Courtenay Nominees Limited v Body Corporate 396139

[2024] NZHC 3608

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2024-404-357

[2024] NZHC 3608

UNDER

the Unit Titles Act 2010

IN THE MATTER

of an application for orders appointing administrators under s 141 of the Unit Titles Act 2010

BETWEEN

COURTENAY NOMINEES LIMITED

Applicant

AND

BODY COPRORATE 396139

First Respondent

THE OTHER RESPONDENTS as set out in Schedule 1 to the Originating Application Second to Eleventh Respondents

Hearing:

On the papers

Appearances:

K L Wendt for the Applicant

TJG Allan for the Second to Sixth and Eighth Respondents

Judgment:

29 November 2024

JUDGMENT OF GAULT J

This judgment was delivered by me on 29 November 2024 at 4:00 pm pursuant to r 11.5 of the High Court Rules 2016.

Registrar/Deputy Registrar

……………………………………

Solicitors / Counsel:

Ms K L Wendt, Barrister, Auckland

Mr TJG Allan, Grove Darlow & Partners, Auckland

COURTENAY NOMINEES LTD v BODY COPRORATE 396139 [2024] NZHC 3608 [29 November 2024]

[1]    Following my minute of 23 August 2024 declining the applicant’s interlocutory application to adjourn a one-day fixture on 17 September 2024, the applicant discontinued this originating application for orders appointing administrators under  s 141 of the Unit Titles Act 2010.

[2]    The second to sixth and eighth respondents (the opposing respondents) seek costs and disbursements, totalling $78,723.83, following the discontinuance, including costs on the unsuccessful adjournment application.

[3]    In response, the applicant seeks 2B costs and disbursements, totalling $16,827, following the discontinuance. It agrees to pay 2B costs of $1,553.50 on the adjournment application.

[4]My minute of 23 August 2024 included reference to costs:

[11]   The cost consequences also should not be overestimated.  Accepting the costs presumption on a discontinuance,1 and the onus on the plaintiff to persuade the Court to exercise its discretion to displace the presumption,2 in deciding whether it is just and equitable to exercise the discretion the Court may consider the parties’ conduct in the matter and the reasonableness of the parties’ respective stances, including the reasons why the plaintiff brought and continued the proceeding and the defendant opposed it.3 Courts have been persuaded to exercise the discretion when the defendant’s acts or omissions have caused the litigation and then rendered it unnecessary.4 However, the Court will not undertake a review of the merits of the plaintiff’s claim unless they are immediately apparent. To undertake a disputed merits review would result in a trial which would be contrary to the object of r 15.23.5 Where costs are payable, they are likely to be relatively modest in accordance with scale, as increased or indemnity costs may be awarded on the basis of lack of merit, in a case where the trial is not completed, only where the lack of merit is both obvious and incontrovertible.6 Mr Allan candidly acknowledged the position and signalled only that the respondents may seek scale costs on other than a 2B basis in relation to the time required to respond to the applicant’s extensive evidence. I am willing to address such cost issues if there is a discontinuance, although counsel should be able to agree the application of these principles.

1      High Court Rules 2016, r 15.23.

2      Earthquake Commission v Whiting [2015] NZCA 144; (2015) 23 PRNZ 411 at [68]; Powell v Hally Labels Ltd [2014] NZCA 572 at [21].

3      Earthquake Commission v Whiting [2015] NZCA 144; (2015) 23 PRNZ 411 at [68]; Kroma Colour Prints Ltd v Tridonicato NZ Ltd [2008] NZCA 150; (2008) 18 PRNZ 973 at [12] and [29]; and Powell v Hally Labels Ltd [2014] NZCA 572 at [22].

4      Earthquake Commission v Whiting [2015] NZCA 144; (2015) 23 PRNZ 411 at [69].

5 At [71].

6      N-Tech Ltd v Abooth Ltd [2012] NZHC 1167 at [108].

[5]    Despite that, and no real dispute about the applicable principles, costs could not be agreed. The parties are far apart. The opposing respondents seek substantially increased costs for inspection of affidavits and filing the notice of opposition and supporting affidavits. On the other hand, the applicant seeks to displace the costs presumption on discontinuance.

Discussion

Presumption on discontinuance

[6]    The first issue is whether the costs presumption on a discontinuance has been displaced. The applicant submits the originating application was in the best interests of the Body Corporate and refers to defects not disputed in the opposing respondents’ evidence. It also refers to the substantive evidence and relies on Barry Park Investments Ltd v Body Corporate 95388,7 in which Davison J held that the respondent’s change of position well after the applicant’s proceeding was commenced supported the applicant’s contention that the respondent’s remedial steps had overtaken the proceeding and it was because of that development that the applicant then discontinued its proceeding which had been rendered nugatory.

