Moorhouse Commercial Park Limited v Vero Insurance New Zealand Limited
[2023] NZHC 2377
•29 August 2023
IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY
I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE
CIV-2017-409-997
[2023] NZHC 2377
BETWEEN MOORHOUSE COMMERCIAL PARK LIMITED
PlaintiffAND
VERO INSURANCE NEW ZEALAND LIMITED
Defendant
Hearing: On the papers Appearances:
S P Rennie and J E Bayley for Plaintiff C M Brick for Defendant
Judgment:
29 August 2023
JUDGMENT OF DUNNINGHAM J RE: COSTS
This judgment was delivered by me on 29 August 2023 at 3 pm, pursuant to r 11.5 of the High Court Rules
Registrar/Deputy Registrar Date:
MOORHOUSE COMMERCIAL PARK LIMITED v VERO INSURANCE NEW ZEALAND LIMITED [2023] NZHC 2377 [29 August 2023]
Introduction
[1] Moorhouse Commercial Park Ltd (Moorhouse) is the owner of two commercial buildings situated on Moorhouse Avenue in Christchurch. These buildings were insured by Vero Insurance New Zealand Ltd (Vero). The buildings were damaged in the Canterbury Earthquake Sequence, and Vero accepted Moorhouse’s insurance claims to repair the damage. However, the parties could not agree on what repair strategy was required to reinstate the buildings to the policy standard and therefore what Moorhouse should be paid under the insurance policy. Vero maintained a repair strategy based on the use of epoxy resin to fill concrete cracks would suffice. Moorhouse disagreed.
[2] This dispute was the subject of a decision of this Court dated 6 December 2022.1 Vero was successful in its defence of Moorhouse’s claim. I found the proposed repair strategy using epoxy resin was appropriate,2 and I declined to make any other declaration interpreting the insurance policy as I considered the declarations sought either mirrored the wording of the policy or sought to put a gloss on the policy wording which was not warranted.3 I reserved the issue of costs, although signalling that, in the usual course, 2B costs would apply.4
[3] The parties have not been able to agree on costs. Vero seeks costs generally on a 2B basis, with uplifts in the form of an extra five days’ costs for the additional time required to prepare witnesses’ briefs of evidence, and it seeks a 35 per cent uplift to reflect the fact that Moorhouse pursued unmeritorious arguments and rejected a settlement offer without reasonable justification. This totals $211,245.10. It also claims disbursements of $438,731.87.
[4] Moorhouse does not dispute that Vero is entitled to costs but does dispute the quantum of costs. It says an award of $118,264 for scale costs with items variously categorised at band A and band B and disbursements of $190,517.45 would be appropriate.
1 Moorhouse Commercial Park Ltd v Vero Insurance New Zealand Ltd [2022] NZHC 3260.
2 At [126]–[143].
3 At [239]–[244].
4 At [253]–[254].
Submissions
Vero’s submissions
[5] Vero calculates scale costs for these proceedings as $147,626. This calculation is done mostly on a standard 2B basis, but includes:
(a)the following items recorded at band A:
(i)eight of the additional 11 occasions of inspections of documents listed at (c) below;
(ii)filing a memorandum for a judicial conference; and
(iii)filing a memorandum as to the plaintiff’s application for adjournment;
(b)certification for second counsel;
(c)11 additional occasions for inspection of documents;
(d)time allowances for preparation of briefs and preparation for hearing calculated for 12 days, instead of the 10 days the trial took; and
(e)costs on costs.
[6] Vero claims the items outlined at (a) above at band A to reflect the fact the time taken for them was less than calculated under band B.
[7] It claims certification for second counsel on the basis it was necessary due to the number of witnesses Vero called, the large volume of documents including the use of an electronic casebook, and the fact the trial took place in Christchurch while Vero’s solicitors are Auckland based. Vero notes Moorhouse had three counsel for most of the trial. Travel and accommodation disbursements are also sought for second counsel.
[8] The additional items for inspection of documents are claimed because Vero says the initial discovery by Moorhouse was inadequate and it had to make numerous requests to obtain discovery and inspection of relevant documents. These 11 further attendances are calculated variously as band A or band B depending on the volume of documents discovered which were relevant to the buildings which were in issue at trial.
[9] Vero claims additional days for preparing briefs and for the hearing on the basis that 13 days were originally allocated for the trial, and counsel prepared for a trial of that length. The trial duration was reduced by agreement just prior to trial because some of the evidence was agreed to be taken as read. Vero says that although this agreement made the trial more efficient, it prepared for a longer trial and that should be reflected in the costs award.
[10] Vero then claims increased costs in the form of a five-day uplift for the preparation of briefs of evidence which it says substantially exceeded the amount allocated for that step under band C. Vero called evidence from nine witnesses, eight of those being expert witnesses. Four of the experts provided more than one brief, which Vero says is largely because of the late briefs filed by Moorhouse or because of Moorhouse’s failure to disclose relevant matters to Vero before Vero filed its original evidence.
[11] Vero also claims a 35 per cent uplift because of Moorhouse’s alleged unnecessary contribution to the time and expense of the proceedings. Vero alleges this is the case because Moorhouse:
(a)pursued a repair strategy that was unjustified by the minor damage suffered to the buildings;
(b)unreasonably persisted with its argument that crack repair by epoxy was an inappropriate method under the insurance policy, including an unreasonably late concession that epoxy repair was suitable for the panels of the building at 43 Moorhouse Avenue;
(c)unreasonably persisted with its argument that deep pile foundations were required to be installed as part of the repair schemes for the buildings, which was conceded late into the proceedings;
(d)unreasonably pursued claims that Vero was responsible for delay in assessing Moorhouse’s policy entitlements and was attempting to avoid Moorhouse’s policy entitlements; and
(e)unreasonably rejected a settlement offer made by Vero on 22 June 2021 including the full cost of repairs and accepted claims preparation costs without any deduction for depreciation regardless of whether the repairs were undertaken, which Vero says is worth more than Moorhouse now stands to recover under the judgment.
[12]Including increased costs, the costs claimed total $211,245.10.
[13] Vero originally claimed $442,132.92 in disbursements, including $421,745.97 in expert fees. It says these expert fees were specific to the conduct of the proceedings, reasonably necessary for the conduct of the proceedings and reasonable in amount. It also claims costs incurred for litigation support services which were used to facilitate electronic discovery for the large volume of documents it was obliged to discover from its files, but the cost of data storage was not included.
[14] Vero adjusted its disbursements to $438,731.87 in response to Moorhouse’s submissions. This adjustment removes disbursements for alcohol incorrectly charged, miscalculations of GST, misstatements of some amounts, and experts’ costs associated with a judicial settlement conference.
Moorhouse’s submissions
[15] Moorhouse does not dispute that costs should be awarded, but it does dispute the quantum that should be awarded.
