Metlifecare Retirement Villages Limited v James Hardie New Zealand Limited
[2022] NZHC 351
•3 March 2022
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2015-404-3080
[2022] NZHC 351
BETWEEN METLIFECARE RETIREMENT VILLAGES LIMITED
Plaintiff
AND
JAMES HARDIE NEW ZEALAND LIMITED
First Defendant
STUDORP LIMITED
Second DefendantJAMES HARDIE NZ HOLDINGS LIMITED
Third Defendant
(Continued next page)
Hearing: On the papers Counsel:
C M Meechan QC, J K Stewart and C L Gordon for Plaintiff J E Hodder QC, J A McKay and L Fraser for Defendants
Judgment:
3 March 2022
JUDGMENT (NO 13) OF WHATA J
Re Costs
This judgment was delivered by me on 3 March 2022 at 3.00 pm,
pursuant to Rule 11.5 of the High Court Rules.
Solicitors:
Minter Ellison Rudd Watts, Auckland Commerce Commission, Wellington
Registrar/Deputy Registrar Date: ………………………….
METLIFECARE RETIREMENT VILLAGES LIMITED v JAMES HARDIE NEW ZEALAND LIMITED [2022] NZHC 351 [3 March 2022]
RCI HOLDINGS PTY LIMITED
Fourth Defendant
JAMES HARDIE AUSTRALIA PTY LIMITED
Fifth Defendant
JAMES HARDIE RESEARCH PTY LIMITED
Sixth Defendant
JAMES HARDIE INDUSTRIES PLC
Seventh Defendant
[1] Both the plaintiff, Metlifecare Retirement Villages Limited (Metlifecare), and the defendant, James Hardie New Zealand Limited (James Hardie), seek costs in respect of multiple hearings and judgments about discovery. The submissions in support of both parties are lengthy, raising various and diverse reasons as to why and how costs and their quanta should be resolved. I have reduced those submissions into a tabular form for ease of reference at the end of this judgment. I do not address the submissions in a granular way, because the claims can be resolved in accordance with the High Court Rules 2016 (the Rules) without that approach.
[2] In addition, as I said in the White costs judgment, there were infringements by both parties during what was a lengthy discovery process.1 Ultimately, those infringements, except where specifically identified below, do not warrant departure from the usual approach, namely that costs follow the events.
The plaintiff
[3] The plaintiff is Metlifecare. However, at the time of the discovery applications, there were multiple plaintiffs identified as the Waitakere plaintiffs, which included Metlifecare. For the purposes of this judgment, Metlifecare includes the Waitakere plaintiffs.
The claims
[4] James Hardie seeks $77,579.00 in scale costs and $220.00 in disbursements against Metlifecare. This claim relates to:
(a)Metlifecare’s interlocutory application for orders dated 6 December 2019;
(b)Metlifecare’s amended interlocutory application for orders that the defendants provide compliant discovery dated 15 June 2020;
(c)Metlifecare’s interlocutory application for leave to file and serve second amended interlocutory application dated 21 July 2020;
1 White v James Hardie New Zealand Ltd (No 9) [2021] NZHC 930 [Judgment No 9] at [26].
(d)Metlifecare’s second amended interlocutory application for discovery orders dated 21 July 2020;
(e)Metlifecare’s cross-application for costs dated 4 November 2021; and
(f)Their application for costs dated 7 October 2021.
[5] Metlifecare seeks $38,956.12 in scale costs and disbursements ($37,956.12 in costs and $1,000.00 in disbursements) in respect of:
(a)18 December 2019 hearing (in relation to Metlifecare’s interlocutory application for orders that James Hardie provide compliant discovery dated 6 December 2019);
(b)18 March 2020 hearing (in relation to Metlifecare’s updating memorandum dated 11 March 2020, involving Priority Discovery Issues);
(c)the Independent Counsel Process dated 17 July 2020;
(d)6–7 August 2020 hearing (related to Metlifecare’s amended interlocutory application that James Hardie provide compliant discovery dated 15 June 2020 and amended on 21 July 2020);
(e)17–20 May 2021 hearing (in response to Metlifecare’s leave application to address the privilege issue);
(f)17 May 2021 Metlifecare’s memorandum on late discovery and disclosure of Allunga Queensland testing documents;
(g)the Second Independent Counsel Process dated 26 August 2021;
(h)applications for further and better particulars heard on 30 March 2021 and determined by this Court in Metlifecare’s favour on 1 April 2021; and
(i)costs of the memorandum for this judgment dated 4 November 2021.
[6]My cost orders are noted at [35] below.
Background
[7] My discussion of the background to this proceeding in my substantive discovery judgment (Judgment No 8) provides a useful summary of key events. I repeat it here:2
Background
[2] The central claim in both the White and Waitakere proceedings is that the defendants (collectively, James Hardie), manufactured, supplied or promoted defective exterior cladding products, sold under the brand names “Harditex”, “Monotek” or “Titan” (the James Hardie products). Approximately 1,246 properties are claimed to be clad with defective James Hardie products. Of those properties, 1,236 are residential homes, five are commercial buildings and five are retirement villages. The five retirement villages are the plaintiffs in the Waitakere proceedings. The primary issues raised by the plaintiffs in their proceedings are set out in Schedule 1.
[3] The hearing of this matter has been split into two stages with the following issues to be addressed at stage one:
(a) who is responsible for the design/manufacture/sale of the James Hardie products and related product information;
(b) whether the James Hardie products are defective;
(c) whether the defendants knew/ought to have known about any defects, and
(d) whether the defendants breached any common law or statutory duties in respect of the James Hardie products or James Hardie product information.
[4] The trial date for stage one was set down to commence on 3 May 2021. Tailored discovery orders were subsequently made in two bites, with the result being that James Hardie was required to discover the following classes of document:
A. Product Development
B. Testing
C. Promotional Material
2 As I did in the White costs judgment in what were then parallel proceedings. See White v James Hardie New Zealand (No 8) [2020] NZHC 2202 [Judgment No 8] at [2]–[18].
