DOWNEY v QUIRK [2023] NZHC 2810

DOWNEY v QUIRK [2023] NZHC 2810 [6 October 2023]IN THE HIGH COURT OF NEW ZEALANDCHRISTCHURCH REGISTRYI TE KŌTI MATUA O AOTEAROAŌTAUTAHI ROHECIV-2018-409-000737[2023] NZHC 2810IN THE MATTER of the estate of PETER EDWARDCULMER READBETWEEN RICHARD WILLIAM DOWNEY as thetrustee of ST JOHN'S TRUSTPlaintiffAND TREVOR KINRED QUIRK as trustee andexecutor of the estate of PETER EDWARDCULMER READDefendantHearing: On the papersCounsel: R W Downey in personK W Clay for T K Quirk (proposed Second Defendant), R P Read(proposed Fourth Defendant), G F Rhodes and IndependentTrustees (Canterbury) Ltd as trustees of the Resonia Family Trust(proposed Fifth Defendants), Layburn Hodgins Ltd (proposedSixth Defendants), and D K Quirk, J B Abbott, D A MacIntyreand S L Tait (proposed Seventh Defendants)M O Robertson for H van Schreven (proposed Third Defendant)Judgment: 6 October 2023JUDGMENT OF ASSOCIATE JUDGE PAULSEN(Costs)This judgment was delivered by me on 6 October 2023 at 3.45 pmpursuant to Rule 11.5 of the High Court RulesRegistrar/Deputy RegistrarDate:[1] On 3 August 2023, I heard an application by Mr Downey for leave to file athird amended statement of claim adding new causes of action and joining six furtherdefendants after the close of pleadings date. The proposed defendants opposed theapplication.[2] Towards the conclusion of the hearing, Mr Downey raised the possibility thathe might withdraw the application. I was not prepared to allow him to do so until hehad time to consider his position overnight. I reserved my decision on Mr Downey'sapplication to give him the time to consider the matter, having drawn to his attentionthe possibility that if he withdrew the application the proposed defendants might seekcosts.[3] On 4 August 2023, Mr Downey emailed the Court that he wished to withdrawhis application as far as the proposed third amended statement of claim sought to addnew causes of action and new parties, but he still wished to amend his claim as itrelated to existing causes of action against the defendant, Mr Quirk (in his capacity asexecutor of the estate of Peter Read).[4] Having received that advice from Mr Downey, I issued a minute recording thathis application was withdrawn and directing the filing of submissions on costs. I alsomade directions concerning the filing of a third amended claim against the defendantin respect to the existing causes of action.[5] The directions in relation to costs required the proposed defendants to file theirsubmissions by 11 August 2023, and Mr Downey had until 1 September 2023 to fileany reply submissions.[6] The proposed defendants filed their submissions seeking costs in accordancewith the timetable. Mr Downey did not comply with the timetable, but due to hisongoing health issues he sought and was granted two extensions of time to file hissubmissions. The second extension gave Mr Downey until 20 September 2023 to filehis submissions. Mr Downey did not file his submissions by 20 September. He sentan email to the Court on 21 September 2023 stating that he was unable to address othertimetabling directions that have been made and adding:In regard to my submissions on the costs issue, all I can say at the moment isthat I would not have withdrawn my application if I had not been suffering theside-effects of my medication. There were clearly good reasons for theplaintiff trust to join the additional defendants, and had I been allowed a morereasonable period of time to consider the situation, I would have got over myfoggy brain from my medication and been able to think more rationally.[7] I issued a minute on 25 September 2023 that I was not prepared to grantMr Downey a further extension of time to file his submissions and would issue mydecision on costs as soon as possible.The position of the proposed defendants' and Mr Downey in relation to costs[8] Mr Clay represents the proposed second, fourth, fifth, sixth and seventhdefendants. They are collectively seeking costs on a 2B basis with an uplift of 50 percent.[9] The proposed third defendant, Mr van Schreven, is separately represented byMr Robertson. Mr van Schreven is seeking costs on the same basis as the otherproposed defendants.[10] Although he has not filed submissions, I am inferring from his recent emailthat Mr Downey is opposing costs on the basis that his application was meritoriousand that the decision to withdraw it was affected by his medication.Principles[11] The starting point is that all matters of costs are discretionary, but thediscretion must be exercised on a principled basis in accordance with pt 14 of the HighCourt Rules 2016.1 The determination of costs, so far as possible, should be bothpredictable and expeditious.2 The party that has lost should pay the costs of the partythat has won unless there are exceptional reasons to the contrary.31 High Court Rules 2016, r 14.1(1).2 Rule 14.2(1)(g).3 Rule 14.2(1)(a) and Shirley v Wairarapa District Health Board [2006] NZSC 63, [2006] 3 NZLR523 at [19].