Cridge v Studorp Limited

[2022] NZHC 2024

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE

CIV-2015-485-594

[2022] NZHC 2024

BETWEEN

T J CRIDGE and M A UNWIN

Plaintiffs

AND

STUDORP LIMITED

Defendant

CIV-2015-485-773

BETWEEN

K M FOWLER and S WOODHEAD
Plaintiffs

AND

STUDORP LIMITED

Defendant

JAMES HARDIE NEW ZEALAND LIMITED

Second Defendant

Hearing:	18 July 2022
Counsel:	J A Farmer QC, E S Dalzell and L K Worthing for Plaintiffs J E Hodder QC and J A McKay for Defendants
Judgment:	16 August 2022

JUDGMENT OF SIMON FRANCE J

(Costs)

Table of Contents

Paragraph No.

The litigation  [3]

Common costs  [8]

Introduction  [8]

CRIDGE v STUDORP [2022] NZHC 2024 [16 August 2022]

Plaintiffs’ Submissions  [17]

The Authorities  [31]
Defendant’s submissions[45]

Decision  [55]

Specific cost issues  [68]

Rule 14.6(3)(a)  [69]

(i)    General  [69]

(ii)     First uplift step – discovery  [77]

(iii)     Second uplift step – preparation of witness briefs  [82]

(iv)    Third uplift step – preparation for hearing  [89]

Rule 14.6(3)(b)[93]

Costs in relation to a post-hearing evidential matter  [101]

Summary on costs  [107]

Disbursements  [112]

General  [112]

Dr Lstiburek  [113]
Ms Johnson  [124]

Litigation support accommodation  [129]

Overall proportionality  [134]

Remaining issues  [152]

Costs on costs  [152]
Leave to apply to appeal order  [153]

Summary  [155]

Costs  [155]

Disbursements  [157]

[1]                  This judgment addresses a number of disputes concerning a costs claim made by James Hardie as successful defendant in this large-scale litigation. Like the litigation, the claimed costs are large – $2,341,737.75 costs plus $4,748,887.98 disbursements.

[2]                  The challenges involve the common and the novel. The common concerns whether uplifts to scale costs are appropriate, and if so to what extent; and whether certain large disbursements related to key witnesses are reasonable. The novel concerns a proposition that the plaintiffs’ liability should be reduced because James Hardie’s expenditure will be of value to it in what are termed parallel proceedings. This proceeding was one of three contemporaneously brought by the owners of homes clad in a James Hardie product called Harditex. All proceedings challenged the soundness of the product. The plaintiffs say the common costs expenditure incurred by James Hardie in defence of the claims should be spread across the three sets of plaintiffs.

The litigation

[3]                  James Hardie sold a cladding product called Harditex. It was its major fibre- cement product following the removal from the market of predecessors which contained asbestos. It was a large selling product, and was extensively used in the residential market. The product was sold as suitable as part of a weatherproof cladding system capable of giving a monolithic look. The cladding was direct-fixed to the timber framing.

[4]                  The litigation was a representative action on behalf of the owners of 153 properties1 which had suffered water damage. It was claimed the damage was due to a defective product and/or a defective installation system, both of which were James Hardie’s responsibility.

[5]                  Fibre-cement cladding is a core James Hardie product, and the litigation, which challenged the theory behind the product as well as how it was made, represented a significant reputational threat to the defendant. Further, the claim in relation to the properties was quantified at $127 million, so it was also a significant claim in pure fiscal terms.

[6]The raw figures indicate the scale of the litigation:

(a)The sitting days were 83.2 This figure requires explanation. It is made up of a comparatively small percentage of evidence-in-chief which was largely taken as read. Most witnesses provided truncated summaries, or read extracts. If evidence had been given in the orthodox way the hearing would possibly have been twice as long. It is difficult to know as the briefs of two witnesses, one for each side, were in the order of 1,000 pages each and involved reference to an extraordinary number of photographs and other documents. How long it would have taken to read is difficult to assess.

1      Being the two dwellings owned by the four “lead” homeowners and 151 properties owned by the “class” of 144 others.

2      In terms of the High Court Rules 2016, which operate in quarter days, the relevant figure is agreed to be 74.5 days.

(b)The judgment records the written briefs and appendices as amounting to more than 10,000 pages. The Notes of Evidence were more than 6,000 pages. The judgment made no effort to quantify the vast majority of other documentation. However, at the costs hearing Mr McKay advised the bundle consisted of 54,612 pages, with a further 17,866 pages of reference material. There were 67 witnesses.

(c)The claims were both in negligence and under the Fair Trading Act 1986.

[7]                  The outcome of the proceeding was that the claim was dismissed “in its entirety”.3 The Court was critical of many of the plaintiffs’ expert witnesses, finding some to be unreliable and others to have strayed outside the areas of expertise.4

Common costs

Introduction

[8]                  Three sets of proceedings involving Harditex were commenced against James Hardie at about the same time. They have been referred to as:

(a)The Cridge proceeding, being this one, with a statement of claim filed in August 2015, and by the second plaintiff in October 2015.

(b)The White proceeding which was filed in the Auckland High Court in December 2015. It commenced its hearing after the close of the present case and while judgment was reserved. Following the completion of the plaintiffs’ evidence, the plaintiffs discontinued. They made a payment of $1.25 million to James Hardie towards its costs.

(c)The Waitākere proceeding which was filed in Auckland at the same time as White. It has a fixture for May next year. The plaintiffs’ briefs are expected to be filed imminently.

3      Cridge v Studorp [2021] NZHC 2077, [2022] 2 NZLR 309 at [888].

4      For the record, it is noted the judgment is subject to an appeal which is shortly to be heard. The costs ruling necessarily proceeds on the basis of the judgment as it stands.

[9]                  It is important to state at the outset that I have no direct knowledge of the Auckland proceedings which have been managed in that Registry. What is stated about them in the judgment comes primarily from counsel for James Hardie.

[10]              The defendants in the present case were James Hardie’s corporate entities in New Zealand, being James Hardie New Zealand Ltd and then Studorp Ltd. I am advised that in the Auckland proceedings the defendants have also included some James Hardie overseas corporate entities, including from Australia and Ireland. In Waitākere, there are still five overseas entities amongst the defendants.

[11]              The White proceeding involved products other than Harditex, but was reduced by the time of trial to Harditex. The Waitākere proceeding was also wider in scope but is now limited to Harditex, and what is in effect its successor, Monotek.5

[12]              I am advised that for a period White and Waitākere were case managed together but management was separated in September 2020. Waitākere involves buildings constructed in a retirement village environment so generally on a different scale to Cridge which was limited to residential dwellings.

[13]              A purpose of setting this out at the beginning is to highlight what I see as a significant hurdle for the plaintiffs in their common cases argument, putting to one side that the contended-for principles have not previously applied in New Zealand.

[14]              As will be seen, none of the authorities relied upon come close to the present facts:

(a)separate cases filed and heard/to be heard in two separate Registries;

(b)cases managed separately, and in the case of Cridge in complete disregard of the Auckland cases;

(c)cases where the plaintiffs and some of the defendants are different; and

5      Monotex is generally installed over a cavity. This is not the case with Harditex which was directly fixed to wooden framing. I am advised the Monotek claim is limited to situations where it was direct fixed.

(d)cases where one has gone to judgment; one started and was settled in the period during which the first case was awaiting judgment; and one is scheduled to begin next year and where the plaintiffs’ evidence has not yet been filed. All hearings are to be before different Judges. Each case is to have its own evidence.

[15]              That said, I record it is common ground that some evidence used in the Cridge proceeding will be used by James Hardie in the Waitākere proceeding, and that there will be, for James Hardie, a number of common witnesses. My substantive judgment divided the topics into building science and the particular properties. The common evidence will primarily occur in the area of the building science. It cannot be formally known what form the building science evidence of the Waitākere plaintiffs will take since it has not been filed. How much therefore of the James Hardie Cridge evidence is directly relevant cannot be presently determined.