D. Customer Complaints
E. Harditex Improvement Project
F. Decision to withdraw Old Product and Introduce New Product;
G. Industry Study Tour of USA and Canada
H. Technical Literature;
I. Documents Identifying Risks or Defects or liability relating to James Hardie Products;
J. Insurance documents
K. Training Documents
L. Site Visits
M. Customer advice
N. Correspondence with Industry and Regulatory Bodies
P. Licensing arrangements
Q. Sales Figures
U. Agency, representation, joint venture or similar arrangements
[5] A large set of search terms were also sought by the plaintiffs and later adopted by James Hardie. Directions were also made for tranches of discovery by specified defendants to be provided, with a final tranche of discovery to be provided by all defendants by 13 September 2019.
[6] Discovery did not go smoothly. Deadlines for making discovery were not met and the plaintiffs’ demands for further and better discovery continued to evolve. Illustrative of this, the plaintiffs have – since my first discovery orders – filed a further six applications. Three of them are described, together with the supporting evidence, in my judgment issued on 3 April 2020 (Judgment No 7). Some of what the Waitakere plaintiffs called “priority discovery” issues were resolved by that judgment, with other issues deferred for later consideration.
[7] My Minutes 31 – 37 then followed, all dealing with discovery. In my Minute 31, I set down a timetable for the resolution of the remaining discovery issues. The White plaintiffs were to file a second amended interlocutory application in relation to discovery by 8 May 2020, and the Waitakere plaintiffs were to file an updating memorandum that same day. Any notice of opposition and memorandum in reply were to be filed by 22 May 2020. James Hardie were to provide an updated discovery list (in accordance with the amended schedule of document types agreed with the Waitakere plaintiffs) by 1 June 2020. A hearing was to be fixed after 5 June 2020, including in respect of James Hardie’s further application for security for costs. That timetable was optimistic.
The remaining applications
[8] In their memoranda of 8 May 2020, the Waitakere plaintiffs identified the remaining discovery issues and proposed timetabling orders. They also foreshadowed a problem with the generic listing of “James Hardie” in the “Author/Receipt Fields” and the lack of job titles for the custodian of documents.
The White plaintiffs’ second amended and supplementary applications
[9] The White plaintiffs, in their 8 May 2020 application, sought additional orders that:
(a)the defendants file further affidavits as to the methodology employed by the defendants, why and how custodians were identified, confirmation as to whether certain archives had been searched and relevant documents discovered and, if not, why not;
(b)the defendants shall treat an additional 50 persons as custodians;
(c)the defendants provide a further affidavit in relation to categories of documents listed in Schedule 3 to the application;
(d)the defendants search for and discover relevant non- privileged documents using additional search terms listed in Schedule 4 to the application;
(e)the defendants produce copies of the documents listed in Schedule 5 to the application (privileged documents) for inspection by the Court for the purpose of deciding the validity of the privilege claimed; and
(f)the defendants produce copies of the documents listed in Schedule 6 to the application (masked documents) for inspection by the Court.
[10] Further issues arose out of the defendants’ provision of further documents on 8 May 2020, culminating in the White plaintiffs’ supplementary application of 22 May 2020 in which they seek orders:
(a)for production of documents relating generally to management reports and related documents (as identified in Schedule 1 to the application);
(b)for the defendants to produce copies of documents in Schedule 2 to the application (specified documents identified by the defendants as privileged documents) for inspection by the Court;
(c)for the unmasking of specified documents; and
(d)specifying a final date for discovery.
[11] As a result of the various memoranda, a hearing date for one to two days to hear all remaining matters was set down for 6 July 2020. 10 priority issues which remained to be resolved were identified. Given this, expert caucusing and the appointment of independent counsel to assist on reporting on the outstanding discovery issues was mooted. It was envisaged that members for each of the discovery teams should be able to caucus and reach agreement in relation to seven of the remaining issues and that independent counsel should be able to report on the balance of matters.
[12] Minute (No 34) recorded the agreement of the parties to the appointment of independent counsel and conferral between the discovery teams, and a timetable for conferral was fixed. The independent counsel process had to be deferred, given issues relating to identification and an appropriate person to assist.
[13] In Minute (No 35), the role of independent counsel was revisited. A direction was made that independent counsel should address all remaining issues and report to the Court on the proper management of those issues. The issue of independent counsel was revisited in Minutes (No 37) and (No 38).9 A fixture was also allocated and a timetable set down for that purpose.
[14] Minute (No 39) refers to and attaches a copy of instructions to independent counsel. The instructions noted the primary task was to assist the parties and the Court in the resolution of the remaining discovery issues.
Amended interlocutory application by Waitakere plaintiffs
[15] On 15 June 2020, the Waitakere plaintiffs filed an amended application. It has been overtaken by a second amended application of 21 July 2020. As that application requires leave, it remains necessary to describe the 15 June application. In summary that application seeks four orders. First, an order for compliant discovery in relation to Class J and Class I categories on the grounds that the defendants have discovered incomplete documents in both these categories. Second, an order that the defendants search for documents in the control of six persons (Messrs Gustafson, Gries, Salter, Baker, Fisher, Loduwick) on the grounds that James Hardie holds mailboxes for them and no proper basis for excluding searches of them has been provided. Third, that leave be reserved to the plaintiffs to apply for such further orders as may be necessary in relation to above. Fourth, that the costs of the application, and incidental costs, should be awarded to the plaintiffs.
Caucusing and independent counsel process
[16] The independent counsel process below is addressed below. Caucusing of the discovery teams took place on one occasion, on 15 June 2020. No report on that process was produced. That is regrettable because the Court has no clear understanding as to the outcomes of that process. Unhelpfully, correspondence between the parties concerning the matters discussed at the conferral is included in the bundles provided by the parties. It is not the function of this Court to wade through volumes of correspondence to ascertain material outcomes of the caucusing process or other discussions between the parties. I simply understand that it facilitated resolution of some issues but also triggered new issues and/or the refinement of issues. It seems that second amended application by the Waitakere plaintiffs refers to some of these new and/or refined issues.
