Hoeberechts v Sprott [2019] NZHC 651 (1 April 2019)

Last Updated: 10 April 2019

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2017-404-0960 [2019] NZHC 651

UNDER	Section 21 of the Administration Act 1969
IN THE MATTER	of the estate of THOMAS JAMES SPROTT, probate of which was granted under CIV-2014-484-8127 on 30 June 2014; the Estate of ETHEL MARION SPROTT, probate of which was granted under CIV-2014-484-8126 on 30 June 2014, and the Sprott Family Trust and the Rodleigh Family Trust
BETWEEN	LINDSAY ANNE HOEBERECHTS (nee SPROTT) Plaintiff
AND	ADRIAN JAMES SPROTT Defendant

Hearing:	On the papers
Counsel:	V Bruton QC and P Brown for the Plaintiff T J G Allan and K M Wakelin for the Defendant
Judgment:	1 April 2019

COSTS JUDGMENT OF ASSOCIATE JUDGE SMITH

This judgment was delivered by me on 1 April 2019 at 3.00pm, pursuant to r 11.5 of the High Court Rules

Registrar/Deputy Registrar

Solicitors / Counsel:

P Brown, Auckland

V Bruton QC, Auckland Grove Darlow, Auckland

HOEBERECHTS (nee SPROTT) v SPROTT [2019] NZHC 651 [1 April 2019]

[1] On 31 October 2018 I gave judgment on an application by the defendant for further particulars of the plaintiff's amended statement of claim.¹ I indicated my preliminary view that the defendant was entitled to costs on a 2B basis, with disbursements to be fixed by the Registrar. I directed that if counsel were unable to agree on those costs, memoranda could be filed within 20 working days.

[2] Counsel were unable to agree the costs, and memoranda were subsequently filed by both parties. I now give judgment on the costs claims.

[3] In his costs memorandum, Mr Allan seeks costs and disbursements totalling
$10,981 as follows:

SCHEDULE OF COSTS

Item	Description	Rate	Allocated Days	Daily Rate	Total
22	Filing interlocutory application for further particulars	2B	0.6	$2,230	$1,338.00
24	Preparation of written submissions	2B	1.5	$2,230	$3,345.00
25	Preparation by applicant of bundle for hearing	2B	0.6	$2,230	$1,338.00
26	Appearance at hearing of defended application	2B	0.5	$2,230	$1,115.00
36	Preparation of written submissions in reply to plaintiff's memorandum	2B	1.0	$2,230	$2,230.00
36	Preparation and filing of costs memorandum	2B	0.5	$2,230	$1,115.00
	Total Costs				$10,481.00

Disbursements

Filing fee
Interlocutory application on notice	$500.00
Subtotal	$500.00
TOTAL COSTS PLUS DISBURSEMENTS	$10,981.00

[4] In her submissions, Ms Bruton challenged the item 36 claims for $1,115 for Mr Allan's costs memorandum and $2,230 for his post-hearing submissions on the outstanding particulars issues. She also submitted that, as the defendant was only partially successful in the particulars application, the costs that would otherwise have been awarded should be reduced by one-third to one-half.

[5] On the reply submissions on particulars, Ms Bruton noted Mr Allan's advice that 5.5 hours of time was expended on this step, but submitted that Schedule 3 to the High Court Rules 2016 makes no express provision for this step. She also submitted that much of the time spent by Mr Allan on his particulars reply memorandum would have been on the foreseeability of loss issue, on which the particulars request was refused.

[6] Ms Bruton also submitted that the plaintiff should not be required to pay any costs awarded against her until she receives an interim distribution from the estate. Ms Bruton queried whether the defendant has been paying his own costs of this proceeding out of the estate, submitting that, if that has been occurring, it is only fair that the plaintiff should also have access to the estate funds to meet costs (including adverse costs awards).

[7] I deal with each of the issues raised by Ms Bruton in turn.

Is the defendant entitled to costs on his costs submissions?

[8] Ms Bruton's principal submission under this heading was that, because the defendant should not receive all of the costs he has claimed, the costs submissions will have ultimately "cancelled each other out". The result of that would be that the defendant has not been the successful party as far as the costs application is concerned, and the ordinary rule that costs normally follow the event² should not apply in respect of the claim for costs on the defendant's costs memorandum.

[9] I do not accept that submission. I accept Mr Allan's submission that a broader focus is required, and that focusing on who initiated each step and whether the
initiating party was successful on that individual step is only part of the broader picture.³ I take Ms Bruton's submission under this heading into account later in this judgment when I assess the defendant's costs at 80 per cent of the amount claimed.

