Bligh v Earthquake Commission [2017] NZHC 3179 (18 December 2017)

	Home \| Databases \| WorldLII \| Search \| Feedback High Court of New Zealand Decisions

BETWEEN	DEREK RICKY BLIGH Plaintiff
AND	EARTHQUAKE COMMISSION First Defendant
AND	IAG NEW ZEALAND LIMITED Second Defendant

Hearing:	27, 28 November 2017
Appearances:	R J Lynn for Plaintiff N S Wood for First Defendant P M Smith for Second Defendant J Moss and G P Davis for Claims Resolution Service Limited P J Napier for Grant Shand
Judgment:	18 December 2017
_Reissued:	_{12 February 2018}

[1] Derek (Ricky) Bligh sued the defendants (“EQC” and “IAG”) in relation to damage to his house allegedly sustained in the earthquake of 4 September 2010. His claims (including the central claim for $596,244.71 as reinstatement costs) were to have been the subject of a trial commencing on Monday, 31 October 2016. The trial

_{did not proceed. Claims Resolution Service Ltd (CRSL), a litigation
funder which had}

been funding Mr Bligh, cancelled its contract with him (“the funding contract”). As a consequence, the firm of Grant Shand Barrister and Solicitor (“Grant Shand”)¹ceased representing Mr Bligh. Mr Bligh did not appear in Court when the case was called. The Court entered judgment by default against him.²

[2] Mr Bligh was subsequently able to have the judgment set aside.³The Court has ordered Mr Bligh to pay to EQC and IAG the costs and disbursements of the setting aside application.⁴

[3] The Court has allocated a fresh trial date and directions have been made as to the service of further briefs of evidence by the parties.

[4] Wasted costs have been incurred by the three parties as a result of the trial not proceeding on 31 October 2016 and judgment being entered by default. Mr Bligh incurred irrecoverable party/party costs in obtaining the indulgence of the setting aside of the default judgment. EQC and IAG incurred attendances in relation to what ultimately became the adjournment of the trial.

[5] The parties variously hold CRSL and Grant Shand accountable for wasted costs upon the basis that they caused or contributed to the events which created the wasted costs.

¹All references in the judgment are (unless the context indicates to the contrary) to the firm of Grant

(d) Mr Bligh applies for an order that CRSL and Grant Shand indemnify him for any wasted costs orders (made against him in favour of EQC and/or IAG) and for the costs awarded on his setting aside application.⁵

[8] Initially EQC and IAG also sought orders that the proceeding be stayed if Mr Bligh failed to pay any wasted costs orders. Following discussion in the course of submissions, EQC and IAG (through counsel) withdrew that aspect of the applications.

[9] The determination of any award in relation to costs which have been wasted is, as with all costs matters, at the discretion of the Court.⁶Jurisdiction to make a wasted costs order where a party’s default causes a trial to be vacated or adjourned is usually an exception to the usual rule that costs follow the event because there has usually been no “event”.⁷

[10] This Court has in recent years made numerous wasted costs orders where a fixture has been vacated.⁸

⁷A C Beck and others McGechan on Procedure (online looseleaf ed, Thomson Reuters) at [HR Pt

⁸For example, Hamilton v Papakura District Court (1997) 11 PRNZ 43 (HC); Raiser Developments Ltd v Trefoil Properties Ltd CIV-2005-404-5883, 5 May 2008; Fu Hao Construction Ltd v Landco Albany Ltd HC Auckland CIV-2004-404-6608, 23 May 2008; Simpson v Hubbard [2012] NZHC

(b) to impose a sanction on a defaulting party in an effort to avoid future wastage of costs and of judicial and Court resources and disadvantage to other parties yet to be allocated trials.¹¹

[12] Whether there have been some wasted costs will usually be clear. More difficult is the determination of the amount of wasted costs. It has been appropriately observed by Chisholm J in Simpson v Hubbard that, to a large extent, the amount of wasted costs can only be a matter of impression and judgement.¹²

[13] The trial of this proceeding is now to commence on 19 February 2018. The events from 31 October 2016, while involving a number of distinct procedural steps, may be viewed in their entirety as a process by which Mr Bligh as plaintiff obtained an adjournment of the proceeding from its 31 October 2016 trial date. For costs purposes, it is therefore appropriate to consider this case in the category of cases involving late trial adjournments or trials aborted for other reasons.

2016 to Monday, 31 October 2016 as involving, for EQC, attendances which have no continuing value in relation to trial and which were therefore wasted. Mr Wood submits that the failure of the plaintiff or his advisers on Friday, 28 October 2016 to deal with the need for adjournment caused all the defendants’ attendances through the following period to be wasted. Those involved for the plaintiff proceeded instead, so far as the solicitors for EQC and IAG were concerned, as if the trial was definitely

¹²Simpson v Hubbard, above n 8, at [28], followed in Jeffreys v Morgenstern, above n 8, at [34].

[15] Mr Wood, in relation to the EQC’s application for such wasted costs, had regard to an observation of Associate Judge Matthews when granting Mr Bligh’s setting aside application. In relation to costs, his Honour observed:¹³

Plainly enough, [the wasted costs] will be the costs of attending in Christchurch, no prior notice of the decision of the plaintiff’s legal advisers and funder having been given to counsel for either defendant. Whether wasted costs extend beyond that will be a matter for analysis at a later point.

[16] Implicitly, Mr Wood recognised (as did Associate Judge Matthews) that it will frequently be difficult to assess with any accuracy whether and to what extent, on the adjournment of a trial, the costs of preparation and other matters have been truly wasted.

[17] IAG’s approach to wasted costs was not so restricted. IAG seeks recovery of its costs in two tranches. First, it seeks 50 per cent of its solicitor/client costs as invoiced from August 2016 to October 2016 upon the basis that, conservatively, 50 per cent of trial preparation was undertaken in that period. Secondly, it seeks 100 per cent of the fees invoiced from November 2016 to May 2017, those invoices covering the two weeks leading up to and including the first scheduled day of trial (31 October

2016). The fee invoices also cover attendances resulting from the aborted trial and the setting aside of judgment. In summary, IAG seeks to have its solicitor/client costs incurred over a ten month period (August 2016 to May 2017) reimbursed either in total (seven months) or as to half (three months).

[18] For Mr Bligh, Mr Lynn submits that the range of attendances covered by the costs sought by EQC and IAG (but especially those sought by IAG) cannot truly be characterised as wasted attendances. In his written synopsis, Mr Lynn recognised that “the immediate trial preparation” may be categorised as truly wasted but, in his submission, that is all.

[19] CRSL accepted that Mr Bligh was prima facie liable for some wasted costs of the defendants. For CRSL, Mr Moss did not seek to identify the truly wasted costs. His submission in relation to the wasted costs was focused on the proposition that Mr Bligh was the “author of his own misfortune”.

[20] For Grant Shand, Mr Napier did not seek to distinguish from the detail provided by EQC and IAG those attendances which were accepted as wasted and those which were not. Rather, Mr Napier concluded his written synopsis with a focus on quantum, submitting that the quantum claimed for wasted costs (implicitly by both EQC and IAG) is “wildly unrealistic”. Mr Napier referred to the recent decision in Secure Financial Services v Nguy in which wasted costs of $5,017.50 were awarded when a four-day trial was adjourned because the plaintiff was unready.¹⁴

[21] Mr Bligh seeks orders that CRSL and Grant Shand be jointly and severally liable to pay (on behalf of Mr Bligh) any costs awards made against Mr Bligh in favour of the defendants as a result of the aborted hearing and the setting aside application. He further seeks orders that CRSL and Grant Shand be jointly and severally liable to pay his own costs (incurred with his replacement solicitors) in dealing with the consequences of the aborted hearing.

[23] Costs on the setting aside application have already been fixed and ordered to be paid by Mr Bligh to the defendants. Any right which Mr Bligh might have to

[24] Mr Bligh has not provided evidence as to fees he has incurred with his present solicitors. I infer from observations made in the written synopsis of Mr Lynn (where he refers only to scale costs and to work in progress) that a fee note for legal fees and disbursements is yet to be presented.

