CHRISTOPHER JOHN GILBERT v THE ATTORNEY-GENERAL in RESPECT of THE CHIEF EXECUTIVE of THE DEPARTMENT of CORRECTIONS NZEmpC AK
| Jurisdiction | New Zealand |
| Judge | GL Colgan |
| Judgment Date | 05 October 2012 |
| Court | Employment Court |
| Docket Number | AEC 93/97 |
| Date | 05 October 2012 |
IN THE MATTER OF a claim for damages for breach of employment contract
IN THE MATTER OF a personal grievance removed from the Employment Tribunal for hearing in the Employment Court
[2012] NZEmpC 173
AEC 93/97
AEC 69/98
IN THE EMPLOYMENT COURT AUCKLAND
Application for costs — plaintiff partially successful but sought costs and disbursements of $142,000 — defendant contended costs claim excessive and Court should take “partial success” approach endorsed in Health Waikato Ltd v Elmsly, calculating that any award should not exceed $25,000 — issues as to: contribution to plaintiff's legal fees; disbursement of plaintiff's actuary costs (which were greater than the defendant's actuary costs); disbursement of court hearing fees; disbursement of plaintiff's tax expert (where the defendant had not engaged one in addition to the actuary); and plaintiff's claim to interest.
Plaintiff in person
Joanna Holden and Roanna Chan, counsel for defendant
SUPPLEMENTARY COSTS JUDGMENT OF CHIEF JUDGE GL Colgan
On 16 September 2010 the Court of Appeal delivered its judgment on Mr Gilbert's appeal. 1 Neither party sought leave to appeal further and there is now no barrier to determining costs including the earlier application that I agreed to hold over pending the judgment of the Court of Appeal.
The defendant submits that in all the circumstances and particularly in view of the latest judgment of the Court of Appeal, the parties should be left to meet their own costs without recourse to contribution from the other. That was how the Court of Appeal dealt with costs on the second and latest appeal to that Court. 2
In this Court, on what is known to the parties as Mr Gilbert's application for recall of judgment, he was partly successful and partly unsuccessful. 3 The result of the appeal determined in the Court of Appeal has not altered that position materially. In their initial submissions on costs, the parties could not even agree about which of them had been successful on which issues. Mr Gilbert claimed that he was successful on two discrete issues. Ms Holden (for the defendant) submitted, however, that each party had been successful on a major issue and the defendant had achieved limited success on a third. That latter submission is taken from [53] of the Court's judgment on the application for recall and is, I think, the more accurate statement of the position. The parties settled the fourth issue (deductions for interest) before the hearing and the Court was not required to determine it.
Ms Holden has pointed out that as a result of the hearing of the recall application in this Court, Mr Gilbert received an additional $45,567 (gross) in addition to the sums that were paid to him by the defendant in September 2005. Counsel submits that this amount does not justify the time and costs incurred by the parties in obtaining that additional relief in this Court. Finally, Ms Holden submits that the defendant's ready agreement to pay Mr Gilbert substantial costs and
Mr Gilbert takes issue with the defendant's assessment of the value of the increased remedies achieved by him in the recall hearing. He says that although payment of approximately $45,567 was made by the defendant as a result of this Court's judgment, and a further payment of approximately $56,336 in interest has been made by the defendant as a result of the appeal, there is still confusion about whether a net present value of future earnings was used in the calculation of those figures. Mr Gilbert says that agreement on this matter has not been finalised but, in reliance on the defendant's actuary's figures, the defendant owes him a further
$59,904. In these circumstances, Mr Gilbert values his gains from the recall judgment of this Court at $161,807. The Court has not, however, been asked to determine that further question.
Mr Gilbert says that it was reasonable for him to have been represented by counsel up to and at the judgment recall hearing. He says, also, that it was reasonable in all the circumstances to have had the expert advice and evidence that he did (and as the defendant had also) and points out that his lawyers' costs were discounted to legal aid rates. Mr Gilbert submits that in these circumstances the costs incurred by him on the judgment recall application should be awarded in full.