[16] Moorhouse challenges various aspects of Vero’s calculation of scale costs and calculates the appropriate costs award at $118,264. It submits:
(a)some steps are not properly allocated: for example, item 9 is described as appearance at a case management conference (step 13) but should have been claimed as an appearance at a mentions hearing (step 12);
(b)it was appropriate for Vero to apply band A to some steps, but more steps should be calculated on a band A rather than band B basis, including some memoranda which only ran to a few pages and some brief teleconference appearances;
(c)certification for second counsel is appropriate;
(d)the additional items for inspection of documents do not accord with the principle that reasonable time for inspection should be allocated as a whole rather than the number of occasions discovery was provided,5 so it submits an appropriate allocation would be three days (two tranches of band B);
(e)the allowance for preparation of briefs and for hearings is calculated using a formula based on the actual length of the trial, which ensures the determination of costs is predictable and expeditious; and
(f)costs on costs should not be awarded.
[17] Moorhouse submits increased costs should not be awarded. For the claimed extra days for preparing briefs of evidence, it says this extra time is subsumed into the calculation for costs in relation to the trial length as the briefs were read and addressed at trial. Moorhouse also denies its arguments lacked merit or were not justified. Its position was underpinned by the opinion of well-qualified experts and was a bona fide dispute requiring resolution. This also meant its decision not to accept an offer of settlement was reasonably justified.
5 ABB Ltd v New Zealand Insulators (Costs) HC Auckland CIV-2004-404-4829, 18 December 2006 at [13] and [15].
The issues
[18] There is no dispute that the starting point is 2B costs. There is also no dispute that second counsel should be certified.
[19]However, the following issues are disputed:
(a)whether some steps have been incorrectly allocated;
(b)whether more steps should have costs calculated on a band A rather than band B basis;
(c)how costs should be claimed for multiple inspections of documents;
(d)what time allowance there should be for the preparation of briefs and for hearing and whether there should be an award of increased costs;
(e)whether there should be an uplift on costs for unreasonably pursuing certain arguments and rejecting a settlement offer made on 22 June 2021;
(f)whether some of the disbursements are properly claimed; and
(g)whether there should be costs on this costs application.
Allocations at the wrong step
[20] Moorhouse challenges Vero’s classifications of four items as being at step 13, being an appearance at the first or subsequent case management conference, rather than being at step 12, being an appearance at a mentions hearing or callover. Step 13 allows for 0.3 day’s costs at bands A and B whereas step 12 allows for 0.2 day’s costs at bands A and B.6 Moorhouse says this is justified because the appearances were brief and it is consistent with Vero’s claim for costs from the telephone conference on 22 July 2022 for an appearance analogous to a mentions hearing or callover.
6 High Court Rules 2016, sch 3.
[21]The challenged items are:
(a)item 9 for the appearance on 1 August 2018;
(b)item 13 for the appearance on 19 September 2018;
(c)item 17 for the appearance on 11 December 2018; and
(d)item 45 for the appearance on 13 July 2022.
[22] For item 9 for the appearance on 1 August 2018, Vero says this conference was lengthy, and Moorhouse’s counsel filed two memoranda totalling 14 pages and sought a hearing time of two hours. Whata J’s minute from the conference was six pages long. I note that in Moorhouse’s memorandum seeking this appearance before a judge, counsel referred to the hearing as an “urgent case management conference” where it sought unless orders in respect of Vero’s non-compliance with an earlier minute from Whata J. I consider that Vero properly considered this step as a case management conference. That was how it was treated by all the parties at the time. The conference dealt with substantive issues about whether Vero had complied with timetabling orders by Whata J which included an assessment as to whether Vero’s calculations were properly considered to be for “indemnity value” and whether the engineering reports provided were sufficient.
[23] Item 13 relates to an appearance on 19 September 2018. This appearance concerned aspects of the agenda for the engineers experts’ conferral. Vero says detailed memoranda were filed on this issue and the issues for the conference were not straightforward. Courtney J issued a very brief minute where she described the hearing as a “telephone conference” and said the parties had produced agreement as to the final terms of the agenda after a “helpful discussion”. She said counsel were to file a joint memoranda covering the agreed terms. Both parties filed draft agendas and Vero filed a five-page memorandum explaining the disagreements the parties had. I am satisfied that having regard to the issues covered at this appearance, it is appropriately considered akin to a case management conference.
[24] The next appearance challenged is from 11 December 2018. This appearance was the subject of a minute from Gendall J where he noted that counsel filed detailed memoranda, including initial and reply memoranda for both parties, for this “case management conference”. This appearance covered the delay in completing the experts’ joint report, whether the case should be set down for trial, the time allocated for trial, whether a judicial settlement conference should be set down and timetabling directions. I note both parties also referred to this appearance as a “case management conference” in their memoranda. I consider this is properly considered an appearance at a case management conference, as claimed by Vero.
[25] The final appearance challenged is from 13 July 2022. Vero made no submissions in reply in relation to this challenge from Moorhouse. This appearance was before me where counsel requested an adjournment for the start of the trial because two of Moorhouse’s counsel were unwell. I issued a minute which considered whether 10 days would be sufficient to complete the hearing and if a site visit was required, and if it was, when it was to occur. This was a straightforward callover and appears analogous with the hearing on 22 July 2022, also to do with counsel’s illness, which Vero calculated in its costs application as analogous with a mentions hearing or callover. Given that similarity, I agree it is appropriate to treat these appearances as alike and account for this item, being item 45, under step 12, with an allowance of
0.2 days.
Allocations for band A or band B
[26] The second challenge from Moorhouse is that the costs claimed for filing memoranda for case management conferences (or analogous to that step) dated 5 December 2018, 14 February 2019, 9 June 2020, 7 October 2020, 21 April 2021, 21 September 2021 and 11 July 2022 (items 16, 21, 33, 36, 37, 40 and 43) should be calculated on a band A basis rather than a band B basis because the memoranda filed were brief. This would result in 0.2 days’ costs rather and 0.4 days. It says the brief memoranda cannot justify a costs award of almost half a day.
[27] I note that Moorhouse has left a note in its schedule calculating costs to the effect that item 44, being a memorandum dated 12 July 2022, also should be calculated
on a band A basis, however Vero already has calculated this item on a band A basis, so this comment appears to be in error.
[28] I accept the time bands can differ at each step, and under r 14.5 of the High Court Rules 2016, a step will be in band A if “a comparatively small amount of time is considered reasonable” and in band B if “a normal amount of time is considered reasonable”. I note that the length of a memorandum does not necessarily indicate the time required to prepare it, but rather the Court’s focus in determining an appropriate time band should be on the complexity of the issues and the time taken to formulate arguments.7 Furthermore, in my view, parties are to be discouraged from disputing the length of time that each step is assumed to have taken which, in the absence of agreement, requires the Court to deal with contested views about how long these steps might have taken. That is the very antithesis of achieving a “predictable and expeditious” determination of costs.8 In any event, I am not persuaded the filing of the memoranda did obviously warrant a lesser time band than B.
