Johnson v Barry Park Investments Limited
[2022] NZHC 3566
•20 December 2022
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2018-404-455
[2022] NZHC 3566
IN THE MATTER of an application under s 323 of the Property Law Act 2007 BETWEEN
XANTHE ANNA JOHNSON and MARK ANDREW GRAHAM
Plaintiffs
AND
BARRY PARK INVESTMENTS LIMITED
Defendant
Hearing: 29 November, 1 and 8 December 2022 Counsel:
K M Quinn and L A Sheppard for Plaintiffs G J Kohler KC and T Nelson for Defendant
Judgment:
20 December 2022
JUDGMENT OF MUIR J
This judgment was delivered by me on 20 December 2022 at 3.00 pm, pursuant to Rule 11.5 of the High Court Rules.
Registrar/Deputy Registrar Date: ………………………….
Solicitors: Heimsath Alexander, Auckland
Claymore Partners Limited, Auckland
JOHNSON v BARRY PARK INVESTMENTS LIMITED [2022] NZHC 3566 [20 December 2022]
Introduction
[1] By my judgment dated 27 March 2019, I declared an encroachment on the plaintiffs’ land to be a wrongly placed structure for the purposes of the Property Law Act 2007 and ordered the defendant (BPIL) to remove it.1 Approximately 1,300 days have lapsed since my substantive judgment, but the encroachment remains.
[2] The plaintiffs now apply pursuant to the Contempt of Court Act 2019 (the Act) for orders for contempt against BPIL on the grounds that it has not complied with my orders, as varied by the Court of Appeal.2 They seek a declaration accordingly, together with a fine in the amount of $100,000. They invite the Court to direct that a portion of the fine, as it considers appropriate, be paid to them. They also seek indemnity costs on their application.
[3] A further issue which I am required to address in this judgment is the incidence of costs on a contemporaneous application for “sundry other orders” which was settled during the course of the hearing.
Background
[4] The plaintiffs and BPIL are, respectively, the owners of 24 and 22 Tawari Street, Mount Eden, Auckland. Their underlying dispute relates to a basalt rock wall which supports BPIL’s land (as well as the house lived in by Mr Martin Burton who is the person with ultimate beneficial interest in BPIL) and which encroaches onto the plaintiffs’ land in a way which precludes, or at least limits, their redevelopment options. I do not intend to recite again the background referred to in my substantive judgment. Regrettably, however, I am going to have to deal at length with all that has subsequently followed as it necessarily informs both my assessment of whether BPIL has “without reasonable excuse, knowingly failed to comply” with this Court’s order,3 and my approach to costs.
1 Johnson v Barry Park Investments Ltd [2019] NZHC 597, (2019) 20 NZCPR 562 [High Court judgment] at [128].
2 Barry Park Investments Ltd v Johnson [2019] NZCA 686, (2019) 20 NZCPR 680 [Court of Appeal judgment] at [89]–[90].
3 Contempt of Court Act 2019, s 16(3)(b)(iii).
[5] In my substantive judgment I directed that BPIL remove the encroachment by 31 March 2020 and directed it to carry out further stabilisation works either in accordance generally with the methodology identified by the plaintiffs’ expert, Mr Guy Wood of Thorne Dwyer Structures Ltd (which provided for a replacement engineered wall within BPIL’s property) or as approved by a registered structural and geotechnical engineer and tabled with the Court by 20 July 2019.4 I also ordered that the costs of the removal and stabilisation works be borne by BPIL,5 and reserved to both parties an ability to apply for ancillary orders.6
[6] In making these orders, I had in mind that BPIL may develop an alternative methodology (briefly discussed in the trial) at considerably less cost than that proposed by Mr Wood and involving (essentially) a series of simple props under Mr Burton’s house and removal of the basalt encroachment which currently supports it on its western edge. I regarded that as a likely scenario because of the advanced deterioration of Mr Burton’s house, his age and the high redevelopment potential of BPIL’s site. Ultimately, BPIL did develop some alternative plans but not of the type I envisaged. It also elected to appeal my judgment.
[7] In its decision, dated 23 December 2019, the Court of Appeal upheld my finding that the basalt wall was a wrongly placed structure and all my remedial orders, with the exception that it held that the costs of removal and associated stabilisation works should be borne equally by the parties.7
[8] The Court of Appeal also extended the dates by which any alternate approved methodology could be submitted and by which the encroachment was to be removed to 20 March 2020 and 30 October 2020 respectively.8 In so doing, the Court was apparently unaware that an alternative methodology had already been submitted to the High Court. That alternative methodology was ultimately withdrawn and no further alternatives can now be advanced by BPIL, consistent with this Court’s or the Court
4 High Court judgment, above n 1, at [128](b).
5 At [128](e).
6 At [128](h).
7 Court of Appeal judgment, above n 2, at [90].
8 At [89].
of Appeal’s orders. In the result, the methodology which must be followed is that which is generally in accordance with that identified in Mr Wood’s expert evidence.
