Duncan v Taylor HC Auckland CIV-2007-404-296

[2011] NZHC 67

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2007-404-296

BETWEEN  BRUCE LESLIE DUNCAN ALISON LESLEY DUNCAN

AND BRUCE CYRIL MCNIECE AS TRUSTEES OF THE BL AND AL DUNCAN FAMILY TRUST

Plaintiffs

ANDROBIN ERIC TAYLOR First Defendant

ANDLORRAINE KATHLEEN ELDER AND WYNDHAM TRUSTEES LIMITED Second Defendant

ANDRAYMOND FREDERIK DEN OTTER AND SONIA EDWARDS

Third Defendants

ANDTHE AUCKLAND CITY COUNCIL Fourth Defendant

ANDTHE REGISTRAR GENERAL OF LANDS

Fifth Defendant

Hearing:         On the papers

Counsel:         KF Gould for Plaintiffs

SA Grant for Third Defendants

Judgment:      4 March 2011 14:00:00

JUDGMENT OF RODNEY HANSEN J As to costs

This judgment was delivered by me on 4 March 2011 at 2.00 p.m., pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date: ………………………….

Solicitors:           Bruce C McNiece, P O Box 90, Shortland Street, Auckland for Plaintiffs

Barrie Hopkins, P O Box 106-027, Auckland for Defendant

BRUCE LESLIE DUNCAN V ROBIN ERIC TAYLOR HC AK CIV-2007-404-296 4 March 2011

Introduction

[1]      The plaintiffs and the first, second and third defendants are the owners of cross-leased flats on land at Baddeley Avenue, Kohimaramara.  They were unable to resolve  differences  that  arose  after  the  plaintiffs  replaced  a  small  one  bedroom cottage with a substantial residence which exceeded the footprint of the existing flats plan and, in two areas, encroached on common area.   It transpired that the flats owned by the first and second defendants also encroached on common property as a result of errors in the original plans and subsequent alterations.

[2]      The  plaintiffs  sought  orders,  under  the  Property  Law Act  2007,  for  the creation of a new plan and a contribution from the defendants to the cost of repairing a failed retaining wall on common property.  The defendants opposed the plaintiffs’ claim and sought removal of the plaintiffs’ building and compensation for unlawful occupation.   If there were to be amendments to the plan to recognise the encroachments, the defendants sought compensation from the plaintiffs.  They also sought damages for trespass to common property.

[3]      In my judgment of 31 May 2010, I decided that the plaintiffs were entitled to orders which would permit a new flats plan to be created.  I decided that they should pay the defendants compensation totalling $190,150.

[4]      The defendants seek an award of costs on a category 2 band B basis, with an uplift of 50 per cent in respect of costs incurred since 30 October 2008, when an offer of settlement was made.   The plaintiffs claim the defendants were largely unsuccessful in their defences and counterclaims and should pay costs.

Liability for costs

[5]      I am in no doubt that the plaintiffs should be liable for costs.  It is true that they obtained the relief that was their primary objective – an amended flats plan to conform to the new building – and, in that sense, they succeeded.  It is also the case that the defendants both failed in their efforts to prevent that outcome and in their claim for damages for trespass.

[6]      In a sense, however, these outcomes were secondary to the main contest – the compensation which the defendants should be paid if the plaintiffs were permitted to keep their house.   On that issue the defendants prevailed.   The amount I awarded them was substantially more than the plaintiffs were prepared to pay; the plaintiffs also resisted any award of compensation for the use of Area B, which was by far the biggest component of the award made.

[7]      The contrasting approaches of the parties to compensation was reflected in settlement offers made before the hearing.   In an offer made on 30 October 2008, without prejudice except as to costs, the defendants offered to accept $170,000 in settlement (comprising $110,000 compensation and $60,000 in legal costs) and to accept delayed payment.  The plaintiffs rejected the offer and made a counter-offer to pay compensation as agreed by the valuers.  The valuers were unable to agree, the plaintiffs’ valuer contending (as he did at the hearing) that compensation should be minimal.  The plaintiffs’ offer was also conditional on the defendants accepting their plans to add a third storey to their house and to freehold all titles.

[8]      Even if I had found that the plaintiffs had succeeded, I would have applied r

14.11 of the High Court Rules to award costs in favour of the defendants.

Quantum of costs

[9]      The defendants seek increased costs incurred since the Calderbank offer was made on 30 October 2008.  Rule 14.6(3)(b)(v) permits an order for increased costs to be made where the party opposing costs has contributed unnecessarily to the time or expense of the proceeding or a step in it by failing, without reasonable justification, to accept an offer of settlement.   In my view, the rule applies.   The terms of the defendants’ offer gave the plaintiffs the relief they sought on terms which were significantly more  favourable than  produced  by the  judgment.   Their  refusal  to accept it unnecessarily prolonged the proceedings.  A 50 per cent increase in scale costs would grant the defendants a fair recovery for the steps in the proceeding

unnecessarily forced on them.[1]

[1] Holdfast NZ Limited v Selleys Pty Limited (2005) 17 PRNZ 897 (CA) at [47].

[10]     The defendants have each sought an allowance under items 2 and 3.1 of Schedule 3 for the commencement of their defences and counterclaims.  The normal rule under r 14.15 is that only one set of costs is awarded unless it appears to the Court that there is good reason to allow more than one step.  The defendants contend that it is reasonable for separate allowance to be made for these steps because of the time taken by counsel to receive instructions from the individual defendants and their solicitors and to draft each separate pleading.  I am told that the fact that the pleadings of each defendant were combined in one document did not reduce costs significantly.

[11]     I am not persuaded that separate costs should be awarded.  The three owner defendants were not affected in precisely the same way by the litigation but there was a broad community of interest which permitted all to be represented by one counsel.   I consider the allowance for the commencement of their defence and counterclaim would be excessive if I permitted each to recover separately.

[12]     For the plaintiffs, it is submitted that an allowance for junior counsel is not warranted but I consider it was appropriate in this case.   Some of the legal and factual issues involved were quite difficult and complex.  A number of witnesses of fact were called and expert evidence was required.  I consider it reasonable for senior counsel to have the assistance of a junior at the hearing.

[13]     On this basis, I find the defendants are entitled to costs as follows:

Revised schedule

Daily rate  $

1,600.00

Item	Particulars	Days	Amount
2	Commencement of defence by defendant	2	$   3,200.00
3.1	Counterclaim	1.6	$   2,560.00
3.6	Pleading to amended pleadings	1.2	$   1,920.00
4.5	List of documents on discovery	1.5	$   2,400.00
4.6	Production of documents for inspection	1	$   1,600.00
4.7	Inspection of documents	1.5	$   2,400.00
4.10	Filing memorandum for case management conference	2	$   3,200.00
4.11	Appearance at case management conference	1.5	$   2,400.00
4.12	Preparing and filing interlocutory application	0.6	$      960.00
4.17	Appearance at mentions hearing (uplifted)	0.2	$      480.00
8	Preparation for hearing (uplifted)	7	$ 16,800.00
9.1	Appearance at hearing by principal counsel (uplifted)	3.5	$   8,400.00
9.2	Appearance at hearing by junior counsel (uplifted)	1.75	$   4,200.00
$ 50,520.00

[14]   The defendants claim disbursements of $22,418.78.   The schedule of disbursements referred to in [5] of counsel’s memorandum of 12 October 2010 was not in fact attached.  If counsel are unable to agree, disbursements are to be fixed by the Registrar.