Thomson t/a Antique Jewellery v Lloyd

[2020] NZHC 1620

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV 2019-404-2709

[2020] NZHC 1620

BETWEEN

GRAEME THOMSON T/A ANTIQUE JEWELLERY

Appellant

AND

ARTESHAR MAI-RAY LLOYD

Respondent

Hearing:	On the papers
Judgment:	8 July 2020

COSTS JUDGMENT OF DUFFY J

This judgment was delivered by me on 8 July 2020 at 2.00 pm pursuant to

Rule 11.5 of the High Court Rules.

Registrar/ Deputy Registrar

Solicitors:

Neilsons Lawyers, Onehunga Legal Vision, Auckland

Greg Jones, Barrister, Auckland

THOMSON T/A ANTIQUE JEWELLERY v LLOYD [2020] NZHC 1620 [8 July 2020]

[1]    The appellant, Mr Thomson, operates a jewellery shop in Parnell and is a defendant in District Court proceedings brought against him by the respondent, Arteshar Lloyd. Ms Lloyd provided various items of jewellery to the appellant to sell on her behalf and in  return he was to receive  a commission.  Ms  Lloyd is suing   Mr Thomson for breach of contract or breach of fiduciary duty on account of his failure to pay her all that she was due from this arrangement.

[2]    In accordance with  the  District  Court  Rules  2014  Ms  Lloyd  provided  Mr Thomson with initial disclosure, however, Mr Thomson sought fuller and better disclosure in the District Court. Mr Thomson’s application was declined by Judge Mathers and he appealed that decision to this Court. In a decision dated 9 June 2020 I allowed the appeal in part and invited counsel to file memoranda as to costs if costs could not be agreed as between the parties. I have since received memoranda as to costs, which shall be determined in the remainder of this decision.

Position of the appellant

[3]    Mr Jones, on behalf of Mr Thomson, contends that the appellant was the successful party on appeal and seeks indemnity costs in the sum of $31,155.60. He submits that if Ms Lloyd had met her disclosure obligations in the first place the dispute would never have gone this far, and in fact the application for better and fuller disclosure would not have been necessary. He also submits that the respondent alleged that the application was a delaying tactic and an abuse of process and that this position was completely unjustified. Essentially, Mr Jones submits that the objections raised by the respondent were unnecessary and arguably improper or vexatious, and it is on this basis that he contends indemnity costs are warranted. In the alternative Mr Jones seeks costs on a 2B basis with a 50 per cent uplift.

Position of the respondent

[4]    Mr Meys, for the respondent, contends that it was the respondent who was substantially successful on appeal and seeks costs on a 2B basis to be fixed by the Registrar. Mr Meys submits that the respondent’s opposition to the application for better and fuller disclosure was not unreasonable as counsel was entitled to rely on the law as it stood in Panckhurst v Cullinane outlining that there is no requirement to

verify what documents are held at the time of initial disclosure.1 Mr Meys submits that my decision has changed the law and now requires a party to effectively “confirm explicitly when filing a statement of claim that [they have] no documents to prove [their] case” on a certain point. As a result, given that the appeal only succeeded on this point it is the respondent who should be viewed as the successful party and in turn entitled to costs on a 2B basis.

[5]    In the alternative, Mr Meys submits that scale costs may be awarded and reduced by a percentage in keeping with the degree of success set out in my decision. He does not go on to specify what quantum this deduction should be.

Discussion

[6]    It is well settled that the party that lost should pay the costs of the party that won. This position is reflected in r 14.2(a) of the High Court Rules 2016 and was described by the Supreme Court as the principle that the “loser and only the loser pays”.2 The key issue in the current application for costs is who ought to be identified as the loser and liable to pay costs. To address this issue, it is necessary to briefly outline the matter that was heard before me.

[7]    The appeal focused on disclosure in relation to two concerns central to the proceeding, those were: (a) whether Ms Lloyd had received the amount of money she was due to be paid as a result of Mr Thomson selling items of jewellery on her behalf; and (b) whether Mr Thomson ever received four items of jewellery that Ms Lloyd contends she did not receive payment for. Two schedules relating to these concerns had been disclosed to Mr Thomson as part of the initial disclosure.

[8]    Schedule A identified 15 items of jewellery for which Ms Lloyd contends she has not been fully paid. Schedule A set out the value of the item, the sale price, the portion of the sale price she received and the balance allegedly owing to her. This schedule was supported by individual receipts that Mr Thomson had issued for each item and corresponding bank statements from Ms Lloyd showing payments from

1      Panckhurst v Cullinane [2016] NZHC 2774.

2      Shirley v Wairarapa District Health Board [2006] NZSC 63, [2006] 3 NZLR 523 at [19].

Mr Thomson for these 15 items. As set out at [9] of my decision I was satisfied that the initial disclosure in relation to the items set out in Schedule A was sufficient, and accordingly the appeal failed in this respect.

