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High Court of New Zealand Decisions |
IN THE HIGH COURT OF NEW ZEALAND
AUCKLAND REGISTRY
CIV 2004-404-3536
BETWEEN GARY ROBERT ANDREWS AND
PENELOPE JOAN ANDREWS
Plaintiffs
AND TELEVISION NEW ZEALAND LTD
Defendant
Appearances: B P Henry for Plaintiffs
W Akel for Defendant
Judgment:
28 March 2007
COSTS JUDGMENT OF ALLAN J
Solicitors:
Daniel Overton & Goulding, Auckland - Fax (09)
622 2555
Simpson Grierson, Auckland Fax (09) 307 0331
ANDREWS V TVNZ HC AK CIV 2004-404-3536 28 March 2007
[1] In a judgment
delivered on 15 December 2006, the plaintiffs' claim for
damages for invasion of privacy was dismissed. I held that the defendant
was
entitled to costs and directed that counsel file memoranda if they were unable to
agree as to quantum.
[2] There having
been no such agreement, I have received memoranda from
counsel for the defendant dated 9 February 2007 and 19 March 2007 respectively,
and from counsel for the plaintiff dated 15 March 2007. Counsel are agreed that the
appropriate classification for costs purposes
is category 2B but they agree on little
else.
[3] I deal first with Mr Henry's contention that this was effectively a test
case
and that the Court ought to exercise its discretion to award no costs at all to the
successful defendant.
[4] The genesis
of this proceeding lay in the filming, on behalf of the defendant,
of a motor accident in which the plaintiffs were, for a considerable
period, trapped in
their vehicle. Their predicament formed part of a television programme screened by
the defendant many months later,
without their consent and without prior notification
to them. They alleged that what had occurred amounted to an unlawful invasion
of
privacy and claimed general damages of $100,000, together with $15,000 by way of
exemplary damages.
[5] Mr Henry submits
that this was a test case, in that there was no prior decision
in this country touching upon circumstances remotely close to these.
Mr Henry is, of
course, right to submit that costs are often not awarded in test cases: see Securities
Commission v Kiwi Co-operative
Dairies Ltd [1995] 3 NZLR 26 at 36, but cases in
which costs are not awarded on that ground will generally involve a novel point or
principle of law. Where a
case involves merely the application of settled principles
of law to a particular set of facts, a conventional approach to costs
is to be followed:
Birkdale Service Station Ltd v Commissioner of Inland Revenue [2001] 1 NZLR 293
at [81]-[87].
[6] In my view, it would not be proper to view this case for costs purposes as a
test case. I accept that it involved
the application of the principles discussed in
Hosking v Runting [2005] 1 NZLR 1, and Television New Zealand Ltd v Rogers
[2007] 1 NZLR 156, to a set of circumstances unlike those arising in the earlier
cases. But that is not sufficient to justify the treatment of this
proceeding as a test
case. If I reached that conclusion, Mr Henry accepted the accuracy of Schedule 1 of
the memorandum of counsel
for the defendant of 9 February 2007, which set out in
detail the defendant's claim to scale costs of $38,555. Mr Henry does not
challenge
the defendant's claimed disbursements which total $3,667.69.
[7] The defendant is, however, not content with scale
costs. It argues that it
should have either indemnity costs or increased costs by reason of:
a) the plaintiffs' alleged
failure to comply with orders or directions of
the Court during the interlocutory stages of the proceeding; and
b) the plaintiffs' alleged failure to respond appropriately to two formal
offers by the defendant to bring
the proceeding to an end prior to trial.
[8] Rule 48C provides:
(1) Despite rules 47 to 48B, the Court may make an
order--
(a) Increasing costs otherwise payable under those rules ("increased costs"); or
(b) That the costs payable
are the actual costs, disbursements, and witness
expenses reasonably incurred by a party ("indemnity costs").
(2) The Court may make the order at any stage of a proceeding in relation to any
step in the proceeding.
