GROOMBRIDGE v BLANCHE [2020] NZHC 3032 [

GROOMBRIDGE v BLANCHE [2020] NZHC 3032 [ 17 November 2020]IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYI TE KŌTI MATUA O AOTEAROATĀMAKI MAKAURAU ROHECIV-2019-404-2033[2020] NZHC 3032BETWEEN HENRY GEORGE JAMESGROOMBRIDGE by his litigation guardianPamela Peijie MaPlaintiffAND ELEANOR BLANCHEDefendantHearing: On the papersCounsel: T Cai for plaintiffP J Stevenson for defendantJudgment: 17 November 2020JUDGMENT OF KATZ J[Costs]This judgment was delivered by me on 17 November 2020 at 1:00 pmPursuant to Rule 11.5 High Court RulesRegistrar/Deputy RegistrarSolicitors: Douglas Burgess, AucklandFocus Law, AucklandCounsel: P J Stevenson, Barrister, AucklandIntroduction[1] Eleanor Blanche and Henry Groombridge were married on 13 March 2004.They separated on 14 March 2007, and later divorced. On 11 April 2007, they enteredinto a relationship property agreement pursuant to the Property (Relationships) Act1976.[2] In this proceeding Mr Groombridge alleges that that agreement has beenbreached. He seeks specific performance and damages. Because Mr Groombridgelacks capacity, his current wife, Pamela Ma, has been appointed as his litigationguardian. Ms Blanche applied unsuccessfully to the Court to remove Ms Ma aslitigation guardian.1[3] Mr Groombridge, through Ms Ma, now seeks costs on an indemnity basis or,in the alternative, an uplift on 2B scale costs of at least 100 per cent.[4] Ms Blanche submits that 2B scale costs are appropriate. She largely acceptsMr Groombridge's calculations of 2B scale costs, with the exception of one item. Shedoes not accept that there is any basis for an award of indemnity costs, or any groundsfor an uplift.Are indemnity costs appropriate?[5] Indemnity costs are generally awarded when a party has behaved extremelybadly.2 They are exceptional and require exceptionally bad behaviour.3 The badbehaviour must be flagrant to justify the departure from the predictability of the RulesCommittee's costs regime.4 The Court may order indemnity costs if a party actsvexatiously, frivolously, improperly, or unnecessarily in the conduct of a proceeding,1 Groombridge v Blanche [2020] NZHC 2394. Ms Blanche simultaneously applied for an order forsecurity for costs, but withdrew this three weeks after making it, a week before the hearing.2 High Court Rules 2016, r 14.6; Bradbury v Westpac Banking Corp [2009] 3 NZLR 400 (CA) at[27]-[28]; Prebble v Huata [2005] NZSC 18, [2005] 2 NZLR 467 at [6].3 Bradbury v Westpac Banking Corp [2009] 3 NZLR 400 (CA) at [28].4 Bradbury v Westpac Banking Corp [2009] 3 NZLR 400 (CA) at [28].or if another reason exists justifying the award.5 The Court of Appeal recently set outthe following circumstances in which indemnity costs have been granted:6(a) the making of allegations of fraud knowing them to be false and themaking of irrelevant allegations of fraud;(b) particular misconduct that causes loss of time to the Court and to otherparties;(c) commencing or continuing proceedings for some ulterior motive;(d) doing so in wilful disregard of known facts or clearly established law;(e) making allegations which ought never to have been made or undulyprolonging a case by groundless contentions, summarised in French J's"hopeless case" test.7[6] Ms Cai, counsel for Mr Groombridge, submitted that indemnity (or,alternatively, substantially increased) costs are appropriate for the following reasons:(a) Ms Blanche applied for an order for security for costs and thenabandoned it. The application was made on 13 July 2020. A hearingwas set down for 11 August 2020. On 3 August 2020, Ms Blanchediscontinued the application, leaving only the application to removeMs Ma as litigation guardian afoot.(b) Ms Blanche declined a reasonable offer, putting Mr Groombridge toexpense. On 6 August 2020, Mr Groombridge made what is describedas an offer to Ms Blanche: if she would withdraw the removalapplication, then Mr Groombridge would not seek indemnity costs.The offer outlined the case against the removal application, and, inMs Cai's submission, made it "abundantly clear" that the removalapplication was doomed.(c) The application for removal was plainly at odds with New Zealand law.5 I omit several other possibilities enumerated by the Rules that are not relevant to this case.6 Bradbury v Westpac Banking Corp [2009] 3 NZLR 400 (CA) at [29], adopting Goddard J'sadoption in Hedley v Kiwi Co-op Dairies Ltd (2002) 16 PRNZ 694 (HC) at [11] of the Australianrule, as expressed in Colgate-Palmolive Co v Cussons Pty ltd [1993] FCA 801 at [24]. Much ofour law in this area is adopted from the Australian courts.7 This refers to J-Corp Pty Ltd v Australian Builders Labourers Federated Union of Workers(WA Branch) (No 2) [1993] FCA 70. Footnote not in the original.