[29]By way of example, I deal with the first two of the challenged items.
[30] The first item challenged was for the memoranda filed on 5 December 2018 prior to the case management conference on 11 December 2018, discussed above at [24]. Vero filed a four-page memorandum for this conference which provided an update on how the case was progressing and what was causing delays, comments about the orders sought by Moorhouse to set the case down for a trial date and about a judicial settlement conference, and it sought directions for interrogatories. This memorandum also attached Vero’s draft agenda for the experts’ conferral and a skeleton document for the experts’ report. I note that a reply memorandum was also filed responding to a letter filed by Moorhouse regarding the reasons for delay in providing the experts’ report. It seems to me that these memoranda would take a normal amount of time to prepare, especially when the attachments are considered, and therefore an allocation under band B is appropriate.
7 See Minister of Education v James Hardie New Zealand [2018] NZHC 2960 at [16].
8 High Court Rules, r 14.2(1)(g).
[31] The next item challenged is the claim for band B costs in relation to the memorandum prepared for 14 February 2019. This memorandum was filed jointly by Vero and Moorhouse and provided an update for the Court as to how the parties were progressing with the orders given by Gendall J on 11 December 2018. The memorandum informed the Court that Vero wished to file an interlocutory application that the interrogatories be answered and Moorhouse was in turn going to file an amended statement of claim. The parties agreed that Moorhouse should file the amended statement of claim before Vero filed its application, so the parties agreed that the close of pleadings date should be extended and sought a timetabling direction as such. Vero submits this memorandum required a normal amount of time to prepare, including time liaising with Moorhouse’s counsel and the time drafting the memorandum. I agree that on its face, this is the type of memorandum that would take an average amount of time to prepare.
[32] It may well be that some of the memoranda identified did involve less time than allocated under band B, but on the other hand, there are likely to be memoranda which took more. The usual approach, which is to settle on a band for the entire proceeding, generally achieves justice on the basis that, while sometimes steps may have taken less time, on other occasions they will have taken more time. However, overall, it is expected that the band allocated is a fair, if rough and ready, tool for determining costs.
[33] Here, Vero has taken time to identify steps which it reasonably considers should be categorised as band A, for which it is to be commended. I have insufficient evidence to warrant allocating more steps at band A, and to do so would only invite parties in all cases to waste time identifying those steps which they consider took less or more than a band B allocation, resulting in a drawn-out costs determination process.
[34]Accordingly, I decline to allocate any further steps at band A.
Inspection of documents
[35] Vero has claimed 12 tranches of inspection of discovery documents on a band A or band B basis. Moorhouse submits this overstates the allocation of time spent and does not reflect the appropriate approach, which is to assess the reasonable time for
inspection as a whole rather than the number of occasions on which discovery was provided. Moorhouse also says that a number of these documents related to claims for other buildings which had settled. It submits two claims of step 21 for “[i]nspection of documents” at band B is appropriate, which would total three days’ costs, rather than the 10 days claimed by Vero.
[36] Moorhouse cites ABB Ltd v New Zealand Insulators in support of its position that separate claims should not be made for each occasion on which documents were provided for inspection.9 Courtney J in that case considered that a party could not claim costs for additional instances of inspection of documents and the correct approach is to determine the whole of the time required for inspection.10
[37] Vero cites a case where multiple items were costed for inspection of documents.11 In that case, the parties agreed that a series of claims for inspection was appropriate as one party’s discovery was provided in tranches.12 Equally, there are cases where it is combined into one item.13 It therefore appears that there is no general principle that inspection of documents is costed under a single step.
[38] Vero says that its multiple claims are justified because initial discovery from Moorhouse was inadequate and Vero was obliged to make numerous requests in order to obtain discovery and inspection of relevant documents. An interlocutory application for further and better discovery was filed by Vero on 28 February 2019 and orders were consented to by Moorhouse and made by Associate Judge Lester on
20 May 2019. This resulted in further lists of documents being provided by Moorhouse. It says that the piecemeal approach to discovery increased the amount of time it took for Vero to inspect the documents.
[39] Moorhouse does not contest that there were relevant documents for discovery at each of the stages in which Vero claims inspection of those documents. It is clear it did provide documents in multiple tranches and at one point required an application
9 ABB Ltd v New Zealand Insulators, above n 5.
10 At [15].
11 Prattley Enterprises Ltd v Vero Insurance New Zealand Ltd [2017] NZHC 1599, (2017) 23 PRNZ 484.
12 At [15].
13 See Edubase Ltd v Minister of Education [2022] NZHC 2427 at [29].
to this Court to provide those documents. The fact the documents were discovered in tranches would increase the cost to Vero. The cost of that should not have to be borne by Vero given it is entitled to costs and the increased time spent on inspection of documents was due to Moorhouse’s actions.
[40] The issue is how the increased costs of inspection should be met in light of the principle that costs should be recovered on the basis of a reasonable time for each step in the proceeding and that should normally be determined by reference to the bands. In my view, the most appropriate way to apply the cost recovery rules in this case is to say that because inspection was drawn out and occurred in tranches, it took “a comparatively large amount of time” and so should be claimed at band C.14 If the defendant recovers on a band A or band B basis for each tranche of inspection, there is a risk of recovering more than the High Court Rules intended. If all the relevant documents had been discovered at once it would be debatable whether costs could have been recovered on a Band C basis, but given the additional costs the defendant would have incurred inspecting the documents supplied on multiple occasions, I am satisfied a single claim at Band C appropriately reflects the increased costs of completing this step.
Time allocation for preparation of briefs and for preparation for the hearing
[41] Vero seeks costs for the preparation of briefs (step 33) and preparation for hearing (step 33B) for 12 days, despite the fact that the trial ran for 10 days and those two steps provide for costs to be calculated based on the number of days of the hearing. Vero suggests this is justified because the trial was scheduled to run for 13 days and it prepared for that period of time. The trial was shortened because the parties agreed a number of witnesses could have their evidence taken as read.
[42] Vero cites Young v Attorney-General and Auckland Waterfront Development Agency Ltd v Mobil Oil New Zealand Ltd as authority for where costs have been awarded for preparation for briefs and trials for more days than the hearing took.15
14 High Court Rules, r 14.5(2)(b).
15 Young v Attorney-General [2021] NZHC 1359 at [16]; and Auckland Waterfront Development Agency Ltd v Mobil Oil New Zealand Ltd [2015] NZHC 470, (2015) 23 PRNZ 200 at [28].
[43] However, Young v Attorney-General is not authority for this position, as in that case the parties agreed it was appropriate for the Crown to be awarded costs for five days of preparation, and in any event in that case the hearing did go into a fifth day.16 In Auckland Waterfront Development Agency Ltd v Mobil Oil New Zealand Ltd, Katz J awarded increased costs under r 14.6(3)(a) of the High Court Rules where the trial took six days but the parties prepared for a four-week trial.17 Katz J awarded costs for 15 days’ preparation. I do not consider this case supports Vero’s arguments either, as it was an award of increased costs, and not an award of scale costs departing from the calculations in the High Court Rules.
