Body Corporate 355492 v Queenstown Lakes District Council

[2022] NZHC 1808

IN THE HIGH COURT OF NEW ZEALAND INVERCARGILL REGISTRY

I TE KŌTI MATUA O AOTEAROA WAIHŌPAI ROHE

CIV-2015-425-36

[2022] NZHC 1808

BETWEEN

BODY CORPORATE 355492

First Plaintiff

JOHN ROBERT CHESTNEY & ORS
Second Plaintiff

AND

QUEENSTOWN LAKES DISTRICT COUNCIL

First Defendant

ELLIOTT ARCHITECT LIMITED (IN LIQUIDATION)
Second Defendant

EDWIN GERARD ELLIOTT
Third Defendant

continued …

Hearing:

17 and 18 March 2022

Appearances:

D J Powell and G B Lewis for Plaintiffs (by VMR)

C M Meechan QC and M L Rhodes for First Defendant T E Hutchinson for Tenth Third Party (by VMR)

Judgment:

26 July 2022

JUDGMENT OF ASSOCIATE JUDGE LESTER

(Costs)

BODY CORPORATE 355492 v QUEENSTOWN LAKES DISTRICT COUNCIL [2022] NZHC 1808 [26 July 2022]

AND

HOLMES STRUCTURES LIMITED (IN LIQUIDATION)

Fourth Defendant

ARCH UNDERWRITING AT LLOYD’S LIMITED

Fifth Defendant / Fifth Third Party

ASTA MANAGING AGENCY LIMITED
Sixth Defendant / Sixth Third Party

HARDY (UNDERWRITING AGENCIES) LIMITED
Seventh Defendant / Seventh Third Party

LIBERTY MANAGING AGENCY LIMITED

Eighth Defendant /Eighth Third Party

STEPHEN BRUCE McLEAN
First Third Party

JULIE RAEWYN WENSLEY JACK
Second Third Party

PETER LAWSON
Third Third Party

DANIEL STEWART
Fourth Third Party

DE GEEST CONSTRUCTION LIMITED
Ninth Third Party (discontinued)

DE GEEST BATHROOMS LIMITED

Tenth Third Party

[1]                   In my Judgment of 5 April 2022 (the April Judgment), I made an order striking out that part of the current statement of claim dealing with what was referred to in the April Judgment as the “bathroom pod claim”.1

[2]                   The strike out application was brought by the first defendant, Queenstown Lakes District Council (QLDC).

1      Body Corporate 355492 v Queenstown Lakes District Council [2022] NZHC 678.

[3]At [79] of the April Judgment I said:

There is no reason why costs should not follow the event on a 2B basis with certification for second counsel. If no costs submissions are filed by either party within five working days of the date of this judgment, then that shall be the costs order.

[4]                   QLDC had issued a third party claim against the tenth third party relating to the bathroom pods. The tenth third party also applied to strike out the bathroom pod claim against it. Its application was granted given the bathroom pods claim against QLDC was struck out. I made the same observation about costs between QLDC and the tenth third party.

[5]As it turns out, all parties promptly filed costs memoranda.

[6]                   I deferred dealing with costs issues on the strike out applications as the first plaintiff, Body Corporate 355492 (Body Corporate), applied to review my decision (review being available given this proceeding was commenced in 2015).

[7]                   On 27 June 2022, Osborne J dismissed the application for review.2 The Body Corporate was ordered to pay QLDC costs on a 2B basis in respect of the unsuccessful application for review.

[8]                   With the review being dismissed, I now deal with costs in respect of my April Judgment.

Costs on QLDC’s strike out application

[9]                   I remain of the view that the Body Corporate should pay costs to the first defendant on a 2B basis with an allowance for second counsel in respect of QLDC’s strike out application.

[10]               QLDC succeeded in obtaining a strike out of the bathroom pod claim. As such, it was the successful party and costs should follow the event.

2      Body Corporate 355492 v Queenstown Lakes District Council [2022] NZHC 1494 – Review was dismissed save to amend the grant of leave to QLDC so it was conditional on it, pending the expiry of appeal periods and/or determination of an appeal, continuing to prepare for trial on the basis the bathroom pod claim remained.

[11]               Costs are resisted on the ground that the basis I adopted for striking out the claim was not one advanced by QLDC. At the end of the day, success is success.

[12]               I also note that after the hearing, QLDC drew to the Court’s attention, and the parties  were  permitted  to  make  submissions,  on  the   authority   Body   Corporate 360683 v Auckland Council (Orewa Grand).3 I concluded my decision to granting the strike out was supported by that decision.

[13] Body Corporate’s counsel also notes that QLDC’s argument based on a six year limitation, as opposed to the 10 year longstop under the Building Act 2004, which was the basis of the strike out, was abandoned during the hearing. While that is correct, it does not undermine the fact that QLDC’s application was ultimately successful.

