Lawrence Riverside Limited v Colliers International New Zealand Limited HC Auckland CIV-2011-404-1486

[2011] NZHC 1391

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2011-404-1486

BETWEEN  LAWRENCE RIVERSIDE LIMITED First Plaintiff

ANDB R LAWRENCE AND B H LAWRENCE Second Plaintiffs

ANDCOLLIERS INTERNATIONAL NEW ZEALAND LIMITED

Defendant

Hearing:         Memoranda as to Costs from the Plaintiffs - 25 July 2011 and 12

August 2011
Memoranda as to Costs from the Defendant - 22 July 2011

Judgment:      12 October 2011 at 2:00 PM

JUDGMENT OF ASSOCIATE JUDGE D.I. GENDALL

This judgment was delivered by Associate Judge Gendall on 12 October 2011 at 2.00 pm under r 11.5 of the High Court Rules.

Solicitors:           Simpson Dowsett Mackie, Solicitors, PO Box 27-240, Mt Roskill

Russell McVeagh, Solicitors, PO Box 8, Auckland

LAWRENCE RIVERSIDE LIMITED V COLLIERS INTERNATIONAL NEW ZEALAND LIMITED HC AK CIV-2011-404-1486 12 October 2011

[1]      In an oral judgment I gave in this proceeding on 30 June 2011 I granted the defendant’s interlocutory application for a temporary stay of this proceeding and declined an oral application by the first and second plaintiffs for this proceeding to be heard at the same time as proceeding CIV-2006-404-4739 on the basis that it was said to be a related proceeding.

[2]      In that oral judgment I reserved costs and indicated that if counsel could not agree they could file memoranda on the issue which were to be referred to me.

[3]      Counsel have advised that no agreement can be reached and they have filed memoranda on the costs question.  I now give my decision on that issue.

[4]      The defendant here first, seeks costs on its successful stay application on a

2B scale basis totalling $4,324.00 and secondly, it seeks an additional costs award of

$940.00 in relation to its successful opposition to the plaintiffs’ oral application that the two sets of proceedings be heard together.   The defendant also seeks disbursements amounting to $613.33.

[5]      In response, the plaintiffs’ position is that they oppose any costs award and suggest also that any costs award at this stage should be suspended until after the final outcome of the plaintiffs’ substantive claim here is known.   In addition, the second plaintiffs note they are legally aided for this proceeding.  It is said also that the first plaintiff is a party to this proceeding in name only as the assignor of the right to sue the defendant and therefore should not be the subject of any costs award.

[6]      In terms of r 14.1 High Court Rules it is clear that the costs of a proceeding are at the discretion of the Court.  The starting principle in terms of r 14.2 is that the party who fails with respect to an interlocutory application should pay costs to the party who succeeds.

[7]      The initial point in this case must be that costs should follow the event and therefore the defendant as the successful party is entitled to an award of costs.  The suggested application of category 2B as a calculation of these costs is in my view appropriate.

[8]      The main issues for consideration are first, whether there are special or exceptional circumstances which apply in this case, and secondly, whether the fact the second plaintiff is legally aided makes a difference here, such that either of these matters might mean that an award of costs is not appropriate.  I turn now to address these issues.

[9]      Dealing first with the fact that the second plaintiffs are legally aided, under s

45(2) Legal Services Act 2011 (“LSA”) a Court must be satisfied that there are “exceptional circumstances” in order to make an award of costs against a legally aided person.

[10]     Section 45(3) provides a range of factors the Court can take into account in determining whether there are any such “exceptional circumstances”.  These include any conduct that causes the other party to incur unnecessary cost and any unreasonable pursuit of one or more issues on which the legally aided person fails.

[11]     The list in s 45(3) is not exhaustive, however, and the Court can take into account any additional factors it considers appropriate in determining whether there are exceptional circumstances justifying an award of costs.

[12]     On these aspects counsel for the defendant contends that the opposition by the first and second plaintiffs to the defendant’s application for a temporary stay and their pursuit of orders that the proceedings be heard together was itself unreasonable here and lead to the defendant incurring unnecessary costs.  As such, the defendant maintains that this represents conduct that has caused it to incur additional unnecessary cost in terms of s 45(3) of the LSA.

[13]     In my view, however, this is drawing too long a bow in this matter.  It was the defendant’s own stay application which was before the Court and the plaintiffs were entitled to oppose this application.

[14]     In  my  view  this  and  any  other  factors  before  the  Court  could  not  here constitute “exceptional circumstances” in terms of s 45(3) LSA such that an award of costs against the second plaintiffs as legally aided persons is justified.

