Body Corporate 201036 v Whai Rawa Railway Lands LP

[2024] NZHC 2181

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2021-404-1168 [2024] NZHC 2181

BETWEEN

BODY CORPORATE 201036

Plaintiff

AND

WHAI RAWA RAILWAY LANDS LP

Defendant

Hearing:	On the papers
Appearances:	Jeanne Heatlie/Jonathan P Wood for the Plaintiff Rachel Keane/Steven Ma Ching for the Defendant
Judgment:	6 August 2024

COSTS JUDGMENT OF ASSOCIATE JUDGE C B TAYLOR

This judgment was delivered by me on 6 August 2024 at 3:00pm

pursuant to Rule 11.5 of the High Court Rules

…………………………. Registrar/Deputy Registrar

Solicitors:

Court One (J Heatlie/J P Wood), Auckland, for the Plaintiff

LeeSalmonLong (Rachel Keane/Steven Ma Ching), Auckland, for the Defendant

BODY CORPORATE 201036 v WHAI RAWA RAILWAY LANDS LP [2024] NZHC 2181 [6 August 2024]

[1]    Whai Rawa Railway Lands LP (Whai Rawa) has been successful in its appeal of the High Court’s judgment dated 7 April 20221 declining the application by Whai Rawa to strike out Body Corporate 201036’s (Body Corporate) proceeding or grant summary judgment in favour of Whai Rawa. In its judgment dated 4 June 20242 the Court of Appeal has:

(a)struck out the Body Corporate’s proceeding; and

(b)set aside the High Court costs order against Whai Rawa and remitted the issue of costs to the High Court to re-assess in the light of its judgment.

[2]    Counsel for Whai Rawa has submitted a costs memorandum dated 19 July 2024 seeking that the Body Corporate pay costs and disbursements of $70,455.14 as set out in Schedules 1 to 4 of that memorandum. Whai Rawa’s claim includes a claim for increased costs with an uplift of 50 per cent.

[3]    Counsel for the Body Corporate has filed a memorandum in response dated 25 July 2024 disputing Whai Rawa’s claim for increased costs, and disputing some of the disbursements included in Whai Rawa’s claim.

Whai Rawa’s position

[4]Whai Rawa is claiming costs in respect of the following applications:

(a)application for strike-out and/or summary judgment;

(b)application for leave to appeal;

1      Body Corporate 201036 v Whai Rawa Railway Lands LP [2022] NZHC 700.

2      Whai Rawa Railway Lands LP v Body Corporate 201036 [2024] NZCA 207.

(c)various interlocutory proceedings including Whai Rawa’s application to stay the proceedings, and its opposition to the Body Corporate’s application for discovery orders;

(d)other steps taken in the proceedings as set out in Schedule 4 of Whai Rawa’s memorandum.

[5]    Whai Rawa’s position is that the Body Corporate’s argument that the Court has statutory power to amend or set aside the lease terms of a ground lease entered into between the parties using the powers of the Tenancy Tribunal under s 78 of the Residential Tenancies Act 1986 and s 176 of the Unit Titles Act 2010 was without legal or jurisdictional foundation. Whai Rawa says that it  wrote to the Body Corporate’s solicitors on 20 July 2021 setting out Whai Rawa’s position that the Body Corporate’s claim had no legal basis and that the Body Corporate should discontinue before any formal steps in the proceedings were taken.

[6]    Whai Rawa says that the Body Corporate’s unwillingness to discontinue its application following communications from Whai Rawa led to Whai Rawa making its strike out/summary judgment application.

[7]    Whai Rawa submits that as a result of the Court of Appeal’s decision striking out the Body Corporate’s claim, it is made clear that the Body Corporate had maintained proceedings which were without merit and had failed to accept Whai Rawa’s legal argument that the Court had no jurisdiction to grant any of the declarations sought by the Body Corporate in its proceeding. Accordingly, Whai Rawa seeks increased costs with an uplift of 50 per cent in respect of the strike out/summary judgment application.

