Body Corporate 169791 v Auckland City Council HC Auckland CIV 2004-404-5225

[2010] NZHC 1447

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2004-404-5225

BETWEEN  BODY CORPORATE 169791

First Plaintiff

ANDMAGDA FODERMAYER & ORS Second Plaintiffs

ANDAUCKLAND CITY COUNCIL First Defendant

ANDLINES DESIGNS LIMITED Second Defendant

AND  STEVEN MITCHELL

Third Defendant (Claim Discontinued)

ANDSYMPHONY GROUP LIMITED, SYMPHONY PROJECTS LIMITED, WAIMARIE MANAGEMENT LIMITED AND GLANVILLE INVESTMENTS LIMITED

Fourth Defendants

AND  ONYX GROUP LIMITED

First Third Party (Claim Discontinued)

ANDGENERAL MANUKAU ENTERPRISES LIMITED

Second Third Party (Claim struck out)

ANDALUMINIUM CITY (PENROSE) LIMITED

Third Third Party (Claim Discontinued)

ANDMR MATTHEW VESEY (T/A CLADRITE DEVELOPMENTS) Fourth Third Party

ANDFIRE ENGINEERING CONSULTANTS LIMITED

Fifth Third Party (Claim Discontinued)

BODY CORPORATE 169791 AND ANOR V AUCKLAND CITY COUNCIL AND ORS HC AK CIV-2004-

404-5225  17 August 2010

ANDMR GREG ANTHONY THOMPSON (T/A HITEX PLASTERING)

Sixth Third Party (Claim Discontinued)

AND  RON WRIGHT & ASSOCIATES

Seventh Third Party (Claim Discontinued)

ANDVERO LIABILITY INSURANCE LIMITED

Eighth Third Party (Claim Discontinued)

Hearing:         By memoranda

Appearances: Mr G D R Shand for plaintiffs

Ms S A Grant for fourth defendants

Judgment:      17 August 2010 at 4 pm

JUDGMENT OF LANG J

[on costs sought by plaintiffs in relation to unsuccesful applications by fourth

defendants for strike out and production of documents]

This judgment was delivered by me on 17 August 2010 at 4 pm, pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date……………

Solicitors:

Grimshaw & Co, Auckland

Ms S Grant, Auckland

2

[1]      On 14 November 2007, Associate Judge Robinson delivered a judgment in which he dismissed an application by the fourth defendants for an order striking out the plaintiffs’ claims against them.  He also dismissed an application by the fourth defendants for an order requiring the plaintiffs to produce reports that they had earlier obtained from a firm of structural engineers and a firm of building surveyors.

[2]      The fourth defendants filed an application seeking review of those decisions, but ultimately abandoned their application for review so far as it related to the application for production.   In a judgment delivered on 19 May 2009, Cooper J dismissed the application for review in relation to the application for strike out.  The fourth defendants sought leave to appeal to the Court of Appeal against Cooper J’s decision, but Cooper J dismissed that application on 26 October 2009.  Both issues must therefore be presumed to have been finally determined.

[3]      It is now necessary to fix costs in relation to the unsuccessful applications that Associate Judge Robinson determined.  His retirement means that it is necessary for me to undertake that exercise.   I have been assisted to some extent in this endeavour  by  decisions  that  Cooper  J  made  when  he  delivered  a  judgment  on

3 December 2009 fixing the costs payable by the fourth defendants in relation to the unsuccessful application for review.

Costs categorisation

[4]      In the judgment that he delivered on 3 December 2009, Cooper J categorised this proceeding as a Category 3 proceeding.   That issue has therefore now been determined.

Should costs be fixed and paid now?

[5]      The plaintiffs contend that costs should be fixed and paid now.  The fourth defendants contend that they should be fixed now but paid once the proceeding has been determined.

[6]      Cooper J rejected a similar argument by the fourth defendants in the costs judgment  that  he  delivered  on  3  December  2009.    I propose  to  take  the  same approach.  It is important that r 14.8 be observed unless there are special reasons for that not to be the case.   Costs in relation to an interlocutory application should normally be fixed and paid as soon as the application has been determined.

The plaintiffs’ claim for costs

[7]      The plaintiffs say that they have actual incurred costs totalling more than

$170,000.   They have produced invoices showing that this is the case.   It is clear from those invoices, however, that some of the attendances in the invoices related to matters other than the two applications with respect to which I am now required to fix costs.  The plaintiffs have not substantiated their assertion that all but $10,000 of the amounts that they have paid relate to those applications.  I accept, however, that they have spent a considerable sum of money in defending the fourth defendants’ applications.

