Blakesfield Limited v Foote [2016] NZHC 1354 (22 June 2016)

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[1] Blakesfield Limited (Blakesfield) developed a residential subdivision at Prebbleton, adjacent to the property of Ayleath Foote, Lee Foote and Scott Whitaker (the Defendants). Blakesfield brought an action in nuisance alleging that a line of 38 eucalytpus trees (the trees) located on the defendants’ land encroach onto its land.

[2] In a judgment released on 11 June 2015, I found that Blakesfield had established its case there was an actionable nuisance.¹I ordered that six trees were to be removed, six were able to remain subject to conditions, and one was able to remain provided it was trimmed such that there was no encroachment whatever.

_{encapsulated a total of 38 trees. At trial only 27 remained in issue as
it was clear that}

the other 11 were not adjacent to Blakesfield’s land as it had sold the relevant

[4] Following the release of that judgment, the parties have been unable to agree on the issue of costs. Blakesfield seeks costs on a 2B basis totalling $47,163. It also seeks disbursements in the sum of $34,951.44. The total award sought by Blakesfield is $82,144.44. In response, the defendants say that each party has achieved some measure of success and the appropriate award is that costs should lie where they fall.

[5] It is common ground that costs are at the discretion of the Court.⁴Though the discretion is a wide one it is not unfettered and must be exercised judicially. There is a presumption that costs will follow the event in favour of the successful party.⁵

Matters can be more difficult in cases where each party had some success. In Packing In Ltd (in liq) Formerly Known As Bond Cargo Ltd v Chilcott, Tipping J, delivering the judgment of the Court, commented:⁶

[5] In a case such as the present, where in broad terms each party has had similar success, we do not consider it helpful to focus too closely on the question which party has failed and which has succeeded. Costs in a case such as this should rather be based on the premise that approximately equal success and failure attended the efforts of both sides. To that starting point should be added issues such as how much time was spent on each transaction or group of transactions in issue, and any other matters which can reasonably be said to bear on the Court’s ultimate discretion on the subject of costs. In the end, as in all costs matters, the Court must endeavour to do justice to both sides, bearing in mind all material features of the case.

[6] The ultimate inquiry is what award is required in the circumstances to do justice between the parties. As Bowen LJ commented in Forster v Farquhar:⁷

We can get no nearer to a perfect test than the inquiry whether it would be more fair as between the parties that some exception should be made in the special instance to the rule that costs should follow the event upon success.

[7] Blakesfield claims it was the clear victor in the substantive proceedings and is accordingly entitled to a costs award. It points to the following factors:

(a) it established the encroachment by the trees constituted an actionable nuisance;

(b) the Court held the defence of estoppel as pleaded had not been made out; and

[8] Blakesfield also seeks to rebut any suggestion the limited equitable relief I extended to the defendants ought to provide a basis for not awarding Blakesfield costs. It says the relief related to all 27 trees that were the subject of the proceeding. Further, the fact removal of trees was not ordered does not alter the finding that an actionable nuisance had been established in relation to all 27 trees. Finally, the defence of estoppel as pleaded failed.

(a) Blakesfield’s claim as pleaded related to 38 trees. The 11 trees that did not adjoin Blakesfield’s land were not formally abandoned as part of its claim until trial. Further, the claim in relation to these 11 trees was inevitably going to fail. It is incorrect to suggest the claim was limited to only 27 trees.

(b) The defendants took substantial time in resisting certain aspects of the claim (such as that certain tree trunks did not encroach at all, that certain encroachment of tree trunks did not constitute actionable

nuisance, and that the shadow cast by the trees did not amount to an actionable nuisance).

(c) The final result was that 20 trees out of 38 would be removed (6 by Court order and 14 by agreement of the defendants). This reflects the approximate partial success of each party.

(d) Blakesfield unnecessarily pleaded two causes of action, nuisance and encroachment. As I found, encroachment does not amount to a separate cause of action. On this basis it is suggested Blakesfield was only successful on one of the two causes of action as pleaded.

(e) The Court found an estoppel argument arose (albeit not the one that was pleaded).

[10] I consider Blakesfield was substantially successful in its proceeding. It did obtain orders in relation to 27 trees. As a result of the proceeding, the defendants agreed to wholly remove 14 trees. A further six were ordered to be removed. Substantial success was obtained in relation to the remaining seven trees.