[8]    Whai Rawa makes a similar submission that it is entitled to an increase in costs with a 50 per cent uplift in respect of the leave to appeal application.

[9]    In respect of the interlocutory applications, being Whai Rawa’s application to stay the proceedings and the Body Corporate’s application for discovery orders, while these applications were filed and opposed, it appears the Court’s attention was not

drawn to the applications. Neither party sought directions to progress the applications and case management conferences were not held or sought. Whai Rawa’s position is that due to the Body Corporate’s inaction in respect of these applications, costs were wasted and accordingly it seeks increased costs with a 50 per cent uplift.

Body Corporate’s position

[10]   The Body Corporate accepts that Whai Rawa is entitled to 2B costs for the various applications in the proceedings as set out at [4] and for a refund of costs paid in respect of the strike out/summary judgment application and the leave to appeal application.

[11]   However, the Body Corporate disputes Whai Rawa’s entitlement to any increased costs. The Body Corporate submits that the basis on which Whai Rawa seeks increased costs is that the Body Corporate was ultimately found to be incorrect in its position that the Unit Titles Act gave it a means to challenge the ground lease between the parties. The Body Corporate submits that a successful application to strike out does not automatically entitle a successful party to increased or indemnity costs, and something more is required whereby the Court can identify egregious conduct for pursuing argument devoid of merit, citing Whitford Properties Ltd (In Liquidation) v Coumat Limited.3

[12]   The Body Corporate rejects Whai Rawa’s argument that it is entitled to increased costs on the basis that there was an exchange of correspondence on the merits of the proceeding between respective counsel, and that the Court of Appeal ultimately overturned the High Court, submitting this was not behaviour of a litigant that was so egregious that it warranted increased costs because:

(a)the Body Corporate identified a potential statutory pathway allowing it to obtain a declaration in respect of the ground lease;

3      Whitford Properties Ltd (In Liq) v Coumat Ltd [2019] NZHC 2199 at [18]-[19] (relating to indemnity costs) and [22] (relating to increased costs).

(b)nothing in Whai Rawa’s letter elucidated why it was of the view that the pathway did not exist and in particular it did not articulate the argument (that this was not a body corporate dispute) that the Court of Appeal found to be persuasive;

(c)the High Court did not find the case for strike-out was made out, while the Court of Appeal found that to be in error, the argument was not so clearly meritless that it should never have been countenanced in the first place.

Result

[13]   I am of the view that the actions of the Body Corporate are not sufficiently egregious or unreasonable so as to justify increased costs as sought by Whai Rawa. Ultimately the issue was different views of the statutory interpretation and the Body Corporate’s argument was not so lacking in merit that it should not have been heard in the first place.

[14]   Accordingly, Whai Rawa is entitled to 2B costs for the various applications in the proceedings. As to disbursements, in my view the Body Corporate’s position that if the strike out application in the High Court had succeeded in the first instance, the costs of neither Mr McDermott’s nor Mr Dunlop’s affidavits would have been payable and accordingly those adjustments should be made to the disbursements on the strike out/summary judgment application.

Orders

[15]   I make the order that the Body Corporate is to pay Whai Rawa the following costs and disbursements in respect of:

(a)the strike out/summary judgment application, $9082.00 in costs, plus disbursements of $2132.28 totalling $11,214.28;

(b)the leave application, $8,843.00 in costs plus disbursements of $434.78, totalling $9,27.78;

(c)steps on the stay application $7,456.00 plus disbursement statement of facts $530.43, totalling $7,986.43; and

(d)other steps, $2,405.30 in costs plus disbursements of $191.30 totalling

$2,595.60;

giving a total of $31,075.09.

[16]   In addition, the Body Corporate is to refund Whai Rawa’s costs which have been paid on the strike out/summary judgment application (including refunding the cost of Mr McDermott’s evidence as per [14]) of $12,543.65 and the leave application of $5,129.00 totalling $17,672.65.

[17]   The calculations at [15] and [16] result in a total amount of $48,747.74 payable by the Body Corporate to Whai Rawa.

……………………………… Associate Judge Taylor