Stokes v Insight Legal Trustee Company Limited
[2014] NZHC 1753
•25 July 2014
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV-2011-404-1317 [2014] NZHC 1753
BETWEEN BRYAN JAMES STOKES,
ALEXANDRA MARY STOKES and OWEN NEIL WILLIAMS as trustees of the STOKES FAMILY TRUST
Plaintiffs
AND
INSIGHT LEGAL TRUSTEE COMPANY LIMITED and GRAHAM KEITH HEENAN as trustees of the RM COLEBROOK FAMILY TRUST
First Defendants
ELAINE MARGARET COLEBOOK Second Defendant
Hearing: On the papers Appearances:
A J Steele for Plaintiffs
M J McCartney QC for DefendantsJudgment:
25 July 2014
COSTS JUDGMENT OF PETERS J
This judgment was delivered by Justice Peters on 25 July 2014 at 4.45 pm pursuant to r 11.5 of the High Court Rules
Registrar/Deputy Registrar
Date: ...................................
Solicitors: Martelli McKegg, Auckland
Insight Legal, Auckland
Counsel: M J McCartney QC, Auckland
STOKES v INSIGHT LEGAL TRUSTEE COMPANY LTD [2014] NZHC 1753 [25 July 2014]
[1] This judgment determines an application by the Defendants for costs in these proceedings:
(a) up to the judgment of Ellis J of 25 July 2012 (“stage one”);1 and
(b) after 9 May 2013 until my judgment of 21 March 2014 (“stage two”).2
[2] I have considered the parties’ memoranda dated 4, 11 and 17 April 2014 and record their agreement that I should determine the Defendants’ application on the papers.
Background
[3] The Plaintiffs issued this proceeding in March 2011. Ellis J heard the case in March 2012 and gave judgment for the Plaintiffs. The Defendants appealed. The Court of Appeal gave its decision on 9 May 2013 and remitted the case back to the High Court for determination of two issues which arose from the manner in which the Plaintiffs argued their case before the Court of Appeal. The Plaintiffs then filed an amended statement of claim on 10 May 2013.
[4] I heard the (revised) case between 11 and 14 November 2013 and gave judgment for the Defendants.
Stage one
[5] The parties are agreed that the Defendants are entitled to costs on a 2B basis in respect of stage one of the proceedings. I make an order to that effect. The costs are set out in schedule A to the memorandum of counsel for the Defendants dated
4 April 2014 (“schedule A”).
Stage two
[6] The Defendants seek costs in respect of stage two, these costs being itemised in schedule B to their memorandum dated 4 April 2014 (“schedule B”).
1 Stokes v Insight Legal Trustee Co Ltd [2012] NZHC 1822.
2 Stokes v Insight Legal Trustee Co Ltd [2014] NZHC 543.
[7] The Plaintiffs do not dispute that, in principle, the Defendants are entitled to costs in respect of stage two. They do, however, object to some of the items for which the Defendants claim and, in addition, make their own claim for costs.
[8] The Defendants also seek an award of indemnity, alternatively increased, costs for the period after 5 November 2013. This submission is based on a Calderbank offer that the Defendants made to the Plaintiffs dated 5 November 2013 and which the Plaintiffs did not accept. The Plaintiffs were then unsuccessful at trial.
[9] The Plaintiffs oppose such an award.
[10] Accordingly, the issues to be determined are whether:
(a) the Defendants should have costs for particular steps in stage two;
(b)the Plaintiffs should have costs and disbursements in respect of interlocutory applications on which they succeeded. The Plaintiffs calculate that these costs and disbursements total $10,348 and $1,000 respectively;
(c) the Defendants should have indemnity or at least increased costs for steps taken after 5 November 2013.
Schedule B
[11] The Plaintiffs dispute the Defendants’ entitlement to costs on the following
items in schedule B.
[12] Item 2 – the Defendants claim 2.5 days for “Commencement of Defence”. The Defendants filed a statement of defence to the amended statement of claim on
1 July 2013.
[13] The Plaintiffs submit that the Defendants are not entitled to another 2.5 days for the statement of defence filed on 1 July 2013, given that the Plaintiffs have
already agreed to pay 2.5 days for Commencement of Defence for stage one. Their submission is that the Defendants are entitled to claim for an amended defence only, at 0.6 of a day.
[14] I have reviewed the statement of claim filed in respect of stage one and the amended statement of claim filed in respect of stage two. The new allegation at stage two was that Mrs Shona Carr, at the time a trustee of the relevant trust, retrospectively consented to the agreement for sale and purchase at the heart of the case. The Plaintiffs provided particulars of that allegation.
[15] The statement of defence to the amended statement of claim was rather more fulsome than the statement of defence filed at the outset (by the Defendants’ then solicitors). I am satisfied that to allow a further 2.5 days for this step at stage two would be excessive. I allow 1.25 days accordingly.
[16] Item 9 – the Defendants also claim 0.6 of a day for the preparation and filing of an amended defence. I disallow this item. The Defendants obtained leave to file an amended defence on about 17 September 2013. The Plaintiffs succeeded, however, in reviewing that leave. Accordingly, I proceed on the basis that the amended defence was to be disregarded. In any event, no claim would be appropriate. The rationale for the Defendants’ amended pleading was their wish to rely on an affirmative defence, and did not result from any change in the Plaintiffs’ position.
