Euro Master Painting Services Limited v Odgen-O'Fee
[2025] NZHC 811
•7 April 2025
IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY
I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE
CIV-2024-409-647
[2025] NZHC 811
UNDER the Construction Contracts Act 2002 IN THE MATTER
of enforcement of adjudicator’s determination
BETWEEN
EURO MASTER PAINTING SERVICES LIMITED
Plaintiff
AND
VICKI JANE OGDEN-O’FEE and
MICHAEL JOHN OGDEN as trustees of the OGDEN-O’FEE FAMILY TRUST
Defendants
Hearing: 6 March 2025
Further submissions received from Plaintiff and Defendants on 13 March, 14 March and 21 March 2025
Counsel:
G A Cooper for Plaintiff Defendants in person
Judgment:
7 April 2025
JUDGMENT OF ASSOCIATE JUDGE PAULSEN
This judgment was delivered by me on 7 April 2025 at 4.00 pm pursuant to r 11.5 of the High Court Rules.
Registrar/Deputy Registrar Date:
EURO MASTER PAINTING SERVICES LIMITED v OGDEN-O’FEE [2025] NZHC 811 [7 April 2025]
[1] Euro Master Painting Services Ltd (Euro) is a painting contractor and performed work for the defendants. A dispute arose between the parties concerning payment which Euro referred to adjudication under the Construction Contracts Act 2002 (the Act). Euro was largely successful in the adjudication.
[2] Euro brought this summary judgment application for amounts awarded by the adjudicator and to recover what it refers to as pre-adjudication legal costs. The claim for the sums awarded by the adjudicator has been resolved by an earlier consent order. That leaves the claim for the pre-adjudication legal costs and also costs of this proceeding.
[3]The issues that arise are as follows:
(a)Did the defendants accept Euro’s terms and conditions?
(b)Are the pre-adjudication legal costs payable by the defendants under Euro’s terms and conditions?
(c)If I am not satisfied that Euro is entitled to summary judgment for the pre-adjudication legal costs, how should its claim be resolved?
(d)Is Euro entitled to costs and disbursements of this proceeding, and if so in what sum?
Background
[4] The defendants are the trustees of the Ogden-O’Fee Family Trust and the owners of a property at 12 Mica Place, Northwood, Christchurch (the property).
[5] On 7 March 2024, Euro provided the defendants with a quotation for painting work at the property. The defendants accepted the quotation.
[6] Euro performed the painting work, but a dispute arose concerning payment of Euro’s charges which Euro referred for adjudication under pt 3 of the Act. The adjudicator determined:
(a)the defendants were to pay Euro $15,881.66 along with interest up to 22 October 2022 of $1,925.10 within two working days of receipt of the determination;
(b)contractual interest would continue to accrue on the sum of $15,881.66 while that sum remained unpaid;1 and
(c)the parties were to bear their own costs of the adjudication but the defendants were to reimburse Euro for their share of the adjudicator’s fees and expenses in the sum of $1,875.2
[7]The adjudicator did not award costs, relying on s 56 of the Act which provides:
56 Costs of adjudication proceedings
(1)An adjudicator may determine that costs and expenses must be met by any of the parties to the adjudication (whether those parties are or are not, on the whole, successful in the adjudication) if the adjudicator considers that the party has caused those costs and expenses to be incurred unnecessarily by—
(a)bad faith on the part of that party; or
(b)allegations or objections by that party that are without substantial merit.
(2)If the adjudicator does not make a determination under subsection (1), the parties to the adjudication must meet their own costs and expenses.
(3)An agreement about how the costs and expenses in adjudication proceedings are to be apportioned (including an agreement that a party is to indemnify another party in relation to those costs and expenses) is not binding on the parties to the adjudication if that agreement was made before the dispute arose.
[8] The adjudicator held there was a presumption that parties would bear their own costs unless one party had acted in bad faith or aspects of its case lacked merit.3 He was not persuaded that either party acted in bad faith or raised allegations or objections
1 Euro Master Painting Services Limited v Ogden-Fee BDT 24-0926145 LVC 20, 22 October 2024 at [87(a)].
2 At [87(d)].
3 At [72].
that were without substantial merit4 and held the parties must bear their own costs of the adjudication.5
[9] The adjudicator did not determine Euro’s claim for pre-adjudication legal costs of $14,496.42.6 In respect to this claim the adjudicator said:
[68] It is not clear from the Adjudication Claim that Euro was seeking an award of costs that were not incurred as part of these proceedings. As such it is my view that the introduction of the pre-adjudication costs was a new issue raised in the Reply.
