Thornley v Ford

[2023] NZHC 1257

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2019-404-398

[2023] NZHC 1257

BETWEEN

PETER ERIC THORNLEY AND ROLIEN YOLANDA VAN HOUTEN
First Plaintiffs

JAMES RICHARD RUITERMAN
Second Plaintiff

AND

GRAEME REYNOLD FORD, NGAIRE DAWN FORD AND STEPHEN REYNOLD FORD AS TRUSTEES OF THE

FOOTBRIDGE FAMILY TRUST
First Defendants

PAPA PUTAIAO LIMITED

Second Defendant

Hearing:	On the papers
Counsel:	A E Simkiss for Plaintiffs D G Hayes for Defendants
Judgment:	26 May 2023

COSTS JUDGMENT OF PETERS J

This judgment was delivered by Justice Peters on 26 May 2023 at 11 am pursuant to r 11.5 of the High Court Rules

Registrar/Deputy Registrar Date: ...................................

THORNLEY v FORD [2023] NZHC 1257 [26 May 2023]

Introduction

[1]                  In a judgment of 1 April 2022, I declined the plaintiffs’ claim for relief against the first defendants.1 This judgment determines costs in the proceeding.

[2]                  By way of background, at all material times the plaintiffs had a legal easement for the supply of water to their land over the first defendants (burdened) land. However, 40 or so years ago, when the pipes were laid, and well before the plaintiffs acquired their land, the then owners deviated from the easement plan when they erected their pumphouse and laid sections of the pipes.

[3]                  In or about 2017, the first defendants indicated to the plaintiffs that they wished to build on or in the vicinity of where they believed the pipes to be, and they wished the plaintiffs to re-lay the pipes in accordance with the plan. This led to differences between the parties, and culminated in the plaintiffs commencing proceedings in March 2019. The plaintiffs sought recognition of what they contended was an equitable easement; alternatively rectification of the legal easement; alternatively claimed that the first defendants were estopped in denying their right to continue to take supply through the pipes as laid.

[4]                  In late-January 2021, several months before the case was to be heard, the first defendants transferred their land to the second defendant, PPL, which is now in liquidation. PPL was owned and controlled by Mr Stephen Ford, the third-named first defendant and the son of Dr Graeme Ford and Mrs Ngaire Ford, the first and second-named first defendants. The transfer of the land to PPL was principally intended to thwart the plaintiffs, but also to extract Dr and Mrs Ford from the litigation. Mr Hayes appeared for both the first defendants and PPL, as their interests aligned.

[5]                  On learning of the transfer of the land to PPL, the plaintiffs amended their statement of claim to allege that PPL took the land subject to their claimed equitable easement. I would have upheld the plaintiffs on this point, had they succeeded against the first defendants.

1      Thornley v Ford [2022] NZHC 667.

[6]                  Lastly, this judgment on costs is much later than it should have been. I was under the impression, wrongly as it turns out, that I was to await the outcome of the plaintiffs’ appeal against my decision.

Scale costs

[7]                  Mr Hayes, counsel for the first defendants, submits that the plaintiffs must pay the first defendants’ costs and disbursements in accordance with the usual principle that a party who fails with respect to a proceeding should pay costs to the party who succeeds.2 Mr Hayes submits that those costs should be calculated on a 2B basis up until 20 July 2020, after which he seeks increased costs.

[8]                  There can be no dispute that the first defendants were the successful parties and that the plaintiffs must pay their costs and disbursements in accordance with that usual principle. The plaintiffs do not dispute that 2B is the appropriate classification but they do take issue with some of the steps claimed in Mr Hayes’ memorandum of 4 May 2022.

[9]                  Having considered the submissions, I disallow the first defendants’ claims to the following:

(a)Memoranda of 8 and 13 March 2019, filed in respect of an application by the plaintiffs for an injunction at the outset of the proceeding. My reasons for disallowing these items are set out below.

(b)The claim to  an  appearance at  a case management  conference on  12 September 2019. There was no such appearance.

(c)The claim for the memorandum of 18 September 2019 which was to explain to the Court why (then) counsel for the first defendants had not appeared at the conference on 12 September 2019. On the face of the memorandum, it appears that something had gone awry in the Court’s

2      High Court Rules 2016, r 14.2(1)(a).

attempts to contact counsel. Regardless, it is not for the plaintiffs to bear that cost.

(d)The claim for the memorandum of 24 March 2021, the amended pleading of 31 March 2021, and the discovery items of 22 and 30 April 2021. These attendances arose from the transfer of the land to PPL. I do not consider the first defendants should be compensated for these costs, given the purpose of the transfer to PPL.

[10]              Ms Simkiss, counsel for the plaintiffs, also submits the first defendants have used the wrong daily rate for some items. Counsel can resolve that matter between themselves. The only other item in dispute is attendances the first defendants have claimed for discovery and inspection in 2019. It is not apparent to me why the plaintiffs are disputing these costs. If there is good reason for dispute, and the matter cannot be agreed, the plaintiffs may refer the point to the Registrar. Failing that, the plaintiffs are to pay the sums claimed.

