Those costs are sought on an indemnity or increased basis, or at the very least at scale, being category 3B of the Schedule to the High Court Rules.
[4]On the other hand, Ms Sparks contends she should not be liable for costs.
[5]Counsel assisting submits that costs should be set at no more than category 2B.
[6]The principles underlying the application of r 15.23 are well explained in
McGechan on Procedure:1
The following emerge from Chroma Colour Prints Ltd v Tridonic Atco NZ Ltd and FM Custodians Ltd v Pati and Opus International Consultants Ltd v Colac Bay Vision Ltd:
(a)the r 15.23 presumption obviates any requirement for the defendant to demonstrate that the plaintiff acted unreasonably in commencing and then discontinuing the proceeding. The defendant has the advantage of the presumption even where there has not been such unreasonableness.
(b)Although the r 15.22 presumption is designed to give a certain a predictable outcome upon discontinuance, it may be displaced if the court finds there are circumstances which make it just and equitable that it should not apply.
1 Andrew Beck and others McGechan on Procedure (looseleaf ed, Brookers) at [HR15.23.01] (footnotes omitted).
(c)Although the court is not limited in the factors it may take into account when considering whether the presumption is displaced, generally:
(i)the court will not consider the merits of the respective cases, unless they are so obvious that they should influence the costs outcome.
(ii)the court will consider the reasonableness of the stance of both parties up to the point of discontinuance: whether it was reasonable for the plaintiff to bring and continue the proceeding; and for the defendant to oppose the proceeding. The plaintiff will not be able to avoid the presumption by showing that at one point it had reasonable grounds for believing it would be successful in the proceeding.
(iii)the reason for discontinuing may be relevant, for example a change of circumstances rendering the proceeding unnecessary. However it must be clear that the plaintiff would have succeeded had the circumstances (in this case new legislation) not changed: The Star Trust v Hamilton City Council.
(d)the court’s general discretion in r 14.1 as to costs can also override the general principles relating to discontinuance.
Background
[7] The plaintiff, Ms Sparks, commenced proceedings in the Family Court at Auckland on 26 September 2015 under the Property (Relationships) Act 1976 (PRA) and the Family Proceedings Act 1980 (FPA). At the same time she applied to transfer the proceedings to this Court. On 2 October 2015 Judge McHardy made an order transferring these proceedings to the High Court.
[8] Ms Sparks and the first defendant, Mr Olliver, began a de-facto relationship in or about 1997. They married on 18 March 2000 and separated on 4 July 2012. The marriage was dissolved on 26 September 2014. They have three children.
[9] The statement of claim on which this proceeding would have gone to trial pleads that as at the date of their separation the relationship property of Ms Sparks and Mr Olliver comprised:
(a)sundry artwork;
(b)Ms Sparks’ shares and interests in Markom PR Ltd (a company through which she ran a public relations business);
(c)sundry furniture and chattels including a wine collection in the former family home;
(d)all shares and interests in various corporate trustees named in the statement of claim;
(e)the first defendant’s powers of appointment and removal of beneficiaries in Capital Investments and Bankhouse (the personal powers) under Clayton v Clayton principles; and
(f)any and all claims owned by each of them or jointly by way of implied and/or constructive trust under Lankow v Rose principles against the second through to seventh defendants.
[10] Items (a), (b) and (c) of the property relationship claim were items personally owned by either one or both spouses. Resolving those claims would have required valuation evidence and a decision on the division of those items of property.
[11] Resolving items (d), (e) and (f) would have been much more complicated. Mr Olliver was a property developer. During the marriage he carried out this business through a complex web of registered companies in which the shares were held by corporate trustees of trusts that were generally for the benefit of one spouse or both spouses and their children.