[16]              There is, however, undoubtedly within the James Hardie evidence material that would fall within the concept of a common cost, being output that will be usable in whole or in part, directly or as relevant material, in the defence of all three claims.

Plaintiffs’ Submissions

[17]              It is first appropriate to note the plaintiffs’ position is not informed by a concern about double recovery. It is not suggested James Hardie is recovering more than once for the same item of expenditure or endeavour. Rather, the issue is that some of that endeavour will be applicable to all three proceedings, yet James Hardie seeks to visit the full burden on just the Cridge plaintiffs, essentially because they went first.

[18]              The purpose of these submissions is to convince the Court to order disclosure by James Hardie of costing information that will enable the plaintiffs to put together its identification of common costs that should be apportioned across the three proceedings. The directions sought are:

A.     James Hardie should recover a proportionate share of “common” costs referable to its defence of each of the parallel claims, being the White and Waitākere matters, as well as any associated only with the claim by the Cridge plaintiffs.

B.   The costs and disbursement relevant to Cridge and one or both of White

and Waitākere are to be apportioned between them.

C.   To the extent James Hardie maintains that all fees and disbursements have been allocated to the appropriate cases as they are incurred, an affidavit from the responsible partner detailing the allocation of costs is to be provided.

D.     Additionally, any documents related to common costs (as contended for by the plaintiffs as recorded in these submissions) are to be disclosed to the plaintiffs. Such documents will include, without limitation, complete time records/narrations and invoices of James Hardie’s legal advisors and experts relating to the claims in Cridge, White, and Waitākere.

E.   Additionally, any documents recording or evidence:

i.The actual legal costs and disbursements incurred by the defendants in the White proceeding;

ii.The terms of settlement and with any attachments thereto entered into with the White plaintiffs and/or their third-party litigation funder in or about August 2021 (together, the White settlement agreement); and

iii.Any offers of settlement and/or documents related to the costs and disbursements which James Hardie (then) considered claimable against the White plaintiffs, had the White plaintiffs elected to discontinue without a settlement agreement,

are to be provided to the plaintiffs within 7 days of the date of these directions.

F.   Upon completion of the above steps, counsel are to confer and lodge a joint memorandum or otherwise separate memoranda proposing a timetable for further steps to resolve the issue of costs and common costs apportionment.

G.     [Costs].

[19]The plaintiffs introduce their claim in these terms:6

65.The issues arising in respect of common costs incurred by a party in defending or pursuing multiple proceedings do not appear to have arisen in New Zealand previously.

66.However, issues of apportionment of common costs have been considered by courts in both England and Australia and the jurisprudence dates back to the mid-1850s. In the earliest cases, including Oppenshaw v Whitehead, the courts held that no apportionment of common costs was required. It was found to be of no consequence to a costs claim in one proceeding that the relevant costs had been incurred by the same solicitor representing the same client in common pursuance or defence of other proceedings also.

6      Footnotes omitted.

This was so, even if the same costs were therefore recoverable twice over.

67.However, the law was set on a different course from the 1950s when Denning LJ (as he then was) in Boguslawski v Gdynia Ameryka Linie recognised the unjust result that would ensure if the Oppenshaw principles were followed, expressing firmly his disagreement with the same in circumstances where the same solicitor had appeared in three parallel actions tried shortly after one another.

68.While the early authorities built their reasoning around the potential for double recovery (and the need – or otherwise to avoid such an outcome), the principles emerging from these cases have not been confined to prevention of double recovery – but to fairly and properly identify the costs claimable in the one proceeding where costs have been incurred in common pursuit or defence of another.

[20]              There next follows analysis of decisions from the English and Australian Courts. These will be considered more fully later in the judgment. Generally the Australian cases would appear to proffer more support for the approach advocated for by the plaintiffs.

[21]              It is submitted allocation of shared costs serves two purposes – prevention of double recovery, and avoiding an unfair burden being cast on an unsuccessful party. The latter is said to reflect the approach of New Zealand Courts to costs, which is to achieve an outcome that best meets the interests of justice. For this proposition reliance is placed on Kinney v Pardington where the passage reads:7

[1] Questions of costs are ultimately a matter of discretion. The exercise often requires assessment of a wide range of factors. The overall objective is to achieve an outcome that best meets the interests of justice in the given case in accordance with any applicable costs rules and consistent with established principles. …

[22]              It is submitted apportionment of common costs reflects the New Zealand costs scheme which is that disbursements be specific to the proceeding, reasonably necessary for its conduct and reasonable in amount.

[23]              Submissions are next addressed to why the three proceedings are to be regarded as substantially the same. It is noted each proceeding claimed the same product was not fit for purpose, that James Hardie owed a duty of care to warn consumers about

7      Kinney v Pardington [2021] NZCA 174 at [1].

problems with the product, and to withdraw the product, and that the James Hardie technical and promotional literature contained false or misleading statements. Obviously to the extent the claims concern Harditex, there is a similar set of alleged facts concerning its manufacture and marketing. The additional features in the other cases are said to represent separate features of those cases but not to undermine that which is common across the three.

[24]              There is specific focus, as an example, on what is termed the RDH testing material. James Hardie commissioned a Canadian firm to build a test wall made of Harditex and constructed in accordance with its technical literature. The wall was then subjected to a number of tests designed to show its weathertightness.8 Permission was obtained by James Hardie to provide this material to the White plaintiffs, and then subsequently to the Waitākere plaintiffs. It is, as I understand it, material that would have been used in the White defence had that proceeding continued. I am unsure if it will be used in the Waitākere proceeding, but it has been disclosed, so it seems likely.

[25]              Concerning why common costs are appropriately apportioned, it is disputed by the plaintiffs whether the Cridge costs would have been incurred to the same extent had there not been three proceedings. The point is that costs are incurred by most defendants in proportion to potential liability, and the existence of three plaintiffs encouraged a fuller defence. Of this I observe that while the basic point is certainly tenable, the scale of the Cridge proceeding in itself, and the inherent reputational attack, means it would be particularly speculative to suggest it would have been defended differently if it had been the only proceeding.

[26]              It is next submitted the terms of the White settlement, and what James Hardie’s actual expenditure on that case was, should be known. The essential point is the

$1.25 million contribution to costs paid by the White plaintiffs is undoubtedly a compromise. James Hardie should not be entitled to recover from Cridge what it has compromised away in White. Of this I observe that assuming, say, common costs across the three proceedings were $3 million, a figure likely to be too high, the White share would be $1 million. One would then have to address which costs James Hardie,

8      The RDH testing is discussed at [385]–[413] of the substantive judgment.

in accepting $1.25 million, has allegedly compromised away – the separate or the common? Presumably the $1.25 million will itself have to be apportioned on some unknown basis.

[27]              The Cridge plaintiffs observe that they filed first and obtained representative status. It was the plaintiffs in the other proceedings that chose not to opt in but pursue their own litigation. The Cridge plaintiffs are not responsible for there being parallel proceedings. It is submitted it would create a perverse incentive for plaintiffs to go second in terms of order of proceedings if the party going first meets all the costs.

[28]It is noted:

… the plaintiffs fully appreciate that the task of unpacking and assessing attendances and costs for commonality is not straightforward … It is regrettable if James Hardie has not undertaken appropriate apportionments of common costs in real time and now has to complete that task in hindsight – but that does not make the task less imperative, valued or important, nor does it justify claiming all common costs from Cridge plaintiffs.

[29]              The plaintiffs submit the completion status of the three proceedings is irrelevant as common costs have by now been incurred and can be apportioned. In response to a question from the bench, it was submitted the Waitākere plaintiffs could be heard on this exercise if they wished but there was no obligation to hear from them. It was also accepted the common costs assessment by me as Cridge Judge would not be binding on the Waitākere plaintiffs or the Waitākere Judge who might be required to replicate the exercise. If James Hardie were to not succeed in the Waitākere litigation it would be required to absorb that share of the common costs it could not recover from Cridge (and did not know to recover from White).