Costs of filing documents in opposition

[8]      The plaintiffs responded to the fourth defendants’ applications by filing a notice of opposition and 43 affidavits.   I accept that all of those affidavits were necessary, because each of the 41 unit owners was obliged to place certain factual matters on record.  The plaintiffs must be permitted to recover a reasonable sum for the expense to which they were put in responding to the fourth defendants’ applications in that way.

[9]      Counsel for the plaintiffs were also required to prepare the affidavits and have them sworn within a period of six weeks.  One of the reasons that the plaintiffs were required to respond within such a compressed time frame was that the fourth defendants were late in filing their applications and supporting affidavit.  In addition, some of the unit owners lived overseas, and this meant that documents had to be sworn outside New Zealand.  I accept that these factors added to the time and costs that the plaintiffs were required to expend in opposing the applications.

[10]     The  plaintiffs  point  out  that,  even  applying  Band  C,  only two  days  are allowed  for  the  preparation  and  filing of  a  notice  of  opposition  and  supporting affidavits.  They contend that this does not provide a reasonable contribution to their costs in relation to this aspect of their opposition to the application.  They seek an increase  of  23  days,  making  a  total  allowance  of  25  days,  in  relation  to  the preparation and filing of documents in opposition.

[11]     I accept that Band C would not provide the plaintiffs with a reasonable contribution in relation to the cost of preparing and filing the notice of opposition and  supporting affidavits.    Although  the  supporting affidavits  are  short  and  are repetitious to some extent, it was necessary for each affidavit to be drafted separately and for the plaintiffs to arrange for each to be sworn and filed in circumstances where urgency was required.

[12]     I propose to allow a total of 15 days, or approximately one-third of a day for each affidavit, for the filing of all documents in opposition.

Preparation for hearing

[13]     The plaintiffs also seek increased costs in relation to preparation for hearing. The hearing itself took 1.75 days.  Applying Band C, the plaintiffs would ordinarily be allowed 1.75 days of preparation.  They contend that this will not provide them with a reasonable contribution to their actual costs of preparation for the hearing. For that reason they seek an increase of 5.25 days, so that a total allowance of 7 days is permitted for preparation for the hearing.

[14]     I accept that an allowance of 1.75 days would not be sufficient to compensate the plaintiffs for the preparation that they were required to undertake for the hearing. Submissions for both parties were extensive, and they would have required considerable time to prepare.  I note that Cooper J allowed three days preparation for the hearing of the application for review.  He accepted that the period of 1.5 days allowed by Band B would not be sufficient in all the circumstances.  I consider that more  preparation  would  have  been  required  for  the  original  hearing  than  was

required  for  the  application  for  review.    I  therefore  allow  four  days  for  the preparation of submissions for the hearing.

Increased costs

[15]     The plaintiffs seek a further uplift to reflect three separate factors.  These are:

1.      Delays and non compliance with the Court’s directions.

2.Proceeding with arguments in relation to the application for production that had no merit, and failing to accept legal arguments that had merit.

3.Proceeding with the strike out application when it had no chance of success.

Delays and non compliance with directions

[16]     The chronology set out at paras 45 to 48 of the plaintiffs’ memorandum dated

3 December 2007 demonstrates that the fourth defendants were guilty of significant delays and non compliance with Court directions in relation to their application.

[17]     To a large extent, however, the plaintiffs have already received compensation for this through the increased costs that I have awarded to reflect in part the urgency with which the plaintiffs were required to prepare their documents in opposition.  I consider that the plaintiffs will be adequately compensated in relation to this aspect of their claim by receiving the increased costs that I have awarded in relation to preparation of documents in opposition, together with costs on a Category 3 Band B basis  in  respect  of  all  attendances  leading  up  to  the  hearing  (including  the preparation of memoranda for telephone conferences and attendances at telephone conferences where the issue of delay was discussed).

2.       Proceeding with arguments in relation to the application for production that had no merit, and failing to accept legal arguments that had merit

[18]     The plaintiffs contend that the application for production was always doomed to fail on the basis of the decision of the Court of Appeal in Opthalmological Society of New Zealand v Commerce Commission [2003] 2 NZLR 145. They also point out that the fourth defendants failed to refer the Court to this leading authority in their submissions. They also failed to recognise the strength of the plaintiffs' arguments, despite having received advance notice of those arguments in correspondence sent to their counsel prior to the hearing.