[17] As mentioned above, on 21 July 2020 the Waitakere plaintiffs filed a second amended interlocutory application for orders that:
(a)In respect of Class J documents (insurance documents), the defendants:
(i)discover specified documents (e.g. proposal or renewal forms, notifications, insurance policies, or other specified documents referred to in discovered documents) or otherwise confirm that they do not exist;
(ii)confirm they have correctly applied the test for relevance in relation to specified documents; and
(iii)provide copies of their document retention/destruction policies for the period 1980 to 2006.
(b)In respect of Class I documents (documents identifying risks, defects or liability relating to James Hardie Products), the defendants:
(i)discover (or otherwise confirm that they do not exist), all relevant board materials, documents related to Team management, Group Business Results that discuss or identify risks, defects and/or liability, product development monthly reports, and product development meeting minutes;
(ii)produce documents incorrectly listed as privileged; and
(iii)confirm that they have searched all repositories/locations where the relevant materials are likely to be stored.
(c)The defendants provide their document retention/destruction policies and information as to why certain documents are not recoverable.
(d)The defendants treat six persons (Messrs Gustafson, Gries, Salter, Baker, Fisher, Loduwick) as custodians and discover all relevant documents obtained from them.
(e)The Court set aside or modifies the defendants’ claim to privilege over specified documents (which also appear to include insurance-related documents).
[18] Given the lateness of this amended application, leave to file the application was required…
(citations omitted)
[8] As I noted in White v James Hardie New Zealand,3 a costs judgment on discovery issues:
[7] Judgment (No 8) also sets out in detail the background to the discovery process undertaken by James Hardie. It is not necessary to repeat it here. I simply note the following:
“(a) the discovery undertaken was vast, comprising a discovery universe of 1,710,428 documents, a review set of 233,811 documents and a disclosure set of 28,495 documents, which, in the end, was thorough and beyond serious criticism;
(b) however, reflecting the sheer scale of the exercise, the discovery process was iterative and the rationale behind it was not always clear;
(c) various timetabled deadlines for discovery were also missed;
(d) the plaintiffs, bewildered by the scale, nature and form of the discovery and concerned about delay, pressed hard for clarity as to the scope and timing of the discovery. This manifested itself in multiple evolving applications, corresponding affidavits and culminated in hearings in December 2019, March 2020 and August 2020;
(e) in order to bring some definitive clarity to the discovery process and outputs, the parties (eventually) agreed to expert caucusing and an independent counsel process;
(f) the caucusing process proved largely futile, but the independent counsel process succeeded in bringing the requisite clarity. As I noted in Judgment No 8:
[121] … Ms O'Gorman's report was thorough, careful and balanced. She had undertaken the type of fine-grained review I had envisaged. It was of considerable assistance to me. Her substantive analysis was not seriously criticised by any counsel. The primary complaints of the plaintiffs were that Ms O'Gorman was said to have trespassed outside her brief into an adjudicative role, failed to take into account all the post-caucusing proposals and did not accurately record the White plaintiffs' position. I do not accept these complaints. As noted, Ms O'Gorman was tasked with assisting the parties and then the Court with the resolution of the remaining issues and she has done exactly that. In short, she has assessed whether and to what extent, if at all, the issues raised by the plaintiffs require further action by the defendants. She has made recommendations that correspond to that assessment. Any purported failure to take into account post- caucusing proposals or the position of the parties does not materially derogate from the substance of her recommendations.
3 Judgment No 9, above n 1, at [7].
(g) The plaintiffs pressed on with their remaining issues which, as I have noted, the defendants largely showed to be inconsequential.”
Costs principles
[9] I adopt the statement of cost principles I made in the White costs judgment. The party who succeeds is usually entitled to their costs according to scale.4 That scale is usually 2B, but in complex cases the scale might properly be adjusted in whole or part to 3B or 3C.5 Costs however may be increased or decreased depending on, among other things, the conduct of the parties to the litigation.6 In some cases costs may be shared, but success on more limited terms is still success.7
6 December 2019 – Metlifecare’s application for compliant discovery
[10] Metlifecare sought orders requiring, in short, that James Hardie provide discovery by individual defendant. My judgment granting the application was reversed by the Court of Appeal.8 Metlifecare accepts that it must pay costs in this Court on this application, but challenges James Hardie’s claim for costs in respect of two affidavits by reference to step 30 of Schedule 3 of the Rules. It says that James Hardie’s costs on the affidavits comes within steps 22 and 23 of the Schedule. James Hardie responds that costs awards on complex affidavits may be increased by analogy to step 30, noting that this approach was endorsed in the White costs judgment.
[11] The issue of affidavit costs was recently addressed by Katz J in Tandem.9 I cannot improve on the Judge’s reasoning in that case:
[15] Item 30 of sch 3 of the Rules originally appeared under the hearing [sic] “Trial preparation and appearance” and provided for a cost allocation to be made for “Plaintiff's or defendant's preparation of briefs or affidavits”. The relevant rules were amended in August 2019 to separate out the cost allocations that could be claimed for affidavit hearings and witness hearings. Item 30 now appears under the heading “Preparation for affidavit hearing” and allows for a cost allocation for the preparation of affidavits for such hearings. Item 33, on the other hand, relates to the preparation of briefs for a witness hearing. It is clear, however, that the recent amendments to the Rules were not
4 Judgment No 9, above n 1, at [8]; and High Court Rules 2016, r 14.2.
5 Rules 14.3 and 14.5.
6 Rules 14.6 and 14.7.
7 See Packing In Ltd (In Liq) v Chilcott (2003) 16 PRNZ 869 (CA) at [5] per Tipping J; and Weaver v Auckland Council (2017) 24 PRNZ 379 (CA) at [26].
8 James Hardie New Zealand Limited v White [2020] NZCA 142.
9 Tandem Group Limited v ASB Bank Limited [2021] NZHC 1135 at [14]–[16].
intended to expand the ambit of the previous rule and allow parties to claim for the preparation of affidavits for interlocutory hearings as of right. Rather, the preparation of interlocutory affidavits is covered by item 22 (filing interlocutory application) and item 23 (filing opposition to interlocutory application). (I note in this context that rules 7.20 and 7.25 respectively provide that supporting affidavits must be filed contemporaneously with an interlocutory application or notice of opposition.)