[25] CRSL opposes any order in favour of the Mr Bligh. CRSL asserts that it was entitled to cancel the funding contract because of Mr Bligh’s refusal to accept Grant Shand’s advice and the advice of CRSL, and Mr Bligh’s non-cooperation with CRSL. CRSL says that Mr Bligh was responsible for the abandoned hearing and directly caused the need for the default judgment to be set aside. Alternatively, in the event the Court finds that CRSL was responsible for some of Mr Bligh’s wasted costs, CRSL submits that most of the costs of preparing for hearing were not wasted, with the only genuinely wasted costs being those relating to the appearance on 31 October 2016 and a small amount of preparation before that day.

[26] Grant Shand opposes any award of costs in favour of Mr Bligh. It advances grounds of opposition parallel to those of CRSL and further relies on the fact that CRSL itself had cancelled the funding contract.

[27] I consider first whether there were wasted costs in relation to the four days leading up to and including the first scheduled day of trial, as focused upon by Mr Wood for EQC.

October 2016, he would then have obtained an adjournment for trial (albeit on conditions) had the appropriate application been made.¹⁶

[29] Precisely the same situation applied by Friday, 28 October 2016. By that time, as Mr Wood submitted, it must have been obvious to those involved on Mr Bligh’s side (apart from Mr Bligh) that the trial was unlikely to be able to proceed. Mr Bligh had that week refused to accept Grant Shand’s advice as to settlement. CRSL had the right to cancel the funding contract if Mr Bligh did not “cooperate” with CRSL and its advisers and give CRSL instructions which allowed CRSL to act in Mr Bligh’s best interests. CRSL advised Mr Bligh that morning that it would cancel the funding contract if he did not accept Grant Shand’s advice as to settlement by 5.00 pm. Grant Shand was in turn, if continuing to act for Mr Bligh, depending on CRSL to maintain its funding.

[30] Mr Staples subsequently confirmed to Mr Ferguson at 9.45 am on the morning of the trial (Monday, 31 October 2016) that the funding agreement had been cancelled.

October 2016, the need for adjournment of the commencement of the trial (to enable Mr Bligh to obtain alternative representation) was inevitable. Even with further negotiation, those acting for Mr Bligh were not going to achieve such an increase in the defendants’s settlement offer as would lead Mr Bligh not to go to trial.

[32] Both EQC and IAG were left in the ensuing period (unaware of what was going on between CRSL, Grant Shand and Mr Bligh) to prepare on the basis that the trial was to commence on the Monday morning. None of the attendances in that intense period of preparation is likely to remain of continuing value now that the trial will be taking place some 16 months after the event. For IAG and EQC, I find that the attendances of 28 – 31 October 2016 were all wasted.

[33] As noted at [17] above, IAG seeks as wasted costs both 50 per cent of its solicitor/client costs of trial preparation (for the August 2016 – October 2016 period) and 100 per cent of fees invoiced for the period from mid-October 2016 to May 2017.

[34] I treat as neutral the fact that EQC has not sought comparable costs – I must form my own impression and judgement on this aspect of IAG’s claim.

[27] – [32], I am satisfied that within that period the attendances of 28 – 31 October

[36] For IAG, Mr Smith in his synopsis explained the 50 per cent/100 per cent claims in brief terms:

A significant part (conservatively, 50%) of the trial preparation undertaken in this period will have to be repeated.

This invoice range covers IAG’s legal preparation in the two weeks leading up to and including the first day of trial on 31 October 2016, all of which will have to be repeated. It also covers IAG’s post-trial attendances, which arise as a result of the aborted trial and withdrawal of judgment.

[37] I set to one side the events after the default judgment was entered. Costs in relation to the setting aside judgment have been separately dealt with in an appropriate context.¹⁷Similarly, I have accepted the submission that the attendances of 28 – 31

[38] All the remaining costs claimed by IAG fall to be considered as costs of preparation, in relation to which I must be satisfied that they are truly wasted costs before making an award.

[39] There is nothing in the evidence to suggest that the developments surrounding and following the aborted trial have caused IAG to significantly depart from the previous theory of its case. The filing of supplementary evidence for Mr Bligh may mean that IAG’s experts will themselves give supplementary evidence, but that is likely to be truly supplementary rather than a departure from previously briefed evidence. The focus of IAG’s claim for earlier attendances is on the duplication of the

[40] Calida Morrissey, an earthquake claims technician employed by IAG, exhibited the fee notes rendered by IAG’s solicitors from 17 August 2016 to 16 May

2017. The GST exclusive total for the invoices to 17 October 2016 (including disbursements other than expert fees) is $45,326.84. I take into account the fact that at the point the trial was aborted, IAG’s case would have been fully prepared for presentation, including in relation to legal research and the content of submissions. On the other hand, I weigh the fact that the trial will now be proceeding some 16 months after the first trial date.

[41] My impression is that 25 per cent of the costs incurred in the period of preparation covered by the invoices will have been truly wasted. Beyond that, the work undertaken is likely to remain truly valuable for trial.

[42] Accordingly, if the total figure of $45,326.84 were taken as the reasonable solicitor/client costs, a 25 per cent calculation would be $11,331.71.

[43] Mr Bligh pursues as costs he has thrown away and will not recover through this proceeding both the costs he has been ordered to pay to EQC and IAG on the setting aside application,¹⁸and the costs he has incurred with his new solicitor in dealing with events from 31 October 2016.

[44] The wasted costs on the setting aside application have already been determined with each defendant to receive costs on a 2A basis together with disbursements to be fixed by the Registrar.¹⁹

[45] Mr Bligh has not provided evidence of the costs and disbursements incurred through his new solicitor. Mr Lynn indicated from the bar that fees have not been rendered to date. If there were to be an order made in favour of Mr Bligh against Grant Shand in this regard, it would by its nature need to be limited to a claim for the

_{reasonable solicitor/client fees incurred in relation to the setting
aside application.}

There is no basis in the evidence for a conclusion that subsequent attendances in preparation of Mr Bligh’s case for trial have been wasted.

[46] It is just that any parties who caused actual wasted costs incurred in the 28 –

31 October 2016 period (provided they are reasonable) be ordered to pay such wasted costs and that the calculation not be based upon the scale.²⁰It is just that any costs awarded in relation to preparation for trial be calculated by reference to the scale award which the claiming party would have been awarded if successful at trial.

[47] The starting point remains, in terms of r 14.1(1) High Court Rules that all matters are at the discretion of the Court if they relate to the costs of a proceeding.

[48] The leading New Zealand authority in relation to costs against a litigation funder is Dymocks Franchise Systems (NSW) Pty Ltd v Todd (No 2).²¹In that case, the Privy Council granted Dymocks’ petition and ordered the litigation funder which had supported the Todds and their companies (in an unsuccessful defence) to pay Dymocks’ costs in the Court of Appeal and Privy Council.

[49] The Privy Council accepted that the Court had power to make a costs order against a non-party.²²The Privy Council then considered the basis upon which the Court exercises its discretion. The findings are accurately summarised in the head- note to the NZLR report:²³

3 The principles that applied to the exercise of the discretion to award costs against a non-party were:

²⁰Similarly, in Fu Hao Construction Ltd v Landco Albany Ltd, above n 8, the Court based its award of $30,000 for the costs of an adjournment not on scale costs ($22,400) but rather on a proportion of incurred actual costs (over $100,000 in fees and $16,500 in experts’ fees).

²¹Dymocks Franchise Systems (NSW) Pty Ltd v Todd (No 2) [2004] UKPC 39, [2005] 1 NZLR 145.

²²Dymocks Franchise Systems (NSW) Pty Ltd v Todd (No 2), above n 21, at [7].

²³Dymocks Franchise Systems (NSW) Pty Ltd v Todd (No 2), above n 21, summarising the Privy

(a) although costs orders against non-parties were to be regarded as exceptional, the ultimate question was whether in all the circumstances it was fair to make the order;

(b) generally speaking the discretion would not be exercised against a “pure funder”, that is, a party which had no personal interest in the litigation, did not stand to benefit from it, was not funding it as a matter of business, and did not seek to control its course;

(c) justice required that a non-party which not merely funded but substantially also controlled or at least stood to benefit from the litigation should pay the successful party’s costs if the litigation failed. In that case the non-party was not so much facilitating access to justice by the party funded as gaining access to justice for the non-party’s own purposes;

(d) generally speaking a non-party which promoted and funded litigation by an insolvent company for the its own financial benefit should be liable for costs if the litigation failed (see para [25]).

