Body Corporate 417948 v Watts & Hughes Construction Limited
[2019] NZCA 469
•1 October 2019 at 4.00 pm
| IN THE COURT OF APPEAL OF NEW ZEALAND I TE KŌTI PĪRA O AOTEAROA |
| CA484/2018 [2019] NZCA 469 |
| BETWEEN | BODY CORPORATE 417948 AND OTHERS NAMED AT SCHEDULE 1 |
| AND | WATTS & HUGHES CONSTRUCTION LIMITED |
| Court: | Brown and Collins JJ |
Counsel: | B M Easton and A K Hough for Appellants |
Judgment: | 1 October 2019 at 4.00 pm |
JUDGMENT OF THE COURT
A The appellants’ application for costs is granted.
B The second respondent’s application for costs is declined.
CThe second respondent must pay the appellants costs and disbursements in the sum of $11,866.70.
____________________________________________________________________
REASONS OF THE COURT
(Given by Brown J)
Introduction
This case concerns a residential complex in Mt Maunganui which leaks. The appellants’ preference to have a trial deferred until after the repair costs are determined was opposed by the second respondent and other parties. On 27 July 2018 Downs J rejected the appellants’ request and made a direction that the trial commence on 13 July 2020 for 10 weeks duration.[1]
[1]Body Corporate 417948 v Watts & Hughes Construction Ltd HC Auckland CIV-2017-404-557, 27 July 2018 (Minute of Downs J).
The appellants sought leave to appeal that direction, wishing to argue that under r 7.6 of the High Court Rules 2016 a judge may allocate a trial only when the proceeding can be readied for trial. They contended that if in a building defects proceeding a plaintiff elects to repair first before trial, the proceeding cannot be readied for trial until the repairs are complete.
The application for leave to appeal under s 56(3) of the Senior Courts Act 2016, which was opposed by the second respondent and others, was declined in the High Court.[2] However on 16 April 2019 this Court granted leave to appeal under s 56(5).[3] On 1 July 2019 the Registrar advised that the appeal would be heard on 21 August 2019.
[2]Body Corporate 417948 v Watts & Hughes Construction Ltd [2018] NZHC 2692.
[3]Body Corporate 417948 v Watts & Hughes Construction [2019] NZCA 113.
The appellants proceeded to prepare for the appeal. However on 2 August 2019 the parties to the proceeding filed in the High Court a consent memorandum seeking an adjournment of the trial to the first available date after 13 January 2022. On 7 August 2019 the appellants filed in this Court a notice of abandonment of the appeal.
The appellants now seek costs on the abandonment in the sum of $14,547.70. The second respondent opposes the application for costs. It seeks costs itself in the sum of $3,840.28.[4]
Costs on abandonment of appeal — principles
[4]An additional sum of $478 is sought by the second respondent in respect of its memorandum seeking costs.
Rule 44(3) of the Court of Appeal (Civil) Rules 2005 provides that the abandonment of an appeal does not affect the power of the Court to make any order as to costs in respect of the appeal.
Ordinarily costs are payable to the respondent where an appeal is abandoned but particular circumstances may justify a departure from that approach.[5] The onus is on an appellant to displace the presumption that a respondent is entitled to an award of costs on an abandoned appeal.[6]
[5]Pub Charity Inc v Department of Internal Affairs [2016] NZCA 11, (2016) 22 PRNZ 814 at [12].
[6]Chen v Yang [2009] NZCA 458, (2009) 19 PRNZ 810 at [6].
In reliance on authorities in relation to r 15.23 of the High Court Rules the appellants submitted that where a discontinuing plaintiff achieves the object of its claim without the need to continue the litigation it is appropriate to award the plaintiff costs.[7]
Parties’ submissions
Appellants’ submissions
[7]Powell v Hally Labels Ltd [2014] NZCA 572 at [21]; Moodie v Strachan [2015] NZHC 327, (2015) 22 PRNZ 419 at [15]; Earthquake Commission v Whiting [2015] NZCA 144, (2015) 23 PRNZ 411 at [69]; and Carmel College Auckland Ltd v North Shore City Council HC Auckland CIV‑2007‑404‑5894, 20 January 2009 at [18]–[19].
The appellants first observed that the second respondent sought a trial date before the repairs to the leaky building were completed. It then opposed the appeal against the trial date direction, including the application for leave to appeal. Yet some 19 days prior to the appeal hearing, the second respondent effectively capitulated and consented to an adjournment of the trial to 2022.
The second respondent’s actions caused the need for the appeal and then rendered it unnecessary. In the result the appellants have achieved the object of their appeal without the need for a hearing and costs should follow the event.
The appellants sought costs as follows:
| Date | # | Description | Allocation | Total |
| 23/08/2018 | n/a | Application to dispense with security | 0.5 | $ 1,115.00 |
| 14/11/2018 | 8 | Application for extension of time | 0.5 | $ 1,115.00 |
| 13/05/2019 | 14(b) | Commencement of appeal following giving of leave | 0.5 | $ 1,195.00 |
| 10/07/2019 | 15 | Preparation of case on appeal | 1 | $ 2,390.00 |
| Jul-19 | 17 | Preparation for hearing of appeal | 3 | $ 7,170.00 |
| TOTAL | $12,985.00 | |||
| 20/08/2018 | Filing fee to file notice appeal (Court of Appeal) | $ 1,100.00 | ||
| 14/11/2018 | Filing fee for application for extension of time (Court of Appeal) | $ 400.00 | ||
| 11/07/2019 | Courier to Court of Appeal filing casebook | $ 37.04 | ||
| 18/07/2019 | Courier to Court of Appeal filing updated casebook and synopsis | $ 25.66 | ||
| TOTAL | $ 1,562.70 | |||
| FINAL TOTAL | $14,547.70 |
Second respondent’s submissions
The second respondent submitted that as the appellants have abandoned their appeal it should receive costs as in the normal course. It rejected the proposition that it had “effectively capitulated” in respect of the appeal, making the point that the approved question for the appeal was whether the proceeding should have been set down for trial at all, not the timing of the trial. The fact that the parties to the proceeding have now agreed to an adjournment of the trial does not resolve the question on appeal of whether the proceeding was ready to be set down at all in terms of r 7.6.