[16] In some cases, however, particularly where affidavit evidence is complex and comprehensive, an additional award of costs may be justified. As Cooke J observed in Re Miah the most natural way to address this would be to allow a party to make a claim under time band C for item 22 or 23, rather than time band B (if that is the appropriate band for other steps). In Miah, however, his Honour was satisfied that much of the affidavit preparation was covered by the disbursement and the allowance provided for the other steps and to make a further cost allocation for the preparation of affidavits would involve double counting.
(citations omitted)
[12] Therefore, I proceed on the basis that step 30 does not provide the correct formula for assessing the costs of affidavits in interlocutory proceedings. However, in complex cases, the costs of the affidavits may be increased to time band C.
On the merits, there are competing considerations here. The affidavits were substantial, dealing at length with the process adopted by James Hardie. But part of that was necessary so as to comply with the requirements of the discovery process in any event. Furthermore, James Hardie had approved timetabling on the basis that discovery would be undertaken by individual defendants. An explanation for departing from that starting point was necessary. I am satisfied that costs on the 3B basis (including a 50 per cent reduction to reflect time spent at the hearing in relation to the White proceedings) as otherwise sought by James Hardie are appropriate. For completeness, there was no definitive ruling on quantification by reference to step 30 in the White No 9 Judgment. I place no significance on the order made in that judgment.
Metlifecare’s updating memorandum of 11 March 2020 and Judgment (No 7) dated 3 April 2020.
[13] By way of memorandum of 11 March 2020 Metlifecare identified “priority discovery issues” recorded in my Judgment No 7 as follows:10
10 White v James Hardie New Zealand Ltd (No 7) [2020] NZHC 685 [Judgment No 7] at [61].
[61]The Waitakere plaintiffs identify the following key issues for resolution:
(a)Compliance with listing and exchange protocols;
(b)the failure to provide a schedule listing the position of each of the defendants’ employees; and
(c)incomplete provision of documents regarding:
(i) Class B – testing;
(ii) Class L or I – risks, defects or liability, e.g. board materials; and
(iii) Class J – insurance documents.
[14] On each of these issues I found largely in favour of Metlifecare,11 save that I did not impose an unless order sought. Costs were reserved pending outcome of processes envisaged by the judgment. These specific matters were ultimately resolved without further recourse to the Court. I reject James Hardie’s claim for reduction on the costs award. Any success enjoyed by James Hardie on this was modest only. It follows that Metlifecare is the successful party and entitled to its costs on a 3B basis as sought for their attendances in respect of these matters.
Independent Counsel Process
[15] James Hardie submits that Metlifecare did not meaningfully engage in the Independent Counsel Process. James Hardie identifies various steps taken by Metlifecare, which it says demonstrates this claim. It seeks costs on their statement of position lodged with Independent Counsel on an analogous basis to submissions. Metlifecare rejects James Hardie’s complaint, highlighting various steps taken by it which are said to show meaningful engagement.
[16] I do not propose to make an award of costs on the Independent Counsel Process for following reasons:
11 At [69], [73], and [75].
(a)The use of Independent Counsel was not advanced on the basis that it was a step in the proceedings that might subsequently attract a costs award;
(b)The costs of the Independent Counsel Process were agreed by the parties and it would be unfair now to impose an order for costs in respect of that process; and
(c)Rule 14.6 of the Rules might provide a basis for increasing a costs award in circumstances where the conduct of the party was plainly unreasonable, but this is not such a case.
6–7 August 2020 — substantive application
[17] As with the White proceedings, James Hardie was the successful party in respect of the August hearing. As noted in Judgment No 8:
[184] The following issues were live insofar as concerns the Waitakere plaintiffs at the commencement of the hearing:
(a)Whether the defendants complied with the tailored discovery orders in respect of Categories I and J.
(b)Whether six managers/directors identified by the Waitakere plaintiffs should be treated as custodians.
Subject to leave
(c)Whether the defendants should be ordered to produce copies of their document retention/destruction policy.
(d)Whether the defendants should produce documents listed in Schedule B to the Waitakere plaintiffs’ second amended application.
[185] I understand that the Waitakere plaintiffs no longer seek orders in respect of the six additional custodians because the defendants had agreed to run a search in relation to one of them, a Mr Loduwick. If I am wrong about that, for the reasons expressed above at [157]–[160] in respect of the similar request made by the White plaintiffs, I would refuse to add the three additional custodians not already included.
[18] On the remaining substantive issues, I concluded that James Hardie had discharged their obligations in respect of the specified categories of documents12 and I was not persuaded that James Hardie should be directed to confirm that Board Materials do not exist. Instead, I found that it was sufficient for James Hardie to aver to the fact that those materials were not located or that they have been located but not discovered. Therefore, James Hardie was the successful party in this proceeding.
[19] Metlifecare submits however, in short, that the resolution of these issues represents the outcome of a lengthy discovery process, involving multiple steps by both parties, compromise and when viewed in the round, ultimately Metlifecare was broadly successful in its challenges in respect of James Hardie discovery. I disagree. James Hardie successfully defended the remaining applications and is entitled to its scale costs.
[20]Metlifecare nevertheless maintains costs should be reduced to reflect that:
(a)A significant amount of day two was spent on the White security for costs application;
(b)James Hardie should not be entitled to costs on the affidavits;
(c)James Hardie did not engage with Metlifecare about the reasons for not confirming the existence of Board Materials;
(d)Metlifecare requested a custodian schedule in November 2019, which would have enabled it to assess the defendants’ claims to privilege much earlier:
(e)Metlifecare refined its position following conferral and receipt of custodian schedule; and
12 Judgment No 8, above n 2, at [197].
(f)Metlifecare also claims that James Hardie have claimed costs in respect of memoranda that relate to general procedural matters and also relate to the White proceedings.