[50] The Privy Council explained that the term “exceptional” in the above formulation means no more than “outside the ordinary run of cases where parties pursue or defend claims for their own benefit and at their own expense”.²⁴

[51] In Dymocks, their Lordships assumed for the purposes of that application that a non-party could not ordinarily be made liable for costs if those costs would in any event have been incurred without such non-parties’ involvement in the proceedings. The Privy Council referred to English and Australian authority to that effect.²⁵

[52] On the facts, the Privy Council concluded that, but for the involvement of the litigation funder, the Todds would not have pursued their appeal to the Court of Appeal and thereby occasion the costs both in that Court and on the further appeal to the Privy Council.²⁶The Privy Council noted the absence of any suggestion by Russell McVeagh (the solicitors acting for the Todds) that they themselves would have been

_{prepared to conduct the appeals without funding from the litigation
funder.}²⁷

²⁴Dymocks Franchise Systems (NSW) Pty Ltd v Todd (No 2), above n 21, at [25](1).

²⁵Hamilton v Al Fayed (No 2) [2002] EWCA Civ 665; [2003] QB 1175, [2002] 3 All ER 641; Gore (t/as Clayton Utz) v

²⁶Dymocks Franchise Systems (NSW) Pty Ltd v Todd (No 2), above n 21, at [20].

²⁷Dymocks Franchise Systems (NSW) Pty Ltd v Todd (No 2), above n 21, at [22].

[53] It is within the inherent jurisdiction of this Court to make a costs order against a party’s solicitor.²⁸

[54] The basis on which the Court intervenes is that the solicitor’s conduct has tended to defeat justice in the very cause in which they were engaged professionally.

[55] The leading New Zealand authority in relation to costs against counsel and solicitors is Harley v McDonald.²⁹The case dealt with the liability of a barrister but was determined upon the basis that barristers in New Zealand are subject to the same jurisdiction as solicitors as officers of the Court.³⁰

[56] The jurisdiction is at once compensatory (in that the Court directs its attention to costs that would not have been incurred but for the solicitor’s failure to fulfil a duty to the Court) and punitive (to punish the offending practitioner, not the parties, for a failure of duty).³¹The focus of the Court’s enquiry is on whether there has been a breach of duty to the Court, not whether there has been a breach of the rules of professional conduct.³²

[57] There must have been a serious breach of duty to the Court. The test for what constitutes a serious breach was stated by the Privy Council in Harley v McDonald as follows:

[55] Then there is the question as to the kind of conduct that can be regarded as involving a serious breach of duty to the court. Their Lordships agree with the Court of Appeal that the test for the exercise of the common law jurisdiction in New Zealand is that which was applied in England before the wasted costs jurisdiction under section 51 of the Supreme Courts Act 1981 came into effect: [1999] NZCA 145; [1999] 3 NZLR 545 at para [55]. A simple mistake or oversight or a mere error of judgment will not, of itself, be sufficiently serious to fall into that category. Something more is required. In Myers v Elman [1940] AC 282 at pp 291-292 Viscount Maugham indicated that the test was whether the conduct amounted to a serious dereliction of duty, and that negligence could be so described if it was at a sufficiently high level. At p

304 Lord Atkin described the kind of negligence that could lead to an exercise of the jurisdiction as gross negligence. At p 319 Lord Wright said that, while a mere mistake or error of judgment is not generally sufficient, a gross neglect or inaccuracy in a matter which it was a solicitor’s duty to ascertain with accuracy, such as whether he had a retainer to act, might suffice. A more precise definition of the level of seriousness is not appropriate. But where negligence or incompetence is alleged the conduct must be put into its proper context.

[50] As a general rule allegations of breach of duty relating to the conduct of the case by a barrister or solicitor with a view to the making of a costs order should be confined strictly to questions which are apt for summary disposal by the court. Failures to appear, conduct which leads to an otherwise avoidable step in the proceedings or the prolongation of a hearing by gross repetition or extreme slowness in the presentation of evidence or argument are typical examples. The factual basis for the exercise of the jurisdiction in such circumstances is likely to be found in facts which are within judicial knowledge because the relevant events took place in court or are facts that can easily be verified. Wasting the time of the court or an abuse of its processes which results in excessive or unnecessary cost to litigants can thus be dealt with summarily on agreed facts or after a brief inquiry if the facts are not all agreed. Scope for the making of a costs order that will compensate as well as penalise is then likely to be found in making an order against the practitioner that will indemnify the opposing litigant against costs incurred as a result of the breach of duty that would otherwise not be recoverable.

[59] With reference to the Privy Council’s observation as to cases “apt for summary disposal”, the Court of Appeal in Westpac NZ Limited v Fonua recorded:³³

We observe that it will normally be only when serious wrongdoing appears on the face of the record or where the client chooses to waive privilege that the Court can investigate whether a costs order against a solicitor is practicable.

In the present case Mr Bligh has waived privilege. Detailed evidence has accordingly been given by Mr Bligh, Mr Shand and Mr Ferguson which would otherwise have

[60] Mr Lynn indicated that he had not identified a case in which costs had been awarded to a party against their own solicitor in the context of a costs award (as against a claim for indemnity through a negligence action).

[61] The Privy Council in Harley v McDonald identified the possibility that jurisdiction may exist to make a costs order in favour of the client against his own barrister or solicitor in this way:

[53] Their Lordships do not say that the court has no jurisdiction to make a costs order in favour of the client against his own barrister or solicitor. But in cases where an order to that effect is contemplated the court must take great care to confine its attention to the facts which are clearly before it or to facts relating to the conduct of the case that are immediately and easily verifiable. Allegations that may raise questions about duties owed to the client by the barrister or solicitor and the conduct of the case outside the court room are unlikely to be of that character. They are likely therefore to fall outside the proper scope of that inquiry. The court must bear in mind that it is not its function, in the exercise of this jurisdiction, to adjudicate on the position as between the client and his barrister or solicitor.

[62] Mr Lynn was able to identify a single instance in which a plaintiff applied for costs against his former solicitor – Vermeulen v Department of Health.³⁴The solicitor, having appeared at the start of a hearing, had explained to the Court that he had no instructions and had obtained leave to withdraw. Judgment was then entered by default against the plaintiff who had not appeared himself. On the plaintiff’s subsequent application, Thomas J set aside the default judgment. Thomas J recorded that Mr Vermeulen also sought the costs of the setting aside application to be paid by his former solicitor on a solicitor/client basis.³⁵That application was not able to proceed on the day of the setting aside application. It was adjourned to be brought on for hearing at a later date. The ultimate outcome is unknown, as no subsequent judgment has been published.

[63] As Mr Lynn submitted, the case at least illustrates the application made by Mr

Bligh against Mr Shand is not entirely novel. That said, the subsequently expressed reservations of the Privy Council in Harley v McDonald fall to be considered.

[64] The next issue of causation which arises is whether CRSL (either in whole or in part) caused the events (ultimately the adjournment of the trial with associated costs) which led to wasted costs.

[65] The damaged property, the subject of the litigation, was Mr Bligh’s only significant asset. His insurance claim remained unresolved some six years after the relevant earthquake. Mr Bligh’s income was limited and he had substantial bank and credit card debt to service.

[66] As he had explained in the briefs of evidence exchanged for trial, he suffers from Parkinson’s disease and heart disease. Since September 2010 he has suffered bowel cancer and has been diagnosed with terminal T cell lymphoma. He deposes that one of the consequences of his Parkinson’s disease is that his mind gets easily overwhelmed in stressful situations. Part of his claim, as pleaded by Grant Shand, is for general damages related to the stress and deterioration of his health which he attributes to the unresolved insurance claims. The extent of Mr Bligh’s health issues were understood by his funder as well as his solicitors – Mr Staples of CRSL on 29

It is true, EQC are taking a dying man named Ricky Bligh to Court over an argument about his house ...

Grant Shand controlled the litigation from the time he was instructed. In fact, the

contract required that, as between Mr Bligh and CRSL, CRSL continued to have the responsibility to manage and prosecute the claim. Mr Bligh had employed CRSL to do those things, in return for CRSL’s taking a share of Mr Bligh’s recovery.

[69] Mr Grant Shand attended Mr Bligh’s first meeting with CRSL representatives. He was thereafter retained as Mr Bligh’s solicitor under CRSL’s funding arrangement.