[12] It is not necessary for the purposes of determining costs following discontinuance to outline with specificity the various companies, the respective corporate trustee that held shares in a specific company and the specific settlor, trustees and beneficiaries of each such trust. The short point for the purpose of costs is that insofar as any specific company engaged in a development may have owned assets of value those assets as well as the shares of that company were legally removed from either Ms Sparks or Mr Olliver. Such arrangements may provide the individuals for
whom they are intended to benefit with good protection from creditors and they may provide tax advantages and other benefits. However, they can present an obstacle to resolving relationship property claims simply because of the legal distance they place between the spouses and items of value. Here while Ms Sparks and Mr Olliver appeared to be very wealthy during their marriage, they personally owned very little.
[13] From the statement of claim filed by Ms Sparks it is clear that during the marriage she was aware of the company and trust structures used for the developments and participated in their management. Paragraph [24] of the second amended statement of claim pleads that from May 2009 until August/September 2012, while operating Markom PR Ltd and fulfilling parental responsibilities to the couple’s three children, Ms Sparks “had responsibilities managing six actively trading entities and their companies” in conjunction with another trustee (not Mr Olliver). This was seemingly brought about because by late 2008 Mr Olliver was facing an application to bankrupt him. On 13 May 2009 this Court approved the making of orders for a creditors’ scheme, which staved off bankruptcy. It would seem, therefore, that from late 2008 until the time of separation Ms Sparks was active in the operation of the various property development companies and their corporate trustees; she would therefore have been knowledgeable as to their structures and purposes. However, after the date of separation her knowledge of these matters would have diminished through lack of active engagement with them as well as changes made to them by Mr Olliver.
[14] Ms Sparks claimed the various trusts with which the shares in the property development companies were associated were nuptial trusts and therefore vulnerable to claims for orders of resettlement under s 182 of the FPA. Secondly, she sought orders pursuant to s 44 of the PRA. Thirdly, she claimed that various trust powers held by Mr Olliver were themselves valuable personal property owned by him that was subject to the PRA. Finally, she claimed that she sought relief from either Mr Olliver or entities associated with Mr Olliver based on constructive trust principles applied in Lankow v Rose.2
2 Lankow v Rose [1995] 1 NZLR 277 (CA).
[15] However, by 2017 when the proceeding first came before the Court for a substantive hearing both Ms Sparks and Mr Olliver were acting for themselves. Also, by that stage Mr Olliver claimed he owned nothing and the various companies and trusts against which Ms Sparks also sought relief under the PRA, the FPA and in equity were insolvent.
[16] Ms Sparks had issued two persons who had carried out financial work for companies subject to the proceeding with a subpoena duces tecum requiring those witnesses to bring financial records with them. They did so and they were questioned. However, the information they could provide was insufficient to give the Court a full picture of the financial affairs of Mr Olliver or those companies. Accordingly, the hearing was adjourned part heard to allow more extensive information to be obtained. The concern at the time was that Mr Olliver appeared to be receiving funding from a bank with whom he had a long-standing business relationship. This was in circumstances where he claimed to have minimal assets of any real worth and the companies and trusts associated with him and his family were said to be in the same position. It was difficult to see how he could continue to receive funding from a bank when that was the case. The Court’s concern was that there were assets of value that had not been disclosed.
[17] In 2017, because both Ms Sparks and Mr Olliver were not legally represented, and each maintained he or she was without funds to instruct a lawyer, this also meant neither party were able to engage the necessary expert witnesses to give evidence on whether orders under s 182 of the FPA, s 44 of the PRA or in equity against any of the various company/trust structures would be worthwhile. Legal principles cannot be applied when the facts to support them have not been proved. For that reason the Court used its power under s 38 of the PRA to appoint Keith Goodall, who is a financial expert with expertise in complex relationship property disputes involving corporate and trust structures, to conduct an inquiry to see if the various entities associated with Mr Olliver had value and, if they did, to identify the legal connections if any between those entities and Mr Olliver and Ms Sparks.3
3 Sparks v Olliver minute dated 3 August 2017.
[18] During the life of the proceeding Mr Goodall produced two reports. His conclusion was that from the information available to him there was nothing of value and that the debt of the various corporate entities far outweighed the value of the assets they held. Mr Goodall’s reports did not specifically identify a concern that he was not receiving adequate discovery from Mr Olliver.
