Firma Construction Limited v Ace Structural Limited - [2019] NZCA 631

IN THE COURT OF APPEAL OF NEW ZEALAND

I TE KŌTI PĪRA O AOTEAROA

CA354/2019
[2019] NZCA 631

BETWEEN	FIRMA CONSTRUCTION LIMITED Appellant
AND	ACE STRUCTURAL LIMITED First Respondent JOHN GREEN Second Respondent

Counsel:	K A Badcock for Appellant B L Martelli for First Respondent No appearance for Second Respondent
Judgment: (On the papers)	10 December 2019 at 11.30 am

JUDGMENT OF COOPER J ON COSTS

The appellant must pay costs of $3,600 to the first respondent on the abandonment of the appeal, together with any disbursements.

____________________________________________________________________

REASONS

The first respondent (Ace) seeks costs from the appellant (Firma) following the abandonment of the appeal. Regrettably, the parties have not been able to agree on the quantum of costs payable. Memoranda have been filed in which:
(a)counsel for Ace seeks indemnity costs of $5,479.75; and
(b)counsel for Firma opposes any claim amounting to more than $2,390.
The appeal was from a judgment of the High Court on an application for judicial review of the decision of an adjudicator in the Building Disputes Tribunal not to award costs to Ace as part of his determination of disputes under the Construction Contracts Act 2002 (the Act) between Ace and Firma.[1] The adjudicator had found that Firma was liable to pay Ace for unpaid progress claims and variations in the sum of $105,737.12 (GST inclusive) together with interest up to and including the date of his determination.[2] He held that the parties were to bear their own costs and expenses of the adjudication.[3] There had been no bad faith on the part of Firma, nor were its allegations and objections without substantial merit. The costs of the adjudicator were to be met in equal proportions, each party being liable to pay $35,127.[4]
[1]Ace Structural Ltd v Green [2019] NZHC 1558.
[2]At [11(b)].
[3]At [11(d)].
[4]At [11(e)].
Section 56(1)(a)–(b) of the Act provides as follows:
(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.
…
I note in addition that under s 56(2) of the Act, if the adjudicator “does not make a determination” under s 56(1), the parties to the adjudication must meet their own costs and expenses.
In its application for review Ace challenged the adjudicator’s determinations that there were no grounds to consider there had been bad faith on the part of Firma, and there were no circumstances to warrant a conclusion that Firma had made allegations or objections that were without substantial merit. Ace also challenged the determination that the parties should bear their own costs and expenses of the adjudication.
The High Court upheld Ace’s claim for orders quashing the adjudicator’s findings that…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Firma Construction Limited v Ace Structural Limited

Details

AGLC: Firma Construction Limited v Ace Structural Limited [2019] NZCA 631
Case: [2019] NZCA 631
Decision Date: 10 December 2019 at 11.30 am

CaseChat Overview and Summary

In Firma Construction Limited v Ace Structural Limited, the Court of Appeal of New Zealand addressed an appeal abandonment cost claim. Firma Construction Limited had appealed a High Court decision that reviewed an adjudicator’s decision under the Construction Contracts Act 2002. The adjudicator had found Firma liable for unpaid progress claims and variations, but had ruled that both parties should bear their own costs. Ace Structural Limited sought costs from Firma due to the abandonment of the appeal. The Court considered the arguments for indemnity costs and increased costs, and ultimately determined that Firma should pay costs of $3,600 to Ace on the abandonment of the appeal, together with any disbursements.

The legal issues that the Court was required to decide included whether the adjudicator was required to provide reasons for his determination on costs, and if the appeal was hopeless, warranting indemnity costs. The Court also considered whether the adjudicator’s failure to make any order concerning the payment of his own costs was relevant to the appeal. In addition, the Court examined whether Ace's claim for indemnity costs was valid, and if not, whether an award of increased costs was appropriate.

The Court of Appeal found that the adjudicator had made a determination under s 56 of the Act, and was required to give reasons for the costs decision. However, the Court rejected Ace’s claim to indemnity costs as it was rare to find that an appeal was hopeless where it has been withdrawn at an early stage. The Court determined that an award of increased costs was appropriate, and considered that an award of $2,800 for Ace’s costs memorandum and $800 for preparation of the memorandum seeking costs was appropriate. The total amount awarded was $3,600.

The final orders of the Court of Appeal were that Firma must pay costs of $3,600 to Ace on the abandonment of the appeal, together with any disbursements. The registrar was directed to pay that amount to Ace’s solicitors out of the funds held as security for costs.

Orders