Hitex Building Systems Limited v Wilkinson Building & Construction Limited

[2013] NZHC 1566

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2012-404-001123 [2013] NZHC 1566

IN THE MATTER OF	an appeal under Section 93 of the Weathertight Homes Resolution Services Act 2006
BETWEEN	HITEX BUILDING SYSTEMS LIMITED First Appellant
AND	IAN CONRAD HOLYOAKE Second Appellant
AND	WILKINSON BUILDING & CONSTRUCTION LIMITED First Respondent
AND	R A J WILKINSON Second Respondent
AND	AUCKLAND COUNCIL Third Respondent
AND	R J & S K ZAGORSKI Fourth Respondents
AND	T BURCHER Fifth Respondent
AND	R ANGEL Purported Third Party

Hearing:	27 and 28 May, and 5 June 2013 [On the Papers]
Counsel:	A J Thorn for the Appellants R J Macdonald and C D Boell for the First and Second Respondents S Robertson and E E Cowle for the Fourth Respondents
Judgment:	26 June 2013

HITEX BUILDING SYSTEMS LTD and ANOR v WILKINSON BUILDING & CONSTRUCTION LTD and

ORS [2013] NZHC 1566 [26 June 2013]

JUDGMENT OF DUFFY J [Re Costs]

This judgment was delivered by Justice Duffy on 26 June 2013 at 4.00 pm, pursuant to

r 11.5 of the High Court Rules

Registrar/Deputy Registrar

Date:

Solicitors:    Adina Thorn Limited, Auckland Short and Partners, Auckland Kensington Swan, Auckland

[1]      The appellants made an application to adduce fresh evidence on appeal.  The application was opposed by the respondents.   On 30 April 2013, I delivered a judgment   (Hitex   Building   Systems   Ltd   and   Anor   v   Wilkinson   Building   & Construction Ltd and Ors HC Auckland CIV-2012-404-001123, 30 April 2013, hereafter Hitex Building Systems Ltd) in which I stated that the appellants were only partially successful in their application and that this was a relevant consideration when it came to an award of costs.  Both the appellants and the respondents have now applied for an award of costs.

[2]      The appellants seek an award of costs on a 2B basis, which comes to $7,363 and disbursements of $725, making a total of $8,088.

[3]      The respondents oppose any award of costs to the appellants.   Instead, the first and second respondents collectively, and the fourth respondents each seek an award of costs against the appellants on a 2B basis. The first and second respondents seek costs of $6,069.50, and the fourth respondents seek $6,467.50.  The reason the fourth respondents seek a slightly higher award of costs is because the fourth respondents prepared a bundle of documents for the hearing.  They state that whilst the preparation of a bundle of documents is the appellants’ responsibility, here the appellants did not include all the required material, which necessitated the fourth respondents filing a supporting bundle.

[4]      The Supreme Court’s judgment in Manukau Golf Club Inc v Shoye Venture Ltd [2012] NZSC 109, [2013] 1 NZLR 305 is a reminder that the fundamental principle applying to the determination of costs is that costs follow the event. Where there is a departure from that general principle, it is important for the Court ordering the departure to give reasons for doing so.

[5]      In cases where the opposing parties have enjoyed an equal or almost equal measure of success, the outcome is usually an order that costs lie where they fall. This reflects an acceptance that the costs each side might otherwise be entitled to receive would cancel each other out.  Where the success each side has enjoyed is unevenly balanced, a more nuanced approach to awarding costs is required.  There

will need to be an enquiry into the substantive merits of the outcome for each opposing side.

[6]      In Hitex Building Systems Ltd, I found that the evidence in question fell into four categories. Those categories were:

(a) (b)	Evidence which the Tribunal had refused to admit before it; Evidence  that  was  available  at  the  time  of  the  relevant  Tribunal
hearings  (of  which  there  were  four)  but,  for  whatever  reason,  no attempt was made to adduce this evidence before the Tribunal;
(c)	Evidence that was not relevant to the issues that the Tribunal was to determine  and  which  became  available  either  at  the  time  of  the
hearings or later, and which is relevant to the determination of the appeal solely in regard to the appeal grounds alleging improper and
unfair procedural conduct by the Tribunal; and
(d)	Evidence that would already be before the appellate court, or which
can be classified as miscellaneous.
[7]	The	main plank of the appellants’ application to adduce fresh evidence was

premised on an attempt to place before the appellate court additional evidence to support the merits of the appellants’ case on appeal.  For the reasons stated in Hitex Building Systems Ltd, such an attempt is not permissible and will predictably fail.

Category A evidence

[8]      The appellants’ attempt to introduce the category A evidence as new evidence on appeal was doomed to failure.  Evidence which a tribunal or court at first instance has refused to admit will never be admitted as fresh evidence on appeal.  The only recourse an appellant has in this circumstance is to challenge the decision to exclude the evidence as part of the appeal.  Then the excluded evidence is placed before the appellant court for it to determine if the decision to exclude the evidence was right. When the evidence is seen in this guise, it is truly fresh evidence in the sense that it

was not before the Tribunal, and it is necessary for the appellate court to view it in order to reach an informed decision on whether the Tribunal was right to refuse to admit it.  However, that was not the main basis on which the appellants attempted to introduce the evidence in category A.  Had it been, the application would have been a conventional one and unlikely to be opposed.   It was the way in which they attempted to use this evidence on appeal that led to the opposition from the respondents.

[9]      The respondents’ opposition was successful.  Their success was predictable. I consider that as regards the category A evidence, the limited success the appellants ultimately enjoyed through its introduction for the limited purpose that I allowed cannot undo the failed consequences of what they had set out to achieve. Consequently, I consider that in relation to the category A evidence, not only are the appellants not entitled to an award of costs, but the success the respondents enjoyed in opposing this aspect of the appellants’ application should be reflected in an award of costs to the respondents.