[7]    Here, applying the approach referred to in the cases cited in my earlier minute, I am not persuaded to  exercise the discretion to displace the costs presumption.    The applicant understandably sought to avoid a hearing in circumstances where the Body Corporate during the proceeding had taken steps to engage a building surveyor to investigate the building. The applicant acknowledged that the Body Corporate may now comply with its obligations in which case the proceeding would become moot. But it does not necessarily follow that the merits of the application for orders appointing administrators are immediately apparent. The authorities make clear that the Court will not undertake a review of the merits of the claim unless they are so apparent. The difficulty is highlighted in this case by the applicant’s submissions referring to the substantive evidence and a memorandum in reply (which was not sought) submitting those submissions were misleading. A merits review of the extensive evidence is not appropriate on this costs application. It is not immediately

7      Barry Park Investments Ltd v Body Corporate 95388 [2016] NZHC 1527 at [20].

apparent that the applicant achieved the result sought in the proceeding. As indicated in my earlier minute, no settlement has been reached and there remains a prospect that compliance will not eventuate and the applicant will re-file.8

[8]    For these reasons, the presumption is not displaced and the second to sixth and eighth respondents are entitled to costs on the discontinuance.

Costs claimed

[9]    The cost items claimed extend beyond those applicable on an originating application. Item 21 applies to discovery inspection, not reviewing and responding to affidavits, which is separately covered (and claimed for) in item 38. This also amounts to double counting. Item 21 is disallowed.

[10]   Item 38 is claimed on a 2C basis with an uplift from six to 10 days in reliance on r 14.6(3)(a) of the High Court Rules 2016 and Holdfast NZ Ltd v Selleys Pty Ltd.9 The 2B allowance is two days ($4,780). The 2C allowance ($14,340) and uplift ($9,560), totalling $23,900, are sought on the basis of the extent of the applicant’s affidavit evidence. This totalled 1,222 pages (although this includes exhibits and there is said to be some duplication in email chains). The extent of evidence in opposition is not specified. Even so, I accept that 2C costs are appropriate for item 38, given the extent of at least the applicant’s evidence.

[11]   As to whether a further uplift for item 38 is appropriate, the onus is on an applicant for increased costs to persuade the Court that such an award is justified.     I accept that the time actually spent very substantially exceeded the time allocated under band C. However, consideration of increased costs under r 14.6(3)(a) necessitates an assessment that the time required would substantially exceed the time allocated under band C. The opposing respondents submit that it has been recognised that Part 19 proceedings may create an anomaly. But if this were an affidavit hearing other than an originating application, the scale for affidavit preparation would have been calculated by reference to the hearing time. Here, only one day was allocated

8      I noted the opposing respondents understand that if re-filing proves necessary, that may also give rise to costs consequences for them in due course.

9      Holdfast NZ Ltd v Selleys Pty Ltd (2005) 17 PRNZ 897 (CA) at [44].

despite the voluminous evidence filed, which raises a question about the significance of the voluminous evidence. Even on a 2C basis, a one-day affidavit hearing would have resulted in only four days for affidavit preparation. Overall, I am not persuaded that a further uplift of four days from the 2C allowance is justified. I allow $14,340 for item 38.

[12]   Items 10 and 11 relating to the first case management conference are disputed on the basis that the applicant prepared the joint memorandum and directions were made by consent without a conference. I allow a total of $956 for these two items.

[13]   In respect of the applicant’s unsuccessful adjournment application, the opposing respondents claim costs under items 23 and 40, totalling $5,019. Item 23 relates to a notice of opposition to an interlocutory application whereas item 40 relates to preparation of submissions on a substantive originating application. The applicant notes that no notice of opposition was filed and the hearing was a telephone conference. The adjournment request was originally made by memorandum, but Moore J required a formal interlocutory application. It is true that the response was by way of memorandum of submissions rather than notice of opposition with affidavit, but this reflected the urgency as anticipated in my minute of 19 August 2024. I allow

0.4 days for the opposition memorandum and 0.25 days for the telephone conference, totalling $1,553.50.

[14]Thus, the costs allowed total $16,849.50.10

Disbursements

[15]   Disbursements are also disputed. Disbursements are provided for in r 14.12 of the High Court Rules. As the Court of Appeal said recently,11 a disbursement must be awarded to the extent that it meets the criteria at r 14.12(2)(a)–(d). A disbursement may however be disallowed or reduced if it is disproportionate in the circumstances of the proceeding.12 The criteria in 14.12(2)(a)–(d) are that the disbursement is:

10     $14,340 + $956 +$1,553.50.

11     Siemer v Legal Complaints Review Officer [2024] NZCA 220 at [9].

12     High Court Rules, r 14.12(3).

(a)of a class that is approved by the Court or specified in the rule (relevantly, photocopying costs);

(b)specific to the conduct of the proceeding;

(c)reasonably necessary for the conduct of the proceeding; and

(d)reasonable in amount.

[16]   Mr Gray’s expert witness fees of $28,452.43 are said to be too high. There are time records but only very limited narrations of the work. Even so, expert witness fees are approved, and it is not disputed that Mr Gray’s fees were specific to, and reasonably necessary for, the conduct of the proceeding. The only issue is whether the amount is reasonable and proportionate. In the context of discontinuance of this proceeding without a merits review, I accept that Mr Gray’s fees for actual time spent prior to the discontinuance are reasonable.

[17]   Photocopying costs of $1,426.60 are allowed.13 LINZ search fees of $60 appear unnecessary and are not allowed.

[18]Thus, the disbursements allowed total $29,879.03.14

Result

[19]   The applicant is to pay the second to sixth and eighth respondents’ costs and disbursements totalling $46,728.53.

Gault J

13     According to Appendix A1 of Memorandum dated 18 September 2024 (not $1,455.40 as claimed).

14     $28,452.43 + $1,426.60.