[70] The evidence establishes that, but for CRSL’s funding of this proceeding, Mr Bligh would not have pursued this proceeding to its aborted hearing. As is clear from the evidence of the events of 31 October 2016, Grant Shand was not prepared to continue involvement as Mr Bligh’s solicitor without the funding contract in place with CRSL. When CRSL notified Mr Ferguson of the termination of the funding agreement, the firm (Grant Shand) immediately stopped acting for Mr Bligh.

[71] I will not in this judgment address in any detail the standard of the professional work undertaken for Mr Bligh in the initial preparation of his claim, the instructing of experts, the formulation of pleadings, the setting down for trial and the briefing of evidence.

[72] I received submissions both for and against the proposition that Mr Bligh’s claim, as prepared for its 31 October 2016 trial, was hopeless in one way or another. The epithet of “hopelessness” is one which may be found in decided cases – it generally occurs where the Court has been able to consider a claim which is at an end. A substantive determination of “hopelessness” is there able to be made.

[73] The claims for wasted costs in this case arise not in relation to a claim which has come to an end. They arise here because of events which led to a trial proceeding not on its scheduled date but 16 months later.

[74] Determinations as to any “hopeless” aspects to the plaintiff’s case here are not feasible in the Court’s summary jurisdiction in relation to wasted costs. What is

feasible is a consideration of responsibility for what occurred through 31 October 2016

– 1 November 2016. Those events do not require an assessment of a claim yet to be substantively heard. Everything that is relevant occurred in a limited period in October

2016. The relevant documentary trail is available because issues of privilege have been waived. When the sworn evidence and the documents are examined, there is remarkably little dispute between the parties as to the relevant events.

[75] Accordingly, although the narrative of what occurred in October 2016, which I now detail, is lengthy, the key points which should determine the various costs applications can then be stated in relatively brief terms before the Court applies the appropriate principles.

[76] Until late-September 2016, the arrangement within Grant Shand’s office was that another solicitor (Jeremy Morriss) had the conduct of Mr Bligh’s claim. There was an unsuccessful settlement conference on 12 September 2016. Through the remainder of September, Mr Morriss prepared the case for trial. Mr Morriss had digested the EQC and IAG briefs which had been received and was working on supplementary evidence for Mr Bligh.

[77] On 5 October 2016, Mr Morriss wrote a two-page draft email. It was drafted as an email to Mr Bligh but Mr Morriss sent it to another solicitor in Grant Shand’s firm, Andrew Ferguson, who intended to have the primary conduct of the file to and at trial. The draft email would have represented an important explanation to the client of the state of the case, weaknesses in the case (including the difficulty of proving that the earthquake caused the damage), and the prospect that if Mr Bligh lost his case EQC and IAG would be seeking costs of over $100,000 or even $200,000 from Mr Bligh. The draft email ended with a suggestion that, if the solicitors could not get EQC or IAG to offer any more than a sum of $31,000 already offered, Mr Bligh should accept the offer.

[78] Although Mr Ferguson sent a brief reply to Mr Morriss concerning the draft, the draft was at that time neither finalised nor sent to Mr Bligh. (The drafting exercise

was resuscitated on 21 October 2016, with minor amendments made, but even then the email was not sent to Mr Bligh.³⁶It never was).

[79] Mr Ferguson deposes that around 5 October 2016 he determined the best approach was to look for a “reasonable settlement” which reduced or eliminated risk for Mr Bligh.

[80] Without sending detailed written advice (as contained in the draft email), Mr Morriss and Mr Ferguson telephoned Mr Bligh on 7 October 2016. Mr Morriss was unavailable to give evidence. Mr Ferguson deposes that the three had “a long conversation about all the points set out in Mr Morriss’s draft email” and that Mr Bligh gave Mr Morriss instructions “to negotiate on the basis of the Shotcrete solution”, a repair solution which had recently been proposed by an expert retained for Mr Bligh. Mr Ferguson deposes that in the course of discussions, Mr Morriss informed Mr Bligh that if IAG and EQC were to pay $150,000, plus a contribution to some accommodation, Mr Bligh’s net outcome would be $125,000. Mr Ferguson does not state in his evidence that Mr Bligh gave instructions directly on the $150,000 suggestion. The only instruction Mr Ferguson records in his evidence is as to negotiation on the basis of the Shotcrete solution.

[81] Mr Ferguson did not produce a file note of his own of the 7 October 2016 discussion. Evidently he did not take a file note. Mr Ferguson instead exhibited a file note which he said was Mr Morriss’s record. The file note purports to record that Mr Bligh said he would “reluctantly accept” a payment of $150,000 plus possibly some accommodation. The file note does not record (as Mr Ferguson deposes occurred) Mr Bligh’s giving instructions to negotiate on the basis of the Shotcrete solution. There was ample room for confusion on the part of those attending as to exactly what was discussed or agreed. Grant Shand’s office did not send to Mr Bligh a letter or email confirming the discussion or the instructions in the days or weeks immediately following. Similarly, Mr Morriss’s 5 October draft remained an internal draft and was

[82] The reliance on oral discussion and the failure to document to Mr Bligh during this period leading to negotiation and trial is significant background to the pressure which Mr Bligh was to come under in the last four days of October.

[83] Of all clients, Mr Bligh (given his personal situation) needed to be fully informed and involved in the period leading to trial if his substantial claim was to be seen as compromised in the manner suggested in Mr Morriss’s draft email.

[84] Grant Shand’s office set about obtaining details and costings of the Shotcrete solution.

[85] On 12 October 2016, Mr Morriss emailed Mr Dwyer (of CRSL) explaining the latest (Shotcrete) repair proposal and noted that the cost to thus remediate the property would be about $150,000. That email, sent to Mr Dwyer, was not copied to Mr Bligh.

[86] On 17 and 18 October 2016, Mr Ferguson and Mr Dwyer had further email exchanges. On 18 October 2016, there is an email from Mr Ferguson to Mr Dwyer enquiring whether Mr Dwyer had yet spoken to Barry Searle of EQC and IAG. That enquiry is explained in the affidavit of Mr Dwyer. From 5 October 2016, Mr Dwyer had been having discussions with Mr Searle, a loss adjuster working for EQC. Mr Dwyer had discussed with Mr Morriss and Mr Ferguson approaches to settlement. Mr Dwyer deposes that on 7 October he had had a conversation with Mr Morriss who informed him that he was working on the basis that $150,000 might be enough to fix the house, employing the Shotcrete technology. Mr Dwyer does not record Mr Morriss as stating that Mr Bligh had agreed to a settlement of any particular sum. On 17

October, Mr Ferguson forwarded to Mr Dwyer a spreadsheet, described as Mr Morriss’s methodology for “the Bligh proposal”. The calculations within the methodology identify repair costs as being $251,354. Mr Dwyer replies that day that “given the terminal value of $251,354 versus a settlement offer by Ricky of $150,000,

it might be EQC would accept it as presented”. Mr Dwyer undertook to call Mr Searle again. Mr Dwyer deposes that around this time, he had had “feedback” from Mr Ferguson that Mr Bligh was happy for a settlement of $150,000 to be pursued. There is no written record of that communication but Mr Dwyer, in an email to Mr Staples on 19 October 2016, is recording that:

... at this stage a settlement looks imminent and Ricky is happy if he gets what is on the table ($150.000).

There is no evidence that $150,000 was “on the table” in the sense that either side had put such a settlement offer to the other.

[87] On 18 October 2016, Mr Ferguson reported to Mr Dwyer, having spoken to EQC’s lawyer, that he suspected the prospect of resolution at $150,000 might soon disappear.

[88] On 20 October 2016, Mr Ferguson received from EQC and IAG a joint offer at a figure well below the $150,000 mark. Mr Ferguson discussed with Mr Dwyer the possibility of getting Mr Bligh to agree to a counteroffer, much below the $150,000 mark. Mr Ferguson thought that Mr Bligh had probably heard enough from Grant Shand’s office about the negotiations and asked Mr Dwyer to seek Mr Bligh’s instructions on a much lower settlement figure. Around the same time Mr Ferguson nonetheless spoke to Mr Bligh’s son, Hayden Bligh, to explain that he had doubts as to Mr Bligh’s prospect of success at trial.

[89] Mr Dwyer deposes that he spoke to Mr Bligh that day (20 October 2016) to discuss Mr Ferguson’s proposal of a counter-offer. Mr Bligh instructed him that he did not want to settle as he viewed the claim as over cap.