[9]    The second schedule, Schedule B, set out 47 items which Ms Lloyd alleges were sold but for which she  has  received  no  sale  proceeds  from  Mr Thomson. Mr Thomson contends that he never received four of those items and it appears that Ms Lloyd has not disclosed receipts from Mr Thomson for their sale. In the list of documents provided to Mr Thomson, the receipts for the jewellery listed in Schedule B was simply listed as a single group of documents with the description “receipts from Graeme Thomson”. This description made it difficult for Mr Thomson to see which of the 47 items had  corresponding  receipts.  At  [16]  of  my decision  I held  that Mr Thomson was entitled to an amended list of documents that “itemises the Schedule B items” and “list[s] with sufficient particularity to allow it to be identified, any material that is available to [Ms Lloyd] that would establish she once had possession of the four subject items”. In this respect the appeal succeeded.

[10]   This brief overview clearly identifies that there were two key concerns raised in the appeal before me and that the parties each succeeded on one of those issues. Thus, this is a situation where “approximately equal success and failure attended the efforts of both sides”.3 In these circumstances success and failure is best assessed by stepping back and adopting a realistic appraisal of the end result.4 The Court of Appeal in Weaver v Auckland Council identified that the underlying principle of this appraisal is that success on limited terms is still success,5 and where success (even on limited terms) can be identified, there is no proper basis upon which the usual rule that the party who fails should pay costs should not apply. Rather, the proper issue will therefore be whether there is any reason to exercise judicial discretion pursuant to r

14.7 to refuse to make an order for costs or to reduce the costs otherwise payable to the successful party.6

3      Packing in Ltd (in liq) formerly known as Bond Cargo Ltd v Chilcott (2003) 16 PRNZ 869 (CA).

4 At [6].

5      Weaver v Auckland Council [2017] NZCA 330 at [26].

6      Body Corporate 199883 v Auckland Council [2017] NZHC 2455.

[11]    With these principles in mind it is clear that the appellant is the successful party in this proceeding. It elected to appeal the decision of Judge Mathers and succeeded on one of the two concerns on appeal, having limited success but success nonetheless. On this basis the appellant is entitled to an award of costs. The question is the quantum of those costs.

[12]   The appellant seeks indemnity costs, but I cannot see any grounds to award such costs. The conduct of the respondent in opposing the appeal was entirely reasonable, it having partially succeeded in its opposition. Although the respondent in its notice of opposition raised the point that the appeal was a delaying tactic this matter was not raised in counsel’s written submissions and does not cross the threshold of being vexatious, frivolous or improper as would be required to warrant indemnity costs. It alternatively seeks increased costs, but again I cannot see any basis for this. Rather, the question is whether I ought to exercise my discretion to decline to award costs or decrease the scale costs the appellant is entitled to in order reflect that it has been partially unsuccessful.

[13]   Put simply, the respondent was successful in opposing one out of the two matters on appeal, and on this basis I see it appropriate to reduce costs by 50 per cent. Accordingly, the appellant is entitled to costs in the sum of $8,671 being 50 per cent of the 2B scale costs of $17.342.

[14]   For completeness I address the point raised by the respondent that my decision of 9 June 2020 changes the law in relation to Panckhurst v Cullinane. This Court in Panckhurst v Cullinane noted the following:

[8]        …Disclosure of documents pursuant to r 8.4 would seem to involve a preliminary provision of a few of the documents that are relevant to the pleadings…. There is no requirement to verify what documents are held by affidavit when giving disclosure under r 8.4. It would seem that, given the staging of the initial disclosure, the objective is to provide augmentation of the parties understanding of the case against them to enable effective pleadings to be filed and thus to avoid having to go through a process of later amending pleadings. That may have to be done in any case but in simpler cases timely supply of the key documents may enable the parties to come to an understanding, at an early stage, of the issues that must be dealt with in the pleadings.

[9]        So the objectives of the rule itself are relatively modest. They plainly are designed to achieve the overriding objective of the High Court Rules

which is to promote the speedy, just and inexpensive determination of the parties’ disputes. Taking all these matters into account what needs to be done when a party is considering his or her obligations under r 8.4 is to make a common-sense judgment both as to their expectations of the documents that the other party needs to supply and also on the part of the party who has to make disclosure…

[15]   The direction I gave on appeal requiring itemisation of Schedule B and of material that would establish that Ms Lloyd had possession of the four jewellery items in question was entirely consistent with the position in Panckhurst. That case envisioned the disclosure of documents that would allow the parties to understand the case against them and enable effective pleadings. In making a common-sense judgement it is quite clear that to allow Mr Thomson to understand the case against him it was necessary for the respondent to adequately identify the documents in Schedule B and those related to ownership of the four jewellery items. What is required in initial disclosure will always depend on the facts of the case and in this case the nature of the claim meant that more detailed itemisation was necessary.

Outcome

[16]Mr Thomson is entitled to costs of $8,671.

Duffy J