Body Corporate 328392 v Northern Trustee Services (no 145) Limited
[2019] NZHC 3153
•2 December 2019
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2019-404-871
[2019] NZHC 3153
IN THE MATTER of Sections 319 and 320 of the Property Law Act 2007 IN THE MATTER
of an application under Part 19, Rule 19.5 High Court Rules 2016
BETWEEN
BODY CORPORATE 328392
Applicant
AND
NORTHERN TRUSTEE SERVICES (NO
145) LIMITED Respondent
Hearing: On the papers Counsel:
ML Thornton for applicant
GR Grant and MC Frogley for respondent
Judgment:
2 December 2019
JUDGMENT OF FITZGERALD J
[As to wasted costs]
This judgment was delivered by me on 2 December 2019, at 3:30 pm pursuant to Rule 11.5 of the High Court Rules.
Registrar/Deputy Registrar
Date……………
Solicitors: Michael Thornton, Auckland
Rainey Law, Auckland
Body Corporate 328392 v Northern Trustee Services (No 145) Limited [2019] NZHC 3153 [2 December 2019]
Introduction
[1] The applicant applied under the Property Law Act 2007 (PLA) for orders authorising entry onto and over part of the respondent’s neighbouring land in order to undertake repairs to a building on the applicant’s land.
[2] The application was originally filed on 9 May 2019, and the respondent filed a notice of opposition (supported by expert evidence) in June 2019.
[3] The application was scheduled to be heard by me on 6 September 2019. However, a matter of days prior to that hearing, the applicant sought an adjournment of the hearing, given its then view that the scope of the works proposed to be carried out on its property might well change, which would impact on the access required over the respondent’s property (including excavation and/or installation of a drain).
[4] While understandably frustrated at this turn of events, the respondent acknowledged that the hearing would need to be adjourned. By minute dated 3 September 2019, I accordingly vacated the 6 September 2019 hearing.
[5] The hearing has since been re-scheduled for 21 February 2020. The applicant is to file and serve any amended PLA application, and any further affidavits from structural/geotechnical engineers, on or before 10 December 2019.
[6] When (effectively) consenting to the adjournment application, the respondent sought its wasted costs to date. In dealing with the adjournment, I made timetabling orders for the parties to file further memoranda in relation to the application for wasted costs.
[7] The parties have not agreed on the wasted costs application, and this judgment accordingly determines that issue.
The parties’ respective positions
Respondent’s submissions
[8]The respondent seeks:
(a)scale costs for filing its original notice of opposition and supporting affidavits;
(b)scale costs for filing memoranda and appearing at a telephone conference dealing with the adjournment and the subsequent application for wasted costs;
(c)a 50 per cent contribution to experts’ fees incurred to date (which total approximately $15,000).
[9] The respondent says that while the precise scope of its costs which will have been wasted as a result of the adjournment cannot be ascertained, it is inevitable that there are significant wasted costs, because the respondent will need to “gear up” counsel and experts to deal with the application for a second time (even if it proceeds in an unamended form).
[10] Counsel for the respondent refer to two earlier decisions of this Court, Jeffreys v Morgenstern and Fu Hao Construction Ltd v Landco Albany Ltd, in which costs were awarded upon a fixture being vacated or abandoned, including 50 per cent of the fees of expert witnesses.1
Applicant’s submissions
[11] The applicant, on the other hand, says the Court cannot award costs on an interlocutory application (i.e. its PLA application for access) until it has been determined. It says the Court is accordingly unable to determine at this stage whether the costs incurred by the respondent have been wasted, and there remains the possibility that the underlying application could proceed in its original form.
[12] The applicant submits that the only steps that could be said now to be wasted costs are those specifically incurred in responding to the applicant’s request for an adjournment. But even in relation to those costs, it says the “prudent course” would be for the Court to consider all costs issues when it determines the application. It says
1 Jeffreys v Morgenstern [2013] NZHC 1361; Fu Hao Construction Ltd v Landco Albany Ltd, HC Auckland, CIV-2004-404-6608, 23 May 2008
this is a prudent course because the Court at that stage will be able to properly consider the issue of wasted costs in light of the steps, if any, the applicant takes to resolve the application, as well as the final outcome.
Approach
[13] There is no dispute as to the overriding jurisdiction and approach. That is conveniently set out and summarised by the learned authors of McGechan on Procedure as follows:2
(1)Jurisdiction
… The jurisdiction is obviously an exception to the usual rule that costs follow the event, because here there has been no “event”. It is not provided for in the Rules. The rationale for the jurisdiction is twofold:
(i)To compensate the other party or parties not in default who have wasted costs (including disbursements and the fees of expert witnesses);
(ii)To impose a sanction on the defaulting party, in an effort to avoid future wastage of costs and of judicial and court resources, and inconvenience to other parties awaiting fixtures in the court….
(2)Fixture vacated
Costs are routinely awarded against a party whose default results in a fixture being vacated, and the costs of preparation for that fixture thrown away….
…
(4) Quantum
Only costs directly thrown away as a result of the vacating or discontinuing of the hearing are awarded. When a fixture is vacated beforehand these comprise “trial focused” costs – costs thrown away because they will have to be incurred all over again in preparation for the fresh fixture….
The amount awarded is very much a matter “of impression and best judgment of the Court at the time.”
2 R Osborne and others, McGechan on Procedure (online loose-leaf ed, Thomson Reuters) at [Pt14.16A].
Discussion
[14] The applicant’s suggestion that the respondent’s application for wasted costs is a determination of costs on the underlying PLA application (which is yet to be determined) is misconceived.