[30]I turn next to the cases relied on by the plaintiffs.

The Authorities

[31]              Three English cases are cited, the import being said to be a progression towards recovery of common costs.

[32]              The first case is Oppenshaw v Whitehead (1854) where two plaintiffs separately sued the owner of a dam that had burst causing damage to their business.9 The plaintiffs were represented by the same counsel, and the cases were heard in the same court session. The plaintiffs succeeded. The Court held each plaintiff was entitled to costs as the proceedings had not been consolidated.

[33]              The plaintiffs next submit the law was then “set on a different course” by Denning LJ in Boguslawski v Gdynia Amerika Linie (1951). In that case three plaintiffs separately sued for a debt owed to them by an employer pursuant to a wider agreement.10 There was no consolidation and the cases were not heard together. However, the same counsel acted for all three plaintiffs and there was agreement that the evidence in the first case should be deemed to have been taken in the other two. The first case was tried and the plaintiffs succeeded. The other two cases did not proceed but it appears costs were payable to those plaintiffs. The unsuccessful defendant submitted there should be one set of lawyers costs, and witness costs, apportioned across the three cases.

[34]              The Court disagreed, holding that for that to occur there needed to be either consolidation or agreement the first case was a test case. Neither of those situations applied. Denning LJ issued a concurring judgment. The headnote assessment of the judgment is that:

The position might well be different if the plaintiffs in the other two cases had had their actions tried, perhaps very shortly afterwards, and had recovered judgment with costs. The solicitor would hardly be entitled to be paid three times over for the same work because he had won three actions.

[35]              The passage is somewhat ambiguous. It could be support for the plaintiff’s approach here but equally could just be a caution against double recovery. Presumably, for example, counsel appearing three times would be able to claim for three separate appearances. On the other hand, if the same set of submissions were filed three times, few would suggest there should be triple recovery of the one preparation time.

9      Oppenshaw v Whitehead (1854) 9 Ex 383, (1854) 156 ER 163.

10     Boguslawski v Gdynia Ameryka Linie (No 2) [1951] 2 KB 328.

[36]              The third authority is Royal Bank of Scotland v Allianz International Insurance Co (1994).11 It is an otherwise unreported and oral unrevised judgment of the High Court found in the “Costs Reports” and noted in the headnote to be included because it is “an extremely important case” in relation to delay. The plaintiff was a bank which was constructing a new building. Fire damaged it. The bank sued the head contractor and separately the insurance company. The first claim involved both the insured and uninsured loss. The proceedings were consolidated and set down for a single hearing.

[37]              Before hearing, the claim against the head contractor settled. The bank received £1 million in costs from the contractor but returned £100,000 as a contribution for costs incurred in defending the claim for insured losses. The claim against the insurer proceeded, but was settled part way through. Costs were to be paid by the insurance company but the quantum was not agreed.

[38]              The bank prepared a normal costs account as if it were the only proceeding. The insurer said some of the costs should be apportioned to the contractor claim. The Court ordered a bill to be prepared that reflected common and separate costs. The Cridge plaintiffs submit the case stands for the proposition that this order would have been made whether or not there was consolidation. I accept James Hardie’s contrary submission that it is not apparent where that proposition emerges from the judgment.

[39]              In any event, it is an unreported case concerning consolidated proceedings which cannot really represent value beyond its facts. My overall assessment of these cases is that consolidation is the key to common costs which were only ordered in the one case actually involving consolidation. Obiter comments suggest the possibility of common costs in other situations but no more than that.

[40]              There is more value for the plaintiffs in the two Australian cases to which they refer. Leslie v Marsland (1997) arose from a plane crash.12 The families of three victims separately sued the estate of the pilot, and the owner of power lines into which the plane had flown. The claims against the pilot succeeded but not the owner of the power lines.

11     Royal Bank of Scotland v Allianz International Insurance Co [1994] Costs LR (Core) 344.

12     Leslie v Marsland SC Tas 119/1997, 24 October 1997.

[41]              The three cases had been heard at the same time on liability, with the plaintiffs represented by the same lawyer. The costs issue concerned the liability of one of the plaintiffs in costs to the power line owner. The Court held it would not be open to the Taxation Master to allow the whole of the second respondent’s costs to be ordered against the one appellant. Oppenshaw and Boguslawski were cited. In terms of my earlier observation, this is an example of no formal consolidation but where the three cases were heard together, seemingly with one set of common evidence.

[42]              The other case is Victorian WorkCover Authority v Adventure Park Pty Ltd.13 A man was injured at a theme park. He sued the park owner. The Victorian Workcover Authority paid the injured man weekly worker payments for lost earnings and medical expenses. There is a statutory indemnity which the Authority sought to enforce against the park owner to recover these weekly payments. The man’s case was scheduled to proceed first before a jury, with the Authority case to follow before a Judge. The evidence in the worker case was to stand as evidence in the Authority claim. The Authority was separately represented, and would typically play no role in the prior worker negligence claim.

[43]              The worker settled his claim with the park owner. The claim was dismissed with no order as to costs. The Authority then discontinued, and an issue arose as to the quantum of costs recoverable by the defendant theme park. The Authority contended it should only be liable for separate costs. The park owner accepted common costs could be apportioned with approval but disputed the Authority was not liable for its share of them. The Court cited a text on costs, for the proposition that in separate actions against the same defendant, there may be apportionment.14 The terms of the settlement would be relevant to the apportionment which was left to be decided by a Taxation Master.

[44]              I accept the Australian cases point to an approach more similar to that for which the plaintiffs here contend, but there was nevertheless a high degree of connection between the “separate” cases. In the first the proceedings were tried together,

13     Victorian WorkCover Authority v Adventure Park Pty Ltd [2019] VSC 270.

14     At [23], citing Gino Evan Dal Pont Law of Costs (4th ed. LexisNexis Butterworths, Chatswood, 2018) at [11.4].

reflecting they arose from a single event. In the second, though separate plaintiffs, both were relying on the one set of evidence as regards proof of negligence.

Defendant’s submissions

[45]The defendants oppose the common costs proposition on four bases:

(a)the plaintiffs’ proposal is inconsistent with the scheme of the High Court Rules 2016 (the Rules);

(b)the Rules already address the alleged mischief;

(c)the authorities relied on do not support the plaintiffs’ argument; and

(d)the proposal is practically unworkable.

[46]              Concerning the Rules, the longstanding approach is that a Court’s broad discretion on costs is to be exercised consistently with the scheme of the Rules.15 The plaintiffs’ proposition is submitted to require departure from several rules – that the loser pays,16 that costs are calculated by applying the scale rates,17 modified if necessary in accordance with the Rules allowing modification, that the quantum does not turn on the skill of the lawyer or the actual amount of time spent,18 and that costs should be predicable and expeditious, which includes the concept of self-calculating.19

[47]              It is noted that the plaintiffs’ proposal requires inquiry into invoices and time actually spent on various activities in preparation for the case and consideration of proceedings and time records for a case not yet heard and for which resolution may be years after the present outcome. It places a huge burden initially on parties and then on the Judge, and creates a situation where costs cannot be calculated early or promptly.

15     Manukau Golf Club Inc v Shore Venture Ltd [2012] NZSC 109, [2013] 1 NZLR 305 at [7].

16     High Court Rule 2016, r 14.2(a).

17     Rule 14.2(1)(c).

18     Rule 14.2(1)(e).

19     Rule 14.2(1)(g).

[48]              Concerning the mischief, it is first submitted it is difficult to identify what it is said to be. Putting double recovery to one side, it seems to be a claim that the defendants are receiving an ancillary benefit in defending the other claims which is being funded by the Cridge plaintiffs and this would be unfair on the Cridge plaintiffs. Mr Hodder QC submits the real proposition is that the intellectual capital acquired by James Hardie in preparation of its Cridge defence is and should be divisible. It is submitted there is no authority to support this.