[19]     Having reviewed the decision of the Associate Judge, I have concluded that this issue was not as straightforward as the plaintiffs now contend.  The Associate Judge  was  not  required  to  determine  whether  the  two  reports  were  subject  to litigation privilege; they clearly were.  Rather, he was required to decide whether the plaintiffs had effectively waived privilege by making extensive reference to them in schedules attached to their statement of claim.   Although the Associate Judge ultimately decided that issue in favour of the plaintiffs, it cannot be said that the fourth defendants’ argument lacked merit to the extent that an award of increased costs is justified.  I decline to award increased costs on this ground.

The strike out application

[20]     Similarly,  I  do  not  accept  that  the  plaintiffs’  strike  out  application  was entirely without merit.   That fact can be ascertained from the careful manner in which the Associate Judge dealt with the fourth defendants’ argument.  Ultimately, he concluded at [63] that the fourth defendants had not clearly made out an unarguable  limitation  defence.    There  is  nothing  in  the  judgment,  however,  to suggest that he was of the view that the application was misconceived or entirely lacking in merit.

[21]     Cooper J reached the same conclusion at [25] in his judgment in relation to costs on the application for review.   He said that he “would not characterise Symphony’s argument [in relation to the strike out claim] as lacking in merit”.  For that reason he did not consider that the plaintiffs had demonstrated that they should receive an increased award of costs.  I reach the same conclusion in relation to the original argument before Associate Judge Robinson.

[22]     The  fourth  defendants  maintain  that  the  final  award  of  costs  should  be reduced to reflect the fact that the plaintiffs’ costs in preparing for trial will be reduced by virtue of the preparation that they have undertaken in opposing the present applications.

[23]     I decline to make any reduction in the costs that the plaintiffs are to receive.  I very much doubt, in fact, that the work that the plaintiffs have been required to undertake  in  relation  to  the  present  applications  will  reduce  the  amount  of preparation that they will need to do for the trial.   The production issue will not feature at all at trial.   The limitation issues, on the other hand, will need to be prepared and explored just as thoroughly at trial as they were in the hearing before the Associate Judge.

Disbursements

[24]     The plaintiffs claim disbursements totalling $9,299.98.   Those include the fees of expert witnesses, Mr Buckley ($1,417.50) and Mr Jones ($2,770.88).  There is also a claim for “office communications” ($810.00).

[25]     The fourth defendants contend that it would be inappropriate to make an allowance for expert witness fees at this stage and that those disbursements should be considered once the proceeding has been determined.   They also object to the claim for office communications on the basis that that claim has never been properly substantiated.

[26]     I am satisfied that the expert witnesses’ fees relate directly to the evidence that the plaintiffs adduced in opposition to the fourth defendants applications.  For that reason I consider that they should be fixed and paid now.

[27]     I do not, however, accept that the plaintiffs have justified their claim for office communications.  That claim is disallowed.

[28]     The plaintiffs are therefore entitled to disbursements in the sum of $8,489.98.

[29]     The fourth defendants contend that they achieved a measure of success in relation to applications that they filed, and that this fact needs to be recognised by an award of costs in their favour.

[30]     First, the fourth defendants applied for an order removing Symphony Projects Limited as second-named second defendant.  Ultimately the plaintiffs did not oppose that  application,  and  an  order  was  made  by  consent  at  the  hearing  before  the Associate Judge to that effect.  The fourth defendants seek an award of costs on a category 2B basis in relation to this aspect of their application.

[31]     Secondly, the fourth defendants also applied for an order that parts of the plaintiffs' claim against them be struck out on grounds unrelated to the operation of the limitation period.  It says that the plaintiffs consented to this being done, but not until just before the hearing.

[32]     The plaintiffs oppose any award of costs being made in relation to these issues.   They point out that the evidence that the fourth defendants adduced in support of the application to remove Symphony Projects Limited consisted of just six paragraphs in the affidavit that the fourth defendants filed in support of their applications. They also point out that their notice of opposition to the fourth defendants’ applications did not include any opposition to the removal of Symphony Projects Limited as a defendant.

[33]     The  plaintiffs  also  say,  correctly,  that  the  fourth  defendants’  application sought orders striking out sub-paragraphs 30(f), (i), (k), (l) and (m) of the plaintiffs' second amended statement of claim.   Before the hearing, counsel resolved these aspects of the application by agreement.  The plaintiffs agreed that sub-paragraphs (k), (l) and (m) could be struck out.   The fourth defendants then withdrew their application to strike out sub-paragraphs (f) and (i).

[34]     I accept the submissions for the plaintiffs in relation to both issues.  I decline to make any order for costs in favour of the fourth defendants.

Lang J