GIBSON V MINTER ELLISON RUDD WATTS CA CA202/05

GIBSON V MINTER ELLISON RUDD WATTS CA CA202/05 21 December 2007IN THE COURT OF APPEAL OF NEW ZEALAND CA202/05 CA33/06 [2007] NZCA 595BETWEEN NEVILLE JAMES GIBSON Appellant AND MINTER ELLISON RUDD WATTS, A FIRM Respondent Hearing: 6-8 November 2007 Court: Hammond, Chambers and Robertson JJ Counsel: N J Gibson, Appellant in Person P J L Hunt and R J Scott for Respondent Judgment: 21 December 2007 at 12 pmJUDGMENT OF THE COURT A The appeal (CA202/05) against the substantive judgment of the High Court dated 24 August 2005 is dismissed. B The appeal (CA33/06) against the costs judgment of the High Court dated 21 November 2005 is allowed. In substitution for the costs order in the High Court, this court orders that the appellant must pay to the respondent costs of $211,290, together with disbursements as fixed by the High Court. C The appellant must pay to the respondent interest on the total sum payable under order B. Interest is to be calculated at 7.5% pa from 21 November 2005 down to the date of this judgment.D The appellant must pay to the respondent costs of $20,000, plus usual disbursements, on this appeal. We certify for second counsel. REASONS OF THE COURT(Given by Chambers J)Table of ContentsPara NoA claim against professional advisers arising from a claim against professional advisers [1]Issues on the appeal [5]Was the judge wrong to find Mr Gibson was not eligible for legal aid on his claim against Arthur Andersen? [13]Was the judge wrong to find that Minters had not been affected by a conflict of interest? [34]Were Minters guilty of dilatoriness in prosecuting Mr Gibson's claim against Arthur Andersen? [49]Did Dr Patterson give an assurance of success? [73]Conclusion on liability [84]Did the judge adopt the wrong approach to the assessment of costs?What Ronald Young J held [85]Mr Gibson's challenge and Minters' response [90]Our analysis of costs [98]Interest [121]Costs in this court [123]A claim against professional advisers arising from a claim against professional advisers[1] Back in 1991, Arthur Andersen, then an international accountancy firm, sued Neville Gibson, then a Remuera dentist, for unpaid fees totalling $56,000. This provoked a ferocious counterclaim on Mr Gibson's part, which eventually – 11 years later – resulted in his obtaining a judgment against Arthur Andersen for some $1.6 million. Laurenson J, the trial judge, found Arthur Andersen had breached fiduciary duties they owed to Mr Gibson, who had been their client.[2] Mr Gibson's success against Arthur Andersen was, on any measure, a forensic triumph. Mr Gibson's lawyers throughout the litigation were a firm now called Minter Ellison Rudd Watts. Within that firm Mr Gibson's affairs were handled first by Ross Patterson and later by David Hurd. Shortly after Mr Gibson had secured his victory against Arthur Andersen he turned his guns on Minters. He complained that, when they were pursuing Arthur Andersen on his behalf, they had not advised him of the availability of a civil legal aid system and his eligibility under it. He also complained that Minters were guilty of unconscionable delay in prosecuting his claim against Arthur Andersen. Had they not delayed, he would have achieved victory against Arthur Andersen as early as 1995 rather than, as occurred, in 2002. Mr Gibson was of the view that Minters' tardiness arose from their being under a conflict of interest, Minters having had, it was said, a long-standing business relationship with Arthur Andersen. [3] To some extent history repeated itself in 2002, as what appeared to provoke Mr Gibson's claim against his professional (this time, legal) advisers was their having sued him for unpaid fees, in this case $70,000. As in 1991, Mr Gibson responded with a massive counterclaim, on this occasion for almost $6.5 million. But history never repeats itself to the last detail. Mr Gibson's counterclaim against Minters ended in failure after a 16 day hearing in the High Court at Auckland. [4] Mr Gibson now seeks to appeal against the judgment of Ronald Young J and also against a subsequent costs judgment, under which he was required to pay Minters $350,000 by way of costs, with a further $196,442 by way of disbursements.Issues on the appeal[5] At trial, Mr Gibson was represented by counsel. On the appeal before us, however, he represented himself. The appeal lacked focus. In his points on appeal, Mr Gibson identified no fewer than 33 points. But many were repetitive. We had to assist Mr Gibson to marshal his case. In the end, as Mr Gibson agreed, his appeal comes down to a much more limited number of points – and, indeed, because of the view we take on some of them, we are able to deal with this appeal under five main headings.[6] The first issue is whether Ronald Young J was wrong to find that Mr Gibson had not been eligible for legal aid when pursuing Arthur Andersen. For reasons we shall give, we find the judge was not wrong in that regard. Because of our finding on that issue, we do not need to consider other downstream arguments which Mr Hunt and Ms Scott, for Minters, raised as subsidiary arguments should their primary contention on legal aid not be sustained. [7] The second issue is whether the judge was wrong to find that Minters had not been affected by a conflict of interest. [8] The third issue is whether the judge was wrong to find that Minters had not been guilty of dilatoriness in prosecuting Mr Gibson's claim against Arthur Andersen. [9] The fourth issue (and the final issue so far as the substantive judgment is concerned) is whether Ronald Young J was wrong to find that Dr Patterson had not given an assurance of success. We shall be finding on that issue that the judge was not wrong. Had we reached a different view, there would have been downstream arguments we would have had to consider. [10] There were a number of points of appeal relating to causation and damages. We do not need to consider those because we are satisfied the judge was right in finding Minters not liable on any cause of action. [11] Mr Gibson disputed in his points on appeal some findings of fact the judge made on specific matters. But he did not make any submissions in support of those points, none of which could in any event have been decisive. Mr Gibson also challenged two evidential rulings. Again, these were not the subject of submission. In each case, Mr Gibson has, in any event, misunderstood the "rulings". Neither is of any significance on this appeal. [12] The essential issue on the costs judgment is whether the judge adopted a wrong approach.Was the judge wrong to find Mr Gibson was not eligible for legal aid on his claim against Arthur Andersen?[13] Mr Gibson submitted Minters should have told him about his eligibility for legal aid on his claim against Arthur Andersen. Had they told him about that, there would have been two consequences. First, his legal fees would have been lower. Secondly, there would have been fewer delays in progressing the claim to trial. Mr Gibson acknowledged that part of the reason the case took so long to come to trial was his inability to meet his lawyers' bills in a timely fashion. [14] Mr Hunt made a number of submissions in response. The first was that Mr Gibson was not entitled to legal aid. Minters could not, therefore, have been under any duty to advise him of his eligibility. [15] On this issue, Ronald Young J found that "the only time when Mr Gibson could possibly have received legal aid would have been in the early part of the 1992 year": Minter Ellison Rudd Watts v Gibson HC AK CIV 2002-404-1987 24 August 2005 at [165]. He thought "at best" Mr Gibson might have been given at that stage "a limited grant to see if his case was credible and worth pursuing". Even had such a grant been made, however, the judge found it "would soon have been withdrawn because by March 1993 Mr Gibson's pre-tax (and post-tax given his accumulated losses) income was $150,000": at [165]. The