SLATER & ANOR v BLOMFIELD [2019] NZCA 664

SLATER & ANOR v BLOMFIELD [2019] NZCA 664 [19 December 2019]IN THE COURT OF APPEAL OF NEW ZEALANDI TE KŌTI PĪRA O AOTEAROACA640/2018[2019] NZCA 664BETWEEN CAMERON JOHN SLATERFirst AppellantSOCIAL MEDIA CONSULTANTSLIMITED (IN LIQUIDATION)Second AppellantAND MATTHEW JOHN BLOMFIELDRespondentCourt: French, Miller and Stevens JJCounsel: G S Caro for the Official Assignee for First AppellantF E Geiringer for RespondentJudgment:(On the papers)19 December 2019 at 10.30 amJUDGMENT OF THE COURTA The respondent's application for indemnity costs is declined.B The appellants are jointly and severally liable to pay costs and disbursementsto the respondent as follows:(a) the sum of $10,000 by way of increased costs;(b) disbursements (if any) as approved by the Registrar; and(c) the sum of $1,737.49 in respect of the costs and disbursements of andincidental to the briefing of medical experts.C The Registrar is directed to pay out the sum held by the Registry forsecurity for costs on the basis agreed between the respondent andthe Official Assignee in the joint memorandum dated 17 September 2019.____________________________________________________________________REASONS OF THE COURT(Given by Stevens J)Introduction[1] This is an application by the respondent, Mr Blomfield, for indemnity costsand disbursements following the abandonment of an appeal by Mr Slater and SocialMedia Consultants Ltd (in liq).[2] The appeal followed judgments given by Davison J in the High Court inrelation to interlocutory applications made by Mr Slater. These judgments:(a) declined Mr Slater's application for security for costs and declinedan application for an order permitting Mr Slater to file a fourth amendedaffirmative statement of defence;1 and(b) declined Mr Slater's application to file a fifth amended affirmativestatement of defence and ruled that Mr Slater was not permitted to giveevidence in support nor cross-examine on the defences of truth, honestopinion or bad character of Mr Blomfield.2[3] Mr Slater applied to adjudicate himself bankrupt in late February 2019.The Official Assignee formally abandoned the appeal in respect of the first appellanton 14 March 2019.[4] Mr Blomfield then sought to clarify the status of the appeal bythe second appellant.3 Cooper J confirmed that "[t]he appeal by the second appellantis deemed to be abandoned".4 Subsequently the shareholders of the second appellantappointed a liquidator who has not participated in the costs application.1 Blomfield v Slater [2018] NZHC 2538.2 Blomfield v Slater [2018] NZHC 2679.3 By memorandum dated 14 March 2019.4 Slater v Blomfield CA640/2018, 18 March 2019 (Minute of Cooper J).[5] The only participation by the Official Assignee in this matter is in a jointmemorandum which states that the Official Assignee "neither consents to nor opposesthe order for costs sought". The parties have come to an agreement on how to dealwith a costs order if one is made.5[6] No agreement has been reached as to the amount of costs and disbursementsto which Mr Blomfield might be entitled following the abandonment of the appeal.Grounds[7] Mr Blomfield's grounds for indemnity costs include that the behaviour ofMr Slater in commencing and continuing the appeal merits such a sanction.Counsel for Mr Blomfield also says Mr Slater was responsible for delays, misledthe Court as to the extent of his invalidity and the appeal lacked merit. Although nosubstantive appeal hearing ever took place, a large amount of unnecessary work wasoccasioned by Mr Slater's conduct.Rules concerning awards of costs[8] Even though an appeal has been abandoned, this Court may still make an awardof costs.6 Under pt 4A of the Court of Appeal (Civil) Rules 2005 (the Rules) the powerto award costs is discretionary.7[9] The Court has power under the Rules, in appropriate circumstances, to awardindemnity costs or increased costs.8 The principles governing an award of indemnitycosts are as follows:53E Increased costs and indemnity costs(1) Despite rules 53A to 53D, the Court may make an order—(b) that the costs payable are the actual costs and disbursementsreasonably incurred by a party (indemnity costs).5 By joint memorandum dated 17 September 2019.6 Court of Appeal (Civil) Rules 2005, r 44(3).7 Rule 53.8 Rule 53E.