Focus Construction Interiors Limited v Spaceworks Design Group Limited - [2019] NZHC 3296

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2016-404-2609

[2019] NZHC 3296

BETWEEN FOCUS CONSTRUCTION INTERIORS LIMITED
Plaintiff

AND

SPACEWORKS DESIGN GROUP LIMITED

First Defendant

ELIZABETH MARY CHARLOTTE HINES (nee WHALEY)

Second Defendant

Hearing: On the papers

Counsel

L Ponniah for the Plaintiff M Harris for the Defendants

Judgment:

13 December 2019

JUDGMENT OF GAULT J

(Costs)

This judgment was delivered by me on 13 December 2019 at 11:00 a.m. pursuant to r 11.5 of the High Court Rules 2016.
Registrar/Deputy Registrar

……………………………………

Solicitors:
Mr L Ponniah, Corban Revell, Henderson, Auckland Mr M Harris, Gilbert Walker, Auckland

FOCUS CONSTRUCTION INTERIORS LTD v SPACEWORKS DESIGN GROUP LTD [2019] NZHC 3296
[13 December 2019]

[1] Following my judgment of 5 September 2019 dismissing Focus’ claim,1 the defendants claim costs and disbursements. In my judgment I directed the filing of memoranda, if costs could not be agreed, and indicated I would deal with costs on the papers.

[2] The defendants submit that the case justifies a band C allowance for preparation of briefs and trial preparation and also seek increased costs of 50 per cent above scale.

[3]Focus submits scale costs on a 2B basis are appropriate.

Band B or C

[4] I agree that band 2B is appropriate for the proceeding generally, but I accept Mr Harris’ submission that band C is appropriate in respect of preparation of briefs and trial preparation. Given the way Focus proceeded with its case and its actual legal and expert costs pre-trial, I consider that a comparatively large amount of time for preparation of briefs and trial preparation was required and therefore band C is appropriate for those steps. This increases scale costs from $55,304 to $65,339.

Increased costs

[5] The defendants seek increased costs of 50 per cent above scale, relying on the following limbs of r 14.6(3):2

(b)(iii) failing, without reasonable justification, to admit facts, evidence, documents, or accept a legal argument; or

…

(b)(v) failing, without reasonable justification, to accept an offer of settlement whether in the form of an offer under rule 14.10 or some other offer to settle or dispose of the proceeding; or

…

(d) some other reason exists which justifies the court making an order for increased costs despite the principle that the determination of costs should be predictable and expeditious.

1 Focus Construction Interiors Ltd v Spaceworks Design Group Ltd [2019] NZHC 2211.
2 High Court Rules 2016.

[6] The essence of the defendants’ position in relation to increased costs is that Focus failed to accept the defendants’ reasonable settlement offers.

[7] The context is a claim for breach of a ‘reasonable endeavours’ clause in a settlement agreement, initially seeking over $650,000, which was reduced to approximately $536,000 by trial. In my judgment, I did not accept Focus’ interpretation of the clause, and Focus failed to establish breach. I concluded that even if Focus had established a breach, I would have calculated its loss as $172,573.20. So…

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.

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Details

Case: [2019] NZHC 3296
Decision Date: 13 December 2019

CaseChat Overview and Summary

In the High Court of New Zealand, Auckland Registry, Focus Construction Interiors Limited sued Spaceworks Design Group Limited and Elizabeth Mary Charlotte Hines (nee Whaley). The plaintiff sought damages for breach of a settlement agreement, which had been signed after a previous dispute between the parties. The defendants opposed the claim and counterclaimed for costs. The court was required to determine the appropriate costs for the proceeding. The court needed to decide whether band 2B or band C costs were appropriate for the proceeding, and whether there were grounds for increasing the costs above the scale.

The court found that band 2B was appropriate for the proceeding generally, but band C was appropriate for preparation of briefs and trial preparation. The court considered that a comparatively large amount of time was required for those steps due to the plaintiff's approach to the case and its pre-trial legal and expert costs. The court also found that the plaintiff unreasonably failed to accept the defendants' settlement offer made in April 2019, and that this warranted increased costs. The court considered that the claim was overstated and misconceived, and that the plaintiff had unreasonable settlement expectations. The court decided that the appropriate uplift was 50 per cent for the cost items after the April 2019 offer, which totalled $40,140. This resulted in total costs of $85,409. The defendants were also entitled to disbursements of $14,358, which were not disputed.

Orders