judge further noted that Mr Gibson had made "no effort to establish his entitlement beyond 1991/1992": at [166]. The judge concluded, therefore, that he was satisfied "no valuable grant of legal aid would have been given to Mr Gibson": at [166]. [16] Mr Gibson's pleadings were defective in that they failed to specify when he alleged Minters should have told him about his eligibility for legal aid. He confirmed before us, however, that he should have been informed about legal aid in December 1991, which was the time at which Minters became involved in defending, on Mr Gibson's behalf, Arthur Andersen's application for summary judgment in respect of outstanding fees. Mr Gibson also confirmed to us that he accepted he would have been ineligible for legal aid after early 1995 because of his "rising income" by that time. Assuming, therefore, a continuing obligation onMinters' part to advise with respect to legal aid eligibility, we must focus on the period from the start of 1992 to the start of 1995. [17] For that period, Mr Gibson faced limitation problems: after all, the present proceeding was not commenced until 2002, more than six years after the last date on which it is alleged Minters should have advised about legal aid eligibility. Minters did advance a limitation defence, but, in the end, Ronald Young J did not rely on it in finding against Mr Gibson. The judge expressed tentative views only: at [220]- [223]. In view of the fact Minters did not seek to uphold the judgment on other grounds (as permitted by r 33 of the Court of Appeal (Civil) Rules 2005), we say no more about limitation, other than to remark that it seems clear to us this part of the claim was indeed time-barred. [18] Ronald Young J found it was "highly improbable that any legal aid application would have been made by Mr Gibson between 2 December 1991 when he first gave [Minters] the summary judgment proceedings and 1 February the following year": at [155]. The relevance of 1 February 1992 was that it was the date on which the Legal Services Act 1991 came into force: see s 1(2). That Act repealed the previous legal aid legislation, namely the Legal Aid Act 1969. The judge noted that "most of the intervening period was the Christmas holidays" and, in any event, it would have taken Mr Gibson some time "to provide credible financial information to support a legal aid application". Accordingly, the judge considered he could safely assess Mr Gibson's eligibility for legal aid exclusively under the new Legal Services Act, although he noted there was, in any event, "little difference between the 1969 and 1991 Acts as regards income and capital limits on legal aid grants": at [155]. [19] Mr Gibson did not attempt to challenge this particular factual finding. We are satisfied it was correctly made, particularly when one considers the following feature of the transitional provision in the Legal Services Act. Under s 160(5), any application for legal aid under the Legal Aid Act would continue to be dealt with under that Act only if it had been "wholly or partly dealt with" by 1 February 1992. In all other cases, the application whenever filed was to be treated as if it had been lodged under the 1991 Act. So, to render the Legal Aid Act relevant, Mr Gibson would have had to establish not only that he would have filed an application for legalaid prior to 1 February 1992 but also that such application would have been "wholly or partly dealt with" by that same date. There is no evidence to support such a conclusion. Mr Gibson's eligibility for legal aid must thus be determined by reference to the Legal Services Act and the regulations made under it. [20] It was for Mr Gibson to prove he would have been eligible for legal aid. The first thing he had to establish was that his disposable income did not exceed $2,000 in the previous 12 months. That was the maximum figure prescribed by reg 35(1) of the Legal Services Regulations 1991. These regulations came into effect on the same date as the Act under which they were made (the Legal Services Act 1991): see reg 1(2). Only in "special circumstances" was a District Subcommittee (as constituted under the Legal Services Act) entitled to grant civil legal aid to someone whose disposable income was higher than that: reg 35(1). [21] The regulations specified how to calculate disposable income. The formula is not difficult. What has been difficult, however, is working out Mr Gibson's actual income. The judge found Mr Gibson was quite unreliable in the evidence he gave as to income. He found Mr Gibson prone to inaccuracy and exaggeration, with financial information being moulded by him "to fit the circumstances he was in": at [158]. Having carefully reviewed the evidence, we consider the judge's criticism of Mr Gibson in this regard to be completely justified. [22] Minters called John Cregten, a chartered accountant, as an expert witness. He was asked to provide an opinion on Mr Gibson's financial position between 1991 and 2000. He also provided an opinion with respect to the same years on Mr Gibson's "disposable income" and "disposable capital" for the purposes of the Legal Services Act. He described the process of evaluating Mr Gibson's financial position as "extraordinarily difficult", because no satisfactory financial statements had been kept and Mr Gibson's answers to the interrogatories served on him lacked "specific detail". We may add that, following cross-examination, it was also clear the answers were untrue in numerous respects. [23] Based on Mr Gibson's answers to interrogatories, Mr Cregten worked out that Mr Gibson's disposable income for the years ended 31 March 1992 to 31 March1995 was (in round terms) $44,000, $40,000, $185,000, and $100,000 (respectively). Mr Cregten's figures based on his own analysis were in fact lower than that: $30,000, $11,000, $81,000, and $51,000, respectively. Probably neither set of figures is correct. [24] There was yet a further set of figures in evidence as to Mr Gibson's earnings from his dental practice for the years ended 31 March 1992 to 31 March 1995. These had been prepared by Patrick McCormick, Mr Gibson's accountant. He had prepared income and expenditure figures for the purpose of a loan Mr Gibson was seeking. His figures for the four years in question showed a net income of $80,000, $159,000, $220,000, and $205,000 (respectively). To obtain Mr Gibson's "disposable income" for the purposes of the Legal Services Act, it would be necessary to deduct from those figures an allowance for tax and the personal and spousal allowances permitted under the Act. No one did that calculation, but it is clear that, had it been done, this set of figures would have yielded easily the highest "disposable income" figures. Even though in the witness box Mr McCormick confirmed that in his view these figures presented "a realistic picture" of Mr Gibson's practice income, the figures are almost certainly wrong. [25] The point is, however, whichever set of figures is adopted, it is clear that Mr Gibson came nowhere near establishing, on the balance of probabilities, that his income was below the statutory limit or even close to it for any 12 month period between the start of 1992 and the start of 1995. [26] What is more, Mr Cregten, when calculating "disposable income", appears to have overlooked s 31 of the Legal Services Act. That required him to take into account the income of Sonya Gibson, at the relevant period Mr Gibson's wife. Mr Cregten correctly gave an allowance in respect of her, as required by reg 36(b) of the Legal Services Regulations, but failed to add in the quid pro quo for that allowance, namely Mrs Gibson's income. She was Mr Gibson's practice nurse and accordingly was being paid. We are not sure what she was being paid, as Mr Gibson's financial statements do not show a "salary" or "wages" expense. Each of the revenue statements for the years ended 31 March 1992 to 31 March 1995 does show, however, an unexplained