Street v Fountaine
[2016] NZHC 2670
•8 November 2016
IN THE HIGH COURT OF NEW ZEALAND MASTERTON REGISTRY
CIV-2014-435-6 [2016] NZHC 2670
UNDER section 313 of the Property Law Act 2007 IN THE MATTER
of an application for relief concerning principally the land comprised in computer freehold registers WN40A/853 and WN564/201
BETWEEN
CHRISTOPHER JOHN STREET, PHILIP JOHN ENGLAND, MICHAEL JOHN STREET AND JOAN ISABELLA STREET
Plaintiffs
AND
REX ALISTAIR FOUNTAINE First Defendant
ASHBY DOWNS LIMITED Second Defendant
ANZ BANK NEW ZEALAND LIMITED Third Defendant
MARGARET ELIZABETH FOUNTAINE Fourth Defendant
On the papers Counsel:
R K Macdonald for Plaintiffs
T G Stapleton QC for DefendantsJudgment:
8 November 2016
JUDGMENT OF CLIFFORD J (COSTS)
STREET v FOUNTAINE [2016] NZHC 2670 [8 November 2016]
Introduction
[1] In my decision of 3 October 2016 I dismissed the plaintiffs’ application for a declaration that their rights under a local water scheme constituted an equitable easement over land belonging to the first, fourth and second defendants, and accordingly declined their application for the registration of that easement over that land.1 I also declined the alternative, and generally unspecified, relief that the plaintiffs sought.
[2] In delivering judgment I observed that I saw no reason why costs should not follow the event. Anticipating a lack of agreement, I invited submissions. I have now received those submissions.
Submissions
[3] The defendants apply for scale costs calculated on a Category 3 basis in accordance with various Band A, B or C time allocations they consider appropriate. With disbursements in accordance with r 14.12 of the High Court Rules, those scale costs total $130,956. The defendants further claim increased costs of approximately
35 per cent ($46,691) to “ensure that they recover two-thirds ($177,647) of their actual and reasonable costs ($266,470)”. They claim those increased costs on the basis of various elements of r 14.6.
[4] Notwithstanding the terms of my judgment, the plaintiffs argue they succeeded in part or that the outcome represented something in the nature of a “draw”. They base that argument on the following, brief, observation in my judgment.
[115] In this judgment I did not have to consider the legal significance of an absolute or unreasonable refusal by the Fountaines to allow access over Waikaramu for the purposes of the Lower Scheme. But on the fundamental proposition that the law, hopefully more often than not, reflects properly informed assessments of what is fair and reasonable, such an absolute and unreasonable refusal would, in my view, be of highly uncertain legality.
[5] The plaintiffs therefore argue that costs should lie where they fall. Alternatively, there should be a 50 per cent reduction in costs otherwise payable. In doing so, the plaintiffs point to the provisions of r 14.7(b), (e), (f) and (g). Finally, the plaintiffs deny there is any basis for an order of increased costs.
Analysis
Who succeeded?
[6] High Court Rule 14.2 sets out the general principles which apply to the determination of costs. The first such principle is that the party who fails pays costs to the party who succeeds.2 Who succeeded here?
[7] The plaintiffs brought these proceedings for the express purpose of establishing their right to a legal easement. They were, on a number of occasions, offered lesser versions of the rights they sought. They rejected those offers.
[8] On the basis that:
(a) I dismissed that claim; and
(b)I declined the alternate, lesser, relief they sought because (amongst other things) they had been offered such relief by the defendants but had rejected those offers,
the only proper characterisation of the outcome of these proceedings is that the defendants succeeded. The plaintiffs were truly clutching at straws when, in reliance on my expressly obiter comment relating to the legal significance of an absolute or unreasonable refusal by the Fountaines to allow the users of the Lower Scheme access over Waikaramu for its purposes, they argued the result in effect represented a draw.
[9] I therefore remain of the view that costs should follow the event, the event being the defendants’ success.
Proceedings – characterisation
[10] These proceedings were allocated to the complex case management track. On that basis, the defendants submit that a Category 3 characterisation is appropriate for costs purposes. The plaintiffs disagree. They note that, in a memorandum of
27 February 2015 for a case management conference, they submitted the appropriate costs categorisation for these proceedings was Category 2 and, in their reply memorandum of 2 March 2015, the defendants did not disagree.
[11] Characterisation of a case as one that needs intensive case management, and hence – for case management purposes – as a complex proceeding in terms of r 7.1, is not a costs categorisation in terms of r 14.3.
[12] This case had a difficult case management history. For various reasons, which the parties will be well aware of and which I need not detail here, as matters transpired the r 14.3 categorisation of these proceedings was not specifically addressed during that process.
