Anderson v DeMarco

[2020] NZHC 3490

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE

CIV-2018-485-622

[2020] NZHC 3490

BETWEEN

NORMAN HUGH ANDERSON AND REBECCA ALICE CARRASCO
Plaintiffs

AND

EUGENE JOHN DE MARCO

Defendant

Hearing:	On the papers
Appearances:	E S Dalzell, M B Lambert and D Viatos for the Plaintiffs G D R Shand and P H Biddle for the Defendant
Judgment:	21 December 2020

JUDGMENT (NO 2) OF COOKE J

(Finalisation of quantum and costs)

[1]                 By judgment dated 11 November 2020 in these proceedings I upheld the plaintiffs’ claims and awarded $132,123 as an interim judgment.1 The award of damages was only an interim award because there was one aspect of the claim for damages that I wanted to ensure was not covered by the principle that legal expenditure incurred in the proceedings themselves are not recoverable as damages.2 I indicated that that issue would be addressed at the same time as the question of costs, and gave directions for the filing of memoranda in relation to costs.3 This judgment deals with both matters, and also addresses an application for a stay that has been filed by Mr De Marco.

1      Anderson v De Marco [2020] NZHC 2979.

2 At [108].

3      At [125]–[126].

ANDERSON v EUGENE JOHN DE MARCO [2020] NZHC 3490 [21 December 2020]

Legal expenses

[2]                 In the principal judgment I determined that the plaintiffs could claim for expenses as part of their damages claim as compensation under s 43 of the Contract and Commercial Law Act 2017. When doing so I listed the expenses claimed and said:

[107]    There  was  little  challenge  to  these   matters   at  trial,  although Mr Anderson confirmed in cross-examination that the costs as set out in his evidence had been paid, and Mr Shand submitted in closing that the claim costs were unreasonable and too high.

[108]    In the absence of any more direct challenge, or reasons why the claimed costs and expenditure are not reasonable, they seem to me to be appropriate and I allow them with one qualification. The qualification relates to the legal fees for Parker & Associates which go through to 10 August 2018, and expressly include disbursements for filing the statement of claim and an interlocutory application. These proceedings were commenced on 10 August 2018. Whilst a plaintiff is entitled to claim legal costs as damages/compensation, it is not appropriate to include within that claim legal expenditure incurred in the proceedings themselves.4 That expenditure is to be addressed by the costs award in this proceeding. That difficulty is illustrated by the plaintiffs claiming the filing fees for originally filing the proceeding, and bringing an interlocutory application, are recoverable as damages.

[109]    In the circumstances, and notwithstanding that Mr Shand did not directly address this question, I currently exclude the amount of $38,851.66 from the compensation allowed. I act under r 11.2(a) of the High Court Rules 2016 and currently award the plaintiffs $132,123 as an interim judgment. The question of what further amounts should be awarded for legal expenditure which is not expenditure on these proceedings will be addressed at the same time as assessing costs, with the final judgment sum to be awarded determined along with the costs decision.

[3]                 The plaintiffs have now filed their memorandum accompanied by an affidavit describing the legal expenditure involved.

[4]The amount now claimed is $40,694.83 which is a little higher than the

$38,851.66 originally claimed.    Counsel for the plaintiffs has explained that the original claim was erroneously calculated.

4      See the summary of the authorities in Carr v Brookside Farm Trust Ltd [2016] NZHC 2065 at [731]–[737].

[5]                 Both the memorandum of counsel and an affidavit now filed by the plaintiffs indicate that none of the legal expenses claimed are for legal fees in connection with the proceedings themselves. That appears to be confirmed by the copies of the invoices which are attached to the affidavit. The narration to the bills that have been exhibited do not include any expenditure referable to the proceedings. The plaintiffs have accepted, however, that an amount of $538.20 for legal research should be deducted from the claim on the basis it could be said to relate to the proceedings. On that basis I accept that, subject to deducting that amount, there is no impediment to the amount as claimed being awarded.