(3) The Court may order a party to pay increased costs if--
...
(b) The party opposing costs has contributed
unnecessarily to the time or
expense of the proceeding or step in the proceeding by--
...
(iv) Failing, without reasonable justification, to comply with an order
for discovery, a notice for
further particulars, notice for
interrogatories, or other similar requirement under these rules; or
(v) Failing, without reasonable justification, to accept an offer of
settlement whether
in the form of an offer under rule 48G or some
other offer to settle or dispose of the proceeding; or
(4) The Court may order a party to pay indemnity costs if--
...
(b) The party has ignored or
disobeyed an order or direction of the Court or
breached an undertaking given to the Court or another party to the
proceeding;
or
...
(f) Some other reason exists which justifies the Court making an order
for
indemnity costs despite the principle that the determination of costs should be
predictable and expeditious.
[9] As counsel for the defendant accepts, the Court does not lightly award
indemnity costs. Indeed, as Goddard J observed in
Hedley v Kiwi Co-operative
Dairies Ltd (2002) 16 PRNZ 694 [8], such awards tend to be reserved for cases:
... where truly exceptional circumstances exist.
[10] Here, counsel
for the defendant points to a number of instances in which it is
said that the plaintiffs or their counsel failed to comply with
orders and directions of
the Court during the interlocutory stages of the proceeding. Those shortcomings are
said to fall within
r 48C(4)(b). And the plaintiffs' failure to accept either of the two
offers by the defendant to bring the proceeding to an end (the
second involving a
proposed discontinuance by the plaintiffs on the basis that costs lay where they fell),
is said to fall within
r 48C(4)(f).
[11] I deal below with these claimed failings on the part of the plaintiffs, in the
context of the defendant's
claim to increased costs. For present purposes, it is
sufficient to say that, even if the defendant's contentions regarding the plaintiffs'
procedural shortcomings are correct, the case does not begin to approach the point at
which it would be appropriate to consider indemnity
costs . There are no exceptional
circumstances which might justify costs awarded at that level. The defendant's
argument for costs
in excess of scale are, in my view, to be considered in terms of
r 48C(3) only, that is, in the context of a claim for increased
costs.
[12] I deal first with the plaintiffs' alleged failure to comply with the Court's
procedural requirements.
[13] The
defendant says that the plaintiffs were to file and serve a verified list of
documents by 25 May 2005, but that they did not do so
until 26 October 2005
some five months later. In the meantime, there were numerous reminder letters to
counsel for the plaintiffs.
It was necessary for Mr Akel to raise the issue at judicial
conferences, and finally to make an appropriate application to the Court
for default
orders. In a conference minute of 17 August 2005, Faire AJ put the plaintiffs on
notice that any further default might
give rise to the making of an unless order
pursuant to r 258.
[14] Further, the discovery of documents relating to the New Zealand
Fire Service
and the Ambulance Service was not made until 9 December 2005 and answers to
interrogatories due on 1 September 2005
were not provided by the plaintiffs until 26
October 2005, after the defendant had made an application to the Court for an order
directing that answers be supplied.
[15] In a minute of 15 November 2005, Faire AJ reserved the question of costs in
respect
of the defendant's application for orders directing the plaintiffs to answer
interrogatories and to provide a verified list of documents.
[16] There were further difficulties in obtaining from the plaintiffs documents
relating to the excess blood alcohol charges.
In a pre-trial conference minute of 19
December 2005, Asher J reserved costs in respect of discovery and interrogatories,
for ultimate
resolution at the end of the trial, observing that the plaintiffs had their
opportunity at trial to vindicate their position that
such documentary material was
irrelevant.
[17] The plaintiffs' briefs of evidence were evidently late. They were due on 10
July
2006. On 18 July 2006, the defendant was advised that Mrs Andrews' earlier
affidavit would form the basis of her brief, but briefs
of evidence were not finally
served until 26 July 2006.