expense of "subcontractors". That figure for those yearswas (again in round terms) $10,000, $48,000, $43,000, and $43,000. Presumably, at least some of those expenses represented payments to Mrs Gibson for her services. So far as we can tell from the record, Mr Gibson did not have any other assistants during these years. [27] In short, therefore, Mr Cregten's assessment of disposable income for legal aid purposes is likely to understate the (combined) income by potentially a very significant amount. [28] Because of the potential discretion with respect to granting legal aid cover, both sides called experts to express opinions as to how the Auckland District Subcommittee exercised these discretions at that time. Mr Gibson called Keith Willoughby, and Minters called Ian McHardy. Both were lawyers with many years' experience in administering the civil legal aid scheme at District Subcommittee level. [29] Mr Willoughby's statement of evidence was a model brief. He set out clearly his qualifications, the factual assumptions on which his opinion was based, and then the opinion itself. As it happens, Mr Willoughby's opinion was based on an assumption that Mr Gibson would have applied for legal aid in October 1991, with the consequence that the old Act applied. For reasons we have already given, we consider the new Act would have applied, but nothing particularly turns on that. Mr Willoughby thought, on the basis of the assumptions he made, that Mr Gibson probably would have received a grant of legal aid, although "almost certainly [it] would have been for a set amount to cover the next stage in the proceedings eg filing a defence and counterclaim or discovery". He expressed no view as to the likelihood of further grants beyond that. [30] Once the assumptions are examined, it becomes clear Mr Willoughby's opinion did not advance Mr Gibson's case at all. For a start, it was based on an assumption he was given that Mr Gibson's practice was "operating at a low level (loss making, with a fee revenue of $37,000 in the current financial year)". In addition, Mr Willoughby was asked to assume Mr Gibson was "in severe financial difficulties, on the verge of bankruptcy, [and] unable, from his own resources tolive, to pay instalments to creditors in the amounts necessary to avert bankruptcy and to pay the legal fees likely to be associated with the defence of the summary judgment application and the diligent prosecution of his counterclaim". Those assumptions are not remotely borne out by the facts. For instance, the fee income for the practice at that time was not $37,000 but rather $104,000. Further, Mr Willoughby was not told about other income Mr Gibson was at that time receiving. Nor was he told anything about Mrs Gibson's income, although he did note she was the practice nurse. Nor was he told about substantial liquid assets Mr Gibson had, such as a 1971 Rolls Royce, worth, according to Mr Gibson, $50,000. [31] In addition, Mr Willoughby expressed no opinion as to Mr Gibson's entitlement to legal aid other than at October 1991. [32] In short, therefore, his opinion as to Mr Gibson's eligibility, which was guarded in any event, was completely undermined by Mr Gibson's failure to establish the assumptions on which it was based and by the absence of highly relevant assumptions. [33] The answer to the first issue is that the judge was right to find Mr Gibson was not eligible for legal aid on his claim against Arthur Andersen. In these circumstances, we do not need to consider what legal or ethical obligations fell on lawyers in the first half of the 1990s when acting for clients who were or might be eligible for legal aid. Nor do we need to consider whether the judge was justified in finding that, in any event, Mr Gibson probably did know about legal aid, but did not wish to apply for it because he wanted Minters to conduct the case and knew they would not do so if he was a legal aid client: at [151].Was the judge wrong to find that Minters had not been affected by a conflict of interest?[34] One of Mr Gibson's major complaints against Minters was that, during the period from July 1991 to 1995, they acted for both him and Arthur Andersen. His complaint was that, because of this conflict, Minters did not diligently pursueMr Gibson's claim against Arthur Andersen. Mr Gibson argued that Minters should have either told him to find another lawyer or obtained his informed consent to continuing to act for him on the claim against Arthur Andersen. Ronald Young J rejected this complaint on a number of grounds. [35] Before we analyse Mr Gibson's argument and the judge's reasoning on this topic, we need to set out the essential facts necessary for an understanding of this issue. We stress this account is by no means a full chronology of everything that happened between Mr Gibson and Arthur Andersen or between Mr Gibson and Minters. The summary is limited to matters material to the conflict allegation. [36] In 1989, Mr Gibson established an accident and emergency medical centre in West Auckland. The holding company for the business was Remuera Dental Group Limited (RDG). Mr Gibson, in establishing the business, utilised the services of Wayne Anderson, then a partner of Arthur Andersen. Although the business was able to generate a good cash flow, there was concern it was undercapitalised. Mr Anderson introduced Mr Gibson to Stuart Galloway, who was represented to be "a man of considerable financial substance". The initial proposition was that the Gibsons would sell one-third of the shares in RDG to Mr Galloway's interests for $300,000. The Gibsons would then lend that $300,000 to RDG for working capital. In addition, the Galloway interests were to lend RDG $150,000. [37] Unfortunately, the Galloway interests did not perform as promised. Mr Anderson suggested various changes to the agreement. Mr Gibson was not happy about all those changes. In February 1991, he consulted for the first time Ross Patterson, a commercial partner in Minters. Dr Patterson, on the Gibsons' behalf, renegotiated the contract between them and the Galloway interests. After the Gibsons signed the relevant documents constituting the renegotiated contract, Dr Patterson sent them to Arthur Andersen to be held in escrow until the Galloway interests had signed the contract and performed their part of the agreement, including payment of the money required. [38] Still the Galloway interests did not perform as promised. Mr Anderson, notwithstanding that, attempted to persuade the Gibsons to make further concessionsto the Galloway interests, over and above what had been agreed in February 1991. In particular, in July 1991, Mr Anderson approached Mr Gibson at home, asking him to sign a proxy voting document relating to RDG. That document needed to be signed only after the Galloway interests had performed their part of the contract, which at that stage they had still not done. Mr Gibson rang Dr Patterson regarding Mr Anderson's request. At this point, Dr Patterson became concerned about the propriety of Mr Anderson's actions. [39] Dr Patterson said this action on Mr Anderson's part was the first time he became concerned about the propriety of Mr Anderson's actions, as opposed to the Galloway interests' conduct. He recognised there might be a conflict in future between Mr Gibson and Arthur Andersen. He said that at that time (July 1991) he advised Mr Gibson that Minters had acted in insolvency matters involving particular partners of Arthur Andersen who were receivers of businesses. He said he expressed the view to Mr Gibson that he did not consider any conflict of interest arose, but that he would check with his partners to ascertain their view. He later confirmed to Mr Gibson their view that there was no conflict of interest. [40] It was Mr Gibson's case at trial that he did not know of the connection between Minters and Arthur Andersen. He denied Dr Patterson had told him about Minters' Arthur Andersen connection. He said that he should have been given full information about that and that Minters should have continued to act for him only if he gave his consent. In the circumstances, Minters' continuing to act was wrongful and in breach of a fiduciary duty owed to him. The conflict continued, Mr Gibson asserted, until 1995, when Minters ceased doing any work for Arthur Andersen. [41] Ronald Young J held Mr Gibson's complaint in this regard must fail. First, he did not consider Arthur Andersen was ever a "client" of Minters. Minters' instructions came, he said, from two partners of Arthur Andersen who had been appointed managers and/or receivers of insolvent companies: at [118]. He added:These appointments were personal to the individuals, and the fees were paid from the insolvent companies' assets. I therefore do not consider that in a conflict sense [Minters] ever acted for [Arthur Andersen].