Lee v Whangarei District Council

[2014] NZHC 1317

IN THE HIGH COURT OF NEW ZEALAND WHANGAREI REGISTRY

CIV 2013-488-000469 [2014] NZHC 1317

BETWEEN

OLIVIA LEE

Applicant

AND

WHANGAREI DISTRICT COUNCIL First Respondent

K J FUNG
Second Respondent

Contd…/…

Hearing:	(on the papers)
Appearances:	Applicant in Person S B Mitchell and H E Waldron for the First Respondent A Holgate for the Third Respondent G Swanepoel for the Fourth Respondent
Judgment:	12 June 2014

[COSTS] JUDGMENT OF WYLIE J

This judgment was delivered by Justice Wylie on 12 June 2014 at 10.00 am

Pursuant to r 11.5 of the High Court Rules

Registrar/Deputy Registrar

Date:

LEE v WHANGAREI DISTRICT COUNCIL & ORS [2014] NZHC 1317  [12 June 2014]

ANDALTHERM ALUMINIUM NORTHLAND LIMITED Third Respondent

NORTHLAND WATERPROOFING SOLUTIONS LIMITED

Fourth Respondent

DESIGN METAL ROOFING LIMITED

Fifth Respondent

[1]      I refer to my reserved judgment dated 14 May 2014.  Ms Lee was seeking leave to appeal out of time a decision given by Mr R M Carter, a member of the Weathertight  Homes  Tribunal,  dated  7  March  2013.    I declined  to  grant  leave, because I considered that it was not in the interests of justice to do so.  I held that the first, third and fourth respondents were each entitled to costs.  I invited the parties to try and reach agreement.

[2]      The parties have been unable to agree.  They have filed memoranda in regard to their respective positions.

[3]      The first respondent, the Whangarei District Council, submits that, normally, it would be entitled to indemnity costs, on the basis that Ms Lee acted vexatiously, frivolously, improperly, or unnecessarily, in seeking leave to appeal out of time. However, given Ms Lee’s advice as to her financial circumstances, it seeks 2B scale costs, with a 75 per cent uplift.  It refers to the relevant rules.  It also seeks recovery of its actual disbursements.

[4]      The third respondent records that its actual costs were below the costs that would be awarded on a 2B basis.  It says that costs calculated on a category 2 basis comes to $6,220.50, but that its actual costs were $4,500.  It seeks recovery of its actual costs, together with its actual disbursements.

[5]      The fourth respondent has also corresponded with Ms Lee regarding costs.  It notes that, although Ms Lee has claimed to be in financial difficulty, she was able to deposit $30,000 on 1 November 2013 for the Building Disputes Tribunal to initiate her arbitration against the builder, and further, that she owns a property in Ruakaka, and two units in Queen Street, Auckland.  It seeks costs on a 2B basis, together with a 75 per cent uplift.  It also seeks its actual disbursements.

[6]      Ms  Lee  submits  that  costs  have  not  been  correctly  calculated  by  the respondents, and that there is no justification for the uplift proposed by the first and fourth respondents.  She says that costs should be based on half the applicable rate under Band A.  She says that she should not be punished, given that the Weathertight

Homes Resolution Services Act 2006 permitted her to make application for leave to appeal out of time.

Analysis

[7]      Pursuant to r 14.1 of the High Court Rules, all matters in relation to costs are at the discretion of the court.  There is, however, guidance in the rules.  Pursuant to r 14.2(a), a party who fails with respect to an interlocutory application, should expect to pay costs to the party who succeeds.   An award of costs generally reflects the complexity and significance of the proceeding.   Costs are commonly assessed by applying the appropriate daily recovery rate for the category of proceeding taken from Schedule 2 to the High Court Rules, to the time considered reasonable for each step reasonably required in relation to the proceeding or step in the proceeding, taken

from Schedule 3 to the High Court Rules.1    Pursuant to r 14.6, the court may make

an order increasing the costs otherwise payable in certain circumstances, or order that the costs payable should be the party’s actual costs.

[8]      Where  the  court  uplifts  from  scale,  it  is  not  a  question  of  awarding  a percentage of actual costs.  Rather, the court should first categorise the proceeding under r 14.3, then work out a reasonable time for each step in the proceeding under r 14.5, and then consider whether or not to allow increased costs under r 14.6(3)(b). Any increase above 50 per cent of the costs produced by steps 1 and 2 is unlikely, given that the daily recovery rate is intended to represent two-thirds of the daily rate

considered reasonable for the particular proceeding.2

[9]      In the present case, I am satisfied that the proceedings should appropriately be categorised as category 2 proceedings.  The daily rate for category 2 proceedings is $1,990 per day.  They were of average complexity, requiring counsel of skill and experience  considered  average  in  the  High Court.    Further,  in  my  judgment,  a determination of the reasonable time for each step required can be made under Band B.

[10]     I have considered the steps taken in the proceedings. They were as follows:

1      High Court Rules, r 14.2(c).

2      Holdfast NZ Limited v Selleys Pty Ltd (2005) 17 PRNZ 897 (CA).

Filing opposition to Ms Lee’s interlocutory application	.6 x $1,990 (category B allowance)	$1,194
Filing memoranda for case management conference	.4 x $1,990	$796
Appearances at case management conference	.3 x $1,990	$597
Preparation of written submissions for substantive hearing	1.5 x $1,990	$2,985
Appearances at the substantive hearing	.25 x $1,990	$497.50
Total	$6069.50

[11]     I do not allow for second counsel, as claimed by the Whangarei District

Council.  In my view, second counsel was not necessary in relation to this matter.

[12]     I  am  also  satisfied  that  it  is  appropriate  to  award  increased  costs  under r 14.6(3)(b).  In my view, Ms Lee contributed unnecessarily to the time and cost of the proceedings by making an application which was grossly out of time, in circumstances where the delay was not, and could not be, satisfactorily explained, and where the prospects of success, even if the appeal had been allowed to be brought, were very low indeed.  The legal principles applicable to the applications for leave to appeal out of time are well established and, in my view, Ms Lee’s application was inappropriate and unnecessary.

[13]     I am not satisfied that it is appropriate to award increased costs of more than

25 per cent.   I note that the daily recovery rate detailed in the rules is intended to equate to two-thirds of the daily recovery rate considered reasonable for the proceeding.

[14]     Accordingly, I direct as follows:

(a)      Ms Lee is to pay to the first respondent, costs in the sum of $7,586.87, being costs assessed on a 2B basis, plus an uplift of 25 per cent. Ms Lee is also to pay the first respondent its disbursements in the sum

of $931.49.  I note that the first respondent sought travel costs.  No justification was provided for that claim.   The hearing was held in Auckland, and the first respondent’s solicitors are based in Auckland. The application for travel costs is declined.

It follows that the total award of costs and disbursements in favour of the first respondent is $8,518.36.

(b)The third respondent is awarded its actual costs of $4,500, together with its actual disbursements of $110.

(c)      The fourth respondent is awarded costs on the same basis as the first respondent – that is, costs of $7,586.87, together with its disbursements.  Its disbursements total $192.

It follows that the total award of costs and disbursements in favour of the third respondent is $7,778.87.

Wylie J