NEWPORT V COBURN AND ORS CA CA234/04

NEWPORT V COBURN AND ORS CA CA234/04 10 August 2006IN THE COURT OF APPEAL OF NEW ZEALAND CA234/04BETWEEN DAVID A NEWPORT Appellant AND ALAN COBURN AND DALE MARGARET COBURN First Respondents in CP17/01 AND INSTALLER SERVICES (MANAWATU) LIMITED Second Respondent in CP17/01 AND DEAN STEVEN CORRY & SELWYN HURSTWOOD JACKSON Third Respondents in CP17/01 AND INSTALLER SERVICES LIMITED Fourth Respondent in CP17/01 AND GEOFFREY OWEN JAMES LEEMING AND SHARON TRACEY LEEMING First Respondents in CP18/01 AND INSTALLER SERVICES (WELLINGTON) LIMITED (IN LIQUIDATION) Second Respondent in CP18/01 AND DEAN STEVEN CORRY AND SELWYN HURSTWOOD JACKSON Third Respondents in CP18/01 AND INSTALLER SERVICES LIMITED Fourth Respondent in CP18/01 Court: Glazebrook, O'Regan and Ellen France JJ Counsel: R J Latton for Appellant P T Finnigan for Respondents Judgment: 10 August 2006 at 11.amJUDGMENT OF THE COURT The amount for which the appellant is liable to the first respondents in CP17/01, Mr and Mrs Coburn, in respect of the costs and disbursements awarded to Mr and Mrs Coburn in the High Court is $14,000.REASONS OF THE COURT(Given by O'Regan J)Introduction[1] In our judgment of 17 May 2006, we reserved the question of the extent of the appellant's liability for costs and disbursements in the High Court in relation to the first respondents Alan and Dale Coburn. We sought further submissions on this issue. We have now considered those submissions and, in this judgment, set out our determination of the issue.Background[2] The background is set out in our judgment of 17 May 2006. For present purposes, it suffices to say that we upheld the High Court decision that Mr Newport was liable to the Coburns for a breach of the Fair Trading Act 1986 (the Act) but took a different view from that of the High Court Judge on the extent of Mr Newport's liability for this breach. In the High Court, Mr Newport and two other defendants, Mr Corry and Mr Jackson, were found jointly and severally liable to pay $25,000 to the Coburns in respect of the breach of the Act. Mr Corry and Mr Jackson were also found liable to the Coburns for damages of an additional$30,000 for a breach of the Contractual Remedies Act 1979. In this Court, we determined that Mr Newport's role in the transaction leading to the breach of the Act was considerably less significant than that of Mr Corry and Mr Jackson. Accordingly, we considered it appropriate to discount Mr Newport's liability to $5,000, leaving the remaining $20,000 to be payable jointly and severally by Messrs Corry and Jackson. [3] Mr Newport's appeal in relation to the Coburn matter was heard at the same time as his appeal in a related case involving Mr and Mrs Leeming. We allowed Mr Newport's appeal in that matter, quashed the High Court damages award and costs order against Mr Newport, and awarded Mr Newport costs in this Court of $1,500 against the Leemings. [4] Mr Newport, Mr Corry and Mr Jackson were ordered to pay costs on a 2B basis plus disbursements to the Coburns in the High Court. Their liability was joint and several. The costs amounted to $60,255. Disbursements totalled $31,868.25, making a total of $92,123.25. [5] It is now necessary to re-evaluate the amount of the High Court costs award against Mr Newport in the light of his reduced liability to the Coburns in respect of the breach of the Act.SubmissionsThe appellant[6] Mr Latton, for the appellant, pointed out that a total of $55,000 was awarded against various defendants in the Coburn proceedings at first instance. We have now reduced Mr Newport's liability to $5,000, which is 9.09% of $55,000. Mr Latton therefore submitted Mr Newport's liability for costs should be no greater than 9.09% of costs awarded to the Coburns.[7] Mr Latton submitted that even that proportion would lead to too high a liability for Mr Newport. Mr Newport's evidence in the Coburn proceedings took only two days to hear out of 11. Mr Latton pointed out that in the High Court, only one of the actions against Mr Newport, that under the Act, succeeded. An action for negligence failed. Given the limited time taken by Mr Newport's evidence during the conduct of the Coburn proceedings in the High Court, the failure of the negligence action, and the limitation of liability to $5,000 in this Court, Mr Latton submitted Mr Newport's costs in the High Court should be no greater than the award of costs in Mr Newport's favour in this Court (against the Leemings), namely $1,500. [8] In summary, Mr Latton submitted Mr Newport should be liable for a maximum of 9.09% of $92,123.25 (ie $8,374.84). However Mr Latton's principal submission is that given Mr Newport's limited involvement in the Coburn proceedings, this figure should be capped at $1,500.The Coburns[9] Mr Finnigan, for the Coburns, asked us to leave the costs orders in the High Court undisturbed. He submitted there had been no submissions in the High Court attempting to persuade Durie J to reduce Mr Newport's costs in relation to the Coburn proceedings. Had there been such an attempt, any need for appeal might have been obviated (since costs in this case far exceed damages). Mr Finnigan said that although Mr Newport cannot be blamed personally for the failure of his counsel in the High Court (not Mr Latton) to seek a costs hearing in that Court, the Coburns should not suffer by this omission either. [10] Mr Finnigan asked that, if we did choose to alter the High Court costs award, we be conservative in our approach. He submitted the public interest required a substantial costs award, given the Act is a consumer protection statute and the need to deter misleading conduct in trade. It was said that Mr Newport occupied the High Court's time mounting a defence and never tendered an offer to settle without prejudice to costs (a Calderbank offer) to any of the plaintiffs.[11] Mr Finnigan submitted that although the discounted award of $5,000 in damages imposed in this Court was not large, the amount of liability is only one factor in the determination of costs. Mr Finnigan submitted that, since we reduced Mr Newport's damages liability to 20% of that imposed in the High Court (from $25,000 to $5,000), Mr Newport should be liable for between 20% and 33% (insofar as he is one of three original defendants) of the costs in the Coburn proceedings. He averaged this out at 25% of $92,123.25 (ie $23,030.81).Discussion[12] At the outset we reject Mr Finnigan's submission that the High Court costs award should remain undisturbed. At the conclusion of our substantive judgment in this case, we said at [108]: "The award of costs in the High Court in relation to the Coburn/IS Manuwatu case will need to be altered to reflect the outcome of this appeal". Given our differing view of the extent of Mr Newport's liability, this must be so. [13] On the other hand, we reject Mr Latton's request to cap Mr Newport's costs liability at $1,500. There is no logical correlation between his liability for the Coburns' costs in the High Court and the Leemings' liability for his costs in this Court. The hearing in the High Court took a considerable amount of time and given the Coburn and Leeming proceedings were prosecuted at the same trial, costs in Mr Newport's favour in this Court against the Leemings simply represent Mr Newport's victory on that discrete aspect of the entire case. Mr Latton's attempt to paint the dismissal of the negligence claim as a failure is also not strictly accurate. The High Court Judge simply said there was no need to consider the action as the Coburns were able to claim against Mr Newport under the Act (Coburn & Ors v Newport & Ors HC WN CP17/01 6 August 2004 at [317]). [14] In the end, we do not think a strict proportionality approach is appropriate. Mr Newport is still a losing party. The losing party must pay costs. Mr Newport denied misleading the Coburns and his denial was rejected. He did not tender a Calderbank letter.[15] Having said this, we reject Mr Finnigan's proposed starting point of 20%. Although Mr Newport is liable for 20% of the damages payable to the Coburns in respect of breaches of the Act for which he and Messrs Corry and Jackson are jointly and severally liable, the Coburns' court costs reflect a wider legal battle. With respect, the High Court costs award did not reflect this: the Judge fixed the liability of Messrs Corry and Jackson as being higher than that of Mr Newport, and yet required all three to pay the Coburns' costs in equal shares. Taking a broad view, we conclude that a figure of less than 20% is appropriate to reflect the apportionment that ought to have taken place, and the much reduced liability of Mr Newport as a result of this Court's judgment. [16] Looking at the case in the round, we consider it just that Mr Newport be liable for approximately 15% of the Coburns' costs and disbursements in the High Court. We therefore set the figure at $14,000. We understand from counsel that there has been a settlement on all issues (including costs) with Messrs Corry and Jackson. For that reason, they took no part in this appeal, though they were nominally parties.Solicitors: Lowndes Associates for Appellant Rory MacDonald for Respondents