[6]                 Mr Shand has again argued that the amounts are excessive, and that they would have been associated with work on the proceedings given the timing of the rendering of the fees, however. I did not, and do not, accept the argument that the amounts involved are too high. As I indicated in the principal judgment, the plaintiffs’ claims in this respect were not challenged at trial except for a general argument that the amounts claimed were too high. Whilst I could simply have allowed the plaintiffs’ claims on that basis, I did not do so to ensure that there was no significant injustice involved in the quantification of the claim given the principle that legal expenditure incurred for the proceedings are not recoverable as damages. Given the further information that has been provided by the plaintiffs I accept that I should award the amount initially claimed as no infringement of the principle appears to be involved.

[7]                 I am allowing the expenses amount because it was claimed, it was not challenged, and as a consequence of the further material I accept that that was properly claimable on the face of it. But I do not think it fair to the defendant for the plaintiff to increase the amount claimed, even if it is a modest amount, because of suggested error. I only allow the amount originally claimed, less the $538.20. Accordingly I allow the plaintiffs’ damages claim to be increased by $38,313.46.

Costs

[8]                 The plaintiffs seek costs on a 2B basis which they have calculated in a schedule attached to the costs memorandum. There are certain matters that are in dispute.

Rule 14.13: District Court calculation

[9]                 First the defendant argues that costs should be calculated on the amounts set by the scale in the District Court as a consequence of the application of r 14.13. The plaintiffs do not agree.

[10]Rule 14.13 provides:

14.13 Proceedings within jurisdiction of District Court

Costs ordered to be paid to a successful plaintiff must not exceed the costs and disbursements that the plaintiff would have recovered in the District Court if the proceeding could have been brought there, unless the court otherwise directs.

[11]              In Killalea v In Print Publishing Co Ltd Woodhouse J held in relation to the equivalent rule:5

In my opinion R. 550 is intended to serve a double purpose. It is designed to minimise costs, and it is intended to persuade litigants to accept the jurisdiction of the lower Court in all proper cases. Nevertheless, these practical considerations need to be applied with some reasonable flexibility, and accordingly the rule provides that if an action brought in the Supreme Court produces a modest result for the plaintiff when tested by the amount recovered, then the Judge is to have a discretion to measure these considerations against the particular circumstances of the case and in terms of the interests of the parties and the administration of justice generally. If it were not for the qualification contained in this discretion the issue of costs or mere questions of convenience could have a disproportionate influence upon the parties' choice of forum. There can be no doubt that the Magistrate’s Court is well able to dispose of many cases which involve complicated or important questions; and with respect I agree with MacGregor J, who was not prepared in the Anderson case (supra, 1035) to accept the view that every plaintiff bringing an action for defamation was justified in bringing it before a jury in the Supreme Court. On the other hand it is not enough to show that a case could have been disposed of satisfactorily in the lower Court; the question is rather whether the case was a proper one to bring in the Supreme Court: see Williams

v. Allen (1889) 60 L.T. 103, 104. In the final analysis this problem becomes one of degree.

[12]              In terms of a more recent example, in Koromako v Uluiviti Fitzgerald J held that the costs of a summary judgment application be set on the High Court rather than District Court scale as the proceeding in question was commenced by an urgent

5      Killalea v In Print Publishing Co Ltd [1966] NZLR 70 (HC).

application for interim relief, and that it was not unreasonable or inappropriate for the plaintiffs to commence in the High Court.6

[13]              Mr Shand also referred to the decision of the Court of Appeal in Fuehrer v Thompson which assessed the factors relevant to whether proceedings should be transferred from the District Court to the High Court and argues that the present case was one that could appropriately have been dealt with in the District Court on the basis of those principles.7

[14]              I accept that this case could have been dealt with in the District Court. The amount in dispute was well within that Court’s jurisdiction, and there was nothing about the issues in dispute that could not have been dealt with competently by the District Court. The District Court has considerable civil expertise that has been enhanced since the judgment of Woodhouse J in 1966. Having said that in recent years there has been some institutional difficulty with the District Court’s civil jurisdiction giving the overwhelming needs of the criminal jurisdiction. There could have been some delay in getting proceedings of this kind dealt with in that Court. There is also something in the point made by Mr Dalzell that it was necessary to obtain orders from the Associate Judge that invasive testing be undertaken at the property in question, which was something more readily and promptly obtained in the High Court.