[18] The defendant complains also that the plaintiffs' opening submissions
and
chronology, due for service on 9 August 2006, were not in fact provided until 11
August 2006, which was the final working day
before commencement of the trial.
[19] There is substance in the defendant's complaints. Mr Henry does not take
issue with the
procedural history as outlined by counsel for the defendant, but
explains that he was himself unwell at times during 2006 and that
much of the delay
can be laid at his door.
[20] Rule 48C(2) provides that the Court may make an order for increased costs in
relation to any step in the proceeding.
[21] In Holdfast NZ Ltd v Selleys Pty Ltd (2005) 17 PRNZ 897 at [47], the Court
of Appeal said that the normal judicial response to a substantiated claim for
increased costs in respect of a
step unnecessarily forced upon a party, will be an
increase of 50% on scale costs for that step, so enabling the claiming party to
recover
the underlying daily rate referred to in r 47(d). That, in my view, is the correct
approach here. From material on the Court
file and the essentially unchallenged
submissions as to the interlocutory shortcomings of the plaintiffs advanced on behalf
of the
defendant, it seems to me that there ought to be an uplift in respect of the
following items:
a) 4.10 Counsel's
memoranda of 15 August 2005, 11 November 2005
and 19 December 2005;
b) 4.11 Counsel's appearance
at case management conferences on 17
August 2005, 15 November 2005 and 19 December 2005;
c) 4.12
Preparing and filing an interlocutory application for an order
that the plaintiffs provide answers to interrogatories
and file a verified
list of documents (dated 25 October 2005).
[22] I increase the scale costs by 50% in each
instance. Accordingly, the sum
allowed for each of the three memoranda filed by counsel is increased from the scale
figure of $580
to $870. The amount allowed for each of counsel's three appearances
at case management conferences on the relevant dates is increased
from the scale
figure of $435 to $652.50. The sum allowed for the preparation and filing of the
interlocutory application is increased
from the scale figure of $870 to $1,305. The
total increase is therefore $1,922.50.
[23] The defendant claims a further increase
by reference to the failure of the
plaintiffs to respond appropriately to the defendant's offers of settlement. There
were two such
offers. On 26 May 2006, the defendant wrote to counsel for the
plaintiffs proposing that the plaintiffs discontinue their claim and
that if costs could
not be agreed between the parties then they should be determined by the Court. The
proposal was expressed to
be:
... in full and final settlement of the proceeding and of any other claims that
the plaintiffs may have against
the defendant or any other party arising out of
the subject matter of the proceeding.
The letter was marked "without prejudice
except as to costs".
[24] On 21 July 2006, Mr Henry advised Mr Akel, senior counsel for the
defendant, that the plaintiffs would
not settle on those terms.
[25] On 9 August 2006, just three working days prior to the commencement of the
trial and following
service of the defendant's briefs of evidence, Mr Akel wrote a
further letter to Mr Henry in which the defendant proposed that the
plaintiffs file a
notice of discontinuance and that costs lie where they fell. Again the letter was
marked "without prejudice except
as to costs". Of particular note is the inclusion in
the letter of an indication that, if the offer was not accepted by the plaintiffs,
the
defendant would seek indemnity costs. There was no response to that letter.
[26] The rules now expressly provide for such
formal communications, formerly
known as Calderbank letters, and provide legislative guidance as to the approach to
be adopted. Rules
48G and 48GA respectively provide:
48G Written offers without prejudice except as to costs
(1) A party to a proceeding
may at any time make to any other party to the
proceeding a written offer that--
(a) is expressly stated to be without
prejudice except as to costs; and
(b) relates to an issue in the proceeding.
(2) The fact that the offer has been
made must not be communicated to the
Court until the question of costs is to be decided.
48GA Effect on costs
(1) The effect (if any) that the making of an offer under rule 48G has on
the question of costs is at the discretion
of the Court.
(2) Subclauses (4) and (5)--
( a) apply subject to subclause (1); and
(b) do not limit rules 48C or 48D.