[42] Secondly, in any event, the judge found there was "no evidence of any causal link between the breach of fiduciary duty arising from the conflict and the losses allegedly suffered by Mr Gibson": at [126]. The judge found that the delays that occurred between 1991 and 1995 were not the fault of Minters, and certainly were not a consequence of Dr Patterson not wanting to pursue the litigation because of a fear of offending another client. [43] Thirdly, the judge found that, even if there was a conflict, Minters had promptly disclosed to Mr Gibson all relevant facts and he had chosen to continue to instruct Minters. There was, he found, "informed consent": at [127]. [44] Mr Gibson, before both the High Court and us, accepted that his claim against Arthur Andersen and the insolvency work Minters did for several Arthur Andersen partners in their capacity as receivers were "separate matters", as that term was used by this court in Russell McVeagh McKenzie Bartleet and Co v Tower Corporation [1998] 3 NZLR 641. Mr Gibson also accepted that there was no risk of disclosure of his confidential information to Arthur Andersen or the converse. In those circumstances, it is impossible to see how a conflict could have arisen which required Minters to shed either Mr Gibson or the Arthur Andersen insolvency work, if not both. [45] Mr Gibson, in his submissions to us, submitted the judge had misunderstood his complaint. This was not, he said, a case like Russell McVeagh or Re A (Barrister and Solicitor of Auckland) [2002] NZAR 452, on which the judge had also relied: at [124]. Rather, Mr Gibson said, this was a case where "the conflict alleged [was] between the financial interests of the law firm itself and the interests of its client, [Mr Gibson]". His assertion was that Minters wanted to keep "the receivership work generated by [Arthur Andersen]", it being "a valuable and important source of work". For this reason, Mr Gibson submitted, Minters had an interest in not allowing his counterclaim against Arthur Andersen to "escalate into anything other than low level litigation". Because of Minters' wish to keep the Arthur Andersen work, "the diligent prosecution" of Mr Gibson's counterclaim was "immobilised".[46] We do not think the judge did misunderstand the true nature of Mr Gibson's complaint. We certainly understand it. In a nutshell, his concern is that Minters conducted his case half-heartedly so as not to jeopardise possible future instructions from Arthur Andersen. The problem for Mr Gibson is that that sort of concern does not come within "conflict of interest" precepts. To cast "conflict of interest" duties that widely would lead to absurd results. Suppose X wanted to sue Fonterra. Most law firms, certainly most of the major firms, would no doubt like to attract in the future some of Fonterra's legal work. If they harbour such a hope, does that mean they must turn X's work away, because of their own potential financial interest in acquiring Fonterra's work? Of course not. Indeed, the result would be most unfortunate for X in that he would be denied representation by any law firm harbouring an interest in securing future work from Fonterra. [47] We have no doubt that Minters as a firm was keen to keep getting instructions in receivership work from those Arthur Andersen partners who undertook receiverships. But that did not give rise to a conflict of interest. There was no reason why Minters could not act for Mr Gibson on his defence to Arthur Andersen's claim for unpaid fees and on his counterclaim against Arthur Andersen. Indeed, we do not consider it was even necessary for Dr Patterson to reveal to Mr Gibson that Minters had previously acted on instructions from Arthur Andersen partners. We accordingly agree with Ronald Young J that no conflict of interest arose on the facts of this case and that Minters were not obliged to refuse to act on Mr Gibson's behalf. [48] Of course, it goes without saying that Minters were not entitled to prosecute Mr Gibson's claim half-heartedly because of a wish to court Arthur Andersen for further work. If they prosecuted his claim half-heartedly, that would be a breach of their contract of retainer. It would be a breach regardless of the motive for it. That is to say, if the claim was prosecuted half-heartedly without proper justification, then Minters would be liable for any loss arising therefrom, regardless of what motivated them to delay. That is a separate topic to which we shall supply the answer in the next section of these reasons.Were Minters guilty of dilatoriness in prosecuting Mr Gibson's claim against Arthur Andersen?[49] We have concluded so far that Minters were entitled to act for Mr Gibson: he was not eligible for legal aid and the firm's wish to keep receiving work from Arthur Andersen's receivership partners was not a ground for ditching Mr Gibson as a client. The next question is whether Minters were dilatory in the way they handled Mr Gibson's claim in the period up to 1995. [50] Mr Gibson asserts that, had Minters acted properly, his claim against Arthur Andersen could have been disposed of by 1995, rather than in 2002 as occurred. The case, instead of being finished by 1995, was barely under way. The reason for that, he asserts, was Minters' reluctance to upset Arthur Andersen, from whom they wished to continue to receive work. [51] Before us, Mr Gibson accepted, in answer to questions from the bench, that he did not blame Minters for delays after 1995. By that stage, Minters had ceased getting work from Arthur Andersen. Also, from late 1995 on, David Hurd took over the conduct of his case. Initially, that was in his capacity as a litigation partner of Minters, but later, after Mr Hurd left the firm in 1997 to practise as a barrister, it was in his barristerial capacity. Mr Gibson now makes no complaint about Mr Hurd's handling of the case; indeed, he could not, as he reached a settlement with Mr Hurd which prevents him from suing Mr Hurd. [52] It is important to note that Mr Gibson does not complain about the result Minters and Mr Hurd ultimately achieved for him. He simply alleges it should have been achieved sooner, and had it been, he would have incurred lower legal fees and have received the fruits of judgment earlier. [53] The focus, therefore, must be on the delays between 1991 and 1995 and the causes of them. [54] The judge found there were delays between 1991 and 1995, but exonerated Minters as being responsible for them. The judge found that Mr Gibson first broughtthe Arthur Andersen proceedings to Minters' attention in early December 1991: at [137]. The priority at that stage was to arrange for the urgent filing of documents intended to respond to Arthur Andersen's summary judgment application. At that stage, a counterclaim was not envisaged. [55] For the next six months Mr Gibson tried to settle Arthur Andersen's claim for fees. Those negotiations did not break down until July 1992. Arthur Andersen's solicitors then told Minters that Arthur Andersen now intended to pursue its proceeding to recover unpaid fees. That proceeding had