Bradbury v Westpac Banking Corporation Notes

Bradbury v Westpac Banking Corporation [2009] NZCA 234

Overview

This case involves an appeal by Bradbury against a High Court decision that awarded indemnity costs to Westpac Banking Corporation (WBC). The dispute arose after WBC suspended dealings with Bradbury and his firm, Banbury & Muir (BM), who had previously provided specialist legal services to WBC. Bradbury sued WBC, alleging breach of a contractual obligation to retain BM. The High Court (HC) found Bradbury's case to be hopeless from the start and awarded indemnity costs to WBC.

Background

• Parties:
  • Clive Richard Bradbury (First Appellant)
  • Bradbury & Muir (Second Appellant)
  • Westpac Banking Corporation (First Respondent)
  • Richard Willcock (Second Respondent)
• Initial Claim: Bradbury originally claimed special damages of $13.9$ million, later reduced to $5.415$ million, along with general, aggravated, and punitive damages totaling $1,000,000$ plus interest.
• High Court Decision: The HC awarded indemnity costs to WBC, finding Bradbury's case hopeless from inception. WBC sought indemnity costs of $1.683$ million plus disbursements of $136,895$, or alternatively, increased costs. Bradbury argued liability should be limited to scale costs of $89,250$ plus disbursements of $57,515$, along with witness expenses. The costs judgment ordered Bradbury to pay WBC $996,712$ for actual costs plus $60,917.25$ for witness expenses and disbursements, totaling $1,057,691.25$.
• Appeal Issues: The appeal questioned whether the HC erred in its findings regarding the hopelessness of the causes of action, imputation of knowledge to Bradbury, finding of misconduct, assessment of indemnity costs, failing to assess costs on a staged basis, failing to consider increased costs, not awarding scale costs, and ordering disproportionate costs.

Key Legal Principles

Costs Regime in New Zealand

• General Rule: The loser pays the winner's costs according to a scale that reflects the complexity and significance of the proceeding. The scale is assessed at 2/3 of the daily rate set by the Rules Committee.
• Indemnity Costs: An exception to the normal costs regime, awarded at the court's discretion in situations not contemplated or fairly recognized by the specific costs rules.
• Increased Costs: Permitted if the opposing party unnecessarily contributed to the time or expense of the proceeding, such as by failing to comply with rules, pursuing meritless arguments, or failing to accept reasonable offers of settlement (r 48C(3), now r 14.6(3)).
• Indemnity Costs Conditions: The court may order a party to pay indemnity costs if they acted vexatiously, frivolously, improperly, or unnecessarily in commencing or continuing a proceeding (r 48C(4), now r 14.6(4)).

Access to Justice and Rule of Law

• Access to Justice: A fundamental right that supports limiting a losing party's liability for costs.
• Rule of Law: Requires consistent administration and predictability, especially concerning indemnity costs, which are inherently unpredictable.

Comparative Analysis of Costs Approaches

United States

• Approach: No party and party costs are awarded.
• Rationale: To avoid penalizing parties for defending or prosecuting lawsuits and prevent discouraging the poor from seeking justice.

England and Australia

• Approach: Historically, a form of indemnity costs was the norm.
• England: A presumption that the successful party should receive full taxed costs.
• Australia: The successful party is generally entitled to receive their costs from the unsuccessful party, but actual recovery often falls short of full indemnity.

Assessment of Indemnity Costs Test

• International Trend: Leaning against indemnity costs due to difficulties with implementation and potential for abuse.
• New Zealand Approach: A three-stage classification: standard scale costs, increased costs, and indemnity costs.
  • Standard scale applies by default.
  • Increased costs for failure to act reasonably.
  • Indemnity costs for behaving either badly or very unreasonably.
• Justification for Indemnity Costs: Requires exceptionally bad behavior; misconduct must be