[9] The Court of Appeal also upheld my award of costs against BPIL in the amount of $133,716.70.9
[10] Following the Court of Appeal’s decision, memoranda (dated 27 March 2020 by BPIL and 22 April 2020 by the plaintiffs) were filed. Because of delays caused by the COVID-19 pandemic, these were not forwarded to me until 12 May 2020. My Minute of that day notes acceptance of the plaintiffs’ primary submission that the Court of Appeal’s orders meant greater involvement on their part in both the design and execution of the works was now justified:
[3] I accept Mr Quinn’s basic submission that the decision of the Court of Appeal requiring a 50 per cent contribution by his clients to the costs of remediation somewhat alters the previous dynamic to the extent the plaintiffs may, it seems to me, now legitimately seek more proactive involvement in the design and delivery of the remedial works.
[11] I subsequently scheduled a telephone conference for 15 May 2020. At that conference, proposed amendments to the substitute design tabled by BPIL on 18 July 2019 were foreshadowed. I noted that the plaintiffs did not necessarily oppose the new design but needed further information in terms of feasibility and indicative cost. I agreed to adjourn the conference until 8 June 2020 for the provision of further information. I noted that it was my “expectation that by that time the parties will have agreed the methodology to be adopted and a timetable for procurement and completion of the works”. I indicated that I considered myself at liberty to extend the completion date by consent if required but that, in the absence of consent, the matter may need to be readdressed by the Court of Appeal.
[12] On 8 June 2020, I was asked to adjourn the next telephone conference which I did until 2 July 2020. By consent, a further adjournment was sought until 23 July 2020.
9 At [91].
[13] By 23 July 2020, BPIL’s proposed alternative methodology had been abandoned. The plaintiffs, in turn, indicated that in their view, no substantive progress had been made in engaging experts and contractors settling the scope of works or agreeing a plan by which such scope could be put into effect and funded. They accordingly sought orders that the methodology adopted be that identified by Mr Wood, that an independent contract administrator be engaged and that CLL Service and Solutions Ltd be engaged as head contractor.
[14] In response, BPIL criticised the plaintiffs for failing to provide plans for the removal of various naturally occurring basalt outcrops and formations, which both my judgment and that of the Court of Appeal said were to be to the plaintiffs’ ultimate account.10
[15] My Minute in respect of the 23 July 2020 conference set out my assessment in reasonably direct terms:11
(a)Seven months have now elapsed since delivery of the Court of Appeal’s judgment.
(b)In terms of that judgment, the works are to be completed by 30 October 2020. Accordingly only a little over three months remains to do so.
(c)Absent agreement between the parties to an adjusted compliance date, application would need to be made to the Court of Appeal to amend or vary its judgment.
(d)In terms of my judgment, as modified by the Court of Appeal, it is the defendant’s obligation to remove the encroachment by the assigned dated. Failure to do so engages a range of potential outcomes, including the possibility of a contempt finding.
(e)Given that the defendant no longer pursues an alternative methodology (and is now time-barred from developing any further plans) removal of the encroachment is to be undertaken “in accordance generally with the methodology identified by the plaintiffs’ expert Mr G N Wood and appended to his brief of evidence dated 1 February 2019 as Schedule A[”].
(f)My orders, as modified by the Court of Appeal, do not provide for instalment contribution by the plaintiffs to the costs of removal of the encroachment, whatever the utility of such arrangements. In the result, unless the parties are able to reach a sensible commercial result,
10 High Court judgment, above n 1, at [128](f)(i) and Court of Appeal judgment, above n 2, at [88].
11 Footnote omitted.
the work will have to be undertaken by the defendant at its cost and with the defendant seeking subsequent recovery. Moreover, in the event there are disputes in terms of what is ultimately recoverable, they will need to be separately litigated.
(g)It appears wrong in principle for the defendant to be delaying commencement of the works pending plans from the plaintiffs for removal of the solid basalt outcrop at the southern-most portion of their driveway. The Court of Appeal’s judgment contemplates in para
[88] footnote 32 that it will be the contractors “clearing the encroachment” who remove the basalt outcrop in “the same scope of works”. It will ultimately be for the contractors, and in the event of dispute for a Court, to apportion the appropriate sum paid by the plaintiffs for this work.
[16] At the conclusion of my Minute, I indicated that I would resume the conference the following day at 9 am. I pointed out that the parties should consider themselves on notice that costs were currently at large in respect of the multiple post-judgment attendances which had been necessary.
[17] At the resumed conference, counsel for the plaintiffs advised that some progress had been made and that I could expect a consent memorandum later in the day. This was duly filed. It provided for appointment of a contract administrator; a commitment that the parties, under the direction of the contract administrator, would apply for all necessary local authority consents; and for a timetable which would result in an invitation to tender being issued on 14 August 2020 and selection of a contractor by 11 September 2020. The consent memorandum also stipulated that payment for the works would, at first instance, be by BPIL. The parties further noted that they had been unable to agree on the identity of the contract administrator and advanced two names (on a blind basis) for me to make the necessary selection.
[18] Later, on 24 July 2020, I made my selection, appointing Mr Martin Hill as the contractor administrator. It transpires that Mr Hill was BPIL’s nominee.
[19] Significantly, in one of my two Minutes, dated 24 July 2020, I recorded that “the Court would be happy to assist in respect of any ‘roadblocks’ which might occur between the parties”. That has remained my position throughout.
