Katz v Mana Coach Services Ltd

 
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[2011] NZEmpC 88

IN THE EMPLOYMENT COURT WELLINGTON

judges:

A D Ford

WRC 42/10

In The Matter Of an application for costs

BETWEEN
Beatrice Katz
Plaintiff
and
Mana Coach Services Ltd
Defendant

Tanya Kennedy, counsel for the plaintiff

Blair Scotland, counsel for the defendant

Application by a successful defendant for costs where the plaintiff, a bus driver, had claimed she was entitled to be indemnified by her employer, the defendant, for legal costs she had incurred in successfully defending a careless driving charge arising out of an accident occurring in the course of her employment — whether the defendant was entitled to indemnity costs on the basis the plaintiff unreasonably failed to agree to an agreed statement of facts; whether the fact that the Calderbank offer the defendant made the plaintiff did not include a monetary payment prevented the offer from being taken into account in the final assessment of the award of costs and whether costs must be assessed taking into account the plaintiff's own financial circumstances and ability to pay.

At issue was: whether Mana was entitled to indemnity costs on the basis Katz unreasonably failed to agree to an agreed statement of facts; whether the fact that the Calderbank offer Mana made to Katz did not include a monetary payment, prevented the offer from being taken into account in the final assessment of the award of costs and whether costs must be assessed taking into account Katz's own financial circumstances and ability to pay.

Held: The methodology and principles relating to awards of costs in the Employment Court were now well established (Binnie v Pacific Health Ltd). The recognised starting point for an award was two thirds of the legal costs reasonably incurred.

Each party maintained a strongly opposing stance in relation to the issue of fault. Additional costs incurred by Mana in having to call one or more witnesses on the issue of fault could not properly be attributed to any unreasonableness on the part of Katz. Likewise, Katz had not acted unreasonably in relation to the production of any documentation given that fault was strongly contested.

Even though no payment was offered as part of the Calderbank offer did not mean that it could not be considered when determining costs. An offer that would allow a party to litigation to walk away bearing only its own costs could on occasions provide a real benefit and be a sensible litigation strategy. Such offers were not to be discouraged. Regulation 68(1) Employment Court Regulations 2000 required only that the offer be one that would “settle all or some of the matters at issue between the parties”. If Mana's offer had been accepted in the present case it would have accomplished that objective.

The ability of a party to pay a costs award has long been a relevant factor in the exercise of the Court's discretion (Order of St John Midland Regional Trust Board v Greig) however in the present case there was insufficient evidence to show Katz was unable to pay a costs award.

The hearing was for a half day — a sum of $3,500 was awarded to Mana.

JUDGMENT OF JUDGE A D FORD
1

In my substantive judgment 1 dated 25 May 2011, I dismissed the plaintiff's claim and awarded costs to the defendant. The parties were unable to reach agreement as to an appropriate figure for costs and the matter has now fallen back on the Court for determination. Both parties have filed helpful memoranda.

2

The short issue in the case had been whether the plaintiff, a bus driver, was entitled to be indemnified by her employer, the defendant, for legal costs she had incurred in successfully defending a careless driving charge arising out of an accident occurring in the course of her employment.

3

As I noted in Zhang v Sam's Fukuyama Food Service Ltd, 2 the methodology and principles relating to awards of costs in this Court are now well established and need not be repeated – Binnie v Pacific Health Ltd.3 In this case the defendant claims that the actual legal costs it incurred (exclusive of GST) amounted to $14,170.09 together with disbursements of $106.09.

4

The recognised starting point for an award is two thirds of the legal costs reasonably incurred. 4 Some unusual issues have been raised in relation to the assessment of this particular award. First, the plaintiff claims that costs should lie where they fall because the case could be viewed as a test case or one involving a dispute over the interpretation of a collective agreement. In the alternative, counsel for the plaintiff submits that the costs claimed are excessive and were not reasonably incurred. Finally, it was submitted that the Court needed to have regard to the ability of the plaintiff to meet any award of costs.

5

For its part, the defendant submits that it is entitled to indemnity costs, in other words, to an award for the full amount claimed. It advances three submissions in support of this proposition. First, that the plaintiff unreasonably failed to agree to an agreed statement of facts; secondly, that proper allowance needs to be made for a Calderbank offer it made to the plaintiff 5 and thirdly, that the award should recognise that the defendant incurred additional costs because of the plaintiff's unreasonable objection to the defendant's proposed production of certain documentation.

Agreed statement of facts
6

Dealing first with the defendant's submissions, the point Mr Scotland made about the agreed statement of facts was that it should have been possible to conduct the hearing without having to call any witnesses but the plaintiff unreasonably would not agree to any mention in the agreed facts that she was at fault for the accident which gave rise to the case. It was, therefore, necessary for the defendant to locate and call evidence from the driver of the other vehicle. Ms Kennedy, for the plaintiff, pointed out that she had been the one who had drafted the agreed statement of facts

and she submitted that it was the defendant who had been unreasonable in insisting upon an admission of fault when that was an issue before the Court. Ms Kennedy also made the point that she had spent approximately two hours in preparing the draft statement of facts compared with the five hours claimed by defendant's counsel for his input.
7

I accept Ms Kennedy's submissions in this regard. Each party maintained a strongly opposing stance in...

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