Addressing interest on costs, Mr Gilbert submits that this should be calculated from the date of liability for the costs rather than the date at which the amount of them is established: Hunt v RM Douglas (Roofing) Ltd. 4 He submits that at the very least, interest should be payable on the costs from the date of hearing. Mr Gilbert submits that this should be at the full rate under the Judicature Act 1908 to reflect the recognised dual purposes of interest, those being to compensate for loss of use of money and the public policy of encouraging prompt resolution of litigation. Mr Gilbert says that he was not “a willing lender” and the proper comparison is not with bank deposit rates, but with borrowing rates. He says that a “punitive” borrowing rate could well exceed the rate of interest under the Judicature Act.
So Mr Gilbert seeks contributions to his costs of $66,223.13 and to his disbursements of $76,177.26. These figures do not include costs and disbursements relating to the subsequent appeal to the Court of Appeal. Although Mr Gilbert had the assistance of counsel in preparing his application for recall and correction, he has advised the Court that he has been unable to afford to retain lawyers to act for him and so makes this application in person.
The defendant accepts that Mr Gilbert was largely successful on the first recall issue of deduction for contingencies. It says, however, that he was not successful on the second issue which dealt with salaries and grandfathering. Ms Holden submits that the Court made two findings on this issue. The first sub-issue, which the defendant accepts went in Mr Gilbert's favour, was that the “grandfathering” principle applied. Ms Holden submits, however, that the second sub-issue under this question favoured the defendant's position that Mr Gilbert would probably have attained no more than 10 of the potential 13 competencies by the time his salary was fixed for future compensation loss purposes on 14 October 2002. Counsel submits that this second finding in favour of the defendant is the one with economic significance.
Further, the defendant does not accept Mr Gilbert's contention that its success on the third issue on recall (tax calculations) should not be taken into account for the purposes of calculating costs. The defendant says it is not to the point that this might have more properly been a matter for appeal – the fact is that it was dealt with by the Court to the defendant's (albeit limited) advantage.
Turning to the defendant's contention that Mr Gilbert's claims to costs are excessive, Ms Holden identifies correctly that the approach to Employment Court costs is set out in the judgment of Tipping J in Binnie v Pacific Health Ltd: 5
The first step is to decide whether the costs actually incurred by the plaintiff were reasonably incurred. Adjustment must be made if they were not. The second step is to decide, after an appraisal of all relevant factors, at what level it is reasonable for the defendant to contribute to the plaintiff's costs.
The defendant submits that in circumstances, as here, where disbursements constitute a significant proportion of the award sought, it is not appropriate to distinguish between costs and disbursements. Counsel relies, for this submission, on the judgment of the Court of Appeal in another employment case, Health Waikato Ltd v Elmsly. 6 Ms Holden concedes that this is not an approach of universal application but might sometimes be appropriate.
Challenging the disbursements which constitute Mr Gilbert's actuary's fees and disbursements ($62,541), the defendant says these were about 40 per cent more than the costs and disbursements of the defendant's actuary, so that the difference between the two figures ($26,447) should be deducted from the total costs sought by the plaintiff. Next, counsel for the defendant submits that it was unnecessary for Mr Gilbert to have engaged a tax expert in addition to an actuary. She points out that the defendant did not engage a similar expert so that the costs of a tax expert ($9,881.40) were not, therefore, incurred reasonably. Counsel submits that, in any event, the Court found against Mr Gilbert on the tax issue so that it should not be reasonable for the defendant to contribute to that expense and the best way of allowing for this would be to deduct from the costs sought by Mr Gilbert the amount so incurred.
Next, the defendant's case is that it was unreasonable generally for Mr Gilbert to incur such high costs and disbursements in light of his limited success at the recall hearing. Ms Holden invites the Court to take this into account when determining what is to be a reasonable contribution to costs reasonably incurred.
So, Ms Holden submits, Mr Gilbert's claim for costs and disbursements should be reduced thereby from $142,400.39 to $106,071.60.
Addressing the second Binnie question (at what level is it reasonable for the defendant to contribute to Mr Gilbert's costs and disbursements), counsel identify several factors in countering Mr Gilbert's claim to indemnity costs.
The first of these is the relative successes of the parties. As already noted, counsel submits that each party succeeded on one issue and the defendant is said to
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