Swindle v Withers
[2015] NZHC 1742
•24 July 2015
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV-2012-404-1237 [2015] NZHC 1742
BETWEEN BURVLE EDWARD SWINDLE and
CAROLIE ANN TERPENING SWINDLE as trustees of the Swindle Family Trust First Plaintiffs
AORANGI FORESTS LIMITED Second Plaintiff
ORAKEI SECURITIES LIMITED Third Plaintiff
AND
MARK DONALD WITHERS Defendant
AND
ZURICH AUSTRALIAN INSURANCE LIMITED
Third Party
Hearing: 8 July 2015 Appearances:
P A Robertson for Plaintiffs
J Long and S G Ma Ching for Defendant
A C Challis for Third PartyJudgment:
24 July 2015
JUDGMENT OF M PETERS J As to Costs and Other Matters
This judgment was delivered by Justice M Peters on 24 July 2015 at 2 pm pursuant to r 11.5 of the High Court Rules
Registrar/Deputy Registrar
Date: ...................................
Solicitors: Heaney & Partners, Auckland Lee Salmon Long, Auckland McElroys, Auckland
SWINDLE v WITHERS [2015] NZHC 1742 [24 July 2015]
[1] This judgment determines several issues arising from memoranda following my judgment of 30 April 2015 (“judgment”).1 The memoranda include applications:
(a) by the Plaintiffs that I should recall or correct my judgment and for an award of costs and disbursements against the Defendant (“Mr Withers”);
(b)by Mr Withers that I should make an order declaring the Plaintiffs’ loss to be $2,311,394 and for an award of costs and disbursements against the Plaintiffs;
(c) by Mr Withers for orders against the Third Party (“Zurich”).
Plaintiffs’ application for recall or correction of a slip or omission
[2] By memorandum dated 9 June 2015 (which the Court received on 1 July
2015),2 the Plaintiffs ask that I recall or correct [126] of my judgment, which states:3
[126] I have already set out the components of the Plaintiffs’ loss. To the extent that the Vintage companies defaulted in instalments of interest (as I understand it, from October 2009), interest on the outstanding principal is allowed at the rate paid from time to time on funds in the costs accounts until the date the trustees commenced proceedings. This measure is consistent with performance of the undertakings. Thereafter interest accrues at the Judicature Act 1908 rate.
[3] The effect of this passage is that, as between 1 October 2009 and the date the First Plaintiffs (“the trustees”) commenced proceedings, being 29 February 2012, the Plaintiffs should have interest on outstanding principal at the rate paid from time to time on the costs account.4
[4] Counsel for the Plaintiffs advises that, in fact, the interest rate paid on funds in the costs account during this period was nil, that the effect of the order is thus
1 Swindle v Withers [2015] NZHC 888. This judgment is under appeal.
2 Memorandum of Counsel for the Plaintiffs in Relation to Interest Damages dated 9 June 2015;
and Memorandum in Relation to the Recall or Correction of the Judgment dated 1 July 2015.
3 Swindle v Withers, above n 1, at [126].
4 As defined in my judgment of 30 April 2015.
unjust and/or does not reflect my intention, and that I should recall or correct that part of the judgment, as to which see High Court Rules, rr 11.9 and 11.10.
[5] Counsel for Mr Withers and Zurich oppose the application. They submit that the circumstances in which recall or correction is necessary or appropriate do not arise.
[6] I accept that submission. I mean no disrespect to the Plaintiffs in not addressing their contentions in detail. The short answer to their argument is that I intended to make the order I did and so there can be no question of recall or correction.
Application by the Defendant for order as to quantum
[7] In [5] of his memorandum of 22 June 2015, counsel for Mr Withers seeks an
“order that $2,311,394 is the Plaintiffs’ loss”.
[8] Counsel has not identified any jurisdictional basis for making such an order but in submissions on 8 July 2015 Mr Long advised that the order was sought pursuant to [134] of my judgment, in which I said:5
[134] I reserve leave to apply if any issues arise as to the calculation of the sum due. In the meantime, pursuant to s 43(2)(d) of the Act, I order Mr Withers to pay the trustees and Aorangi a sum equivalent to 50 per cent of their loss.
[9] I determined that the principal that remained outstanding was $2,620,000, this comprising the sums pleaded in the fourth amended statement of claim at [47] and [57].