[19] The proceeding required a new date for the resumption of the substantive hearing. It was a legally complicated proceeding that lacked evidence to support the allegations made by Ms Sparks and the relief she sought. Courts cannot make decisions based on a party’s belief, suspicions or convictions. Allegations need to be substantiated by properly proved evidence. Only then does a Court have a factual basis to which the law can be applied. Here, all the evidence pointed to there being nothing of value to which any orders could attach. The initial concerns that Mr Olliver’s continued access to bank funding was being supported by registered securities against assets he had not disclosed was not supported by the enquires made by Mr Goodall or by the information provided by non-party discovery from the bank that was supplying the funding. Legal principles cannot be applied when the facts to support them have not been proved. To assist further, the Court appointed counsel assisting, Ms Jan McCartney QC, who is an experienced relationship property lawyer.4 Mr Goodall was also directed by the Court to provide his second report around this time.
[20] At some point Mr Olliver engaged counsel to assist him with settlement discussions and then more generally. The parties engaged in settlement discussions including participation in a judicial settlement conference. This gave rise to settlement offers of a kind that Mr Olliver’s counsel contends engage Calderbank principles. These are now relied on to support the claim for indemnity or increased costs against Ms Sparks.
[21] It is helpful at this point to consider the principles relevant to awards of indemnity and increased costs. In Bradbury v Westpac Banking Corp,5 the Court of Appeal discusses the principles relevant to ascertaining whether costs should be
4 Sparks v Olliver minute dated 26 April 2018 at [2].
5 Bradbury v Westpac Banking Corp [2009] NZCA 234, [2009] 3 NZLR 400.
awarded as standard scale costs, increased costs or indemnity costs. In this regard, standard scale applies by default where no cause is shown to depart from it. Increased costs may be ordered where there is a failure by the paying party to act reasonably, whilst indemnity costs may be ordered where the party has behaved either “badly or very unreasonably”.6
[22] One of the ways in which a party can fail to act reasonably for the purposes of an award of increased costs is by refusing to accept a settlement offer without reasonable justification. This is expressly provided as a ground for an order for increased costs,7 but not mentioned in relation to indemnity costs.8 This suggests that such failure will usually warrant no more than increased costs. Some additional factor will be required, therefore, to elevate refusal to accept a settlement offer to the level of being “very bad or very unreasonable” before it will qualify for an award of indemnity costs.
[23] In my view the level of conduct justifying indemnity costs — “badly or very unreasonably” — requires evidence that the plaintiff knew its claim was untenable and hopeless but pursued it, nonetheless. Typically, fraud, malice or bad faith would underlie such conduct. Wilfully pursuing an untenable, hopeless claim might also qualify. Careless or misguided pursuit of a claim would not qualify in my view.
[24] Here there is no evidence to show that in addition to refusing the settlement offers Ms Sparks has acted fraudulently, maliciously or in bad faith by continuing with the proceeding. Nor do I consider there is evidence to show she has wilfully pursued an untenable, hopeless claim. More importantly, I consider the offers were not capable of acceptance, which is something I shall return to when considering whether increased costs are warranted. Accordingly, I consider there is no basis for awarding indemnity costs against Ms Sparks.