(d) The evidence cited was irrelevant to Ms Ma's role as litigationguardian, but instead related to Ms Ma's role as welfare guardian.(e) The removal application was brought with an ulterior motive toderail the broader case. The removal of Ms Ma would have leftMr Groombridge with no plausible candidate to act as a litigationguardian, and hence (as I found at [33] of the judgment) would havelikely made it impossible for him to pursue the proceeding.8[7] In my view, Ms Blanche's conduct does not reach the "exceptionally bad"threshold and is therefore not sufficient to justify an award of indemnity costs.Although Ms Blanche was unsuccessful in her application, it was not totally withoutfoundation. Amongst other things, I note that the Family Court was highly critical ofMs Ma's conduct in related proceedings in that Court, which was relevant as towhether her appointment as litigation guardian in this proceeding was appropriate. Ifurther note that Ms Blanche was acting in accordance with legal advice and appearsto have been genuinely concerned that Ms Ma had a conflict of interest.[8] Ms Stevenson's legal arguments on behalf of Ms Blanche failed by a fairlywide margin. She relied primarily on Canadian cases that operated in a differentstatutory context. Although the legal arguments were weak, however, and lackedmerit, they cannot be described as totally hopeless. The relevant New Zealandauthorities were at High Court level and were accordingly not binding on this Court.While Ms Stevenson's submissions were not ultimately accepted, they were not madein wilful disregard of clearly established law.[9] Taking these various matters into account, I have not been persuaded thatindemnity costs are warranted in this case.What is the appropriate level of 2B scale costs?[10] As previously noted, the quantum of 2B scale costs is agreed, with oneexception. Ms Blanche objects to meeting the costs of a memorandum filed by Ms Ma8 Groombridge v Blanche [2020] NZHC 2394.objecting to the admission as further evidence on appeal of an affidavit sworn byNicole Evans, Mr Groombridge's daughter. That affidavit made various criticisms ofMs Ma in her capacity as Mr Groombridge's welfare guardian.[11] I considered that the affidavit was of some, but limited, relevance. I admittedit to the extent that I considered it to be relevant.[12] The starting point is the presumption that "the party who fails with respect toa proceeding should pay costs to the party who succeeds",9 a robust view of successshould be taken, and the presumption should not be too readily displaced. Rule 14.2(g)provides that "as far as possible the determination of costs should be predictable andexpeditious."[13] Although it had some (limited) relevance the affidavit also containedconsiderable material that was not relevant. Ms Ma was therefore entitled to takeexception to it and challenge its admissibility. On balance, it is my view that Ms Mashould be entitled to recover costs in respect of the relevant memorandum.Is an uplift appropriate?[14] I now turn to consider whether an uplift to scale costs is warranted.[15] The relevant rule provides that the Court may order increased costs if a partycontributed unnecessarily to the time or expense of the proceeding by failing to complywith the rules, pursing an unnecessary step or meritless argument, failing to acceptfacts or an argument without reasonable justification, or unreasonably failing to accepta settlement offer.10[16] Cost increases above 50 per cent are rare, reflecting that the costs scale in theRules is set on the basis that it is intended to broadly reflect two-thirds of actual andreasonable costs.9 High Court Rules 2016, r 14.2(1)(a).10 High Court Rules 2016, r 14.6.[17] As I have noted previously, the legal arguments advanced on behalf ofMs Blanche were weak, albeit not totally hopeless (particularly in the absence ofbinding Court of Appeal authority on point). By a fairly fine margin, I have concludedthat the threshold for an increased costs award is not met.Result[18] Mr Groombridge is awarded 2B scale costs in the sum of $8604.00.____________________________Katz J