[21]On these matters:
(a)I accept that a larger amount of time was spent on the White priority issues and the security application at the August hearing. Exemplifying this, the August hearing engaged two substantive White applications and attracted a costs order in respect of those applications of
$53,832.50.13 Therefore, I consider that a discount of 60 per cent (not
50 per cent) for steps 26 and 27 is necessary to meet this issue;
(b)In terms of the affidavits, while step 30 is not engaged directly or by analogy, I am satisfied that the complexity and usefulness of the affidavit evidence warrants a 3C scale award in respect of step 23. Judgment No 8 at [19]–[47] is sufficient evidence to support this;
(c)James Hardie’s conduct does not engage r 14.6 of the Rules; and
(d)I am not in a position to unpick the content of individual memoranda. But the memoranda appear to coincide with major steps in the discovery process, the time claimed appears reasonable, and the 60 per cent discount adequately apportions costs to the White proceedings. No further adjustment is therefore needed for James Hardie’s claim.
6– 7 August — leave application
[22] Metlifecare applied for leave to make application for orders to produce their document retention/destruction policy and for the production of specified documents the defendants claimed were privileged. It obtained leave in relation to the issue of privilege. I did not grant leave in relation to the document retention/destruction policy
13 Judgment No 9, above n 1, at [30(b)].
issue. I previously indicated that Metlifecare should have its costs on the application for leave.
[23] James Hardie submits that costs should lie where they fall because counsel for Metlifecare indicated to the Court that it was content for Independent Counsel to review the challenged document and that this was material to the decision to grant leave, but counsel later recanted and demanded a substantive determination of the issue of cogency. It is also noted that James Hardie was successful insofar as leave was not granted on one of the two issues.
[24] I remain content that Metlifecare should have its costs on the application. As it submitted, some success is still success.14 The issue in relation to Independent Counsel goes to costs on the substantive application to which I will now turn.
Judgment (No 11) – the issue of cogency
[25] In my judgment granting leave to apply for orders in respect to privilege documents, I referred to counsel indicating that Metlifecare would be content for independent counsel to review specified documents and I indicated that Metlifecare’s request is amenable to that approach. James Hardie subsequently indicated that they were happy with that approach, but Metlifecare insisted on a substantive determination of whether there was cogent evidence of an erroneous claim to privilege. As mentioned in Judgment 11, I found this perplexing, given that the end result may be referral to Independent Counsel in any event.15 In the result, I doubted that there was cogent evidence of the alleged error, but referred the documents to Independent Counsel because that was the most efficient course.16
[26] Against this background, James Hardie is the successful party, and to be commended for its pragmatic approach. Conversely, the two step approach demanded by Metlifecare was unnecessarily technical and an inefficient use of court time, triggering r 14.6(3)(b)(ii). I am satisfied this should be reflected in an increased costs award of 15 per cent on 3B scale costs.
14 Weaver v Auckland Council, above n 7, at [26].
15 Waitakere Group Ltd v James Hardie New Zealand [2021] NZHC 1111 [Judgment No 11] at [2].
16 At [11].
[27] Metlifecare submits that James Hardie’s claim in respect of memoranda should be rejected because they relate to general matters and that James Hardie’s cost claim should be reduced from $11,296.00 to $8,454.00. I have reviewed these memoranda dated 21 August 2020 and 17 September 2020. I reject Metlifecare’s claim. I am satisfied that these matters plainly relate to discovery matters and are claimable.
Second Independent Counsel Process
[28] James Hardie seeks $2,118.00 in costs against Metlifecare for the second Independent Counsel Process. It submits the Independent Counsel favoured its analysis on every material matter still in issue. Further, James Hardie submits it waived privilege on a document, which reduced all parties’ costs. It says that if that pragmatic decision meant it was unable to recover costs on its successful defence of Metlifecare’s application, that would disincentivise sensible concessions. Metlifecare submits that costs should lie where they fall and that as James Hardie maintained its claim to privilege, verification remained necessary.
[29] For the reasons expressed above at [16], I make no order for this. The Independent Counsel Process was not a step in the proceeding. Rather, it was an agreed step designed to avoid further hearing costs. That it did not entirely achieve that outcome is addressed by the above costs determination. But save for that, I see no reason to make a costs order in respect of it.
Costs on particulars
[30] In my judgment on particulars, I resolved that Metlifecare should have its costs on a 2B basis less 25 per cent.17 James Hardie says that the costs for items 25 and 26 should be reduced by 50 per cent to reflect that the hearing and bundle substantially concerned the plaintiffs own application and disagree that costs ought to be payable for a second counsel.
[31] I am content that my order, given while the matter was fresh, should remain intact. James Hardie’s complaint is too fine grained. Regarding second counsel, as
17 Waitakere Group Ltd v James Hardie [2021] NZHC 722 at [44].
counsel in both the White and Metlifecare proceedings have emphasised throughout, this is a complex proceeding, justifying second counsel, even in respect of a relatively discrete application for particulars.
Costs on memorandum filed in respect of late discovered documents
[32] Metlifecare seeks an award of costs for a memorandum and associated case conference dealing with late discovered documents relating to the testing of materials in May 2021. This all came to prominence because of exchanges about these documents in the White trial. Problematically, Metlifecare did not submit an application, initiate a proceeding or file an interlocutory order against which a costs order might be readily attached. Although the step instigated by Metlifecare was not unreasonable, I am not satisfied it reveals conduct on the part of James Hardie that should attract an order for costs at this stage. In my view, costs in relation to this step are more properly addressed when the merits of the proceeding are resolved.
Costs on the costs memoranda
[33] I make no order for costs on the memoranda. The costs regime envisages quick disposition of costs matters. Lengthy costs memoranda and subsidiary litigation of the present kind are to be discouraged. In any event, success (and defeat) has been largely shared across the six steps for which claims for costs were made.18
Costs on disbursements
[34] James Hardie seeks an order for disbursements in relation to filing fees for Metlifecare’s application dated 6 December 2019 and amended application dated 15 June 2020. No submissions explaining this claim were provided. I propose to simply approach this issue by awarding disbursements to the successful party where relevant.
Outcome
[35]I make the following orders:
18 See Body Corp v Mehta [2013] NZHC 213 at [87]. Allan J refused to order a costs award for the defendant’s memorandum because the defendant lost on a major issue and needed to file further costs submissions. The plaintiff had enjoyed some success on the costs memorandum too.