[20] At that point, my expectation was that the encroachment would be removed and a new retaining wall built within a matter of months. Regrettably, over two years later, that is still not the case. How conceivably could this have occurred?
[21] My narrative starts nearly two weeks after the conference when the solicitor then acting for BPIL, Mr Doug Cowan,12 unhelpfully, wrote to the contract administrator, Mr Hill, with the following opening comment about the plaintiffs:
I need to break this down for you as Xanthe (not her partner Mark) tends to mislead people. She is very sly/cunning but not as smart as she thinks she is.
[22] At the conclusion of the letter, Mr Cowan blamed the passage of time on Ms Xanthe Johnson’s “own stubbornness and refusal to cooperate”. He said that she was “itching for a legal fight”.
[23] Unsurprisingly, Mr Hill did not consider he could perform the functions of contract administrator in this environment. He resigned the same day. A new contract administrator therefore had to be appointed. The parties ultimately agreed on Mr Sam Jackman, who assumed the role in late September 2020.
[24] On 7 October 2020, BPIL filed a building permit application for the replacement wall. It did not seek the plaintiffs’ consent to the plans. Such consent was necessary because the footings for the proposed wall extended significantly into the plaintiffs’ property. The absence of consent was immediately identified by Council and the application went no further.
[25] The plaintiffs say that this unilateral consent application was in breach of the agreement made and endorsed by the Court on 24 July 2020, that the parties would “under the direction of the contract administrator … cooperate to apply for all consents”. They do not, however, allege a contempt in this respect. They simply
12 At trial the solicitors representing BPIL were Ellis Gould. Subsequently, Mr Cowan was engaged. His services were, in turn, terminated sometime in February 2021. Jackson Russell Lawyers were then engaged. Their services were, likewise, terminated sometime in early 2022 and Claymore Partners were engaged. At the point contempt proceedings were filed, active carriage of the proceedings had been assumed by solicitors Mr Patrick Castle and Mr Miles Brown, the principals of Castle/Brown, who are also the directors of BPIL. They continue to retain Claymore Partners as the BPIL’s solicitors.
highlight what occurred as an example of the frustrations with which they have had to contend.
[26] They, likewise, say that BPIL’s unilateral decision to terminate the services of Thorn Dwyer Structures Ltd and substitute Envivo Ltd (Envivo) as structural engineers for the project, and to replace geotechnical engineers, Riley Consultants Ltd, with Babbage Consultants Ltd,13 was a breach of the 24 July 2020 agreement.
[27] When the design was ultimately shared with the plaintiffs later in October 2020, they identified various concerns, including that it appeared, from their perspective, to be considerably in excess of what was required to support BPIL’s property. They suggested that there were “simple solutions” which would involve less of a burden on their land14 and that the proposed ground beams were “very undesirable in terms of our service connections with the public lines”.
[28] On 30 October 2020, the enlarged completion date specified by the Court of Appeal expired.
[29] By early 2021, no further progress had been made. Mr Jackman proposed a meeting on site to resolve the outstanding differences. The response from Mr Burton, through his intermediary, Mr Hadi Younan, was that “a meeting would not serve any useful purpose at this stage”. Despite that indication a meeting did occur on 16 February 2021. Mr Cowan attended on behalf of BPIL. In an email later that day to Mr Jackman and all interested parties, he said:
That was a productive session with the professionals to further meet to finalise the scope of works. Thanks.
[30] Two days later, Mr Jackman also wrote to the interested parties. He described the meeting in similar terms to Mr Cowan:
13 Both replacements appear to have occurred between 24 July 2020 and submission of the building consent application on 7 October 2020 and neither of which was discussed with the plaintiffs.
14 The footings for the wall will necessarily be on the plaintiffs’ land. My substantive judgment provided for easements in favour of the defendant accordingly: High Court judgment, above n 1, at [128](g).
Thanks to those of you who attended the meeting on Tuesday, as anticipated this was invaluable in getting a clear way forward on resolution of the technical queries.
[31] On or about 24 February 2021, however, Mr Cowan’s services were terminated by BPIL. In a letter of the same date, Mr Cowan advised:
I no longer have instructions. Please contact Martin [Burton] direct.
[32] By late May 2021, none of the progress envisaged at the February meeting had occurred. In response to a letter from Mr Burton, ostensibly raising new issues about thermal gain and turning circles, Mr Jackman wrote to Mr Younan saying:
Your response is very disappointing and I am beyond frustrated here with what appears to be the continued obstruction of the project and the delay in closing it out. I expect this will be met with consternation by No. 24 [the plaintiffs] and will leave it to them (or the legal representation) to respond accordingly.
[33] I interpolate here that, although my substantive judgment reserved comprehensive rights to the parties to approach the Court for ancillary orders, no application was made by BPIL either at this point or, indeed, any later time. Since it was ultimately its responsibility to remove the encroachment by the nominated date, any inability to do so should, in my view, have been the subject of timely application by it to the Court.
[34] Despite the ongoing frustrations, a building consent application in a form acceptable to both parties was ultimately filed in June 2021. The application resulted (initially) in two Council requests for information (RFIs), dated 6 and 7 July 2021. By 30 August 2021, Envivo’s Mr Mike Edwards had responded to the points raised. One of the points related to the construction of a barrier fence at the top of the wall. Exchanges occurred between Mr Jackman, Mr Edwards and the parties, resulting in the design of a timber barrier. This formed part of the RFI response on 30 August 2021.