…
[70] Accordingly, under section 37A(4)(a) of the Act, I have not considered the pre-adjudication costs raised in the Reply.
[10] The defendants failed to pay the amounts owing under the adjudicator’s determination and Euro commenced this claim seeking summary judgment for:
(a)the amount owing under the determination as of 6 November 2024 of
$19,873.76;
(b)the pre-adjudication legal costs;
(c)interest pursuant to the Interest on Money Claims Act 2016; and
(d)costs and disbursements in this proceeding.
[11] In the affidavit of Ms Ogden-O’Fee filed in opposition to the summary judgment application she stated that “[t]he Defendants agree to pay the sum owed as determined by the Adjudicator” but said they were suffering financial hardship. The defendants did not accept Euro’s claims for pre-adjudication legal costs.
[12] When the summary judgment application came before me on 6 March 2025 the defendants consented to judgment being entered in respect to the amounts payable
4 At [76].
5 At [77].
6 At [70].
under the adjudicator’s determination along with interest. I entered judgment in favour of Euro for those sums.7 Euro sealed the judgment the same day.
[13] In respect to Euro’s remaining claim for the pre-adjudication legal costs, I made directions for Euro to file any response to Ms Ogden-O’Fee’s affidavit by 13 March 2025 and the parties agreed that the summary judgment application was to be decided on the papers without a hearing. This reflected the relatively small amount at stake and the parties’ desire to maintain costs at a proportionate level. I directed that the application would be dealt with in that way.
[14] Following the 6 March hearing, and without leave, Ms Ogden-O’Fee filed an affidavit in which she deposed she had not received Euro’s terms and conditions and the enforcement of the adjudicator’s award would be unjust “as the fundamental contractual basis is in dispute”. This was contrary to the position taken at the 6 March hearing. If the defendants wished to challenge the consent judgment their remedy was to appeal.
[15] Euro filed a memorandum of 13 March 2025 addressing issues raised in Ms Ogden-O’Fee’s affdavit.
[16] Then, again without leave, the defendants filed a further memorandum dated 14 March 2025 in respect to Euro’s claim for pre-adjudication legal costs. I allowed Euro an opportunity to respond to the defendants’ further memorandum, which it did by memorandum of its counsel dated 21 March 2025.
Summary judgment principles
[17]The relevant rule is r 12.2 of the Rules which reads as follows:
12.2 Judgment when there is no defence or when no cause of action can succeed
(1)The court may give judgment against a defendant if the plaintiff satisfies the court that the defendant has no defence to a cause of action in the statement of claim or to a particular part of any such cause of action.
7 Euro Master Painting Services Ltd v Ogden-O’Fee High Court, Christchurch, CIV 2024-409-647, 6 March 2025 (Minute).
…
[18] The principles that apply to a plaintiff’s summary judgment application were summarised by Associate Judge Osborne in Mount Grey Downs Ltd v Pinot Properties Ltd as follows:8
(a)Commonsense, flexibility and a sense of justice are required.
(b)The onus is on the plaintiff seeking summary judgment to show that there is no arguable defence. The Court must be left without any real doubt or uncertainty on the matter.
(c)The Court will not hesitate to decide questions of law where appropriate.
(d)The Court will not attempt to resolve genuine conflicts of evidence or to assess the credibility of statements in affidavits.
(e)In determining whether there is a genuine and relevant conflict of facts, the Court is entitled to examine and reject spurious defences or plainly contrived factual conflicts. It is not required to accept uncritically every statement put before it, however equivocal, imprecise, inconsistent with undisputed contemporary documents or other statements, or inherently improbable.
(f)In assessing a defence the Court will look for appropriate particulars and a reasonable level of detailed substantiation — the defendant is under an obligation to lay a proper foundation for the defence in the affidavits filed in support of the Notice of Opposition.
