Body Corporate 346799 v KNZ International Co Limited

[2017] NZHC 543

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2012-404-6290 [2017] NZHC 543

BETWEEN

BODY CORPORATE 346799

First Plaintiff

HA THI HOANG & ORS Second Plaintiffs

AND

KNZ INTERNATIONAL CO LIMITED First Defendant

BROOKFIELD MULTIPLEX CONSTRUCTIONS (NZ) LIMITED (IN LIQUIDATION)

Second Defendant

… continued

Hearing:

Further submissions:

5 December 2016

15 December 2016, 17 February and 8 March 2017

Counsel:

G B Lewis and L M Deane for Plaintiffs
D T Broadmore for Second Defendant
S A Thodey and L J Douglas for Fifth Defendant

Judgment:

24 March 2017

JUDGMENT OF THOMAS J

(COSTS FIFTH DEFENDANT CROSS CLAIM)

This judgment was delivered by me on 24 March 2017 at 4.00 pm pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date:………………………….

BODY CORPORATE 346799 v KNZ INTERNATIONAL CO LIMITED [2017] NZHC 543 [24 March 2017]

FAÇADE DESIGN SERVICES LIMITED Third Defendant

PBS CONTRACTING LIMITED (IN LIQUIDATION)

Fourth Defendant (Discontinued)

AUCKLAND CITY COUNCIL Fifth Defendant

BOSTIK NEW ZEALAND LIMITED Sixth Defendant (Discontinued)

STEPHEN MITCHELL ENGINEERS LIMITED

First Third Party (Discontinued)

STEPHEN MITCHELL
Second Third Party (Discontinued)

CITY DESIGN LIMITED
Third Third Party (Discontinued)

DAVID LEE
Fourth Third Party (Discontinued)

DAVID JAMES FORSTER
Fifth Third Party (Discontinued)

TRISTAN D’ARCY HARVEY-SMITH Sixth Third Party (Discontinued)

WILLIS NEW ZEALAND LIMITED Seventh Third Party (Discontinued)

RONALD CHARLES HANLEY Eighth Third Party

[1]      By my decision dated 22 March 2017,1  judgment was given for the fifth defendant (the Council) in its cross claim against the first defendant (KNZ) and the second defendant (Multiplex).

[2]      Costs were awarded to the Council in principle. This decision now deals with the detail of the costs award.

Claim

[3]      The Council originally sought to recover total costs of $493,540.14. [4]        Of that sum the Council sought scale costs of:

(a)       $29,415 against KNZ; and

(b)      $25,147 against Multiplex.

[5]      As  concerns the  scale  costs  sought  for the preparation  and  filing of  the notices to cross claim, the Council restricted its claim to the costs directly associated with  the  filing  and  service  of  those  statements  of  cross  claim  and  amended statements of cross claim against KNZ and Multiplex.

[6]      As concerns the scale costs sought for preparation of evidence, on the basis the Council claimed the full amount from both parties, it did not apportion the claimable costs as between KNZ and Multiplex but sought the prescribed costs against each.

[7]      As concerns the costs claimable for discovery and inspection, the Council made an assessment as to how these costs ought to be apportioned between the

defendants.

1      Body Corporate 346799 v KNZ International Co Limited [2017] NZHC 511.

[8]      As concerns the claim for disbursements, the Council made an assessment as to how those claims could fairly be apportioned between the two defendants.

[9]      The disbursements sought against both KNZ and Multiplex are of a relatively standard nature and amount, with one exception, which relates to experts’ fees.  In its original submissions, the Council sought $438,975 for expert fees with a suggestion the cost should be split 50/50 between KNZ and Multiplex.

Assessment

[10]     I asked the Council to the address how its costs related to defending the proceedings brought by the plaintiffs and in particular the experts’ costs which may have related specifically to the Council’s liability and role and the extent to which this should be taken into account in a costs award against KNZ and Multiplex.  The Council has now reassessed its position in light of those observations.

[11]     The Council records that the total experts’ costs it incurred in the proceedings were $877,958.27.  The Council considers that of that amount, $476,450.99 can be said to relate solely to expert work undertaken with respect to the Council’s liability, with the remaining $401,507.28 relating to the Council’s liability and that of KNZ and Multiplex.  Of that sum the Council has assessed the following:

(a)      $118,606.72 attached to KNZ’s liability ($148,745.80 including disbursements   and   scale   costs   claimable   against   KNZ   and Multiplex); and

(b)       $118,606.72 attached to Multiplex’s liability ($144,077.60 including disbursements   and   scale   costs   claimable   against   KNZ   and Multiplex).

[12]     In support of its position, the Council itemised the various experts and the scope of their work.

[13]     Counsel  for  Multiplex,  consistent  with  its  approach  in  the  proceedings generally, has not filed substantive submissions but does point out:

(a)       In support of its cross claim against Multiplex, the Council filed evidence from only two experts, Mr Flay and Mr Smith.  Any other

expert  evidence  the  Council  obtained  cannot  have  related  to  the

Council’s cross claim against Multiplex; and

(b)       Much of Mr Flay’s and Mr Smith’s evidence related to the Council’s defence of the plaintiffs’ claim.  To the extent that the Council has included in its disbursements fees incurred for the purposes of defending the plaintiffs’ claim, rather than for the purpose of the cross claim against Multiplex, those disbursements should not be recoverable from Multiplex.

[14]     While it is true that the Council filed evidence from two experts only in support of its cross claim, as noted in my substantive judgment,2  the Council also relied on the affidavits provided by the plaintiffs in the formal proof hearing against KNZ  and  Multiplex.    In  the  circumstances,  where  all  parties  were  seeking  to minimise costs and the hearing was on a formal proof basis, it is hardly surprising that the Council did not file affidavits from all the experts involved on its behalf in the proceedings.

[15]     I am satisfied from the information provided in the Council’s submissions that a large number of experts were engaged by the Council for the purpose of carrying out investigations and reporting on the defects and the Council’s cross claim against KNZ and Multiplex.  It would be highly unusual if only the work of the two experts referred to above were relevant to the Council’s assessment of the claim and cross claim in proceedings of this nature.

[16]     I am satisfied the Council is entitled to the fees of the experts as listed in its memorandum, save those of Mr Clarke, the facilitator at the experts’ conferences. Given neither Multiplex nor KNZ played any part in the proceedings, including experts’ conferences  in  my assessment  they should  not  have  to  contribute  to  a facilitator’s costs.

[17]     As a result, the sum of $114,992.84 can be recovered against each of KNZ

and Multiplex in respect of expert fees.  The total costs, including disbursements and scale costs, is therefore:

2 At [147].

(a)       145,131.92 in respect of KNZ; and

(b)      $140,463.72 in respect of Multiplex.

Thomas J

Solicitors:

Grimshaw and Co, Auckland for Plaintiffs
Buddle Findlay, Auckland for Second Defendant

Heaney and Partners, Auckland for Fifth Defendant