[25] As to an award of increased costs based on the refusal to accept the settlement offers, the problem with the offers is that they drew in settlement of a potential
6 At [27].
7 Rule 14.6.(3)(b)(v).
8 Rule 14.6.(4).
counterclaim that Mr Olliver had against Ms Sparks. At the time the counterclaim was not pleaded, and Mr Olliver faced the difficulty of obtaining leave to introduce it into the hearing so close to the date of the resumed hearing. Ms Sparks would have been entitled to assess the reduced chances of Mr Olliver being able to amend his defence with the introduction of a counterclaim so late in the day. I acknowledge he had a good explanation for the delay in the form of the parties having spent a good part of 2019 focused on settling their dispute. However, he could have proceeded to bring a separate claim against Ms Sparks and the introduction of his counterclaim to the hearing would inevitably have ended in the resumed hearing being adjourned. Given the delays to date this was a prospect to be avoided, especially when there was no barrier to Mr Olliver proceeding with a separate claim.9
[26] The settlement also involved Ms Sparks and Mr Olliver reaching agreement on distribution of funds belonging to a corporate trustee which was not a party to these proceedings. The terms of the proposed settlement offer were spelt out in draft consent orders which would have been sought had the settlement proceeded. Those orders show that funds from a trust, in which Ms Sparks and the children of the marriage were final beneficiaries and Mr Olliver a discretionary beneficiary, were to be divided as part of the settlement of the dispute between Ms Sparks and Mr Olliver. This was in circumstances where the children were minors and no counsel had been appointed by the Court to represent their interests.
[27] The relevant corporate trustee held shares in a company that was in liquidation. Land the company owned had been sold for an unexpectedly high price, which meant the liquidators had funds available for distribution including to the company’s shareholders. The liquidators of the company had determined the appropriate division was $1,952,698 to the corporate trustee and $497,344 to Mr Olliver. The draft consent orders show that it was proposed that $1,225,000 from the total funds be paid to Ms Sparks and the remaining balance to Mr Olliver. Once those payments were made there would have been no further funds held by the corporate trustee and, therefore, nothing for the children in the future.
9 See Olliver v Sparks [2021] NZHC 220 where Fitzgerald J declined to strike out Mr Olliver’s s 182 claim which is now being pursued as a separate proceeding.
[28] The Court was essentially being asked to approve a distribution of trust funds that seemingly made no provision for the interests of the children in circumstances where they were not legally represented and their interests as beneficiaries were not being separately considered. The Court could not have made these orders without the minor beneficiaries being legally represented, and their counsel advising the Court that their interests would not be jeopardised by the proposed division.
[29] It is therefore difficult to see how it can be said Ms Sparks acted unreasonably by refusing to settle when it is doubtful the terms of the settlement would have resulted in the requisite consent orders from the Court. Whilst it was in both parties interests to reach a reasonable settlement, that could not be done at the expense of other beneficiaries to a trust that would otherwise have received those funds. When individuals settle funds or assets on trust the beneficial ownership is transferred to the beneficiaries. The settlors can no longer act as if the funds are their own to do with as suits their interests.
[30] Accordingly, I am satisfied the refusal of the settlement offer cannot be seen to be unreasonable.
[31] Has Ms Sparks otherwise acted unreasonably in pursuing this proceeding to the point where she discontinued? Because the proceeding did not go to trial I have not had the benefit of seeing Ms Sparks cross-examined about her motives for proceeding in circumstances where all the available evidence suggested it was fruitless for her to do so. It is to her credit that, following the decision of this Court in Sparks v St Heliers Capital Ltd (in liq)10 on 11 March 2020, she seems to have taken stock of her position. The decision is a helpful one because it provides in microcosm an example of the reasons why Ms Sparks was unlikely to succeed in this proceeding.
[32] In Sparks v St Heliers Capital Ltd (in liq) Ms Sparks made notices of claim under s 42 of the PRA over two blocks of land, one at 109 Kapiti Road and the other at 77 Kapiti Road. By 2019 when the settlement discussions were proceeding it was clear that the only potential for obtaining any financial relief was in relation to these two blocks of land. They were the focus of Ms Sparks’ attention. However, neither
10 Sparks v St Heliers Capital Ltd (in liq) [2020] HZHC 480.
was owned by Mr Olliver in his personal capacity. One was owned by Olliver Trustee Company Ltd, a company in liquidation, and the other was owned by St Heliers Capital Ltd (SHC). The judgment clearly sets out why it was that Ms Sparks had no basis for issuing a s 42 notice of claim against either property. In relation to one property the notice of claim had lapsed, but Associate Judge Paulsen accepted Ms Sparks could provide an adequate explanation for that. The question was whether she would be permitted to lodge a second notice of claim. To do that she had to satisfy the Court she had an arguable claim to an interest in that property. The Associate Judge found she did not.