[17] Item 20 – the Defendants seek an allocation of 2.5 days for preparation of a list of documents. The Plaintiffs dispute this claim on the ground that the only further discovery that the Defendants gave was of original documents that they ought to have discovered in stage one. Counsel for the Defendants responds that copies of the relevant documents were discovered at stage one and that the originals assumed an added significance at stage two.
[18] I disallow the Defendants’ claim in respect of item 20. The Defendants ought to have given discovery of the originals in the list of documents that they filed during stage one.
[19] Item 21 – the Defendants’ claim 1.5 days for inspection of documents.
[20] The Plaintiffs submit that this should be disallowed as the Plaintiffs gave no additional discovery during stage two. The Defendants’ response is that they spent time discussing with the Plaintiffs the original documents referred to above, and so the time for inspection should be allowed.
[21] The allowance for inspection in High Court Rules, schedule 3 is for inspection of the other party’s documents and not for preparing one’s own documents for inspection. That said, I am satisfied some reconsideration of the discovery given by the Plaintiffs would have been required given the passage of time and I allow the sum claimed.
[22] Item 22 – on or about 30 September 2013 the Defendants applied to Ellis J to recuse herself from hearing stage two. The Defendants have claimed the costs and disbursements associated with the application.
[23] I accept the Plaintiffs’ submission that they should not be required to pay these costs. A party who seeks recusal is required to make an application to that end and the Judge concerned is required to consider whether it is proper for them to recuse themselves. The application is necessary, regardless of the stance of the other party. In short, the Defendants’ application was required whether the Plaintiffs consented to, opposed or proposed to abide the decision of the Court, as the Plaintiffs did.
[24] Item 35 – I have already declined to allow for two counsel. The issues in the case were confined and straightforward. They depended on findings of fact, not of law. I am not satisfied that two counsel were required.
[25] Subject to these matters, I award costs to the Plaintiffs as set out in schedule
B.
Plaintiffs’ claim for costs
[26] The Plaintiffs seek costs and disbursements on two applications on which they succeeded, both of which the Defendants opposed.
[27] The first was an application to review a decision of Associate Judge Doogue made on 14 June 2013. Keane J allowed the Plaintiffs’ application for review on about 20 August 2013.
[28] The Defendants do not oppose an award of costs to the Plaintiffs on this matter, although they say that the application was heard in 0.25, rather than 0.5, of a day. The Court’s records indicate that the Defendants’ recollection is correct.
[29] The second application was for review of a decision of Associate Judge Doogue on 15 October 2013, granting leave to the Defendants to file a counterclaim. Ellis J allowed that application on 21 October 2013.
[30] The Defendants oppose any allowance for costs in the Plaintiffs’ favour on this application. They accept that the Plaintiffs succeeded but say that they appealed the decision and that both parties agreed that the appeal should be deferred pending the outcome of the hearing. The Defendants submit it would be unjust to treat the outcome of the application for review as favouring the Plaintiffs.
[31] I do not accept that submission. As a general rule costs follow the event. The fact that a party appeals the outcome does not alter the position.
[32] Subject to the amendment required to the hearing time as referred to above, there can be no objection to the Plaintiffs having the costs and disbursements set out in [7] of their memorandum dated 11 April 2014. I order accordingly.
Calderbank offer
[33] I turn now to the Defendants’ Calderbank offer of 5 November 2013. [34] Rule 14.6 of the High Court Rules provides:
14.6 Increased costs and indemnity costs
…
(3) The court may order a party to pay increased costs if—
(b) the party opposing costs has contributed unnecessarily to the time or expense of the proceeding or step in it by—
(v) failing, without reasonable justification, to accept an offer of settlement whether in the form of an offer under rule 14.10 or some other offer to settle or dispose of the proceeding; or
…
[35] The important terms of the offer were:
(a) The Defendants would pay the Plaintiffs $150,000 by 26 November
2013, and forgo any claim for damages arising out of caveats that the
Plaintiffs had lodged against properties owned by the Defendants.
(b)The offer was in full and final satisfaction of all claims that the Plaintiffs might have in relation to the agreement for sale and purchase at the heart of the case. The Plaintiffs were to discontinue the proceedings, withdraw the caveats they had lodged and refrain from taking steps to enforce a judgment for $943,033.36 that they had already obtained against Mrs Heenan.
(c) The offer was open for acceptance for 24 hours.
[36] The Plaintiffs submit that the circumstances in which the Court may order indemnity or increased costs do not arise in the present case because, assessed at the time of rejection, they had reasonable justification for failing to accept the Defendants’ offer of settlement.
[37] The grounds on which the Plaintiffs submit they had reasonable justification for refusing the offer are as follows. They were suing for approximately
$1.3 million. The Defendants’ offer was made less than a week before trial – in fact four working days before the trial commenced – and the 24 hour period allowed for
acceptance was too short. The Plaintiffs say they had only just received the
Defendants’ briefs (served on 30 October 2013).
[38] For the reasons advanced by the Plaintiffs, I accept their submission that they had reasonable justification for refusing the Defendants’ offer. I also consider it important that the offer was not exclusively to settle the proceedings but also required the Plaintiffs to forego any attempt to enforce the substantial judgment already obtained against Mrs Heenan personally. Essentially the Defendants were seeking to resolve two claims with the one payment.
[39] It follows that I decline to award increased, let alone indemnity, costs. [40] To summarise:
(a) the Defendants are to have costs as set out in schedule A and as set out in schedule B, subject to the items I have disallowed.
(b)the Plaintiffs are entitled to the costs set out in [7] of their memorandum dated 11 April 2014, subject to what is said in [28] above.
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M Peters J
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