(3) The Court may order a party to pay indemnity costs if—(a) the party has acted vexatiously, frivolously, improperly, orunnecessarily in commencing, continuing, or defendingan appeal or a step in an appeal; or(b) the party has ignored or disobeyed an order or direction ofthe Court or breached an undertaking given to the Court oranother party; or(c) costs are payable from a fund, the party claiming costs isa necessary party to the appeal affecting the fund, andthe party claiming costs has acted reasonably in the appeal; or(d) the person in whose favour the order of costs is made was nota party to the appeal and has acted reasonably in relation to it;or(e) the party claiming costs is entitled to indemnity costs undera contract or deed; or(f) some other reason exists which justifies the Court makingan order for indemnity costs despite the principle thatthe determination of costs should be predictable andexpeditious.(4) If the Court makes an order that a party pay indemnity costs, it mayorder that the costs be subject to taxation (a taxation order).(5) If the Court makes a taxation order, the taxation must be carried outby the Registrar.(6) Rules 14.18 to 14.23 of the High Court Rules 2016 apply to any suchtaxation, with all necessary modifications.Submissions for Mr Blomfield[10] Mr Blomfield sought costs and disbursements totalling $24,337.49 (excludingGST). These comprised of:(a) $22,600 of legal fees;(b) $1,500 of expert fees; and(c) $237.49 in postage fees and notary fees for the taking of an affidavit ofan expert in San Diego.[11] The detailed grounds advanced by Mr Blomfield in support of his claim forindemnity costs may be summarised as follows:(a) While there has not been a substantive appeal hearing, there has beena significant amount of work for the respondent in the proceduralmatters:(i) four teleconferences; and(ii) two applications (for a stay and under r 43 of the Rules) whichrequired four affidavits, two of them from an expert neurologistand associated fees;(b) There is evidence to suggest that Mr Slater was misleading the Courtas to the extent of his invalidity;(c) The delay of four years in these proceedings (both in this Court and inthe High Court) caused by non-compliance with timetabling; and(d) The appeal was without merit, belatedly articulated and could not havesucceeded, even if the relevant facts were established.Our analysis[12] A party who abandons an appeal can expect to have costs awarded againstthem, unless they can justify that there should not be a costs burden placed upon them.9Mr Blomfield recognises that an order of indemnity costs is a "rarely exercis[ed]"power but argues that the circumstances here justify such an order being made.9 Chapman v Badon Ltd [2010] NZCA 613, (2010) 20 PRNZ 83 at [14]. The Court is usuallyreluctant to examine the reasons for the discontinuance except in a clear case, as explained inPowell v Hally Labels Ltd [2014] NZCA 572 at [19]–[24].Indemnity costs[13] In Bradbury v Westpac Banking Corp this Court adopted Goddard J's approachto indemnity costs in Hedley v Kiwi Co-operative Dairies Ltd.10 It accepted thatthe categories in which the discretion may be exercised are not closed, butthe following are examples of circumstances in which indemnity costs may beawarded:(a) the making of allegations of fraud knowing them to be false andthe making 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 inFrench J's "hopeless case" test.[11][14] We are not satisfied that the case for indemnity costs has been made out.Our focus when considering the possible award of indemnity costs must be on conductby the relevant party in the course of the appeal in question.[15] This appeal has had a chequered history marked by some delays on the part ofMr Slater. The key events are:(a) The notice of appeal was filed on 19 October 2018. It was insufficientlyparticularised because at that point only results judgments had beenissued.(b) At a teleconference on the 25 October 2018 Asher J directed thatparticularised grounds needed to be filed. The Judge noted that10 Bradbury v Westpac Banking Corp [2009] NZCA 234, [2009] 3 NZLR 400 at [29] citing Hedleyv Kiwi Co-operative Dairies Ltd (2002) 16 PRNZ 694 (HC) at [11]. This adopted the categoriesof Sheppard J in Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225.11 In J-Corp Pty Ltd v Australian Builders Labourers Federation Union of Workers (WA Branch)(No 2) (1993) 46 IR 301 at 303."the time designated for the taking of steps must be observed, and thatthe Court will expect there to be no slippage".