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Jerard v Auckland Council [2015] NZHC 3357 (21 December 2015)

Last Updated: 3 March 2016

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2011-404-7422 [2015] NZHC 3357

JERARD & LEADER v AUCKLAND COUNCIL & ORS [2015] NZHC 3357 [21 December 2015]

_{COSTS JUDGMENT OF DUFFY J}

This judgment was delivered by me on 21 December 2015 at 3.30 pm pursuant to

Rule 11.5 of the High Court Rules.

Registrar/ Deputy Registrar

[1] On 22 July 2015 I delivered a judgment in which I dismissed the application of the second defendants, Mr and Mrs Paxton, to set aside a judgment given by Lang J on 10 October 2014 after a formal proof hearing. In doing so I found that the Paxtons had no excuse for their failure to defend the proceedings brought against them and that they did not have a substantial ground of defence.¹

[2] As part of their case for setting aside the judgment against them the Paxtons attempted to attribute responsibility for their failure to defend the proceedings to their then counsel Mr McCartney, who they contended had failed to take proper steps to protect their position and to advise them accordingly. I rejected that argument.

[3] Some time before the hearing Mr McCartney became aware of the Paxtons’ criticism of his conduct of their defence. He engaged counsel, Mr Parmenter, who appeared on 12 February 2015 with counsel for the parties’ before Hinton J and advised the Judge that Mr McCartney wanted to clarify the advice that he had given to the Paxtons. Hinton J’s minute of 12 February 2015 records:

[3] By consent of all counsel, including Mr Parmenter, I direct that William Alexander McCartney file an affidavit as to the advice he gave to the second defendants in this proceeding, by 26 February 2015

[4] Following Hinton J’s direction Mr McCartney filed a substantial affidavit with exhibits which disclosed fully the advice that he had given to the Paxtons and the steps that he had taken in their defence. Whilst Hinton J’s minute refers to Mr McCartney appearing before her represented by Mr Parmenter and refers to Mr McCartney as an interested party, I can find no formal application on the Court file which shows that Mr McCartney made a formal application seeking to be joined as an intervener or interested party pursuant to r 4.56 of the High Court Rules.

[5] In the present case Mr McCartney did not address the Court. He did no more than file two affidavits, the evidence of which was supportive of the plaintiffs’ case. Since he was counsel for the Paxtons, the information he held regarding the advice he had given to them and the steps he had taken to advance their defence would have

_{been privileged. The consent of all counsel to him providing evidence in the}

¹ Jerard v Auckland Council [2015] NZHC 1691 at [85].

proceeding including the Paxtons’ counsel, meant that the barrier legal professional

privilege presented to his giving evidence was lifted.

[6] On 5 March 2015 Moore J issued a minute when the matter was called in the Duty Judge list before him. At that time Mr Parmenter is recorded as appearing for the “interested party” and his advice to the Court was that he sought leave to be excused from any further appearances unless directed by the Court. He also sought costs be reserved in respect of his appearances.

Application for costs

[7] Mr McCartney has now filed memoranda seeking indemnity costs against the Paxtons on the grounds that he is an interested party in the proceeding who is entitled to an award of indemnity costs.

[8] Mr McCartney notes that he did not keep records of the time he spent preparing his affidavit but submits that costs should be calculated by increasing 2B costs by 50 per cent for the analogous time allocations – filing a notice of opposition and supporting affidavits (item 37: two days) and appearance at mention hearing (item 12: 0.2 days).

[9] This would bring costs to $6,567.00.

Opposition by the Paxtons

[10] The Paxtons submit that costs should lie where they fall. The Paxtons submit that Mr McCartney must show why increased costs are justified. They say that costs are not justified in this case because:

(a) The two parties have settled the issue of costs. If the Council was entitled to 2B costs for the application, total costs would have been

$7,246.00. In comparison, Mr McCartney is seeking total costs of

$6,567.00;

(b) There was merit in most of the allegations advanced by the Paxtons against Mr McCartney;

(c) The situation was complicated by Mr McCartney’s refusal to release the litigation file to the Paxton’s instructing solicitors. Had this happened, counsel would have had the opportunity to fully review all the advice he provided; and

(d) The affidavit filed by Mr McCartney failed to clarify many of the issues raised by the Paxtons.

