Everest Serviced Apartments Limited v Body Corporate 511909

[2021] NZHC 3243

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2019-404-1191

[2021] NZHC 3243

BETWEEN

EVEREST SERVICED APARTMENTS LIMITED

Plaintiff

AND

BODY CORPORATE 511909

First Defendant

STRATA TITLE ADMINISTRATION LIMITED

Second Defendant

Hearing:

On the papers

Counsel:

MJF Taylor and LH Mau for the Plaintiff E St John for the First Defendant

S Connolly for the Second Defendant

Judgment:

30 November 2021

COSTS JUDGMENT OF ASSOCIATE JUDGE SUSSOCK

This judgment was delivered by me on 30 November 2021 at 3.30pm pursuant to r 11.5 of the High Court Rules

Registrar/Deputy Registrar

Solicitors / Counsel:

Russell McVeagh, Auckland Price Baker Berridge, Auckland Duncan Cotterill, Auckland

E St John, Auckland

EVEREST SERVICED APARTMENTS LTD v BODY CORPORATE 511909 (costs) [2021] NZHC 3243 [30

November 2021]

Introduction

[1]    In my Judgment of 9 July 2021 (re-issued on 19 July 2021 with schedules attached), I determined three issues arising from the plaintiff’s application for further and better discovery in favour of the plaintiff. I did not hear from the parties on costs and so asked the parties to confer and attempt to agree matters.1

[2]    I indicated that as the plaintiff had succeeded in the usual course it would be entitled to costs. I recorded however that some reduction may be justified as the parties had not complied with clause 3 of part 1 of schedule 9 of the High Court Rules 2016 when agreeing the tailored discovery categories which may have avoided many of the issues that had arisen. The correspondence in relation to the tailored discovery categories was not before me however and so I could not reach a final view on whether all parties were at fault. I further noted that the defendants’ delayed responses and staggered affidavits of documents had made discovery a more protracted and costly exercise than necessary.2

[3]    I directed the parties to file memoranda (preferably joint) setting out the proposed search methodology and timetable directions for the further discovery ordered. Agreement was not able to be reached and so I issued a minute making further discovery directions on 11 October 2021.

[4]    Directions were also made in respect of costs memoranda requiring the parties to confer and, if agreement could not be reached, file memoranda.

[5]    The parties have been unable to reach agreement. Memoranda have been filed on behalf of all parties and I now determine costs.

Costs sought

[6]    The plaintiff, Everest Serviced Apartments Limited, seeks costs on a 2B basis of $11,233.00 plus $500.00 in disbursements for a total of $11,733.00. The plaintiff

1      Everest Serviced Apartments Ltd v Body Corporate 511909 [2021] NZHC 1725.

2 At [91].

proposes that any award is divided between the two defendants evenly so that each pays half of the award for a total of $5,866.50 each.

[7]    The first defendant, Body Corporate 511909, responds that one of the items claimed, for the preparation of updated written submissions in the amount of

$3,585.00, ought not to be claimable because there was no leave granted or even sought for the filing of further submissions. Furthermore the first defendant says the submissions did not add anything that could not have been advanced orally, that a large part of the updating submissions were simply a reply to the defendants’ submissions and that it would be contrary to the object of the costs regime if a party could unilaterally file material and then claim the cost of doing so.

[8]    The first defendant further submits that costs should be reduced by 50 per cent because the plaintiff filed four affidavits from Ms Robertson, a solicitor at the plaintiff’s solicitor’s firm, that the first defendant submits purported to give evidence improperly as to her subjective view as to what she expected to be discovered and inferences to be drawn. This led in the first defendants’ submission to the lengthening of the hearing.

[9]    The second defendant, Strata Title Administration Limited, submits that the only remaining issue between the plaintiff and Strata prior to the hearing on 24 May 2021 was the actual search terms to be used in the further review of the category 4 documents and the methods and strategies for searching. The second defendant submits that counsel asked the plaintiff to outline the searches it wanted Strata to run on 20 May 2021, prior to the hearing, but that the plaintiff did not put forward its requested search terms, rejected the second defendants’ suggested adjournment and stated that the plaintiff wished to proceed to have the matter heard.

[10]   The second defendant submits that the situation was no further advanced after the hearing than it was prehearing because the judgment directed the parties to agree on the search terms to be used for the category 4 documents and methods and strategies for locating the documents.