effectively been on hold, as was possible in those pre-case management days. [56] In August 1992, Mr Gibson instructed Minters to issue a counterclaim against Arthur Andersen: at [137]. At that time, Minters filed on Mr Gibson's behalf a statement of defence and counterclaim. Requests for mutual discovery followed. [57] From then until the end of 1994, however, very little occurred on either Arthur Andersen's claim or Mr Gibson's counterclaim. The principal reason for that was that Dr Patterson was concentrating on two other disputes Mr Gibson was involved in, both of which he judged to have higher priority. The first was a claim by Inland Revenue that Mr Gibson had guaranteed the tax liability of Emergi Care, one of the companies in the RDG group. Inland Revenue said $188,000 was owing. The second matter was a claim Mr Gibson faced pursuant to a guarantee of a debenture in favour of a finance company called Venture Funds. Dr Patterson considered that, unless those claims could be resolved, Mr Gibson would be bankrupted. Since Mr Gibson was not in a financial position both to fund major litigation and to defend himself against these other claims, priority had to be given to staving off bankruptcy: at [138]. [58] Those two claims were finally resolved in August 1994. Inland Revenue agreed to accept $55,000 in full and final settlement of its claim under the Emergi Care tax liability guarantee. The Venture Funds receiver agreed not to pursue Mr Gibson for any shortfall on the debenture, and indeed to pay to him $55,000 arising from the dispute over the validity of the debenture. That $55,000 was then inturn used to pay Inland Revenue. Ronald Young J expressed his view on these settlements as follows (at [39]):This was without question an excellent settlement for Mr Gibson. He had faced potential liabilities of over $350,000 from the Emergi Care tax guarantee ($188,000) and the Venture Funds debenture guarantee ($175,000). In the end, both potential liabilities were settled without Mr Gibson paying anything.[59] The judge also noted as relevant that, throughout 1993 and 1994, Mr Gibson was constantly behind in meeting his financial obligations to Minters. By October 1994 he owed Minters $85,000. By the end of the year, he still owed $40,000: at [141]. [60] Following settlement of the Inland Revenue and Venture Funds claims, Dr Patterson turned to organising a refinancing package for Mr Gibson. That was in place by the end of 1994, and indeed was partly responsible for the reduction in the outstanding fees owed to Minters at the end of 1994. [61] Dr Patterson then undertook a comprehensive review of the Arthur Andersen case in the first few months of 1995: at [50]. He considered the claim against Arthur Andersen to be strong and thought that, if his report were given to Arthur Andersen, they would wish "speedily" to settle the case. Mr Gibson agreed with that strategy. Dr Patterson's report, with supporting documents, was given to Arthur Andersen in May 1995. Dr Patterson considered it showed dishonest conduct on Mr Anderson's part. Arthur Andersen's solicitors took some time to respond. They advised the matter was out of Arthur Andersen's Auckland partners' hands. Eventually, in October 1995, a meeting was held with Arthur Andersen's solicitors, but it became clear there would be no settlement: at [51]. Following that unsuccessful meeting, Dr Patterson introduced Mr Gibson to Mr Hurd, who thereafter took charge of the litigation: at [52]. [62] The judge accepted that the Arthur Andersen claim "received only modest attention from August 1992 until settlement of the Venture Funds/IRD claim in August 1994": at [149]. But he considered it was "a responsible and legitimate strategy to pursue settlement of the Ventures Funds/IRD matter before vigorouspursuit of the [Arthur Andersen] litigation" was undertaken. He also considered it was "legitimate" to pursue settlement after August 1994. He accepted there were "periods of time, relatively minor" when the litigation was not pursued speedily while the litigation was Mr Hurd's responsibility, but the reason for those delays was "Mr Gibson's failure to pay fees either on time or keep to arrangements agreed to by him". [63] With that background, we now turn to Mr Gibson's essential complaints under this head. He prepared a written summary of his argument, which made three points. [64] His first complaint was that the judge "made a wrong factual finding in that he found a counterclaim was not available to the appellant until August 1992 at the earliest when on the evidence before the court it was available in August 1991". This was, somewhat surprisingly, the main point he developed. But it is not sustainable on several grounds. First, even on the pleading on which Mr Gibson went to trial, he did not assert that Minters should have taken action against Arthur Andersen as early as "August 1991". On the contrary, he asserted he gave instructions to sue Arthur Andersen "in late 1991". [65] In any event, the judge did not assert that "the counterclaim was not available to [Mr Gibson] until early August 1992". Mr Gibson referred for that proposition to [34] of the judgment. What the judge said in that paragraph was something different:It was, I consider, in early August 1992 that for the first time Dr Patterson received the documents found by Mr Gibson and for the first time any in-depth assessment could be made as to whether a counterclaim could be properly filed. Dr Patterson having perused the documents was satisfied that, based on the evidence he saw, such a claim could responsibly be filed.[66] The actions on Mr Anderson's part, on which the counterclaim was based, had indeed occurred in 1991, but the judge's point was that there was not sufficient evidence until August 1992 for Dr Patterson responsibly to conclude that Mr Gibson had a counterclaim against Arthur Andersen. We can well understand why it would not have been clear until August 1992 that there was a possible claim againstArthur Andersen. At that stage, Arthur Andersen had not provided discovery. Exactly what had happened between them, Mr Galloway, and his interests would not have been completely clear. Nor would it have been obvious who had suffered losses: was it Mr Gibson personally or was the correct plaintiff or plaintiffs one or more of his companies? And what loss had been suffered? It is noteworthy that the first counterclaim, filed in August 1992, did not attempt to articulate quantum of loss, as that would have been impossible at that stage. [67] The judge's factual finding at [34] was entirely justified on the evidence. We do not accept there was any undue delay in the filing of the counterclaim, especially in circumstances where Mr Gibson had been involved in trying to settle Arthur Andersen's claim against him. [68] Mr Gibson's second complaint was that the counterclaim filed in August 1992 pleaded as causes of action only breach of contract and negligence and did not plead breach of fiduciary duty. He asserted this was "as a result of a conflict of interest in acting for Arthur Andersen" and that it was not until December 1995, "at which time [Minters'] relationship with [Arthur Andersen] ended", that breach of fiduciary duty was pleaded for the first time. There is nothing in this point at all. The August 1992 counterclaim alleged that Arthur Andersen had breached their contractual obligations to Mr Gibson by acting contrary to his interests and instead preferring the interests of other clients to his detriment. The other clients referred to included Mr Galloway, two of his companies, and a Galloway family trust. The allegation may not have been advanced under the rubric "breach of fiduciary duty" but the assertion that Arthur Andersen had allowed themselves to get into a conflict situation and had wrongly preferred one client over another was squarely put. [69] We see nothing of current significance in the change of pleading between 1992 and 