Winton v Winton
[2018] NZHC 486
•21 March 2018
IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY
I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-Ā-TARA ROHE
CIV-2016-485-419
[2018] NZHC 486
BETWEEN JAMES ANDREW WINTON
Plaintiff
AND
VIRGINIA RUTH WINTON
Defendant
Hearing: On the papers Appearances:
J D Haig for the Plaintiff
C S Chapman for the Defendant
Judgment:
21 March 2018
JUDGMENT OF GRICE J
(Costs (interlocutory applications))
[1] This is an application by the defendant for costs following the disposal of two interlocutory matters. These matters were applications by the defendant for particulars and an application by the plaintiff for standard and tailored discovery, with a cross- application by the defendant for tailored discovery.
Background
[2] Associate Judge Smith partly heard the interlocutory applications on 14 August 2017, but the hearing was not completed. Associate Judge Smith is unavailable to deal with the costs matter. I have reviewed the file, including the Associate Judge’s relevant minutes, and I have the material upon which to determine the costs application.
[3] The interlocutory matters were set down for hearing before Associate Judge Smith on 14 August 2017. The record indicates that part way through the hearing it
WINTON v WINTON [2018] NZHC 486 [21 March 2018]
became apparent that probate of the deceased’s estate which was the subject of the proceedings had been granted in Australia.
[4] The Judge returned after the morning adjournment and was advised by counsel that the matter would not proceed as it appeared that the interlocutory applications would be resolved by consent. The Minute No. (2) of Associate Judge Smith on 14 August 2017 records that:
[1] During the hearing today on the particulars and discovery applications, it became apparent that probate has fairly recently (30 June 2017) been issued by the Supreme Court of New South Wales in the estate of the late Mrs Rachel Winton. Mr Chapman told me that he has only fairly recently received a copy of the probate document, and he was able to supply me with a copy of the probate after the morning adjournment.
[2] The probate document has annexed to it an “inventory of property”, which appears to list the assets in the late Mrs Winton’s estate.
[3] Mr Haig had not seen the probate document or the inventory at all before this morning’s hearing, and he tells me that his client only saw it for the first time on Thursday or Friday of last week.
[4] An important issue at the trial of this proceeding will be whether the assets in the late Mrs Winton’s estate have been preserved as required by the settlement agreement, and the plaintiff will clearly now at least have some details of the assets in the estate.
[5] In those circumstances, counsel sensibly agreed that it would not serve a useful purpose to continue with the particulars and discovery applications before Mr Haig and his client have had an opportunity to consider the probate document and inventory, and make such amendments to the plaintiff’s pleadings as may then seem appropriate.
[6] After conferring with counsel, I adjourn the hearing to 11.00 am on 26 September 2017 for mention. Mr Haig advises that the plaintiff will be looking again at the pleadings in the meantime, and counsel are hopeful that some resolution may be worked out on the applications presently before the court.
[5] It is apparent that the information in the annexed inventory was of assistance to the plaintiff and influential in terms of the parties’ resolution of the relevant interlocutory applications, all of which were withdrawn by leave. The grant of probate dated 30 June 2017 in the estate of Mrs Rachel Winton, with the annexure of an inventory of property, is referred to by the plaintiff in his Third Amended Statement of Claim, dated 20 December 2017.
[6] The matter was again called on 21 September 2017 and 18 October 2017. Various consent orders were granted on 7 November 2017, including leave to withdraw both interlocutory applications and the timetabling for filing dates associated with this costs application. A joint consent memorandum dated 8 November 2017 was filed which dealt with discovery. Further orders were made on the basis of that memorandum on 9 November 2017.
Submissions on costs
[7] This judgment deals with the costs application by the defendant resultant from the two interlocutory applications discussed above.