Category B evidence

[10]     The category B evidence is as follows:

(a)      A  copy  of  a  PowerPoint  presentation  compiled  by  the  second appellant showing a visual summary of where the building defects were (annexure B to the second appellant’s first affidavit); and

(b)A copy of a report of Scion Research on the Efficacy of Brush-on Remedial Treatments on Radiata Pine Framing dated September 2012 and a copy of a similar report by Scion to the Department of Building and Housing dated June 2012 (attached as annexures I and J respectively to the second appellant’s first affidavit).

[11]     I found that the PowerPoint presentation could not be used in the appeal as evidence to challenge the correctness of the Tribunal’s findings.  On the other hand, I considered that the PowerPoint presentation could be relevant fresh evidence in

relation to proof of the grounds of appeal based on procedural impropriety.  The appellants make a number of complaints about the procedure the Tribunal adopted in relation to the Tribunal’s decision not to allow them to introduce the PowerPoint presentation in evidence. At [16] of Hitex Building Systems Ltd, I found that:

… in order to develop the argument that the Tribunal has contributed to a procedural irregularity, which resulted in the appellants being deprived of the opportunity to put evidence in annexure B [the PowerPoint presentation] to the expert witnesses, the appellants wanted to have the subject evidence before the appellate court.

At [16] I also found that:

… in order for the appellate court to determine if there was a procedural irregularity and, if so, whether it had a material effect on the outcome of the appeal, the court will need to assess the evidence, including its quality and whether it would have been admissible or not.

This last statement was a reference to real concerns I had earlier identified at [6] of the judgment about the admissibility of the PowerPoint presentation.   It contained evidence that was objectionable in terms of the requirements of the Evidence Act

2006.

[12]     I found that for the limited purpose of determining the procedural irregularity ground of appeal, the PowerPoint presentation could be admitted as evidence for the appeal.    This  outcome  was  materially  different  from  the  basis  on  which  the appellants had sought to have this evidence introduced as fresh evidence on appeal.

[13]     I refused  leave to adduce as evidence on  appeal the  other two  items  of evidence within category B.  Looked at overall, the appellants were substantially unsuccessful in their application to adduce the category B evidence.  The limited purpose for which the category B evidence was allowed may not have been opposed by the respondents.  Their opposition was based on the overall stance taken by the appellants.   I am satisfied that when it comes to the category B evidence, the application by the appellants should be treated substantially as a failure and they should not be entitled to costs.  I consider that the respondents have enjoyed a measure of success in their opposition to the introduction of this evidence.   This would warrant an award of costs to the respondents.

[14]     The category C evidence is identified at [20] of Hitex Building Systems Ltd as follows:

(a)       A  copy  of  email  correspondence  with  the  Tribunal’s  Registry

(annexure C to the second appellant’s first affidavit);

(b)Copy of an audio-recording of a discussion with one of the Tribunal members with the second appellant (annexure D to the second appellant’s first affidavit);

(c)       A copy of email wrongly sent by the Tribunal’s Registry to the second

appellant (annexure E to the second appellant’s first affidavit); and

(d)Copies of a selection of photographs from 375 photographs taken by the assessor of this claim (annexure L to the second appellant’s first affidavit).

[15]     At  [26]  I found that  all  the evidence in  category C  was  relevant  to  the grounds of the appellants’ appeal that relate to whether the Tribunal conducted itself in accordance with procedural propriety.  I found that the evidence in this category could be adduced.  Here the appellants were successful.

[16]     Regarding the category D evidence, leave was refused to admit any of the evidence falling within this category.  Here the appellants were unsuccessful, and the respondents were successful in their opposition.

[17]    The appellants also sought to introduce affidavit evidence from the second appellant.  I allowed some of the narrative paragraphs in the second appellant’s affidavit to be admitted. The appellants enjoyed a limited measure of success here.

[18]     Looked  at  overall,  the  measure  of  success  enjoyed  by  the  respondents outweighs the limited success enjoyed by the appellants.   Furthermore, if the appellants had confined the application to the limited grounds on which they ultimately succeeded, there may have been no opposition and the application could have been dealt with by consent on the papers.  The principles for the admission of

new evidence on appeal are well settled and straightforward in their application.  The way in which the appellants approached their application was wrong and led to unnecessary cost and a waste of the parties’ time and resources.    In such circumstances, I am satisfied that the appellants are not entitled to any costs.

[19]     Because the measure of success the respondents enjoyed outweighs that of the appellants by a considerable margin, I consider that the respondents are entitled to an award of costs.

[20]     I do not, however, consider that the category 2B costs they seek properly reflect the measure of success they enjoyed.  Whilst an application of this type would ordinarily qualify for category 2B costs, I consider that some discount needs to be made to reflect the limited nature of the respondents’ success.   I consider that this can be achieved by awarding them costs, at the steps each group of respondents seeks, on a category 1A basis.   Each group of respondents is also entitled to reasonable disbursements.

[21]     Leave is reserved to the parties to return to Court on any question regarding the calculation of the costs award, should there be any dispute about that.

Result

[22]     The appellants’ costs application is declined.

[23]     The first and second respondents collectively are awarded costs at category

1A for the steps set out in their costs application and reasonable disbursements.

[24]     The fourth respondents are awarded costs at category 1A for the steps set out in their costs application and reasonable disbursements.

[25]     Leave is reserved to the parties to return to Court on the issue of calculation of the costs awarded, should the need to do so arise.

Duffy J