(g)In weighing these matters, the Court will take a robust approach and enter judgment even where there may be differences on certain factual matters if the lack of a tenable defence is plain on the material before the Court.
(h)The need for judicial caution in summary judgment applications has to be balanced with the appropriateness of a robust and realistic judicial attitude when that is called for by the particular facts of the case. Where a last-minute, unsubstantiated defence is raised and an adjournment would be required, a robust approach may be required for the protection of the integrity of the summary judgment process.
(i)Once the Court is satisfied that there is no defence, the Court retains a discretion to refuse summary judgment but does so in the context of the general purpose of the High Court Rules which provide for the just, speedy and inexpensive determination of proceedings.
(footnotes omitted)
8 Mount Grey Downs Ltd v Pinot Properties Ltd [2018] NZHC 3094 at [12].
Did the defendants accept Euro’s terms and conditions?
[19] Euro says its entitlement to the pre-adjudication legal costs arises under its terms and conditions which formed part of its quotation. They contain payment provisions including:
7. Payment
…
[Euro] shall be able to charge interest on all overdue accounts at the rate of 2.5% per month or part month from the due date for payment until the date when payment is actually made by the Customer. All expenses, disbursements and costs (including legal costs as between solicitor and client and debt collection agency fees) incurred by [Euro] in the enforcement of any rights contained in these Terms shall be paid in full and without deduction by the Customer.
[20] Euro’s director, Laszlo Meszaros, deposes that Euro provided a quotation to the defendants for the work by email on 7 March 2024. The email sending the quotation (including the terms and conditions) is exhibited to his affidavit. The front page of the quotation states “By accepting this quote you agree with, and accept our General Terms and Conditions, attached to this quote”.
[21] Mr Meszaros says there was some negotiation in respect to payment of a portion of the quoted price in Bartercard dollars, and the quotation was then accepted verbally with a request that work begin as soon as possible. He says work commenced on 18 March 2024.
[22] Mr Meszaros also deposes that when the defendants disputed payment it was referred to adjudication, and that between June 2024 and September 2024 Euro incurred expenses, disbursements and costs (including legal costs) totalling
$14,496.42 which were “necessary to enforce its contractual rights and pursue recovery of the amounts owed by the [defendants]”. He exhibits copies of invoices from Euro’s lawyers to his affidavit.
[23] In her affidavit dated 3 March 2025 Ms Ogden-O’Fee acknowledges the defendants had used Euro previously without issue. It is apparent the defendants corresponded with Euro by email. She annexes Euro’s quotation as an exhibit to her
affidavit, including the terms and conditions. She does not say the quotation or the terms and conditions were not received and relies upon them, alleging that Euro did not comply with them.
[24] In a letter sent by the defendants to Euro’s lawyers on 1 July 2024 the defendants asked to see “a copy of the quote signed by myself and Vicki as Trustees”, which falls short of a denial that the terms and conditions had been received. In subsequent correspondence there is no denial that the terms and conditions were received and applied to the relations between the parties. It is also apparent from the adjudicator’s determination that the defendants did not argue the terms and conditions had not been received or did not apply in that proceeding.
[25] It is in her subsequent affidavit of 12 March 2025 that Ms Ogden-O’Fee says that Euro did not provide the terms and conditions with its quotation, that she did not receive or review them prior to the dispute arising, and nor did she sign them or any acceptance of the quotation.
[26] I am satisfied the terms and conditions were sent as an attachment to Euro’s 7 March 2024 email. There is no dispute the quotation was received and accepted. This is apparent from the matters I referred to above. I also note that in an email to Euro of 21 May 2024 Ms Ogden-O’Fee states “I asked for a quote. We got the quote,” and in the adjudication proceeding Ms Ogden-O’Fee filed a document stating, “[t]he quote was provided and verbally accepted”.
[27] It does not assist the defendants that they may have not reviewed Euro’s terms and conditions or that they did not accept them in writing. By verbally accepting the quotation and engaging Euro to begin work the defendants bound themselves to Euro’s terms and conditions.
Are the pre-adjudication legal costs payable under Euro’s terms and conditions?
[28] As a general proposition, a contractual obligation to pay actual legal costs reasonably incurred consequent upon a breach of contract is enforceable and ordinary
principles of contractual interpretation apply.9 However, that will not be the case if in the circumstances the obligation to pay is contrary to public policy10 or contrary to statute.
