Graham v Scott [2014] NZCA 269 (25 June 2014)

Last Updated: 4 July 2014

IN THE COURT OF APPEAL OF NEW ZEALAND
CA874/2013 [2014] NZCA 269
BETWEEN	TONY GEORGE GRAHAM Applicant
AND	GAVIN ROBERT SCOTT First Respondent AND PATRICK ROBIN VAN BERKEL Second Respondent

Hearing:	23 June 2014
Court:	Harrison, Wild and French JJ
Counsel:	N Levy for Applicant Respondent G Scott in person No appearance for Respondent van Berkel
Judgment:	25 June 2014 at 2.30 pm

JUDGMENT OF THE COURT

A The application for special leave to appeal is dismissed.

2. The applicant is to pay any disbursements reasonably incurred by the respondents, to be fixed by the Registrar failing agreement.

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REASONS OF THE COURT

(Given by Wild J)

[1] This is an application for special leave to appeal against a judgment of Mallon J given in the High Court on 26 October 2013.^[1]
[2] In that judgment Mallon J upheld an award of $13,842.55 costs, including disbursements, which Judge Broadmore had ordered the applicant to pay the respondents.^[2] Mallon J also awarded the respondent Mr Scott $2,500 damages for nuisance. Although the applicant also seeks leave to appeal the finding of nuisance and the damages award, that is not the focus of this application. Ms Levy accepted that the nuisance issue would not meet the test for special leave to appeal.
[3] The parties owned neighbouring properties in Upper Hutt. They got into disputes about a number of matters, primarily access over a right-of-way, alleged nuisance and consent to building plans. The disputes festered on for years.
[4] When the respondents were unable to make any headway with the applicant in resolving the disputes, they issued a proceeding against the applicant in the District Court. They were successful in obtaining an interim injunction ordering the applicant to remove two concrete blocks he had placed in the right-of-way preventing vehicular access to the respondents’ properties, and restraining the applicant from other actions.
[5] On the morning the proceeding came on for hearing in the District Court, the parties were able to settle all their disputes except for Mr Scott’s claim for damages for nuisance, Mr van Berkel’s claim for damages for unlawful interference, and the question of the costs of the proceeding. The parties agreed that those matters should be resolved by the District Court.
[6] In his judgment Judge Broadmore did not award damages to Mr van Berkel but awarded Mr Scott $5,000 exemplary damages and ordered Mr Graham to pay the costs of Messrs Scott and van Berkel. He did that on the basis that their success lay in achieving resolution of disputes which had festered for a decade, rather than on the basis of the outcome in the District Court, that is, the award of damages to Mr Scott.
[7] In the High Court Mallon J quashed the award of $5,000 exemplary damages because Mr Scott had not claimed them. She substituted an award of $2,500 general damages for loss of amenity and stress.
[8] Mallon J upheld the District Court’s costs award as an available exercise of its costs discretion.
[9] In support of this application Ms Levy submits:

• (a) The District Court’s costs order was wrong because the costs discretion cannot be exercised in favour of the party which commenced the proceeding simply on the basis that the existence of the proceeding has resulted in settlement of issues between the parties, including matters that were not in issue in the proceeding.
• (b) That approach to costs would “significantly alter the existing balance of power between parties attempting to settle litigation”.
• (c) The approach is contrary to the first and fundamental costs principle: that costs should follow the event. That principle cannot be displaced when the parties have settled but asked the Court to determine costs.
• (d) Where parties ask the Court to determine costs after settlement, it must do so by assessing as best it can the outcome of the settlement against the pleadings, to determine which party has succeeded.
• (e) The District Court’s costs order took into account conduct before the proceeding commenced, contrary to the well established principle that it is only conduct during the litigation that is relevant to costs: Paper Reclaim Ltd v Aotearoa International Ltd.^[3]

[10] As refined by Ms Levy in her oral submissions, the question of law sought to be appealed is whether the District Court’s costs discretion is broad enough to support its award of costs, given that neither party was successful and given also that the principles relating to the award of increased or indemnity costs did not apply.
[11] We do not consider this question is appropriate for a second appeal. As Mallon J pointed out, what was more important to Judge Broadmore’s assessment in awarding costs was his view that Messrs Scott and van Berkel had succeeded in their proceeding simply because they had achieved a resolution. Indeed, in their initial statement of claim the relief the respondents had sought was:

An order that [Mr Graham] engage in open, face-to-face, verbal communications to resolve these and any future issues over the right-of-way, and provide his telephone number to the [respondents].

Mallon J held that Judge Broadmore was not seeking to impose costs because Mr Graham had been difficult prior to the hearing being commenced.

[12] Mallon J held that Messrs Scott and van Berkel were entitled to costs for other reasons, in particular because they had succeeded with their injunction application and because Mr Scott was successful on his claim for damages.
[13] Although Mallon J observed that a Court would not normally base a costs order on its assessment of who had succeeded in a settlement, if the settlement here were analysed (and Mallon J did analyse it), then it demonstrated that Messrs Scott and van Berkel had achieved a greater measure of success.
[14] Judge Broadmore made his award in a careful judgment, in which he ruled on some of the submissions Ms Levy has made to us.
[15] The costs award was upheld by Mallon J after further careful consideration. We broadly agree with the reasons given by Mallon J. Certainly, we do not consider that the question formulated by Ms Levy is appropriate for a second appeal. It simply does not meet the well established test under s 67 of the Judicature Act 1908.
[16] The application for special leave to appeal is accordingly dismissed.
[17] As Mr Scott represented himself and Mr van Berkel did not appear, a costs order is inappropriate. Mr Graham is to pay any disbursements reasonably incurred by the respondents, to be fixed by the Registrar failing agreement.

Solicitors:
Brandons, Wellington for Applicant

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^[1] Graham v Scott [2012] NZHC 2834.

^[2] Scott v Elmslie Estate Ltd DC Wellington CIV-2010-085-0550, 20 July 2012.

^[3] Paper Reclaim Ltd v Aotearoa International Ltd [2006] 3 NZLR 188 (CA).