(a)James Hardie is entitled to its 3B costs of $12,796.25 and disbursements in respect of the 6 December 2019 application (Judgment (No 5)) without separate provision for the affidavits by analogy to step 30;
(b)Metlifecare is entitled to its 3B costs of $18,086.00 and disbursements in respect of Metlifecare’s updating memorandum of 11 March 2020 and Judgment (No 7) dated 3 April 2020;
(c)James Hardie is entitled to its scale costs of $30,711.00 and disbursements for the 6–7 August 2020 substantive application and Judgment (No 8) comprised as follows:
(i)3B scale costs for all steps except step 23;
(ii)3C scale costs in respect of step 23 ($7,060.00);
(iii)Steps 26 and 27 reduced by 60 per cent (step 26: $2,118.00 and step 27: $1,059.00); and
(iv)no separate provision by analogy to step 30;
(d)Metlifecare is entitled to its 3B costs of $7,413.00 and disbursements on the application for the 6–7 August 2020 leave application;
(e)James Hardie is entitled to its 3B costs and disbursements in respect of the cogency issue, Judgment (No 11) uplifted by 15 per cent ($1,694.40), amounting to $12,990.40; and
(f)Metlifecare is entitled to its 2B costs (reduced by 25 per cent) of
$6,184.12 and disbursements on its application for particulars, including for second counsel.
[36] There shall be no orders in respect of the Independent Counsel Processes, for memoranda in relation to late discovery documents or for the costs on costs memoranda.
Appendix 1
Schedule of counsels’ submissions for Metlifecare v James Hardie
| Hearing | Related application/s and judgment/s | Defendant’s (James Hardie’s) submissions | Plaintiffs’ (Metlifecare’s) submissions |
| 18 December 2019 | Metlifecare’s interlocutory application for orders that the defendants provide compliant discovery dated 6 December 2019. Judgment (No 5) dated 19 December 2019.19 Court found for the plaintiffs. However, Court of Appeal overturned the decision.20 | James Hardie submits it was the successful party in this hearing because the Court of Appeal overturned the judgment from this hearing, which favoured Metlifecare. It seeks costs for the preparation of two substantial affidavits due to what they claim is the Court’s approval in Judgment No 9.21 James Hardie claims 3C scale costs using the same scale costs as item 3022, calculated on the basis of the duration of the interlocutory hearing that the specific affidavit related to. This claim also includes a claim for the cost of preparing a common bundle named ‘Defendants’ common bundle for interlocutory hearing relating to discovery on 18 December 2019’ dated 17 December 2019. | Metlifecare accepts it is liable for scale costs on a 3B basis in connection with the 18 December 2019 hearing. However, Metlifecare rejects James Hardies’ claim for the affidavits prepared in opposition to its application. It submits that James Hardie’s claim for costs of preparing the affidavits is predicated on affidavits in opposition to an interlocutory application not being expressly referred to in item 23 of sch 3 of the High Court Rules 2016 (the Rules). It says the Court has previously upheld the proposition that affidavits for interlocutory applications are covered by step 22 or 23 of the Schedule.23 The Court also rejected the use of step 30 as |
White v James Hardie New Zealand (No 5) [2019] NZHC 3459.
James Hardie New Zealand Limited v White [2020] NZCA 142 at [98].
White v James Hardie New Zealand Ltd [2021] NZHC 930 [Judgment No 9 — White costs judgment] at [28].
High Court Rules 2016, sch 3.
See Tandem Group Limited v ASB Bank Limited [2021] NZHC 1135 at [14]–[16].
| For this hearing, James Hardie seeks $15,443.75 against Metlifecare. | a mechanism to claim costs for affidavits for interlocutory applications.24 Metlifecare accepts the calculation of costs less the costs for preparing the affidavits, which amounts to $12,796.25. | ||
| 18 March 2020 | Metlifecare’s updating memorandum dated 11 March 2020 (Priority Discovery Issues) Judgment (No 7) dated 3 April 2020.25 | James Hardie submits costs should lie where they fall because the Court previously found in White v James Hardie New Zealand that costs should lie where they fall regarding this hearing.26 Further, James Hardie submits both parties enjoyed a measure of success. James Hardie says this Court found in favour of Metlifecare regarding the relisting of author/recipient information and the custodian schedule. James Hardie was successful in alleging incomplete provision of certain types of discovery against Metlifecare. Both parties cooperated on document types, which avoided the need for a Court order. James Hardie submits that if this Court finds Metlifecare is entitled to costs on the March 2020 hearing, the time | Metlifecare rejects James Hardie’s position that costs should lie where they fall in respect of the priority discovery issues (18 March 2020 hearing). Metlifecare submits it is the successful party because the Court favoured it on each issue. Specifically, the Court granted the orders Metlifecare sought for “Protocol non-compliance” and failure to provide custodian schedule. The Court reserved leave to Metlifecare to report to the Court on the progress of James Hardie for the Document Gaps issue, the Court directed James Hardie to agree to an amended schedule of document types within 10 working days, and the Court reserved leave to Metlifecare and reserved costs. |
See Du v M5 Holdings Limited [2020] NZHC 28 at [12].
White v James Hardie New Zealand Ltd (No 7) [2020] NZHC 685 at [79].
Judgment No 9 — White costs judgment, above n 21, at [4], [16] and [31].
| allocation should be reduced by 50 per cent under r 14.7(d) of the HCR, citing Weaver v Auckland Council.27 James Hardie submits that Metlifecare should not be entitled to recover costs for a full day in the hearing. They submit a majority of the hearing concerned the White plaintiffs’ discovery applications. | In response to James Hardie, Metlifecare submits that just because the Court concluded costs should lie where they fall in the White proceeding does not mean that the same result should apply here. In addition, Metlifecare rejects James Hardie’s claim for a reduction in costs award because seeking an unless order was appropriate in the circumstances and the Court reserved leave to Metlifecare to seek orders it considered necessary to secure final discovery. It accepts, as James Hardie submits, that the time allocation for this hearing should be reduced due to the White plaintiffs’ involvement. Metlifecare seeks $18,086.00 against James Hardie for this hearing. | ||
| 17 July 2020 Independent | On 22 June 2020, Court appointed Ms Laura O’Gorman as independent counsel. Report dated 17 July 2020. | James Hardie submits Metlifecare failed to meaningfully engage in the first Independent Counsel Process. In particular, James Hardie says: | Metlifecare rejects James Hardie’s claim to costs and submits costs should lie where they fall regarding the first Independent Counsel Process. |
Weaver v Auckland Council (2017) 24 PRNZ 379 (CA) at [26].