[44] Vero separately claims for increased costs under r 14.6 based on the time required to prepare the briefs of evidence, and I will consider that claim shortly. That is the more principled way, in my view, to assess whether scale costs should be departed from. There is no reason, in my view, to justify a departure from the clear calculations in the High Court Rules which ensure certainty and expeditiousness around costs orders. Accordingly, scale costs are to be calculated on the 10 days that the trial ran and not for the time it was scheduled to run.
Increased costs
[45] Vero makes two claims for increased costs. The first is for an additional five days for the preparation of briefs, and the second is for Moorhouse’s alleged unnecessary contribution to the time and expense of the proceedings.
[46]Increased costs can be ordered under r 14.6 of the High Court Rules:
14.6 Increased costs and indemnity costs
(1)Despite rules 14.2 to 14.5, the court may make an order—
(a)increasing costs otherwise payable under those rules (increased costs); or
(b)that the costs payable are the actual costs, disbursements, and witness expenses reasonably incurred by a party (indemnity costs).
16 Young v Attorney-General, above n 15, at [14] and [16].
17 Auckland Waterfront Development Agency Ltd v Mobil Oil New Zealand Ltd, above n 15, at [28].
(2)The court may make the order at any stage of a proceeding and in relation to any step in it.
(3)The court may order a party to pay increased costs if—
(a)the nature of the proceeding or the step in it is such that the time required by the party claiming costs would substantially exceed the time allocated under band C; or
(b)the party opposing costs has contributed unnecessarily to the time or expense of the proceeding or step in it by—
(i)failing to comply with these rules or with a direction of the court; or
(ii)taking or pursuing an unnecessary step or an argument that lacks merit; or
(iii)failing, without reasonable justification, to admit facts, evidence, documents, or accept a legal argument; or
(iv)failing, without reasonable justification, to comply with an order for discovery, a notice for further particulars, a notice for interrogatories, or other similar requirement under these rules; or
(v)failing, without reasonable justification, to accept an offer of settlement whether in the form of an offer under rule 14.10 or some other offer to settle or dispose of the proceeding; or
(c)the proceeding is of general importance to persons other than just the parties and it was reasonably necessary for the party claiming costs to bring it or participate in it in the interests of those affected; or
(d)some other reason exists which justifies the court making an order for increased costs despite the principle that the determination of costs should be predictable and expeditious.
…
Additional time for the preparation of briefs
[47] This claim is based on r 14.6(3)(a), with Vero asserting that the time required to prepare the briefs substantially exceeded the time allocated under band C. The relevant step under sch 3 of the High Court Rules is step 33 which allocates, for all bands, one day for the first to fifth hearing days, 0.75 per day from sixth to tenth hearing days, and 0.5 of a day from then on. Vero is claiming an additional five days, which would be equivalent to an additional 10 days of hearing time.
[48] Vero called evidence from nine witnesses, eight of these being experts. Four of the experts provided more than one brief. It says, to a large extent, the need for subsequent briefs arose because of the late evidence served by Moorhouse. In particular, Vero says the evidence contained in Moorhouse’s original briefs was confined and the bulk of its evidence was contained in reply or supplementary briefs, which necessitated Vero filing further briefs. One issue it cites as having to address after the date of filing for Moorhouse’s evidence was the appropriate method of crack repair for the damage to the blockwork at 41 Moorhouse Avenue. It says that late evidence was filed that changed its understanding that the wall was single wythe to the wall being double wythe. It also points to the brief of evidence filed by Moorhouse for Mr Walker the week before trial, which also required Vero to respond.
[49] Overall, Vero says that the time spent by counsel was well in excess of the additional five days it claims as increased costs.
[50] Moorhouse says that Vero’s approach is flawed because the additional briefs were considered at trial and therefore contributed to the trial length, which in turn is used to calculate the appropriate scale costs.
[51] I do not consider that Vero’s approach is flawed, as the test for increased costs is whether the time taken for a particular step “substantially exceed[s] the time allocated under band C”.18 The number of briefs does contribute to the length of the trial, which in turn affects the calculation of scale costs. However, it is still possible for Vero to say that it took substantially longer than the time allocated under scale costs and so justifying an award of increased costs.
[52] I start by noting that Vero has not informed the Court of how long it spent on preparing briefs, only to say that it was substantially longer than the amount of time calculated for scale costs. As it is an objective assessment of the step taken in the context of the proceeding (to avoid counsel claiming increased costs for inefficient
18 High Court Rules, r 14.6(3)(a).
work),19 the Court often has regard to the actual time taken in assessing the award of increased costs.20
[53] I accept, though, that there are inefficiencies inherent in a party providing substantive new evidence in reply briefs or supplementary briefs which has to be responded to compared with the situation where the plaintiff’s case is fully disclosed in its primary briefs of evidence. That is because time can be wasted by the defendant’s witnesses responding to evidence that is ultimately discarded or significantly altered. Thus, I do consider there are grounds for increasing costs, but I have to be sure I am not duplicating that increase between the different heads of claim for increased costs under r 14.6. Accordingly, I go on to consider the second claim for increased costs before deciding how best this is addressed.
Unnecessary contribution to the time and expense of the proceedings
[54] Vero seeks a 35 per cent uplift on schedule costs claimed on the basis of r 14.6(3)(b)(ii), (iii) and (v), being taking or pursuing an unnecessary step or an argument that lacks merit, failing without reasonable justification to admit facts, evidence, documents or accept a legal argument, and failing without reasonable justification to accept an offer of settlement.
[55]Vero’s primary argument is that Moorhouse unreasonably:
(a)pursued a repair strategy that was unjustified by the minor damage suffered to the buildings;
(b)persisted with its argument that crack repair by epoxy was not an appropriate repair method under the insurance policy, including an unreasonably late concession that epoxy repair was suitable for the panels of the building at 43 Moorhouse Avenue;
19 David Bullock and Tim Mullins The Law of Costs in New Zealand (LexisNexis, Wellington, 2022) at 67.
20 See Trustpower Ltd v Commissioner of Inland Revenue [2014] NZHC 3072; Sovereign Assurance Co Ltd v Commissioner of Inland Revenue [2012] NZHC 3573; and Strathboss Kiwifruit Ltd v Attorney-General [2019] NZHC 62.
(c)persisted with its argument that deep pile foundations were required to be installed as part of the repair schemes for the buildings, which was conceded late into the proceedings; and
(d)pursued claims that Vero was responsible for delay in assessing Moorhouse’s policy entitlements and was attempting to avoid Moorhouse’s policy entitlements.