[49]              It is noted the Rules prevent recovery from subsequent plaintiffs of costs already recovered. Importantly, the Court rely upon the assurances of counsel, and information provided. Here the relevant firm has consistently advised work was allocated at the time to whichever of the proceedings it was considered it related to, and counsel have confirmed actual costs well exceed the claimed costs. Further in terms of double recovery, if in the subsequent proceedings a step requires less than the allocation for band A, r 14.7(a) provides for the actual cost to apply.

[50]              It is submitted there is nothing unfair in the burden being faced by the plaintiffs. They are the costs properly recoverable on the plaintiffs’ case, and reflect the scale and breadth of the claim, the monetary amount claimed, and the nature of the claim in terms of its reputational threat to the business. What is being asked of the plaintiffs is to pay the correct costs on a case they brought and lost.

[51]              As a general proposition, litigation efficiencies frequently arise in a number of ways – lawyers with experience, defendants who face similar repeat claims (insurers) and cases where there are applicable precedents. These efficiencies are considered irrelevant to the costs regime.

[52]              James Hardie further submits that, whatever the correctness of the propositions about common costs, these cases are separate. James Hardie accepts the situation is likely different with consolidated cases (into which group it places most of the plaintiffs’ authorities) but says this is not such a situation. Importantly the cases have not been managed together; Cridge has stood alone. Cridge brought its own evidence and strongly opposed access to its briefs being granted to the other proceedings. It is

in all respects its own case, not linked to the other cases except by the subject matter of the case.

[53]              Turning to practicality, the defendants submit the plaintiffs’ proposition is unworkable. How is apportionment to be done without a knowledge of the three cases, down to the level of individual witnesses and how claims were framed and responded to. The Judge would need to assess pleadings, witness statements, evidence, and underlying time records. Further, lawyers are apparently meant to assess apportionment as they go along and somehow recognise at an early stage overlap in the cases. Even if doable, all this would inevitably increase costs.

[54]              Other observations concern the role to be allocated to the Waitākere plaintiffs in this case, and to the White plaintiffs had it not settled, and to the current lack of finality of Waitākere. It is also noted that in submission the plaintiffs suggest the apportionment should not be even, but rather be done according to the respective risk to James Hardie in each proceeding, with that involving yet a further assessment.

Decision

[55]              The submissions have been addressed in full detail to provide a record, since the Court’s reasoning will be relatively brief.

[56]              I do not consider this particular set of circumstances an apt vehicle for the plaintiffs’ propositions. The cases, at least as regards Cridge on the one hand and White and Waitākere on the other, are simply separate cases, albeit there will be common issues, and evidence. That seems to me the determining factor and what sets this situation well apart from any of the cases referred to. Further, in none of those authorities relied on was one of the allegedly common cases at such a nascent stage as Waitākere presently is.

[57]              I cannot speak for the similarities between White and Waitākere. They were seemingly case managed together for a time before the plaintiffs went separate ways, but again that separation emphasises the lack of any commonality in the presentation and conduct of these trials. Each set of plaintiffs has chosen to go their own path and to incur the costs liability, if any, that they incur. Separate full trials have been

scheduled for each with evidence being called in the normal way. Waitākere, for example, is scheduled to occupy more court time than Cridge.

[58]              Putting to one side the somewhat eclectic group of authorities relied upon by the plaintiffs to establish the claimed principles (eg, from England a decision that is contrary to them, followed by a decision reaching a different conclusion on the facts from that sought here, followed by an unreported unrevised oral decision of a trial court), there was obviously much more commonality in the conduct of all those proceedings than is present here. They bear little or no resemblance to the current situation.

[59]              My first two assessments, therefore, are that Cridge is a separate proceeding and that the plaintiffs’ claim is unsupported by reference to any authority which suggests apportionment should occur in circumstances such as the present.

[60]              Concerning the Rules, I agree that what is proposed is the antithesis of the theory of the Rules. That would not necessarily be determinative if the situation could be seen as exceptional and not really falling within the intent of the Rules, but I do not consider that is the case. It is no complete answer but it is important to observe that what the Cridge plaintiffs will pay is the same amount they would pay whether or not the other two cases occurred. I accept the same is not true of the Waitākere plaintiffs, but at issue here is the liability of the Cridge plaintiffs.

[61]              The unworkability of the proposal, though perhaps not as spectacular as James Hardie contends, is nevertheless a real factor. It exists because they are in reality separate proceedings and so the task of assessing common costs is that much bigger. I also consider the plaintiffs gave too little consideration to how it works in relation to Waitākere – whether those plaintiffs were to be heard,20 whether those plaintiffs would be bound, and whether it is a just outcome if James Hardie were to lose the Waitākere proceeding and not have been able to recover costs in the normal way arising from its successful defence in this proceeding. By definition a common cost has been incurred

20  In this regard it can be noted the Waitākere plaintiffs are still engaged with filing their evidence.  Yet it would be suggested they also engage now with an analysis of Cridge and White so as to defend their position on having liability for the common costs of all three proceedings if they lose a case they no doubt hope to win, and which is still a year from hearing.

in each of the proceedings, so in the normal way they are costs a successful party is entitled to claim.

[62]              The White proceedings also raise quite interesting issues. That settled before the outcome of this case was known. James Hardie could not therefore have known whether it was to have an opportunity to recover costs in this case at all, as it does not in Waitākere. Despite this, the settlement is said by the Cridge plaintiffs to have compromised the ability of James Hardie to recover common costs.

[63]              My third assessment, therefore, is that common costs are an unworkable proposition in this case. This conclusion flows from the reality they are separate independent proceedings.

[64]              Because this proceeding is an inapt vehicle through which to advance the common costs concept, it is unnecessary to draw conclusions on the broader proposition. No doubt there will be different views, and there are bodies in place whose role is more suited to the issue. I accept there is the policy argument that non- apportionment seems to place a hard burden on the claim going first. For myself, that concern would yield to the more important proposition that having three cases like this, if they are so much the same, is wholly undesirable. Visiting costs on the first does not of course deter that happening, but I would consider there is sound argument not to have a special rule to assist plaintiffs in this type of situation, which should not exist anyway.

[65]              It seemed to me that the party genuinely not “at fault” from a costs perspective was James Hardie. It is being sued about the same thing by three separate sets of plaintiffs. Three very large trials are required. It has successfully defended the first. It seeks its costs and is being told it compromised away the opportunity to recover some of those costs from plaintiffs in another of the proceedings. This alleged compromise occurred before the outcome in this case was known and before there was any suggestion of common costs, let alone what they might be.

[66]              Then as regards the third set of proceedings, it is being said James Hardie should wait to see if it wins. If it does not, costs that would under the Rules be classed

as having been incurred in the Cridge proceedings (as well as in Waitākere) cannot be recovered against either plaintiff. If it does win, it must seek to convince the Waitākere Court that my assessment of common costs is correct, and that the Waitākere plaintiffs should be ordered to pay that share, even though it is a greater amount than James Hardie would say it incurred (because James Hardie says they were incurred in Cridge). And finally, the Waitākere plaintiffs may seek to have the whole common costs allocation exercise repeated.

[67]              I accordingly do not accept that a case for apportionment has been made out, and proceed to determine the other cost issues in the normal way.

Specific cost issues

[68]              Contests exist concerning claimed uplifts under rr 14.6(3)(a) and 14.6(3)(b), and concerning disbursements. The disbursement issues involve disputes over recoverability, and reasonableness of quantum.