[15]              Parties can normally be expected to have disputes within the jurisdictional level of the District Court determined in that Court. The institutional difficulties presently arising within that Court are being addressed, and that Court has the competence to deal with this type of claim. But I nevertheless accept that costs should be awarded on the High Court scale in the particular circumstances of the present case. It seems to me that it suited both parties for this matter to be dealt with in the High Court where leaky building litigation has been most commonly addressed. There is no suggestion of disagreement between them that the proceeding would be dealt with in this Court. The proceeding has been dealt with more quickly, and efficiently than would have been likely to have been the case in the District Court. Moreover the complexity of some of the issues, including evidential issues, meant there was nothing

6      Koromako v Uluiviti [2019] NZHC 2234.

7      Fuehrer v Thompson [1981] 1 NZLR 699 (CA).

inappropriate about it being dealt with by the High Court, and subsequently on appeal to the Court of Appeal, notwithstanding the relatively low amount in issue. If the plaintiffs were not able to recover costs on the High Court scale this may materially reduce their success given the levels of legal expenditure likely to be involved. There are related access to justice issues — individuals such as the plaintiffs, and the defendant should be able to have their disputes resolved promptly and efficiently.

[16]              I also bear in mind that what was ultimately in issue was a deposit that the plaintiffs had paid to the defendant which the defendant elected to keep. In other words the plaintiffs were seeking to get their money back. The defendant elected to resist that course. The consequences that have followed can be said to be at the defendant’s door.

[17]For that reason under r 14.13 I direct that costs be set on the High Court scale.

Expert costs

[18]              The defendant challenges the disbursement claimed of $50,960 for expert costs on the basis that they are excessive and unreasonable given the lack of complexity with the issues in dispute. Mr Shand argues it is disproportionate with the $120,000 claimed by the plaintiffs. Mr Shand focuses on the expert evidence of Mr Wutzler of Helfen Ltd. The defendant accepts that invasive testing was required, but to a far lesser extent than he undertook, he argued.

[19]              I do not accept this argument. It is certainly true that the expert fees are disproportionate to the amount in issue, and I also accept that Mr Wutzler’s fees seem somewhat high. But it was the defendant that put in issue whether the building had material leaky building issues. That necessitated the invasive testing to address the factual dispute raised by the defendant. It is difficult to see how the plaintiffs could have responded to the defendant’s approach otherwise. It is then very difficult to say that invasive testing was required, but the level of it was excessive. When the defendant’s experts gave evidence, and in particular when Mr Prowse gave evidence, it was said that Mr Wutzler’s work was not sufficiently comprehensive, and that the

conclusions he reached should not be accepted for that reason.8 I did not accept this argument, but the short point is the defendant cannot have it both ways. It is the defendant that put in issue the questions that required this expert evidence to be obtained.

[20]              The defendants also contest certain disbursements. I accept that the service fee of $195.50 for a subpoena for Mr Tony Flipp should not be allowed as he was not called. Secondly I accept that the filing fee of $200, and for sealing the charging order of $100 should not be allowed. The other two charges for sealing orders are allowed, however. The disbursements otherwise claimed are allowed.

[21]              Costs are accordingly allowed as claimed on the basis addressed above. Leave is reserved to the Registrar to finalise any questions arising from calculation.

Stay application

[22]              By document dated 3 December 2020 Mr De Marco has made an application in person for a stay on the basis that he is appealing the principal judgment. In it he says that he is now self-represented and is at a disadvantage.

[23]              I do not know whether an appeal has in fact been lodged. In any event the judgment should not be executed unless and until the application for a stay is determined. Mr De Marco should file and serve his written submissions in support of his application by 5 pm Monday 18 January 2021. Mr De Marco should indicate at that time whether he is content for his application for a stay to be dealt with on the papers. The plaintiffs’ opposition including submissions in opposition should be filed and served by 4 pm Friday 22 January 2021. I will then indicate how the matter is to be dealt with.

Cooke J

8      Anderson v De Marco, above n 1, at [94].

Solicitors:

Parker & Associates, Wellington for the Plaintiffs Grant Shand, Auckland for the Defendant