[56] In response to these claims, Moorhouse says its arguments did not lack merit and were justified. It says the critical issue at trial was whether epoxy repair was suitable. Its position that it was not suitable was underpinned by the opinions of well-qualified and respected expert witnesses. This was a bona fide dispute between experts.
[57] For what Vero describes as “late concessions”, Moorhouse says that its experts responsibly agreed that epoxy repair to the accessible walls at 43 Moorhouse Avenue was acceptable when a suitable aesthetic finish was proposed by Vero. The removal of the pile issue was also a responsible concession and did not obviate the need for the geotechnical reporting and evidence which informed how the foundations would be replaced if required.
[58] Moorhouse says that it was not unreasonable to pursue claims that Vero was responsible for the delay in resolving the insurance claim because this was inextricably linked to the key dispute as to whether epoxy was an appropriate repair strategy. If it was not, then the delay would have been caused by Vero insisting on using it in their repair strategy.
[59] Vero’s second argument is that Moorhouse unreasonably rejected a settlement offer. This settlement offer was made on 22 June 2021, with the trial due to start in October 2021, where Vero offered a settlement of $750,000 plus GST. In addition to the $935,835.21 plus GST already paid to Moorhouse, this would total $1,685,835.21 plus GST. This price included: the full cost of repairs with an allowance for construction cost escalation to mid-2021; the full cost of compliance upgrades to strengthen the buildings and undertake fire upgrades; a generous additional allowance
for engineering supervision of repairs (in addition to that included in the scopes/costing); and accepted claims preparation costs. This offer was for full and final settlement and was made on the basis that the funds did not have to be applied to the repair works, unlike what is required in the insurance policy.
[60] In Vero’s letter offering that settlement, Vero’s lawyers explain at a high-level the evidence that would be presented at trial as to the suitability of an epoxy repair strategy and say that Moorhouse’s arguments are unlikely to succeed. Vero says these arguments were wholly upheld by the Court in the judgment. It says that following the trial, Moorhouse is entitled to recover far less under the policy (indemnity costs being $404,744 plus GST on Vero’s evidence) than was offered by Vero and Moorhouse has incurred costs and disbursements at the conclusion of the trial.
[61] In its letter in response, Moorhouse noted that the issue for determination at trial was whether an epoxy repair strategy would meet the policy standard of repairing the buildings to the standard “when new”. It provided reasons as to why it considered an epoxy repair strategy would not meet that standard. It noted that if the buildings need to be replaced, it would cost $3.349 million for 33–39 Moorhouse Avenue and
$1.479 million for 41–43 Moorhouse Avenue. It ended the letter by saying it was open to further settlement discussions between the parties.
[62] Moorhouse says it did not refuse the settlement offer “without reasonable justification” as this has to be assessed as at the time of the offer and not after the subsequent result.21 It essentially argues the issue of whether an epoxy repair strategy was appropriate was properly pursued into trial, and it was not unreasonable for it to reject a settlement offer based on the main issue to be heard at the trial. In response, Vero says that Moorhouse was able to assess Vero’s offer at this stage because while Vero had not yet served evidence in response to Moorhouse’s reply evidence, the basis of Vero’s case was set out in the offer letter and Moorhouse had ample understanding of those claims.
21 RA Osborne and others McGechan on Procedure (online ed, Thomson Reuters) at [HR14.6.02(3)(a)(iii)].
Discussion
[63] In determining whether a rejection of a settlement offer is reasonable, the following factors (without limitation) may be relevant:22
(a)the size of the offer relative to the actual costs of counsel;
(b)the amount of the claim;
(c)the reasonable expectations of the party that refuses the offer;
(d)the amount of preparation for trial already undertaken;
(e)whether the proceeding concerns an uncertain area of law;
(f)whether the parties were in a position to assess the merits when the offer was received;
(g)the information available to the party who receives the offer and the extent to which they can assess the offer;
(h)the timing of the offer;
(i)the conduct of the offeror.
[64] Considering these factors (with the same lettering) in relation to the Calderbank offer made in 2021, I find as follows:
(a)The offer was for a settlement of an additional $750,000 plus GST, whereas scale costs and disbursements claimed by Vero were
$586,357.87 and accepted by Moorhouse were $308,781.45. Actual costs were therefore higher.
(b)The claim was for declarations as to how the insurance policy should respond to the identified damage in the buildings, but if successful in all its claims, and if it proceeded with its engineers’ repair strategy (albeit in my view that was unlikely), Moorhouse would be entitled to the replacement value of the buildings (assessed in their reply letter as
$3.349 million and $1.479 million) less depreciation.
22 Weaver v HML Nominees Ltd [2016] NZHC 473, at [30] (footnotes omitted).
(c)As noted by Moorhouse, its expectations were that if it succeeded in proving that epoxy was not a sufficient repair strategy, the offer would not come near Moorhouse’s policy entitlement.
(d)At the point the offer was sent, most of the preparation for trial had occurred as all the briefs of evidence had been served except for Vero’s reply evidence, which were due to be filed shortly afterwards.
(e)The proceedings did not consider an uncertain area of law but involved a factual and technical dispute over the appropriateness of crack repair with epoxy resin.
(f)The parties were largely in a position to assess the merits of the arguments when the offer was received given the amount of preparation that was completed when the offer was received.
(g)As for (f) above.
(h)The offer was received around four months before the trial was scheduled to start, although that date was eventually delayed.
(i)There is nothing to impugn Vero’s conduct.
[65] Overall, the settlement offer was based on a much lower figure than Moorhouse was claiming and was based on Vero’s repair strategy, which Moorhouse considered insufficient. The key question is whether, at the point in time when the offer was made, Moorhouse had enough information to determine that it was unlikely to be successful at the hearing and therefore ought to have accepted the offer.
[66] While I accept that both parties had well-qualified experts, each advocating that their proposed repair scope complied with the policy, Moorhouse’s approach overlooks the fact that unless it actually undertook the repairs proposed, it would only be entitled to indemnity value. There was no evidence which unequivocally asserted that Moorhouse would implement its repair proposal and, indeed, it would have, in my view, been uneconomic to do so. Its cost vastly exceeded the maximum sum insured,
and there was no evidence Moorhouse would have funded the shortfall to implement the repairs. This means the difference between what was being offered by Vero and what Moorhouse could realistically expect to obtain was not as marked as it might first appear.
[67] In my view, the Calderbank offer was made at an appropriate stage in the proceedings, where the expert evidence had been largely identified. The factors discussed at [64] generally support Vero’s offer as being a generous and pragmatic offer to settle. Moorhouse took the risk of proceeding with its claim and should meet an increased costs from this point forward. An uplift of 35 per cent on scale costs is warranted, both to reflect the additional time involved in preparation of briefs, along with Moorhouse’s refusal to accept what proved to be a generous settlement offer from Vero.
[68] Accordingly, the costs for all steps following the presentation of the Calderbank offer should be uplifted by 35 per cent. There is no need, in addition to this uplift, to increase the amounts claimable for preparation of briefs.