[90] On 21 October 2016, Mr Morriss’ 5 October draft email of advice is abruptly resuscitated, in the form of a fresh email from Mr Morriss to Mr Ferguson. The only significant difference appears to be that the draft was updated to take into account EQC’s most recent (but still low) offer. The draft contains the advice of the firm that, if EQC and IAG cannot be persuaded to pay more money, Mr Bligh should accept the EQC offer. Mr Ferguson exhibits the redrafted email of 21 October 2016 as a document he received. He did not either then or subsequently send it on to Mr Bligh as he received or amended it.

[91] On 22 October 2016 (a Saturday), Mr Ferguson wrote a detailed email to Mr Staples and Mr Dwyer, the purpose of which is to “set out some of the difficulties with this case”. Mr Ferguson stated that he was not confident that earthquake damage could

be proved. He described the plaintiff’s experts as “much less persuasive” than EQC’s experts. He summarised:

Mr Ferguson referred to Mr Bligh’s costs exposure on an unsuccessful claim (around

I understand that Brian [Staples] will pay EQC and IAG’s costs if this occurs, can you please confirm this.

The understanding referred to arose from the commitment of CRSL under the funding contract to a “No Win No Pay” outcome.³⁷This significant letter of advice (as with the 5 October draft email redrafted on the previous day) was not copied to Mr Bligh by Mr Ferguson, Mr Dwyer or Mr Staples.

[92] Immediately that Saturday morning (22 October), Mr Staples sent a one-line reply to Mr Ferguson stating:

[93] Mr Ferguson continued to seek confirmation that CRSL would meet EQC’s and IAG’s costs if Mr Bligh’s claim was unsuccessful at trial. Mr Staples replied to Mr Ferguson that day stating that he was not paying costs if Mr Ferguson was running the claim. He stated:

That led to further exchanges. Mr Ferguson recorded the need “to sort out now who is liable”. Mr Shand responded to Mr Ferguson that he had no exposure to costs and suggested that Mr Bligh would primarily be liable if he lost.

[94] The next day, Sunday (23 October 2016), Mr Ferguson again sought clarification from Mr Staples of what Mr Bligh’s costs exposure was. Mr Ferguson

_{recorded at that point that Mr Bligh had instructed him to run the case,
which Mr}

Ferguson stated he would do. Mr Staples replied by email, criticising the quality of Grant Shand’s work to date. He recorded that Mr Bligh was Grant Shand’s client and that Mr Bligh was the one who would have to pay if the case was lost. Mr Staples added that Mr Bligh would negotiate but what was being offered was nothing but a joke. Mr Staples told Mr Ferguson to “get out there and talk to your client”.

[95] On Monday, 24 October 2016, Mr Staples emailed Mr Dwyer and stated that he (Mr Staples) was “staying out of this, just forwarding emails to you as received”. Mr Dwyer responded to Mr Staples (on Tuesday, 25 October) commenting that he thought it too late for Mr Staples to stay out of matters. He noted that Mr Staples had taken a position at odds with the lawyers and the experts, and Mr Bligh had picked up on that approach and was settling in for a court battle. Mr Dwyer then turned to the likelihood that there would be substantial costs payable if Mr Bligh lost. Mr Dwyer recorded:

As I see things this will be a cost to CRS on the “no win, no cost” basis. We would have to terminate our contract with Ricky to avoid this. However, we can only do this on the basis that Ricky will not follow CRS's recommendation to settle. CRS through you is not giving that advice.

[96] On Wednesday, 26 October, the day after Mr Dwyer had expressed to Mr Staples his view that costs awarded to the defendants on an unsuccessful claim would be a cost to CRSL, Mr Staples’ position in relation to Mr Bligh’s claim dramatically altered – that day he emailed Mr Dwyer, in what is (but for this sentence) a completely redacted email, stating:

And of course I would be happy to go see Ricky next week and talk him down from the tree if that is what is needed.

Later in the day, Mr Bligh was contacted by an assistant of Mark Kearney, one of the engineers to be called for Mr Bligh. Mr Kearney wished to inspect the property on the morning of the trial. It was arranged that he would meet Mr Bligh at the property immediately after the trial Judge’s site inspection on Monday, 31 October 2016.

[97] On Thursday 27 October, in the morning, Mr Ferguson, Mr Morriss and one of the plaintiff’s experts (Pavol Csiba) went to look at Mr Bligh’s property. Mr Ferguson deposes that at the site visit he had certain conversations with Mr Bligh about proving

damage, about strategy and about costs outcomes (if he were to be unsuccessful at trial). Mr Ferguson deposes that Mr Bligh’s response was to place costs liability on CRSL. Mr Ferguson deposes that he decided to address the issue of costs upon his return to the office. Mr Bligh states that at this meeting Mr Ferguson told him in person for the first time that he thought Mr Bligh had a weak case and should settle. In a note Mr Ferguson made of the conversation that day he recorded that he had explained to Mr Bligh that day that $100,000 “is a good outcome”. He also recorded that he had explained to Mr Bligh that he needed to consider the actual risks, saying that if Mr Bligh lost he would be up for over $200,000 costs. Mr Ferguson recorded that Mr Bligh replied that it was Mr Staples who was up for the costs.

[98] At 4.26 pm that afternoon (Thursday, 27 October), Mr Ferguson sent an email to Mr Bligh. The email stated that its purpose was to advise Mr Bligh as to his potential costs liability to EQC and IAG. It estimated Mr Bligh’s exposure to costs at about $240,000. The email did not discuss Mr Bligh’s contention that the exposure was in fact that of CRSL under its “no win no pay “agreement”.

[99] At 5.22 pm the same afternoon, Mr Ferguson emailed Mr Bligh setting out fresh offers received from IAG and EQC. Mr Ferguson recorded that Mr Bligh had previously instructed Grant Shand to offer $150,000. He recommended that Mr Bligh offer to accept “$150,000 or less”.

[100] Mr Bligh promptly emailed back at 7.46 pm to Mr Ferguson, copying his email to all involved, including Mr Staples. He rejected the suggestion that he had ever offered to accept $150,000. He critiqued the further information which was to hand including as to the Shotcrete solution. He recorded that his goal and Mr Ferguson’s mission was to get EQC over the cap for many, many times the $150,000.

[101] When Mr Staples received Mr Bligh’s email, he forwarded it to Mr Dwyer, recording:

[102] The proposed “letter” took the form of an email which Mr Dwyer sent to Mr Bligh the following morning (Friday 28 October 2016). In that letter Mr Dwyer recorded that CRSL believed Mr Ferguson was giving good advice and that a sum of

Can you please advise by close of business today whether you now wish to instruct Andrew to settle or continue to trial? If we do not hear from you we will assume that you are moving towards trial and as such we will terminate our agreement.

[103] On the Friday (28 October 2016), Mr Ferguson filed and served a synopsis of his opening submissions. Over the weekend which followed (29 – 30 October 2016) he had a number of exchanges with opposing counsel over possible settlement approaches and served a further brief of evidence (of a Mr Johnstone). On the Saturday (29 October 2016), Mr Bligh made efforts to contact lawyers who might assist him if Grant Shand stopped acting – he was unsuccessful.

[104] On the morning of the trial (Monday, 31 October 2016), Clark J conducted a site visit in the company of counsel. Mr Bligh, who was not invited to attend, waited in a car near the property. During that time he had a telephone discussion with Mr Staples. Mr Staples sought to persuade him to settle as Mr Dwyer had urged in his

28 October 2016 email. Mr Bligh said that he did not wish to negotiate and wished to proceed. Mr Bligh deposes that Mr Staples told him that if he did not negotiate CRSL would withdraw funding. Mr Staples’ evidence is that he said that there was nothing more that he could do to assist Mr Bligh as the funding contract was cancelled. Mr Staples deposes that following that conversation with Mr Bligh he confirmed the cancellation to Mr Ferguson.

[105] At the end of the Court’s site visit (around 9.30 am) Mr Ferguson had a conversation with Mr Bligh. Mr Ferguson records of that conversation:

... we informed Mr Bligh that we were going to the High Court to begin preparing for the hearing. We informed Mr Bligh that the hearing began at

property one final time, we planned for Mr Bligh to give his evidence first, followed by Mr Kearney. Mr Bligh said to us that he would let Mr Kearney into the property and would then meet us at Court at 11.00 am.

