Houghton v Saunders
| Jurisdiction | New Zealand |
| Judge | Dobson J |
| Judgment Date | 18 December 2013 |
| Neutral Citation | [2013] NZHC 3452 |
| Court | High Court |
| Date | 18 December 2013 |
| Docket Number | CIV-2008-409-348 |
[2013] NZHC 3452
IN THE HIGH COURT OF NEW ZEALAND
WELLINGTON REGISTRY
CIV-2008-409-348
JUDGMENT OF Dobson J
(Defendants' costs claims for interlocutory hearings, July-September 2013)
The defendants have applied for costs on a category 3B basis in respect of the steps taken for the hearing of interlocutory arguments in July, August and September 2013. The main areas of dispute are:
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(a) the extent to which the defendants were successful in relation to the orders sought;
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(b) the level of costs claimed by each defendant, including the choice of 3B instead of 2B scale for all steps, and the likelihood of duplication amongst defendants.
The general principle governing costs is that costs should follow the event, and be awarded to a successful party against an unsuccessful party. 1 All matters regarding costs are at the Court's discretion, 2 and departures from the normal range should be accompanied by reasons. 3
The majority of the interlocutory orders sought by the defendants were granted, and the plaintiff's application to have Hunter Hall's claims heard at the first stage of the trial was not granted. However, each of the applications needs to be dissected in more detail to determine the extent to which the defendants were successful.
The plaintiff disputed the extent of duplication, both in preparation for, and appearances on, the various applications. My overall impression was that the applications reflected the defendants dragging a somewhat reluctant plaintiff to the barrier on the various obligations for interlocutory progress with the proceedings. The extent of opposition on behalf of the plaintiff to some of the defendants' applications tended to lessen shortly before, or during, hearings. That was certainly
the case in relation to applications for further particulars of the plaintiff's statement of claim.My relevant judgment identified three categories of documents that were still disputed: the opt-in forms, the electronic data, and the JAFL documents. 4 The applications were pursued by the first, second and third defendants.
Discovery of the opt-in forms and the JAFL documents was ordered, but the plaintiff was not required to pay for transforming the electronic data it had provided to the defendants into a readable format. The defendants were therefore successful in respect of two out of three categories of documents they sought discovery of and should be entitled to costs in respect of them.
The plaintiff submits that the costs should be reduced to reflect the fact that the discovery of JAFL documents is third party discovery, to be completed by Mr Gavigan, and not the plaintiff. However, it is the plaintiff's responsibility to ensure all relevant discoverable documents are indeed discovered, regardless of whose possession they are in. Given that Mr Gavigan has either a measure of control over the proceedings, or at the least substantial involvement in managing them, the plaintiff should be subject to an adverse costs award for his failure to discover relevant documents.
The plaintiff also asserts that the award of costs on the discovery of the opt-in forms should be reduced to reflect the time and resource expended by the plaintiff to review, collate and copy 3,281 forms for provision to the defendants. However, this exercise would not only benefit the defendants. The steps taken to review and collate the opt-in forms would likely make them more accessible and usable for the plaintiff as well, and they may have had to expend the time and resources on this task in any event. I am not persuaded by the plaintiff's submissions that he is acting as an agent for the Court in performing this task, as it is the responsibility of a representative plaintiff to organise its class of claimants, not the Court's.
On the basis that two out of three categories of documents sought by the defendants were ordered to be discovered, I consider the defendants who pursued the applications are entitled to recover 66 per cent of the costs that would be awarded, had they succeeded completely on this application. A reduction is appropriate for the first defendants, who took a lesser role.
The first defendants and the second and third defendants provided separate bundles of documents in respect of which privilege was claimed. My 19 July 2013 judgment held that the first defendants were entitled to assert privilege in respect of the documents at tabs 2–8 of their bundle. The plaintiff says that privilege in respect of most of these documents was conceded, and that only 26 out of 32 documents were recognised as being privileged.
My 19 July judgment also held that the second and third defendants were entitled to claim privilege in respect of minutes of meetings at tabs 11–18 of their bundle, and in respect of the components of the document at tab 9 that reflect legal advice. Documents contained in nine other tabs were held not to be privileged. Therefore, unlike the first defendants, the second and third defendants were only partially successful in their claims to privilege in their documents.
One other area where the second and third defendants were unsuccessful was in seeking orders that the privileged documents obtained by the plaintiff from Godfrey Hirst should be destroyed or returned to the plaintiff. My judgment held that Feltex had waived any privilege it had in the documents, and therefore they were legitimately in the plaintiff's possession. 5
The first defendants are entitled to costs, and the second and third defendants are entitled to half of the otherwise appropriate costs award to reflect the extent of their success.
All defendants were successful in this application, as the plaintiff was ordered to give a bank guarantee or similar form of security by January 2014. The defendants seek costs in respect of both hearings for security for costs and the argument on the form of security heard on 16 September 2013.
The plaintiff was successful in resisting a variation to the confidentiality orders over the affidavit of Susan Dunn. I rejected the plaintiff's argument that the general nature of funding arrangements was commercially sensitive, and that the defendants would gain an unfair tactical advantage by seeing a redacted version of the documents.
However, I have continued to respect the confidentiality of some specific details of the funding arrangements, thus far at least, 6 and therefore the confidentiality orders were not varied. The judgment recognised the prospect of revisiting those orders, depending on the form of security for costs the plaintiff provides.
I do not think this matter detracts from the defendants' entitlement to costs on their security for costs applications. The plaintiff was not successful in his substantive arguments that the redacted agreement was commercially sensitive or that the defendants would gain an unfair advantage. Rather, the orders for continued confidentiality were made for more practical reasons, so that any variation could respond to the shape the security would take.
As to the substance of the analysis on the justification for increased orders for security for costs, the defendants prevailed over various grounds argued in opposition for the plaintiff. Therefore, the defendants are entitled to costs on their security for costs applications, subject to considerations of overlap. The issues on security for costs were relatively more extensive than might ordinarily arise, and I will reflect that in the band allocated as appropriate.
My 19 July judgment ordered further particulars on some aspects of the second amended statement of claim. A third amended statement of claim was prepared and filed on 3 September 2013. After a hearing on 16 September 2013, two aspects of the third amended statement of claim were found to be inadequate and steps were taken to review it and make the necessary amendments.
The scope and manner of pleading of the allegations in the statements of claim are relatively complex. That is not a criticism of them, rather a measure of the substantial task in analysing the gaps necessarily addressed in preparing full responses.
The defendants seek costs in respect of both the July and the September hearings.
Of the requests for further and better particulars, the following were not ordered:
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(a) particulars of individual sales relating to the allegations of manipulation of earnings;
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(b) details of each shareholder claiming loss;
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(c) reliance on post-facto comments to substantiate claims of failing to disclose the state of affairs at the relevant time (although these particulars were sought only by the second and third defendants).
In the scheme of all the particulars sought, these are only a small proportion. In addition, the necessity for a third amended statement of claim gives some indication of the inadequacy of the pleadings at the stage that the defendants were arguing for further and better particulars. Therefore I consider they are entitled to costs on this step. The scale of the task warrants consideration of a higher...
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Houghton v Saunders
...CIV-2002-404-1791, 9 June 2005 (85 per cent) and Mueller v Hendren (2009) 19 PRNZ 432 (HC) (75 per cent). 17 Houghton v Saunders [2013] NZHC 3452 at [27]. I supported the latter proposition by reference to McGechan on Procedure (online looseleaf ed, Brookers) at 18 Compare with considerati......