[13] By my assessment, however, these were not Category 3 proceedings for costs purposes, although they certainly were complex for case management purposes. The evidential and legal issues were relatively straightforward. The difficulties arose because of context and behaviour by both parties’ counsel and a plaintiff (discussed below). Accordingly, the defendants are entitled to costs on a Category 2 basis.
[14] By the same token, I consider Band B to be the appropriate categorisation in terms of r 14.5.
Increased costs?
[15] High Court Rule 14.6(3) provides for increased costs in the following terms:
(3) The court may order a party to pay increased costs if—
(a) the nature of the proceeding or the step in it is such that the time required by the party claiming costs would substantially exceed the time allocated under band C; or
(b) the party opposing costs has contributed unnecessarily to the time or expense of the proceeding or step in it by—
(i) failing to comply with these rules or with a direction of the court; or
(ii) taking or pursuing an unnecessary step or an argument that lacks merit; or
(iii) failing, without reasonable justification, to admit facts, evidence, documents, or accept a legal argument; or
(iv) failing, without reasonable justification, to comply with an order for discovery, a notice for further particulars, a notice for interrogatories, or other similar requirement under these rules; or
(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
(c) the proceeding is of general importance to persons other than just the parties and it was reasonably necessary for the party claiming costs to bring it or participate in it in the interests of those affected; or
(d) some other reason exists which justifies the court making an order for increased costs despite the principle that the determination of costs should be predictable and expeditious.
[16] The defendants argue an increased award of costs is justified by reference to the way in which the plaintiffs conducted this litigation and, in particular, because they failed to accept reasonable settlement offers.
[17] One of the plaintiffs, Mr Christopher Street, was the principal “actor” in these proceedings from the plaintiffs’ perspective. Mr Street is or was a commercial solicitor. Mr Street adopted what could benevolently be called a “commercial” approach to this dispute. I have already commented on certain aspects of Mr Street’s behaviour in the substantive judgment. I do not need to lengthen this costs judgment by repeating those observations. Suffice to say, in my carefully considered view Mr Street’s personal conduct of this dispute was fairly characterised at one point by Mr Kershaw (the Fountaines’ Wairarapa solicitor) as being “inflammatory, unhelpful and verging on the belligerent”.
[18] Having said that, the question I must ask is whether Mr Street’s behaviour is such as to come within the triggers for an award of increased costs. Inflammatory, unhelpful and even belligerent conduct will not necessarily, of itself, meet those requirements. What is required is an unnecessary contribution to the time or expense of the proceedings.
[19] Of particular relevance, in that context, are the offers the defendants made to the plaintiffs to grant them a contractual licence to access Waikaramu in connection with the Lower Scheme. Convinced of his legal right to an easement, Mr Street rejected a number of such offers. He did so peremptorily. I have, in this context, considered again the significance of the plaintiff’s plea for alternative relief. However, and as I observed in my judgment, the plaintiffs had – by rejecting the defendants’ offers of contractual licence terms – rejected the very relief they appeared to seek in the alternative. Those offers were, in my view, reasonable: particularly as they included not only contractual rights granted by the Fountaines, but also that those rights would run with the land. Had they been accepted, the plaintiffs would have had access to Waikaramu on reasonable terms and conditions, and this unfortunate litigation between neighbours could have been avoided.
[20] I am therefore satisfied that an award of increased costs, of 25 per cent (rather than 35 per cent as sought by the defendants) is appropriate.
[21] At the same time it is necessary to acknowledge the criticism I expressed of the conduct of both counsel in the interlocutory stages of this proceeding.3 In Minutes of 27 November 2015 and 10 December 2015, I felt compelled to record respectively:
The state of affairs between counsel as recorded in the memoranda recently filed is unacceptable;
and:
Counsel continue to waste their and the Court’s time. I have no intention of
dignifying their unseemly exchanges with further attention.
3 I note that both counsel conducted themselves appropriately at trial.
[22] I also note my observation that I could see no reason why Mr Stapleton was declining to deal directly with Mr Street.
[23] My assessment is, however, and very much as those memoranda reflect, that Messrs Macdonald and Stapleton were responsible in equal parts for that state of affairs. No further adjustment is, therefore, called for on that account.
[24] On the basis of this judgment, I trust that the parties will now be able to resolve the question of the quantum of costs payable by the plaintiffs to the defendants. If they are unable to do so, the Registrar is to prepare a costs order pursuant to the terms of this judgment.
“Clifford J”
Solicitors:
Rob Macdonald, Lower Hutt for Plaintiffs
Nowland Gordon and Associates, Wellington for Defendants
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