[33] In relation to the other property the judgment, in explaining the ownership network, illustrates the difficulty Ms Sparks would have faced in this proceeding. The land, which was undeveloped, was owned by SHC. The Bankhouse Trust Ltd (Bankhouse Ltd) is the sole shareholder of SHC. Mr Olliver is a director and sole shareholder of Bankhouse Ltd, which is a corporate trustee for the Bankhouse Trust. It was created by Deed of Trust dated 19 March 2001. Mr Olliver is the settlor of the Bankhouse Trust and is both a discretionary beneficiary and a final beneficiary. On 12 September 2014 Ms Sparks was removed as a discretionary beneficiary of this trust and the spouse of Mr Olliver as at the date of final distribution was excluded as a final beneficiary.
[34] 77 Kapiti Road was formally owned by a company and was heavily encumbered by several mortgages held by the bank that has been a source of finance for Mr Olliver. CIT Holdings Ltd (CIT) is a company incorporated by Mr Olliver and Ms Sparks, and its shares are owned by the trustees of the Glover Trust. The Glover Trust was established to benefit Mr Olliver, Ms Sparks and their children. CIT paid interest on debts secured against 77 Kapiti Road and obtained an option to purchase the property from the then first mortgagee. CIT did not exercise the option and nominated Bankhouse Ltd to do so. Bankhouse Ltd acquired the property in October 2010 and it was immediately transferred to SHC. The purchase was funded by the bank which took a first registered mortgage over the property, at a price of approximately $6,150,000. In October 2014 CIT took a mortgage over the property to secure repayment of the interest payments that had been made by it amounting to
$260,000. This has been repaid. Further advances have been obtained from the bank and as at 30 October 2019 the amount owing to the bank was $21,559, 218.
[35] Associate Judge Paulsen found Ms Sparks did not have an arguable claim to an interest in 77 Kapiti Road. First, Mr Olliver is not and has never been the registered owner of 77 Kapiti Road. SHC is the registered owner and the sole shareholder of SHC is Bankhouse Ltd. Although Mr Olliver is the sole shareholder of Bankhouse Ltd and a discretionary and final beneficiary of the Bankhouse Trust, he does not have a beneficial interest in the land. The Judge correctly found that any beneficial interest Mr Olliver owned can only be in the shares of Bankhouse Ltd and not in the land.11 Ms Sparks’ only claim could have been to the shares of the company that owned the land and not the land itself. That was fatal to her s 42 notice. A further point is that, given the mortgage is registered against the land, any valuation of the shares of Bankhouse Ltd would have had to take that into account. When a company owes debt to a bank for the sum of $21,559,218 its shares will only have value if that is the sole debt and the land it owns is worth more than the debt. There was no evidence to support this scenario. Evidence from registered valuers put the land value at less than the secured debt owed to the bank.
[36] The result was the Associate Judge found Ms Sparks did not have an arguable case to an interest in 77 Kapiti Road. Ms Sparks also sought to advance an argument that services she had rendered to SHC and/or Bankhouse Ltd could sustain a constructive trust claim. She advanced this argument on the grounds she was actively involved in the property’s acquisition and provided emails to the Associate Judge which showed she was copied into correspondence concerning security documentation and insurance. However, the Judge found that there was no evidence that she had made a contribution to the land that would entitle her to bring a constructive trust claim against the legal owner of the land.