[15] No formal interlocutory application was filed by the applicant seeking orders vacating the September 2019 fixture. Rather, that request was made by way of memorandum. But that procedural point cannot obviate the fact that the applicant applied for and was granted an adjournment of the September 2019 date, and a new date (in February 2020) was scheduled. As such, the wasted costs arise on that application, not the underlying substantive application.
[16] It would be quite wrong for the question of wasted costs arising from the September 2019 hearing being vacated simply to be reserved into the determination of costs on the PLA application. The two are quite separate matters. Further, there is no doubt that last minute adjournments of substantive fixtures cause not only the opposing party inconvenience and inevitable wasted costs, but also has broader flow- on effects. As Venning J observed in Jeffreys v Morgenstern:3
As this Court has previously observed in the case of Fu Hao Construction Ltd v Landco Albany Ltd default that leads to vacation of fixtures leads to inconvenience and costs not only to the other parties to that proceedings but to other parties awaiting fixtures in the Court. Fixtures allocated by this Court are commitments of limited judicial and Court resources. Time is booked for the case. Other parties who might otherwise have had their cases allocated hearing time are disadvantaged by default which leads to late vacation of fixtures.
[Citation omitted]
[17] Given the consequences of last minute adjournment of fixtures, wasted costs are routinely awarded. As Venning J noted in Jeffreys v Morgenstern, the outcome of the substantive hearing will not affect the fact that the original hearing could not take place because of the applicant’s conduct.4
3 Jeffreys v Morgenstern, above n 1, at [31].
4 At [21].
[18] I accept, however, the applicant’s submissions that it cannot yet be determined at this stage the extent to which costs incurred by the respondent to date will truly be wasted. The extent of wasted costs will turn in part on whether the underlying PLA application is amended, and if so, to what extent.
[19] Nevertheless, I am fully satisfied there will have been some wasted costs due to the fixture being vacated so close to its scheduled hearing date. There is an inevitable “gearing up” process as a hearing date approaches. Further, even if the PLA application is not amended, or is amended in a very minor way, there will inevitably be further costs associated with re-engaging with the experts and getting them “back up to speed” on the file. They will have turned their minds away from these matters and on to other projects in the intervening period.
[20] Turning therefore to the wasted costs sought by the applicant, I am satisfied the costs associated with memoranda and appearance at a telephone conference in relation to the adjournment itself are properly categorised as wasted costs. Those are items 11 and 12 in the schedule of scale costs sought in the respondent’s memorandum dated 5 October 2019. It is also appropriate that the respondent is awarded scale costs for a second item 11, being its memorandum in relation to this wasted costs application.
[21] The respondent also seeks scale costs for item 38, namely filing a notice of opposition and supporting affidavits. That item makes up a significant portion of the scale costs sought. I am not persuaded it is appropriate to award those costs, at least at this time. If, for example, the PLA application proceeds unamended, then the costs associated with the original notice of opposition and supporting affidavits will not have been wasted. Further, if the application is amended, it will only be after determination of the amended application that the Court will have before it the materials necessary to establish if, and to what extent, the original notice of opposition and supporting affidavits were wasted. For example, it may be that a further notice of opposition is filed but draws heavily on the original notice of opposition. A similar situation may result with the supporting affidavits.
[22]I accordingly decline to make an award of costs at this stage for item 38.
[23] That leaves the 50 per cent contribution sought in relation to expert fees. Again, the extent to which these fees are wasted cannot be ascertained with any precision until after the substantive hearing.
[24] But I do consider some award ought to be made in relation to the expert fees incurred to date, given there will inevitably be some wasted costs in relation to engaging with the experts and “gearing up” for the original hearing, which will need to be incurred again, in advance of the February 2020 hearing (and even if the PLA application proceeds in an unamended form). But I do not agree that 50 per cent of experts’ fees incurred to date should be ordered. To the extent this draws on the authorities relied on by the respondent, I note that in Jeffreys v Morgenstern, there was further information before the Court as to the additional fees expected to be incurred directly as a result of the vacation of the fixture in that case (in the form of correspondence from the experts concerned confirming the likely additional costs that would be incurred by them).5 Similarly, in Fu Hao Construction, the 50 per cent contribution was applied only to that portion of the expert fees which had been incurred after setting down in the expectation that the fixture would proceed.6
[25] As the commentary set out at [13] above makes clear, the approach to quantifying wasted costs will be one of impression and best judgment. Particularly given the full extent of wasted expert fees will only be able to be ascertained after any amended PLA application (and supporting materials) has been filed, and the respondent’s approach to opposing that is known, a relatively cautious approach should be adopted at this stage of assessing wasted costs. It would be wrong, for example, to award a significant portion of the experts’ fees as wasted if the underlying PLA application is unamended, or amended in only very minor respects.
[26] Nevertheless, to reflect the inevitable wasted costs of having to re-engage with the experts and gear up for the new hearing, I propose to make an award of $2,000, which represents just under 15 per cent of the actual expert fees incurred to date. Depending on the nature and shape of the PLA application as it actually proceeds, it
5 Jeffreys v Morgenstern, above n 1, at [38]-[39].
6 Fu Hao Construction Ltd v Landco Albany Ltd, above n 1, at [9].
may well be a greater proportion of these fees are properly categorised as wasted. At this time, however, the Court is not in a position to assess that.
Result
[27] There an award of costs in favour of the respondent against the applicant in the sum of $4,390, as set out in the schedule attached to this judgment.
Fitzgerald J
SCHEDULE
Step Description Days Allowance 11 Filing memorandum – 3 September 2019 0.4 $956 12 Appearance at mentions hearing 0.2 $478 11 Filing memorandum – 5 October 2019 0.4 $956 Allowance for expert fees $2,000 Total $4,390
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