[29] In Black v ASB Bank Ltd the Court of Appeal held that in assessing whether such legal costs claimed under a contract are reasonable the Court was required to make an objective assessment of the following:11
(a)what tasks attract a costs indemnity on a proper construction of the contract;
(b)whether the tasks undertaken were those contemplated in the contract;
(c)whether the steps undertaken were reasonably necessary in pursuance of those task;
(d)whether the rate at which the steps were charged was reasonable having regard to the principles normally applicable to solicitor/client costs; and
(e)whether any other principles drawn from the general law of contact would in whole or in part deny the claimant its prima facie right to judgment.
[30] While costs for which a party seeks indemnity must be “reasonably incurred”, the word “reasonable” does not import a discretion in the usual sense12 because the exercise of a judicial discretion to order less costs could erode the contractual protection the indemnity was intended to provide.13
[31] The defendants raise several matters in opposition to Euro’s claim. These include that the issue of costs had been determined by the adjudicator who not only
9 Gibson v ANZ Banking Group (NZ) Ltd [1986] NZLR 556 (CA) and Taharoto Motels Ltd v Ritz Enterprises Ltd [2024] NZHC 1030 at [13].
10 Gibson v ANZ Banking Group (NZ) Ltd, above n 9, at 566.
11 Black v ASB Bank Ltd [2012] NZCA 384 at [80].
12 Frater Williams & Co Ltd v Australian Guarantee Corp (NZ) Ltd (1994) 2 NZ ConvC 191,873 (CA) at 191,887.
13 Beecher v Mills [1993] MCLR 19 (CA).
decided there was no basis to award costs but also that there was insufficient evidence to support Euro’s claim. The defendants argue Euro should not be allowed to reintroduce the claim again. Further, they say no clear breakdown has been provided of the costs claimed and they are disproportionate and unnecessarily incurred.
[32] The term Euro relies upon appears in the section of the terms and conditions concerned with payment for the cost of Euro’s work as invoiced to the customer or, as occurred in this case, the subject of payment claims under the Act. It entitles Euro to payment of actual legal costs “incurred … in the enforcement of any rights contained in these Terms” which must include the right to payment. As a matter of contractual interpretation, legal costs incurred by Euro directly in the pursuit of payment would appear to fall within the scope of the term.
[33] However, Euro has not satisfied me that the defendants have no defence to this claim. There is an insufficiency of evidence both as to work undertaken for which the legal fees were incurred (and thus whether they are costs for which the defendants could be liable) and the reasonableness of those legal fees. In addition, in my view there is merit in the defendants’ position that at least some portion of the legal fees could only be recovered by an award of the adjudicator under s 56 of the Act.
[34] As to the insufficiency of evidence, the lawyers’ invoices attached to Mr Meszaros’ affidavit are notable for the absence of any description of the work undertaken. Each invoice contains the bland narration “To our fee for professional services for the period [date] to [date]”.
[35] Mr Meszaros’ evidence is similarly uninformative and does not describe the work undertaken. His evidence is only:
18.Between June and September 2024 and prior to commencing the adjudication proceeding on 12 September 2024, Euro incurred expenses, disbursements, and costs (including legal costs) of
$14,496.42 comprised of the following items necessary to enforce its contractual rights and pursue recovery of the amounts owed by the Trust:
19.True copies of the invoices documenting the costs incurred by Euro are attached to this affidavit and marked as Exhibit “D”.
[36] Euro’s statement of claim lists in broad terms tasks undertaken and this is repeated in a memorandum of counsel of 6 March 2025, but Mr Meszaros does not confirm the content of the statement of claim in his affidavit and counsel’s memorandum is not evidence.
[37] Even if I have regard to the broad description provided of the work undertaken there is no attempt to relate tasks to particular invoices. There is also no evidence that I would expect to have before me supporting the claim as to the time spent on individual tasks, the level of experience of the authors undertaking that work and the charge out rates applied.