[35] On 20 September 2021, Council raised a further RFI. In an email dated 22 September 2021 to the parties, Mr Edwards described the position as follows:
Council have come back earlier this week with a few more queries that we are working on a response to right now. Mainly minor things around specific
notes and references relating to geotechnical to be added to drawings. They have also asked for a couple of things to be checked and confirmed relating to the wall design.
We will have a response back to them by Friday latest [24 September 2021].
[36] The response necessitated some updated building consent drawings. On 11 November 2021, Mr Edwards wrote to Mr Younan saying:
Attached updated BC drawing set with front yard wall amended as per Martin’s direction.
Could you please pass this to him to check and approve (as he requested) before I forward to Mark & Xanthe to sign.
[37] The response from Mr Burton, dated 13 November 2021, a Saturday, was as follows:
These drawings are not adequately updated to return to Council, so do not forward to #24 [the plaintiffs] for signing until fence detail contradictions, as discussed at great length, are attended to. Please be mindful that the safety compliance of the fence is an integral part of the Council RFI.
[38] Mr Jackman replied the same day, saying: “Please elaborate as to what the ‘fence detail contradictions’ are.” He pointed out that on 1 November 2021, he had received confirmation from Mr Edwards that all outstanding issues had been resolved with Mr Burton and incorporated into the most recently revised building consent plans and, in the days that followed, Mr Jackman indicated that he was perplexed with why the fence issue was being raised again, given that it had been dealt with in response to the Council’s first two RFIs.
[39] It is from this point onwards that the plaintiffs say I can most readily conclude that BPIL was acting in contempt as Mr Burton was the only person who thought the latest iteration of the drawings were not sufficiently updated to return to Council.
[40] The extensive email chain then identifies disputes in relation to a proposed pilaster on the street corner of Number 22 and the location of a services box. On 16 December 2021, Mr Jackman proposed a Microsoft Teams or Zoom meeting to “go over the remaining matters”. Mr Burton responded by text: “Unfortunately there seem to be opposing views on the technical issues, so another talkfest is likely to be counterproductive.”
[41] By 20 December 2021, Mr Burton suggested to Mr Jackman that matters were at an “impasse” and that he found it “extraordinary that you appear, to me, to be ‘stonewalling’ still on this subject”.
[42] Mr Jackman responded the same day, noting that, as far as he was aware from discussions earlier in the day, BPIL’s solicitors (at that point, Jackson Russell) were awaiting instructions to confirm a meeting “which they agreed is the best way to close matters out”. He continued:
As a suggestion and to prevent ongoing time wasting and costs, being the fourth time this correspondence has been sent and given you’ve had months to do so, it would be appreciated if you could please take the time to review and digest this information before we go any further as it appears that you have not done so to date given your ongoing requests to contest design decisions from almost 12 months ago.
To be clear, CKL [Mr Jackman’s firm] is not stonewalling and implying blame on our part for the delays is unreasonable. …
In summary, this is all over to you to resolve and advise us of the outcome. You’ve had months to sort out the RFI with your consultant team including your concerns over the front yard, which appear unfounded given a design outcome was detailed in Envivo’s BC design of which you approved for issue back in June at the time of the BC submission. Until advised further, we reiterate that CKL are at an impasse and cannot do anything further, which is further compounded by your ongoing unwillingness to meet or even discuss via phone.
[43]The following day, Mr Jackman sent another email which noted:
In conclusion, to get to December 2021 without the works completed and in fact not even having a consent nor a final design for that matter is extremely disappointing considering that we have now spent the best part of 15 months (since our involvement) making very limited progress on a job that should have been completed by October 2020, now further stalled by your recent contesting of the design at a late stage. Until you are willing to engage meaningfully, CKL do not see how we can assist you to progress the project of which we are trying to do so as per the instructions of the court but are having ongoing difficulty doing so compounded by your refusal to discuss in person or to meet. We further note that none of the suggestions in our 29th September 2021 letter sent to BPI almost 12 weeks ago have been acted upon other than a limited attempt by Jackson Russell over the past week or so to facilitate things, of which they are clearly hamstrung without your instruction or direction.
We are at a loss as to how to progress things further, so perhaps once you are at a point where you wish to engage in a proper, professional manner and can confirm how the design, consent and RFT documentation/process will be finalised, please let us know and we can continue or involvement. Until then,
unfortunately we don’t have much to add nor do we see the point in responding further.
[44] It is clear from contemporaneous correspondence that Mr Burton had, at this point, lost confidence in Mr Jackman whom he considered unresponsive to his requirements. From Mr Jackman’s perspective (and that of the plaintiffs), it was a case of Mr Burton stonewalling and/or wishing to constantly revisit matters already resolved.
[45] The first few months of 2022 saw no further progress. Even though, by this point, more than 14 months had elapsed since the due date for completion of the wall. Again, BPIL did not see fit to return to the Court for directions.
