Cummins v Body Corporate 172108

[2022] NZHC 2819

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV 2021-404-002170

[2022] NZHC 2819

UNDER

Section 142 of the Land Transfer Act 2017 and Part 19 of the High Court Rules

BETWEEN

ROBERT JAMES CUMMINS

Applicant

AND

BODY CORPORATE 172108

First Respondent

AND

MANCHESTER SECURITIES LIMITED

(in liquidation) Second Respondent

AND

FLAT BUSH FINANCE LIMITED

Third Respondent

On the papers

Counsel:

K P Sullivan for the Applicant

T J G Allan and K M Wakelin for the Respondents

Judgment:

31 October 2022

JUDGMENT OF VAN BOHEMEN J

[Costs]

This judgment was delivered by me on 31 October 2022, at 3.00pm Pursuant to Rule 11.5 of the High Court Rules

…………………………

Registrar/Deputy Registrar

Solicitors/Counsel:

Reeves Lawyers Limited, Wellington Port Nicholson Chambers, Wellington Grove Darlow & Partners, Auckland Stout Street Chambers, Wellington

CUMMINS v BODY CORPORATE 172108 [Costs] [2022] NZHC 2819 [31 October 2022]

[1]    In my judgment dated 13 April 2022, I dismissed Mr Cummins’ application for the removal of a caveat registered by Body Corporate 172108 against the title to  Unit 12A of the unit development at 196 Hobson Street, Auckland, known as Hobson Apartments (Second Caveat Judgment).1 I also said I would have upheld the Body Corporate’s application to strike out Mr Cummins’ application  on  the  basis  that Mr Cummins was seeking to revisit issues already decided in the judgment of Gwyn J dismissing the application of Flat Bush Finance Ltd, an entity Mr Cummins controls, for the removal of the same caveat (First Caveat Judgment).2

[2]    As set out in my judgment, there is a considerable history to the proceedings involving, on the one side, the Body Corporate and, on the other side, Mr Cummins and the entities he controls or has controlled: being Manchester Securities Trading Trust, Flat Bush and Manchester Securities Ltd. All proceedings relate to the dispute over liability for repairs to Unit 12A.3 Mr Cummins and his entities have lost at every stage. They have also been consistently criticised both for their failure to give effect to decisions of the High Court and Court of Appeal, particularly the directions to pay the sums held to be owing to the Body Corporate, and for engaging in abuses of court processes.4

[3]    I recorded in my 13 April 2022 decision that I considered Mr Cummins’ application to remove the Body Corporate’s caveat was another instance of he and his associated entities engaging in “unjust harassment” of the Body Corporate and the other owners by seeking again to advance their interests while avoiding paying Court- ordered sums. In that sense, Mr Cummins was again vexing the Body Corporate and the other owners, as well as taking up valuable court time, by pursuing issues that had already been determined to try to achieve what he could not achieve earlier.5

1      Cummins v Body Corporate 172108 [2022] NZHC 774 [Second Caveat Judgment].

2      Body Corporate 172108 v Flat Bush Finance Ltd [2020] NZHC 3135, (2020) 21 NZCPR 622 [First Caveat Judgment].

3      Second Caveat Judgment, above n 1, at [12] – [68].

4      See, for example: Manchester Securities Ltd v Body Corporate 172108 [2019] NZCA 408 [Stay Appeal] at [27] – [30] and [39]; Body Corporate 172108 v Manchester Securities Ltd [2021] NZHC 365 [Joinder Judgment] at [13]; and Cummins v Body Corporate 172108 [2022] NZCA 68 [Joinder Appeal] at [64].

5      Second Caveat Judgment, above n 1, at [124]

[4]    In these respects, I was satisfied the application was itself an abuse of process and another example of dilatory and prevaricating behaviour by the Cummins’ interests. I therefore upheld the Body Corporate’s application for an award of indemnity costs.6 I gave leave to the parties to submit memoranda if they could not agree.7

Mr Cummins’ appeal

[5]    Mr Cummins has appealed my judgment but only in relation to indemnity costs. I understand the appeal is likely to be heard in 2023.

Memorandum by counsel for Body Corporate

[6]    Counsel for the Body Corporate have filed a memorandum advising they were unable to agree costs with Mr Cummins’ counsel, Mr Sullivan. They seek indemnity costs of $68,060.00 plus disbursements of $3,159.62, making a total of $71,219.62.

[7]    Those figures include actual costs and disbursements for this proceeding to 14 April 2022, the day after I issued my judgment. They also include what are described as “additional sums claimed”, being a one-third share of further actual costs incurred after 14 April 2022 in attempting to agree costs with Mr Sullivan ($2,500); and, as disbursements of $665, the April 2022 fees for Mr Opin-Dowell, a barrister who has acted for the Body Corporate across the various proceedings but did not appear in this proceeding.

[8]    Counsel for the Body Corporate have provided invoices and itemised time cost reports to support the claim as well as an explanation assuring the Court the costs claimed are referable only to this proceeding and not to other proceedings involving Mr Cummins and his entities. The costs claimed include preparation for and attendance at the hearing by Mr Allan and Ms Wakelin.

[9]    Counsel for the Body Corporate have also provided a comparative calculation of costs that would have been claimable if 2B costs had been awarded (that sum being

6      At [125] and [127].

7 At [128].

$29,636.00). The sum included: two entries of 1.5 days ($3,585) for the preparation of submissions; a day for appearance at the hearing by principal counsel ($2,390); and a half day for appearance at the hearing by second counsel ($1,195).

