Ford v Blundell

[2023] NZHC 741

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2021-404-001125

[2023] NZHC 741

IN THE MATTER OF

an originating application for relief under s 339 of the Property Law Act 2007

BETWEEN

SONYA LOUISE FORD

Applicant

AND

GRAHAM GEORGE BLUNDELL and NGAIRE ANN BLUNDELL

First Respondents

ROXY TRUST LIMITED
Second Respondent

KATHRYN ANNE FORD
Third Respondent

KYUNG HO YU and SUNGNYEON KIM

Fourth Respondents

Hearing:

[On the Papers]

Appearances:

S E Wroe and A R Nicholls for Applicant

J T Burley and M C Staines for First, Second and Fourth Respondents

Judgment:

4 April 2023

JUDGMENT OF EDWARDS J

This judgment was delivered by me on 4 April 2023 at 4.00 pm pursuant to r 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Counsel/Solicitors:

S W Wroe, Auckland Nicholls Law Ltd, Auckland McVeagh Fleming, Auckland

FORD v BLUNDELL [2023] NZHC 741 [4 April 2023]

[1]                 In my judgment dated 12 December 2022, I granted the applicant’s application for sale of the parties’ cross-lease property.1 The application was supported by the third respondent. The second respondent did not participate at trial.

[2]The parties have been unable to agree costs. The applicant seeks scale costs of

$31,667.50 with a 50 per cent uplift. The applicant also seeks disbursements in the sum of $53,372.97 which includes expert fees.

[3]                 The first and fourth respondents (jointly referred to as respondents) challenge the calculation of scale costs and oppose the award of increased costs. They also oppose an award for disbursements in the quantum claimed.

Scale costs

[4]The applicant has calculated scale costs as totalling $31,667.50.

[5]                 The respondents challenge four of the steps in this calculation. I have read the relevant submissions. It is unnecessary to go into the competing arguments in any detail. My findings on each of the contested steps are as follows.

[6]                 First, I allow the costs claimed for filing the interlocutory application for invasive testing and filing further evidence. While the invasive testing aspect of the application was ultimately resolved, it was done so in the same manner proposed by the applicant prior to filing that application. Furthermore, the application was largely successful in relation to the further evidence to be filed.

[7]                 Second, the filing of a memorandum in support of the application to commence an originating application is allowed. Leave was granted to bring the proceeding by way of originating application and so costs should follow the event. The reservations expressed in the judgment about the appropriateness of the originating application procedure in this case do not detract from that fact.

1      Ford v Blundell [2022] NZHC 3340.

[8]                 Third, I accept that a memorandum for the mention of the applicant’s interlocutory application was filed, and the costs claimed in respect of this memorandum are justified.

[9]                 Fourth, the allowance for hearing time in relation to the interlocutory application is allowed in full. The application was argued as part of the trial. There is no double up in terms of the hearing time for this application, and the hearing time at trial. The time spent on Sonya Ford’s affidavit, parts of which were ruled admissible, does not justify a reduction in scale costs for this step.

[10]             Fifth and finally, I allow the claim for preparation of hearing by way of analogy with step 32, preparation for an affidavit hearing. While the application was brought by way of originating application, the trial proceeded as if it was a full hearing. An allowance for the time spent preparing for the hearing, and examining and cross- examining witnesses, is appropriate.

[11]It follows that the applicant’s calculation of scale costs is allowed.

Increased costs

[12]             The applicant seeks a 50 per cent uplift on scale costs. It proposes that this is shared 25 per cent between the first and fourth respondents jointly and severally, with the remaining 25 per cent awarded against the first respondents only.

[13]The applicant seeks an uplift for three reasons:

(a)First, for failing to accept expert evidence that the units would need to be repaired and sold together to maximise return.

(b)Second, for failing to accept settlement proposals set out in letters dated 25 June 2021 and 22 August 2022.

(c)Third, the first respondents’ conduct in changing their position at trial.

[14]             As for the first ground, I accept that there was a degree of commonality between the experts engaged for the parties which diminished the force of the opposition to the application.

[15]             As for the second ground, I am not satisfied that any uplift is warranted for the letter sent on 25 June 2021. It did not contain an offer capable of acceptance. In addition, the fourth respondents were not parties to the claim at that time and were not represented by counsel.

[16]             However, the first and fourth respondents were parties to the proceeding when the letter dated 22 August 2022 was sent. This letter proposed a collective sale. It was made after the expert evidence was served. The offer was rejected in a letter dated  30 August 2022.