Disbursements
[69] Moorhouse suggests there were the following errors in Vero’s calculations for disbursements, resulting in a recalculation of $15,449.22 of disbursements and
$175,068.23 of expert fees:
(a)Vero claims concurrent disbursements for three counsel where certification is only sought for two counsel;
(b)some incorrect calculations for GST;
(c)fees totalling $89,519.03 from an expert from Batchelar McDougall Consulting (BMC) were listed as a disbursement, but no witness from that firm was called in the proceedings nor was a brief of evidence filed; and
(d)many of the invoices cover attendances or costs associated with claims for other buildings which have been settled without being adequately proportioned (being done on a percentage basis in lieu of objective substantiation) or relating to events where costs cannot be claimed for, such as judicial settlement conferences23 and tasks required for the usual claims adjustment process.
[70] As explained above at [14], Vero has conceded some of Moorhouse’s claims as to its claimed disbursements. However, for the most part, the disbursements remain contested.
[71] Rule 14.12 of the High Court Rules covers the recovering of disbursements and relevantly provides:
14.12 Disbursements
(1)In this rule,—
disbursement, in relation to a proceeding,—
(a)means an expense paid or incurred for the purposes of the proceeding that would ordinarily be charged for separately from legal professional services in a solicitor’s bill of costs; and
…
(2)A disbursement must, if claimed and verified, be included in the costs awarded for a proceeding to the extent that it is—
(a)of a class that is either—
(i)approved by the court for the purposes of the proceeding; or
(ii)specified in paragraph (b) of subclause (1); and
(b)specific to the conduct of the proceeding; and
(c)reasonably necessary for the conduct of the proceeding; and
(d)reasonable in amount.
(3)Despite subclause (2), a disbursement may be disallowed or reduced if it is disproportionate in the circumstances of the proceeding.
23 Watts & Hughes Construction Ltd v Biala [2021] NZHC 290 at [8].
…
[72] This rule requires the fees to be an expense that would be charged separately from legal fees and: (a) approved by the court; (b) specific to the conduct of the proceeding; (c) reasonably necessary for the conduct of the proceeding; and (d) reasonable in amount.
Disbursements relating to counsel
[73] As I have already noted there is no dispute that second counsel should be certified. However, in this case, Vero had three counsel who rotated through the hearing because senior counsel, Ms Anderson KC, fell ill at the outset of the hearing and junior counsel had to come on board to assist Ms Brick who took over carriage of the trial. Moorhouse claims that Vero has claimed disbursements for three counsel in some instances. In its schedule of costs, it points to the following instances:
(a)item 17 — travel for Ms Anderson from Auckland to Christchurch on 14 July 2022;
(b)item 18 — travel from Christchurch to Auckland on 24 July 2022; and
(c)item 24 — taxis for Ms Anderson.
[74] Vero says across the three counsel acting as principal and second counsel across the course of the trial, four return flights from Auckland to Christchurch are claimed. (Ms Brick on 17 July 2022 – 3 August 2022 and 2 October 2022 – 4 October 2022; Ms Anderson 14 July 2022 – 24 July 2022; and Ms Cornwell 17 July 2022 – 29 July 2022 and 31 July 2022 – 2 August 2022). Although there are actually five, Vero submits this is reasonable given counsel are based in Auckland and the trial spanned across two weekends.
[75] I do not consider there is unreasonable overlap in the claims for flights. While Ms Cornwell flew up before Ms Anderson flew back, she had to travel anyway to appear as second counsel to support Ms Brick who took over as lead counsel. The flights are therefore all properly claimed, as are the taxi fares.
[76] Relatedly, Moorhouse challenges the production of a second casebook. Vero says this was necessary for second counsel. I agree with Vero that this disbursement should be allowed.
BMC’s consulting fees
[77] The contested fees are disbursement items 57–84, totalling $89,519.03 for BMC’s consulting fees. Moorhouse says BMC ought to be seen as an advisor to Vero and therefore its costs should be paid by Vero rather than claimed as a disbursement. It says this is because there was no expert answerable to the Court as there was no expert giving evidence or providing a brief. It says that it is therefore not possible for Moorhouse to verify the involvement of BMC as they were entirely in the background. Moorhouse further says BMC’s involvement would inevitably cause duplication in work required to get Dr Brooke from Compusoft Engineering up to speed about the proceedings.
[78] Vero says it relied on BMC’s work at trial as BMC prepared the July 2018 engineering reports on which Vero’s repair scoping was based. BMC engineers participated in the expert conferral in the proceeding and prepared the joint experts’ report. Dr Brooke then relied on this work in providing his evidence. BMC’s drawings and calculations were appended to Dr Brooke’s supplementary brief of evidence. Vero also submits that BMC effectively acted as juniors for Dr Brooke and allowed the work to be costed at a lower rate than if Dr Brooke had done it himself.
[79] The question of whether disbursements should be allowed for fees incurred with experts who are subsequently not called as witnesses has been considered before.24 In Houghton v Saunders, Dobson J considered whether fees of $15,200 could be claimed as disbursements for Mr Cameron-Brown, an investment banking expert, who was engaged in case Mr Cameron, another expert, was not able to give evidence.25 Dobson J held:
[109] There are precedents for allowing, as disbursements, fees incurred with experts who are subsequently not called as witnesses. Each claim is to be assessed within the context of preparation for, and presentation of, cases at
24 See Houghton v Saunders [2015] NZHC 548; and Day v Official Assignee [2018] NZHC 2610.
25 Houghton v Saunders, above n 24 at [107].
trial. In this case, given the extent of fees I have approved for Mr Cameron, and the absence of any brief for Mr Cameron-Brown, I consider the plaintiff’s objection is a reasonable one. I am not prepared to authorise the fee for Mr Cameron-Brown as a recoverable disbursement.
[80] In Day v Official Assignee, Edwards J allowed the second defendant to recover the costs of an external service provider to resurrect an accounting database so the experts could provide an expert opinion.26
[81] BMC consultants and in particular, the senior engineer, Mr Warren Batchelor, had a direct role at the beginning of the proceedings, as can be seen by his involvement in the experts’ conferral. There are also charges for writing a brief of evidence, and these references predate any invoices from Dr Brooke. Mr Batchelor from BMC never filed a brief of evidence with the Court but that was as a consequence of personal circumstances which prompted his retirement and which were beyond Vero’s control. An invoice from 30 September 2019 notes there was a meeting with Dr Brooke “to discuss BMC reporting and change of Expert [witness]”. From that point, BMC consultants were working with Dr Brooke to assist him in providing his expert evidence to the Court. It seems he accepted and adopted the work done by BMC to that date.
