Starling v Bailey

[2016] NZHC 1903

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

CIV-2015-409-516 [2016] NZHC 1903

BETWEEN

MICHAEL STARLING

Plaintiff

AND

SERINA GAYLE BAILEY First Defendant

AND

SERINA GAYLE BAILEY AND MARK JAMES BAILEY AS TRUSTEES FOR THE SERINA BAILEY FAMILY TRUST Second Defendants

AND

MICHAEL STARLING Third Defendant

Hearing:	16 August 2016 (On the papers)
Appearances:	M Starling (in person) Plaintiff and Third Defendant J W A Johnson for the First and Second Defendants
Judgment:	16 August 2016

JUDGMENT OF DUNNINGHAM J

[1]      Almost a year ago I issued a judgment declining the plaintiff’s application for a mandatory interim injunction to effect a partial distribution of the proceeds of sale of a property owned by two family trusts.  The proceeds of sale were both then, and now, held in trust while the plaintiff and first defendant were in dispute, following a relationship breakup, over how the proceeds should be allocated between their respective family trusts.

[2]      The application was prompted because the plaintiff had agreed to purchase a property in  his  personal  name,  and  hoped  to  use  the  partial  distribution  of  the

proceeds of sale of the property to settle the purchase of the property he had brought.

STARLING v BAILEY [2016] NZHC 1903 [16 August 2016]

[3]      I declined the application for interim relief primarily on the basis that the plaintiff had no entitlement to the funds and the trustees of the plaintiff ’s family trust would not suffer any loss if the interim relief sought was not granted.  Even if he was entitled to the funds, the plaintiff had not demonstrated that he had no alternative means of raising the finance to complete the purchase.

[4]      At the conclusion of the decision declining relief, I recorded that costs were reserved.  I also noted that, while the provisions of r 14.8 of the High Court Rules provided that costs would normally be fixed and payable when the application was determined, I considered that it would not “facilitate prompt resolution of this matter if costs are fixed now”.  Instead, I simply recorded that I considered 2B costs would be appropriate if, in the future, costs needed to be fixed.

[5]      Unfortunately, my hope that resolution would be facilitated if costs were not fixed then, proved to be incorrect.  Almost a year later, the parties have filed memoranda in respect of the defendants’ application for costs.   These were filed pursuant to directions made by Osborne AJ1 at the conclusion of a judicial settlement conference which did not resolve the issues between the parties.

[6]      The memoranda explain that, since the interlocutory application was heard, a settlement agreement “in principle” was reached. As part of the proposed settlement, the plaintiff filed a discontinuance of these proceedings dated 25 November 2015. However, the settlement was not finalised, with the plaintiff determining that the terms of the settlement were, in his words, “detrimental to the Michael Starling Family Trust”.  The defendants therefore decided to “reactivate their counterclaim” and, by 27 April 2016, it was recorded that both the plaintiff’s claim, and the first and second defendants’ counterclaim, were live and would continue.

[7]      At the time the notice of discontinuance was filed by the plaintiff, counsel for the first and second defendant indicated by way of email to the Registrar that there was no issue as to costs.   However, as they explain, this was in the context of an

understanding that a settlement had been reached and that settlement documentation

1      In a minute dated 28 July 2016.

would shortly be executed by the parties.   Given the plaintiff has reneged on settlement they say they are not bound by that concession.

[8]      From the first and second defendants’ perspective, as settlement has not been able to be achieved and they must pursue their counterclaim in order to achieve resolution, they now consider that a costs award on the interim injunction application is appropriate.

[9]      They seek an order for costs of $11,373 on a 2B basis as set out below, together with disbursements of $110.

Step	Allocated Time	Amount
Filing opposition to interlocutory application	.6	$1,338.00
Affidavit in opposition	2.5	$5,575.00
Preparation of written submissions	1.5	$3,345.00
Appearance at half day hearing	.5	$1,115.00
Sub-total 2B costs	5.1	$11,373.00
Disbursement-Filing Fee	$110.00
Total	$11,483.00

[10]     There is no dispute that if costs are awarded they should be categorised as

2B.  However, the plaintiff considers that the Court should exercise its discretion to refuse costs in this case as the interlocutory application would not have been necessary if the defendants had not “unreasonably refused a partial distribution with the funds not in dispute”.  He also submits that it is relevant to the issue of costs that, in these circumstances, the application was “reasonably brought”.

[11]     I do not consider those arguments are relevant to costs.   Most litigation proceeds to Court because the parties are unable to resolve their differences by negotiation.   The obvious consequence is that each party knows that they risk an award of costs should their claim or defence fail.   This may include claims or defences that are “reasonably brought”.  If they were unreasonably brought, then that

may justify increased or indemnity costs, if they fail.   Here, I concluded that the plaintiff’s claim for relief failed, and the defendants were prima facie entitled to costs. That view has not changed.

[12]     The  second  submission  made  in  opposition  is  that,  if  costs  against  the plaintiff are considered appropriate, then the time allocation of 2.5 days claimed for the “affidavit  in  opposition” is  disputed as  the time allocation  seems  to  be for preparation of affidavits at trial.

[13]     I accept this point has merit.   The application required one affidavit to be filed  in  response,  whereas  the  time  allocation  of  2.5  claimed  envisages  the preparation of all briefs or affidavits for a full trial.  By comparison, the 2B claim for filing  an  interlocutory application,  or  opposition  to  an  interlocutory  application, which includes preparation of affidavits, is only .6.  I consider there is no basis for claiming costs for preparing evidence for trial in addition to the claim for filing opposition to the application.

[14]     Accordingly, the defendants’ claim for costs is reduced by $5,575.00 and the plaintiff is ordered to pay the defendants’ legal costs of $5,798 plus disbursements totalling $110.00.

Solicitors:

Michael Starling, Christchurch

Wynn Williams, Christchurch