Mr Ferguson records that it was following this conversation with Mr Bligh that he received, around 9.45 am, Mr Staples’ advice “for the first time” that CRSL had cancelled its contract. Mr Ferguson records that he told Mr Staples that CRSL risked a wasted costs order due to its decision. Mr Staples, whose affidavit was executed a week after Mr Ferguson’s, did not take issue with Mr Ferguson’s evidence as to this conversation. As Mr Ferguson’s evidence is inherently plausible, I find on the evidence that (Grant Shand’s) firm was advised by CRSL for the first time around 9.45 am on the day of the trial that the funding contract was cancelled. I find also that

[106] Mr Bligh has detailed what passed in the period after 10.00 am. His evidence is recorded in the setting aside judgment in the following passage:³⁸

[31] Mr Bligh says that as Mr Ferguson was leaving, he told him that he should be at court at 11.00 am, instead of 10.00 am when court was originally meant to begin. Mr Bligh thinks that Mr Ferguson told him that he had to withdraw as counsel but he is not sure. He says he was feeling very overwhelmed by the process and he does not recall if Mr Ferguson explained what the consequences of his withdrawing were. Mr Bligh does recall, however, telling Mr Ferguson that if he was running late to let the Judge know and if necessary let one of the witnesses, Mr John Johnstone, give evidence first.

[32] It will be recalled that Mr Kearney was to visit the property after the Judge’s inspection, as arranged by CRSL. Mr Bligh says there should have been enough time for him to let Mr Kearney into the property so he could do the inspection, and to get to court in time. He says, however, that looking back he now believes that he was too upset by what was happening to think clearly and that he did not understand what was going to happen. Before they left, either Mr Ferguson or Mr Morriss spoke to Mr Kearney by phone to see how far away he was. At that point Mr Kearney’s flight had been delayed and he was just leaving Christchurch Airport and making his way to Mr Bligh’s home in Waddington.

[33] Mr Bligh says that at that time he believed he had no choice but to wait for Mr Kearney to ensure that he had access to his house and garage. Because

Mr Bligh was pinning all his hopes on Mr Kearney who he understood could prove that there was earthquake damage. As Mr Bligh puts it:

I thought he was my last chance to save my case and my home and that it was very important for me to stay with him and point out the before and after damage. At that point, although Mr Kearney had prepared a brief of evidence, he had relied on reports from some of his employees. I thought that it was one thing to rely on the reports

and photos from his employees following their visit earlier that month but nothing beats a physical visit. I was also able to show him my before and after photos taken by my Engineer Grant Wilkinson of Ruamoko Solutions in 2007 and 2010.

[34] Mr Kearney arrived about 10.30 am. Mr Bligh showed him the damage in question. He says:

Because Mr Ferguson, Mr Staples and Mr Dwyer did not believe that I could win the case, I thought I needed to make sure Mr Kearney had all the information he needed to be able to prove the earthquake damage in Court. At this point I was absolutely desperate and thought Mr Kearney was perhaps my saviour. His advice and that of his colleagues had been an absolute breath of fresh air. They were very helpful and proactive and I thought that Mr Kearney was therefore my only chance.

Mr Ferguson and two minutes later a call from Mr Morriss. He thinks Mr Ferguson told him that he had withdrawn because CRSL had withdrawn its funding. Mr Bligh says that although Mr Ferguson may have explained this to him earlier in the day before he left the property, this was the first time that he thinks he really understood that CRSL had actually withdrawn funding support and that Mr Ferguson would abandon his representation, and that the trial would not proceed. He says Mr Ferguson went on to advise him that it was “absolutely important” for him to get to the court as soon as possible. Mr Morriss said there would be a judgment and that “I either had to contact the court or go in there”. At the time he did not understand what a judgment meant and he was still feeling quite shocked. He needed time to recover. By the time he arrived at court later that day the Judge had already left.

[107] Accordingly, it is Mr Bligh’s evidence that he was not informed by Mr Ferguson (or anyone else on behalf of Grant Shand) that the firm was ceasing to act for him until the call which Mr Bligh specifically records as occurring at 11.49 am. Mr Ferguson does not challenge that evidence. I find the call to have been made, with the content as relayed by Mr Bligh, at 11.49 am.

[108] In the meantime, Clark J had commenced the hearing in Court shortly before

11.30 am, at a time when the contract of retainer between Grant Shand and Mr Bligh remained on foot.

[109] In the default judgment, Clark J set out what had occurred in Court that morning:³⁹

[3] On returning to the court following the site visit I was advised that plaintiff’s counsel wished to address me in chambers concerning a recent development. The matter was called shortly before 11:30am and Mr Ferguson advised that the plaintiff’s litigation funder had terminated his agreement with Mr Bligh on the basis of Mr Bligh’s “non-cooperation”. Consequently Mr Bligh has no ability to pay his legal advisers and in the absence of any agreement about payment Mr Ferguson sought leave to withdraw.

[4] In response to my concern and queries about Mr Bligh, Mr Ferguson confirmed he had advised Mr Bligh:

(d) in response to Mr Bligh saying he wished to arrange legal aid, that it was unlikely he could do that in the time available before the hearing was due to commence and that Mr Bligh should come and speak to the Court about it but it appeared he had chosen not to do so.

[5] My further exchanges with Mr Ferguson were to satisfy myself that the application to withdraw was not attributable to a breakdown in the relationship which might be reparable.

[6] I viewed as inevitable the grant of Mr Ferguson’s application for leave to withdraw there being no basis upon which Mr Ferguson could be required to commit to completion of a seven-day trial spread over a fortnight. Before formally granting the application I heard from Mr Wood and Mr Smith, counsel for the first and second defendants.

[7] Counsel had only become aware of the withdrawal of funding and of Mr Ferguson’s intended application to withdraw at 11:00am. In circumstances where Mr Bligh had not even turned up, notwithstanding that he had been advised by his counsel to do so, counsel sought judgment dismissing the proceeding. There had been significant wasted costs and serious inconvenience and expense for witnesses including experts.

[8] Mr Ferguson, albeit acknowledging his dubious standing to do so, urged the Court to consider that in not attending Mr Bligh was not being disrespectful. He may have been attempting to arrange legal aid. I draw no inferences from Mr Bligh’s conduct. I have little basis for doing so and I bear in mind that he is very ill.

[110] Thereafter, Mr Bligh contacted his present solicitor, Mr Lynn, and was able to formally instruct him around 6.00 pm on 31 October 2016. Mr Lynn then prepared a memorandum for the Court seeking an adjournment. The Court nonetheless entered

judgment under r 10.8 High Court Rules.⁴⁰In entering judgment by default, Clark J noted that any miscarriage of justice thought to arise from that course could be addressed by an application to set the default judgment aside.⁴¹

[111] In the event, Mr Bligh was ultimately able to have the default judgment set aside through Associate Judge Matthews’ hearing and judgment some six months later.⁴²

[112] Associate Judge Matthews dealt with the setting aside application as an issue between the plaintiff and the defendants. The non-parties were not represented. His Honour was faced with a conflict between Mr Bligh’s evidence and Mr Ferguson’s explanation of events as given to Clark J. (Clark J had preferred Mr Ferguson’s statement of events).

[51] As I have indicated, there were two conflicting stories about what Mr Bligh was told by Mr Ferguson when Clark J came to make her decision. There are two conflicting stories now. They cannot be resolved on the present evidence. The context, however, of the events of Monday morning is critical to an assessment of how the Court should now act in relation to Mr Bligh not attending court. I accept his evidence that given the sudden and unexpected announcement by his legal team of their views of the weakness of his case, he was justified in placing considerable reliance on Mr Kearney. I accept that he was entitled to remain at his property when Mr Ferguson and Mr Morriss left in order to await Mr Kearney’s arrival, which was known to not be far off, and to let him into the house so he could conduct an inspection. This visit had been arranged by one or other of his legal team or related advisors. They must have thought it necessary or they would not have arranged it. Further, they had not called it off even though it must have been obvious to them that if they were not going to appear for Mr Bligh, the trial was not going to proceed.

Mr Bligh wanted Mr Kearney’s evidence, so he must have thought the trial was going to proceed.