Memorandum by counsel for Mr Cummins

[10]   Mr Sullivan has also filed a memorandum in which he takes issue with the costs incurred by the Body Corporate. He contends scale costs should have been no more than $13,145. He says that, in the absence of cogent explanation by counsel for the Body Corporate as to why the time spent was so great, and given the challenges to the Court in determining reasonable actual costs, the Court may wish to await the outcome of Mr Cummins’ appeal of my ordering indemnity costs.

[11]   Mr Sullivan also takes issue with the Body Corporate’s delay, following the release of Gwyn J’s judgment, in initiating the substantive proceeding to determine the respective priorities of the equitable interests of the Body Corporate and Flat Bush in the assets of the Trust. By inference, he invites the Court to accept that this delay was the reason for Mr Cummins’ application to seek the removal of the caveat.

[12]   Mr Sullivan says the costs claimed by the Body Corporate are not reasonable. In particular, he says the costs claimed for two counsel and extra counsel are unreasonable, the time spent in preparation and at the hearing was disproportionate to the issue before the Court, the justification for time spent on the “detailed history” of the proceeding was misguided, the issues canvassed had already been rehearsed before Gwyn J, and there was no need for two sets of submissions addressing Mr Cummins’ application for removal of the caveat and the Body Corporate’s strike out application. Mr Sullivan also takes issue with the adequacy of the information provided to support the Body Corporate’s claim for costs and says it is insufficient to explain which steps were taken or not taken.

[13]   Mr Sullivan sets out a breakdown of what he says would have been reasonable costs actually incurred, by step, in the proceeding. These total $25,101 and are nearly double the rate of 2B costs as he calculates they should have been. Mr Sullivan says this applies a reasonable indemnity rate for a single counsel to realistic timeframes per identified task. Mr Sullivan invites the Court to use his calculations to determine the

reasonable sum to be paid by Mr Cummins by way of indemnity cost, supplemented as necessary by any further allowance I consider appropriate.

Analysis

[14]   To the extent Mr Sullivan’s submissions invite me to review my decision to award indemnity costs, I leave that question for the Court of Appeal.

[15]   As confirmed by the Court of Appeal,8 indemnity costs should be calculated not on the basis of the costs rules, but on the basis of a reasonable allocation of actual costs having regard the reasonableness of particular items of expenditure incurred, to the appropriate time taken, the significance and complexity of the work, and a median hourly rate reasonably applicable.9 It is clear, therefore, that Mr Sullivan’s recommended approach of working on the basis of a notional calculation of reasonable costs is not appropriate. The starting point is the actual costs incurred.

[16]   Mr Sullivan also seriously underplays the complexity of the proceeding. While the specific issue raised was relatively narrow, I found it necessary to canvass the sorry history of this lengthy set of proceedings to understand the nature and significance of the issue I had to decide. It was necessary and appropriate for the Body Corporate to give that history in order to provide adequate context and to rebut the submission then made by Mr Sullivan that I was not being asked to decide the same question already decided by Gwyn J – a point Mr Sullivan’s memorandum ignores.

[17]   As counsel for the Body Corporate have pointed out, counsel had been directed during case management to prepare separate sets of submissions on the two applications. Both did. There can be no criticism, therefore, for the two sets of costs claimed in that respect.

[18]   More generally, given the history of the litigation between the Body Corporate and the Cummins’ interests, particularly the latter’s proclivity to act as if prior Court decisions can be ignored, it was inevitable the Body Corporate would prepare carefully for this hearing. That reasonably included time spent inspecting the work carried out

8      Edel Metals Group Ltd v Geir Ltd [2018] NZCA 494 at [62].

9      Bradbury v Westpac Banking Corp Group (2009) 18 PRNZ 859 (HC) at [204] and [209].

on Level 12A, given Mr Cummins’ argument that the caveat had to be removed to enable him to raise funds to advance the renovation works to a suitable point.

[19]   The short point is that these costs were incurred because of the decision taken by Mr Cummins to revisit an issue that had already been decided by Gwyn J, but which had to be put in its context for a judge who had no familiarity with the historical dispute. I am not persuaded that the costs incurred by the Body Corporate were generally excessive or unreasonable.

[20]   I agree, however, with Mr Sullivan that the time apparently spent by Mr Allan (65 hours at $500 per hour) and Ms Wakelin (103 hours at $400) on the file is high, given their familiarity with the issues. While I acknowledge that not all of that time has been claimed, I consider that adjustments should be made to both the number of hours and the rate charged to reflect:

(a)the time taken and the significance and complexity of the work, having regard to the familiarity of counsel with the issues; and

(b)a reasonable median rate as recommended in Bradbury.

[21]   I consider 115 hours (90 hours for Ms Wakelin and 25 hours for Mr Allan) at a median rate of $450 to be appropriate.

[22]Those adjustments result in a total of $51,750.

[23]   I also agree that there is no appropriate basis for the Body Corporate to recover the costs of Mr Orpin-Dowell, who was not involved in the hearing. Nor do I consider it appropriate for the Body Corporate to claim a proportion of the time spent post decision in attempting to agree costs. That amounts to seeking costs on costs.

Result and order

[24]   Having regard to the history of proceedings, the significance and complexity of the issues and what I consider to be a reasonably applicable hourly rate, I am

satisfied that the Body Corporate  is  entitled  to  recover  costs  of  $51,750  from  Mr Cummins.

[25]I order Mr Cummins to pay the Body Corporate costs of $51,750.

G J van Bohemen J