[12] In relation to costs on an interlocutory application (which is what I am dealingwith here), unless there are special reasons to the contrary costs must be fixed whenthe application is determined and become payable when they are fixed.4[13] The amount of an award of costs is usually determined by applying anappropriate daily recovery rate to the time considered reasonable for each stepreasonably required in relation to a proceeding or interlocutory application.5 Theapplicable daily recovery rates depend upon the nature of the proceeding. This is acategory 2 proceeding, being a proceeding of average complexity in the High Court.6The time allocations for steps in any proceeding or interlocutory application are setout in the sch 3 to the High Court Rules.[14] However, the Court may make an order for increased or indemnity costs incircumstances set out in r 14.6, which relevantly provides:(1) Despite rules 14.2 to 14.5, the court may make an order—(a) increasing costs otherwise payable under those rules(increased costs); or(b) that the costs payable are the actual costs, disbursements, andwitness expenses reasonably incurred by a party (indemnitycosts).(2) The court may make the order at any stage of a proceeding and inrelation to any step in it.(3) The court may order a party to pay increased costs if—(b) the party opposing costs has contributed unnecessarily to thetime or expense of the proceeding or step in it by—(i) failing to comply with these rules or with a direction ofthe court; or(ii) taking or pursuing an unnecessary step or an argumentthat lacks merit; or(iii) failing, without reasonable justification, to admit facts,evidence, documents, or accept a legal argument; or4 Rule 14.8.5 Rule 14.2(1)(c).6 Rule 14.3.(iv) failing, without reasonable justification, to comply withan order for discovery, a notice for further particulars, anotice for interrogatories, or other similar requirementunder these rules; or(v) failing, without reasonable justification, to accept anoffer of settlement whether in the form of an offer underrule 14.10 or some other offer to settle or dispose of theproceeding; or(d) some other reason exists which justifies the court making anorder for increased costs despite the principle that thedetermination of costs should be predictable and expeditious.(4) The court may order a party to pay indemnity costs if—(d) the person in whose favour the order of costs is made was not aparty to the proceeding and has acted reasonably in relation toit; My analysis[15] The proposed defendants were entirely successful in opposing Mr Downey'sapplication insofar as it affected them. It follows they are prima facie entitled to theircosts.[16] This is the case even though Mr Downey chose to withdraw the applicationfollowing the hearing. By that stage, the proposed defendants had been put to all ofthe expense of opposing the application, except for making their claim for costs.Mr Downey's decision to withdraw the application was entirely understandablebecause the application was not meritorious and in some respects quite improper.[17] While Mr Downey says his decision was influenced by medication, it wasconveyed to the Court in an email which suggests it was carefully considered andrelated only to the position of the proposed defendants. In other respects he maintainedhis application. His email read:I would like to convey to Your Honour my appreciation for your patience, andthe opportunities you gave me to comment on matters raised at yesterday'shearing.I wish to confirm to Your Honour that in respect of the plaintiff trust'sapplication for leave to file a third Amended Statement of Claim (insofar asthe joining of new defendants and the addition of the new causes of action areconcerned), it is the decision of the plaintiff trust to withdraw those aspectsfrom that application.For the avoidance of doubt, the plaintiff trust wishes to retain both the updatedcorrections that were made in the third Amended Statement of Claim filed on1 June 2023 (that related solely to the causes of action previously specified inthe second Amended Statement of Claim), and the additionaltypos/corrections that were identified in the covering letter emailed to theCourt and other parties on 1 June 2023.If required, the plaintiff trust will provide the Court with a redraft of the thirdAmended Statement of Claim that encapsulates the changes specified above.[18] The next issue is the quantum of the awards that are to be made in the proposeddefendants' favour. Commonly, where an application involves a non-party, they areawarded indemnity costs provided they have acted reasonably. However, the proposeddefendants do not seek indemnity costs against Mr Downey. They seek an uplift onscale costs, principally on the basis that an increased award is appropriate becauseMr Downey unnecessarily contributed to the time and expense associated with theapplication by failing to comply with directions of the Court and pursued theapplication despite it lacking merit.[19] In my assessment, the proposed defendants are entitled to increased costs. Itis the case that Mr Downey's application was irregular procedurally. Despite adirection he file an application, Mr Downey sought leave to file his third amendedstatement of claim informally by memorandum. He later sought to file a furtheramended pleading, making substantial changes to his earlier draft, in an attempt tofend off legitimate objections raised by the proposed defendants. He also filed anaffidavit which was discursive and referred to 13 other affidavits filed in theproceeding on the basis that they were "highly relevant to the plaintiffs' application"without further explanation. Counsel for the proposed defendants were not familiarwith this prolonged proceeding and coming to terms with those affidavits andattempting to identify their relevance would have been a substantial task.