[52] There remains a question mark about the advice Mr Ferguson gave Mr Bligh, which he says was that Mr Bligh must attend court. Even if that is so, however, Mr Ferguson knew Mr Bligh was remaining at the property to let Mr Kearney in. Once he knew that, it must have been obvious to him, given his decision (or perhaps instruction from Mr Shand and/or CRSL) not to continue to represent Mr Bligh, that Mr Bligh was critically at risk of his case being struck out. In that circumstance, and knowing Mr Bligh’s state of health, it

Mr Kearney and that Mr Bligh come with him to the city straight away. Be that as it may, it seems that Mr Bligh did not grasp the seriousness of the

outlined it is readily understandable why. Mr Bligh did know that he had to go to court, because in the end he did, but he does not seem to have registered the urgency. In my view it is likely that either he was not told in the clearest terms what might occur if he was not there when Mr Ferguson withdrew, or he did not understand it. He says there was reference to a judgment, but he did not understand what that meant.

[114] At this hearing, I have had the benefit of the affidavit evidence of Mr Ferguson, together with the previous and additional evidence of Mr Bligh.

[115] Nothing in the full evidence before me leads to conclusions other than those set out in Associate Judge Matthews’ paragraphs [51] – [52]. Significantly,

Mr Ferguson’s evidence indicates that at the time (from around 11.25 am) he was giving his explanation of the morning’s events to Clark J, his telephone conversation with Mr Bligh (placed by Mr Bligh at 11.49 am) had yet to occur. Neither Mr Ferguson nor Mr Shand terminated Mr Shand’s contract of retainer before 11.49 am. Nevertheless, Mr Ferguson, in the 11.30 am Court hearing, made his application for leave to withdraw as Mr Bligh’s solicitor, having confirmed to Clark J that he had advised Mr Bligh previously that he would be making an application to the Court for leave to withdraw.

At 9.30 am, following the site visit, we informed Mr Bligh that we were going to the High Court to begin preparing for the hearing. We informed Mr Bligh that the hearing began at 11.00 am and he should be present. As Mr Kearney intended to view the property one final time, we planned for Mr Bligh to give his evidence first, followed by Mr Kearney. Mr Bligh said that he would let Mr Kearney into the property and would then meet us at Court at 11.00 am.

Mr Ferguson left for Court, that he would be making an application to the Court for leave to withdraw. To the contrary, he was going to Court to prepare for the hearing. Mr Ferguson told Mr Bligh how he would be presenting Mr Bligh’s claim. As

Associate Judge Matthews found,⁴⁴Mr Bligh must have thought, on the basis of the discussion with Mr Ferguson with the Court, that the trial was going to proceed. He must equally have thought that it was going to proceed with Mr Ferguson as counsel. If, in such circumstances, Mr Kearney’s site visit took a little longer than the expected period through to 11.00 am, Mr Bligh would have believed that Mr Ferguson would be at Court continuing to represent him, rather than seeking leave to withdraw.

[117] I find it established on the evidence that Mr Bligh did not know that he had, as a matter necessary to his representation, to be at Court at 11.00 am. On the further evidence now adduced, I find that of the two possibilities identified by Associate Judge Matthews in the setting aside judgment,⁴⁵the position was that Mr Bligh had not been told in clear terms what might occur if he was not at Court at 11.00 am. He was not told that Mr Ferguson intended to seek leave to withdraw. Mr Ferguson’s own evidence is that Mr Staples told him, around 9.45 am, for the first time that CRSL had cancelled its funding contract. Mr Ferguson recorded to Clark J that he had advised Mr Bligh:⁴⁶

(a) that he, Mr Ferguson, would be making an application to the Court for leave to withdraw;

[118] To complete the narrative, there were then telephone calls from Mr Ferguson and Mr Morriss to Mr Bligh commencing at 11.49 am. Mr Bligh deposes that Mr Ferguson told him that he had withdrawn from acting for Mr Bligh because CRSL had withdrawn its funding. He says that Mr Ferguson went on to advise him that it was absolutely important to get to Court as soon as possible. Mr Morriss told him “that

_{there would be a judgment” and he needed to either contact the
Court or to go in there.}

Mr Bligh records that at the time he did not understand what “a judgment” meant, that he was still feeling quite shocked and needed time to recover. He deposes that by the time he arrived at Court later in the day, the Judge had already left Court.

[119] In his evidence, Mr Ferguson did not take issue with Mr Bligh’s recollection of this conversation.

[120] On the basis of the narrative and documentary evidence at [65] to [119] above, I find the following facts to be key to the determinations which the Court must make on the present applications:

(a) By 5 October 2016, when Mr Morriss drafted his two-page advice intended for Mr Bligh, solicitors at Grant Shand’s firm had concluded that:

• Mr Bligh’s best focus (with causation nevertheless still very hard to prove) would be on the brick first floor (involving a Shotcrete solution);

• Should Mr Bligh lose his case, EQC and IAG would likely obtain costs of above $100,000 or even $200,000, possibly resulting in Mr Bligh losing his property; and

• Mr Bligh should accept EQC’s current offer of $31,000 (or more if the insurers would offer it).

(b) Grant Shand’s relatively negative view of Mr Bligh’s prospects of trial did not substantially alter before 31 October 2016.

(c) Mr Morriss and Mr Ferguson met Mr Bligh on 7 October 2016 and discussed the Shotcrete solution as a basis for negotiation. Although there is later suggestion from Grant Shand’s office that Mr Bligh at this meeting instructed the solicitors that he would accept a settlement of

$150,000, the affidavit evidence establishes that there was confusion concerning what Mr Bligh may have agreed to that day. The solicitors contributed to the confusion by not confirming instructions in writing.

(d) By 22 October 2016, Grant Shand is providing written advice to CRSL as to “the difficulties with this case” and in particular as to the difficulty of proving earthquake damage but is still not providing such written advice to Mr Bligh.⁴⁷

(e) At the same time (22 October 2016) Grant Shand set out to CRSL the understanding that, under the “No Win No Pay” provision in the funding contract, CRSL will pay the defendants’ costs if Mr Bligh’s claim is unsuccessful.⁴⁸Mr Dwyer of CRSL is of the same understanding. In exchanges which followed between Grant Shand and CRSL, the extent of CRSL’s liability is not resolved. Mr Bligh is not copied into any of those discussions.

(f) On Tuesday, 25 October 2016, Mr Dwyer of CRSL identifies to Mr Staples that CRSL cannot avoid liability for the successful defendants’ costs unless Mr Bligh fails to follow a recommendation to settle given by CRSL, which recommendation has not been given by Mr Staples.⁴⁹

(g) Until around Wednesday, 26 October 2016, CRSL’s consistent position known to and relied upon by Mr Bligh was that Grant Shand’s negative view was inadequately researched (as exemplified by his 22 October

(h) Around this time, Mr Staples changes his advice to Mr Bligh and decides to “talk him down from the tree”.⁵¹

$150,000 or less (if Mr Ferguson could obtain such an offer). Mr Staples determined that evening that CRSL now had the opportunity to “bow out with Ricky” and left Mr Dwyer to send a letter threatening cancellation on Friday, 28 October 2016.⁵²

(j) Nevertheless, in his continued dealings with Mr Bligh up to and including early Monday morning, Mr Ferguson confirmed that he was preparing for trial.

(k) When Mr Ferguson left Mr Bligh at the property, following the Court’s site visit, around 9.30 am on 31 October 2016, it was upon the express basis that he was going to Court to begin preparing for the hearing. The possibility of Mr Ferguson’s withdrawing from representation was not discussed. Mr Ferguson became aware only 15 minutes later “for the first time” that CRSL had cancelled the funding contract.⁵³

(l) Mr Bligh failed to appear at Court at 11.00 am although he had been asked to do so by Mr Ferguson for the purposes of giving his evidence first. There is uncertainty, which I cannot resolve on the affidavit evidence, as to the degree of importance placed on the exact timing of

11.00 am which Mr Ferguson explained to Mr Bligh. It is clear on the evidence that Mr Bligh was not given information as to either Mr Ferguson’s possible withdrawal from acting or the risk of a default judgment.

shocked”, took time to “recover” and arrived at Court only later in the day after the Judge had left.⁵⁴

Discussion – apportionment of responsibility between CRSL, Grant Shand and

[121] Under Mr Bligh’s funding contract, the responsibility for managing and prosecuting his claim lay with CRSL. The responsibility for legally presenting the claim lay with Grant Shand.

[122] It would have been evident to legally experienced people well before the weekend of 29 – 30 October 2016 that a number of problems could confront Mr Bligh as the trial date arrived. Mr Bligh’s bullish view of his prospects was reinforced up until a very late point by the equally bullish view taken by Mr Staples of CRSL. There was a great likelihood that, if Mr Staples’s view were to be changed near trial, then Mr Bligh would not be persuaded to accept that view. The prospect of cancellation of the funding contract was not raised with Mr Bligh until the last working day before trial.

