AC/JV Holdings Ltd v General Construction Group Ltd - [2023] NZHC 2944

IN THE HIGH COURT OF NEW ZEALAND DUNEDIN REGISTRY

I TE KŌTI MATUA O AOTEAROA ŌTEPOTI ROHE

CIV-2023-412-000079

[2023] NZHC 2944

BETWEEN
AC/JV HOLDINGS LTD

Plaintiff

AND

GENERAL CONSTRUCTION GROUP LTD

First Respondent

PETER BERNARD DEGERHOLM

Second Respondent

Hearing: (On the papers)

Counsel:

R J Hollyman KC and A J Peat for the Applicant

A S Olney and H M Mander for the First Respondent No appearance for the Second Respondent

Judgment:

20 October 2023

JUDGMENT OF CHURCHMAN J

[Costs]

Introduction

[1] The applicant, AC/JV Holdings Ltd (AC/JV), and the first respondent, General Construction Group Ltd (GCG), were parties to an NZS 3915 construction contract dated 29 October 2020 concerning the construction of an accommodation block. GCG completed its construction work in February 2021 and left the site at that time. Since May 2021, AC/JV has been using the accommodation block as intended. However, on 31 July 2023, GCG purported to bring an expert determination with the second respondent, Mr Degerholm, in relation to disputes over payments said to be outstanding on the contract.

AC/JV HOLDINGS LTD v GENERAL CONSTRUCTION GROUP LTD & ANOR [2023] NZHC 2944
[20 October 2023]

[2] Correspondence followed between the parties. On 9 August 2023, AC/JV’s solicitors wrote to GCG’s solicitors, stating that an expert determination was inappropriate in the circumstances. GCG’s solicitors replied on 10 August 2023, advising that GCG would be proceeding with its expert determination process, regardless of whether AC/JV chose to participate. On 11 August 2023, AC/JV’s solicitors wrote again to GCG’s solicitors, inviting them to agree to suspend the proposed expert determination, pending the determination by the Court of an application to injunct that process. They advised that in the absence of agreement, they would apply to the High Court for urgent relief. No agreement was forthcoming and AC/JV filed an application without notice for an injunction on 14 August 2023.

[3] The matter was heard on 15 August 2023. Counsel for the applicant and first respondent appeared by VMR. On 16 August 2023, I issued a decision allowing AC/JV’s application for an interim injunction to restrain GCG from proceeding with its proposed expert determination.1

[4] Having been successful in its application, AC/JV now seeks an award of costs against GCG. It seeks scale costs on a 2B basis, with a 50 per cent uplift, on the basis that GCG forced AC/JV to make the application when it otherwise would have been avoided. It also seeks costs on the costs application, stating it has endeavoured to agree costs with GCG, to no avail. Scale costs on a 2B basis amount to $9,440.50, and the total costs with uplift sought amount to $14,160.75 (plus disbursements).

[5] GCG opposes the application for costs. It says costs are not available, as the application was not opposed. Alternatively, it submits costs on the application be in the cause. GCG submits if the Court is minded to award costs against it, no uplift is warranted, since it did not oppose the application and AC/JV intended…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2023] NZHC 2944
Decision Date: 20 October 2023

CaseChat Overview and Summary

In the High Court of New Zealand, AC/JV Holdings Ltd sought relief from General Construction Group Ltd (GCG) regarding an expert determination process that AC/JV considered inappropriate. AC/JV had previously completed a construction contract with GCG for an accommodation block. Following GCG's attempt to proceed with an expert determination, despite AC/JV's objections and assertions that such a determination was not appropriate, AC/JV sought an injunction to prevent GCG from continuing with the process. The court granted the injunction, and now AC/JV seeks costs against GCG.

The legal issues before the court were whether GCG's conduct justified an award of increased costs against it and if so, the appropriate amount of the uplift. The court considered whether GCG's refusal to suspend the expert determination, despite being made aware of the legal position, warranted an award of increased costs under the relevant rules. The court also examined the reasonableness of the timeframe GCG was given to respond to AC/JV's request to suspend the expert determination.

The court found that GCG's conduct in pursuing the expert determination was unreasonable, as it failed to accept the clear legal position and did not provide any justification for its actions. The court held that GCG's refusal to suspend the expert determination forced AC/JV to bring the injunction application. The court noted that GCG's opposition to the application, although made on a Pickwick basis, did not mean it had not opposed the application. The court held that an uplift was justified, as GCG's conduct was unreasonable and it failed to accept a good legal argument. The court awarded an uplift of 40 per cent on the scale costs, considering the conduct of GCG, and awarded costs to AC/JV.

The final orders of the court were that AC/JV is entitled to costs against GCG in the amount of $13,216.70, plus disbursements of $478.26, exclusive of GST. The court awarded an uplift of 40 per cent on the scale costs, finding that GCG's conduct warranted an award of increased costs.

Orders