[15]     For these reasons no  costs  order is  to  be made here  against  the second plaintiffs.

[16]     A costs order however that would have been granted against an aided person but for s 45 LSA may be specified in terms of s 45(5) LSA.   In my view this is appropriate here.

[17]     Had the second plaintiffs not been legally aided, there is no doubt in my mind that an order for costs against them as the unsuccessful respondents in the stay application would have been made.  This would have been calculated on a 2B scale basis and totalled $4,324.00 as noted at para [4] above.  In addition I see no reason why the extra costs award of $940.00 in  relation to the plaintiffs’ unsuccessful application to have the two proceedings heard together would not have been ordered also.

[18]     Although therefore there is to be no costs order made against the second plaintiffs, the costs order noted below and which is to be made against the first plaintiff would have been ordered against the second plaintiffs but for s 45 LSA had they not been legally aided.

[19]     Turning now to the costs application against the first plaintiff, again I am satisfied first, that as a named plaintiff and party to this proceeding, it is responsible for an award of costs here and that secondly, there are no special or exceptional circumstances in this case which might justify some departure from the normal rule that the unsuccessful party on an interlocutory application is to pay the costs of the successful party.

[20]     All steps taken by the plaintiffs in this proceeding have been taken on behalf of both the first and second plaintiffs.   The first plaintiff was the tenant of the premises the subject of the dispute and is the party that suffered the alleged losses claimed against the defendant.  While the plaintiffs have pleaded that the rights in this cause of action have been assigned to the second plaintiffs, as I understand the position there is no documentation before the Court supporting the purported assignment nor does it seem that the defendant has had an opportunity to explore the

validity of that  assignment.   These issues  will  need  to  be dealt  with  when  the temporary stay is lifted and it may be then that the purported assignment is challenged.   In the meantime there is nothing before the Court to suggest the first plaintiff should not be liable for costs. An order for costs is therefore to follow.

[21]     A further matter arises here.   Rule 14.8 High Court Rules provides that, unless there are special reasons to justify the contrary, costs awarded in relation to an interlocutory application such as the present one are, not only to be determined at the time the interlocutory decision is made but are also to be paid at that point.

[22]     Counsel for the plaintiffs submit, however, that special reasons exist in the present case which justify the making of an order that the costs awarded here against the first plaintiff are to be suspended and are not to be payable until final disposal of the present proceeding.

[23]     Those special reasons outlined by counsel for the plaintiffs appear to be based upon several matters.   The first and second plaintiffs are said to have no assets currently and the only form of income the second plaintiffs are receiving is national superannuation.   Counsel advises that the second plaintiffs are living in extremely modest  circumstances  in  a  small  cottage  in  rural Tauranga.    The  present  claim against the defendant is that it carried out a negligent rental valuation in relation to the plaintiff’s former motel business operated in Rotorua.  If those claims are upheld ultimately, the plaintiffs will be seeking compensation on the basis that the defendant here contributed to what is described as their “financial ruin”.

[24]     As  I  understand  the  position,  additional  proceedings  have  been  brought against other parties with respect to the motel business and these are to be heard shortly.

[25]     Counsel for the plaintiff contends that a costs award at this point that the plaintiffs could not pay would be likely to lead to liquidation of the first plaintiff and bankruptcy of the second plaintiffs respectively and a likely abandonment of all their recovery  proceedings.     Under  those  circumstances  it  is  submitted  that  it  is appropriate here that any liability to pay the costs awarded in this judgment should

be deferred until the final position of the plaintiffs and the defendant in these proceedings is known.

[26]     Under  all  the  circumstances  prevailing  in  the  present  case,  which  I acknowledge may be seen as somewhat unusual, I accept that these submissions advanced for the first plaintiff do provide special reasons justifying a suspension of their present obligation to pay the costs awarded here to the defendant company which, as I understand it, is a reasonably large New Zealand wide (and possibly international) real estate agency company.

[27]     An order for costs is to follow against the first plaintiff, but payment of these costs is to be suspended until final disposal of this proceeding.

Orders

[28]     Subject to [29] below, costs are therefore awarded to the defendant on its successful stay application against the first plaintiff only on a category 2B basis totalling $4,324.00 together with disbursements amounting to $613.33.  In addition, costs of $940.00 are awarded to the defendant against the first plaintiff only on the defendant’s successful opposition to the plaintiffs’ application to hear both matters together.

[29] An order is also made suspending the obligation of the first plaintiff to pay the costs and disbursements awarded to the defendant at [28] above in this judgment until final disposal of the substantive proceeding involved here.

‘Associate Judge D.I. Gendall’