Rule 14.6(3)(a)

(i)    General

[69]Rule 14.6.(3)(a) provides:

(3)the court may order a party to pay increased costs if—

(a)the nature of the proceeding or the step in it is such that the time required by the party claiming costs would substantially exceed the time allocated under band C; or

[70]              There are a number of complex cases where increased costs have been awarded.21 Generally for this pool of cases, there has been little dispute over the fact of an uplift, with the scale of it being the issue.22

[71]              The present contest has been made more difficult by the inexplicable decision, as I see it, of James Hardie to not disclose the actual hours spent on the steps

21 Trustpower Ltd v Commissioner of Inland Revenue [2014] NZHC 3072; Houghton v Saunders [2021] NZHC 3590; Strathboss Kiwifruit Ltd v Attorney-General [2019] NZHC 62; and Mainzeal Property and Construction Ltd v Yan [2019] NZHC 1637.

22 Houghton v Saunders being the outlier.

concerning which uplifts are sought. James Hardie point to numerous decisions where it has been said the uplift is not to be calculated as a proportion of the actual.23 I accept that is the position but almost universally in these cases the time spent is known and assists with the analysis.

[72]              It seemed at one point that the plaintiffs were claiming this failure to disclose the actual hours meant James Hardie could not establish a case for increased costs. That position appeared to be modified to a claim that the Court should be conservative because of the information vacuum, but in case I am wrong about that, I reject the original proposition. It is simply not contestable that the steps in issue – disclosure, brief preparation and trial preparation “would substantially” have exceeded the time allocated under band C. What the Court does not know, unlike the other cases, is by how much.

[73]              It may be that James Hardie considered the case for an uplift so clear that it did not need to disclose the actual time. If that is so, although I consider the failure to disclose is wrong and unhelpful to the Court, I agree with the actual assessment.

[74]              This ruling has previously referred to the scale of the litigation. In all its numbers it appears to exceed the other cases to which I have referred, and on top of that one can refer to the somewhat artificially lowered number of hearing days. This latter point leads into a second matter to be addressed – a claim by the plaintiffs that amendments to the High Court Rules in 2019 mean uplifts such as these are no longer needed.

[75]              In 2019 for some of the steps concerning which uplifts are sought the Rules moved from a fixed allowance to a formula based on hearing days. This is submitted to be a formula intended to reflect complexity as captured by the length of trial, meaning increases are less likely. No judicial authority for this is cited but that may reflect the reality that these types of cases are not everyday events. An answer to this submission would seem to be that r 14.6.3(a) remains in place subsequent to the 2019 change. Its sole role is these cases where band C is not a realistic basis for awarding

23     Mainzeal, above n 21; Strathboss Kiwifruit Ltd, above n 21; Trustpower, above n 21; and Kidd v van Heeren [2015] NZHC 3191.

costs. It recognises that some litigation simply occupies a different space. I also repeat my observation, for this particular case, concerning the unreliability of hearing days as a means to measure scale and complexity.

[76]              It follows that I consider the case falls comfortably within that group concerning which uplifts under r 14.6(3)(a) are appropriate.

(ii)     First uplift step – discovery

[77]              The scale figure is 13 days. The defendants seek an uplift of four times this figure, meaning a total of 65 days. That would mean a total claim of $214,500. The equivalent final figure in Mainzeal was 67 days, and in Trustpower 70 days.

[78]              In support James Hardie notes the listed documents number 20,763, with the number of documents reviewed obviously being much higher. The plaintiffs’ claim covered a 30-year period and encompassed the whole product process from development through manufacture through marketing and installation, and also covered James Hardie’s conduct during the life of the product. It is submitted some insight into the scale of the exercise comes from the fact that disclosure was provided in 25 tranches. Finally it is noted that the disclosure obligations in the other proceedings meant further assessment was also required in the current case under the ongoing disclosure obligation.

[79]              The plaintiffs’ primary response on this and all the uplifts is to focus on the absence of actual hours point. It is not necessary to repeat the general comments already made but it is a matter that can be considered in relation to actual uplifts. Whata J, in one of the White interlocutory judgments, noted actual discovery costs in White and Waitākere, to that point, were over $3 million. The plaintiffs reject that as a barometer of actual cost in this case noting there were more products and more defendants.

[80]              I am satisfied actual cost is a distraction here. James Hardie’s description of the scope of the exercise flowing from the breadth of the case is accurate and telling. There was, for example, a considerable focus at trial on James Hardie documentation

from the time the product was launched through to its removal from the market. The timespan was very significant.

[81]              I am satisfied that what is claimed is reasonable, will be significantly less than actual costs incurred, and is consistent with comparable cases. The actual dollar figure is not disproportionate to the quantum claimed in the proceeding and the scale of the exercise. I confirm the uplift as claimed.

(iii)     Second uplift step – preparation of witness briefs

[82]              James Hardie initially sought an allocation of five days per primary brief and three days per supplementary brief. This produced a figure of 216 days. The figure was made up of:

(a)27 primary witness briefs;

(b)16 supplementary briefs; and

(c)Ms Johnson’s evidence calculated separately at 33 days.24

[83]              In comparable cases the awards were Mainzeal – 5.3 days on average; Trustpower – done on a witness-by-witness basis with the final figure representing an average of 5.8 days: and Strathboss done on a universal basis at 4 days per brief.

[84]              In response to concerns raised by the plaintiffs, James Hardie undertook a witness-by-witness analysis, primarily using page count as the basis. This produced a reviewed figure of 198 days, which is the figure now claimed. In this regard I note the defendants’ briefs totalled 3,254 pages.

[85]              By way of general submission, James Hardie refers to the breadth of the claim, what it submits was a scattergun approach by the plaintiffs’ witnesses and the technical nature of much of the evidence, particularly in the building science domain.

24 Ms Johnson was the primary defence witness concerning the actual properties. She provided detailed analysis of two houses, less detailed but substantial analysis of five more and considered other properties ultimately not included by the plaintiffs.

[86]              The plaintiffs take issue with aspects of the witness-by-witness analysis, highlighting a six-day figure for an eight-page witness, Dr Kunzel. That overlooks, however, as James Hardie points out, that Dr Kunzel reported the results of an analysis he did which required inputs from numerous sources. The work needed to obtain and agree the inputs is what is significant.

[87]              Generally the plaintiffs’ contest does not really get past their “actual hours” complaint, and again in my view is unrealistic.

[88]              Applying the Strathboss figure of four days per brief yields a total of 176 days. Even recognising this approach is intentionally broad brush in the way it covers both the major witness and the minor equally, I agree Ms Johnson needs separate consideration. Adding, say, 20 days for her gives a total almost the same as that claimed. I am satisfied the claim for 198 days is reasonable and it is approved.

(iv)    Third uplift step – preparation for hearing

[89]              The schedule figure is 45.25 days. James Hardie claim an uplift of 120.75 days, leading to a total of 165 days, or approximately two days per day of hearing time. The comparators are:

(a)Mainzeal – almost 2.5 days;

(b)Trustpower – 1.875 days;

(c)Strathboss – 1.6 days;

(d)Sovereign Assurance – 2.3 days;25

(e)N-Tech Ltd – 2 days;26 and

(f)Kidd v Van Heeren – 10 days.27

25     Sovereign Assurance v Commissioner of Inland Revenue [2012] NZHC 3573.

26     N-Tech Ltd v Abooth [2012] NZHC 1167.

27     Kidd v Van Heeren, above n 23.

[90]              James Hardie submits there is little to distinguish between the cases and sees the recent cases of Mainzeal and Strathboss as the best comparators. A figure that is roughly the mid-point has been selected.

[91]              The plaintiffs accept these two cases and also Trustpower are relevant, but queries what information informs James Hardie’s claim concerning the Trustpower figure. It is, however, more generally submitted comparators are not valid and each case falls to be determined on its own facts; which in turn leads to a repetition of the actual costs argument. Here, however, the argument seems more directed towards a proposition that the uplift should reflect the actual. Alternatively they seek application of the Strathboss multiplier.

[92]              There is nothing new to be said here. This step merits an uplift and I agree it is difficult to discern wherein lies the difference between the cases. There is inevitably a correlation in all these uplift steps where more time on one may mean less is needed at the next. I prefer, having made two uplifts already, to be conservative but remain influenced by the point made concerning the artificiality of the hearing days. It is what makes the slightly higher figure adopted by James Hardie reasonable. The claim is approved.

