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High Court of New Zealand Decisions |
IN THE HIGH COURT OF NEW ZEALAND
DUNEDIN REGISTRY
CIV-2006-412-1031
BETWEEN HEENAN FAMILY TRUST 1960 &
AMENDED HEENAN FAMILY
TRUST
1960 & AMENDED HEENAN FAMILY
TRUST NUMBER TWO
Plaintiffs
AND DE VELLA JUNE GORE & ORS
Defendants
CIV-2006-412-1023
BETWEEN HEENAN FAMILY TRUST 1960
DAVID STANLEY HEENAN
First Plaintiffs
AND AMENDED HEENAN FAMILY TRUST
1960, TREVOR ALLEN LEE,
PAMELA JOAN WADSWORTH and
DAVID STANLEY HEENAN
Second Plaintiffs
AND
AMENDED HEENAN FAMILY TRUST
NUMBER TWO, TREVOR ALLEN
LEE, PAMELA JOAN WADSWORTH
and DAVID STANLEY HEENAN
Third Plaintiffs
AND DA VELLA JUNE GORE
First Defendant
AND WAYNE RICHARD GORE
Second Defendant
AND PHILIP JONES
Third Defendant
AND JOHN FOOKES
Fourth Defendant
AND
ALISTAIR MCLAY
Fifth Defendant
HEENAN FAMILY TRUST 1960 & AMENDED HEENAN
FAMILY TRUST 1960 & AMENDED HEENAN
FAMILY TRUST NUMBER TWO V DE VELLA JUNE GORE & ORS HC DUN CIV-2006-412-1031 1 April
2008
AND
HEENAN FAMILY TRUST NUMBER
TWO
Sixth Defendant
AND NEVILLE PETRIE FAGURLUND
Seventh Defendant
AND ROBERTA
JANE MARY HEENAN
Eighth Defendant
AND HFK TRUSTEES LTD
Ninth Defendant
AND EUAN HILSON
Tenth Defendant
AND
MICHAEL KEYS
Eleventh Defendant
AND CAMERON FLEMING
Twelfth Defendant
AND JEFFERY ROBERT MORRISON
Thirteenth
Defendant
AND VASILI ENTERPRISES LTD
Fourteenth Defendant
AND RHYES JAMES CAIN
Fifteenth Defendant
AND ROBIN
ALAN MACDUFF
Sixteenth Defendant
AND GRAHAM MCGARRY
Seventeenth Defendant
AND BRUCE BOIVIN
Eighteenth Defendant
AND GREGG ROSS
Nineteenth Defendant
AND ALASDAIR ROY
Twentieth Defendant
AND STUART DAVID MORGAN
Twenty-First
Defendant
2
AND ALEXANDER EDWIN CUTHBERT
Twenty-Second Defendant
AND JOHN PAUL HEDGES
Twenty-Third Defendant
AND GERARD CURRY
Twenty-Fourth Defendant
AND JAMES GARETH
DONKIN
Twenty-Fifth Defendant
AND WARWICK
GRIMMER
Twenty-Sixth Defendant
AND ROGER
SINCLAIR
Twenty-Seventh Defendant
AND JERARD
HANSON
Twenty-Eighth Defendant
AND EXECUTORS OF LYN SAUNDERS
Twenty-Ninth
Defendant
AND HENRY STOKES & PUBLIC TRUST
Thirtieth Defendants
AND JOHN FRENCH
Thirty-First
Defendant
Judgment: 1 April 2008 at 1.00 pm
JUDGEMENT AS TO COSTS
OF ASSOCIATE
JUDGE D.I. GENDALL
This judgment was delivered by Associate Judge Gendall on 1 April 2008 at 1.00
p.m. pursuant
to r 540(4) of the High Court Rules 1985.
Solicitors/Parties:
D Heenan
M Ryan, Anderson Lloyd, Solicitors, Queenstown
A J Fincham,
Russell McVeagh, Solicitors, Auckland
J G French, French Burt Partners
3
[1] On 8 October 2007 I gave a judgment in this proceeding striking out the
plaintiffs' claims
which were an appeal against a judgment of Judge Somerville in the
District Court on 5 December 2006 and a fresh proceeding brought
in this Court.
[2] In that 8 October 2006 judgment at paragraphs 136 & 137 I referred to the
issue of costs and stated:
"[136] As to costs, the defendants having succeeded with their strike out
applications, they are entitled to
an award of costs. No submissions
were put to me as to the quantum of costs to be awarded or as to who
should bear responsibility for these costs.
