Hellaby Resource Services Limited v Body Corporate 197281

[2021] NZHC 2382

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2019-404-000869

[2021] NZHC 2382

BETWEEN

HELLABY RESOURCE SERVICES LIMITED
First Plaintiff / Fourth Counterclaim Defendant

SRG GLOBAL REMEDIATION SERVICES (NZ) LIMITED
Second Plaintiff / First Counterclaim Defendant

AND

BODY CORPORATE 197281

Defendant / Counterclaim Plaintiff

MAYNARD MARKS LIMITED
Second Counterclaim Defendant

HOBANZ PROJECT ASSIST LIMITED

Third Counterclaim Defendant

On the papers:

13 September 2021

Appearances:

R J Hollyman QC and N G Lawrence for the Counterclaim Plaintiff

P Hunt and T W Clark for the Second Counterclaim Defendant C Laband and R Tosh for the Third Counterclaim Defendant

Judgment:

13 September 2021

COSTS JUDGMENT OF ASSOCIATE JUDGE GARDINER

This judgment was delivered by me on 13 September 2021 at 11.30 a.m. pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar Date.......................................

HELLABY RESOURCE SERVICES LTD v BODY CORPORATE 197281 [2021] NZHC 2382

[13 September 2021]

[1]    In a decision delivered on 8 June 2021 I dismissed strike-out applications by HOBANZ Project Assist Ltd (HPAL) and Maynard Marks.1 I ordered that HPAL and Maynard Marks pay the Body Corporate’s costs, with the parties to file memoranda if costs could not be agreed.2 The parties have not been able to agree costs.

[2]    The parties agree on the quantum of 2B scale costs and disbursements. However, the Body Corporate requests an order that Maynard Marks and HPAL pay increased costs. Maynard Marks and HPAL oppose that.

[3]    The Body Corporate advances two reasons why it should be awarded increased costs:

(a)an offer from the Body Corporate which would have avoided the necessity for my judgment; and

(b)Maynard Marks and HPAL’s conduct in pursuing applications which had very little practical utility.

[4]    The Court’s jurisdiction to award increased costs is derived from r 14.6(3) of the High Court Rules 2016:

The court may order a party to pay increased costs if—

…

(b)the party opposing costs has contributed unnecessarily to the time or expense of the proceeding or step in it by—

…

(ii)taking or pursing an unnecessary step or an argument that   lacks merit; or

…

(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; …

1      Hellaby Resource Services Ltd v Body Corporate 197281 [2021] NZHC 1329.

2 At [33].

[5]    The prerequisite for an order for increased costs is unreasonable conduct on the part of the party paying costs, where that unreasonable conduct has impacted upon the cost of the proceeding in practical terms, necessitating extra work (and, therefore, presumed expense).3

[6]Therefore, the issues I need to decide are:

(a)Did HPAL and Maynard Marks’ applications to strike out lack merit, contributing unnecessarily to the time and expense?

(b)Did HPAL and Maynard Marks fail, without reasonable justification, to accept an offer of settlement?

Did the applications lack merit?

[7]    The argument advanced by the Body Corporate is that the applications had very little practical utility. I have considerable sympathy with that submission. Even if I had not earlier ordered summary judgment for TBS against the Body Corporate4 (rendering the applications to strike out moot), the best outcome for HPAL and Maynard Marks would have been orders for strike-out, requiring the Body Corporate to issue separate proceedings to pursue its claims. HPAL and Maynard Marks acknowledged that in their submissions. As I signalled in my judgment, two separate proceedings against different actors in the same construction project, involving some overlapping issues, is an unattractive prospect and inconsistent with r 1.2. Moreover, the Body Corporate had indicated that if required to file separate proceedings against HPAL and Maynard Marks, it would likely join TBS/Hellaby or seek consolidation of the counterclaim/claims.

[8]    Further, I was unpersuaded that severing the Body Corporate’s claims against HPAL and Maynard Marks from TBS’s comparatively simple debt recovery claim against the Body Corporate (had that not been decided) would have materially simplified the proceedings from the perspective of HPAL and Maynard Marks.

3      Bradbury v Westpac Banking Corp [2009] NZCA 234, [2009] 3 NZLR 400 at [27].

4      Hellaby Resource Services Ltd v Body Corporate 197281 [2021] NZHC 554.

[9]    However, an application serving no practical utility is not necessarily an application without merit. HPAL and Maynard Marks did have grounds for bringing the applications on a technical application of r 5.57(6)(c). Had I been required to decide the strike-out applications, I would have taken a more practical approach, consistent with the overall purpose of the rules and the approach described by Cooke J in Koanga Institute Inc v Kotare Community Land Trust Board.5 But, the approach taken by HPAL  and Maynard Marks was consistent with a strict application of         r 5.57(6)(c). For that reason, I am unable to conclude that the applications were so without merit that an order for increased costs is justified.

[10]   The Body Corporate also submits that HPAL’s failure to file its submissions on time, requiring an amendment to the timetable, justifies increased costs. This is not an unusual event and I do not accept that it increased the cost involved beyond prompting the Body Corporate to file a memorandum in response on 24 February 2021. I have added the cost associated with the memorandum (time allocation of 0.2) to the 2B scale costs payable to the Body Corporate.

Did HPAL and Maynard Marks fail to accept an offer without reasonable justification?

[11]   Was it unreasonable of HPAL and Maynard Marks not to withdraw their applications when the lack of practical utility was highlighted  to  them  by  the  Body Corporate on 25 February 2021? It is finely balanced, but I conclude no. Having concluded that it was open to HPAL and Maynard Marks to make the applications based on a technical application of the rules, the circumstances had not materially changed by 25 February 2021. That is, if the applications were not completely without merit when they were filed (because the rules permitted them) that remained the position on 25 February 2021. The points made by the Body Corporate about the different scenarios that might result were points that HPAL and Maynard Marks would already have considered. So, nothing had changed. Moreover, by this stage, Maynard Marks had, on 22 February 2021, filed their submissions. The hearing was just over  a week away. The Body Corporate’s offer was for HPAL and Maynard Marks to withdraw their applications, the concession being that it would not seek costs.   In all

5      Koanga Institute Inc v Kotare Community Land Trust Board [2021] NZHC 169 at [16].

the circumstances it wasn’t unreasonable for HPAL and Maynard Marks to reject that offer and persist with their applications.

Result

[12]I order:

(a)the Body Corporate’s application for increased costs is dismissed;

(b)the Body Corporate is awarded 2B scale costs of $9,201.50 together with disbursements of $270, with costs apportioned equally between Maynard Marks and HPAL, so that each severally pay the Body Corporate a total of $4,735.75.

Associate Judge Gardiner

Solicitors:

Farry & Co, Auckland Bell Gully, Auckland

R J Hollyman QC, Auckland