[46] In April 2022, the plaintiffs decided to change tack, believing that while delivery of the project remained in the hands of Mr Burton, it would never be completed. They wrote to the directors of the company, Mr Patrick Castle and Mr Miles Brown, the principals of Castle/Brown. Both are senior property and commercial lawyers.
[47] Their letter of 13 April 2022 gave, pursuant to para [128](i) of my substantive judgment,15 14 days’ notice of the plaintiffs’ intention to apply to the Court for orders that BPIL be found in contempt of Court and requiring the directors to purge the contempt and pay a fine.
[48] In his affidavit in opposition to the contempt application, Mr Castle explains that up until this point, the directors considered it appropriate that matters be left in Mr Burton’s hands, as the party with the ultimate beneficial interest in BPIL.
[49] However, the letter clearly had the effect of concentrating the minds of the directors in terms of their ultimate responsibility for compliance with the Court’s directions and, on 4 May 2022, Claymore Partners responded on behalf of BPIL. They said that Jackson Russell were not willing to act in the event that litigation was in prospect and that they were now instructed. They rejected the proposition that the impasse was the responsibility of BPIL, stating that, in BPIL’s view:
15 High Court judgment, above n 1.
… there is more than a respectable basis on which to attribute responsibility for the delays to the plaintiffs, including the delays associated with the design changes they caused to be made to the area below the front garden.
They went on to say that their instructions were to respond “constructively”.
[50] What followed, however, was regarded by the plaintiffs as far from constructive. Although Claymore Partners conceded that Mr Jackman could stay in his position, this was expressed to be on the “condition” that the parties reverted to the plans prepared by Envivo in September 2020 (those which the BPIL had lodged with Council without seeking the plaintiffs’ consent). The plaintiffs’ response was predictable:
The conditions you seek to impose in paragraph 2 of your letter are a further example of Mr Burton’s ongoing tactic to avoid compliance with the Court Order by revisiting issues and complicating the process in a rather obvious way so as to tie the matter in knots. The suggested plans and some of the other requirements are not acceptable, and this will come as no surprise to Mr Burton …
We do not intend to go through this all again, point by point, as it just supplies Mr Burton with more string to tangle.
[51] The plaintiffs then proceeded to prepare their application which was styled: “Interlocutory application for contempt orders against the respondent and for sundry other orders to progress the matter.” The “sundry other orders” broadly sought Mr Jackman’s appointment as project manager with power to negotiate all relevant contracts and with an immunity from suit. The applications were filed on 27 July 2022 and the matter came before the Duty Judge on 1 August 2022, at which point timetabling directions were made and the matter set down for trial before me.
[52] Review of the documentary record indicates that in the following weeks, Mr Castle took the matter, in Mr Quinn’s words, “by the scruff of the neck”. On 6 September 2022, he wrote to Envivo, pointing out that the matter was to be heard in the High Court where BPIL would be required “to explain why the re positioning of the boundary wall has not been completed”. He emphasised the importance of urgently obtaining a building consent.
[53] On 7 September 2022, Mr Phuong of Envivo (who had by this time replaced Mr Edwards) responded saying that his team had been “working overtime … to revise the structural calculations, and structural drawings as requested by council’s engineer”. Later the same day, Mr Phuong wrote to the Council enclosing the various structural drawings and additional calculations necessary to meet the outstanding information request. Clearly, therefore, the outstanding issues were capable of reasonably prompt resolution with appropriate instruction and the commitment of necessary resource.
[54] The revised plans were not, at this stage, given to the plaintiffs. Indeed, that did not occur until approximately one month later. They took issue with the plans, particularly in respect of wall and footing strengthening in relation to the nine metre section of the wall south of Mr Burton’s house. Again, they suggested the new specification was over-engineered.
[55] When the matter came on for hearing before me, I elected, first, to focus on the ancillary order applications. I did so cognisant of the fact it was approaching four years since delivery of my substantive judgment, with no practical progress towards removal of the encroachment. I requested (but did not direct) Mr Castle to attend Court. He agreed to make himself available to answer any questions of counsel for the plaintiffs or by me. In so doing, he provided the plaintiffs with sufficient confidence in delivery of the project for them to contemplate consent orders. These were ultimately made by me after approximately one and a half days of (effectively) facilitated negotiation. Concessions were made on both sides, with Mr Jackman replaced as the contract administrator, Babbage Consultants confirmed as the geotechnical engineers and the plaintiffs agreeing to countersign the latest version of Envivo’s plans16 but with the basic structure of their proposed orders accepted by BPIL. Costs in relation to the consent orders were reserved, to be ultimately dealt with in this judgment.
[56] Following that agreement, I heard submissions in relation to the contempt application. A further one day’s sitting time was required.
16 Reserving a new right to argue betterment in favour of BPIL.
The legal test under the Contempt of Court Act
[57]Section 16 of the Act provides:
16 Certain court orders and undertakings may be enforced
(1)This section applies to—
(a)any interim or final order, decision, decree, direction, or judgment of a court (a court order) to do or abstain from doing something, except as provided in section 17:
(b)any undertaking given to the court if, on the faith of the undertaking, the court has sanctioned a particular course of action or inaction.
