Walker v Procare Health Ltd

• Jurisdiction: New Zealand
• Judge: A D Ford
• Judgment Date: 01 November 2012
• Court: Employment Court
• Docket Number: ARC 72/09
• Date: 01 November 2012

In the Matter of a challenge to a determination of The Employment Relations Authority

BETWEEN

Vicki Jane Walker

Plaintiff

and

Procare Health Limited

Defendant

[2012] NZEmpC 186

ARC 72/09

IN THE EMPLOYMENT COURT AUCKLAND

Costs decision — plaintiff had been dismissed as an employee of the defendant for incompatibility — plaintiff had been successful in the Employment Relations Authority but then unsuccessfully challenged the determination in the Employment Court — plaintiff was a lay litigant during the Employment Court proceeding — plaintiff had refused two Calderbank offers — due to plaintiff's high legal fees Calderbank offers would have left her with a shortfall — defendant sought actual costs of over $90,000 — whether defendant was entitled to costs — whether an upgrade was appropriate for plaintiff's conduct — whether the amount should be discounted because plaintiff was a lay litigant and had financial and health difficulties.

Counsel:

Esma Brown and Nicole Smith, counsel for the plaintiff

Richard Harrison, counsel for the defendant

COSTS JUDGMENT OF JUDGE A D Ford

Introduction

1 In my substantive judgment 1 dated 15 June 2012, I dismissed the plaintiff's challenge and invited the parties to endeavour to reach agreement on the issue of costs. Failing such agreement, I invited Mr Harrison, counsel for the defendant, to file a memorandum within 28 days and allowed Ms Walker a like period in which to respond. In a memorandum dated 13 July 2012, Mr Harrison confirmed that attempts to reach agreement on the issue of costs had not been successful. Counsel advised that the defendant's actual costs had amounted to $94,395 (exclusive of GST and disbursements) and it sought an award at 80 per cent of that figure, rounded off at $75,000, plus GST and disbursements totalling $1,036.42. Costs were reserved

but Ms Walker would have been entitled to an award of costs in the Employment Relations Authority (the Authority)

2 On 7 August 2012, the Court received confirmation from Ms Brown and Ms Smith that they had been instructed to act for the plaintiff on the issue of costs and they sought an extension of time, which was not opposed, for the filing of submissions on behalf of Ms Walker in response to those received from Mr Harrison. In their comprehensive submissions in response, counsel for Ms Walker accepted the principles that costs normally follow the event and that the Court must decide, after an appraisal of all relevant factors, at what level it is reasonable for the unsuccessful party to contribute towards those costs. The thrust of the plaintiff's submissions, however, was that due to her financial circumstances, “she does not have the means to pay.” The plaintiff submitted that the Court should, therefore, “let costs lie where they fall.”

Background

3 In brief, the background to the litigation was that on 18 December 2007, Ms Walker's employment with the defendant (ProCare) had been terminated for alleged “incompatibility”. She had been employed as ProCare's Financial Controller. Ms Walker commenced proceedings in the Authority claiming that her dismissal was unjustified. The Authority, in a determination 2 dated 13 August 2009, upheld her claim and awarded her loss of wages of approximately $2,600 and compensation for non-economic loss in the sum of $11,500. The Authority reserved costs. The Court understands that no application was ever made for costs but that is not an issue before me.

4 Ms Walker challenged the Authority's determination electing a full hearing of the entire mater (a hearing de novo). The challenge was heard in this Court over a period of 11 days between September 2011 and February 2012. In my substantive judgment I concluded that Ms Walker's dismissal had been justified and, accordingly, she failed in her claim. I specifically noted that, having been successful before the Authority, her decision to challenge the Authority's determination de novo was “a high-risk step to take.”

5 This Court has a discretion in relation to the issue of costs. The starting point is cl 19(1) of sch 3, of the Employment Relations Act 2000 (the Act) which provides:

19 Power to award costs

• (1) The Court in any proceedings may order any party to pay to any other party such costs and expenses … as the Court thinks reasonable.

The broad discretion conferred on the Court under that provision is to be exercised judicially and in accordance with recognised principles.