Rule 14.6(3)(b)

[93]Rule 14.6(3)(b) provides:

(3)       the court may order a party to pay increased costs if—

…

(b)the party opposing costs has contributed unnecessarily to the time or expense of the proceeding or step in it by—

(i)   failing to comply with these rules or with a direction of the court; or

(ii)     taking or pursuing an unnecessary step or an argument that lacks merit; or

(iii)   failing, without reasonable justification, to admit facts, evidence, documents, or accept a legal argument; or

(iv)    failing, without reasonable justification, to accept an offer of settlement whether in the form of an offer under

rule 14.10 or some other offer to settle or dispose of the proceeding; or …

[94]              James Hardie focuses on two aspects – what is said to be unnecessary steps and arguments on the part of the plaintiffs; and what is said to be an unreasonable rejection of what is termed a “walk away” offer made prior to trial. The uplift, if granted, is claimed only in relation to trial attendance, being a one-third uplift claim on scale allowance. In monetary terms, the extra amount is $176,500.

[95]              The primary focus is on what is claimed to be the plaintiffs’ insistence on pursuing every conceivable issue or criticism, including a detailed analysis of the adequacy of every technical information document. Reference is also made to the areas, noted in the judgment, where witnesses exceeded their expertise. Possibly the most striking example was Mr Lalas, who spent over 400 paragraphs critiquing documents in circumstances where the Court held it was not an area in which he was qualified to comment. There were also significant aspects of Mr Wutzler’s evidence that exceeded his established expertise.

[96]              My view of the plaintiffs’ expert evidence is recorded in the judgment, and does not need repeating. There is obviously more needed for a successful claim under r 14.6(3)(b) than the fact that the evidence of witnesses was not accepted. The two examples cited come closest to meeting that test, particularly Mr Lalas. In my view, the difficulties with his evidence should have been apparent. In a different case there may be a basis for an uplift in all this, but my assessment is that as a percentage of the whole endeavour these excesses or arguably unnecessary evidence were not sufficiently significant to merit an uplift.

[97]              The trial started on 17 August 2020. On 26 June 2020, so seven weeks earlier, James Hardie offered to let matters lie without any payment for costs if the plaintiffs discontinued. The late timing is why the uplift is focused only on trial attendances.

[98]              James Hardie notes that at the time of the offer most of the evidence had been filed, and it should have been apparent to the plaintiffs what the flaws in their case

were. Reference is made to several cases where walk away offers resulted in a costs uplift.28

[99]              I do not consider it unreasonable for the plaintiffs to reject the offer such that it should sound in costs. First, their homes had all suffered water damage. Second, it was known other houses clad in the same product had also suffered damage – the White plaintiffs, for example. Third, very senior counsel were acting for them. Fourth, their evidence had apparent merit with witnesses of standing such as Messrs Hazleden and Sutherland, and Drs Wakeling and Akers.

[100]          The matter is not to be judged with hindsight.29 The flaws the Court identified were not necessarily to be known.30 I decline an uplift under r 14.3(3)(b).

Costs in relation to a post-hearing evidential matter

[101]          Subsequent to the hearing, the White case started in Auckland. During opening submissions in that case reference was made to documents which were not in the plaintiffs’ possession, having not been disclosed by the defendants.31 The documents are known to the parties as the Allunga Tully documents, and concern testing on fibre- cement products carried out by James Hardie.32

[102]          James Hardie resisted disclosure saying it held the documents in its capacity as a co-defendant in the other proceeding. The source of the documents was a non- party in Cridge, namely James Hardie Australia. Eventually prior to a hearing on the matter, James Hardie disclosed them, without accepting any obligation to do so but having obtained permission from James Hardie Australia. By agreement the documents became evidence in the Cridge proceeding and are referred to in the judgment.

28 Oxygen Air Ltd v LG Electronics Australia Pty Ltd [2020] NZHC 1863; Wislang v Attorney- General [2020] NZHC 3172; Ware v Reid [2019] NZHC 1706; and Detection Services Ltd v Pickering [2019] NZHC 638.

29   New Zealand Sports Merchandising Ltd v DSL Logistics Ltd HC Auckland CIV-2009-404-5548, 19 August 2010 at [36]; Samson v Mourant [2016] NZHC 1119 at [44]; and Weaver v HML Nominees Ltd [2016] NZHC 423.

30 Apart from the comments already made on Mr Lalas and Mr Wutzler.

31 Incomplete versions of some of the documents were in evidence in Cridge.

32  Tully has an average rainfall of more than four metres and has once exceeded 7.9 metres.  It is   also hot and exposed to trade winds. It is a rainforest climate well suited to stressing products.

[103]          The plaintiffs applied to have the case reopened so that a James Hardie witness, Mr John Cottier, could be recalled and questioned about the documents. This was opposed by James Hardie and declined by the Court.33 An opportunity to file further submissions on the new evidence was then proffered and accepted by both parties.

[104]          James Hardie claims scale costs, with the steps in issue being opposition to recall, preparation of submissions on recall, preparation of submissions on evidence, and appearance at recall hearing (one counsel). The total is $29,563.75.

[105]          The plaintiffs oppose the payment of costs. The opposition is based on the proposition the documents should have been discovered (literally) earlier and then disclosed. Had this been done there would not have been the post-hearing issues. It  is therefore reasonable for costs to lie where they fall. Alternatively, the recall component merits only a 2B rating.

[106]          Costs may be claimed. The issue arose, it required attendances, these were carried out. It is an unusual event but it was an orthodox process concerning which costs are claimable by the overall successful party. Generally I would agree concerning the lower band for a recall application but the context fitted very much into the whole case.   It was an application to reopen evidence, it required analysis of    Mr Cottier’s role, there was an oral hearing and then written submissions on the evidence. The banding applying to the overall case holds for this component. The claimed costs are granted.

Summary on costs

[107]The application concerning common costs is declined.

[108]The uplifts claimed for discovery and preparation of briefs are granted.

[109]The uplift claimed for trial preparation is granted.

33     See Cridge v Studorp, above n 3, at [933]–[940].

[110]          The uplift claimed for trial attendance and based on the walkaway offer and alleged unnecessary steps ($176,500) is declined.

[111]          The costs claimed for the post-trial events concerning the Allunga Tully documents are granted ($29,563.75).

Disbursements

General

[112]          An issue regularly raised by the plaintiffs is the lack of detail in invoices provided by the witnesses for whom James Hardie claims reimbursement. My assessment is that the work is sufficiently identified, with the primary check in these matters that the party immediately incurring the expense has no certainty about being able to recover any of it. It is valid to challenge the total claimed for identified areas, and those challenges will be addressed but otherwise I consider the complaint requires no response from the Court.

Dr Lstiburek

[113]          Dr Lstiburek was the defendant’s main building science witness. He is a world leader in the field. He came to New Zealand for the whole trial, with his accommodation claim of 99 days indicating the length of his stay.

[114]          For context I observe it was appropriate for the defendants to engage an overseas expert of this standing. The issues at stake in the trial have been noted. It has not been suggested to me there were local experts who could do the job, and     Dr Lstiburek’s expertise was exactly in the area of the key trial issues.

[115]          The claim for Dr Lstiburek is $915,315.62, of which $733,698.46 relates to his time in New Zealand. Dr Lstiburek attended the whole trial either in person or remotely but within New Zealand.  His  charge-out  rate  in  New  Zealand  was  USD 5,000 per day, which assuming an eight-hour day is just over $900 an hour. Issue is taken with three aspects of the claim:

(a)in 2017 Dr Lstiburek travelled to New Zealand to discuss the case;

(b)the claim for trial attendances; and

(c)the accommodation claim.

[116]          Concerning the 2017 trip, the original claim was reduced as a response to plaintiff queries about whether the work was all attributable to Cridge. The plaintiffs challenge the now revised figure on the basis that the trip occurred three years prior to the exchange of evidence, and need not anyway have been in person.