[37] The judgment is relevant to the purposes of determining the present costs issues because it clearly illustrates the difficulties Ms Sparks would have faced in advancing her claims in this proceeding. By 2020 she appeared to accept the only source of any
11 Unkovich v Marbeck [2015] NZHC 742 at [24].
value against which relief might practicably attach was the two Kapiti Road properties. Once the s 42 PRA notices were lost she had no way of preserving those properties. Further, the Associate Judge’s comments would have been a warning to her of the barriers she faced in proving a claim that would have entitled her to relief against those properties. The difficulties were based on her not having the legal grounds to successfully make the claims, nor the evidence to prove there was anything of value against which relief for a successful claim might attach.
[38] Ms Sparks was legally represented when the proceeding was commenced. This would have given her some belief in the merits of her claim. Ms Sparks did not receive the judgment in Sparks v St Heliers Capital Ltd (in liq) until 11 March 2020. This would have been the first time she was confronted with a correct legal analysis of the merits of part of her claims in this proceeding, albeit in relation to two specific pieces of land. Until then she was operating without the benefit of legal representation.
[39] I am not persuaded that Ms Sparks’ conduct has been so unreasonable that it warrants an award of increased costs. Had she proceeded to trial in the face of the judgment in Sparks v St Heliers Capital Ltd (in liq) I consider this would have qualified as conduct so unreasonable that increased costs were warranted.
[40] Mr Olliver sought to rely on NR v MR12 as authority for an award of increased costs against a lay litigant. The case is distinguishable. NR sought to challenge a harassment order made against him. The litigation was essentially a continuation of conduct that first led to the harassment order being made.
[41] There remains the question of scale costs. I consider in accordance with the general presumption in r 15.23 that it is appropriate that Mr Olliver be awarded scale costs at category 2B for the periods when he was legally represented. Mr Olliver seeks scale costs at category 3B. I do not consider the proceedings fit category 3B. The evidential problems Ms Sparks faced in advancing her claims were always apparent. What made the proceedings arduous was the fact Ms Sparks represented herself. This resulted in time wasting actions. However, the fact her actions were time wasting and confusing rather than legally complex and difficult was always apparent.
12 NR v MR [2014] NZCA 623.
[42] Ms Sparks essentially had two complaints: (a) there were assets of value remaining; and (b) Mr Olliver had wrongly used assets to fund himself after separation. Mr Goodall’s reports showed there were no remaining assets of value. To prove Mr Olliver had improperly used assets to fund himself after separation required Ms Sparks to identify that Mr Olliver had used assets to which she had a legal claim in this way. If he had misused company or trust assets it was for the company or the trustees concerned to make those complaints. Factual evidence of misuse and its impact on value compared against counterfactual evidence of what the value would have been but for Mr Olliver’s misuse would have been required. None of this was available. Nor is it clear that Ms Sparks was the appropriate person to bring such claims.
[43] It was a matter for Mr Olliver’s defence to determine whether it was strategically and tactically wise to attempt to counter Ms Sparks’ arguments rather than simply stand by and see them fail for want of proof.
[44] Ms Sparks has filed memoranda for the costs application in which she continues to raise concerns based on suspicion and speculation that relate to the merits of her claim against Mr Olliver. Having decided to discontinue, she now in the guise of costs arguments attempts to argue the merits of her allegations in the substantive proceedings. The arguments appear to be an attempt to relitigate the substantive issues which she abandoned with the discontinuance. This approach is not permissible. The discontinuance of the proceeding means it is not appropriate to attempt to traverse those issues. It follows that evidence she relies on to support her arguments going to the merits of her claims will not be considered. This answers Mr Olliver’s objection to some of the evidence Ms Sparks has filed.
[45] There has been considerable complaint by Ms Sparks and also to a lesser extent by counsel assisting that Mr Olliver was not being open in the discovery of relevant information, which in turn hampered the presentation of Ms Sparks’ claims. The problem with these complaints is that they were never brought in an appropriate way. If it is believed that a party in litigation is not making discovery of relevant information the appropriate steps are to apply to the Court for further and better discovery during the life time of the proceeding. In this case no such application was brought.