[17]             The pursuit of the opposition to the application in the face of the expert evidence lacked commercial realism, and I consider the rejection of the offer was unreasonable. A 20 per cent uplift on all steps taken after 31 August 2022 is warranted for the failure to accept the settlement proposal in this letter.

[18]             As for the third ground, it is curious that the first respondents did not disclose their desire to sell and move from their unit, nor the steps taken to list the unit for sale, in their affidavits. It is not clear to me whether this was known to the first respondents’ solicitors, or whether it also caught them by surprise.

[19]             The first respondents’ steps to sell their unit (albeit not on a collective basis) were highly relevant to the question of relative hardships, on which the application essentially turned. If the applicant had known of the true position, it is possible that the consensus reached during the hearing would have been reached much earlier. This may have reduced the costs of the trial.

[20]             Against that, however, is the fact that the costs of the trial still had to be incurred due to the fourth respondents’ continued opposition. Accordingly, any additional cost caused by the first respondents’ conduct was marginal. There is also a degree of overlap between the failure to accept the expert evidence, the rejection of

the settlement offer on 22 August 2022, and the change in position of the first respondents. Looking at these factors cumulatively, I do not consider a separate uplift against the first respondents is justified.

[21]             For completeness, I reject counsel for the respondents’ submission that it was the applicant’s own actions or inactions that contributed unnecessarily to the cost of the proceeding.

Disbursements

[22]The applicant claims disbursements of $53,372.97 divided as follows:

(a)Expert fees: $47,446.50;

(b)Court fees: $3,990; and

(c)Other disbursements: $1,936.47.

[23]             The opposition is primarily to the experts’ fees incurred, which the respondents say were unreasonable in all the circumstances. That was because of the number of experts instructed, and the date of their engagement.

[24]             I make the following findings in relation to each expert witness, and expert fees:

(a)Maynard Marks. These fees, including those relating to the preparation of the weathertightness report, were reasonably necessary for the proceeding. The condition of the property was a key feature of the proceeding and was a driver of the application. I referred to aspects of the weathertightness report in my judgment (at [42]). These are allowed.

(b)Mr Bates. The valuation reports  produced  in  August  and  November 2019 formed the basis of Mr Bates’ affidavit filed for the proceeding. These reports were also considered and referred to in my

judgment (at [46]–[49]). The expert fees were reasonably incurred and are allowed as a disbursement.

(c)Mr Moodie. Mr Moodie’s reports and expert fees were reasonably necessary for the proceeding and reasonable in amount. These are allowed.

(d)Prendos/Mr O’Sullivan. Mr O’Sullivan’s report was referred to by  Mr Moodie, but Mr O’Sullivan was not called to give evidence at trial. It is not clear to me that this report was reasonably necessary given the other experts involved. I decline to allow the expert fees for this witness.

(e)Fraser Thomas – engineer. Mr Thomas was not called to give evidence and his report was not relied on in the proceeding. His expert fees are disallowed.

(f)Precision Construction. I accept that the invasive investigation of the property was reasonably necessary for the conduct of the proceeding. These expert fees are allowed.

(g)We Subdivide (Keith Aldous). Mr Aldous prepared an affidavit and gave evidence at trial. Some of his fees relate to a report he prepared in July 2016 which was annexed to his affidavit. While I accept that his evidence was reasonably necessary for the proceeding, a discount is appropriate to reflect the age and purpose of the original report. I allow 20 per cent of these expert fees.

[25]             The other disbursements (court fees, process servers, printing costs) are reasonably incurred, as is the filing fee for the interlocutory application for invasive testing and filing further evidence.

[26]I allow for the GST component on each of the invoices.

Result

[27]             The applicant is awarded costs and disbursements against the first and fourth respondents as follows:

(a)Scale costs in the sum $31,667.50; plus

(b)A 20 per cent uplift on scale costs on steps taken after 31 August 2022.

(c)Disbursements in the sum of $44,092.57 comprising the following:

(i)Maynard Marks’ fees: $23,215.25.

(ii)Bates Valuations’ fees: $7,644.

(iii)Paul Moodie fees: $5,481.59.

(iv)Precision Construction fees: $1,572.26.

(v)We Subdivide (Keith Aldous) fees: $253.

(vi)Court fees: $3,990.

(vii)Other disbursements: $1,936.47.

Edwards J