Clark v Central Lakes Homes Limited

[2016] NZHC 3138

IN THE HIGH COURT OF NEW ZEALAND

INVERCARGILL REGISTRY

CIV-2016-425-25

[2016] NZHC 3138

BETWEEN

PETER JOHN CLARK

Appellant

AND

CENTRAL LAKES HOMES LIMITED

Respondent

Hearing:

20 December 2016 On the papers

Counsel:

T M Braun for Appellant

H C Matthews for Respondent

Judgment:

20 December 2016

JUDGMENT OF MANDER J

Introduction

[1]                 The appellant, Peter Clark, appealed the entry of summary judgment against him for a sum of money the Building Disputes Tribunal (the Tribunal) determined he owed to the respondent company, Central Lakes Homes Ltd (CLH). On 25 July 2016 I dismissed the appeal.1 The parties have been unable to agree on costs and CLH now comes to the Court for resolution.

Background

[2]                 CLH entered into a contract with Mr Clark to build a residential dwelling on his Queenstown property. Relations between the parties broke down and the contract was brought to an end. The circumstances leading to the termination of the contract were in dispute. The dispute was referred to the Tribunal for adjudication. The

1      Clark v Central Lakes Homes Ltd [2016] NZHC 1694.

CLARK v CENTRAL LAKES HOMES LTD [2016] NZHC 3138 [20 December 2016]

adjudicator determined that Mr Clark was liable for claimed losses, together with interest as well as a half share of the adjudicator’s fee.

[3]                 CLH sought to enforce the adjudicator’s determination in the District Court by applying for summary judgment which Mr Clark resisted. Judge Callaghan granted the application for summary judgment.2 Mr Clark appealed.

[4]                 On 25 July 2016 I issued my judgment dismissing the appeal.3 The issue as to costs remained to be agreed between the parties with memoranda to be exchanged if they could not agree. They could not do so.

Actual and reasonable

[5]                 CLH  have  sought  an   award  of   “actual  and  reasonable”  costs  under     s 59(2)(a)(ii) of the Construction Contracts Act 2002 (the Act). That section provides:

59 Consequences of not complying with adjudicator’s determination under section 48(1)(a)

(1)The consequences specified in subsection (2) apply if a party to the adjudication fails, before the close of the relevant date, to pay the whole or part of the amount determined by an adjudicator.

(2)The consequences are that the party who is owed the amount (party

A)  may do all or any of the following:

(a)recover from the party who is liable to make the payment (party B), as a debt due to party A, in any court,—

(i)the unpaid portion of the amount; and

(ii)the actual and reasonable costs of recovery awarded against party B by that court:

…

[6]                 Arguably the reference in s 59(2)(a)(ii) to “that court” is to the Court from which recovery is sought for the unpaid portion of the amount determined by an adjudicator. However, before me was an appeal from the entry of summary judgment

2      Central Lakes Homes Ltd v Clark [2016] NZDC 396.

3      Clark v Central Lakes Homes Ltd, above n 1.

by the District Court. Rule 20.19(1)(c) of the High Court Rules provides that on appeal the court may make any order the court thinks just, including any order as to costs.

[7]                 I am satisfied, given the scheme of the Act, that the prevailing reasons behind actual costs being recoverable under s 59(2)(a)(ii) apply equally on appeal. CLH is therefore entitled to actual and reasonable costs. This accords with the approach taken by this Court in a number of cases where proceedings linked to the recovery of the adjudicated amount were determined. In Re BRC Ltd ex parte Patel, Associate Judge Gendall made an award of actual and reasonable costs of recovering the sums payable in accordance with s 59(2)(a)(ii), which extended to recovery costs incurred in opposing applications by the judgment debtor to set aside bankruptcy notices.4 In Clearwater Construction Ltd v Chow Group Ltd, Kos J made an award of actual and reasonable costs of recovery in respect of liquidation proceedings commenced in the wake of a judgment obtained from the District Court.5

Costs sought

[8]                 CLH seeks $15,486.45 in actual costs and disbursements including the $50.00 sealing fee. The costs figure is based upon three invoices. The first covers a period up until 24 May 2016 and provides:

Fees	$1,162.80
Administration Fee	$60.00
GST	$183.42
TOTAL	1,406.22

4      Re BRC Ltd, ex parte Patel HC Wellington CIV-2011-485-1322, 11 November 2011.

5      Clearwater Construction Ltd v Chow Group Ltd HC Wellington CIV-2011-485-001320, 2 December 2011.

[9]The second invoice covers the period up to 28 June 2016 and provides:

Fees	$6,889.20
Administration Fee	$100.00
GST	$1,048.38
TOTAL	$8,037.58

[10]The final invoice covers the period up to 14 July 2016 and provides:

Fees	$5,111.00
Administration Fee	$100.00
GST	$781.65
TOTAL	$5,992.65

[11]              In the final invoice there were also travel expenses and accommodation charged, however, these are not sought by CLH. CLH has also sought payment of the

$50 sealing fee.

Fees

[12]              The fee component of the invoices sought is $13,163.00 exclusive of GST. The actual costs sought by CLH must be reasonable. In Clearwater Construction Ltd v Chow Group Ltd Kós J determined the reasonableness of costs sought should be referenced to the category 2 daily recovery rate under sch 2 of the High Court Rules.6 In doing so he recognised that the rate set does not constitute actual or reasonable costs, but is set at approximately two-thirds of the rate that practitioners in the relevant category charge, viewed on a national basis.7

6      Clearwater Construction Ltd v Chow Group Ltd, above n 5.

7 At [8].

[13]              In a Minute dated 18 April 2016 Dunningham J categorised the appeal as a 2B proceeding. The current daily recovery rate under sch 2 for a category 2 proceeding amounts to $2,230. Therefore, the Rules would endorse an actual recovery rate of approximately $3,345 per day excluding GST.

[14]              A difficulty with assessing the reasonableness of CLH’s claimed costs is that the number of hours compiled in respect of the matters requiring attendance in this proceeding have not been provided. However, by way of reference, time allocations for appeals under sch 3 of the Rules allows for one day for preparation of case on appeal, three days for written submissions and the allocated time for the hearing which amounted to a half day. Based on $3,345 per day that already amounts to approximately $15,050.

[15]              In the absence of challenge, I consider $13,163.00 excluding GST to be reasonable and recoverable in full.

Disbursements

[16]              In terms of disbursements, CLH only claims $260 in administration fees and the sealing fee of $50. I can see no reason not to allow this in full.

GST

[17]              CLH claims $2,013.45 in GST. When a party is entitled to actual costs this includes the GST component.8 Given I have allowed both of the above figures in full, there is no reason to not also allow GST on those figures.

8      New Zealand Venue and Event Management Ltd v Worldwide NZ LLC [2016] NZCA 282, (2016) 27 NZTC 22-058 at [13].

Determination

[18]I order Mr Clark to pay costs totalling $15,486.45 comprising:

(a)       $13,163.00 costs;

(b)$310 disbursements; and

(c)       $2,013.45 GST.

Solicitors:

White Fox & Jones, Christchurch Whitfield Braun, Hamilton