[137] That said the following directions with regard to this issue of costs
are
now made:
a) within 20 working days of the date of this judgment counsel for
the defendants are to file and serve any memoranda they may
wish to regarding the issue of costs;
b) within a further 20 working days of receiving those memoranda
from counsel for the
defendants, the plaintiff trusts, Mr.
Heenan, and the other persons said to be trustees of the plaintiff
trusts, Pamela Joan Wadsworth and Trevor Allen Lee, shall
have an opportunity to provide
memoranda in response on the
issue of costs;
c) all those memoranda are then to be forwarded
to me and I will
then decide the issue of costs based upon the material before the
Court."
[3] Various memoranda as to costs were filed. Then on 19 December 2007 I gave
a further judgment in this proceeding
which related to this issue of costs. In that
judgment I made an order awarding $15,528.89 costs and disbursements to the
fifteenth,
sixteenth, twenty-ninth and thirty-first defendants against David Stanley
Heenan ("Mr. Heenan"), Trevor Allen Lee ("Mr. Lee") and
Pamela Joan Wadsworth
("Ms. Wadsworth") jointly and severally and directed that the award of costs and
disbursements against Mr.
Heenan was to be paid from the fund held by the Public
Trustee noted at paragraph [11] of that judgment.
[4] So far as costs
sought by the other defendants in this proceeding were
concerned, in that 19 December 2007 judgment I directed that those defendants
were
to have an opportunity to provide additional memoranda with respect to the calculation
and breakdown of the costs and disbursements
sought in each case with the plaintiffs
having an opportunity to reply.
[5] The time for those additional memoranda to be filed
has now expired. The
plaintiffs have taken the opportunity to provide further memoranda and other
documents on 31 January 2008, 5
February 2008 and 20 February 2008.
[6] Counsel for the eighth defendant, Ms. Ryan and Mr. Couling, (who were also
counsel
at the hearing for the third to eleventh, the seventeenth and eighteenth, twenty-
third and thirtieth defendants) filed a further memoranda as to costs dated 5 February
2008.
[7] Mr. Finchem, counsel for the twelfth, thirteenth, fourteenth, twenty-first,
twenty-second, twenty-fourth, twenty-fifth,
twenty-sixth, twenty-seventh and twenty-
eighth defendants has also filed a further memorandum as to costs dated 24 January
2008.
[8] I have had an opportunity to consider all the additional material filed together
with the earlier memoranda and material
provided prior to my 19 December 2007
judgment and now give my decision on the costs issues.
Background
[9] In this proceeding
both the plaintiffs' appeal and the fresh substantive
proceedings brought against all the defendants were commenced in the names
of three
plaintiffs:
a) Heenan Family Trust 1960 by Mr. Heenan as the sole surviving trustee.
b) Amended
Heenan Family Trust 1960 by Mr. Lee and Ms. Wadsworth
as trustees and Mr. Heenan by certain power of attorney.
c) Amended Heenan Family Trust No. 2 by Mr. Lee and Ms. Wadsworth
as trustees and Mr. Heenan by the
power of attorney.
[10] Although the proceedings were purported to be issued on behalf of the three
trusts named above, in my
8 October 2007 judgment (and in earlier judgments of this
and other Courts) those entities were found not to exist.
[11] In
my 19 December 2007 costs judgment I noted that so far as the first named
plaintiff was concerned, in my view, the present proceeding
was effectively brought
by Mr. Heenan alone. With regard to the second and third plaintiffs however those
claims were brought not
only by Mr. Heenan but also by Mr. Lee and Ms. Wadsworth
"as trustees".
[12] It is also clear from an 18 May 2007 affidavit
of Ms. Wadsworth filed in this
proceeding together with a further affidavit of both Ms. Wadsworth and Mr. Heenan
sworn 12 December
2007 that she joined with Mr. Heenan in launching and
continuing these proceedings on behalf of the second and third plaintiffs.
In these
affidavits Ms. Wadsworth deposes that she was familiar with the three plaintiff trusts
and with the basis of the various
claims. In addition it seems she entirely supports Mr.
Heenan's assertions including the allegations of fraud/corruption/perversion
of the
course of justice against the various defendants. Further, it is clear from these
affidavits and the other material
before the Court that both Ms. Wadsworth and Mr.
Heenan have made claims and assertions throughout "also for and on behalf of Mr.