Plaintiff ’s submissions
[8]The plaintiff opposes the defendant’s application on the basis that:
(a)The applications were not determined, and therefore costs should not be fixed. This submission relies on r 14.8(1) of the High Court Rules 2016 which provides:
14.8Costs on interlocutory applications
(1)Costs on an opposed interlocutory application, unless there are special reasons to the contrary, –
(a)Must be fixed in accordance with these rules when the
application is determined;1 and
(b)Become payable when they are fixed. (emphasis added)
(b)The fixing of costs on the application runs contrary to the general principle that the Courts will not assess the merits of a claim until it is resolved.
(c)Fixing costs where there has been a resolution or withdrawal by agreement without a full hearing “would be against the spirit of the rules”.
1 Emphasis added
[9] The plaintiff points to the comments of Faire AJ in James Products v APL Investments Ltd.2
[4] Because the disposal of the applications occurred short of a fully opposed hearing, it is appropriate that I refer to r 48E of the High Court Rules. That, of course, requires costs on an opposed interlocutory application to be fixed in accordance with the Rules when the application is determined, unless there are special reasons to the contrary. Where the determination occurs without a fully argued application it sometimes will not be appropriate to deal with the matter with [sic] the disposal of the application for the simple reason that an examination of all the issues pertaining to the application has not occurred. The effect of this will become apparent when I deal with the specific applications in this case.
[10] The plaintiff then goes on to make submissions as to the level of any costs award, if an award is to be made at all.
Defendant’s submissions
[11]In response, the defendant submits:
(a)Rule 14.8(1) does not require the application to be “determined by the court”, but rather “determined” or brought to an end by any means.
Counsel for Ms Winton quotes Ip v Ip on this point.3
(b)In any event, the Court has discretion as to costs under r 14.1, even if r 14.8(1) was not applicable as there had been no “determination” of the interlocutory applications.
(c)In this case, the Court heard arguments before the application was determined or discontinued, and is in a good position to decide who has been successful. Further, the defendant was ultimately successful in both applications. The plaintiff had not properly pleaded their claim initially.
2 James Products v APL Investments Ltd HC Auckland, CIV-2005-404-4785, 18 October 2006 at [4].
3 Ip v Ip [2016] NZHC 528 at [11]-[14].
(d)It will be more difficult for a Judge at the substantive proceedings, fresh to these applications, to consider and set costs when that Judge will not have heard the applications.
[12] The defendant then goes on to the address the substantive merits of the various interlocutory applications in detail.
Should costs be fixed?
Had the applications been “determined”?
[13] Costs in interlocutory proceedings tend to have their own rules. Rule 14.8 recognises this, and states that on opposed interlocutory applications costs are generally fixed when the application is determined.4 In Chapman v Badon Ltd, the Court of Appeal said: 5
[12] … Apart from applications for summary judgment, the general approach to costs in respect of interlocutory applications is that they are dealt with at the time the applications are determined rather than being held over until the outcome of the proceedings is known.6 This reflects the fact that the merits of particular applications and the merits of the substantive proceedings are different matters. So it is in this case. …
[14] In the present case, the process by which the interlocutory applications were resolved was very different to the process discussed in Ip.7 That case related to an application for a freezing order over certain trust properties and one of the defendants had offered to file an undertaking in the High Court not to charge, encumber or otherwise dispose of the disputed property.8 The applicant refused to accept proposals for undertakings on behalf the defendants. The undertakings proffered were similar to those that the applicant ultimately accepted and which was the basis upon which the applicant was persuaded to discontinue his application.
[15] Ip was concerned with a discontinuance of an application. The current case is, in effect, an application for costs in relation to the withdrawal of two interlocutory
4 High Court Rules 2016.
5 Chapman v Badon Ltd [2010] NZCA 613 at [12].
6 High Court Rules, r 14.8.
7 Ip v Ip, above n 3.
8 At [1].
applications, by each the defendant and plaintiff. The subsequent order for discovery by consent appears to indicate that the discovery application by the plaintiff was at least in part successful.
