Body Corporate 207624 v Grimshaw & Co

[2021] NZHC 2608

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV 2018-404-2107

[2021] NZHC 2608

BETWEEN

BODY CORPORATE 207624

Plaintiff

AND

GRIMSHAW & CO

Defendant

On the papers

Counsel:

A I C Denton and A G Holden for the Plaintiff

L Taylor QC, P Hunt and J Heard for the Defendant

Judgment:

30 September 2021

COSTS JUDGMENT OF CAMPBELL J

This judgment was delivered by me on 30 September 2021 at 4:00 pm pursuant to Rule 11.5 of the High Court Rules

Registrar/Deputy Registrar

BODY CORPORATE 207624 v GRIMSHAW & CO [2021] NZHC 2608 [30 September 2021]

[1]                 The plaintiff, Body Corporate 207624 (the body corporate), is the body corporate for the apartment building in Takapuna known as Spencer on Byron. The defendant, Grimshaw & Co (Grimshaw), is a firm of solicitors in Auckland. The body corporate sues Grimshaw for breach of contract and negligence in relation to the distribution of settlement funds to repair damage to the building.

[2]                 The proceeding was set down for trial for three weeks commencing on 12 July 2021. On 6 July 2021, in response to an application by the body corporate, Moore J vacated the fixture and allocated a new trial date, for four weeks, commencing on 18 July 2022. The adjournment was necessary because, for personal reasons, the body corporate’s senior counsel became unavailable for the 12 July 2021 trial.

[3]                 Moore J made directions regarding the issue of costs. Agreement between the parties was not possible and submissions were filed. The matter has been referred to me for determination.

Submissions

[4]Grimshaw seeks wasted costs in the sum of $119,520.41. This comprises

$55,322.40 in costs (being 70 per cent of the scale rate for various items, primarily preparation for the trial) and $64,198.01 for eight experts who were to give evidence at trial. Mr Taylor QC, for Grimshaw, submits the firm has incurred significant costs in preparation for the vacated trial and such costs will have to be incurred again next year when the trial proceeds. He says the costs sought are a fraction of the actual costs incurred by Grimshaw.

[5]                 Mr Denton, for the body corporate, responds that the question of wasted costs should be deferred until the conclusion of the proceeding. Alternatively, if wasted costs are to be dealt with at this stage, no order should be made, given the circumstances that led to the unavailability of the body corporate’s senior counsel. Finally, he submits the amount claimed is excessive. If the Court makes an award of wasted costs at this point, he says the amount should be approximately $20,417.88, comprising $6,721.88 for counsel’s preparation, $1,196 for matters relating to the adjournment application and approximately $12,500 for expert witnesses.

Analysis

[6]                 It is well established that this Court has an inherent jurisdiction to award wasted costs.1 There is nothing in the circumstances of this case that either justifies refusing an award of costs to Grimshaw or reserving costs until the proceeding has been determined. The body corporate sought the adjournment. The adjournment was not wanted by Grimshaw. As between the body corporate and Grimshaw, the body corporate must bear the costs consequences of the adjournment.

[7]                 The adjournment has left Grimshaw in a position where some of the costs they have incurred in preparing for the now vacated trial have been wasted. The real issue here is quantum.

[8]                 An award of wasted costs is the exercise of a discretion.2 It is only those costs that will have to be incurred again in preparation for the trial that are awarded.3 However, quantum is a matter “of impression and best judgment of the Court at the time”.4

[9]                 There are two key features of this case that are relevant to quantum. First, the fixture was vacated the week prior to commencement of the trial. Preparation by Grimshaw’s counsel and experts was well-advanced. Secondly, there is a long time to the new trial, and this affects the volume of work that counsel and experts will need to repeat in preparation for the trial next year.

[10]              Mr Denton submitted that one of the two rationales for an award of wasted costs – to impose a sanction on the defaulting party – was absent in this case, because the body corporate was not personally at fault for the adjournment. He said quantum should be assessed in that light. I do not accept that. First, that rationale is of subsidiary significance – the principal rationale for an award of costs is that the other party has incurred costs that will be wasted. Secondly, while the body corporate’s officers and members may not personally have been at fault, there was an element of

1      Jeffreys v Morgenstern [2013] NZHC 1361 at [31], Burgess v Monk [2015] NZHC 1881 at [15].

2      Burgess v Monk [2015] NZHC 1881 at [14].

3      Jeffreys v Morgenstern [2013] NZHC 1361 at [37].

4 At [34].

fault in the body corporate’s senior counsel’s delay in dealing with the circumstances that led to the adjournment.

[11]              Dealing first with costs, I do not allow anything for the pre-trial conference. That will have dealt with matters that are unlikely to be repeated next year. I accept that another pre-trial conference is likely next year, but a second pre-trial conference had already been scheduled for the July 2021 trial.

[12]              I allow for the filing of two memoranda in respect of the body corporate’s adjournment application. The first memorandum justifies a 2B allowance, the second (barely half a page) only 2A. This comes to $1,434.5

[13]              Given my overall conclusion on costs, I also allow for the two costs memoranda filed by Grimshaw. 2B is appropriate. This comes to $1,912.

[14]              The largest component of the claim for costs (as opposed to expert witness fees) is for wasted preparation for the hearing. Grimshaw seeks an award of 70 per cent of scale preparation costs. Grimshaw’s calculation of scale preparation costs is based on category 3 for senior counsel and category 2 for second counsel.

[15]              Grimshaw’s calculation of scale preparation costs is overstated. This proceeding has been categorised as category 2, not category 3, for costs purposes. No submissions were made to me as to why I should now adopt a different category. At category 2, scale preparation costs are $26,887.50 for senior counsel and $13,443.75 for second counsel, a total of $40,331.25. I accept a large portion of the preparation work will have to be repeated, but I think 70 per cent is excessive. I allow 60 per cent, which is $24,198.75.

[16]              As to the wasted expert witness fees, I accept there will be significant preparation work that will have to be repeated by the experts. I have reviewed the explanations given by Grimshaw’s experts for their estimates of wasted preparation and have considered the body corporate’s submissions on each estimate. Some of the

5      Grimshaw’s schedule of costs claimed costs for the memoranda twice (once for junior counsel and once for senior counsel). I assume that was an error. It is not in accordance with the costs rules.

explanations are rather brief. Applying a necessarily impressionistic analysis, my judgment is that a reasonable estimate of wasted expert witness fees is $46,000, including GST. The GST component needs to be removed, since I presume Grimshaw is GST-registered.6 The allowance is therefore $40,000.

[17]The total sum of wasted costs to be awarded is therefore $67,544.75.

Result

[18]The body corporate is to pay Grimshaw wasted costs in the sum of $67,544.75.

Campbell J

6      New Zealand Venue and Event Management Ltd v Worldwide NZ LLC [2016] NZCA 282 at [17].