[11]   The second defendant says that its share of costs should therefore be reduced by its contribution to the cost of the hearing (by removing its half share of the cost of preparation of the bundle and the hearing appearance) amounting to a $3,476.50 reduction. Strata further submits that a further 50 per cent reduction should then be made to account for the plaintiff’s failure to co-operate and agree methods and strategies for locating documents at the outset. For these reasons, Strata submits that the costs award against it should be no more than $1,738.25.

Discussion

Updating submissions

[12]   I agree with the first defendant’s submission that in the circumstances of this case the plaintiff ought not to be able to claim for the updating submissions filed, so claiming for Item 24 of Schedule 3 of the High Court Rules twice.

[13]   Although the first hearing was delayed as a result of the unavailability of counsel for the second defendant, leave was not sought to file updating submissions and part of the reason for the failure to agree matters between the parties was the failure by all parties, including the plaintiff, to comply with clause 3 of Part 1 of Schedule 9 when agreeing on the tailored discovery categories.

[14]   The plaintiff submits that as all parties failed to comply it would be unfair if the defendants benefitted at Everest’s expense and that given the defendants’ failure to engage on the issue after the order was made it is unlikely that engagement would have been any greater before discovery.

[15]   In determining costs, the question is whether any conduct by the parties would have removed the need for any of the steps as itemised in Schedule 3. Even if the parties had complied with the rules, it appears that a hearing would have been necessary and so I allow the plaintiff’s claim for the steps leading up to the hearing and the hearing itself: items 22, 24, 25 and 26. In my view however the failures to comply with Schedule 9 and clearly confirm its position in correspondence with the other parties during discussion does not support a claim to an increase above the usual award for a defended interlocutory.

[16]   The costs amount claimed is therefore reduced by $3,585 to $7,648 plus disbursements of $500.

Ms Robertson’s affidavits

[17]   I do not accept that Ms Robertson’s four affidavits lengthened the hearing unnecessarily as the first defendant submits. The affidavits attached correspondence or documents included in discovery, with any commentary that was included largely appearing to be a summary of the position as evidenced by the correspondence attached. I do not consider that the costs award ought to be reduced as a result of these affidavits.

Need for hearing

[18]   Finally, in response to the second defendant’s submission that costs should be reduced because the plaintiff did not agree to an adjournment when the hearing was no longer necessary, the three issues addressed in my judgment were:

(a)Have the defendants provided sufficient particulars of the searches undertaken?

(b)What is the scope of discovery required by category 4 in the tailored discovery categories?

(c)Are the defendants required to obtain documents held by former committee members or former employees?

[19]   By the time of the second hearing neither defendant had provided particulars of the searches conducted in their discovery affidavits and were continuing to resist doing so. Both defendants submitted at the hearing that they were not required to set out the key words used when searching the relevant databases for documents. I held in answer to the first issue that where there is a pool of documents in respect of which parties have conducted searches for documents, the parties were required to set out in the affidavits of documents what the key words used for the searches are.3

3 At [66].

[20]   Regarding the second issue, I found that Strata appeared to have been applying a relevance test once a document was located that fell within category 4 and that this was contrary to its discovery obligations.4 Furthermore the second defendant resisted the orders sought in relation to category 4 on the basis of proportionality, yet did not file evidence of the number of documents that would be captured by category 4 or by any combination of search terms except as a rough estimate.5

[21]   I further found that the tailored discovery categories had been agreed so proportionality was strictly no longer a factor. In an effort to ensure that the orders made were practical and reasonable, however, I directed the parties to endeavour to agree on the methods and strategies appropriate to capture the relevant documents.6

[22]   On the third issue, I found that documents held by former committee members of the first defendant and former employees of the second defendant were discoverable, again a finding that had been resisted by the defendants.7

[23]   From the above, it is clear that there was a need for the hearing. Furthermore the reason for not making a direction as to the key words that were required to be used or the methodology was because the second defendant had not provided anything other than rough evidence of the likely numbers of documents that would be collected using key words.

[24]   There is no basis therefore for reducing the costs award because the plaintiff did not agree to adjourn the hearing.

4 At [71].

5 At [80].

6 At [81].

7      At [86]–[87].

Result

[25]   For the reasons set out above, I award costs to the plaintiff, Everest Serviced Apartments Limited, of $7,648.00 plus disbursements of $500.00 for a total of

$8,148.00. This amount is to be paid by the first and second defendants in equal shares of $4,074.00 each.

Associate Judge Sussock