[16] I am of the view that the applications are at an end and so are “determined”. That “determination” may be by decision of the court, or by another mechanism.9 In the present case, it was by an agreement between counsel or, more specifically, withdrawn by leave.
[17] I accept the defendant’s submission that the interlocutory applications have been “determined” for the purpose of this costs application. In that respect, I adopt the reasoning of Duffy J in Ip.10
Merits of the plaintiff and defendant’s applications?
[18] In MV Celebre Ltd v Airwork Flight Operations Ltd, the withdrawal of the applications was considered the effective “determination” of the applications.11 It, therefore, followed that if withdrawal was to be treated analogously to a discontinuance of proceedings, costs of which would fall to be decide in terms of r 15.23 of the High Court Rules. The costs ordered were based on a limited number of steps undertaken leading up to the hearing. Doogue AJ said:12
[7] … However, the rule which governs the position where there has been a discontinuance of a proceeding is also of application. Rule 15.23, which is to be considered shortly, is stated in terms which literally limit its effect to the circumstances in which a proceeding in its entirety has been discontinued. That provides as follows:
15.23 Costs
Unless the defendant otherwise agrees or the court otherwise orders, a plaintiff who discontinues a proceeding against a defendant must pay costs to the defendant of and incidental to the proceeding up to and including the discontinuance.
9 Ip v Ip, above n 3, at [11]-[14].
10 At [12].
11 MV Celebre Ltd v Airwork Flight Operations Ltd [2015] NZHC 1400 at [7]-[10].
12 At [7].
[19] In that case, Associate Judge Doogue also noted that the Court, in dealing with costs on interlocutory matters, will not generally have regard to the merits of the case, as it does not have the means of coming to a reasoned conclusion nor of conducting a hearing. He said:13
[11] The second point is that it is understandable why the Court will not in general have regard to the merits of the respective cases of the parties on a discontinuance. The fact is that the court has not, of necessity, in those circumstances embarked upon the hearing of the case and therefore is not in a position to come to a recent conclusion about the merits of the respective cases.
[12] The reason why the Court ought not to attempt to come to a view about the merits of the case is that it does not have the means of coming to a reasoned conclusion, or, in the alternative, conducting some kind of hearing into that matter would result in the parties incurring avoidable legal costs and contributing to delay in the proceedings. Both of those outcomes would be contrary to the objective of the High Court Rules, which is stated in r 1.2 to be securing the just, speedy and inexpensive determination of any proceeding or interlocutory application.
[13] On the other hand, there will be cases where the Court simply does not know what the merits of the respective positions of the parties were and ought not to try to come to a view about it. In a circumstance where the court knows no more than that the applicant has discontinued the proceeding, the analogous application of r 15.23 will require that the applicant should pay costs. Such an approach recognises the reality that, in the absence of some other explanation, a likely explanation for the applicant not proceeding is that it appreciated that it was unlikely that its application would prevail. In such a circumstance where the opposing party has been put to the expense of opposing the application, an order for costs against the discontinuing party would often be the just result.
[20] Further, there is a residual discretion left to the Court to decide not to fix and order costs where there are special reasons to the contrary. In Alarm New Zealand Ltd v 15 Hopetoun Ltd, Thomas J put it this way: 14
[18] … However, there is a residual discretion where there are “special reasons to the contrary” not to fix and order costs. That discretion has been exercised previously, in cases where “unresolved factual disputes about the appropriateness of the interim relief application” gave rise to “special reasons to decline to make an order for costs”, as the Court had not had an opportunity to examine the merits of the case.15 …
13 At [11]-[13].
14 Alarm New Zealand Ltd v 15 Hopetoun Ltd [2016] NZHC 2080 at [18].
15 Kenealy v Morton-Jones [2015] NZHC 297 and Commercial Factors Ltd v Veda Advantage (NZ) Ltd HC Auckland CIV-2010-404-6798, 21 June 2011, where interim injunction applications were discontinued.