1995. Such changes as there were reflected Minters' much greater knowledge of Arthur Andersen's wrongdoing by 1995. By that time, Dr Patterson had, of course, undertaken his extensive review of the case against Arthur Andersen, based in large part on the documents discovered in the wake of filing the 1992 counterclaim alleging conflict of interest. Like the judge, we are satisfied that thechange in pleading had nothing whatever to do with Arthur Andersen's having ceased providing work to Minters. [70] Mr Gibson's third point was that the judge had "made further wrong findings of fact in relation to the period between August 1991 and December 1995 when it was concluded that [Minters] was investigating elements of [Mr Gibson's] claim before prosecuting his case in December 1995 and that that course was reasonable". Unfortunately, however, Mr Gibson did not develop that argument. None of the submissions following the summary (paras 3.2-3.22) related to this third point. Rather, they reflected Mr Gibson's fixation on the first point. In answer to questions from the bench, Mr Gibson asserted that one of Minters' litigation partners could have been getting on with the claim against Arthur Andersen during this period, even if Dr Patterson was involved with resolving other disputes, such as the disputes with Inland Revenue and Venture Funds. [71] Mr Gibson has not established that the judge's analysis of the reasons for the delays between 1992 and 1995 was wrong. Like the judge, we regard Dr Patterson's strategy as being entirely sensible. Mr Gibson was not in a position to fight wars on all fronts. Mr Gibson was well behind in paying fees rendered by Minters as early as 1992, a state of affairs which continued to plague their relationship throughout. Mr Gibson and his legal advisors had to fix priorities, and it was sensible to concentrate on the Inland Revenue and Venture Funds disputes first. We are satisfied that putting those disputes ahead of the potential claim against Arthur Andersen had nothing to do with any wish Minters as a firm may have had to attract more receivership work from Arthur Andersen. Dr Patterson was entirely focused on achieving the best outcome for Mr Gibson in his financial circumstances. Of course, if Mr Gibson had been richer, more battles could have been fought simultaneously. But all of Mr Gibson's troubles stemmed from the failure of his West Auckland business. His coat had to be cut according to his cloth. Mr Gibson's submission that a litigation partner could have been pressing on with the Arthur Andersen litigation while Dr Patterson concentrated on Inland Revenue and Venture Funds misses the point: Mr Gibson could not afford to move forward on all fronts at once.[72] The answer to this issue is that the delays were not Minters' fault.Did Dr Patterson give an assurance of success?[73] Mr Gibson's second appeal point, in his amended points on appeal, was that "the judge erred in fact and in law in concluding that [Mr Gibson] had not been advised that he would recover the whole of the $1.9 million because it was a case of breach of fiduciary duty". [74] Before we can evaluate this submission we need to explain the background to it. [75] Mr Gibson succeeded against Arthur Andersen on the basis that they had breached fiduciary duties they owed to him: Arthur Andersen and Co v Gibson HC AK CP1633/91 10 June 2002. Arthur Andersen had pleaded that, even if they were liable to Mr Gibson, the compensation should be reduced on account of Mr Gibson's contributory negligence. Laurenson J found that Mr Gibson had contributed to the loss he had suffered by: (a) Failing to obtain adequate funding or investment capital for the medical centre prior to undertaking the project: at [219]; and (b) Failing to provide Arthur Andersen with adequate information regarding the level of indebtedness: at [221]-[222]. [76] In the end, Laurenson J decided that Arthur Andersen's contribution to Mr Gibson's loss should be 60% and Mr Gibson's 40%: at [235]. Accordingly, judgment was ultimately entered in respect of the various losses with, in each case, a 40% reduction to reflect Mr Gibson's own contribution to each loss: at [276]. [77] In the claim against Minters, Mr Gibson pleaded as follows:In or about June or July of 1992 and subsequently, [Dr Patterson advised Mr Gibson] that, if [Mr Gibson] were to establish that Arthur Andersen had breached its fiduciary duty, the legal consequence was that Arthur Andersen would be liable to pay the full amount of the claim, which could not be lessthan Arthur Andersen's valuations of 3 January and 5 February 1991 of $1.9 million.[78] It was further pleaded that this advice was wrong because it failed to take into account the possibility that damages might be reduced "on account of [Mr Gibson's] contribution to the circumstances of the failure of the medical centre". No specific consequences of this alleged wrongful advice were pleaded. For example, Mr Gibson did not plead that, had he been given the correct advice, he never would have pursued the claim or he would have settled the claim. [79] Dr Patterson denied he had ever given Mr Gibson an assurance that the compensation he received would be no less than $1.9 million. He also denied ever asserting that the defence of contribution could not succeed. [80] Ronald Young J dealt with this allegation at [174]. He noted that this allegation had not been the subject of any submission by Mr Gibson's then counsel, either in opening or in closing: at [173]. We can understand why: the allegation, even if true, led nowhere, as it had no effect on Mr Gibson's course of conduct vis a vis Arthur Andersen and the litigation. [81] Ronald Young J found that Dr Patterson had never told Mr Gibson that the compensation, if breach could be established, would be "the full amount of the claim": at [32], [114] and [174]. The judge did not believe Mr Gibson when he asserted that he did not know until trial "that his claim for damages might be reduced because he had contributed to his loss": at [103]. The partial defence of contribution had, after all, been raised by Arthur Andersen in their statement of defence to the amended statement of claim. [82] Mr Gibson has shown us nothing which would persuade us to revisit the judge's findings on this topic. No lawyer as experienced as Dr Patterson would have been so rash at such an early stage in the litigation to have given a promise of the kind alleged. [83] We are satisfied that the judge was right to find that Dr Patterson had not given an assurance of success.Conclusion on liability[84] Mr Gibson has not established any ground for challenging the judge's finding that Minters were not in breach of any duty owed to Mr Gibson. As already explained, this means we do not have to consider the judge's observations on damages or contributory negligence. Nor have we considered the extent to which a number of the claims advanced might have been time-barred. Mr Gibson's appeal against the substantive judgment in the High Court must be dismissed.Did the judge adopt the wrong approach to the assessment of costs?What Ronald Young J held[85] The judge delivered his costs judgment on 21 November 2005. He noted that Minters' total legal fees were $709,000: at [5]. Those fees compared, he said, with costs of $186,000, "which would be payable if ordered on a 3C basis": at [5]. He added: "The 3C calculation is therefore approximately 25% of the actual fees." (In fact, we observe in passing, the judge was wrong when he said that. The $186,000 scale figure had been calculated by Minters' lawyers predominantly on a 2B basis, save for seven steps, which had been calculated on a 2C basis.) [86] The judge concluded at [9]:As I have said, the actual legal fees were approximately $700,000 and scale costs approximately $185,000. In the circumstances I am prepared to almost double the scale costs. I allow costs in the sum of $350,000 in total covering both [Minters'] claim and [Mr Gibson's] counterclaim.