Concrete Structures (NZ) Limited v NZ Windfarms Limited

[2014] NZHC 2818

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

CIV 2008-409-002301 [2014] NZHC 2818

BETWEEN

CONCRETE STRUCTURES (NZ)

LIMITED Plaintiff

AND

NZ WINDFARMS LIMITED Defendant

Judgment:                13 November 2014

COSTS JUDGMENT OF WHATA J

[1]      Concrete Structures Limited (CSL) was successful in obtaining damages in respect of three of its five claims, resulting in a damages award of about $64,000 (inclusive of interest) for underpayment on a construction contract. However, it was unsuccessful in relation to its largest claim based on an alleged variation for winter

works.1

[2]      NZ Windfarms Limited (NZWF) seeks increased costs pursuant to sub-rules

14.6(3)(b)(ii) and (v).  The main reasons for increased costs are said to be that the plaintiff:

(a)       pursued arguments that lacked merit;

(b)did not  properly plead  its  claim  resulting in  wasted  work  in  trial preparation and intensive rework during trials; and

(c)       failed without reasonable justification to accept four separate offers of

settlement made under r 14.10 (“Calderbank offers”).

1      Concrete Structures (NZ) Limited v NZ Windfarms Limited [2014] NZHC 2118.

CONCRETE STRUCTURES (NZ) LIMITED v NZ WINDFARMS LIMITED [2014] NZHC 2818 [13

November 2014]

[3]      In response the plaintiff contends that: some of the items sought for cost compensation are not appropriate;2 an uplift is not justified on the basis that CSL has been successful in part of its claim and completely successful in relation to its contractual interest claim; and that CSL acted reasonably in pursuing its claim and rejecting the NZWF’s Calderbank offers.

Principles

[4]      The principles for cost considerations are well settled, first by part 14 of the High Court Rules and then by various authorities.3     I have a broad discretion to impose costs, but the primary principle is that costs follow the event.4    Particularly relevant to the present claim is r 14.6(3) dealing with increased costs and r 14.11(3) dealing with Calderbank offers.  Together they contemplate (among other things) an increased costs award against plaintiffs that take wasteful steps, pursue meritless

arguments and/or unreasonably fail to accept an offer to settle.

Argument

[5]      The defendant’s central contention is that the primary winter variation claim had no prospect of success, was not properly pleaded and the plaintiff unreasonably rejected “four generous and reasonable Calderbank offers”.5     The final two Calderbank offers made in June and July 2014 included an offer to settle all matters for $200,000.

[6]     The plaintiff maintains that the winter claim had merit, and it was not unreasonable for the plaintiff to pursue its claims, as evidenced by its success on

some of the claims, especially the claim relating to contractual interest.

2      These include additional costs for discovery of the second defendant’s list of documents; costs of a judicial settlement conference; costs of second counsel; disbursements for electronic support; and disbursements for Mr Fletcher (the engineer under the contract).

3      Glaister v Amalgamated Dairies Ltd [2004] 2 NZLR 606 (CA) at [24] and [28]; Holdfast NZ Ltd v Selleys Pty Ltd (2005) 17 PRNZ 897 (CA); Bradbury v Westpac Banking Corp [2009]

3 NZLR 400 (CA) at [27] and [94]; Bluestar Print Group (NZ) Ltd v Mitchell [2010] NZCA 385
(2010 7 NZELR 494 at [20].

4      High Court Rules, r 14.2(a).

5      The first offer was made on 7 November 2008 for $30,000. The second offer was made on

12 December 2012 for $30,000. The third offer was made on 4 June 2014 for $200,000. The fourth offer was made on 8 July 2014 and repeated the 4 June offer.

Assessment

[7]      The defendant should have its costs on a 2B basis, together with a 25 per cent uplift for attendances from 4 June 2014.   Two counsel are approved, given the complexity both factually and legally of the various claims (as demonstrated by the ongoing evolution of the pleadings into the hearing).  I allow the disbursement for

electronic support, subject to affidavit evidence as to its reasonableness.6    It was a

cost incurred to achieve efficiency (including as to counsel time) in the overall presentation of the defendant’s case.  I reject the disbursement claim for Mr Fletcher. He was giving evidence as a primary actor, not as an expert.  I also reject attendances on the judicial settlement conference.  This was a matter crying out for settlement and steps taken by the parties to settle matters should not in my view be treated as steps in the litigation.   I do not allow for inspection at twice the ordinary rate specified in the third Schedule, there being no evidence that the discovery process

was particularly demanding.7

[8]      My reasons for the uplift can be stated succinctly.  First, the final two offers more  than  amply  exceeded  the  plaintiff’s  actual  success.    Second,  the  winter variation claim was weak, as is evidenced by the late change in pleadings. Notwithstanding Mr Blanchard’s skilled advocacy, it was a claim looking for a home and never quite found one.  Third, the rejection of the offer was unreasonable in the circumstances, especially as the largest possible award by the time of the hearing was based on interest payable in respect of the flawed winter variation claim.

[9]      I reject any further increase because the previous offers were unreasonable, and the reasonable offer was late.   By this time the plaintiff must have already expended considerable resources on its overall case and it was successful on at least three matters of substance which collectively occupied as much time and energy as

the primary claim in the hearing.

6      As to the requirement for evidence, see Progressive Enterprises Ltd v North Shore City Council

HC Auckland CIV 2004-404-7139, 22 December 2005.

7      The second defendant’s list ran to 78 pages, and many of the entries do not appear to duplicate what was already necessary to inspect in terms of the plaintiff ’s and defendant’s lists.  But this is a flimsy basis upon which to assume that further increased costs for discovery is justified.

[10]     Accordingly there shall be a costs order in terms of [7] above.  The remaining affidavit evidence is to be filed within five working days (of the date of this judgment).  I otherwise do not anticipate that further recourse to this Court will be necessary for final quantification purposes.   Nevertheless, leave is granted to file submissions, not more than two pages in length, within ten working days, in the unlikely event that it is necessary.

Solicitors:

Kevin A Badcock, Rotorua

Anthony Harper Lawyers, Christchurch