[82] The question here is whether these charges are “reasonably necessary for the conduct of the proceeding” and, as seen in Houghton v Saunders, that assessment is coloured by whether the work is being duplicated by another expert, which in this case is Dr Brooke. It is clear that BMC consultants were originally engaged to be expert witnesses in the proceeding but then this changed around September 2019 when Dr Brooke picked up that role in Mr Batchelor’s absence. The only issue is whether there was duplication involved as Dr Brooke reviewed BMC’s work and advised whether he could independently support those opinions.
[83] I accept that the fees of BMC can be claimed as a disbursement because it is clear that they did do work that was reasonably necessary to support the preparation of Dr Brooke’s evidence. The uncertainty over the extent to which there was duplication does not mean the fees should be not claimed as a disbursement, but could
26 Day v Official Assignee, above n 24, at [19](b) and [21].
justify a reduction in the amount payable. This was done in Auckland Waterfront Development Agency Ltd v Mobil Oil New Zealand Ltd where the Judge considered a more detailed analysis and independent evidence of the expert fees would have been appropriate but adopted a pragmatic approach in order to ensure that justice was done between the parties.27 The onus is on Vero to satisfy me on the balance of probabilities that the disbursements were reasonably necessary for the proceeding and reasonable in amount. Here, I am not satisfied that Moorhouse should pay both BMC’s fees and Dr Brooke’s fees in full, given the likelihood of duplication between them. In my view, BMC’s fees should be reduced by roughly 30 per cent to reflect this and I hold that only $60,000 of BMC’s fees are claimable.
Experts’ fees for settled claims
[84] The biggest concern Moorhouse has with the disbursement calculations is the invoices that cover attendances or costs associated with claims for other buildings which have been settled. The parties agree that costs associated with the settled claims should not be claimed as disbursements. However, the invoices themselves do not apportion the work between the buildings which were the subject of the trial and the ones that were settled, so Vero has estimated that apportionment.
[85] Moorhouse says this is inappropriate because it is arbitrary, inaccurate and not befitting of the substantial amount (over $150,000) claimed. It says no enquiry has been made with the relevant experts to arrive at the nominated percentages. It acknowledges that some of these claims are legitimate but says that “the substantiation is so clearly lacking that the defendant has not discharged its onus to prove its claims”. It says that if the Court is prepared to endorse some form of percentage amount in lieu of objective substantiation, then the percentages awarded should be substantially less than those currently advanced by Vero because it is appropriate to err on the side of caution.
[86] Vero agrees that it bears the onus of sufficiently substantiating its claim. However, it says there is sufficient information available to fairly estimate the amount
27 Auckland Waterfront Development Agency Ltd v Mobil Oil New Zealand Ltd, above n 15, at [50]– [53].
it may properly claim for these invoices. It says the Court should adopt a practical approach which does justice between the parties and requesting time sheets or expert statements will not necessarily provide any more useful information. It says that the work done by experts prior to December 2019 is obvious because, by that time, all of the experts had provided reports which were in evidence at trial. Briefs of evidence had been served for the expert witnesses and some experts had also participated in the joint expert conferral and preparation of joint experts’ reports. Vero also says that the briefs presented at trial show the extent of the redactions for the evidence relating to the settled buildings and the redactions are generally a minor proportion of the evidence overall. Many of the experts gave evidence on general issues that was unchanged as a result of settlement.
[87] Vero says that the buildings in respect of which the claims were settled were smaller and therefore the claims were worth less than the claims for the buildings that went to trial. It says therefore that an apportionment of 50 per cent for a number of the expert costs where it cannot be apportioned more accurately is generally favourable to Moorhouse.
[88] Moorhouse challenges a large number of disbursements based on Vero’s apportionment for costs in respect of the settled claims. These include:
(a)items 5–10 — streamlined litigation support charges from 26 February 2018 to 29 April 2019 where 50 per cent of the overall cost is charged as a disbursement, totalling $3,254.93;
(b)items 48–51 — invoices from Alexander&Co for inspection of buildings, preparatory work and completion of reports where between 50 per cent and 85 per cent of costs are claimed, totalling $25,956.09;
(c)items 63–71 and 76 — invoices from BMC (discussed above) where between 50 per cent and 75 per cent of costs are claimed, totalling
$27,220.75;
(d)items 85–87 — invoices from Dr Brooke from Compusoft Engineering for report writing and preparing Dr Brooke’s brief of evidence with 75 per cent of attendance costs claimed, totalling $37,533.58 of which Moorhouse challenges $36,038.77;
(e)item 96 — an invoice from Fire Review Solutions for a fire engineering assessment with 50 per cent of costs claimed, totalling $1,391.25;
(f)items 104–108 — invoices from KGA Geotechnical from 30 September 2018 to 31 October 2020 for preparation of a report, a site inspection, participation in a joint expert conferral/ joint expert report and preparation of Mr Hutchinson’s brief of evidence where between 75 per cent and 100 per cent of costs were claimed, totalling
$19,153.23 (including the reduction agreed to by Vero for incorrectly added GST);
(g)items 111–113 — invoices from Maynard Marks for work undertaken on an inspection of all the buildings, preparation of reports and preparation of Mr Wilson’s brief of evidence with 50 per cent of costs (plus 100 per cent of travel disbursements) claimed, totalling
$12,626.39;
(h)items 116–121 and 124 — invoices from New Zealand Building Training & Compliance Ltd and Maynard Marks for work undertaken in inspecting sites, preparing repair scopes and photobooks and preparation of Mr Tolley’s evidence where 50 per cent of costs (for all but two items which are claimed in full) are claimed, totalling
$36,822.50 (including reductions conceded by Vero for costs apportioned as relating to a judicial settlement conference); and
(i)item 135 — an invoice from 31 October 2019 from Telfer Young which covers the preparation of valuation reports for all buildings and the preparation of Mr Stanley’s brief of evidence where 75 per cent of costs claimed, being $21,778.12.
[89] Moorhouse alleges that any invoice that has any level of apportionment is insufficiently substantiated and therefore should not be claimed as a disbursement or should be claimed at a lower rate.
[90] I have reviewed all the disputed invoices, and none of them clearly apportion the work done for the different sets of buildings. From those invoices alone, it is impossible to tell what an accurate proportion of the work is. For example, one invoice from New Zealand Building Training & Compliance, from 31 July 2019, described the job as:
Investigate EQ related damage and provide scopes of works Provide expert witness in high court proceedings
8 commercial buildings
The tasks detailed in that invoice are described as “Consultancy - Reporting” and “Consultancy - Surveying (on-site)”, which were both charged out at a rate of $180 per hour with 56.25 hours charged for the former and 19 hours charged for the latter. Vero claimed 50 per cent of this invoice.
[91] The onus is on Vero to prove on the balance of probabilities, that the disbursements are claimable under r 14.12 of the High Court Rules.28 As outlined above, for disbursements to be claimable, they must be:
(a)specific to the conduct of the proceeding; and
(b)reasonably necessary for the conduct of the proceeding; and
(c)reasonable in amount; but
(d)may be disallowed or reduced if the claim is disproportionate in the circumstances of the proceeding.