Lee" and that Mr. Lee through a power of attorney he has given and otherwise has
participated in the proceeding and the various actions
over time involving the second
and third plaintiff "trusts".
[13] At paragraph [136] of my 8 October 2007 judgment I noted that
the defendants
who had been successful in their strike out applications were entitled to awards of
costs against the plaintiffs.
I saw no reason why costs should not follow the event in
the normal way with those successful defendants being entitled to costs
from the
plaintiffs as unsuccessful parties in terms of Rule 47(a) High Court Rules.
[14] In addition, at para. 134 of that judgment
I made the following comments
which can be considered as a proper starting point for a consideration of costs in the
present case:
"As I signalled at the outset in this judgment, these proceedings bear all the
hallmarks of vexatious litigation.
They are pursued by an almost compulsive
litigant against a widening circle of defendants and involve extravagant and
unfounded claims and attacks upon those defendants. I have no doubt they are
designed to cause the defendants unnecessary
trouble and expense and to tie
up a group of defendants in litigation which can only be described as frivolous
and
vexatious. They are a misuse of the judicial process. I am fully satisfied
that it would be an injustice and an abuse of the process of the Court to allow
the proceedings to continue."
My Decision
[15] There are effectively two issues before the Court in addressing these costs
questions. The first is a determination
as to the identity of the parties who are to bear
the awards of costs to be made here in favour of the various defendants. The second
relates to the quantum of costs to be awarded in each case.
[16] Turning first to consider who is to be liable for the costs
award, at the outset it
needs to be remembered that Mr. Heenan is an undischarged bankrupt.
Notwithstanding this in an earlier costs
judgment dated 13 October 2006 in
proceedings CIV 2005-425-223, His Honour Justice John Hanson awarded costs
against Mr. Heenan and
directed these to be paid from a fund of money held by the
Public Trustee from certain sale proceeds following the mortgagee sale
of a Heenan
property. As I see the position, a similar order to this effect is appropriate here.
[17] In addition to Mr. Heenan,
as I have noted above, the other named plaintiffs in
this proceeding are Ms. Wadsworth and Mr. Lee. As I noted in my 19 December
2007, judgment, in my view it is significant that, in delivering his judgment
concerning claims for costs in proceedings CIV 2005-425-223,
His Honour Justice
John Hansen at paragraph [4] warned Ms. Wadsworth specifically that if she
continued to be involved with Mr. Heenan's
Court proceedings generally and if they
continued to be conducted in a similarly improper manner, Ms. Wadsworth might well
personally
face a costs order in the future. As I have already opined, that is precisely
what has occurred here. Although it may be that Ms.
Wadsworth and Mr. Lee have
once again "been sucked into these proceedings" in the words of His Honour Justice
John Hansen at paragraph
4 of his 13 October 2007 judgment, the clear warning given
in that judgment has been flagrantly ignored.
[18] Ms. Wadsworth
did not heed the warning particularly when she provided the
affidavits in support of the plaintiffs' present claims which she has
done. In addition,
by his participation in this proceeding, Mr. Lee has also clearly ignored this warning.
[19] That said and
again given the involvement of both Ms. Wadsworth and Mr.
Lee in these matters in their capacities as named second plaintiffs and
third plaintiffs,
in my view the same award of costs against them personally as will be made here
against Mr. Heenan is warranted.
[20] I now turn to consider the quantum of costs to be awarded.
[21] On this, the various defendants have generally sought
costs on an indemnity
basis.
[22] As to this matter, Rule 48C(1) provides:
"[48C Increased Costs and Indemnity Costs
(1) Despite rules 47 to48B, 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,
and
witness expenses reasonably incurred by a party (indemnity costs).
[23] In addition Rule 48C(4) provides:
"The Court may order a party to pay indemnity costs if--
(a) The party has acted vexatiously, frivolously, improperly,
or unnecessarily
in commencing, continuing, or defending a proceeding or a step in a
proceeding; or
(b) The party has ignored or disobeyed an order or direction of the Court or
breached an undertaking given to
the Court or another party to the
proceeding; or
(c) Costs are payable from a fund, the party claiming costs
is a necessary
party to the proceeding affecting the fund, and the party claiming costs
has acted reasonably
in the proceeding; or
(d) The person in whose favour the order of costs is made was not a party to
the proceeding
and has acted reasonably in relation to the proceeding;
or
(e) The party claiming costs is entitled to indemnity costs
under a contract
or deed; or
(f) Some other reason exists which justifies the Court making an order for
indemnity costs despite the principle that the determination of costs
should be predictable and expeditious.".
