Body Corporate No 207715 v McNish

[2016] NZHC 475

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2015-404-001248 [2016] NZHC 475

UNDER

the Contracts (Privity) Act 1982 and the

Unit Titles Act 2010

BETWEEN

BODY CORPORATE NO 207715

Appellant

AND

DEREK JOHN MCNISH First Respondent

MARGARET THELMA MCNISH

Second Respondent

Hearing:	On the papers
Counsel:	P Muir for appellant P M Webb for respondents
Judgment:	18 March 2016

JUDGMENT OF KATZ J [Costs]

This judgment was delivered by me on 18 March 2016 at 4:30pm

Pursuant to Rule 11.5 High Court Rules

Registrar/Deputy Registrar

Solicitor:           Price Baker Berridge, Auckland

Denham Bramwell, Auckland

Counsel:           P Muir, Auckland

P M Webb, Auckland

BODY CORPORATE NO 207715 v MCNISH [2016] NZHC 475 [18 March 2016]

[1]      The appellant is the body corporate of a unit title development known as the Santa   Rosa   apartments,   located   in   Gulf   Harbour,   Whangaparaoa,   Auckland (“Body Corporate”).   It sought to enforce the payment of body corporate levies directly against the respondents, Derek and Margaret McNish.  Mr and Mrs McNish are the lessees of an  apartment in the Santa Rosa complex.   The lessor of the apartment, which is the entity contractually liable for payment of the body corporate levies, has been struck off the companies register.

[2]      The  Body  Corporate’s  attempt  to  enforce  direct  payment  of  the  body corporate levies  against  Mr and  Mrs  McNish,  pursuant  to  s  4  of the Contracts (Privity) Act 1982, failed in the District Court.   An appeal to this Court was unsuccessful.  I found that the District Court Judge had not erred in finding that the relevant lease agreement did not contain an enforceable promise in favour of the Body Corporate, but was simply a covenant by the lessee in favour of the lessor.1

[3]      As the successful parties, Mr and Mrs McNish now seek costs of $7,200.49, in accordance with rule 14.2(a) of the High Court Rules.  This is what they received in legal aid for the appeal.  Costs on a 2B basis would have amounted to $9,812.00, but Mr and Mrs McNish acknowledge that a costs award cannot exceed the total

legal aid grant.2  The Body Corporate has not filed a costs memorandum.

[4]      No order for costs can be made against a legally aided person unless the Court is satisfied that there are exceptional circumstances.3    A legally aided party who succeeds in litigation, however, is entitled to costs.  The fact that a legally aided person may have been charged at rates less than those contemplated by Schedule 2 to the High Court Rules (as must have been the case here) does not justify a reduction in the costs awarded to that party, provided that the costs award does not exceed the actual costs incurred.4  As a general rule a successful legally aided party is entitled to

the  full  sum  of  the  legal  aid  grant,  provided  this  is  the  same  or  less  than  the

1      Body Corporate No 207715 v McNish [2015] NZHC 2848.

2      High Court Rules r 14.2(f).

3      Legal Services Act 2011, s 45(2).

4      Rule 14.2(f); Kawhia Offshore Services Ltd v Rutherford HC Hamilton CP 61/99, 10 July 2002 and see Rudman v Way HC Auckland CIV-2008-404-2893, 17 September 2008 at [7] and [11]; P v Minister of Immigration (1999) 13 PRNZ 370 (HC) at 371.

appropriate costs award calculated on a scale basis.  Ronald Young J  summarised the position in Taunoa v Attorney-General as follows:5

[45]... It is accepted principle that the actual cost incurred by a successful party are not by themselves relevant in fixing costs unless indemnity costs are sought…Thus what costs the party has actually incurred is not the starting point. The starting point is to identify the appropriate band and category. Once this is done, any reduction for partial success can be factored in. It is only then that Rule [14.2(f)] comes into play. Is the proposed costs award greater than actually incurred? If the answer is yes, then the amount actually incurred will be the amount of costs awarded. That is the position here.

[5]      The appropriate award of costs in this case is therefore the actual legal aid grant of $7,200.49,  given that that is less than the amount of costs that would

otherwise have been awarded on a 2B scale basis.  I order accordingly.

Katz J

5      Taunoa v Attorney-General (2004) 8 HRNZ 53 (HC).