[117]          I disagree. The scale of the claim and the broad issues that would arise were readily apparent from the statement of claim. It was reasonable for the defendants to have Dr Lstiburek attend in person to obtain his input at that stage. The claim of

$12,649.34 is allowed.

[118]          There is some overlap within the challenges to the amounts incurred by reason of trial attendance and accommodation. Matters raised by the plaintiffs include whether it was reasonable to have Dr Lstiburek attend in person, whether it was necessary for him to attend all the trial and whether sufficient explanation of other costs such as assisting counsel with cross-examination has been offered.

[119]          Given the scale of the claim and the centrality of Dr Lstiburek’s expertise to most of the key trial issues, it was in my view reasonable to have Dr Lstiburek come to New Zealand for the trial. To the extent, however, that COVID made that more difficult or extended the timeframe, I generally do not view that as a factor to be visited on the losing party. I accept return trips to the United States were unrealistic, but nevertheless consider the accommodation claim should be linked to whatever are found to be necessary attendances during the period he was here. There is no evidence that on other days Dr Lstiburek could not work on other business.

[120]          As regards those attendances, I do not accept it was reasonable, in a costs recovery sense, for an expert of this standing and expense to attend all days of the trial. That Dr Lstiburek is able to comment and assist counsel on all aspects of the trial is not a basis to claim recovery on this scale. There are ways to obtain his assistance as needed should matters arise unexpectedly in an area of the trial not otherwise directly

engaging his core expertise. This particularly relates to, for example, evidence about the houses, New Zealand’s regulatory scheme, and generally the history of building in New Zealand. Local experts could equally assist, or the particular evidence could be summarised and put to him for comment. I accept attendance for the building science evidence was appropriate. I of course appreciate the divide between these two categories is far from a sharp line and some witnesses addressed opinion to both (although they should not have done), but in the context of costs, it is a workable distinction.

[121]          I do not accept the plaintiffs’ focus on the time Dr Lstiburek’s own evidence took as a relevant measure. The extent of cross-examination was a choice for the plaintiffs. The building science was technical and important and in Dr Lstiburek the defendants had a witness able to assist across the spectrum of topics. It was reasonable for him to be available to provide assistance to counsel.

[122]          Only a broad assessment is possible of what portion of trial this represents. My analysis is to allocate 10 per cent to topics not falling within my broad two-way split. There were issues for example surrounding the correctness of James Hardie’s conduct once problems with Harditex homes emerged, and a focus on good corporate governance. I then divide the balance of 90 per cent equally into my two subject areas. This is far from a nuanced approach, and, as noted, the evidence of some witnesses straddled both, but it is sufficient for costs.

[123]          In general terms I consider a Court is right to be conservative in the area of large disbursements, and overseas witnesses. The overall cost of bringing litigation is always a concern.   Weighing  these factors in my discretion I approve costs for     Dr Lstiburek in this way:

(a)all attendances on the case from arrival until the start of the hearing (and accommodation); and

(b)attendances at the trial, including giving evidence, up to but not exceeding 45 per cent of the actual hearing days (with accommodation reflecting the adjusted figure).

Ms Johnson

[124]          Ms Johnson was the defendants’ main building adviser. She analysed the several houses specifically in issue in the case, and responded to Mr Wutzler’s equivalent analysis. The two tasks were related but different. Ms Johnson also gave context evidence about the building industry in New Zealand, and as various items of regulatory control. The total claim for her is $767,194.91.

[125]          The primary challenge is to the amounts claimed after the trial had begun. These amount to 338.5 hours, being $137,637 plus GST. To introduce first a cap, to the extent this figure includes observation of the trial I likewise place the ceiling on recovery for that at 45 per cent of actual sitting days, including the time her own evidence took.

[126]          Next, that 45 per cent total cannot include observation of the closing addresses. The defendants support this aspect by reference to complexity, and uncertainty as to what the defendants might raise. Conscious that what is in issue is only 6.5 hours, I nevertheless consider it was at that stage for counsel to deal with. Presence of the witness was not required.

[127]          Claims in relation to Ms Johnson’s expenses that fall outside observation of the trial and to which are challenged relate to preparation by her of reply evidence (not ultimately filed) and site visits. My view is that these are matters on which the witness spent time for the trial, are related to the trial and were considered reasonably necessary by the instructing party. Recognising the onus is on the party claiming, I see no reason to query the assessment. It is not activity that can be seen as gratuitous or extravagant. It was not an unreasonably incurred expense.

[128]          Concerning Ms Johnson, the claim is approved save that the component reflecting time spent on observing the trial is capped at 45 per cent of actual hearing time, not including attending the closing.

Litigation support accommodation

[129]          The case was conducted on an electronic courtroom model with documents for witnesses displayed simultaneously to everyone, including witnesses many/most of whom were attending remotely. It was very effective and efficient, and undoubtedly was vital in allowing the trial to be completed within the available time.

[130]          Central to the installation and running of it was an employee of Chapman Tripp, the firm engaged by James Hardie. Ms Fisher-Holtz has filed an affidavit setting out what work she did to help install the electronic courtroom.

[131]          A claim is made for six nights’ accommodation ($1,200) and 20 hours’ work ($5,400). Ms Fisher-Holtz deposes this is much less than actual time. The description of her role leaves no doubt that is so. This is reduced from an original claim of

$20,000.

[132]          The objections are that it was unnecessary to use Auckland-based litigation support, the work is not that difficult, and the assistances to the plaintiffs is overstated. It is not disputed there is capacity to claim the expense as a disbursement.

[133]          There is a dispute between counsel for the plaintiffs and Ms Fisher-Holtz as to the extent of direct assistance she provided. I do not need to resolve it. I am satisfied the claim as now presented is modest and appropriate. My sense is that the plaintiffs understate the nature of the task to ensure the system was correctly established and worked. I allow the modified claim.

Overall proportionality

[134]          The plaintiffs  seeks  a  general  reduction  of  45 per  cent  in  the  fees  of  Dr Lstiburek (as now approved) and RDH Building Science. This is the Canadian firm that built the test wall and also included are the costs of a second building science expert and witness, Dr Straube.

[135]          The 45 per cent figure comes from Houghton v Saunders where Cooke J reduced an American expert’s fee by that amount on the grounds of proportionality. The concept identified was that it would be disproportionate to allow:34

… a single expert’s fees to occupy such a dominating component of the overall costs claim.

[136]          Dr Lstiburek’s evidence has generally been described. The substantive judgment sets out his qualifications and standing in the community and relevant fields. The scope of his evidence was to describe the principles of water management in building enclosures, and to assess Harditex against that; to comment on the testing procedures adopted by both parties; to respond directly to Mr Hazleden who was, to a certain extent, the plaintiffs’ equivalent witness; and to comment more generally on leaky home crises and his direct experience of analysing most of those that have occurred in North America. Dr Lstiburek critiqued each of the nine “inherent defects” identified by Mr Wutzler and advanced by the plaintiffs.

[137]          Dr Straube is likewise a specialist in building enclosures and moisture physics. His experience is worldwide. He is a principal of RDH. His evidence covered an overview of testing procedures for rain penetration, and of various methods of controlling rain penetration; a comment on Harditex and on the validity of claims about what testing James Hardie should have done but did not; a commentary on both parties’ testing, he being a designer of, and involved in, the RDH testing; and a comment on what is known as the WUFI simulation analysis. Along with Dr Kunzel and Ms Hugens, he had expertise in that system.

[138]          Supplementary briefs addressed further testing done by the plaintiffs which was called a prolonged duration test, and then to a plaintiffs’ reply brief filed from Ms Hugens on the WUFI analysis. The judgment indicates the Court found Dr Straube an important and compelling witness. At least as I assessed it, these supplementary briefs exposed important flaws in the plaintiffs’ evidence being considered.