[20] However, I would not award increased costs against Mr Downey on this basisalone because I consider allowance should be made for the obvious practicaldifficulties faced by a self-represented litigant attempting to navigate through complexcourt processes.[21] The reason I consider an uplift on scale costs is justified is because theapplication lacked merit and should not have been made. There are several aspects tothis. First, Mr Downey had, well before the close of pleadings date, raised the issue ofjoining further parties but had not done so. He only attempted to join the proposeddefendants upon the close of pleadings with the trial date looming, and incircumstances where he was not ready to proceed to trial on the scheduled dates. Iconsider there is some merit in Mr Clay's submission that the application was madefor tactical purposes.[22] Further, Mr Downey was on notice that the application was unlikely tosucceed. In a minute of 21 June 2023, Dunningham J directed an urgent telephoneconference to deal with issues raised by Mr Downey's late filing of the third amendedstatement of claim and recorded: I note that leave is required to file the amended statement of claim namingmultiple new defendants and further causes of action. Given the chequeredhistory of this claim and the inevitable risk to a trial date that has already beenadjourned there is little prospect of leave being granted. The plaintiff maywish to reflect on this before the parties incur further costs in addressing theissues raised by the plaintiff's attempt to file a third amended statement ofclaim.[23] I also accept the proposed defendants' submissions that Mr Downey madeallegations of dishonest conduct without a reasonable factual foundation. As anexample, he alleged that a settlement agreement in respect to insurance claims mayhave been a sham and that Mr Quirk may have deliberately failed to disclose the realsettlement agreement in this proceeding. That is a most serious allegation, particularlywhen made against an officer of the Court, and it was made without any factual basisthat I can see.[24] Finally, the application was entirely unnecessary in my view. Mr Downey'sclaim is that he has not been paid for services he rendered to Mr Read during hislifetime. The claim was adequately set out in the second amended statement of claim.The proposed third amended statement of claim would, in my assessment, achievelittle or nothing to advance Mr Downey's claim, but would substantially add to thecosts and complexity of the litigation.Separate costs awards[25] There is a further issue to be addressed which is whether it is appropriate tomake separate awards of costs in favour of Mr van Schreven and the other proposeddefendants, or whether they should have joined in their defence of the application.[26] Mr van Schreven was in a quite different position to the other proposeddefendants as he was, and remains, the solicitor on the record for Mr Quirk. He wasgiven leave by Dunningham J to continue to act for Mr Quirk, but not in relation tothis application. In his defence of the application, there was clearly the potential forMr van Schreven's interests to conflict with those of his client and the other proposeddefendants (whether or not they were in fact joined). It was necessary that he beseparately represented.The amount of the awards[27] The proposed defendants have provided a calculation of costs on a 2B basis. Iaccept those calculations, noting that they are generous to Mr Downey in that no costshave been sought for preparing submissions on costs. In the case of Mr van Schreven,his 2B costs total $9,799. In the case of the other proposed defendants, their 2B coststotal $8,843.[28] For the reasons set out above, I consider all proposed defendants are entitledto an uplift on scale costs. They have sought a 50 per cent uplift, and I can see howthat might be justified. However, I am again mindful that some of the criticisms thatcan be made of Mr Downey are likely to have been contributed to by his lack ofunderstanding of court processes, and also his ill-health. That said, the proposeddefendants are entitled to expect some tangible recognition of the unnecessary coststhat they have been put to by his application and the manner in which he pursued it. Ihave decided that an uplift on scale costs of 20 per cent is appropriate.Result[29] The proposed defendants, represented by Mr Clay, are awarded 2B scale costsin the amount of $8,843.00, as set out in the schedule to counsel's memorandum of11 August 2023, with a 20 per cent uplift making a total of $10,611.60 together withdisbursements as fixed by the Registrar.[30] Mr van Schreven is awarded 2B scale costs in the amount of $9,799.00, as setout in schedule A to counsel's memorandum of 11 August 2023, with a 20 per centuplift making a total of $11,758.80 together with disbursements of $110.00._______________________O G PaulsenAssociate JudgeSolicitorsGCA Lawyers, ChristchurchClark Boyce, Christchurch