(3) Subclauses (4) and (5) apply to an offer made under rule 48G by a
party to a proceeding (party A) to another party
to the proceeding (party B).
(4) If party A--
(a) offers a sum of money to party B that exceeds the amount
of a
judgment obtained by party B against party A; or
(b) makes an offer that would have been more beneficial to
party B than
the judgment obtained by party B against party A,--
the principle to be applied in determining costs
is that party A is entitled to
costs on the steps taken in the proceeding after the offer is made.
(5) If an
offer made by party A does not fall within paragraph (a) or
paragraph (b) of subclause (4), but is close to the value or benefit
of the
judgment obtained by party B, the principle to be applied in determining
costs is that the offer may to be taken
into account.
[27] Rule 48C(3)(b)(v) empowers the Court to award increased costs where a
party has, without reasonable justification,
failed to accept a settlement offer,
whether made under r 48G or otherwise.
[28] I do not regard the first of the letters, dated
26 May 2006, as calling for any
consideration. That is because the letter cannot properly be regarded as a settlement
offer at all.
It simply proposes that the plaintiffs give up and take the costs
consequences. It is not surprising that the letter was not
favourably received. If a
simple exhortation to discontinue was sufficient to attract the Court's discretion to
entitle a defendant
to additional costs, then such letters would become routine. The
former Calderbank procedure was much more narrowly confined than
that. I put the
letter of 26 May 2006 to one side.
[29] The letter of 9 August 2006 did, in contrast, offer the plaintiffs
something,
namely freedom from liability for the defendant's costs if they discontinued. I am
satisfied that this letter does come
within the letter and spirit of rr 48G and 48GA.
However, it was sent only three working days prior to the commencement of the trial
at a time when the plaintiffs and their counsel would have been preoccupied with
trial preparation. Moreover, it is understandable
that the plaintiffs might have
regarded this second offer as falling short of what was appropriate. In retrospect, the
plaintiffs'
primary objective appears to have been an appropriate acknowledgement
of their plight. That much is recognised by Mr Henry in his
written submissions on
costs.
[30] It is not possible to say, in these circumstances, that the plaintiffs' failure to
accept
the defendant's second offer was irresponsible or that it should have costs
implications beyond what the scale provides. It is, of
course, important to bear in
mind the objectives of rr 48G and 48GA, namely to provide a mechanism for
defendants to limit their
exposure to the risk of costs, and the Court must ensure that
the procedure operates as an effective encouragement to settle:
see Moore v
McNabb (2005) 18 PRNZ 127 at [58].
[31] Mr Akel submits that the plaintiffs had no reasonable justification for not
accepting the proposals contained
in his letter of 9 August 2006 to Mr Henry, but in
a case such as this, the Court is simply unable, in my view, to conclude that
the
plaintiffs' failure to accept the offer was not reasonably justified.
[32] While the elements of the tort of invasion of
privacy are now tolerably well
settled by recent Court of Appeal authority, their application to circumstances such
as occurred here
is not. In a case of this sort the plaintiffs must have been heavily
reliant on legal advice. There was, in my view, room for a responsibly
held legal
opinion to the effect that this claim might well succeed. The plaintiffs sought
vindication. The defendant's offer involved
no real recognition that the plaintiffs'
case had substance. It was, in my opinion, not unreasonable for the plaintiffs to
reject
it. Moreover, the defendant gained some benefit from the litigation, in that
privacy principles, highly relevant to its core business,
were further elucidated.
[33] Accordingly I reject the argument that there ought to be an uplift of costs on
this ground.
[34]
In the result, the defendant is entitled to costs in terms of category 2B, as set
out in Schedule 1 to Mr Akel's memorandum of
9 February 2007, but increased by
$1,922.50, for the reasons given above.
[35] Accordingly, I make an order for costs in favour
of the defendant in the sum
of $40,477.50. The defendant is also entitled to disbursements of $3,667.69.
C J Allan J
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