Affordable Housing Limited v Body Corporate 396511

[2022] NZHC 581

IN THE HIGH COURT OF NEW ZEALAND TAURANGA REGISTRY

I TE KŌTI MATUA O AOTEAROA TAURANGA MOANA ROHE

CIV-2019-470-000135

[2022] NZHC 581

BETWEEN

AFFORDABLE HOUSING LIMITED

Plaintiff

AND

BODY CORPORATE 396511

Defendant

Hearing:

on the papers

Appearances:

A K Hough for the Plaintiff

J Heatlie and J P Wood for the Defendant

Judgment:

25 March 2022

JUDGMENT OF ASSOCIATE JUDGE GARDINER

This judgment was delivered by me on 25 March 2022 at 4.00 p.m. pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar Date.......................................

Solicitors:

Grimshaw & Co, Auckland Court One, Auckland

AFFORDABLE HOUSING LTD v BODY CORPORATE 396511 [2022] NZHC 581 [25 March 2022]

Introduction

[1]                  In  a  judgment  delivered  on  23  November  2021,   I   dismissed   the   Body Corporate’s application for summary judgment and strike-out of the statement of claim.1 Affordable Housing Ltd (AHL) now seeks a costs award of $10,148, comprising scale 2B costs with a 50% uplift, plus disbursements.2

[2]                  AHL argues that the applications were essentially dealt with together as a strike-out application  and  the Court should  feel free to  award costs  to AHL under r 14.8(1) of the High Court Rules 2016. Further, an uplift is appropriate because AHL unreasonably rejected an offer of settlement prior to the hearing; and its applications attacked every aspect of AHL’s claim, meaning a Band C time allocation is suitable.

[3]  The Body Corporate does not agree. It submits that the application was predominantly a summary judgment application and therefore costs should be reserved. The defendant submits that of the five issues the Court was required to resolve, three were summary judgment issues, one was a strike-out issue, and the remaining issue, whether a strike-out or summary judgment issue, was resolved in favour of the Body Corporate.

Discussion

[4]                  If the application was only for strike-out, there can be no doubt that the Court is required to fix costs on the application pursuant to r 14.8(1), which requires that costs be determined when the application is determined.

[5]                  The position is complicated by the fact that the application also involved an application for summary judgment. It becomes necessary to consider r 14.8(3), which states that r 14.8(1) does not apply to applications for summary judgment.

1      Body Corporate 396511 v Affordable Housing Ltd [2021] NZHC 3149.

2      Plaintiff’s submissions on costs dated 14 December 2021, at Schedule 1.

[6]                  The position is further complicated by the fact that there is no settled practice on the approach to costs on a defendant’s unsuccessful application for summary judgment.3

[7]                  In Suharnan v Brookfields,4 Associate Judge Faire noted the different approach to a defendant’s summary judgment application:5

A plaintiff’s summary judgment, even if unsuccessful, can have considerable benefits in relation to the overall disposition of the litigation. The same does not necessarily apply where a defendant seeks summary judgment and, in fact, founds its claim on principles that are those pertaining to strike out applications. The appropriateness of a defendant’s application is the subject of comment by the Court of Appeal in Westpac Banking Corp v MM Kembla New Zealand Ltd and by the Supreme Court in Body Corporate 207624 v North Shore City Council.6 Both emphasise the position that an application for strike out or summary judgment is appropriate only in cases where there is clear legal impediment to liability, or where there is a complete and incontrovertible answer on the facts.

In this case, there was initially some doubt as to whether the first plaintiff would be able to provide a foundation to bring his position within the exceptions to Brownie Wills v Shrimpton type of cases.7 Be that as it may, I am of the view that there is no justification for not ordering costs in favour of the successful party on this strike out and defendant’s summary judgment application. The considerations that support a different view on a plaintiff’s summary judgment application simply do not apply in this case.

[8]                  I note that in that case Associate Judge Faire concluded that for all intents and purposes all issues were covered by the strike-out application.