[38] Turning then to s 56 of the Act, the lawyers’ attendances are shown on the invoices to relate to the period 7 June to 24 October 2024. The adjudication was commenced and completed in that period and it is clear that some of the work undertaken included preparing Euro’s case for the adjudication. Counsel describes that work as:
Preparing all documents requested for adjudication including notice of adjudication, adjudication claim, and supporting affidavit, application to the Building Disputes Tribunal for appointment of an adjudicator, all correspondence with the Building Disputes Tribunal for the appointment of adjudicator.
[39] Euro’s position appears to be that as the adjudicator did not consider its claim for the pre-adjudication legal costs they remain recoverable in ordinary proceedings. I do not accept that is necessarily the case.
[40] The adjudicator was uncertain as to the basis upon which Euro’s claim for pre- adjudication costs was being advanced. He was alive to the possibility that they were costs incurred for the purposes of the adjudication, in respect of which he made an express finding that there was no basis to depart from the “default provision/presumption” under the Act that each party was to bear their own costs.
[41] In my view, to the extent that that the pre-adjudication costs were incurred for the purposes of the adjudication they are not now recoverable from the defendants. Section s 56(2) is clear in its terms that unless the adjudicator makes a determination
under subs (1) “the parties … must meet their own costs and expenses”. Here, the adjudicator refused to make an order under subs (1).
[42] There is support for my approach in Canam Construction (1955) Ltd v LaHatte which concerned an application for judicial review of an adjudicator’s determination under the Act.14 The adjudicator had made an award in favour of a party for claim preparation costs. It was held that the award was beyond the jurisdiction of the adjudicator as follows:
[89] The award of costs the adjudicator made for Yun’s “claim preparation costs”, incurred in respect of the quantity surveyor, who framed Yun’s claim, Canam contends, was in excess of the adjudicator’s power. In this instance I agree with Canam.
[90] This was not an award of the kind envisaged in the George Developments case for expenses necessarily incurred in the completion of work during the course of the contract and before the adjudication process began. It was a claim for costs incurred for the purposes of the adjudication. The award made could only have been under s 56. There was no basis for s 56 to be invoked, nor did the adjudicator invoke it.
[91] To have invoked s 56 the adjudicator would have had to find either that Canam put Yun to unnecessary cost by acting in bad faith, or by adopting a stance without substantial merit. The adjudicator made no such finding. Nor on the record could he have. Instead the adjudicator made an award in the nature of damages. That was beyond his jurisdiction.
[43] There is another hurdle facing Euro’s claim, which is s 56(3) of the Act. It must be arguable that insofar as Euro’s terms and conditions allow for recovery of legal costs incurred in respect to an adjudication under the Act, they are not binding on the parties.
[44] That result is consistent with the purposes of the Act to provide a “speedy resolution of disputes arising under a construction contract” on an interim and provisional basis. It is also consistent with the view expressed in Concrete Structures (NZ) Ltd v Inframax Construction Ltd:15
[13] If the costs of the adjudication process were to be ordered by the court, then the court would be usurping the jurisdiction given to the adjudicator pursuant to the Construction Contracts Act 2002, s 57. Whilst it is
14 Canam Construction (1955) Ltd v LaHatte [2010] 1 NZLR 848.
15 Concrete Structures (NZ) Ltd v Inframax Construction Ltd HC Hamilton CIV-2010-419-385, 30 March 2011.
acknowledged that the adjudicator’s jurisdiction is limited to cases of bad faith or to allegations or objections that are taken without substance, the statutory regime makes it plain that unless those circumstances are found to be present by the operation of the Construction Contracts Act 2002, s 56(2), the parties to the adjudication must meet their own costs and expenses.
Costs of this proceeding
[45] Euro seeks costs of this proceeding on a 2B basis. The defendants argue that no costs should be awarded for much the same reasons as they oppose Euro’s claim for the pre-adjudication costs.
[46] All issues of costs are discretionary, but the discretion must be exercised judicially having regard to the principles set out in the High Court Rules 2016 (the Rules).
[47] Rule 14.2 sets out general principles applying to the determination of costs. Particularly relevant in this context is that the party who fails with respect to a proceeding should pay costs to the party who succeeds. This principle will apply in circumstances where the party claiming costs was only partially successful because “success on more limited terms is still success”.16
[48] Euro succeeded on its summary judgment application in part. To the extent it was successful, I consider it is entitled to costs up until 6 March 2025 being the date judgment was entered on its claim to enforce the adjudicator’s determination.