[46] Counsel assisting has filed an affidavit from Mr Goodall for the purposes of the costs application in which he refers to gaps in information provided by Mr Olliver. The problem is that during the life of the proceeding when Mr Goodall provided the Court with two reports he never specifically said that he considered there was information that was not being disclosed by Mr Olliver, or that further steps should be taken to require Mr Olliver to disclose information that should have been disclosed and which was available to him. During the proceeding various orders relating to discovery were made. If a complaint that Mr Olliver was not disclosing information that was available to him had been brought at an interlocutory stage in the proceeding it could have been dealt with in circumstances where everyone had a fair opportunity to be heard on that topic. It is not appropriate for Mr Goodall to suggest now in an affidavit relating to costs that there was difficulty in obtaining information from Mr Olliver.13 The time for complaining that Mr Olliver has not made proper discovery of all the information that he should have discovered has past.
[47] Further, there was substantial non-party discovery by the bank that was lending to Mr Olliver. Neither Ms Sparks not counsel assisting complained at the time about the scope of non-party discovery.
[48] While the proceeding remained live there was no indication to the Court that relevant information was not being made available either by Mr Olliver or by non- party discovery.
[49] Ms Sparks essentially claims that her lack of evidence is a result of Mr Olliver intentionally withholding information. However, she has no evidential foundation to support that claim. Moreover, there can be many reasons for information not being available, particularly after the passage of time. It does not automatically follow that a lack of information means the information has been intentionally withheld. Since 2008 Mr Olliver has been attempting to keep various land development projects afloat with borrowed funds. In such circumstances it would not be surprising if the
13 In Sparks v Olliver minute dated 3 August 2017 Mr Goodall was directed: “Once Mr Goodall has identified the active related entities, and any dormant entities likely to have value he should: (a) view the discovered documents relating to those entities; (b) to determine if further discovery is required or if sufficient discovery is available to allow those entities to be valued; and (c) if valuation is possible, to ascertain the value of those entities”
companies through which he was operating did not keep tidy and orderly sets of accounts. To do so requires funds. This is not to excuse matters, but it goes some way to explain why the financial records of the companies may appear untidy. Also some of the defendant companies were in liquidation. It was never clear to what extent the liquidators of those companies may have held information that was relevant to discovery. Once companies were in liquidation they took no part in defending the proceeding.
[50] Mr Olliver also complained that Ms Sparks had retained financial records accessed while she was controlling the business operations (2009-2012) once he resumed control.
[51] Put shortly, there are various arguments for why some information may not have been available for discovery. In the context of determining a costs award I cannot resolve those arguments or attribute blame to any party.
[52] This is not a case where there has been a change of circumstances that would render the proceeding unnecessary. The only change is in the form of the judgment in Sparks v St Heliers Capital Ltd (in liq) which, rather than rendering the proceeding unnecessary, served to identify the futility in pursuing it. Here, unlike in many cases of discontinuance, the judgment in Sparks v St Heliers Capital Ltd (in liq) throws some light on the prospects of the proceeding ending in an unfavourable outcome for Ms Sparks. The judgment has not been appealed.
[53] Accordingly, I see nothing here to displace the general presumption that a plaintiff who discontinues without first reaching agreement with a defendant on costs must bear an award of costs.
[54] I have not accepted Mr Olliver’s argument that costs should be at category 3B. No itemised schedule of category 2B costs has been provided. This will need to be done. The items for inclusion in the schedule should cover the period when Mr Olliver was represented by counsel and include the items that are properly claimable as per the schedule.
[55] I shall deal with the disbursements claim at the same time as I deal with the itemised claim for category 2B costs.
Result
[56] Mr Olliver is awarded category 2B costs. He is to provide an itemised schedule of those costs. Claims for disbursements will be dealt with at the time of ordering an itemised award of costs.
Duffy J
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