[10] The sum that Mr Withers now proposes derives from a consent memorandum that the parties submitted on 8 August 2014. On its face, the memorandum was to record the Plaintiffs’ loss calculated on a “no transaction” basis, which I declined to adopt. Moreover, the sum of $2,311,394 appears to treat payments of interest that were made as if they were repayments of principal. Given these points, counsel for
Mr Withers withdrew the application and it is unnecessary to say more about it.
5 Swindle v Withers, above n 1, at [134].
Costs and disbursements
[11] There is no dispute that the Plaintiffs are entitled to an award of costs on a
2B basis and disbursements. Issues arise, however, as to:
(a) several steps in the proceeding for which the Plaintiffs seek costs;
(b)the disbursements claimed and particularly the claim in respect of fees paid to an expert witness and travel costs claimed by the trustees, who live in the United States;
(c) whether the award should be reduced to reflect Mr Withers’ success in his claim that the Plaintiffs’ conduct contributed to their loss, that is that the Plaintiffs were contributorily negligent. I reduced the sum awarded to the Plaintiffs by 50 per cent to reflect their contribution to the loss they suffered.
[12] After exchange of memoranda, the Plaintiffs’ most recent claim as to costs is contained in a (revised) schedule annexed to their memorandum of 29 June 2015.6
Having heard the parties, my decision on the issues which arise is as follows.
Part 1
Step 3
[13] The Plaintiffs seek costs for filing replies, both dated 12 May 2014, to Mr Withers’ and Zurich’s statements of defence. I am not satisfied that Mr Withers should meet the costs of the reply to Zurich’s statement of defence and decline the claim in respect of this item.
Step 11
[14] In step 11 the Plaintiffs seek costs in respect of their preparation of memoranda for four case management conferences. This claim has been the subject
6 Memorandum of Counsel for the Plaintiffs with Amended Costs and Disbursements Schedule dated 29 June 2015.
of dispute and revision. I am satisfied that the most recent claim by the Plaintiffs is reasonable and allow it accordingly.7
Step 15
[15] The Plaintiffs seek costs of $995 in respect of preparation for a pre-trial conference.
[16] The pre-trial conference was to take place on 7 June 2013.8 By minute dated
17 April 2013, Sargisson AJ directed the parties to file a joint statement of the legal and factual issues requiring determination at trial. The parties did so on 22 May
2013, following which Sargisson AJ vacated the conference.9
[17] The Defendant submits that he is not liable for the costs of this step, given that the conference was vacated.
[18] I accept that the Plaintiffs should have costs in respect of preparing and filing the required consent memorandum. I also accept the point made by Zurich as to an error by the Plaintiffs in calculating the sum due and accordingly award $796.
Step 22
[19] The Plaintiffs seek costs in respect of their application to join the Third Plaintiff (“Orakei”) as a plaintiff to the proceedings and to amend the setting down date.10 I accept Mr Withers’ submission that it was open to the Plaintiffs to join Orakei from the outset and, that as a result, the application was not reasonably required in relation to the proceeding.11 I decline this part of the claim accordingly.
[20] The Plaintiffs also seek costs in respect of an application by Zurich dated
19 May 2014, seeking an adjournment of the trial. Zurich withdrew the application,
7 Ibid.
8 Minute of Sargisson AJ dated 17 April 2013.
9 Minute of Sargisson AJ dated 29 May 2013.
10 Interlocutory Application by Plaintiffs for Joinder of a Further Plaintiff and Amendment
(Extension) of Setting-Down Date dated 19 September 2013.
11 High Court Rules, r 14.2(c).
with costs reserved.12 The Plaintiffs seek costs for their preparation of a notice of opposition, a supporting affidavit and submissions. I am satisfied that Zurich should bear those costs and so order.
Step 34
[21] The Plaintiffs seek costs in respect of a hearing on 17 November 2014. That hearing was required in respect of cross-examination of an expert witness called by the Plaintiffs, Mr Grant Graham. At an earlier hearing, in October 2014, Mr Graham had given supplementary evidence that had not been included in his brief of evidence. That evidence took counsel for Mr Withers by surprise and I accept counsel’s submission that the additional hearing time was only required as a result and should be declined. I also decline the disbursement claimed in respect of hearing fees for that half day.