[49] I do not accept the defendants’ submissions that Euro unnecessarily incurred the costs of the proceeding, or the several arguments advanced that challenge Euro’s entitlement to the adjudicator’s determination or that raise concerns about the standard of Euro’s work (which the defendants are pursuing elsewhere). This proceeding was necessary because the defendants failed to comply with the adjudicator’s determination. They acknowledged they had no defence to that claim. Had they made payment they could have avoided their liability for costs.
16 Weaver v Auckland Council [2017] NZCA 330, (2017) 24 PRNZ 379 at [26].
[50] I do not consider that Euro is entitled to any costs following the 6 March hearing because costs incurred after that date relate to its claim for the pre-adjudication costs and it failed to obtain summary judgment on that claim.
[51] As far as the quantum of costs are concerned, Euro’s counsel has provided a schedule of costs calculated on a 2B basis. I accept this is a category 2 proceeding but also note that under r 14.2(1)(c) “costs should be assessed by applying the appropriate daily recovery rate to the time considered reasonable for each step reasonably required in relation to the proceeding or interlocutory application”. A party applying for costs should demonstrate that consideration has been given to the time required for each step in a proceeding.
[52]In addition, r 14.13 is also relevant. It states:
14.13 Proceedings within jurisdiction of District Court
Costs ordered to be paid to a successful plaintiff must not exceed the costs and disbursements that the plaintiff would have recovered in the District Court if the proceeding could have been brought there, unless the court otherwise directs.
[53] Euro’s claims were within the jurisdiction of the District Court, and this is not a case where bringing them in the High Court was justified because of the nature and complexity of the proceeding or the issues that arise. Costs should therefore be assessed on the basis of Euro’s entitlement had the proceeding been brought in the District Court.
[54] I have assessed Euro’s claim for costs and disbursements. It is awarded costs and disbursements of the proceeding in the amount of $3,542 in accordance with the attached schedule.
Future conduct of the case
[55] Euro’s claim for the pre-adjudication costs remains unresolved. The amount at stake is modest and it is not appropriate that it be resolved in this Court. It appears to me that the best way forward is for the proceeding to be transferred to the Disputes
Tribunal. The power to do so exists under s 37(2) of the Disputes Tribunal Act 1988 which provides:
37 Transfer of proceedings from District Court, etc
...
(2)Where proceedings within the jurisdiction of the Tribunal have been commenced in the High Court before a claim in respect of the same issues between the same parties has been lodged in the Tribunal, or transferred to the Tribunal under this section, that court or a Judge of that court may, on the application of either party or of its or that Judge’s own motion, order that the proceedings be transferred to the Tribunal.
...
[56] As I have not raised this possibility with the parties I will receive submissions on the matter before making any order.
Result
[57] The plaintiff’s application for summary judgment to recover the pre-adjudication costs is dismissed.
[58] The plaintiff is entitled to costs and disbursements on its summary judgment application in the amount of $3,542 in accordance with the attached schedule.
[59] The parties are to confer and advise by memorandum no later than 30 April 2025 whether there is agreement to transfer the balance of Euro’s claim to the Disputes Tribunal for hearing. In the event the parties consider there is some better alternative for resolving the matter, they should set that out in their memoranda and I will determine the matter on the papers.
O G Paulsen Associate Judge
Solicitors:
Cavell Leitch, Christchurch
SCHEDULE 1
Item Description Time Costs
($1,910 per day)
1
Preparing statement of claim (receiving instructions, researching facts and law, and filing and serving that document) 2A basis
0.75
$1,432.50
9.8
Filing and serving memorandum in anticipation of judicial conference 2B basis
0.25
$477.50
9.16
Sealing order or judgment 2B basis
0.20
$382.00
19.13
Preparing and filing interlocutory application (excluding an application to vary, discharge, or suspend attachment order) and supporting affidavits 2B basis
0.40
$764.00
Total costs
$3,056.00
Disbursements
District Court filing fee on claim
$260.00
District Court sealing fee on judgment by default
$65.00
Process server’s fee for serving claim
$161.00
Total disbursements
$486.00
Total costs and disbursements
$3,542.00
4
0