Discussion

[11] The fact that Mr McCartney has never been formally added as an interested party in the proceedings under r 4.56 has made the issue of costs more complicated. In addition, I am conscious that the two parties have reached an agreement as to costs without taking a possible order of costs in favour of Mr McCartney into consideration.

[12] Despite this, there is jurisdiction to make an order of costs in favour of Mr

McCartney:

(a) This Court’s jurisdiction to award costs against a non-party is well- established. Such orders will only be made in exceptional circumstances.²

(b) In Erwood v Maxted the Court of Appeal considered that there was also jurisdiction to make an order of costs in favour of a non-party both under the broad discretion conferred under r 53 of the Court of Appeal (Civil) Rules 2005 as well as r 53(3)(d) which empowers the Court to order indemnity costs in favour of a non-party who has acted

_{reasonably. The Court held that “on the principle that the greater}

² Mana Property Trustee Ltd v James Developments Ltd [2010] NZSC 124, [2011] 2 NZLR 25 at

[10]; Dymocks Franchise Systems (NSW) Pty Ltd v Todd (No 2) [2004] UKPC 39, [2005] 1

NZLR 145 at [28].

includes the lesser, this rule supports out conclusion that this Court has jurisdiction to award scale costs to a non-party.”³

(c) Rule 14.6(4)(d) of the High Court Rules also provides for the Court to make an order for indemnity costs if “the person in whose favour the order of costs is made was not a party to the proceeding and has acted reasonably in relation to it”.

(d) Costs in favour of non-parties have been made where an application for an order for non-party discovery has been made but withdrawn.⁴

(e) Finally, there is an exception to the principle that a self-represented litigant is not entitled to costs in the case of a practising solicitor who represents him or herself.⁵

[13] I consider that Mr McCartney is entitled to an award of costs. He spent considerable time preparing the affidavit which in the event was critical to my determination that the application for recall was without merit. Further, based on the material in Mr McCartney’s affidavit I do not accept the Paxton’s allegation that Mr

McCartney’s refusal to hand over documents complicated the matter.⁶

[14] However, I do not consider that indemnity costs are appropriate in this case. Mr McCartney was anxious to protect his reputation and had a personal interest in

_{filing the affidavit.}

³ Erwood v Maxted [2010] NZCA 93, (2010) 20 PRNZ 466 at [18] and [19]. While the Court’s judgment was overturned by the Supreme Court on a different issue and the order of costs set aside, I do not consider that this effects the general principle as to third-party costs enunciated by the Court.

⁴ Rule 8.22 provides that where an order for non-party discovery has been made under r 8.21, a

Judge may, if the Judge thinks it just, order the applicant to pay to the person from whom discovery is sought the whole or part of that person’s expenses incurred in relation to the application and in complying with any order made on the application. In Hemmingson v Rod [2015] NZHC 2021 a non-party applied for the costs of responding to a non-party discovery application which was withdrawn without an order being made. Associate Judge Smith granted

costs under r 14.6(4)(d). Costs were awarded in favour of a non-party in the same circumstances

_{in Air New Zealand Ltd v E-Gatematrix New Zealand Ltd [2007] NZHC 174; (2007) 18 PRNZ 501 HC.}

⁵ See Hanna v Ranger (1912) 31 NZLR 159 (SC) at 160. See also R v Meyrick [2008] NZCA 45 at [10]; and Brownie Wills v Shrimpton [1998] 2 NZLR 320 (CA) at 327

⁶ An email exchange between the parties in January and February 2015 shows that there were issues as to outstanding costs and a notice of change of representation.

[15] Accordingly, I make an award of 2B costs in favour of Mr McCartney against the Paxtons of $4,378.00.

[16] I note for completeness that while the parties have already reached an agreement as to costs, I do not consider that this precludes an order for costs as between the Paxtons and Mr McCartney. In Love v Auburn Apartment Ltd (in rec and liq) Ellis J held that she had the jurisdiction to make an award of costs on a fresh application for costs against a non-party, despite the Court of Appeal having already

_{made a determination of costs between the two parties.}⁷

⁷ Lover v Auburn Apartments Ltd (in rec and in liq) [2013] NZHC 851at [47].