| · Metlifecare attempted to recuse Ms O’Gorman due to alleged bias, which James Hardie says was a substantively meritless application; · Metlifecare did not engage with James Hardie on a joint report on the outcome of the caucusing process; · Metlifecare objected to Ms O’Gorman’s cost estimate and proposed to restrict her process for considering discovery issues, despite this Court directing that any issues regarding costs of counsel assisting should be referred to her; and · Metlifecare sought to limit Ms O’Gorman’s role. James Hardie says it proposed the process, Metlifecare opposed it, but the Court ordered the process. James Hardie claims costs outlined in the Statement of Position dated 22 June 2020. James Hardie says that the Independent Counsel agreed with them | Metlifecare also refers to its memorandum (filed jointly with the White plaintiffs) recording that there was no reason to depart from the original allocation of costs of the report (each party contributes one-third share of the costs). Further, Metlifecare submits it engaged meaningfully with the process, referring to the following examples: · Metlifecare’s counsel held a meeting with James Hardie’s counsel, which focused on narrowing the issues between the parties; · At the meeting the parties agreed to populate a table identifying areas of agreement; · Metlifecare continued to engage in correspondence with James Hardie after the meeting; · Metlifecare filed a joint memorandum with the White plaintiffs recording they had engaged in an effort to reach agreement and there was no reason to depart from the original |
| on every discovery issue in dispute in their report dated 17 July 2020. | allocation of costs of the report; and · At the end of the meeting, counsel from both Metlifecare and James Hardie agreed that there was little point in preparing a joint report on the outcomes of the meeting. Nevertheless, James Hardie circulated a joint report to Metlifecare. It then criticised Metlifecare for not cooperating with the report. | ||
| 6–7 August 2020 (substantive application) | Metlifecare’s amended interlocutory application that defendants provide compliant discovery dated 15 June 2020 (amended again on 21 July 2020). Judgment (No 8) dated 27 August 2020.28 | James Hardie submits scale costs of $35,388.25 against Metlifecare is appropriate for the 6–7 August hearing (including the leave application). That is because James Hardie was the successful party on both the tailored discovery and custodian issues. Also, this Court ordered the White plaintiffs to pay costs for the hearing. James Hardie also claims the cost of preparing two substantial affidavits: the affirmation of Mikhaila Nola affirmed 27 May 2020 and the affirmation of Alexander Petrie affirmed 27 May 2020. | Metlifecare rejects James Hardies’ claim to be entitled to costs and says costs should lie where they fall regarding this hearing. It makes this submission in light of the fact that when taking into account the whole context, it was the successful party. In summary, Metlifecare submits it was the successful party because: · James Hardie’s approach to discovery has been characterised by a “drip-feeding” of documents, which meant issues ebbed and flowed. Therefore, |
White v James Hardie New Zealand Ltd (No 8) [2020] NZHC 2202.
| James Hardie does not apply a reduction to the costs claimed in regard to the two affidavits because the content was not information required to be proved as part of the discovery process. Rather, they seek costs calculated on the basis of the interlocutory hearing that the affidavits James Hardie submits Metlifecare’s opposition to including the cost of preparing affidavits in the costs claim for 6–7 August 2020 hearing is misconceived. James Hardie submits that the issue of whether an additional award of costs for preparing affidavits is justified is a contextual question. They say they only sought costs for complex and lengthy affidavits, which is appropriate due to the unusual scale and complexity of Metlifecare’s discovery complaints and the evidence required to respond to the complaints. Further, James Hardie says they reduced the scale costs sought from Metlifecare by 50 per cent in respect of the steps taken up until 6–7 August 2020 hearing | some issues were resolved and others emerged as counsel provided further documents and information to the Court; · James Hardie had a narrow position on costs, which does not properly account for the breadth of issues between the parties; the piecemeal nature of James Hardie’s discovery; and the fact Metlifecare filing the applications led to many of the issues between the parties being resolved before the Court was required to address them; · Appreciating the underlying background is fundamental to determining the successful party. With that approach, Metlifecare is substantively the successful party. In regard to the 6–7 August 2020 hearing, Metlifecare says it agreed to adopt a pragmatic approach to agree to James Hardie confirming the extent of the search in respect of board materials on behalf of James Hardie, which meant |
| 6–7 August 2020 (leave application) | to take into account the White plaintiffs’ applications. In regard to the leave application on 6–7 August 2020, James Hardie submits costs should lie where they fall due to the reversal of the position by Metlifecare on a critical matter. James Hardie acknowledges that the Court indicated Metlifecare was entitled to costs on the leave application. However, James Hardie submits: · both parties enjoyed a measure of success as James Hardie was successful in opposing leave for the document retention policy, while Metlifecare was successful in obtaining leave in respect of the challenges to privilege. · Further, the Court granted leave on a material misapprehension of the facts because Metlifecare reversed their position on a critical matter material to the Court’s decision. Finally, James Hardie submits that while Metlifecare obtained leave, ultimately, James Hardie was the successful party in | the Court was not required to determine this aspect of Metlifecare’s application. In addition, Metlifecare says the Court confirmed their change in focus regarding privilege as “appropriate” in respect of Category J and in respect of Category I the Court ordered in Metlifecare’s favour. In respect of the issue of privilege, the Court considered there would be a tenable basis for concerns raised by Metlifecare. The Court declined leave in respect of James Hardie’s document For the reasons above, Metlifecare says that it was the successful party. If the Court finds James Hardie is the successful party, Metlifecare submits James Hardie’s cost award should be reduced because: · The second day of the hearing concerned James Hardie’s application for security for costs; |
| the second Independent Counsel process, where the challenges to privilege were assessed. | · James Hardie is not entitled to the costs of preparing affidavits; · A reduction of 50 per cent of the costs is warranted ($35,388.25 claimed less $7,060.00 for the memoranda and $8,825 for the affidavits). | ||
| 17–20 May 2021 | Metlifecare’s leave application to address the privilege issue. Judgment (No 11) dated 20 May 2021.29 | James Hardie seeks increased costs of $16,944.00 (scale costs of $11,296.00 plus 50 per cent uplift) on every step after the Court granted leave to Metlifecare’s privilege application. James Hardie says Metlifecare insisted the Court issue a determination on whether there was a cogent basis for going behind Metlifecare’s representations as to privilege. The Court concluded it was not fully convinced there was “cogent evidence” of James Hardie’s alleged privilege failings. Also, the Court indicated costs on the substantive application should go to James Hardie. | Metlifecare rejects James Hardie’s claim to increased costs in relation to Judgment (No 11). It accepts it is liable for scale costs on a 3B basis and accepts James Hardie’s calculations of its scale costs (i.e., excluding the claimed 50 per cent uplift). It also rejects James Hardie’s claim regarding memoranda that relate to general matters. It says that the costs James Hardie claims in Schedule A ($11,296.00) should be reduced to $8,454.00. Metlifecare seeks a costs order against James Hardie of $7,413.00 for the leave application. It says Court determined that Metlifecare was entitled to costs on |
Waitakere Group Ltd v James Hardie New Zealand Limited [2021] NZHC 1111 (Judgment No 11).