(2)A court may enforce the court order or undertaking against the party, non-party, or other person bound by the order or undertaking by taking action provided for in subsections (3) and (4) on application by—
(a)the party who sought the order or undertaking being enforced; or
(b)a person who benefits from, or has an interest under, the order or undertaking; or
(c)the Solicitor-General, if the Solicitor-General is satisfied that there is a high degree of public interest in enforcing the order or undertaking.
(3)The court—
(a)must not proceed further under this section unless it is satisfied that other methods of enforcing the court order or undertaking have been considered and are inappropriate or have been tried unsuccessfully; and
(b)if so satisfied, must make a finding as to whether it is proved beyond reasonable doubt that—
(i)the court order or undertaking being enforced has been made in clear and unambiguous terms and is clearly binding on the person; and
(ii)the person had knowledge or proper notice of the terms of the court order or undertaking being enforced; and
(iii)the person has, without reasonable excuse, knowingly failed to comply with the court order or undertaking being enforced.
(4)On finding beyond reasonable doubt that the requirements of subsection (3)(b)(i) to (iii) are met, the court may—
(a)do any of the following:
(ii)issue a warrant committing the person or a director or an officer of the body corporate, as the case may be, to a term of imprisonment not exceeding 6 months:
impose a fine,—
(A)in the case of an individual, not exceeding
$25,000; or
(B)in the case of a body corporate, not exceeding
$100,000:
(iii)order the individual or a director or an officer of the body corporate, as the case may be, to do community work, not exceeding 200 hours, as the court thinks fit:
(b)if the court is the High Court, make a sequestration order in accordance with the rules of court.
(5)An applicant may apply under subsection (2) on 1 or more occasions to enforce the same court order or undertaking, and the court may take further action under subsections (3) and (4) as it thinks necessary to enforce the order or undertaking.
(6)Any enforcement action under this section does not operate to extinguish or affect the liability of the person to comply with a court order or an undertaking.
[58] Accordingly, before I can contemplate any of the actions specified in s 16(4), I must be satisfied:
(a)on the balance of probabilities that the threshold criteria in s 16(3)(a) are satisfied; and
(b)beyond reasonable doubt that each of the requirements in s 16(3)(b) are met.
[59] There appears to be no contest that BPIL had “knowledge or proper notice of the terms of the court order”. There is, therefore, no issue arising in respect of s 16(3)(b)(ii). I agree with the plaintiffs that given the history of the proceeding, that conclusion, at least, is clear.
Discussion
The threshold question
[60] BPIL argues that this issue is effectively resolved against the plaintiffs by reference to the terms on which their application was brought, in particular, the fact that it seeks both an order for contempt and “sundry other orders to progress the matter”. It says that it has always been open to the plaintiffs to seek the Court’s intervention and that, the fact they finally elected to do so, reinforces the conclusion that, in terms of s 16(3)(a) of the Act, they had not adequately considered other methods of enforcement beforehand.
[61] The plaintiffs say that this approach belies the reality of what has occurred over the last three years. They emphasise their engagement with the Court in mid-2020 which they say was necessary to bring assessment of Mr Burton’s proposed alternative methodology to a head. They point out that this alternative methodology was ultimately abandoned and that they then sought appointment of a contract administrator to take control of the process off BPIL (including application for the necessary consents). They emphasise also the Court’s warning on 23 July 2020, that it was BPIL’s obligation to remove the encroachment and that failure to do so engaged a range of potential outcomes, including the possibility of a contempt finding. Although that “shot across the bow” resulted in appointment of a contract administrator, they say that the process was then almost immediately subverted by Mr Cowan’s unhelpful letter and BPIL’s replacement of both the structural and geotechnical engineers on the project. Throughout, they point to their efforts to cooperate, including payment of 50 per cent of the costs of the contract administrator. This, they say, should have been sufficient to ensure delivery of the wall by the due date.
[62] Mr Quinn submits that there was not, strictly speaking, any other way of “enforcing” the Court’s order other than by applying under the Act. He emphasises that my order was a final order of the Court so that remedies like “unless orders”, strike-out orders or orders debarring a delinquent party from further pursuing its case were unavailable.
[63] The fact that my substantive judgment reserved a general right to apply for ancillary orders and directions, which was exercised in 2020 and again as part of the current application, does not, in my view, preclude an application under s 16. I accept that “enforcement” and “further directions” are conceptually different species. At the point the current applications were filed, further directions were necessary irrespective of the outcome on the contempt pleading — if only to fix a new date for removal of the encroachment, but realistically also to address a number of the other differences which had bedevilled the project to that point. So, the fact that the application invoked the residual jurisdiction in my substantive judgment cannot of itself be said to resolve the threshold question against the plaintiffs.
[64] Moreover, irrespective of a right to further apply, there must come a point in a case such as this where the passage of time is so significant, where the Court has already so frequently been engaged, where the parties have seemingly reached agreement only for one party to reopen technical issues, and where even the independent contract administrator appears to have become “beyond frustrated”, that a plaintiff may legitimately consider a contempt application as the only appropriate way to sufficiently concentrate the mind of a defendant.
[65] To some extent, events subsequent to filing the applications speak for themselves. No longer could the directors of BPIL responsibly leave delivery of the project to Mr Burton (if ever that were the case). Mr Castle immediately stepped into the breach. He applied himself diligently to finalisation of plans and lodgement of the building permit application. My assessment is that this would not have happened, or at least not nearly as promptly, if the contempt proceeding had not been filed.