[14]               Body Corporate’s counsel submits that QLDC, by including its misconceived six year limitation argument and then not abandoning it before written submissions were due, it contributed unnecessarily to the time and expense of the application. Counsel submit it represented QLDC pursuing an argument that lacked merit and it failed without reasonable justification to accept Body Corporate’s legal argument on that point.

[15]               Body Corporate’s counsel also notes that QLDC sought an indulgence from the Court as it needed leave to bring its application after the close of pleadings.

[16]               QLDC seeks that time band 2C rather than 2B should be awarded for preparation of written submissions given the complexity of the legal issues.

[17]               I am satisfied that awarding time band 2C costs as opposed to 2B is not appropriate given the fact QLDC only abandoned its limitation argument at the hearing. QLDC says it did not pursue the six year limitation argument in its written submissions and therefore the Body Corporate was not obligated or required to pursue that issue in their submissions in reply but, as Mr Powell, counsel for the Body Corporate, noted in his reply submissions, QLDC’s submission did state the six year limitation period was engaged. In my view, QLDC should have made it express,

3      Body Corporate 360683 v Auckland Council [2017] NZHC 1785.

before the Body Corporate had to file its submissions, that it was not pursuing the six year limitation argument in the strike out hearing rather than leaving any doubt over that issue.

[18]               As to the issue of indulgence, the fact is QLDC required leave for the application to be brought out of time. That is a factor standing against the increase in costs sought by QLDC.

[19]               Accordingly, I confirm my initial view that the Body Corporate is to pay QLDC costs on a 2B basis together with disbursements, being the filing fee on the application. I allow for second counsel. There is an order accordingly.

Strike out of tenth third party

[20]               The issue here is whether QLDC should be liable for costs following its third party claim against the tenth third party being struck out or whether the Body Corporate should be liable to pay those costs.

[21]               QLDC, while accepting the starting position is that it is liable to the tenth third party for scale costs, it asserts the Body Corporate should bear those costs. The starting position is under r 14.2(1)(a) of the High Court Rules 2016 (the Rules),    the party who fails on an interlocutory application should bear the costs. The tenth third party says QLDC should bear the costs because:

(a)it was QLDC who joined the tenth third party to the proceeding;

(b)the Body Corporate did not join the tenth third party as a defendant, presumably on the basis such a claim would be out of time;

(c)it cannot be said that the Body Corporate’s claim was effectively against a third party thus making QLDC’s third party claim against the bathroom pod supplier inevitable; and

(d)QLDC’s claim was statute barred in any event.

[22]               Costs on a 2B basis in respect of the proceeding are sought by the tenth third party.

[23]               The Body Corporate opposes being made responsible for the costs that QLDC is prima facie liable to pay to the tenth third party. The Body Corporate says it did not join the tenth third party as it considered any claim against the bathroom pod supplier would be barred by the longstop. The Body Corporate says it did not encourage or influence QLDC’s decision to bring the tenth third party claim against the tenth third party and therefore should not be liable for those costs. QLDC says its joinder of the tenth third party was inevitable once the bathroom pod claim was pleaded and as such the Body Corporate should pay the costs the tenth third party is entitled to as it was the Body Corporate’s amended pleading that caused the tenth third party to become involved in the proceeding.

[24]               For the reasons set out in the tenth third party’s memorandum as to costs dated 12 April 2022 and counsel  for  the  Body  Corporate’s  memorandum  dated 14 April 2022, I do not consider it appropriate that the costs of QLDC’s decision to join the tenth third party should be visited on the Body Corporate.

[25]               The joinder of the tenth third party was in part a result of QLDC delaying in bringing its strike out application. Had the strike out been brought when the bathroom pod claim was first pleaded then the tenth third party would never have been joined. QLDC could have signalled its intention to join a further third party, reserving its position on joinder, pending determination of its strike out application. Any delay in joining the tenth third party in those circumstances would not have stood against joinder had its strike out application been unsuccessful. The consequences of QLDC’s delay in bringing its strike out application should not be the Body Corporate’s responsibility.

[26]               I therefore order that QLDC is to pay to the tenth third party its costs on a 2B basis as per Schedule A to the Anthony Harper memorandum of 12 April 2022. The only  difference  between  Schedule  A  to  Anthony   Harper’s   memorandum   of 12 April 2022 and Schedule A to Wynn Williams’ memorandum of the same date, is the former includes a claim of .4 of a day for item 11. If that memorandum was filed

then the claim is approved. If the memorandum was not filed then I am sure counsel for the tenth third party would not maintain a claim for a step that was not taken. The quantum of the tenth third party’s cost claim is approved subject to counsel clarifying this point between them.

Associate Judge Lester

Solicitors:

Grimshaw & Co, Auckland (for Plaintiffs)

Wynn Williams, Christchurch (for First Defendant) Anthony Harper, Christchurch (for Tenth Third Party)

Copy to counsel:
C M Meechan QC, Barrister, Auckland (for First Defendant)