[21] In the current case, both applications were withdrawn. The probate documents provided by the defendant to the plaintiff supplied some information which he was seeking and so indicates some level of justification for the plaintiff’s application. The filing of a further amended Statement of Claim, with the benefit of the further information in the probate documents, indicates that the defendant’s application was justified in part at least.
[22] Any conclusions beyond that, however, would require a consideration of the merits of the applications. Associate Judge Smith did not have the benefit of a full hearing nor did he determine the merits of the applications. It is not appropriate for me to embark on that assessment at this stage.
[23] If the defendant had provided the probate inventory earlier, the plaintiff’s application may have been resolved without the need the hearing at all. In that respect I note:
(a)The resolution between the parties was achieved with the assistance of the probate attachment which an inventory of estate property and values. This was made available to the plaintiff by the defendant only a few days before the interlocutory application was due for hearing and to counsel for the defendant only at the hearing.
(b)Probate of Mrs Rachel Winton’s will was granted on 30 June 2017 and was made available to the defendant in her capacity as executor by her Australian lawyers, Haille Paine, by letter (on its face sent by email to the defendant) dated 4 July 2017. It was copied to the defendant’s current solicitor on record.
(c)The provision of probate and the inventory likely assisted in the interlocutory applications being resolved without a hearing.
(d)Even if the defendant’s New Zealand lawyers did not have a copy of probate and inventory earlier, both she and her Australian lawyers did. I have noted it was also emailed to her New Zealand solicitor on the
record. This was over a month before the interlocutory applications were due for hearing. There is nothing to indicate the defendant did not receive it. Nevertheless, it does not appear to have been listed in her list of documents, which should have been amended in accordance with her ongoing discovery obligations. That omission is not before me so I put it to one side.
(e)The application for probate was initially lodged by way of letter from the Australian lawyers, Haille Paine, dated 17 March 2017. The defendant executor swore the affidavit in support of the summons for probate on 17 March 2017. An Australian law firm acting for the plaintiff, Armstrong Legal, were sent drafts of the summons for probate and related documents by letter from Haille Paine on 9 March 2017. In a letter dated 21 March 2017 addressed to Armstrong Legal, Greg Kelly Law, and the defendant’s solicitor on record, Haille Paine indicated it would contact the plaintiff’s lawyers once probate was granted. It is not apparent that this occurred, but counsel’s indications were that the first the plaintiff saw of the probate grant and complete inventory was a few days before the hearing of the application in August 2017.
[24] It seems that some of the relevant probate documents were in the hands of the lawyers acting for the plaintiff in March 2017. However, the crucial ones, according to the submissions of the plaintiff, regarding the value of the estate and responses to requisitions by the New South Wales Supreme Court asking for the gross and net values of the assets, were not supplied in a timely manner once the information was sent to the defendant. It may well be that Mr Chapman did not have the documentation until he made it available to Mr Haig, but his client and instructing solicitor did have it.
[25] I also note that in relation to the discovery application by the plaintiff, this application was resolved by the provision by the defendant of a substantial volume of initial disclosure documents, as well as admissions made in the Statement of Defence.
[26] Therefore, I do not consider the defendant should be entitled to costs to be fixed in any event in relation to the two interlocutory applications. The merits of his applications were not decided by the court. This is analogous to a discontinuance where costs are awarded to the other party.
[27] I note that the plaintiff did not seek costs be fixed at this stage, but rather sought that they be left to be assessed at the conclusion of the proceedings. In my view that is the correct course. Included in that assessment should be the costs of this application.
Other issues
[28] This costs application only relates to the interlocutory applications partly heard before Smith AJ on 14 August 2017. In the defendant’s application for costs, she also applies for costs for the filing of amended pleadings. That is outside the ambit of this application, and has not been dealt with for that reason.
Conclusion
[29]The defendant’s application for costs is refused.
Grice J
Solicitors:
Nowland Gordon & Associates, Wellington Brandons, Wellington
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