[139]          Mr Schumacher is a principal of RDH who specialises in building monitoring and enclosure, and the testing of building systems. Along with Dr Straube he carried

34     Houghton v Saunders, above n 21.

out the RDH test. He also attended the plaintiffs’ testing, and conducted an analysis of James Hardie’s customer feedback forms. A trial issue was whether James Hardie had a duty to act in relation to Harditex during its life as a consequence of what was said to be a growing awareness of issues. This feedback form work was done in this context. The analysis involved reviewing each of 4,778 documents.

[140]          In response to the plaintiffs’ concerns, a breakdown of the RDH expenditure which covers both Dr Straube and Mr Schumacher was provided. Of a total bill of USD 871,936.88, the RDH testing represents $361,320.70.

[141]          Before analysing this case it will assist to set out in full the reasoning of Cooke J:35

[65]      I agree that it would be excessive and disproportionate to allow the full amount of the defendants’ claim for this disbursement. It is striking that such a significant claim is made for the preparation of evidence that was never called. When reducing Professor Cornell’s claim by 35 per cent, Dobson J said:

Without interfering with the autonomy of parties in the choices they made to retain experts, parties cannot rely on the Court to endorse the reasonableness of choices made when it comes to recovering experts’ costs and where the matters addressed might be dealt with by a competent expert closer to home. The circumstances in which international experts are retained need to be assessed in the evidentiary context and the relative importance of opinion evidence to the matters in issue.

[66]      I accept that Professor Lehn had a particular expertise in event study analysis and that there are no New Zealand experts known to have this expertise. But a party cannot expect to instruct overseas experts having considerably higher charge out rates and then seek to recover them in New Zealand without a high degree of scrutiny. There is a need for proportionality in costs awards in New Zealand. In my view it would be disproportionate to allow a single expert’s fee to occupy such a dominating component of the overall costs claim.

[67]      On the other hand litigation of this kind is inevitably complex, and a party bringing a claim of this kind can be expected to be required to meet the costs of experts required to respond to such challenges, as has been the case in Australia. These fees were in fact incurred by the defendants. So I do not accept that the discount can be as significant as argued for by Mr Davy.

[68]      I am not in a position to make a comprehensive assessment of the value of Professor Lehn’s evidence as no hearing proceeded. I agree that his brief of evidence seems comparatively short given the amount charged for it.

35     Houghton v Saunders, above n 21 (footnotes omitted).

But brevity is to be encouraged, and it may be that a great deal of analytical work was required to create evidence that concisely addressed the issues. Nevertheless the amount charged is disproportionate particularly as the evidence was never given at a hearing. Bearing all of these factors in mind I adopt a similar approach to that adopted by Dobson J—that is that the claim for the fees of Compass Lexicon will be deducted by 45 per cent. It is higher than 35 per cent adopted by Dobson J given the size of the claim and the fact the evidence was not given.

[142]          The total disbursements claimed are $4.748 million of which these three witnesses constitute, as claimed, about $2 million. Both figures are in themselves large but as noted so is the case. In that regard my assessment is that the size and scale of the case was set by the plaintiffs who focused on all aspects from the design of Harditex through to its ultimate removal from the market some 30 years later. The attacks were to the concept, the testing and whether it met reasonable standards, the manufacturing process, the marketing, the installation method and accompanying literature, and the conduct of James Hardie during the 15 years of the product. This scale has been noted previously but it is necessary to repeat it when considering what is essentially a claim that the total bill is just too high. Within that there arises this idea of some components contributing disproportionately.

[143]          The charge-out rates for these witnesses are for Dr Lstiburek USD 400 an hour in the States, and USD 5,000 per day in New Zealand (approximately NZD 900 an hour). Dr Straube and Mr Schumacher were USD 300 an hour for general attendances and USD 400 for giving evidence. The rate of the witness at issue in Houghton v Saunders was USD 995 an hour so well over twice the standard rate of these witnesses.

[144]          My assessment of rates is that they are of course sizeable but not excessive. The highest New Zealand rate for James Hardie’s local experts was $450 an hour which is comparable or higher (excluding exchange rates).

[145]          Exchange rates make a difference, however, so this is where it is appropriate to ask was expert evidence on the topic needed, and was an overseas witness required, to give it. The answer here to both questions is “yes”. The evidence was central (with one exception I will come to) and obtaining it was a reasonable response to the claim. There is no evidence or information before me to suggest viable domestic or cheaper

alternatives were overlooked in favour of a “Rolls Royce” to use the term adopted by Dobson J in an earlier Houghton decision.36

[146]          I accordingly conclude that no basis exists for a general reduction as done by Cooke J in Houghton. I note there are significant differences – the rates here are substantially lower, the evidence was of course called and was important to the case, and it is not about one disproportionate witness but rather three being combined to found the disproportionality claim. In that regard Dr Straube is properly to be seen as separate from Mr Schumacher.   Although they worked together on the RDH test,   Dr Straube’s evidence covered a much broader range of topics.

[147]          There is one exception. The size of the general attendances of RDH (being the non-testing work) covers three aspects – Mr Schumacher’s observation of the plaintiffs’ testing, Dr Straube’s evidence, and the complaint form analysis. It is the latter that I have reflected on following the oral hearing.

[148]          I accept the analysis was a reasonable tack for the defendants to take as part of the response to the plaintiffs’ case, although it was not generally an aspect of the case that I saw as central. I have doubts that it needed an overseas expert charging about NZD 630 an hour (current exchange).

[149]          There is no breakdown as to what part of Mr Schumacher’s expenditure was engaged on this, and I note he also used an assistant who presumably had a lesser rate. I also accept some understanding of the case was needed to do the exercise and understanding building issues would also help, but could be easily enough acquired at a sufficient level.

[150]          I have not heard from the parties. I propose an adjustment of $50,000, recognising it is a guess but fixing on a figure to minimise further costs. The parties can be heard further on this quantum if they wish, with the caveat that I would expect it to be an argument worth having before it is taken up.

36     Houghton v Saunders [2020] NZHC 265 at [22]–[23].

[151]          With this modest adjustment I otherwise decline the plaintiffs’ request for a general reduction  on  proportionality  grounds  of  the  disbursements  relating  to  Dr Lstiburek and RDH.

Remaining issues

Costs on costs

[152]          James Hardie seeks costs in relation to the costs hearing. Given that the scale of the total costs and disbursements claim dwarfs much substantive litigation, some hearing was inevitable. It has not been protracted. The plaintiffs’ common costs argument has not convinced me, but I would not say it was unreasonably advanced. Both parties have had success. Costs are to lie where they fall.

Leave to apply to appeal order

[153]          The ultimate costs order will be against the nominal plaintiffs. There is a litigation funder in the background. James Hardie seeks leave to apply if required, for the order to be varied to include the funder. The defendants do not envisage such an application being required but submit that the granting of the leave will maintain the jurisdiction of the Court to receive such an application.

[154]Leave is given to apply to amend the order if required.

Summary

Costs

[155]          The application by the plaintiffs for orders requiring further disclosure of costings in this and similar proceedings in which James Hardie is the defendant is declined.

[156]          The costs claim made by the defendants, including claimed uplifts and Allunga Tully matters, is allowed with these adjustments:

(a)an uplift for trial attendance is declined.

Disbursements

[157]          The disbursements claimed (as modified in the defendant’s response memorandum of 14 July) are granted with these adjustments:

(a)trial attendance for Dr Lstiburek is limited to 45 per cent of hearing time, being on my calculation 37.3 days, inclusive of own evidence;

(b)trial attendance for Ms Johnson is similarly limited. Her attendance at the closing addresses may not be included in the figure;

(c)the RDH invoice is reduced by $50,000.

[158]Costs on the costs application lie where they fall.

[159]          Leave is reserved to apply to vary the order, and concerning the $50,000 reduction in RDH costs.

Simon France J

Solicitors:

Parker & Associates, Wellington for Plaintiffs Chapman Tripp, Wellington for Defendants