Exuberant Limited v Quinovic Property Management Limited

[2022] NZHC 1289

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

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

CIV-2019-485-595

[2022] NZHC 1289

BETWEEN

EXUBERANT LIMITED

First Plaintiff

AKSHAYA KHERA
Second Plaintiff

AND

QUINOVIC PROPERTY MANAGEMENT LIMITED

First Defendant

TE ARO PROPERTY MANAGEMENT LIMITED
Second Defendant

ROSS SCOTT DAVEY and LANA DOREEN DAVEY

Third Defendants

Hearing:	On the papers
Appearances:	P Dalkie and D Watson for Plaintiffs T Gee and E Cox for Defendants
Judgment:	2 June 2022

JUDGMENT OF ASSOCIATE JUDGE JOHNSTON

[Costs]

[1]    By memoranda dated 19 and 27 April 2022, counsel for the defendants, Mr Gee and Mr Cox, and counsel for the plaintiffs, Mr Dalkie and Ms Watson, have made costs submissions in relation to the final stages of this litigation.

[2]    The background was fully set out in my judgment of 20 December 2021 (reissued 12 April 2022). I do not propose to repeat it. It is sufficient to say that the

EXUBERANT LIMITED v QUINOVIC PROPERTY MANAGEMENT LIMITED [2022] NZHC 1289 [2 June 2022]

plaintiffs commenced a proceeding against the defendants alleging breach of contract and, after a lengthy period of hard-fought interlocutories, the defendants made an application for an order striking out the proceeding which was ultimately unopposed. Cooke J issued a judgment striking out the claim on 11 August 2021.

[3]    The issue that then arose concerned costs. Under the contractual arrangements between the parties, the defendants were entitled to recover indemnity costs incurred in enforcing their rights under the contract. In the judgment noted above Cooke J ordered that the plaintiffs pay the defendants’ an interim payment of actual and reasonable costs. The defendants sought costs of $609,790.69 (exclusive of GST) and disbursements (inclusive of GST) of $215,071.64. The plaintiffs opposed that claim, essentially on the basis that the costs being sought were not reasonable. The dispute as to the reasonableness or otherwise of the costs went to a full day’s hearing. In my judgment of 20 December 2021 I reduced the defendant’s costs from $609,790.69 to

$347,768.31, but declined to reduce the disbursements. My judgment however only dealt with matters down to and not including the application to strike out the claim.

[4]    The defendants now seek costs in respect of the application to strike out and the interlocutory hearing dealing with costs for the earlier period. The plaintiffs also seek costs.

[5]    The argument advanced on the plaintiffs’ behalf by Mr Dalkie is essentially that as they did not oppose the defendants’ application for an order striking out the proceeding, and as they were partially successful in opposing the total amount of costs sought by the defendants as described earlier, they should be treated as the successful party and receive costs. I do not think that that can be right. Both pursuant to the contractual arrangements between the parties and in terms of Cooke J’s judgment dated 11 August 2021, the defendants are entitled to indemnity costs on an actual and reasonable basis in relation to the litigation. This was covered in detail in my judgment of 20 December 2021 and does not need to be reiterated here. The fact that I concluded that the defendants’ costs were not reasonable and reduced one component of these — even by a relatively significant proportion — does not alter the fact that the defendants are entitled to their actual and reasonable costs. In short, that point was already determined by Cooke J and it is not open to the plaintiffs to suggest that the Court departs from that.

[6]    For their part, the defendants to seek costs on the very basis I have described in addressing the plaintiffs’ application. On this occasion, what the plaintiffs seek is their solicitors’ costs on a 2B basis (essentially to circumvent any argument about their reasonableness or otherwise) together with disbursements, those including counsel’s fees and other disbursements. That is a sensible approach and I will award the defendants’ costs down to the date of this judgment on a 2B basis. That leaves only the question of the reasonableness or otherwise of the disbursements.

[7]    Mr Gee’s fees cover the period between September and November 2021 and include the unopposed application for an order striking the claim out and the subsequent dispute about the defendants’ costs which was dealt with in my judgment of 20 December 2021. As far as I can see from Mr Dalkie’s submissions he does not take issue with the quantum in Mr Gee’s fees. I have nevertheless reviewed these. They appear to me to be well within the range of reasonable fees for the work completed and I am prepared to award those.

[8]    The balance of the disbursements appears to relate to the costs of the expert witness called by the defendant. It is a little surprising to see that counsel’s fees covering the same period of time and are about $20,000 less than the expert’s costs. That said, there can be no doubt that the defendants incurred these costs, and having regard to the terms of Cooke J’s order, I have reached the view that it would be inappropriate to carry out a detailed analysis of the reasonableness or otherwise of them. The remaining disbursements are rats and mice.

[9]    In short, I am satisfied that the defendants are entitled to an award of costs and disbursements down to the conclusion of these proceedings in the amount sought by them.

Associate Judge Johnston

Solicitors:

Shine Lawyers, Auckland for Plaintiffs Gibson Sheat, Wellington for Defendants