(c) The reasons decisions were released on 26 October 2018,12 butparticularised grounds of appeal were not filed by 16 November 2018.(d) Mr Slater had a stroke in late October 2018.(e) On 30 November 2018 there was a teleconference where Asher Jdeclined an application for a stay for two months while Mr Slaterrecovered. He also set the 14 December 2018 as the deadline forthe filing of amended grounds of appeal on the basis of the stroke alone.(f) The amended notice of appeal was filed on 14 December 2018.However, neither a case on appeal nor an application for a hearing datewas sought by 11 February 2019. On that day the appellants appliedfor an extension under r 43 of the Rules.(g) At a teleconference on 13 February 2019, Asher J allowedthe appellants to file affidavits in reply to support the application.They were due on 22 February 2019.(h) On 22 February 2019, Mr Slater adjudicated himself bankrupt.[16] It is clear Mr Slater suffered a stroke and this would have inevitably hadan effect on his ability to instruct counsel in relation to the taking of the required stepsunder the appeal. It is difficult to assess how great an impact the stroke had, but itcertainly led to some of the delays outlined above. But such delays alone are notsufficient to warrant indemnity costs in respect of the abandoned appeal.[17] In the circumstances of this case Mr Blomfield's claim for indemnity costswould require a finding that Mr Slater had acted "vexatiously, frivolously, improperly,12 Blomfield v Slater [2018] NZHC 2781.or unnecessarily in commencing, [and] continuing" the appeal.13 Such findings arerare and we do not consider they are warranted here.Increased costs[18] Instead of indemnity costs, we consider an award of increased costs is justified.When determining the nature of an award of increased costs, the actual costs and scalecosts involved both need to be considered.[19] To assist with quantum, we asked counsel for Mr Blomfield to provide copiesof the bills for legal costs and disbursements. We have reviewed these.[20] We also asked counsel to provide a calculation of scale costs. This resulted inan assessment of $16,730 if classed as a standard appeal, and $24,710 if classed as acomplex appeal (both excluding disbursements).[21] We accept that the determination of time allocations for different steps is notstraightforward. Neither is it entirely clear under the Rules what steps are properlyallowed for and at what rate. In such circumstances reference to the High Court Rules2016 and related Costs Schedules is permissible.[22] We consider the assessment by counsel for Mr Blomfield of the scale costsunder the Rules is too high. In summary, the allowances for the stay application andthe r 43 application are too great and ought not be treated as complex matters.Also the rates applicable prior to 1 August 2019 ought to have been used.14[23] We consider a more conservative figure of scale costs would be $6,770. This isarrived at by more appropriate time allocations for the steps involved and by applyinga daily recovery rate of $2,230.[24] Having determined the appropriate figure for scale costs, we accept thatan uplift is warranted to reflect increased costs. The figure we fix is $10,000.13 Court of Appeal (Civil) Rules, r 53E(3)(a).14 High Court Amendment Rules 2019, r 2 and sch 1.Result[25] The respondent's application for increased costs is declined.[26] Instead there is an order that the appellants are jointly and severally liable topay costs and disbursements to the respondent as follows:(a) the sum of $10,000 by way of increased costs;(b) disbursements (if any) as approved by the Registrar; and(c) the sum of $1,737.49 in respect of the costs and disbursements of andincidental to the briefing of medical experts.[27] The Registrar is directed to pay out the sum held by the Registry for securityfor costs on the basis agreed between the respondent and the Official Assignee inthe joint memorandum dated 17 September 2019.Solicitors:Bytalus Legal, Auckland for Respondent