[24] The starting point noted in Hedley v Kiwi Co-Operative Dairies Limited (2002)
16 PRNZ 694 is that indemnity costs are to be awarded only where truly exceptional
circumstances exist. From Hedley however, Goddard J noted
that:
"circumstances warranting the exercise of the discretion to award indemnity
costs include:
(a) The
making of allegations of fraud knowing them to be false, and the
making of irrelevant allegations of fraud;
(b) Evidence of particular misconduct that causes loss of time to the Court
and other parties;
(c)
The fact that the proceedings were commenced with some ulterior
motive;
(d) The fact that the proceedings
were commenced in wilful disregard of
known facts or clearly established law;
(e) The making of allegations
that ought never to have been made or the
undue prolongation of a case by groundless contentions;
(f)
An imprudent refusal of an offer to compromise".
[25] Significantly at page 19 of the plaintiffs' statement of claim in proceeding
1023 the pleading notes that:
"These proceedings are designed to cause these thirty one defendants expense
..."
[26]
In my view the circumstances of the present proceedings constitute what is an
overwhelming case for an award of indemnity costs
in favour of the defendants against
Mr. Heenan, Mr. Lee and Ms. Wadsworth. Allegations are made in these proceedings
which, in my
view, should never have been made. The proceedings allege fraud quite
improperly and they have been prolonged unnecessarily through
the actions of the
plaintiffs. They are improperly brought on behalf of the plaintiff trusts who have been
found not to exist and,
in my view, they are likely to have been commenced with an
ulterior motive. This is all wholly unacceptable.
[27] I turn now
to the issue of quantum. On this it is clear that if, as here, actual
costs are sought, an appropriate detailed breakdown of those
costs should be provided
to the Court ACC v Robinson, 6 December 2002, O'Regan J., High Court Whangarei
AP38/02. I will now deal
with this quantum question in relation to each of the three
separately represented groupings of defendants.
(A) Fifteenth,
Sixteenth, Twenty-Ninth and Thirty-First Defendants
[28] An order for costs GST and disbursements totalling $15,528.89 was made
in
favour of these defendants against Mr. Heenan, Mr. Lee and Ms. Wadsworth jointly
and severally at paragraphs [26] and [27] of
my 19 December 2007 judgment. This
order is confirmed here.
(B) Eighth Defendant (together with Third, Fourth, Fifth, Sixth,
Seventh, Ninth,
Tenth, Eleventh, Seventeenth, Eighteenth, Twenty-Third and Thirtieth
Defendants)
[29] On 3 October
2007 Ms. Ryan who appeared as counsel for each of these
thirteen defendants filed her memorandum as to costs. On 5 February 2008,
Mr.
Couling on behalf of Ms. Ryan filed a further memorandum as to costs. These
memoranda indicated that they were provided "on behalf
of the eighth defendant". At
the hearing of the strike out application, however, Ms. Ryan appeared as counsel for
not only the eighth
defendant but also each of the twelve defendants noted above
under this section (B). I am proceeding therefore on the basis that
each of these
memoranda relate to costs sought for not only the eighth defendant but also for the
other twelve defendants noted in
this section.
[30] In these memoranda, counsel seek total legal costs of $23,979.55 plus GST of
$3,092.48 and disbursements
of $1,278.43 giving a grand total of $28,350.46. A
detailed breakdown of the actual legal costs, GST and disbursements incurred by
these
defendants and claimed against the plaintiffs has been provided.
[31] So far as the costs claim of $23,979.55 is concerned,
counsel here indicated
that this is made up as follows:
(i) 9.06 hours charged at $220.00 = $ 1,993.20
(ii)
81.87 hours charged at $245.00 = $20,058.15
(iii) 6.22 hours charged at $310.00 = $ 1,928.20
$23,979.55
[32] In addition to these costs, GST at $3,092.48 on this sum and disbursements of
$1,278.43 are claimed. The disbursements include
a Court filing fee of $600.00,
photocopying of $180.12, a mileage charge of $396.80, together with other minor
disbursements.
[33]
In my view the hourly rates charged in this matter for the various staff
members involved effectively on behalf of these thirteen
defendants in preparation for
and the hearing of this strike out proceeding are appropriate. And, given the complex
nature of these
proceedings, the wild and unsubstantiated allegations made against all
these defendants which needed to be dealt with individually
and the lengthy period
occupied by the hearing of these applications, the total hours charged together with the
disbursements listed
are reasonable. I therefore approve the total costs, GST and
disbursements of $28,350.46 claimed here by counsel for these thirteen
defendants.