[87] The judge gave the following reasons for the doubling of scale costs: (a) "A significant extra level of preparation beyond what might be expected even from a four week trial": at [6]. (b) "Mr Gibson's conduct of this litigation considerably expanded the time for preparation and hearing": at [7].(c) Minters had made a Calderbank offer of $400,000 without an admission of liability, an offer Mr Gibson never responded to: at [8]. [88] As will be apparent from the conclusion at [9] set out above, the judge did not attempt to deal with these factors other than in the round. [89] The judge then went on to award $196,000 in respect of disbursements.Mr Gibson's challenge and Minters' response[90] Mr Gibson prepared detailed written submissions in support of his contention that the award of costs was manifestly excessive and contrary to decided cases. In particular, he submitted the decision was contrary to this court's decision in Holdfast NZ Limited v Selleys Pty Limited (2005) 17 PRNZ 897, a decision delivered after Ronald Young J's decision under review. In addition, Mr Gibson challenged the judge's approach of taking actual costs and effectively ordering that Mr Gibson should pay 50% of them. [91] Mr Gibson also complained he had not been heard on costs. This was because he had failed to file submissions on costs when ordered. However, we need take that matter no further as, for reasons we are about to explain, we are satisfied costs must be recalculated. [92] Mr Gibson's final point of appeal was worded thus:The judge erred in fact and in law in ordering the payment of "disbursements" of $100,000 which were in fact charges for time spent by [Minters] which is not properly recoverable as costs.[93] We are at a complete loss to understand this point, to which no reference was made in Mr Gibson's written submissions. We are not even sure whether the point relates to the order for costs or the order for disbursements. Neither contained an award of $100,000. We propose to ignore this point.[94] Apart from that point, no other attack was made on the disbursements order, either in the amended points on appeal or in Mr Gibson's written submissions. In view of that, we do not review the disbursements order, which must stand. [95] Ms Scott, who argued this part of the case on Minters' behalf, submitted initially that the judge's approach to costs did accord with principle, including this court's decision in Holdfast. She was, of course, bound to attempt to uphold the judge's approach, as the approach he had adopted was the very approach she and Mr Hunt had urged on him. In their High Court submissions on costs, they had sought "a very substantially increased award of costs" in Minters' favour. They argued for "an award that reflected 50% to 70% of [Minters'] actual legal costs". [96] Following questioning from the bench, however, Ms Scott accepted that the approach counsel had urged in the High Court and which the judge had accepted was contrary to the costs regime under the High Court Rules, as interpreted in a number of High Court and appellate authorities. She provided for us a revised calculation as follows: 1 Scale costs on Mr Gibson's counterclaim as calculated in Minters' High Court memorandum, based on category 2 ($1,450 a day) $173,035Adjust for extra time reasonably required:2 Extra ten days' preparation $14,500 3 Extra 16 days for preparation of briefs $23,200 4 Extra ten days for inspection and discovery $14,500Subtotal $225,235 5 Add 50% for Mr Gibson's conduct $112,617Total counterclaim costs $337,8526 Add costs on Minters' claim for fees (2B scale) $12,325 TOTAL $350,117[97] Ms Scott, perhaps with tongue only slightly in cheek, assured us there was no element of "reverse engineering" involved in this calculation and that it was mere serendipity that this calculation was only $117 different from that reached by the judge!Our analysis of costs[98] It is perhaps debatable exactly how the judge reached his $350,000 costs figure: see [9] of his costs judgment, cited above at [86]. The more likely explanation is that he adopted Minters' approach of "an award that reflected 50% to 70% of [Minters'] actual legal costs", opting for the figure at the bottom of the range. If that is what he did, then it is clearly contrary to what this court said inHoldfast at [39]-[42]. See also Nomoi Holdings Ltd v Elders Pastoral Ltd (2001) 15 PRNZ 155 at [33]-[34] and Air New Zealand Ltd v Commerce Commission [2007] 2 NZLR 494 at [60] (CA). Even if this was a case for departing from the costs regime and hanging a costs award off actual costs (which we do not accept), that step should never be taken unless the judge is satisfied that the actual costs are reasonable: here, there was no evidence as to the reasonableness of McElroys' charges, as the time spent and hourly rates were not disclosed. [99] Alternatively, it may be that the judge simply decided on an uplift "in the round" under the general principles set out in r 48C of the High Court Rules. If that is the correct interpretation of what he did, the approach is still contrary to principle, for the reasons given in Holdfast. [100] While it is true that r 46 confers a general costs discretion, that does not mean costs orders are or should be immune from appellate review. The reason for that discretion was given by this court in Glaister v Amalgamated Dairies Limited [2004] 2 NZLR 606 at [24]: "The discretion exists to enable the unexpected and the unforeseen to be fairly accommodated." The court also observed that the costs regime introduced with effect from 1 January 2000 "is of a regulatory character": at [21]. The court emphasised the importance of maintaining the integrity of the scheme; where a departure from the scheme was warranted, it was necessary, this court said, "that it be done in a particularised, and principled way": at [22]. Anappellate court will interfere only if "the Judge has applied wrong principles of law, or was plainly wrong": at [30]. [101] With respect to the judge, his approach to costs did not comply with the principles of the costs regime, as explained in Glaister and the other cases cited. Sometimes, where there has been an error in principle, it may be preferable to remit the matter to the trial judge for his or her reassessment in accordance with such directions as the appellate court thinks appropriate On other occasions, the appellate court itself will grapple with the reassessment. In this case, we have decided on the latter course, as we heard detailed submissions. As well, we are conscious of how expensive this case has been for both sides; we are keen to bring finality to this litigation. So we start afresh and, in doing so, use Ms Scott's revised calculation as our departure gate.• Step 1[102] Scale costs had been calculated in Minters' High Court memorandum on the basis this was a category 2 case. We are not sure whether the High Court had itself so categorised it at some earlier stage or whether that was merely Minters' suggestion. Either way, we accept that categorisation. [103] There are, however, two errors in Ms Scott's calculation. The first is she applied a daily recovery rate of $1,450 a day throughout. But that rate applied only to steps taken after 1 January 2004: see High Court Amendment Rules (No. 2) 2003, r 4. The relevant daily recovery rate for steps taken in 2002 and 2003 was $1,300 a day. [104] The second error was that she claimed four days under each of items 7.3 and 7.4, as set out in Schedule 3 of the High Court Rules. Those items are applicable only in circumstances where a trial does not eventuate. Where there is a trial, item 8 covers preparation for hearing. One cannot claim under both item 7 and item 8. The item 7 claims must be disallowed. [105] When one corrects those two errors, the total under step 1 comes to $155,660.