Benns v Radford [2006] CKHC 11; OA 08, 09 of 2006; Misc 48 of 2006 (1 December 2006)

IN THE HIGH COURT OF THE COOK ISLANDS
HELD AT RAROTONGA
(CIVIL DIVISION)

OA NO. 8/06,9/06
MISC NO. 48/06

BETWEEN

ROSEMARY ELIZABETH BENNS
as administrator of the estate of
the late Sally Heather (Taromi Benns) of Auckland,
New Zealand, Teacher
Applicant

AND

HEDLEY GEORGE RADFORD
of Bermuda, Retired Architect
Respondent

Counsel: G D Clews for Applicant
C Little for Respondent

Date: 01 December 2006

COSTS RULING

Introduction

[1] In these three proceedings which are related, Mr Radford seeks costs on a full indemnity basis totaling $6980.50. If full indemnity costs are not awarded a substantial award of costs is sought. Ms Benns’ position is that costs should lie where they fall.

History of Proceedings

[2] On 19 July 2006 Ms Benns applied on an ex parte basis for an interim injunction to effectively prevent Mr Radford from exercising his power of sale under a mortgage (M48/2006). It was alleged that Mr Radford did not have approval from the Development Investment Board (DIB) to make the advance secured by the mortgage.

[3] I was not prepared to grant an interim injunction on an ex parte application, but was prepared to consider it on a Pickwick basis after the proceedings were served on Mr Radford.

[4] The Pickwick hearing was conducted by conference telephone call on 3 August 2006 (NZ time) and timetable orders were made for the issuing of declaratory judgment proceedings. Two such sets of proceedings were subsequently issued (O/A 8/2006 and O/A 9/2006).

[5] My minute of that conference included:

Mr Radford indicated that he could not sell the property at the present time. In the circumstances, there will be an order restraining the Respondent and/or his agents, servants or contractors from entering into possession or selling the property described in the ex parte application for an interim injunction. This order will expire if the application for a declaratory judgment has not been filed within the time provided above [18 August 2006]. It will also be reviewed during the conference on 19 September 2006.

[6] It subsequently transpired that Mr Radford had obtained the necessary DIB approval. On 7 November 2006 I discharged the interim injunction. The other two actions were discontinued about the same time.

The Parties’ position

[7] Mr Radford seeks full indemnity costs on the basis that:

(a). The proceedings were improperly and/or unnecessarily advanced; and

(b). Ms Benns is contractually liable to meet solicitor/client costs.

[8] Ms Benns’ position is that costs should lie where they fall because:

(a) The proceedings were commenced upon misleading information;

(b) Unnecessary legal costs were incurred because of the time taken by Mr Radford to produce evidence that the necessary consent had been obtained;

(c) The consent would have been provided earlier if Mr Radford had responded in a timely manner to a Notice to Produce.

(d) This is not a case where the applicant should be contractually bound to meet solicitor/client costs..

Discussion

[9] Unless Ms Benns is contractually committed to solicitor/client costs I have a discretion to award costs under Rule 300 of the Code of Civil Procedure of the High Court 1981. In accordance with that rule I see no reason why costs should not abide the event. Such costs would normally be a reasonable contribution in the circumstances to costs actually and reasonably incurred. There is no challenge to the reasonableness of Mr Radford’s costs on the basis of hourly rates which Mr Clews his counsel has not provided. There is a challenge to the time for which the cost are claimed.

[10] The allegation that the proceedings were improperly advanced rests, in the main, upon the enquiries made with the DIB. Mr Little’s request to the DIB asked the Board to determine whether or not Mr Radford received approval from the Board to make the advance. He referred to a mortgage dated 19 march 1998 securing a principal advance of $30,000. The DIB replied advising that it had perused the 1998 file of Mr Radford and its 1998 minute book and could not find a recorded decision approving or declining the loan. The letter noted that Mr Radford had applied for and received approval to make other advances. In actual fact the loan had been approved in 1997.

[11] As the loan was made in March 1998 prudence may suggest that Mr Little should have made further enquiries. However, his letter of request did not ask the DIB to confine its search to 1998. In the case of a mortgagee’s exercising of powers it is not unusual to proceed without requesting details from the mortgagee first. Time is often of the essence. I am not prepared to award full indemnity costs on the basis of the inquiries made.

[12] The contractual issue arises from the obligation in the mortgage where the mortgagor covenanted to:

"...if and so often as the Mortgagor shall have become in default ... will pay the costs of the Mortgagee (as between solicitor and client) of and incidental to the enforcement or attempted enforcement by the mortgagee of his rights, remedies and powers under this mortgage."

[13] Mr Clews submitted that all the steps taken by Mr Radford to resist the claims in this case were steps "incidental to the enforcement or attempted enforcement of his rights, remedies and powers." Mr Little for the Ms Benns submitted that the contractual provisions of the mortgage only apply in the usual course of enforcement.

[14] While I accept the matter is not free from doubt I prefer the view that the provision does not apply to the action taken by Ms Benns. It was not in response to an enforcement of rights, but rather a challenge to the validity of the mortgage, albeit that it had an effect on the enforcement of rights. Mr Radford obtained leave to exercise his rights more than 5 years ago. The nature of the action is in itself a factor that tells in favour of a generous costs award, particularly as the mortgagor had been in default for several years and presumably knew about leave having been given by this Court under the provisions of the Property Law Act to enforce the mortgagor’s rights.

[15] The fact that proceedings were commenced upon misleading information does not take away Mr Radford’s entitlement to costs. He was not a party to the giving of misleading information.

[16] The only factor which can reduce a reasonably high cost award is the time taken by Mr Radford to produce evidence of obtaining the DIB’s consent. He knew this was the issue no later than 3 August 2006. It was not until 12 October 2006 that the consent was produced. If it had been produced earlier a portion of his own legal costs would not have been incurred.

[17] On the other hand Mr Radford is aged 82 years. He says, and he told me this during the telephone conference on 3 August, that no solicitor on the island will act for him. In my view he can not be criticized for failing to produce the consent before he took legal advice. He did not hold the records himself and at the relevant time his agent was overseas. However, in my view there should be some reduction of the costs to be paid by Ms Benns because of the delay in producing the evidence of the consent.

[18] Balancing the competing factors it is my view that if it had not been for the matters referred to in the preceding paragraph the appropriate fee would have been two thirds of the amount claimed. While the reduction is in some respects arbitrary, I am of the view that this amount should be reduced to $3750.

Decision

[19] Ms Benns will pay Mr Radford a cost contribution on all three cases totaling $3750. She will also reimburse him for any court filing fees he paid.

Paterson J