An order to this effect is to follow.
(C) Twelfth, Thirteenth, Fourteenth, Twenty-First, Twenty-Second, Twenty-
Fourth, Twenty-Fifth, Twenty-Sixth, Twenty-Seventh and Twenty-Eighth
Defendants
[34] So far as these defendants
are concerned, counsel have filed memoranda as to
costs dated 1 November 2007 and 24 January 2008. The claimed indemnity costs
sought
by counsel for these defendants totalled $35,229.00. In addition disbursements
totalling $1,525.00 are sought.
[35] With regard
to the costs claim of $35,229.00 counsel advise that the breakdown
using an average hourly rate is as follows:
a) Senior
Solicitor at $299.00 per hour hours spent 63.8 $19,096.00
b) Law Graduate at $155.00 per hour 53.6 hours
$ 8,283.00
c) Junior Solicitor at $231.00 per hour 12 hours $ 2,772.00
d) Partner
hourly rate $612.00 8.3 hours $ 5,078.00
TOTAL
$35,229.00
[36] So far as the $1,525.00 clamed for disbursements are concerned, this included
$800.00 for filing fees
on two strike out applications, domestic air travel to Dunedin
for the hearing of this matter totalling $648.00 and certain other
minor disbursements.
[37] Although it might be thought that the hourly rates charged in this matter for the
various staff members
engaged by counsel for these defendants is towards the higher
end of charges particularly for the partner involved, I am satisfied
that these rates are
appropriate. The bulk of the work here was completed by a senior solicitor and law
graduate at appropriate rates.
The highest charge-out rate which was for a partner
involved only a total of 8.3 hours of a total of 137.7 hours. It is significant
also that
this work was carried out on behalf of 10 separate defendants and ranged over a
number of different claims made against
them.
[38] As I have already noted elsewhere, the plaintiffs by their actions have made
wild and unsubstantiated allegations
which have included allegations against these
defendants as well. All these baseless allegations needed to be responded to on an
individual basis.
[39] I am satisfied therefore that the total hours charged together with the
disbursements listed are reasonable.
I therefore approve the total costs at $35,229.00
and disbursements at $1,525.00 claimed here by these 10 defendants. An order to
this
effect is also to follow.
[40] For the submissions advanced on behalf of these defendants, one other matter
needs to be
mentioned. Although in their memoranda, counsel for these defendants
suggested that costs only on a Category 2B scale of $8,800.00
should be awarded
against Ms. Wadsworth and Mr. Lee and the balance of the indemnity costs should be
awarded against Mr. Heenan alone,
for the reasons I have outlined earlier in this
judgment, I see no justification for this approach. The total award of costs and
disbursements in favour of these 10 defendants
is to be met on a joint and several basis
by Mr. Heenan, Mr. Lee and Ms. Wadsworth.
Orders
[41] As to the indemnity costs and
disbursements sought here by the individual
defendants orders are now made as follows:
a) The order made at paragraph
27 of my earlier costs judgment dated 19
December 2007 is confirmed to the following effect:
(i)
That Mr. Heenan, Mr. Lee and Ms. Wadsworth jointly and
severally are to pay the sum of $15,528.89 costs and
disbursements to the fifteenth, sixteenth, twenty-ninth and
thirty-first defendants.
b) An order is made that Mr. Heenan, Mr. Lee and Ms. Wadsworth jointly
and severally are to pay the sum
of $28,350.46 costs and disbursements
to the third, fourth, fifth, sixth, seventh, eighth, ninth, tenth, eleventh,
seventeenth, eighteenth, twenty-third and thirtieth defendants.
c) An order is made that Mr. Heenan, Mr.
Lee and Ms. Wadsworth jointly
and severally are to pay the sum of $35,229.00 costs and $1,525.00
disbursements
to the twelfth, thirteenth, fourteenth, twenty-first,
twenty-second, twenty-fourth, twenty-fifth, twenty-sixth, twenty-
seventh and twenty-eighth defendants.
d) A further order is made that all the awards of costs and disbursements
noted in this paragraph against Mr. Heenan personally are to be paid
from the fund held by the Public
Trustee noted at paragraph 11 of my
judgment as to costs dated 19 December 2007.
`Associate Judge D.I. Gendall'
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