• Steps 2 and 3[106] Ms Scott claimed an extra 10 days' preparation (item 8) and an extra 16 days for preparation of briefs (item 7). The latter item must immediately be disallowed, for the reasons given when discussing step 1. As to the former, the question is whether the scale allowance of 33 days' preparation was sufficient. Should that be increased to 43 days? [107] This is difficult for us, as appellate judges, to assess with precision. The preparation item under the schedule covers preparation of statements of evidence, preparation of cross-examination of the other party's witnesses, preparation of the common bundle of documents, researching the law, preparation of opening submissions, and preparation of at least a draft of closing submissions. Given the size of this case, we are satisfied increased costs are justified under r 48C(3)(a), as the time required for preparation would have substantially exceeded the 33 days allocated under item 8. This accords with Ronald Young J's view that this case did involve "a significant extra level of preparation": at [6]. We certify for an extra ten days ($14,500).• Step 4[108] Ms Scott claimed an extra ten days for inspection and discovery under r 48C(3)(a). She said time spent on these activities substantially exceeded the band C allocations. So far as inspection is concerned, she cited Mr Gibson's list of documents, dated 26 June 2003. She said it was 295 pages long and listed some 15,000 to 20,000 documents, "in poor order". It took many days to inspect those documents. She also said that Mr Gibson's "obsessive approach to discovery" led Minters to incur substantial costs. For instance, Minters were required to search "archived and electronic records relating to minutes of management meetings, which produced no documents of any significance at trial". [109] We accept immediately that Mr Gibson was obsessive about discovery by Minters and that his own discovery was excessive, because of a lack of focus as to the true issues in the litigation. At the same time, however, we note that Ms Scott'sscale cost calculation (step 1) already claims 30.3 days for matters relating to discovery and inspection. Can a further ten days really be justified, bringing the discovery/inspection total to 40 days? [110] We are not convinced that this claim for increased costs has been established. If some of the applications regarding discovery and/or inspection were unjustified, that should have been the subject of an appropriate costs order at the time: see r 48E. [111] The case for increased costs for inspection and discovery is not made out. The subtotal, therefore, after steps 1 to 4, is $170,160.• Step 5[112] Steps 2-4 represented Minters' claim for increased costs under r 48C(3)(a). Ms Scott submitted, however, that increased costs were generally warranted under r 48C(3)(b). In this regard, she submitted the uplift should be 50%, in accordance with the reasoning set out in Holdfast at [46]-[48]. [113] We accept that the trial was unnecessarily extended as a consequence of Mr Gibson's pursuing some issues that completely lacked merit: r 48C(3)(b)(ii). We note in particular some aspects Ronald Young J mentioned. The first was time spent on the hopeless task of trying to establish Mr Gibson might have been entitled to legal aid for some of the period: at [6]. Another example the judge gave was "the attack on Mr Hurd's conduct of the litigation after he became a barrister [in 1997]": at [7]. As the judge observed: "Mr Hurd's conduct after he became a barrister was never part of these proceedings and yet many hours of court time was taken up with the examination of his actions." (We are not sure why the judge did not prevent this.) [114] We are also satisfied that regard should be had to the Calderbank offer made on 27 June 2005, a week or so before trial. By that stage, Mr Gibson and his legal advisors should have been in an excellent position to assess the merits of Mr Gibson's claim. They would have had all Minters' statements of evidence. Theoffer was very generous. We consider Mr Gibson's failure to accept that offer was without reasonable justification, so as to bring r 48C(3)(b)(v) into play. [115] Taking these two matters into consideration, we consider there should be a 50% uplift for: (a) The duration of the trial (16.5 days); (b) Second counsel during the trial (8.2 days); and (c) Half of the 43 days' preparation we have allowed (21.5 days). [116] That makes a total of 46.2 days. The total uplift under step 5 is $33,495 (46.2 days x $1,450 x 50%). The effect of this uplift is that Minters will recover, for the duration of the trial and for the (last) 21.5 days' preparation, a full recovery of what "reasonable" notional counsel would have charged for that period. The uplift remains fair to Mr Gibson, as he is not being asked to pay Minters' actual costs over that period, which we suspect were higher than what notional counsel would have charged: see Holdfast at [47]. [117] Total costs we therefore award on the counterclaim come to $203,655.• Step 6[118] Ms Scott simply claimed scale costs on Minters' claim for fees. The sums claimed are unexceptionable, except that the same two errors were made as were made on the scale calculation for the counterclaim: see [103] and [104] above. In addition, the claim contained an arithmetical error. [119] We must eliminate the erroneous claim under item 7 (three days). After correcting the arithmetical error, we have 4.2 days at $1,300 a day and 1.5 days at $1,450 a day, a total of $7,635. [120] Total costs therefore on claim and counterclaim come to $211,290.Interest[121] We have been informed that Mr Gibson has not paid anything towards the High Court costs order. We consider Mr Gibson should pay interest on our substituted costs award from the date of the High Court costs judgment, namely 21 November 2005. The reasoning is the same as was set out in this court's judgment in Paper Reclaim Limited v Aotearoa International Limited [2007] NZCA 544 at [40]-[45]. By awarding interest to Minters, we ensure they are properly compensated for the delay in securing a "proper" costs award. [122] We do not have to provide for interest after the date of this judgment. That is because the entire sum we have awarded (costs, disbursements, and interest) will be a "judgment debt" which, pursuant to r 538 of the High Court Rules, will carry interest at 7.5% pa "from the time of [this] judgment being given until the judgment is satisfied".Costs in this court[123] We have awarded Minters costs of $20,000. In fixing that, we have not overlooked Mr Gibson's partial success on the costs appeal, but that was really just a side issue (despite the number of paragraphs needed to explain our re-assessment). What was at the heart of the appeal and the hearing before us was always whether Ronald Young J's substantive judgment was right, and we have found it was. [124] The figure of $20,000 is in excess of our normal three day rate. There are two reasons for that: (a) Mr Gibson failed to comply with the Court of Appeal (Civil) Rules 2005 in a number of respects, necessitating additional case management conferences. This increased Minters' costs from what normally would have been expected on an appeal of this kind. (b) The case on appeal Mr Gibson prepared was appalling. It contained many documents which should not have been there. It omitted relevantdocuments, which Minters then had to supply. Many documents were duplicated. It was illogically ordered. It was not properly indexed or page numbered. We have no doubt that the difficulty of finding one's way around the 70 odd volumes of the case on appeal would have increased Minters' preparation time, just as it extended the actual hearing time. The difficulty of finding relevant documents in the case on appeal also significantly added to the burden falling on the panel, but we do not increase costs on that account. The increase provided for is solely to recompense the additional burden the form of the case placed on Minters' counsel.Solicitors: McElroys, Auckland, for Respondent