First defendants’ claim for increased costs

[11]              The first defendants seek an award of increased costs in respect of steps taken after 20 July 2020, this being the date of a letter from them to the plaintiffs, proposing a method of resolution. The gist of the proposal was that the parties agree a new route for a new easement, with the existing legal easement then to be surrendered. All costs would be for the plaintiffs to bear as their land would be the beneficiary of the new easement. The “pump shed” could remain in its present location, thus avoiding the cost of relocating it. Each party would bear their own costs to date.

[12]              As I understand the parties’ submissions, the plaintiffs did not entertain this offer, and possibly did not even reply to it. Regardless, Ms Simkiss submits that there should be no award of increased costs on the basis of this offer. This is because the judgment turned on a point which had not then been pleaded; the letter did not identify the basis of the offer in a way which related to the issues at trial or the findings in the judgment; and the letter is “taken out of context of the correspondence between the parties”.

[13]              I take Mr Hayes’ point that the first defendants’ proposal was a sensible one. The evidence at trial indicated that it would have been vastly cheaper to re-lay the pipes than to litigate.

[14]              That said, I decline to make an order increasing the costs payable by the plaintiffs because I do not consider the first defendants’ letter “an offer of settlement” in the sense of High Court Rules 2016, r 14.6(3)(b)(v). It was an offer to enter into discussions, with a view to a new easement, and a surrender of the existing. Even if discussions had ensued with a bona fide wish to achieve a settlement, there was no guarantee that agreement would have resulted and the litigation ended.

Reduction in costs

[15]              The plaintiffs submit that I should reduce the first defendants’ costs to take account of additional costs they incurred consequential on the transfer to PPL. These costs are in respect of an amended statement of claim and reply filed after the transfer, preparation for the hearing, hearing fees, supplementary briefs, and additional submissions.

[16]              The Court may reduce a party’s (the first defendants’) costs if that party has failed in relation to an issue which significantly increased the opposing party’s costs.3 I am satisfied that occurred here.

[17]              The transfer to PPL was a pointless exercise but I am satisfied that it caused a significant increase in the plaintiffs’ costs. Taking into account that it occurred relatively late in the piece, I consider the appropriate reduction to the first defendants’ costs and disbursements is, say, 20 per cent.

Injunction

[18]              Both parties are seeking costs in respect of the plaintiffs’ application for injunctive relief at the outset of the litigation. I had no involvement in the case at that time and thus can only proceed on the basis of the documents which appear on the Court file. From these, it appears as follows.

3      High Court Rules 2016, r 14.7(d).

[19]              On commencing proceedings, the plaintiffs sought an interim injunction to require the first defendants to restore their water supply. The first defendants had, or were said to have, interfered with this in some way.

[20]              In the first instance this application came before Duffy J on 7 March 2019, who declined to deal with the matter ex parte and required the plaintiffs to serve the first defendants. The matter came back before Duffy J on 8 March 2019, and she made the interim orders sought, by consent. From the documents on the Court file, it appears that the parties had agreed that costs would be reserved.4 Duffy J set the application down for full argument on 23 May 2019.

[21]              Several days later, on 12 March 2019, the plaintiffs applied to vary the earlier orders, so as to permit them to exercise “self help” remedies. This appears to have been because the first defendants had not reinstated supply as they had been ordered to do. The application to vary came before Downs J on 13 March 2019. Dr Ford appeared in person on that occasion, saying that he had not reinstated supply because an electrician had advised him that the plaintiffs’ tanks were unsafe. Despite this, Downs J made the orders sought.

[22]              As it turned out, the 23 May 2019 hearing was not required. On 20 May 2019, the parties filed a joint memorandum to the Court advising of this, and advising that all issues as to costs were to be reserved.

[23]              I have gone into this matter in detail because, as I have said, the first defendants seek costs for the attendances in [9](a) above and, not withstanding their overall failure in the litigation, the plaintiffs seek costs for their attendances.

[24]              Even if I put to one side the general principle that only the unsuccessful party pays, I do not know where the rights and wrongs of what occurred in March 2019 lie. The orders were largely made by consent. Moreover, the parties were expressly given the opportunity to have issues of costs resolved in May 2019 but did not take it. In her submissions on this issue, Ms Simkiss was critical of the Judge(s) concerned for not determining costs at the time. That criticism is misplaced, given the chronology.

4      See (then) counsel for the defendants’ further memorandum of 8 March 2019.

One reason r 14.8 provides for costs on interlocutory matters to be resolved contemporaneously is to avoid the very issue which now arises.

[25]              In the circumstances, I decline to make any order in favour of either party on matters relating to the injunction(s). I simply do not know whether it is fair to characterise the plaintiffs as the successful party on that aspect of the case.

Mr Hewitt

[26]              In accordance with their earlier advice, neither the plaintiffs nor first defendants may seek any contribution from Mr Hewitt. Mr Hewitt, a plaintiff at the outset, discontinued in March 2020.

Result

[27]              The plaintiffs are to pay costs and disbursements to the first defendants in accordance with this judgment. Any further dispute is to be referred to the Registrar for resolution.

[28]I make no award in favour of or against PPL (in liquidation).

Peters J

Solicitors:           MinterEllisonRuddWatts, Auckland

Hunwick Law, Hamilton

Counsel:            D G Hayes, Hamilton

Copy for:           Waterstone Insolvency, Auckland