[11] That said, it is indisputable the defendants also had some success. It was established 11 trees out of the 38 to which the claim originally related were beyond the remit of the proceeding. They did not touch upon land of Blakesfield, yet it initially included these trees in its claim. Blakesfield accepted the claim in relation to these trees could not succeed. The defendants also managed to retain seven of the trees, subject to conditions. This represents some success for the defendants.

[12] Counsel for both sides have sought to make something of what I see as a genuine misunderstanding in relation to a costs memorandum sent by Blakesfield to the defendants. A formal memorandum, properly intituled, was sent to the defendants, accompanied by a letter. The defendants quite reasonably considered this had been filed in Court. It was not marked “draft”. I place no weight on this misunderstanding.

[13] Both parties have made reference to settlement discussions in the lead up to the litigation. These can be summarised as follows:

(a) 9 April 2015 – letter from the defendants to Blakesfield: An offer to settle was made. Eight trees would be removed, nine trees would be trimmed to a height of four metres, access to Blakesfield’s land would be required. By way of compensation, Blakesfield was to pay the defendants the sum of $150,000.

(b) 18 May 2015 – email from the defendants to Blakesfield: In this email, the defendants agreed to include further trees to be removed, and the quantum of compensation reduced from $150,000 to

(c) 19 May 2015 – email from the defendants to Blakesfield: This communication insisted Blakesfield engage in a resolution and claimed the offer would be more than it could expect to achieve in Court.

[14] Counsel for the defendants has sought to take issue with Blakesfield referring to a letter sent by counsel for Blakesfield dated 24 April 2015, and an email sent by Blakesfield dated 13 May 2015. Each of these communications was marked simply “without prejudice”. Counsel for the defendant phrased the objection in these terms:

16 The plaintiff’s memorandum annexes two offers from the plaintiff to which plaintiff’s counsel refer. The offers (annexures “C” and “D” to the plaintiff’s memorandum) were not marked “without prejudice except as to costs” or any accepted equivalent phrase ... nor did they refer to any such phraseology in their wording at any point. The purpose of the need for express phrasing is to put the other party on notice of the intention to rely on the offer on the question of costs. The plaintiff simply did not do that. The offers accordingly do not comply with rule 14.10(1)(a). They are inadmissible on the question of costs and must be disregarded by the Court.

undoubtedly correct. The commonplace nature of the phrase “without prejudice save

as to costs”, or similar such phrases, emphasises this self-evident proposition.⁸The policy underpinning the notion of “without prejudice” offers was considered by Hardie Boys J in DF Hammond Land Holdings Ltd v Elders Pastoral Ltd, where he commented:⁹

The privilege attached to “without prejudice” communications is based to a large degree on considerations of public policy. It is intended to encourage and facilitate the negotiation and settlement of disputes, by preventing any possible admission of liability being raised against the party making it.

The without prejudice rule is a rule governing the admissibility of evidence and is founded upon the public policy of encouraging litigants to settle their differences rather than litigate them to a finish. It is nowhere more clearly expressed than in the judgment of Oliver L.J. in Cutts v. Head [1984] Ch.

That the rule rests, at least in part, upon public policy is clear from many authorities, and the convenient starting point of the inquiry is the nature of the underlying policy. It is that parties should be encouraged so far as possible to settle their disputes without resort to litigation and should not be discouraged by the knowledge that anything that is said in the course of such negotiations (and that includes, of course, as much the failure to reply to an offer as an actual reply) may be used to their prejudice in the course of the proceedings. They should, as it was expressed by Clauson J. in Scott Paper Co. v. Drayton Paper Works Ltd. (1927) 44 R.P.C. 151, 156, be encouraged fully and frankly to put their cards on the table.... The public policy justification, in truth, essentially rests on the desirability of preventing statements or offers made in the course of negotiations for settlement being brought before the court of trial as admissions on the question of liability.

⁸The phrase “without prejudice” was described in the following way by Lindley LJ in Walker v

I think they mean without prejudice to the position of the writer of the letter if the terms he proposes are not accepted. If the terms proposed in the letter are accepted a complete contract is established, and the letter, although written without prejudice, operates to alter the old state of things and to establish a new one.