[66]Accordingly, I find the threshold test met.
The requirements of s 3(b)(i)
[67] In terms of s 3(b)(i), I must be satisfied beyond reasonable doubt that the order sought to be enforced was one in “clear and unambiguous terms” and is “clearly binding”.
[68] At first blush, there seems no contest in this respect. My order was crafted with careful reference to the particulars of the encroachment, referenced a methodology linked to expert evidence in the case and specified a due date for completion. It was not part of BPIL’s appeal that my orders lacked clarity. Nor, when the matter reverted to the High Court in mid-2020, did BPIL raise any doubt or uncertainty over what it was required to do. Nor, if clarification was necessary, did it at any time exercise the leave reserved to both parties my judgment to apply for ancillary orders to that effect. As Mr Castle conceded in his affidavit in opposition, “prima facie [BPIL] is not in compliance with the orders of this honourable Court and the Court of Appeal”.
[69] However, I need to acknowledge at this point the complicating feature of the Court of Appeal’s changes to cost attribution. As I have previously indicated, my orders provided for BPIL to remove the encroachment, on whatever basis it chose (provided the methodology was approved by a registered structural and geotechnical engineer), by a particular date and at its cost. However, at the point that the Court of Appeal provided for construction costs to be borne equally, a tension automatically arose between BPIL’s obligation to deliver the project and the plaintiffs’ understandable desire to be consulted about how and when the project was going to be delivered and at what cost to them. From that point on, what was in reality required was a cooperative approach between parties who, for the previous five years, had, for whatever reason, been able to agree very little. Although at the point BPIL withdrew its alternative methodology, the encroachment had to be removed “in accordance generally with the methodology identified by the plaintiffs’ expert, Mr G N Wood, and appended to his brief of evidence dated February 2019 as Schedule A”,17 that still left sufficient potential for disagreement among parties with an equal interest in the minutiae of the project and its cost, such that three years later the wall has still not been built.
[70] For the purposes of this judgment, I am prepared to find s 3(b)(i) satisfied but only on the basis that the issue identified above is carried forward into my s 3(b)(iii) assessment.
17 High Court judgment, above n 1, at [128](b).
The requirements of 3(b)(iii)
[71] In terms of s 3(b)(iii), I must be satisfied beyond reasonable doubt that BPIL has, without reasonable excuse, knowingly failed to comply with the Court’s order. Two issues are engaged: existence of reasonable excuse and knowing failure. In my view, the case stands or falls on the latter.
[72]I am strongly critical of BPIL for not having exercised the reservation in para
[127] of my substantive judgment at the point roadblocks developed in finalisation of the plans and specifications. Mr Castle himself acknowledges the potency of that criticism, noting in his affidavit that “at the least [BPIL] ought to have sought extensions of time for compliance with the orders”. He then apologises to the Court for failing to do so. The apology was equally due to the plaintiffs and provided on that basis when he subsequently made himself available to the Court. Some criticism is also appropriate in respect of the directors for having left delivery of the project to Mr Burton for so long when a fixed delivery date was specified and had clearly expired.
[73] I am also critical of Mr Burton for his approach to negotiations. Not only the plaintiffs but also the independent contract administrator regarded this as highly frustrating. Whether as a result of initially overlooking issues which later exercised him or because of miscommunications about his requirements, the history of the project is now littered with false starts. I can readily appreciate that this has resulted in a degree of exasperation on the plaintiffs’ part. I can also readily appreciate that only by elevating the matter to an application under s 16 and thereby securing the attention of the directors, did the plaintiffs consider a satisfactory conclusion would ever be reached. Mr Burton’s direction on 13 November 2021 not to provide the amended consent drawings to the plaintiffs for signing, despite all that had occurred in the previous two months and the requirement (expressed through Claymore Partners) on 4 May 2022, that the plaintiffs agree to “reinstate the September 2020 design” (despite the defendant signing off on a new design in the interim) are the clearest examples of this frustrating tendency. I note also Mr Burton’s periodic refusal to attend meetings designed to address various impasses.
[74] However, I find myself unable to conclude beyond a reasonable doubt that BPIL knowingly failed in its obligations. I require no convincing that Mr Burton has never been enthusiastic about removal of the encroachment. He devoted significant resources to the defence of the plaintiffs’ initial claim, arguing that the basalt wall was not a wrongly placed structure for the purposes of the Property Law Act. He maintained that position at the Court of Appeal. He has chopped and changed advisors, both legal and engineering, as he grappled with the reality that something would need to be done and that he would have to engage with the plaintiffs about placement, dimensions, footings, relocation of services and related matters. But there is, in my mind, the reasonable possibility that he is simply a difficult, at times uncooperative and pedantic personality, somewhat obsessed with the security of his dilapidated house and overgrown yard but who, nevertheless, has not knowingly failed to comply with the Court’s orders in the sense that he has actively turned his back on them.
