Attorney-General v Body Corporate No. 68792 HC Wellington CIV: 2006-485-1341

[2007] NZHC 1908

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

CIV:  2006-485-1341

UNDER  The Declaratory Judgments Act 1908

BETWEEN  ATTORNEY GENERAL First Plaintiff

AND  TRANSIT NEW ZEALAND Second Plaintiff

AND  BODY CORPORATE NO. 68792

First Defendant

AND  ALLAN VICTOR DEWSNAP Second Defendant

Counsel:        J A L Oliver and J R Burns for First and Second Plaintiff

First Defendant abides decision of Court

Second Defendant in Person

Judgment:      25 June 2007         at 11.15 am

JUDGMENT OF MALLON J (Costs)

Background

[1]      Following my judgment delivered on 29 March 2007 the first and second plaintiffs seek costs against the second defendant.   My judgment  found that the plaintiffs were able to take the necessary steps to remove from a Unit Plan part of the unit title land required for public works.  The second defendant was the owner of one of the units in the Unit Plan.  He had been opposed to the plaintiffs taking the land (at least on the terms on which the land was to be taken).  In his role as Chairman of the body corporate through which the unit title land was administered, he had refused

to accept some of the votes cast at a meeting of the body corporate which would

ATTORNEY GENERAL AND ANOR V BODY CORPORATE NO. 68792 AND ANOR HC WN CIV:  2006-

485-1341  25 June 2007

have effected the removal of the land from the Unit Plan.  He did so on the basis that these votes were invalid under the Unit Titles Act 1972.   His actions as Chairman had the effect of preventing the plaintiffs from proceeding to remove the land.

Submissions

General importance

[2]      The  plaintiffs  initially  sought  costs  against  the  second  defendant  on  an indemnity basis.  The plaintiffs submitted that the second defendant, as owner of a unit title, had entered into an agreement with the plaintiffs under which it agreed (amongst other things) “not to take any action to prevent or delay” the proposed public works.  The second defendant then took deliberate steps that had the effect of preventing the proposed works from proceeding. His legal advice disclosed only an argument that the plaintiffs did not have the right to exercise the vote.  He did not make enquiries of the owners of the units to determine if the legal risk in accepting the votes that he had identified was a real one.   In reality he, as Chairman, was exposed to no risk because the proprietors had already agreed to transfer their rights and interests to the Crown.   The plaintiffs said that the costs of this proceeding would not have been incurred but for the actions of the second defendant.

[3]      The second defendant submitted that there was no basis for indemnity costs. He submitted that there were difficult legal issues involved.  He said that in refusing to accept the votes he acted as Chairman.  He said that he acted in good faith and reasonably believed that at all times he had no choice under the Unit Titles Act but to uphold the body corporate rules and that under those rules the votes were invalid. He submitted that costs should not be ordered against him because there is a benefit for the Crown and future body corporate chairs from having the difficult issues that were involved in this case resolved.

[4]      The plaintiffs submitted that there is no distinction between the actions of the second defendant as Chairman and as an owner of one of the units. The plaintiffs accept,  however,  that  the  judgment  may  be  of  benefit  to  them  beyond  the

circumstances of this case.   Because of this the plaintiffs have revised their costs application so that they now seek costs on a 2B basis.  The plaintiffs have calculated their costs and disbursements at $15,419.31 on this basis.

Abiding decision

[5]      The  second  defendant  said  his  position  was  that  “subject  only  to  my complying with what I believed to be were my legal obligations, I would abide the Court’s decision in all respects”.  He also referred to the agreement reached between the first defendant and the plaintiffs that the plaintiffs would not seek costs against it in return for it abiding the Court’s decision.   In these circumstances the second defendant said it would be unjust if the plaintiffs were able to recover costs against him.

[6]      The plaintiffs submitted that the second defendant  purported to abide the Court’s decision for some purposes and not others.  The plaintiffs referred to a recent decision of Venning J where costs were awarded against a defendant who formally abided the Court’s decision but who made submissions in support of that defendant’s position.

[7]      The plaintiffs further said that the offer that was made to the first defendant would never have been made to the second defendant.   That is because it was the second defendant’s actions, both as an individual and as Chairman, that led to the need for this proceeding.  In contrast, the members of the first defendant (or most of them) had not taken any action to prevent the removal of the land from the Unit Plan.

Costs follow the event

[8]      Finally the plaintiffs submitted that the second defendant’s actions were held to be wrong in law.   There was nothing in the circumstances of this case which militated against the principle that costs should follow the event.   The second defendant submitted that while the plaintiffs were ultimately successful, they failed on their primary submission.

[9]      I consider that the plaintiffs are entitled to costs.  The usual rule is that costs follow the event, even though the issues involved may be difficult or complex.  That remains the position even where the plaintiffs succeed on some but not all of the grounds they advance to the Court.   Although the second defendant was acting as Chairman when he refused to accept the votes, he potentially stood to benefit from that decision in his capacity as owner of one of the units.    Whatever  the  legal position as he understood it to be, it must have been apparent to him that his actions were against the spirit of the agreement he had entered into.  He proceeded instead on the basis of an “argument” raised by his advisors.  He took inadequate steps to determine whether he was exposed to liability if he accepted the votes.  His formal position at the hearing that he abided the decision of the Court did not avoid the need for the plaintiffs to bring the proceeding.

[10]     The  Crown  submitted  at  the  substantive  hearing  that  the  issues  were  of general importance to it beyond the circumstances of this case.   For this reason I consider that the costs should be discounted to some degree.   Where issues are of general importance that can be a reason for awarding increased costs (r 48C (3)(c)). However, all costs matters are at the discretion of the Court (r 46) and the Court may reduce the costs otherwise payable (r 48D(f)).

[11]     This  case  was  not  a  matter  of  general  importance  from  the  second defendant’s perspective.  The second defendant has to some extent borne the burden of clarifying the position for future body corporates.   The plaintiffs say that they have already discounted the costs they are seeking (from indemnity to a 2B basis). I consider that a further reduction is appropriate to recognise the potential benefit to the plaintiffs and future body corporates of a High Court decision on this issue.   I consider that an order of $12,000 is a reasonable contribution to the costs of the proceeding.

[12]     The sum of $12,000 for costs and disbursements is ordered against the second defendant and in favour of the plaintiff.

Mallon J

Solicitors:

J Oliver, Crown Law Office, PO Box 2858, Wellington (ph: 04 494 5613, fax: [phone])
S Reeves, Solicitor, PO Box 90150, Auckland Mail Centre (ph: 09 379 8594, fax: [phone])