Step 35
[22] By consent I certify for second counsel.
Part 2
[23] In Part 2 of their claim, the Plaintiffs seek costs for steps taken but not provided for in Schedule 3. In particular, the Plaintiffs seek costs in respect of notices to provide further particulars served on 5 May 2014. I accept Mr Withers’ and Zurich’s submission that the sum claimed ($3,980) is excessive, having regard to the brevity of the request, and I allow $1,500 in its place.
Part 3
[24] Part 3 of the Plaintiffs’ claim is for disbursements totalling $139,166.15, components of which include GST. These disbursements were paid by the trustees who are not GST registered. Ms Challis for Zurich acknowledges that a party who is not GST registered may recover the GST component of a disbursement, given their
inability to claim a GST credit. All counsel were content to proceed on that basis.
12 Minute of Venning J dated 22 May 2014 at [1].
[25] The relevant parts of High Court Rules, at r 14.12 provide:
14.12 Disbursements
(1) In this rule,—
disbursement, in relation to a proceeding,—
(a) means an expense paid or incurred for the purposes of the proceeding that would ordinarily be charged for separately from legal professional services in a solicitor's bill of costs; and
(b) includes—
(i) fees of court for the proceeding:
(ii) expenses of serving documents for the purposes of the proceeding:
(iii) expenses of photocopying documents required by these rules or by a direction of the court:
(iv) expenses of conducting a conference by telephone or video link; but
(c) does not include counsel's fee.
relevant issue, in relation to a disbursement, means the issue in respect of which the disbursement was paid or incurred.
(2) A disbursement must, if claimed and verified, be included in the costs awarded for a proceeding to the extent that it is—
(a) of a class that is either—
(i) approved by the court for the purposes of the proceeding; or
(ii) specified in paragraph (b) of subclause (1); and
(b) specific to the conduct of the proceeding; and
(c) reasonably necessary for the conduct of the proceeding; and
(d) reasonable in amount.
…
[26] First, there is dispute as to the Plaintiffs’ claim for a filing fee on the interlocutory application to join Orakei as a party, to which I have already referred. For reasons already given, I disallow the claim in respect of this fee.
[27] Secondly, a claim is made for fees paid to Mr David Taylforth. Mr Taylforth was both a witness of fact and an expert witness.
[28] I discussed with counsel whether some deduction was required in respect the fees paid to Mr Taylforth, to reflect the extent to which he was called as a witness of fact. With the benefit of that discussion and after consideration, I have decided to allow all of these costs. Mr Taylforth is a professional, entitled to be paid for his time, and I accept that the criteria specified in High Court Rules, r 14.12(1) and (2) are met.
[29] No issue arises as to Mr Graham’s costs.13
Mr and Mrs Swindle’s travel costs
[30] The Plaintiffs also ask the Court to award 75 per cent of costs that the trustees, Mr and Mrs Swindle, incurred in travelling from the United States (where they are resident) to New Zealand. In round terms that 75 per cent is said to be
$17,000. Mr and Mrs Swindle are elderly and Mrs Swindle gave evidence at trial and was cross examined by counsel for Mr Withers.
[31] There is no dispute that Mrs Swindle should have a business-class return airfare from Las Vegas to Auckland and several nights’ accommodation and expenses. I heard evidence from the bar as to the costs of different classes of fare. I allow $10,000 in total to meet the costs of a return business fare and, say, four nights’ accommodation/expenses at $350 per night.
[32] The Plaintiffs also sought a contribution to Mr Swindle’s costs on the basis that, given their age, it is reasonable to expect that Mr and Mrs Swindle would travel together. Despite that, I do not propose to make an additional allowance for Mr Swindle as I consider that would impose an unreasonable burden on Mr Withers.
Costs sought by Mr Withers against Plaintiffs
[33] Mr Withers himself seeks an award of costs against the Plaintiffs.
13 As advised to me by counsel for the Defendant on 8 July 2015.
[34] First, Mr Withers seeks costs and disbursements thrown away on filing and serving two amended statements of defence.14 After discussion, counsel for the Plaintiffs accepted that Mr Withers is entitled to the sum claimed in respect of these costs and disbursements pursuant to High Court Rules, r 7.77(8). I award the costs itemised.15
[35] Secondly, Mr Withers seeks costs and disbursements in respect of an application which he made, and which I granted, to adduce further evidence. That evidence was to respond to evidence given by Mr Taylforth as to withdrawals from the costs account from March 2010 onwards.