| James Hardie submits this is an appropriate step for an award of increased costs (scale costs with an uplift of 50 per cent) as it prolonged the dispute and contributed unnecessarily to the time or expenses of the proceeding in it by taking or pursuing an unnecessary step or an argument that lacks merit. It refers to Holdfast NZ v Selleys Pty as authority for the increased costs award.30 James Hardie says the total costs claimed includes the cost of obtaining judgment without appearance. | this issue in Judgment (No 8). Metlifecare says costs on this issue should be determined based on the conduct at the time of the hearing and not before or after it. | ||
| 17 May 2021 (not a hearing) | Memorandum dated 17 May 2021. | James Hardie submits there is no reasonable basis for Metlifecare to seek costs on this basis. It states there was no application relating to those documents, no orders were made by the Court, there was no failure on the defendants’ party to comply with their discovery obligations, and no prejudice raising to the plaintiff from the disclosure. | Metlifecare seeks an order that James Hardie pays $3,883.00 in 3B costs to Metlifecare for its memorandum of 17 May 2021 and appearance at any urgent conference on 20 May 2021 in relation to the late discovery of the Allunga testing documents. |
| 26 August 2021 | Second Independent Counsel Process (following on from Judgment (No 11) to review certain documents for privilege | James Hardie seeks $2,118.00 in costs against Metlifecare for the second Independent Counsel Process. It submits the Independent Counsel favoured its | Metlifecare rejects James Hardie’s claim to costs and submits costs should lie where they fall. It submits that James Hardie maintained a claim to privilege |
Holdfast NZ Ltd v Selleys Pty Ltd (2005) 17 PRNZ 897 (CA) at [47].
| Second Independent Counsel Process | and resulting in a report dated 26 August 2021). | analysis on every material matter still in issue. Further, James Hardie submits it waived privilege on a document, which reduced all parties’ costs. It says that if that pragmatic decision meant it was unable to recover costs on its successful defence of Metlifecare’s application, that would disincentivise sensible concessions. James Hardie also seeks costs on the preparation of a bundle for this process. James Hardie acknowledges Metlifecare reserved its position on the cost of this step. | that Metlifecare could not verify without assistance of the Independent Counsel. Therefore, costs should lie where they fall. |
| Other claims | Defendant’s (James Hardie’s) submission | Plaintiff’s (Metlifecare’s) submission |
| Costs on costs (memorandum for this upcoming costs judgment) | James Hardie seeks $2,390.00 for the costs of preparing the 7 October 2021 memorandum on a 2B basis. They seek costs for a one day time allocation, referring to Prattley Enterprises Ltd v Vero Insurance New Zealand Ltd as precedent for this claim.31 James Hardie notes the question of whether James Hardie’s claim for costs on costs in the White | Metlifecare seeks $2,390.00 on a 2B basis from James Hardie for the costs of preparing the 4 November costs memorandum. For all the reasons discussed above, Metlifecare rejects James Hardie’s claim to costs on costs. |
Prattley Enterprises Ltd v Vero Insurance New Zealand Ltd (2017) 23 PRNZ 484 at [39].
| proceeding was referred to in Judgment (No 9)32, but was not ultimately resolved. | ||
| Particulars (heard on 30 March 2021) | James Hardie accepts costs are payable in relation to Judgment (No 9).33 However, James Hardie considers costs for items 25 and 26 should be reduced by 50 per cent to reflect the fact the hearing (and bundle) substantially concerned Metlifecare’s own application, which was heard at the same time as the defendants’ application on which costs are payable. Metlifecare disagrees that costs ought to be payable for a second counsel on a straightforward and short particulars hearing. | Following Judgment (No 9), Metlifecare seeks costs and disbursements of $6,184.12. In Judgment (No 9), Metlifecare was awarded costs in relation to James Hardie’s application for further and better particulars of Metlifecare’s fourth statement of claim. |
| Metlifecare’s application for joinder and recusal of Chapman Tripp dated 11 September 2020 | Metlifecare reserves the right to file memoranda seeking costs for this issue. | |
| Metlifecare’s application that James Hardie answer interrogatories dated 21 December 2020, Judgment (No 10) dated 29 April 2021 and Judgment (No 12) dated 15 June 2021 | Metlifecare reserves the right to file memoranda seeking costs for these issues. |
Judgment No 9 — White costs judgment, above n 21, at [28].
Waitakere Group Ltd v James Hardie [2021] NZHC 722 [Judgment No 9].
Overall costs claimed:
James Hardie: $77,579.00 in 3B and 3C scale costs and $220.00 in disbursements.
Metlifecare: $37,956.12 in 3B scale costs, 2B scale costs and $1000 in disbursements.
0
10
1