Alaska Construction + Interiors Auckland Limited

[2020] NZHC 1481

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2020-404-000587

[2020] NZHC 1481

UNDER

Judicial Review Procedure Act 2016

IN THE MATTER

of an application for Judicial Review

BETWEEN

ALASKA CONSTRUCTION + INTERIORS AUCKLAND LIMITED

Applicant

AND

CHRISTOPHER JAMES LAHATTE

First Respondent

LOVICH FLOORS LIMITED

Second Respondent

Hearing:

On the papers

Appearances:

C T Patterson for the Applicant

B Rooney for the Second Defendant

Judgment:

29 June 2020

JUDGMENT OF WOOLFORD J

[As to costs]

This judgment was delivered by me on Monday, 29 June 2020 at 3:30 pm pursuant to r 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Solicitors:Hornabrook MacDonald Lawyers, Auckland, (M Hornabrook) for the Applicant Lovegroves, Auckland, (T Hibbitt) for the Second Respondent

Counsel:C T Patterson and E J Grove (Chris Patterson Barrister Ltd), Auckland B Rooney, Auckland, for the Second Respondent

ALASKA CONSTRUCTION + INTERIORS AUCKLAND LIMITED v LAHATTE & ANOR [2020] NZHC 1481 [29 June 2020]

[1]    In a judgment dated 20 May 2020, I dismissed Alaska Construction + Interiors Auckland Ltd’s (Alaska’s) claim for judicial review of a determination by an adjudicator appointed under the Construction Contracts Act 2002. I directed that if costs could not be agreed, memoranda were to be filed. Costs have not been agreed. Memoranda have been filed by the parties.

[2]    Lovich Floors Ltd (Lovich) claims its actual and, what it says are its, reasonable costs of $27,657.50. Alaska says that it should pay no more than 2B costs of $14,818.

Lovich Floors Limited

[3]    Lovich says that Alaska’s application for judicial review was a consequence of Lovich’s efforts to recover the debt due to it in a court, thereby triggering s 23(2) of the Construction Contracts Act 2002. Sections 23(1) and (2) provides:

23 Consequences of not paying claimed amount where no payment schedule provided

(1)The consequences specified in subsection (2) apply if the payer—

(a)becomes liable to pay the claimed amount to the payee under section 22 as a consequence of failing to provide a payment schedule to  the  payee  within  the  time  allowed  by  section 22(b); and

(b)fails to pay the whole, or any part, of the claimed amount on or before the due date for the payment to which the payment claim relates.

(2)The consequences are that the payee—

(a)may recover from the payer, as a debt due to the payee, in any court,—

(i)the unpaid portion of the claimed amount; and

(ii)the actual and reasonable costs of recovery awarded against the payer by that court; and

(b)may serve notice on the payer of the payee’s intention to suspend the carrying out of construction work under the construction contract.

[4]    Lovich says that it is therefore entitled to its actual and reasonable costs on the judicial review application. This is distinct from and unrelated to a claim for indemnity costs under the High Court Rules.

Alaska Construction + Interiors Auckland Ltd

[5]    On the other hand, Alaska says that the costs regime in the High Court Rules applies and none of the criteria for the awarding of increased or indemnity costs that are contained in r 14.6 are present. Rule 14.6 provides:

14.6 Increased costs and indemnity costs

(1)Despite rules 14.2 to 14.5, the court may make an order—

(a)increasing costs otherwise payable under those rules (increased costs); or

(b)that the costs payable are the actual costs, disbursements, and witness expenses reasonably incurred by a party (indemnity costs).

(2)The court may make the order at any stage of a proceeding and in relation to any step in it.

(3)The court may order a party to pay increased costs if—

(a)the nature of the proceeding or the step in it is such that the time required by the party claiming costs would substantially exceed the time allocated under band C; or

(b)the party opposing costs has contributed unnecessarily to the time or expense of the proceeding or step in it by—

(i)failing to comply with these rules or with a direction of the court; or

(ii)taking or pursuing an unnecessary step or an argument that lacks merit; or

(iii)failing, without reasonable justification, to admit facts, evidence, documents, or accept a legal argument; or

(iv)failing, without reasonable justification, to comply with an order for discovery, a notice for further particulars, a notice for interrogatories, or other similar requirement under these rules; or

(v)failing, without reasonable justification, to accept an offer of settlement whether in the form of an offer under rule 14.10 or some other offer to settle or dispose of the proceeding; or

(c)the proceeding is of general importance to persons other than just the parties and it was reasonably necessary for the party claiming costs to bring it or participate in it in the interests of those affected; or

(d)some other reason exists which justifies the court making an order for increased costs despite the principle that the determination of costs should be predictable and expeditious.

(4)The court may order a party to pay indemnity costs if—

(a)the party has acted vexatiously, frivolously, improperly, or unnecessarily in commencing, continuing, or defending a proceeding or a step in a proceeding; or

(b)the party has ignored or disobeyed an order or direction of the court or breached an undertaking given to the court or another party; or

(c)costs are payable from a fund, the party claiming costs is a necessary party to the proceeding affecting the fund, and the party claiming costs has acted reasonably in the proceeding; or

(d)the person in whose favour the order of costs is made was not a party to the proceeding and has acted reasonably in relation to it; or

(e)the party claiming costs is entitled to indemnity costs under a contract or deed; or

(f)some other reason exists which justifies the court making an order for indemnity costs despite the principle that the determination of costs should be predictable and expeditious.

[6]    While its application did fail, Alaska says it raised the determination of a novel area of law, not previously considered by the courts, which it was reasonable (or at least not unmeritorious) to have the Court determine. This was not a proceeding where there was “no possibility that the Court might form a different view the benefit of all the evidence and submissions”.1

Discussion

[7]    The judicial review proceeding was not initiated by Lovich to “recover from the payer [Alaska], as a debt due to the payee [Lovich], in any court, the unpaid portion of the claimed amount”.2 It was initiated by Alaska to challenge the adjudicator’s determination as a breach of natural justice, a failure to discharge his statutory function and an unreasonable exercise of statutory power. It was not a debt recovery action, although the outcome was that the adjudicator’s decision that Alaska owed Lovich a certain sum of money was upheld.

[8]    I do not consider that s 23(2)(a)(ii) applies in the present circumstances. I agree with the comments of Brewer J in Body Corporate 200012 v Keene:3

1      N-Tech Ltd v Abooth Ltd [2012] NZHC 1167.

2      Construction Contracts Act 2002, s 23(2)(a)(i).

3      Body Corporate 200012 v Keene [2018] NZHC 814.

[17] I acknowledge the purpose of the CCA is to provide speedy and efficient resolution of construction contract disputes. However, this does not justify awarding actual and reasonable costs in situations where the Act simply does not provide for it. I refer to Lang J’s comments at [19] of his judgment⁴ and note that, had Parliament intended the successful party in applications for judicial review of adjudicators decisions to be awarded actual and reasonable costs, it would have been straightforward to say so.

[9]    A debt recovery action is quite different from an application for judicial review, which challenges the decision-making process. Rule 14.6 applies to the assessment of increased or indemnity costs in respect of judicial review proceedings. I agree that none of the criteria listed in r 14.6 apply. In those circumstances, scale costs are appropriate. Alaska must therefore pay Lovich the sum of $14,818 as calculated in the schedule attached to the memorandum of counsel for Alaska dated 5 June 2020.

[10]I make an order accordingly.

Woolford J

4      Body Corporate 200012 v Naylor Love Construction Ltd [2018] NZHC 569, [2018] NZAR 613.