6 The principles relating to costs awards in this Court are well established. They are based on the Court of Appeal judgments in Victoria University of Wellington v Alton-Lee; 3 Binnie v Pacific Health Ltd 4 and Health Waikato Ltd v Elmsly. 5 The usual approach is to determine whether the costs actually incurred by the successful party were reasonably incurred and once that step has been taken the Court must then decide, after an appraisal of all relevant factors, at what level it is reasonable for the unsuccessful party to contribute towards those costs. The figure of 66 per cent of the reasonably incurred costs is generally regarded as an appropriate starting point and that figure is then to be adjusted upward or downward, if necessary, depending upon relevant considerations.

7 Regulation 68 of the Employment Court Regulations 2000 has particular relevance to the circumstances of the present case. It provides:

68 Discretion as to costs

• (1) In exercising the Court's discretion under the Act to make orders as to costs, the Court may have regard to any conduct of the parties tending to increase or contain costs, including any offer made by either party to the other, a reasonable time before the hearing, to settle all or some of the matters at issue between the parties.

• (2) Under subclause (1), the court-

  • (a) may have regard to an offer despite that offer being expressed to be without prejudice except as to costs; but

  • (b) may not have regard to anything that was done in the course of the provision of mediation services.

8 Mr Harrison placed particular reliance on a passage from the Court of Appeal judgment in Alton-Lee v Victoria University of Wellington 6 which I set out in full: 7

The primary principle is that costs follow the event. As to quantification, the principle is one of reasonable contribution to costs actually and reasonably incurred. These principles reflect a balance involving a number of factors. We mention only some of them. Access to justice considerations point away from automatic full recovery of costs for the successful party. On the other hand, a monetary judgment will often be of little practical moment to a successful party unless the losing party is required to make a substantial contribution to the costs of obtaining it. Further, litigation is expensive, time-consuming and distracting and the requirement that the losing party not only pays his or her own costs but also makes a subsequent contribution to those of the successful party undoubtedly acts as a disincentive to unmeritorious claims or defences. Special rules as to costs which apply where there have been payments into court or Calderbank letters encourage settlement.

Submissions

9 Mr Harrison acknowledged that ProCare's actual costs were “at the higher end” but he submitted that they were reasonable in the circumstances having regard to a number of factors including an “extensive disclosure process”; a “large volume of documentary evidence which was spread over four volumes”; Ms Walker's “conduct of the hearing” and her “extensive evidence in chief”, including “her evidence in reply running to 851 paragraphs”. Mr Harrison's costs were charged out on a time and attendance basis at a rate of $350 per hour. He submitted that applying the “rule of thumb” test applied by Goddard C J in Alton-Lee, of multiplying by three the time spent in Court to reflect time reasonably spent in preparation, would result in a figure of $99,000.

10 In an interlocutory judgment 8 dated 1 August 2011, I recorded that Ms Walker had informed the Court that the barrister who had represented her at the Authority investigation had ceased to act for her for “financial reasons.” 9 It appears from documentation produced in connection with the present costs application that the barrister formally withdrew from acting for Ms Walker on 8 April 2011. Mr Harrison's criticisms, therefore, are directed at Ms Walker who represented herself throughout the Court hearing, assisted for a period by a support person.

11 Counsel for Ms Walker responsibly accepted that preparation for the hearing and the hearing itself involved a “lengthy and drawn out process”. In their submissions they responded to some of the criticisms raised by Mr Harrison but, otherwise, did not directly attack the reasonableness of the costs incurred. I accept, however, that as they were not acting for Ms Walker at the time, it would have been difficult for them to take the matter any further.

12 Turning to the adjustment exercise referred to in [6] above, Mr Harrison submitted that there were a number of aggravating factors that supported his request for a higher award of costs than the accepted starting point of 66 per cent of the actual and reasonable costs incurred. Mr Harrison's submissions under this head were presented in two parts. First, he raised a number of criticisms about Ms Walker's approach to and conduct of the litigation which counsel submitted, “served to considerably extend the hearing time”. Secondly, he dealt with attempts ProCare had made to try and settle the case prior to the Court hearing. The settlement attempts are an important issue. I propose to deal with them separately.

13 In relation to the conduct of the litigation, in addition to the matters touched upon in [9] above, Mr Harrison claimed that Ms Walker had unnecessarily extended the hearing time by her “insistence on revisiting issues that had very...