⁹_{DF Hammond Land Holdings Ltd v Elders Pastoral Ltd
[1989] NZCA 203; (1989) 2 PRNZ 232 (CA) at 236.}

¹⁰Rush & Tompkins Ltd v Greater London Council [1988] UKHL 7; [1989] AC 1280 (HL) at 1299. See to Westgate

[17] Just as the common law reflected the effect of without prejudice communications, it also recognised an exception for communications expressed to be without prejudice save as to costs.¹¹

[18] Where a settlement offer is expressed to be without prejudice, absent any reservation, the offeree is entitled to proceed on the basis the offer will not subsequently be relied upon in resolving costs. If not, the policy underpinning the regime would be undermined. This is underscored by s 57 of the Evidence Act

(1) A person who is a party to, or a mediator in, a dispute of a kind for which relief may be given in a civil proceeding has a privilege in respect of any communication between that person and any other person who is a party to the dispute if the communication—

(b) was made in connection with an attempt to settle or mediate the dispute between the persons.

(2) A person who is a party to a dispute of a kind for which relief may be given in a civil proceeding has a privilege in respect of a confidential document that the person has prepared, or caused to be prepared, in connection with an attempt to mediate the dispute or to negotiate a settlement of the dispute.

(b) evidence necessary to prove the existence of such an agreement in a proceeding in which the conclusion of such an agreement is in issue; or

¹¹See Cutts v Head [1984] Ch 290 (CA) at 305, cited in Specialized Bicycle Components Inc v Sheppard Industries Ltd [2010] NZHC 2080; [2011] 2 NZLR 242 (HC) at [87]–[88]. See too AMEV Finance Ltd v Artes Studios Thoroughbreds Pty Ltd (1988) 13 NSWLR 486 at 487; Watt v Watt (1988) 12 Fam LR 589 (NSWSC) at 604; Liquorland (Australia) Pty Ltd v CYG Holdings Pty Ltd NSWCA BC9505008, 27 March 1995; Reed Executive plc v Reed Business Information Ltd [2004] EWCA Civ 887, [2004] 3 All ER 942 at [21]–[37]; Oceanbulk Shipping and Trading SA v TMT Asia Ltd [2010] UKSC 44, [2011] 1 AC 662 at [32], citing the judgment of Walker LJ in Unilever plc v Proctor & Gamble Co [1999] EWCA Civ 3027; [2000] 1 WLR 2436 (CA) at 2444–2446.

¹²Emphasis added. The effect of privilege is explained by s 53 of the Evidence Act 2006.

[19] Rule 14.10 of the High Court Rules further emphasises the requirement that the without prejudice offer needs to be explicit if it is sought to be relied upon for the purposes of costs. It provides:

(1) A party to a proceeding may make a written offer to another party at any time that—

(2) The fact that the offer has been made must not be communicated to the court until the question of costs is to be decided.

[20] The Evidence Act and the High Court Rules make the position clear. Communications which are without prejudice are inadmissible due to the privilege attaching to them. A reservation can be made for costs, but it must be express.¹³

[21] I am therefore in agreement with the defendants. The plaintiff did not seek dispensation for the purpose of any costs dispute. As a result, the defendants were entitled to proceed on the basis the communications would not be disclosed. This emphasises the careful use of language in cases such as this, and the distinction between the legal effect of without prejudice, and without prejudice save as to costs. I therefore put the communications expressed as “without prejudice” simpliciter to one side.

[22] However, the remaining correspondence is admissible. I note the subsequent prosecution of the matter was conducted reasonably. The compensation sought by the defendants was substantial. As compared to what they were seeking in pre- contractual negotiations, the outcome for them was substantially less. They secured no financial compensation and more trees were ultimately removed. On the limited settlement information that is admissible, I consider these communications favour

¹³Specialized Bicycle Components Inc v Sheppard Industries Ltd [2010] NZHC 2080; [2011] 2 NZLR 242 (HC), citing Tomlin v Standard Telephones and Cables Ltd [1969] 1 WLR 1378 (CA); Vaucluse Holdings Ltd v Lindsay [1997] NZCA 44; (1997) 10 PRNZ 557 (CA); Unilever plc v Procter & Gamble Co [1999] EWCA Civ 3027; [2000] 1 WLR 2436 (CA); Wicks v Waitakere City Council HC Auckland CIV-2005-404-5146, 13 October 2006; Jung v Templeton [2009] NZHC 2064; [2010] 2 NZLR 255 (HC).

[23] The defendants have submitted the proceeding ought to have been brought in the District Court because it was worth less than the $200,000 financial civil jurisdiction of that Court.¹⁴On this basis it is argued that r 14.13 of the High Court Rules has application. That rule provides that where a proceeding could have been brought in the District Court, scale costs applicable in that Court should have application over the High Court costs regime.