The second respondent further contends that it appears from the appellants’ costs memorandum that their ulterior motive in appealing the setting down order was to achieve an adjournment of the trial date. It submitted that instead of appealing the appellant should simply have sought an adjournment pursuant to r 10.2. The appellants having failed to take the proper procedural pathway to achieve their actual objective, the second respondent is not at fault. Its opposition to the appeal was based on an opposition to any finding that plaintiffs in defective building cases have a “right” to prevent the trial being set down pursuant to r 7.6 until all repairs are completed. That question has not been answered, disposed of, or rendered moot by the adjournment of the substantive proceeding.
Consequently the second respondent sought costs of $3,840.28. Alternatively, if this Court was not minded to award it costs, the second respondent submitted that the situation was closer to that of Myoak Holdings Ltd v Millstone Grazing Ltd[8] than Pub Charity Inc v Department of Internal Affairs[9] and that consequently costs should lie where they fall.
[8]Myoak Holdings Ltd v Millstone Grazing Ltd [2017] NZCA 273 where following the appeal being brought the High Court issued its substantive judgment. Costs lay where they fell.
[9]Pub Charity Inc v Department of Internal Affairs, above n 5, where the respondent reversed the decision that had lead to the High Court judgment and appeal leading directly to the appeal’s abandonment.
Nevertheless, if the Court accepted that the appellants were entitled to costs, then the second respondent submitted that those costs should be in the sum of $8,810.70 rather than the $14,547.70 which the appellants sought.
Discussion
As Downs J recorded in his minute of 27 July 2018, the stance of the defendants and third parties was that a trial date should be allocated even if that meant that the case against them was based on anticipated cost.[10] As that was an interlocutory decision, it was necessary for the appellants to seek leave to appeal.
[10]Body Corporate 417948 v Watts & Hughes Construction Ltd, above n 1, at [3].
The second respondent took an active role in opposing the application for leave to appeal, succeeding in the High Court. In its memorandum in opposition to the application for leave to appeal dated 29 November 2018 filed in this Court the second respondent submitted:
The subject matter of the appeal is not sufficiently meritorious in substance and does not relate to a sufficiently important issue as to outweigh the cost of an appeal. This is, in essence, a proposed appeal of a scheduling decision made by the High Court.
Then in its submissions in this Court in opposition to the application for leave to appeal, the second respondent contended that the appellants’ main point of contention appeared to be not the fact of setting down but that the trial date was prior to their anticipated completion of repairs. It submitted that the circumstances did not warrant further delay. The second respondent filed an affidavit of a quantity surveyor in reply to the appellants’ affidavits in support of their application for leave to appeal.
Leave to appeal was granted and the appellants duly filed their submissions. On 31 July 2019 the second respondent filed a memorandum seeking an extension of time for the filing of its synopsis of argument. The memorandum recorded that the second respondent and the appellants were the only active parties to the appeal, that they were exploring options to resolve the appeal without the need for a hearing, and that in light of the potential resolution of the appeal they were agreed that the second respondent’s synopsis of argument could be delayed while resolution was explored.
There is no evidence before us concerning the circumstances that led to the resolution. However in the appellants’ reply memorandum on costs they stated that they abandoned their appeal because the second respondent approached them with a proposal to adjourn the High Court trial to which they agreed. The second respondent has not sought to take issue with that submission.
While it is correct that the subject of the appeal was the interpretation of r 7.6, the essence of the different stances of the appellants and the second respondent was whether the trial should proceed in 2020 or at a significantly later date. The second respondent was successful in the High Court in obtaining the earlier date. It resisted the appeal, including the application for leave. It then changed its mind. As the appellants put it in their reply submissions, the second respondent “experienced an unexplained change of heart and obtained an adjournment of the trial by consent”.
This had been the appellants’ preferred outcome throughout. The practical necessity for the appeal was removed. In these circumstances we consider that the appellants are entitled to an award of costs against the second respondent.
As to the quantum of the costs award, we agree with the second respondent that the allocation of half a day for the appellants’ informal application to dispense with security is excessive: we allow 0.3 days. We also agree that the second respondent should not be required to pay costs or disbursements in connection with the appellants’ application for an extension of time for the filing of their application for leave to appeal.
However we reject the second respondent’s contention that the appellants are not entitled to the full 3 day allowance for preparation of hearing the appeal. The appellants were required to file their synopsis and bundle of authorities on or before 17 July 2019 which was prior to the adjournment of the trial by consent. The fact that the second respondents were not put to the burden of filing their submissions does not mean that the costs to which the appellants would otherwise be entitled should be reduced.
We further note that in respect of the steps taken in May and July of 2019 the appellants’ costs schedule was calculated by reference to the daily rate of $2,390. However that rate applied only from 1 August 2019. [11] We consider that the applicable daily rate for all the relevant steps was $2,230. We have calculated costs on that basis.
[11]See High Court Amendment Rules 2019, rr 2 and 11.
Consequently we decline the second respondent’s application for costs and grant the appellants’ application for costs. We award costs to the appellants in the sum of $10,704.00 and disbursements of $1,162.70.
Result
The second respondent must pay the appellants costs and disbursements in the sum of $11,866.70.
Solicitors:
Grimshaw & Co, Auckland for Appellants
Rice Speir, Auckland for Second Respondent
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