[36] The Plaintiffs object to any award of costs to Mr Withers in this respect. I accept their submissions that the granting of the application was in the nature of an indulgence to Mr Withers, to ensure that he was not prejudiced by the lack of evidence which might prove relevant. As it was, for reasons set out in my judgment I did not find the evidence of assistance. I decline the claim for these costs accordingly.
Reduction of Plaintiffs’ costs and disbursements on grounds of contributory negligence
[37] Mr Withers and Zurich contend that the Court should reduce the costs and disbursements otherwise payable to the Plaintiffs, on the ground of my finding that the Plaintiffs were contributorily negligent and must bear 50 per cent of their loss. Zurich takes an interest in this issue because, as matters stand, it is required to indemnify Mr Withers for such costs and disbursements as he is ordered to pay the Plaintiffs.
[38] Counsel for Mr Withers submits that a 50 per cent reduction is required. Zurich submits that the reduction should not be “a mathematical exercise” but, rather, assessed in the round and that in this instance a reduction of 40 to 50 per cent would be appropriate. The Plaintiffs object to any reduction on the basis that they
still achieved a substantial victory, as they established liability and defeated several
14 Memorandum of Counsel for the Defendant in Relation to Costs dated 22 June 2015 at [15].
15 At [18].
contentions of Mr Withers’, including his “money-go-round” evidence and argument. The Plaintiffs also submit that the vast majority of hearing time was devoted to the Plaintiffs’ case with only a relatively small amount of time taken up with the case on contributory negligence.
[39] I have been referred to, and have considered, Packing In Ltd (in liquidation) v Chilcott, Waimakariri District Council v Gauld and Johnson v Auckland Council.16 I do not propose to repeat any part of those decisions but having regard to them, and particularly to Woodhouse J’s decision in Johnson, I have concluded that the Plaintiffs should recover 75 per cent of their costs and disbursements.
[40] This is because the Plaintiffs’ submission accords with my view of the relative success of the parties on the difficult issues and the time and cost occasioned by those issues. My finding on contributory negligence largely turned on the evidence of one witness, Mr Kingsley Turner, and a straightforward chronology of what had or, rather more to the point, what had not been done following default.
[41] I order accordingly.
Defendant/Third Party
[42] I turn now to costs as between Mr Withers and Zurich.
[43] In [28] of his counsel’s memorandum of 22 June 2015, Mr Withers seeks a “Sanderson” order, the effect of which he submits would be to require Zurich to meet Mr Withers’ liability to the Plaintiffs directly.
[44] I accept the submission for Zurich that such an order is not appropriate in the present case. Subject to its case on appeal, Zurich acknowledges that it is required to indemnify Mr Withers in respect of (paraphrasing) costs that he reasonably incurred
in defending the Plaintiffs’ claim.
16 Packing In Ltd (in liquidation) v Chilcott (2003) 16 PRNZ 958 (CA); Waimakariri District
Council v Gauld [2015] NZCA 200 and Johnson v Auckland Council [2013] NZHC 1148.
[45] Accordingly, it will be for Mr Withers to submit his costs to Zurich, for Zurich to pay them or to pay those not in dispute, and for any outstanding issues as to “reasonableness” to be determined in due course, if necessary.
[46] As I understand it from counsel, to date the only point that Zurich has taken on that score concerns the reasonableness or otherwise of the costs incurred on Mr Withers’ application to adduce further evidence and all matters consequential on that. At the hearing on 8 July 2015 I left it with counsel to advise whether they wished me to express a view on the point. On reflection, I think it may be best to refrain from doing so, at least at present. Quite aside from the fact of the appeal of my judgment, it is possible further submissions would be required to determine the issue.
[47] That leaves costs and disbursements in respect of Mr Withers’ claim against
Zurich.
[48] Although the parties have proposed that determination of these costs be deferred pending the outcome of the appeal, it is better to fix the costs now, provided that they fall to be determined under Part 14 of the High Court Rules and not under the terms of the policy.
[49] Matters were left on the basis that counsel for Mr Withers and Zurich would confer accordingly and submit a further memorandum/memoranda by 24 July 2015.
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M Peters J
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