[24] This submission gives rise to two issues. First, could the proceeding have been before the District Court. Second, if so, should I nonetheless exercise my discretion to permit the High Court Rules to apply in respect of costs.

[25] In a further memorandum on costs Blakesfield disputed the defendants submissions, arguing the District Court did not have jurisdiction to grant the relief sought by the plaintiff, that is, a declaration. Blakesfield relied on the decision of Heath J in Taylor v Attorney-General to support this contention. ¹⁵However, even if the District Court did have jurisdiction, Blakesfield submitted the proceeding was properly brought in the High Court and it should exercise its general discretion under r 14.1 to allow costs at the High Court scale rate. Blakesfield further submitted that relevantly the defendants did not object to the proceeding being filed in the High Court at any point prior to the hearing.

[26] The defendants in reply assert the District Court does have jurisdiction to make declarations. Furthermore, Blakesfield did not actually require a declaration as an alternative remedy. A mandatory injunction would have sufficed.

Where the case is straightforward, and the amount in issue is not substantial, it will therefore be appropriate for every reasonable endeavour to be made by solicitors and counsel to have the proceeding heard and resolved in the District Court.

¹⁵Taylor v Attorney-General [2015] NZHC 1706, [2015] 3 NZLR 791, applying Belcher v Chief

[28] The issue ultimately reduces to whether the District Court would have had jurisdiction to grant the declaratory relief pleaded by Blakesfield.

[29] Declarations were historically a form of equitable relief granted in conjunction with other specific relief in equity, such as an order for specific performance or an injunction.¹⁷In New Zealand a declaration may now be obtained in three ways:

[30] The Declaratory Judgments Act 1908 empowers the High Court to give declaratory judgments or orders, but not the District Court.¹⁸In terms of declarations of inconsistency with the New Zealand Bill of Right Act 1990, Heath J, in Taylor v Attorney-General and the Court of Appeal in Belcher v Chief Executive of the Department of Corrections both held the District Court does not have jurisdiction to grant such a declaration.¹⁹

[31] However, the District Courts Act 1947 provides the District Court with the same equitable jurisdiction as the High Court to hear and determine proceedings.²⁰

Because a declaration is historically an equitable remedy, the District Court has previously been willing to grant declarations.²¹However it has also been held the Court only has jurisdiction to grant declarations as ancillary relief, not principal

¹⁷W Covell, K Lupton and J Forder Covell & Lupton Principles of Remedies (5th ed, LexisNexis

¹⁸Declaratory Judgments Act 1908, Long Title; Vincent v Kaipara District Council [1993] DCR

1042 (DC) at 1044; Department of Labour v Books & Toys (Wanaka) Ltd, (T/A Wanaka Paper

¹⁹Taylor v Attorney-General, above n 15 at [40]; Belcher v Chief Executive of the Department of

[32] Whether the District Court has jurisdiction to grant declaratory relief, and the ambit of any such jurisdiction, is not entirely clear. A plaintiff is free to choose the relief it seeks. If proceedings had been filed in the District Court, it seems a legitimate argument could have arisen as to whether the District Court had jurisdiction to grant the relief pleaded. That being the case, I do not consider a costs judgment to be the appropriate place to determine the issue.

[33] The argument also brings to bear the difficulty of ascribing a monetary value to equitable relief. Although there will be quantifiable costs in having the trees removed, it is more difficult to quantify the value Blakesfield obtains in having the nuisance removed.

Responsibility to ensure that such a claim is commenced or transferred to the District Court does not end with the plaintiff’s advisers. A defendant’s solicitors or counsel are also under an obligation to consider whether or not the proceeding should be removed into the District Court.

[35] Because I cannot definitively conclude the District Court is where these proceedings should have been filed, I do not consider r 14.13 applies.

[36] Having regard to all the matters presently discussed, I consider the appropriate costs award is that the defendants pay Blakesfield costs on a 2B basis, in accordance with the High Court Rules less a discount of 35 per cent to reflect the partial success the defendants had in resisting the claim as advanced by Blakesfield.²⁴

[37] Certain items included in the costs award claimed by Blakesfield ought not be included. For example, I do consider this a case which required second counsel. Though both parties availed themselves of second counsel, the focus is on what the

_{dispute required, not what the parties did. There are other adjustments
I have made}

to the items claimed by the plaintiff in recognition of the objections taken by the defendants to its costs calculation.

