Taylor v Asteron Life Ltd

[2019] NZHC 1489

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE

CIV-2015-485-1032

[2019] NZHC 1489

BETWEEN

PETER JAMES TAYLOR

Plaintiff

AND

ASTERON LIFE LIMITED

Defendant

Hearing:

On the papers

Counsel:

A C Beck for the Plaintiff

C M Meechan QC and A Borchardt for the Defendant

Judgment:

28 June 2019

JUDGMENT OF COOKE J

(Interest and costs)

[1]                 In my judgment of 7 May 2019 I reserved the question of interest to be payable on the defendant’s successful counterclaim, and the question of costs.1 Memoranda have been filed by the parties on those issues.

Interest

[2]                 The defendant has succeeded in its counterclaim for $371,286.70. I deferred the award of interest on this amount as the total amount paid to the plaintiff over time changed because of the ongoing insurance payments, so the interest calculation was complicated. The defendant has now set out a schedule calculating the interest that is payable (schedule A to counsel memorandum dated 21 May 2019). The schedule calculation itself is not disputed, but the plaintiff argues that the rate of five per cent should not be used as the applicable rate under s 87 of the Judicature Act 1908.

1      Taylor v Asteron Life Limited [2019] NZHC 978 at [125]–[126].

TAYLOR v ASTERON LIFE LIMITED [2019] NZHC 1489 [28 June 2019]

[3]                 The plaintiff raises an issue concerning delays with the proceeding, as well as overpayment of premiums. I see no significance in the point about delay, and in any event the plaintiff’s stance on disclosing information to the defendant was also a cause of delay in this matter coming to Court. In terms of premium payments I accept the defendant’s point that I have no evidence about that.

[4]                 The plaintiff refers to the calculation that can now be undertaken since the Interest of Money Claims Act 2016, and puts forward an alternative calculation of a reasonable interest component leading to an award interest of $109,906.93 rather than

$128,153.66. I accept the defendant’s interest calculation, however. This is a case where the plaintiff has received payments to which he was not entitled. He has had the advantage of the use of that money. Requiring repayment at a five per cent interest rate does not involve over compensation. Accordingly I accept that the defendant is entitled to interest in the amount of $128,153.66 to the date of judgment.

Costs

[5]                 The plaintiff failed in his claim, and the defendant succeeded on its counterclaim. The defendant claims costs generally on a 2B basis, but there are particular issues in dispute.

Discovery

[6]                 A claim in costs for inspection of the plaintiff’s discovery is sought on a 2C basis rather than a 2B basis. The defendant says that it was a very extensive inspection exercise, and that Mr Taylor did not initially meet his discovery obligations. In response the plaintiff says that discovery was a “herculean task” as the defendant had effectively sought the entire documentary records of the plaintiff’s business, and that the documents ultimately had little evidentiary value.

[7]                 Given that the plaintiff had put in issue the extent to which he was working in his business in his claim, it was almost inevitable that the defendant would want discovery that evidenced his involvement. This may well be characterised as discovering the entire documentary records of his business. His involvement in particular business activities was the subject to detailed examination at the trial. The

herculean forensic exercise was simply the consequence of the plaintiff’s stance. Accordingly I accept that costs for this step should be calculated on a 2C basis.

Uplift

[8]                 The defendant seeks a 15 per cent uplift on its costs award under r 14.6(3)(b) on the basis that:

(a)Mr Taylor made unmeritorious claims based on what was a fraudulent assertion. This involved asserting he had not worked in the business other than in a minor way, which was a claim that lacked merit. The Court found his claims were deliberately false. The Court also found that his evidence was generally unreliable and at times not credible.

(b)The plaintiff had discovered a false set of accounts purporting to disclose that the income from his business had significantly reduced when this was not true.

(c)The plaintiff pursued other unmeritorious claims, including a defence of change of position.

[9]                 In response the plaintiff submits that this was an orthodox civil dispute, and that no costs had been increased unnecessarily. Reliance was placed on the decision of the Court of Appeal in Corrick v Silich.2

[10]             In responding to these arguments it seems to me to be appropriate to proceed with caution. In Paper Reclaim Ltd v Aotearoa International Ltd the Court of Appeal overturned an award of indemnity costs because the High Court had made unjustified findings in relation to the honesty where the underlying claims were still properly advanced in the proceeding.3 The pursuit of proper claims should not be penalised. Nevertheless I am satisfied that it is appropriate for there to be an uplift of the costs award in the present case given that costs of the litigation were increased by unmeritorious arguments. In particular:

2      Corrick v Silich [2018] NZCA 221, (2018) 24 PRNZ 210 at [60]–[61].

3      Paper Reclaim Ltd v Aotearoa International Ltd [2006] 3 NZLR 188 at [143]–[161].

(a)The plaintiff had made deliberately false claims, and then gave evidence, that I found unreliable and at times not credible, that he had not been working in any meaningful capacity. He must have known that the claim lacked merit. To respond to this the defendants were required to undertake an extensive forensic exercise, including by subpoenaing his employees to demonstrate that this was not true.