[75] In coming to that conclusion, I have carefully reviewed the correspondence, particularly that in the period between October and December 2021, which is the period I consider an adverse inference is most readily available against him. I am left in no doubt that the issues which he raised in November 2021 about the security fence on top of the wall and about the pilaster on the street corner of Number 22 and location of the services box should have been resolved earlier. The plaintiffs thought that they had been, but clearly from Mr Burton’s perspective there were various details still outstanding. I cannot rule out the reasonable possibility that he regarded these as genuine concerns and not just confections designed to delay the inevitable. In this respect, I take into account the very considerable energy (and costs) Mr Burton had already invested in the project to that point.
[76] Again, the overlay of the Court of Appeal’s decision is relevant. Where an outcome has, in effect, to be negotiated, it will always be a more difficult task to establish a knowing failure to comply. Regrettably, that is the dynamic which emerged from the Court’s judgment.
[77] Ultimately, of course, the directors are responsible for BPIL’s adherence to the Courts’ orders. Messrs Castle and Brown did not knowingly fail to comply. They
believed that the process was being adequately addressed by Mr Burton. Notably, however, they did not follow up Mr Burton’s efforts. As they have acknowledged, their failure to apply to this Court for further directions properly warranted an apology. Clearly, now that they are seized of the project and have committed to its delivery through consent ancillary orders, they can expect a high level of judicial oversight in ensuring such delivery occurs.
Costs
[78] As Pankhurst J observed in Shotover Jet Ltd v Butterfli Enterprises Ltd,18 cases such as this invoke “a broad discretion in relation to costs”,19 necessitating that justice be done between the parties “in all the circumstances of the case”.20 Although His Honour concluded that no wilful disobedience or neglect had been established in that case, he was satisfied that there had been a breach of the Court’s orders and awarded the plaintiff costs of $20,000 which was approximately twice scale.21
[79] Likewise, in Douglas Pharmaceuticals Ltd v Nutripharm NZ Ltd (No 2)22 and Jones v Sky City Auckland Ltd,23 the High Court made costs awards (In Jones on an indemnity basis) in favour of plaintiffs who had established a breach of undertakings to the Court but not on a deliberate or wilful basis.
[80] In the present case, there is the additional feature that I am also required to fix costs on the second part of the plaintiffs’ application which resulted in consent orders. In that context, some determination of the parties’ relative success is necessary.24
[81] As indicated, settlement came after one and a half days of hearing punctuated by various negotiations and after Mr Castle had made himself available for questioning. As indicated, there were some concessions on the plaintiffs’ part in terms of identity of contract administrator/engineer and geotechnical advisor and in respect
18 Shotover Jet Ltd v Butterfli Enterprises Ltd HC Christchurch CIV-2005-454-000593, 24 May 2006.
19 At [40].
20 At [41].
21 At [41].
22 Douglas Pharmaceuticals Ltd v Nutripharm NZ Ltd (No 2) (1998) 12 PRNZ 176 (HC).
23 Jones v Sky City Auckland Ltd (2001) 15 PRNZ 432 (HC).
24 Wheeldon v Body Corporate 342525 [2016] NZHC 862 at [12].
of the plans to be submitted for Council approval, but the latter was subject to new reservations allowing the plaintiffs to later argue betterment and/or excess specification. Overall, the plaintiffs succeeded in putting in place a structure, in part, under the exclusive control of the contract administrator/engineer, Mr Martin Webb, and, in part, requiring Messrs Castle and Webb to work together which:
(a)they can have reasonable confidence will now deliver the project; and
(b)in my view, would never have been achieved, at least in a timely fashion, without their application to the Court.
[82] I take into account also that a new completion date has now been ordered, something which was always necessary and which I have already indicated BPIL should long ago have applied for, with such ancillary orders as were necessary to achieve it.
[83] Against this background, either an order letting costs lie where they fall or even allowing scale costs in favour of the plaintiffs25 would not, in my view, do justice between the parties. Neither alternative would adequately recognise the strongly expressed criticisms in this judgment, including the considerations which motivated Mr Castle’s apology. I regard it as unsatisfactory that the plaintiffs should have been required to bring the matter to a head in the way that was ultimately necessary. Accordingly, the contempt application was, in my view, a legitimate step in ensuring the matter was appropriately elevated and that it will now been adequately progressed.
[84] My inquiries of counsel for the plaintiffs indicate that actual costs on the applications, including GST (which is recoverable, given that the plaintiffs are not registered), total $95,680, excluding second counsel.
[85] I intend to adopt a similarly robust approach to other judges who, although declining to find a contempt proven to the requisite standards, have nevertheless considered the application before them broadly justified. I take into account the prima facie position recognised by Mr Castle; the extraordinary period of delay in giving
25 Which I calculate at $10,516, including appearance at the mention hearing.
effect to the Courts’ orders; Mr Burton’s frustrating and uncooperative approach to the resolution of differences; and BPIL’s failure to seek further orders at the point it believed an impasse had occurred. I allow costs in the sum of $60,000 in favour of the plaintiffs. My only reason for not allowing a full indemnity is because of what I consider to be the implications of the Court of Appeal’s decision, giving Mr Burton the maximum benefit of the doubt in that respect.
Result
[86] I dismiss the application for orders pursuant to s 16(4) of the Contempt of Court Act 2016.
[87] I award costs in favour of the plaintiffs in the sum of $60,000 plus reasonable disbursements as fixed by the Registrar.
Muir J
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