Is the defendant entitled to the amount claimed for his (post-hearing) reply submissions on the outstanding particulars issues?

[10] I accept Mr Allan's submission that it does not matter that no specific allocation is made for this item in Schedule 3 to the High Court Rules 2016. Item 36 of Schedule 3 specifically envisages that costs may be awarded where steps are taken in a proceeding that are not specifically listed in the Schedule.

[11] That said, I accept that a substantial amount of time spent on Mr Allan's post-hearing particulars submissions would have been spent on the breach of trust/foreseeability of loss issue, on which the plaintiff ultimately prevailed. I take that into account in the overall 20 per cent reduction to the costs claim that I make in the next section of this judgment.

To what extent (if any) should the costs claimed be reduced to reflect the fact that the defendant was only partially successful in the application?

[12] Ms Bruton submitted that the defendant was successful on only two out of six particulars requested, and partially successful on two others. On that basis, she proposed that the costs to which the defendant would otherwise be entitled should be reduced by one-third to one-half.

[13] In reply, Mr Allan submitted that most of the particulars were either teased out of Ms Bruton in the course of the hearing, or were subsequently ordered by the Court. The defendant was the substantially successful party, and should be entitled to costs. He submitted that the majority of the time at the hearing was taken up with the Court requesting particulars from Ms Bruton, and obtaining such particulars as she was able and willing to supply at the hearing. He characterised the adjournment to enable Ms Bruton to obtain further instruction and file further submissions as an indulgence granted to the plaintiff by the Court.
[14] Mr Allan acknowledged that, where a party to an application has been partially successful, the Court will endeavour to do justice to both sides. That will involve the Court making a realistic appraisal of the end result, rather than by focusing on who initiated what step, and the extent to which a particular step may have succeeded or failed.⁴

[15] I do not consider that costs should be reduced to the extent proposed by Ms Bruton. The plaintiff succeeded on only two of the particulars that were in issue, and the only reason it was not necessary to give judgment on three of the particulars originally sought was that the answers were provided by Ms Bruton at the hearing and recorded in the Court's minute dated 15 October 2018 (the plaintiff's primary position at the hearing was that it was premature to deal with the particulars request while the Coombes Road property remained unsold, and it appears that for that reason some answers that might have been provided earlier by the plaintiff had not been provided).

[16] Looking at the matter overall, the defendant has been substantially successful, but I accept that some costs reduction is appropriate to reflect the fact that particulars were not ordered on two of his requests. In my view the justice of the situation will be met if the defendant is awarded 80 per cent of the total amount claimed (including the item 36 claim for the costs memorandum), together with the filing fee of $500.00 as claimed. I accordingly order that the plaintiff is to pay the defendant the sum of
$8,384.80 for costs, and $500.00 for disbursements.

Should payment of the costs be postponed until the plaintiff receives a distribution from the estate?

[17] I decline to make any stay or postponement order. First, the plaintiff's ability to meet a costs award is not relevant on the questions of whether the defendant is entitled to the award and whether (if so) he should be paid immediately. Absent an order staying execution of any costs judgment (and no formal application for such an order has been made), I see no basis for making the order sought. Whether the plaintiff is or is not entitled to a distribution from the estate is an issue for trial, and I do not have sufficient evidence before me to effectively uphold the plaintiff's position on that
point by ordering a postponement or stay of the costs judgment. The ordinary rule is that costs on interlocutory applications should be ordered (and, absent any order staying execution) paid when judgment is given on the interlocutory application,⁵ and I see no basis to depart from that approach.

[18] Ms Bruton raised the possibility that the defendant may have been meeting his legal costs from the estate, but Mr Allan has provided a copy of an email confirming that that has not occurred.

[19] Nor do I consider it relevant that the plaintiff may have included in her second amended statement of claim a claim for all of her legal costs and the amount of any costs awards made against her. The fact that such a claim may have been made does not provide a sufficient basis for the Court to assume that some set-off exists, such as might justify a netting–off of the present costs award against amounts claimed by the plaintiff in the proceeding.

[20] For those reasons, I decline to postpone or stay the effect of the costs judgment as set out above.

Result

[21] The plaintiff is to pay the defendant the sum of $8,384.80, together with disbursements of $500.00.

[22] The plaintiff's request for a stay or postponement of that order is refused.

Associate Judge Smith