Steffensen v BGW Investments Limited

[2015] NZHC 1386

IN THE HIGH COURT OF NEW ZEALAND DUNEDIN REGISTRY

CIV-2011-012-000519 [2015] NZHC 1386

BETWEEN

RODNEY STEFFENSEN AND ALYSON

KAY STEFFENSEN Plaintiffs

AND

BGW INVESTMENTS LIMITED First Defendant

QBE INSURANCE (INTERNATIONAL) LIMITED

Second Defendant

Hearing:	On the Papers filed 31 March 2015
Counsel:	C S Withnall QC and M H Hayes for Plaintiffs A B Darroch for First and Second Defendants
Judgment:	18 June 2015

JUDGMENT OF WHATA J ON COSTS

This judgment was delivered by Justice Whata on

18 June 2015 at 4.00 p.m., pursuant to r 11.5 of the High Court Rules

Registrar/Deputy Registrar

Date:

Solicitors:

Webb Farry, Dunedin

Darroch Forrest, Lawyers, Wellington

STEFFENSEN v BGW INVESTMENTS LIMITED [2015] NZHC 1386 [18 June 2015]

[1]      In my judgment on this matter I indicated to counsel that I was minded to award costs on a 2B basis, together with an uplift of ten per cent for the defendants’ failure to produce a file note admitting liability until midway through the trial.1

After a substantial delay, the plaintiffs now seek costs against the second defendant on a 2B basis with a 50 per cent uplift plus disbursements.

[2]      The first  and second defendants  submit that costs should be based on a District Court scale, with deductions for duplications of costs in the High Court. They also claim that there should be no uplift because the file note was not deliberately withheld and a settlement offer was made in September 2012 that was greater than the base liability amount.

Outcome

[3]      I  have  resolved  that  costs  should  be  awarded  on  a  2B  basis  from  15

September 2011 to June 2013 under the District Court Rules and from August 2013 under the High Court Rules, less $3,000 being the scale costs for the evidence capsule in the District Court.   There shall also be an uplift of ten per cent.   The plaintiffs are also entitled to the disbursements as set out in memorandum of counsel.

Jurisdiction

[4]      Rule 14.1 of the High Couirt Rules confers a general jurisdiction on this Court to award costs.  That discretion is not unfettered and should be exercised in accordance with the general scheme of Part 14.   When the discretion is exercised outside the general scheme of those rules, then it must be untaken in a considered and particularised way.

[5]      The following steps should be taken when assessing costs:2

1      Steffensen v BGW Investments Limited [2014] NZHC 2659.

2      See Holdfast NZ Ltd v Selleys Pty Ltd (2005) 17 PRNZ 897 (CA).

(a)       Categorise the proceeding under Rule 14.3;

(b)      Work out a reasonable time for each step under Rule 15.5; (c) Consider whether extra time is justified;

(d)Step  back  and  assess  whether  the  overall  entitlement  to  costs including by reference to Rule 14.6, dealing with increased and indemnity costs.

[6]      There is no dispute between the parties about a 2B categorisation.  The key issue is whether or not the time claimed is appropriate and whether or not there should be increased costs.

Argument

[7]      The defendants opposed my proposed costs order on the following bases:

(a)      Transfer  to  the  High  Court  was  unnecessary,  so  that  scale  costs according to the District Court Rules are appropriate;

(b)There is some duplication of costs claims as between steps taken in the District Court and steps taken in the High Court;

(c)      In all of the circumstances of the case, including that the omission to discover the file note was unintentional and  the fact that an offer was made to settle matters in the sum of $38,000 in September 2012, an increase in the costs award is not warranted.

Assessment

[8]      I respond to the first two matters as follows:

(a)      I am satisfied that the case involved issues of some complexity, as to both fact and law.  Accordingly, while the quantum of the judgment

was within the District Court’s jurisdiction, the claim was properly before this Court.3

(b)      I  am  satisfied  with  the  plaintiffs’  response  to  the  defendants’

submissions about duplication on the following matters:

(i)The filing of the statement of claim in the High Court was not a simple duplication of the notice of claim filed two years prior in the District Court;

(ii)The plaintiffs were put to significant cost and effort to prepare an affidavit to answer the second defendant’s concerns regarding discovery and to answer its questions regarding funds.

[9]      The plaintiffs do not respond to concerns raised about duplication of effort in relation to evidence and judicial conferences.  In the absence of an explanation, the plaintiffs should only receive scale costs for evidence in the High Court.  As to the judicial  conferences,  they  are  a  necessary  incident  of  case  management  and  a function of the High Court process.  I have no issue with the costs claim in relation to these.

Uplift

[10]     A modest uplift for the lateness of producing a file note by Mr Wood is justified. The file note included the notation:

“Major Screw Up”

[11]     As I found in my judgment, this file note was effectively an admission of fault and should have been produced at the outset, rather than in the middle of the

3      In this regard I adopt the approach noted by Woodhouse J in Killalea v In Print Publishing Co [1981] 1 NZLR 699 at 701 (CA) cited by the plaintiffs namely: “… it is not enough to show that a case could have been disposed of satisfactorily in the lower Court; the question is rather whether the case was a proper one to bring in the Supreme Court: see Williams v Allen (1889) 60

L.T. 103,104. In the final analysis this problem becomes one of degree.”

hearing.  I am satisfied that it could have and most likely would have resulted in less cost being incurred, if not by way of settlement then by narrowing the issues.

Settlement offer

[12]     The defendants advise that a settlement offer in excess of the judgment sum was made in September 2012.  It appears to be claimed that this step should be used to offset the effect of the late production of the “major screw up” file note.

[13]     I do not agree.  The problem with the late production of the file note is three- fold.    First,  the  potential  for  a  fully  informed  settlement  opportunity  was  lost. Second, had an agreement been reached based on the settlement offer, the plaintiffs could rightly have complained that they had been misled by the failure to produce the file note.  Third, the breach of the rules of the discovery process meant that a highly relevant  piece of evidence was  not  produced  until  mid way through  the hearing.   The Court is obliged to discourage this type of breach.   An increase in costs, as envisaged by rule 14.6(3)(d), is one mechanism for securing the integrity of the Court’s processes.

Orders

[14]     There otherwise being no dispute as to the plaintiffs’ calculation of costs, there shall be an order in favour of the plaintiffs on the basis sought in the plaintiffs memorandum, reduced by $3000, being the scale costs for the evidence capsule in the District Court.  This net sum shall be increased by 10 per cent.  The plaintiffs are also entitled to disbursements of $22,797.96.

[15]     For completeness I reject the plaintiffs’ request for an uplift of 50 per cent.

That, in my view, would be disproportionate to the effect of the file note.

[16]     I do not expect a dispute about final quantum.  Any further memoranda will entail cost consequences.