[9]The approach in Suharnan was followed by Associate Judge Sargisson in

Resources Services Ltd v AMR Nickel Ltd.8

[10]              Furthermore, in Judge v Dempsey,9 Associate Judge Osborne granted 2B costs to the plaintiffs following an unsuccessful application for summary judgment by the

3      Andrew Beck and others McGechan on Procedure (online ed, Thomson Reuters) at [HR14.8.05] citing Miah v National Mutual Life Association of Australasia Ltd [2016] NZHC 590 at n 39.

4      Suharnan v Brookfields [2013] NZHC 586.

5      At [13]–[14].

6      At Westpac Banking Corp v MM Kembla New Zealand Ltd [2001] 2 NZLR 298 (CA); Body Corporate 207624 v North Shore City Council [2012] NZSC 83 at [4].

7      Brownie Wills v Shrimpton [1998] 2 NZLR 320.

8      Resources Services Ltd v AMR Nickel Ltd [2017] NZHC 1267 at [9] and [11].

9      Judge v Dempsey [2014] NZHC 2864 at [57].

defendant, noting that “[I]t is usually appropriate on an unsuccessful defendant’s summary judgment application that costs follow the event”.

[11]              In this case, some of the arguments advanced by the Body Corporate were advanced as grounds for summary judgment. These included the argument that AHL had not, on the facts, suffered any loss because it had already been compensated through its individual settlement; and that, on the facts, any loss it had suffered was not caused by the Body Corporate but rather by itself.

[12]              But others were advanced as grounds for strike-out of the claim. These included that there is no established fiduciary duty, duty of care or statutory duty on a body corporate to bring a claim for its members for damage to common property.

[13]              Considerable emphasis was placed on the argument that AHL’s claim was fundamentally flawed as it was based on a wrong assumption that only a body corporate can bring a claim for loss caused by damage to common property, relying on the case of Jewett Investments Ltd v Body Corporate 204096.10 I consider that this was argued as a grounds for strike-out. While I found that AHL’s pleading that only a body corporate could sue to recover loss negligently caused to common property was unsustainable considering that authority, I concluded that it did not necessarily follow that AHL’s claim must fail. Thus, it is not  correct  to  say  that  I  found  for  the Body Corporate on this issue.

[14]              I am mindful that the application had benefit in that it exposed parts of AHL’s claim that were, in my assessment, unsustainable. I directed AHL to re-plead these aspects.

[15]              However, weighing against that, the Body Corporate’s attack on the plaintiff’s claim was wide-ranging and, in some respects, unsuitable to a summary procedure. For example, the Court was never going to be able to resolve the issue of whether AHL had been properly reimbursed all legal and expert costs relating to the collective claim. Additionally, the issue of whether a body corporate owes members duties in relation

10     Jewett Investments Ltd v Body Corporate 204096 [2011] NZCA 232.

to litigation against third parties to recover for damage to common property is legally complex and evolving.

[16]              Taking these factors into account, as well as the overall discretion as to costs conferred on the Court by r 14.1, I am satisfied that there is no justification for not ordering costs in favour of AHL as the successful party on the strike-out and summary judgment applications.

[17]However, I decline to order the overall 50% uplift sought by AHL.

[18]              The offer made by the plaintiff on 24 May 2021 and attached to AHL’s memorandum for costs can properly be considered a “walkway offer”. It effectively required the Body Corporate to acquiesce entirely to AHL’s claim. Although AHL’s claim withstood strike-out/summary judgment, whether AHL will succeed at the substantive hearing is another matter.

[19]              Further, I consider a band B allocation suitable for all steps. While some of the issues were complex, it did not appear that the time spent by AHL was outside the usual range of time involved in defending an interlocutory application.

Result

[20]              The defendants are ordered to pay the plaintiff costs of $6,692 and disbursements of $110.

Associate Judge Gardiner