Body Corporate 68792 v Memelink

[2016] NZHC 2452

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

CIV-2015-485-202 [2016] NZHC 2452

IN THE MATTER

of section 141 of the Unit titles Act 2010

AND

IN THE MATTER

of an originating application to appoint an administrator

BETWEEN

BODY CORPORATE 68792
First Applicant

AND

SYNERGY ENTERPRISES LIMITED, JAMES AND CAROLINE MCKERNAN, STEVEN AND VALDA SCHECKTER AND GEOFFREY ARDEN

Second Applicants

AND

HARRY MEMELINK AND IAN TREVOR NIELL HAMILTON AS TRUSTEES OF LINK TRUST NO 1

First Respondent

Hearing:	On the papers
Counsel:	D G Dewar for Applicants Mr Memelink in Person
Judgment:	14 October 2016

JUDGMENT (COSTS) OF CLARK J

[1]     On 9 September 2016 I delivered a judgment extending the period of administration of Body Corporate 68792, and appointing Robert Gary Naylor as administrator. Associated orders and directions were made.

[2]      I awarded costs to the applicants on a 2B basis.  The applicants were invited, if they wished, to submit a memorandum which included a 2B costs calculation.

BODY CORPORATE 68792 v SYNERGY ENTERPRISES LIMITED, JAMES AND CAROLINE MCKERNAN, STEVEN AND VALDA SCHECKTER AND GEOFFREY ARDEN [2016] NZHC 2452 [14

October 2016]

Mr Memelink was to file any memorandum in response within five working days of

receipt of the applicants’ memorandum.

[3]      Mr Dewar, counsel for the applicants, filed a memorandum on 22 September

2016.  Mr Memelink’s memorandum in response was filed on 10 October 2016.

[4]      The  following  calculation  of  the  applicants’ costs  are  on  the  basis  of  a determination of an interlocutory application.

COSTS
22. Preparing and filing interlocutory application	0.6 days	$1,338.00
Appearance at hearing	0.5 days	$1,115.00
Sealing Orders	0.2 days	$446.00
Subtotal:	1.3 days	$2,899.00
DISBURSEMENT
Filingfee		$200.00
Sealingfee		$50.00
Total:		$3,149.00

[5]      Mr Dewar asks the Court to award an additional 1.5 days for preparation because the application for extended administration involved appearances and attendances which are not taken account of in the above costs calculation. Specifically, Mr Dewar refers to an appearance for the purpose of obtaining interim orders which were granted by Williams J on 29 June, the preparation and filing of memoranda and administrators’ reports and an affidavit.

[6]      No written submissions were filed for the hearing before me.  Nonetheless, Mr Dewar asks the Court to award additional costs taking into account the above appearances and attendances.

[7]      Mr Memelink opposes the additional costs.  He points out that the cost of an administrator providing regular written reports to the Court is already covered and levied by BC68792.  Claims for these reports as additional costs is unjust and unfair Mr Memelink says.

[8]      Mr Memelink’s memorandum addressed additional matters arising in other proceedings in which he is involved namely CIV-2013-485-5775, CIV-2016-485-141 and   CIV-2016-485-566.      Two   of   the   proceedings   have   been   brought   by Mr Memelink and either indirectly or directly involve Mr Dewar.   Mr Memelink referred to the stress and the cost of having to “fight these ongoing matters” and continue the cases.   For all these reasons he says neither the costs sought nor any additional costs should be granted.

[9]      I agree with Mr Memelink that the costs of the administrators’ reports ought not to  be factored  into  an  award of  costs.    Beyond  the  fact  that  they have an intitulment and are filed as court documents it is not apparent that there has been input from a legal adviser.  Nor has Mr Dewar elaborated his involvement.  I do not think any associated “preparation” on the part of counsel can legitimately be brought to bear in a costs determination.

[10]     But the more relevant point is that the costs of the administrator are born by the Body Corporate itself, in this case BC68792.1

[11]     In my view the costs calculated by Mr Dewar for preparing and filing the interlocutory  application,  his  appearance  at  the  hearing  and  sealing  the  orders coupled with the filing and sealing fees do not properly reflect the underlying principle  which  is  that costs  are to  represent  a  reasonable contribution  to  costs actually and reasonably incurred.  When the matter first came before Brown J it was by way of originating application.   Costs on such an originating application are covered by step one in sch 3 and attract a time allocation of three days.   The anomalous costs outcome following the application which I determined is because it was brought by way of an interlocutory application for which only .6 of a day’s preparation is provided in sch 3 to the High Court Rules.  I cannot, however, increase the costs by simply ignoring the form of the application filed by the applicants.

[12]     Having re-read the evidence, my notes of the hearing and my decision I am quite clear that there are aspects of the respondent’s conduct of the proceeding that justify the payment of increased costs.  A week before the hearing Mr Dewar put a proposal  to  Mr Memelink.    He suggested  that  the outcome of the hearing was inevitable  given  the  unequivocal  opinions  of  both  Mr Greenwood,  the  outgoing administrator,    and    Mr Naylor,    the    incoming    administrator,    that    ongoing administration was essential to the proper functioning of BC68792.  He proposed to Mr Memelink that he should consent to the application on the basis that he could apply to end the administration.  This would have avoided the need for a hearing.  I recorded in my judgment my view of Mr Dewar’s proposal as realistic and constructive  that  Mr Memelink  had  not  identified  any  basis  for  opposing  the application beyond his own resolute opposition.  Many of the issues he raised were simply  irrelevant   to   the   application   for   ongoing   administration.     As   well, Mr Memelink’s submissions and contentions were repetitive of those disposed of in earlier proceedings.  I made that observation at para [15] of my judgment.

[13]     The correct approach to an uplift from scale is to calculate the reasonable time for each step in the proceeding under r 14.5 and apply for extra time for a particular step.2     I wish to make it clear that the increased costs are not because Mr Memelink  failed  to  accept  an  offer  of  settlement.    There  was  no  offer  of settlement   such   as   is   required   for   the   purpose   of   increased   costs   under r 14.6(3)(b)(v).  Rather, it is that Mr Memelink’s unreasonable conduct in resisting

not just an obvious but an inevitable outcome combined with the repetitive and irrelevant submissions on the day of the hearing contributed unreasonably to the time and expense.

Result

[14]     Accordingly,  in  addition  to  the  sum  which  is  calculated  in  the  schedule attached to Mr Dewar’s memorandum dated 21 September 2016 a further 1.5 days for preparation is allowed.   In addition to the factors which I have identified as contributing to the allowance of a further 1.5 days I record that although they were not in writing, Mr Dewar made extensive oral submissions in which he necessarily

drew on the detailed reports of the two administrators, the previous decisions of

Brown J and evidence and memoranda filed by members of BC68792 in support of the application to extend administration.

Karen Clark J

Solicitors:

Thomas Dewar Sziranyi Letts, Lower Hutt