[123] Both CRSL and Grant Shand failed at a sufficiently early point to address the possibility that either CRSL or Grant Shand (or both) might withdraw from involvement. Mr Bligh was not on notice, until too late, of the possible need for an adjournment while fresh counsel became involved. The responsibility for that substantially lies with CRSL and Grant Shand. Both had the responsibility to guard Mr Bligh’s best interests and to do so in a timely way, having regard to the pressure he would be under as a litigant coming to trial and to his particular personal health issues.

[124] For his part, Mr Bligh, after the event of the cancellation of CRSL’s funding contract and the withdrawal of Mr Ferguson, contributed in some degree to the extent of wasted costs through his absence from Court over the entire day on 31 October

2016. In the stress of the situation that day, there is explanation for his non-attendance but he had, through Mr Ferguson’s clear direction to come to Court, the opportunity to at least reduce the extent of wasted costs that ensued.

[125] It is appropriate to apportion responsibility, as between themselves, as 40 per cent to CRSL, 40 per cent to Grant Shand and 20 per cent to Mr Bligh.

[126] Their combined conduct led to the defendants’ incurring wasted costs in the 29

– 31 October 2016 period. It also resulted, when the trial was subsequently not able to be rescheduled for 16 months, in IAG’s wasted costs of earlier preparation.

[127] To the extent that Mr Bligh has costs thrown away through the aborted trial, CRSL and Grant Shand bear, as between themselves, the same degree (40 per cent each) of responsibility.

[128] As between Mr Bligh and the defendants, Mr Bligh must accept a liability for the wasted costs occasioned by the aborted trial (whether or not CRSL and/or Grant Shand also have responsibility).

[129] I have found that the wasted attendances for both IAG and EQC were those of

28 – 31 October 2016 (inclusive).⁵⁵I have also found it is just that the parties who caused the wasted costs be ordered to pay the actually wasted costs (not a scale award).

[130] The awards I make for the 28 – 31 October 2016 wasted costs (for both EQC and IAG) will therefore be in relation to the actual costs incurred. Similarly, the order I make in favour of IAG for the earlier preparation will be calculated by reference to the actual incurred costs. Leave will be reserved to the liable parties to have the reasonableness of the relevant fees on a solicitor/client basis determined by the Court if there is disagreement between the parties.

[131] CRSL is not a “pure funder” as that term was used by the Privy Council in

_Dymocks.⁵⁶_{CRSL had, through its
funding contract, a personal interest in the}

⁵⁶Dymocks Franchise Systems (NSW) Pty Ltd v Todd (No 2), above n 21, at [25](2).

litigation and did stand to benefit from it as part of its business. It had the contractual right to manage and prosecute Mr Bligh’s claim. The claim would not have been pursued to the 31 October 2016 trial date but for CRSL’s funding arrangements.

[132] As between CRSL and the defendant, CRSL’s liability is co-extensive with Mr

[133] As between CRSL and Mr Bligh, I have found that CRSL bears a 40 per cent responsibility for the wasted costs occasioned by the aborted trial.⁵⁷

[134] I have further found that the attendances of 28 – 31 October 2016 were all wasted.⁵⁸IAG is entitled to recover those wasted costs from CRSL jointly with Mr Bligh. Again, as between CRSL and Mr Bligh, CRSL has a 40 per cent responsibility.

[135] For the period of preparation for trial before 28 October 2016, I have found that 25 per cent of the costs then incurred will have been truly wasted.⁵⁹While IAG’s entitlement is to recovery of the appropriate amounts of their actual costs, the Court has not been provided with sufficient material to enable it to confirm that the fees charged to IAG can be classified as “actual and reasonable”.

[136] The order to be made will include a mechanism for the determination of what were the actual and reasonable fees to be the subject of the wasted costs order.

[137] IAG’s claim against Grant Shand falls to be considered under the principles established in Harley v McDonald.⁶⁰

[138] I have found the conduct on the part of Grant Shand cannot be classified as a simple mistake, oversight or a mere error of judgment. There was a serious dereliction of the duty owed to the Court to guard against there being an adjournment (or, worse

_{still, the risk of a default judgment followed by setting aside and a
new trial date) in}

circumstances where there was sufficient time to avoid a last-minute adjournment or abandonment of trial with all the costs implications and impact on Court resources.

[139] As between Grant Shand and the defendants, Grant Shand’s liability is co- extensive with Mr Bligh’s.

[140] I have found that Grant Shand’s responsibility, as between himself and Mr

[142] EQC claims against CRSL its wasted costs for the 28 – 31 October 2016 period.

[143] For the same reason as they should be ordered in favour of IAG, EQC is entitled to such an order.

[144] As between Mr Bligh and CRSL, their liabilities should be borne in the same proportions (20/40) as applies between those two entities in relation to the IAG claim, with the result that, as between them, Mr Bligh shall bear 33.3 per cent of the costs and CRSL 66.7 per cent of the costs.

[145] The Privy Council in Harley v McDonald, in the passage quoted at [58] above, recognised that it would only be in cases where the facts are clearly before the Court or immediately and easily verifiable that a Court would contemplate a costs order in favour of the client against their own lawyer. The Privy Council noted that conduct of the case outside the courtroom is unlikely to be of that character. This summary jurisdiction is not intended to be the vehicle for adjudicating on the negligence issues as between client and solicitor. Such is the appropriate domain of a distinct negligence proceeding.

[146] I am satisfied that this unusual case falls within the limited class of case in which the summary jurisdiction is appropriate. Although the events of October 2016

require a relatively lengthy narration, they are clearly before the Court. Such differences as exist in the evidence of the parties do not preclude conclusions as to the clear degree of responsibility of CRSL and Grant Shand in the circumstances which gave rise to the events on 31 October 2016.

[147] The combined conduct of CRSL and Grant Shand in contributing to the events of 31 October 2016 impacted on Mr Bligh no less than it impacted on the defendants in favour of whom wasted costs orders will now be made. It is just that CRSL and Grant Shand contribute to Mr Bligh’s thrown-away costs in the same proportion as they contribute to the defendants’, with Mr Bligh left to bear his own degree of responsibility (which I have found to be 20 per cent).⁶¹

[148] The sums thrown away by Mr Bligh are the payment he must make on the costs award for the setting aside judgment and the actual and reasonable fees he incurred in instructing his new solicitor to apply for and obtain the setting aside order. On the evidence he has not established other wasted costs.

[149] There will be an order for the payment of Mr Bligh’s wasted costs, together with a mechanism for confirming that they are actual and reasonable.

[150] All parties made applications for costs on the various applications determined in this judgment. I will reserve that issue.

(a) The plaintiff and Claims Resolution Service Ltd to pay to the first defendant its reasonable solicitor/client costs and disbursements

(b) As between the plaintiff and Claims Resolution Service Ltd, the costs awarded to the first defendant at [151](a) shall be borne 33.3 per cent and 66.7 per cent respectively;

(i) its reasonable solicitor/client costs and disbursements incurred in relation to this proceeding in the period 28 – 31 October

(ii) a sum representing 25 per cent of its reasonable solicitor/client costs and disbursements of preparation for the 31 October 2016 hearing to be fixed by the Registrar;

(d) As between the plaintiff, Claims Resolution Service Ltd and Grant Shand, the costs awarded to the second defendant at [151](c) shall be borne 20 per cent, 40 per cent and 40 per cent respectively;

(e) Claims Resolution Service Ltd and Grant Shand each to indemnify the plaintiff in a sum equivalent to 40 per cent of the total sum the plaintiff is required to pay to the defendants pursuant to the costs judgment in Bligh v Earthquake Commission [2017] NZHC 2964;

(f) Claims Resolution Service Ltd and Grant Shand each to pay to the plaintiff 40 per cent of his reasonable solicitor/client costs and disbursements incurred in instructing his new solicitor to apply for and

(g) In the event of any dispute as to the reasonableness of costs or disbursements claimed by a party pursuant to the above orders, leave is reserved to the affected parties to request the Court to determine the reasonableness; and

(h) The costs and disbursements of these applications for costs, including the hearing of 9 May 2017, are reserved.

High Court of New Zealand Decisions

Bligh v Earthquake Commission [2017] NZHC 3179 (18 December 2017)