Clearwater Cove Apartments Body Corporate No 170989 v Auckland Council

[2012] NZHC 2844

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2012-404-5640 [2012] NZHC 2844

UNDER  the Weathertight Homes Resolution

Services Act 2006

BETWEEN  CLEARWATER COVE APARTMENTS BODY CORPORATE NO 170989

First Appellant

ANDNICHOLAS VAN DIJK AND NORMAN PALMER AS TRUSTEES OF THE LIVI TRUST

Second Appellants

ANDAUCKLAND COUNCIL First Respondent

ANDTHE FLETCHER CONSTRUCTION COMPANY LIMITED

Second Respondent

Hearing:         23 October 2012

Appearances: B A Ivil on behalf of the First Appellant

B L Martelli on behalf of the First Respondent
G J Christie for the Second Respondent

Judgment:      30 October 2012

JUDGMENT OF ELLIS J

(1) Application for increased security on appeal and (2) Application for stay of

execution of WHT costs determination

This judgment was delivered by me on 30 October 2012 at 2.30 pm, pursuant to r 11.5 of the High Court Rules

Registrar/Deputy Registrar

Solicitors:      Heaney & Co, PO Box 105391, Auckland

Simpson Grierson, Private Bag 92518, Auckland: Counsel: D E Smyth, PO Box 105270, Auckland

Copy To:       B A Ivil, PO Box 44, West Park Village, Waitakere City

CLEARWATER COVE APARTMENTS BODY CORPORATE NO 170989 V AUCKLAND COUNCIL HC AK CIV-2012-404-5640 [30 October 2012]

[1]      The background to  this  matter is  set  out  in  other judgments  of mine in relation to the appellants’ substantive appeal from a decision of the Weathertight Homes Tribunal (WHT) largely dismissing their claim against the two respondents.[1]

That appeal has now been dismissed (without a determination on the merits) for the reasons set out in [2012] NZHC 2832.

[1] Clearwater Cove Apartments Body Corporate No 170989 v Auckland Council Ltd [2012] NZHC

1870 and Clearwater Cove Apartments Body Corporate No 170989 v Auckland Council Ltd [2012] NZHC 2832.

[2]      This appeal concerns the very substantial indemnity costs award subsequently made by the WHT. The Tribunal ordered that the Body Corporate pay to:

(a)       Auckland Council its actual legal costs of $341,650.13 and experts’

fees of $105,889.69;

(b)      Fletchers its actual legal costs of $433,022.46 and experts’ fees of

$153,183.77.

[3]      The  grounds  upon  which  the  WHT  ordered  indemnity  costs  against  the appellant were that:

(a)       The appellants’ s claim was largely without substantial merit;

(b)There were grounds for concluding that the appellants had acted in bad faith in their pursuit of the claim;

(c)      The appellants had imprudently refused Calderbank offers made by both the respondents (which the Tribunal found warranted an award of increased costs).

[4]      The first  two  grounds  are those  reflected in  s  91(1) of the Weathertight

Homes Resolutions Services Act 2006.

[5]      The respondents now apply for increased security for costs on the appeal.

[6]      The appellant seeks a stay of the WHT decision pending resolution of the appeal.

[7]      As  far  as  the  respondents’ application  is  concerned,  they seek  increased security of $10,000 each, in addition to the standard security of $3980 (based on a 2 day hearing, costs category 2).

[8]      In  the  substantive  appeal  I  granted  a  similar  application  by  the  second respondent  for increased  security.   Although  $40,000  was  sought  (based  on  the second respondent’s intention to seek increased or indemnity costs if the appeal was dismissed) the increased security actually ordered was $5000.  The appellant did not pay that amount as directed although has since indicated that it is available.

[9] In my view a further order for increased security is appropriate here, largely for the same reasons given in my earlier judgment ([2012] NZHC 1870). Those reasons were that:

(a)       there were grounds to believe that the appellants had not pursued their

WHT claim in good faith;

(b)      there was a real basis for concern about the appellants’ ability to meet

any costs award;

(c)       while the apparent merits of the proposed appeal was not a decisive factor they did not favour the appellants in this case.

[10]     While in the context of the present application and the present appeal I give even less weight to the last matter, the grounds for concern in relation to the second matter have only increased.  In my view it has become even plainer that the Body Corporate is in dire financial straits and Mr Ivil has provided no information to suggest otherwise.  Indeed he has steadfastly maintained a position which appears to be designed to deprive the Court and the respondents of any meaningful financial detail.  He has provided no evidence of any attempts by the Body Corporate to levy its members to meet the judgment debts.  Although he maintained his position that

the Body Corporate’s assets exceed its liabilities, Mr Ivil accepted before me that any excess was a very small one and did not take into account the $1 million now owing  to  the  respondents.    The  Body  Corporate  is  plainly  also  engaged  in  a significant legal battle with its former solicitors over unpaid fees and a number of its members are in default with their rates payments.  And there are the other matters already set out in my earlier judgment.

[11]     The  projected  2B  costs  calculation  provided  by  the  second  respondents suggests that the appellant’s costs liability to each respondent in the event of an unsuccessful appeal would be between $12,000 and $14,000.  On that basis and in all the circumstances of the case I am prepared to order that the appellant pay increased security of $10,000 for each respondent.   But I decline to add on a further $3980 amount as sought in the application.

[12]     Accordingly payment of $20,000 security for costs is to be made by the appellant to the Registrar within 15 working days of the date of delivery of this judgment.   Failure to pay will result in the automatic stay of the appeal and will entitle either respondent to apply to have it dismissed.

[13]     Just as the appellant’s apparently parlous financial state favours the ordering of increased security it also favours the grant of a stay of the WHT decision.  In my view the refusal of a stay would be likely to render the appeal nugatory, notwithstanding that any liquidators who might be appointed in due course could elect to pursue it.   That said, however, it must be acknowledged that whether the appeal will be rendered nugatory is not determinative and there will also be real prejudice to the respondents if they are not able to enforce the WHT judgment.

[14]     I consider that an appropriate balance of the competing interests here can be achieved by granting a stay, but on an interim basis.   Rule 20.10 now expressly contemplates interim relief.

[15]     Accordingly there will be a stay of enforcement in relation to the WHT costs determination presently under appeal for 15 working days following the date of delivery of this judgment.

[16]     If the appellant has paid the increased security I have ordered above by that date, the stay shall continue until further order of this Court. The respondents will be at liberty to apply to have the stay revoked in the event (for example) of any delays occasioned by the appellant in prosecuting the appeal or of any non-compliance with Court orders.

[17]     If the increased security is not paid by that date then the stay will then lapse without the need for further order of this Court.

[18]     As the appellant and the respondents have each succeeded on their respective applications, the costs of the applications will lie where they fall.

Rebecca Ellis J