(b) no interpreter was utilised in the course of the proceeding, and no witness was called which would require an interpreter;

(c) the $2,058.50 incurred in respect of aerial photography was neither necessarily or appropriately incurred and should not, accordingly, be the subject of a costs award;

$1,936.60 as this is all that truly relates to the proceeding, but the defendants maintain he was not truly independent and that no award should be made at all;

(e) the sum of $13,581.96 claimed for the evidence of Mr Kevin Hayes is excessive; drawing an analogy with the arboricultural witness, the sum should not exceed $1,150;

(f) the sum of $1,150 claimed for the evidence of Mr Hutching should be disallowed as he was not a properly independent witness.

(b) in circumstances where an interpreter was not ultimately required because of the plaintiff’s own election not to call a witness, the plaintiff has failed to show why the interpreter was reasonably necessary for the conduct of the proceedings. The disbursement is not allowed;

(c) I do not consider the aerial photography was necessary to demonstrate to the court the extent of the shading of the trees. Given the limited relevance of length of the shadows of the trees, the issue of shading was sufficiently clear from the land-based photographs. This disbursement is not allowed;

(d) I consider Mr Craig’s disbursements as an expert witness to have been reasonably incurred. It is not clear to me however from the material filed, and in particular from the narrative provided in his invoices, that the costs as they relate to performing that task exceed the invoice for

(e) in terms of Mr Hayes’s evidence, I do not consider the arboricultural witnesses to be a useful comparison. Mr Hayes is a registered surveyor and the survey was a key and much used piece of evidence central to the Court’s determination of the dispute. I consider his costs have been reasonably incurred;

(f) I consider Mr Hutching to have primarily been a witness of fact charged with developing the landscape mitigation strip. In giving his evidence about the difficulties in cultivating that area he obviously was required to call upon his expert knowledge, but I do not consider the fact his evidence drew on that expertise means Blakesfield is able to recover his professional costs.

[40] I have also applied the 65:35 ratio to the disbursements to mark the relative success of the parties. For clarity, I have annexed schedules of costs and disbursements.

[41] The defendants are to pay to the Blakesfield: (a) costs in the sum of $24,705.85; and

COSTS
Step	Description	Time (days)	Amount ($1,990 per day)
1	Commencement of proceeding by plaintiff	3	$5,970.00
3	Reply by plaintiff	0.8	$1,592.00
10	Preparation for case management conference	0.4	$796.00
11	Filing memorandum for first and subsequent case management conference	0.4	$796.00
13	Appearance at first or subsequent case management conference	0.3	$597.00
15	Preparation for appearance at pre-trial conference	0.5	$995.00
20	List of documents on discovery	2.5	$4,975.00
30	Plaintiff’s preparation of briefs or affidavits	2.5	$4,975.00
31	Plaintiff’s preparation of list of issues, authorities and common bundle	2.5	$4,975.00
33	Preparation for hearing	3	$5,970.00
34	Appearance at hearing for principal counsel	3	$5,970.00
29	Sealing judgment	0.2	$398.00
Total		19.1	$38,009.00
Less 35 per cent			$24,705.85

DISBURSEMENTS
Description	Amount
Ministry of Justice filing fee on claim	$1,350.00
Ministry of Justice filing fee for amended statement of claim	$110.00
Ministry of Justice filing fee plaintiff ’s statement in reply	$110.00
Ministry of Justice scheduling fee	$1,600.00
Ministry of Justice hearing fees	$11,200.00
Copying fees	$406.50
A Craig – expert fee (adjusted)	$1,936.60
K Hayes – expert fee	$13,581.96
A Holland – expert fee	$1,150.00
Less refund from Ministry of Justice	($3,200)
Disbursements Total	$28,245.06
Less 35 per cent	$18,359.29
GRAND TOTAL	$43,065.14

BETWEEN	BLAKESFIELD LIMITED Plaintiff
AND	AYLEAH VERONICA FOOTE, LEE FOOTE AND SCOTT FRANCIS WHITAKER _Defendants

Hearing:	17 June 2016 (On the papers)
Appearances:	K Clay and G Cooper for Plaintiff R Raymond for Defendants
_Judgment:	_{22 June 2016}

High Court of New Zealand Decisions

Blakesfield Limited v Foote [2016] NZHC 1354 (22 June 2016)

High Court of New Zealand

Blakesfield Limited v Foote [2016] NZHC 1354 (22 June 2016)