(b)In any event his income was not adversely affected by any issue of incapacitation. That fact was obscured by the discovery of false sets of accounts. The defendant was required to call expert accounting evidence to explore that point. Even at trial the plaintiff called his own accountant to explain the accounts so discovered were earlier draft iterations. This further evidence was demonstrated to be incorrect.

[11]             The key point is that the plaintiff was advancing false claims for insurance entitlements. The pursuit of the claim can be seen as a continuation of the attempt to falsely claim entitlements. Given my findings, the plaintiff’s claim was not properly brought. The defendant was put to considerable cost to demonstrate why the claims were illegitimate. In those circumstances an uplift to reflect the additional expense they were required to undertake is justified.

[12]             In the circumstances the claimed 15 per cent uplift is relatively modest given that the whole foundation for the claim failed for two independent reasons — that  Mr Taylor’s ability to work was not materially affected, and the actual income he earned from his business was not materially changed.

[13]Accordingly I accept the defendant’s claim for an uplift.

Disbursements

[14]             The plaintiff does not accept some of the disbursements claims by the defendant on the basis that they do not meet the requirements for approval under

r 14.12(2) in accordance with the approach of this Court outlined in Auckland Waterfront Development Agency v Mobil Oil NZ Limited.4

[15]In relation to each of the disputed disbursements I conclude as follows:

(a)Expert accountancy evidence was given by Mr Hussey. I accept that his costs are high, but I do not accept the plaintiff’s argument that the calculation of his income was not an issue on the pleadings. It was squarely raised — indeed the plaintiff called expert evidence from   Mr Graeme Lindsay directed to the issue of policy interpretation. It was inherently part of both the plaintiff’s claim and the counterclaim. Moreover, the assessment of income was an issue associated with the false accounts that have been discovered. For these reasons I conclude that the entirety of Mr Hussey’s fees are recoverable.

(b)Whilst I accept that Mr Roigard, a private investigator, gave evidence of only peripheral relevance, the amount claimed for his involvement is not very high. Given that the plaintiff was making claims as to entitlements it is not surprising that the defendant would adduce evidence such as the frequency of his telephone calls. Accordingly I accept the disbursement was reasonably necessary for the conduct of the proceedings.

(c)I accept the plaintiff’s point that the  accommodation  expenses  for Ms Tricker and Ms Bridgman were not reasonably necessary as their evidence was commenced on Monday 18 February and completed that morning. Equally I also disallow the accommodation  expenses  for Mr Strong, whose evidence was largely inadmissible.

4      Auckland Waterfront Development Agency v Mobil Oil NZ Limited [2015] NZHC 470, (2015) 23 PRNZ 200 at [50].

Interlocutory applications

[16]             The plaintiff disputes an allowance for costs of two interlocutory applications.5 From the Court file it appears that the decisions on those applications involved reserving costs, or not addressing them.

[17]             I see no reason why the defendants should not be entitled to costs of these applications. As I have already indicated in relation to the higher allowance for inspection addressed above, in a case such as this it was reasonable for the defendant to take steps to fully investigate the factual position, including by obtaining discovery, including non-party discovery. The plaintiff had not presented an accurate factual position either before, or after, the proceedings had been commenced. A full forensic task was justified. I allow the claim of costs of the interlocutory applications.

[18]             The plaintiff says that five case management conferences after the initial conference were unnecessary on this basis as well. Again I conclude that the complexity of the case was created by the plaintiff’s approach.

[19]             The plaintiffs also contest an amount of $9,076.50 being legal fees incurred by IAG in complying with the third party discovery order. Mr Beck argues that the task was essentially an administrative one, with IAG carrying out the task in-house. There is, however, a fee note from Duncan Cotterill, solicitors, dated 13 December 2017 attached to the claim, and I accept that that fee was incurred. For the reasons already addressed, I accept that obtaining third party discovery became a reasonable step because of the plaintiff’s stance. Accordingly it is allowed.

Reduced costs

[20]             The plaintiff contends that there should be a reduction in the defendant’s cost award because the defendant contributed unnecessarily to the time that was spent commencing the proceeding by taking unnecessary steps under r 14.7. The relevant steps relate to the extensive discovery exercise involving extensive records from the plaintiff, non-party discovery, and including Mr Roigard’s analysis. It encompasses

5      Taylor v Asteron Life Limited [2018] NZHC 2939; and Taylor v Asteron Life Limited [2017] NZHC 871.

the two discovery applications referred to above. The plaintiff seeks a 25 per cent reduction.

[21]             For the reasons already traversed I reject these arguments. The extent of the forensic exercise engaged in by the defendant was a consequence of the nature of the plaintiff’s claims, and the stance that he had adopted. I accept the plaintiff’s point that Mr Strong had produced a 290 page brief analysing this material which was largely inadmissible, as I effectively concluded. But no costs are claimed in relation to his time. The underlying documents themselves were admissible and were used extensively in the cross-examination of Mr Taylor.

Cooke J

Solicitors:

Peter Sara, Dunedin for Plaintiff

Anne Lindsay, Auckland for Defendant