28 Auckland Waterfront Development Agency Ltd v Mobil Oil New Zealand Ltd, above n 15, at [42].
[92] In Auckland Waterfront Development Agency Ltd v Mobil Oil New Zealand Ltd, Katz J had to consider the question of the reasonableness of expert witness fees where $800,000 had been claimed but where there was a lack of information as to the rates of relevant fee earners, their seniority or experience, the breakdown on time taken in relation to various stages of the expert evidence process, no separation between disbursements and charges, no indication of the total hours worked, and inconsistencies in the fee earners’ costs and for different types of work.29
[93] Because of that lack of information, Katz J said that she was not satisfied that the entirety of the expert fees claimed were reasonably necessary to the proceeding and reasonable in amount. She said that they may well have been both of these things, but the evidence was not sufficient to prove they were so.30 She determined, however, that a practical approach to costs meant that the party should still be entitled to recover some of these charged disbursements, so she discounted the claimed amount by 30 per cent.31 She said this was “possibly on the high side” but that “[i]t is appropriate to err on the side of caution” given the onus to prove the disbursements were reasonable.32
[94] I consider a similar pragmatic approach should be adopted here, albeit the issue is whether the fees relate to the conduct of the proceeding.
[95] That is what was done in Torbay Holdings Ltd v Napier, where Woolford J accepted it was reasonable and appropriate for the plaintiff to charge 60 per cent of some invoices from a private investigator because the plaintiff admitted that some of those invoices related to other matters.33 It appears the Judge did not require particularised invoices to differentiate between the work that was specific to the proceedings compared to what was done for other matters.
[96] In the end, this is an intensely factual enquiry and must be guided by the general principle that costs determinations should be predictable and expeditious.34 I
29 At [44]–[46].
30 At [51].
31 At [53]–[54].
32 At [54].
33 Torbay Holdings Ltd v Napier [2015] NZHC 3374 at [62]–[66].
34 High Court Rules, r 14.2(1)(g).
consider that given the information provided to the Court, it is not possible to accurately differentiate the proportion of each invoice that is specific to these proceedings. However, it is not disputed, and in my opinion correctly, that much of the expert evidence was reasonably necessary for these proceedings and that is supported by the fact that when the claims in respect of the other buildings settled, the redactions to the expert witness briefs were not extensive.
[97] The question then becomes whether the percentages used by Vero are appropriate. Vero says that the 50 per cent allocations are generous towards Moorhouse as the settled buildings represented only 34 per cent of the total sum insured. This is not a perfect comparison as the work required per claim is not necessarily correlated to the amount each claim is worth, but I think it is a useful indicator given there is no other reasonable way to assess how the costs for each invoice should be apportioned.
[98] However, I note that some invoices are charged at 75 per cent or more of their total charge, which is higher than the 66 per cent Vero says the claims that went to trial are worth. Some of these invoices could be said to be justified as being charged at 75 per cent because Vero says the redacted portions of the briefs of evidence were minor and these invoices related to the briefs of evidence. However, I note not all of the disbursements charged at 75 per cent obviously relate to the briefs of evidence. For example, item 48 is an invoice from Alexander&Co for:
MEASURING AND ESTIMATING
Travel for and inspections at Moorhouse Commercial Park Christchurch (18/7/19), corresponding with Fee Langstone re: inspection and access limitation and availability for potential hearing dates.
Vero claims 75 per cent of this invoice, but it is not explained as to why that amount was claimed.
[99] In all the circumstances, I consider where Vero claims 75 per cent or more of an invoice challenged on the basis it includes work for the settled claims, that should be reduced to 66 per cent, with the balance of the invoices being claimed at 50 per cent
as proposed by Vero. This excludes item 108 which Vero says relates solely to work done after the settlement.
[100] Moorhouse also says that some of the invoices for the experts appear to relate to judicial settlement conferences, which cannot properly be claimed given the legislature has not provided for costs to be awarded in the High Court for judicial settlement conferences.35 Moorhouse’s concerns appear to be related to items 121 and 124, which are invoices from New Zealand Building Training & Compliance Ltd from 31 January 2020 and 31 May 2020. Moorhouse says they are related to judicial settlement conferences because they have taxis to the High Court charged on them. Vero accepts that, because of the taxis, the invoices appear to be partly related to judicial settlement conferences, and suggests a 50 per cent discount is taken off item 121 and $1,000 off item 124 to reflect this.
[101] It is impossible to tell from the invoices how much work was done for the judicial settlement conference as the only narration on both invoices is “Consultancy
– Reporting [or Surveying]”. From the information on the file, it appears that the first judicial settlement conference was scheduled for two days and the second one was scheduled for one day. The Court has not been provided with any information as to what proportion of these invoices concerns the judicial settlement conferences, but I note that the first invoice (which presumably relates to the first settlement conference) was a total of 23.5 hours, so if the representative of the NZBTC was at both full days of the settlement conference, that could amount to more than 50 per cent of the invoice. Based on an abundance of caution, and reflecting the fact that Vero has the onus to prove the reasonableness of these disbursements,36 I reduce Vero’s entitlement to claim these disbursements to 35 per cent, or approximately one third of the amount claimed.
[102] Moorhouse also says that some of the invoices related to procuring reporting which would have been necessary to obtain as part of Vero’s usual claims adjustment process regardless of the existence of the proceeding, and are therefore not specific to the proceeding. Moorhouse points to the BMC invoices for this point, but no other specific invoices.
35 Watts & Hughes Construction Ltd v Biala, above n 23, at [8].
36 Auckland Waterfront Development Agency Ltd v Mobil Oil New Zealand Ltd, above n 15, at [54].
[103] Moorhouse has not specified why it suspects this is the case, or what reports it is referring to, when they were written and who they were written by. Given I have found the BMC invoices were necessary for preparing evidence in the proceeding (albeit I have reduced the amount claimable to reflect some duplication with Dr Brooke’s work), I will not disallow this claim.
Costs on costs
[104] The Court has said it is generally reluctant to awards costs on costs applications as they are often dealt with through memoranda.37 However, other cases note that an application for costs is to be treated no differently for costs purposes from an interlocutory application.38 Woodhouse J in Gibson v Official Assignee of New Zealand appropriately noted that costs on costs are ultimately a matter of discretion.39
[105] In this case, I consider that neither party has been wholly successful on the costs arguments. Accordingly, I consider costs should lie where they fall.
Orders
[106] Vero’s claim for costs as set out in the schedule to its memorandum in reply is modified as follows:
(a)Item 45 is reallocated as step 12 from step 13.
(b)Items 6, 7, 12, 15, 19, 20, 23, 24, 28, 29, 31, and 34 are to be subsumed under one claim for step 21 at Band C.
(c)Steps 33 and 33B are to be calculated based on the length of the hearing.
37 See Neal v Neal [2022] NZHC 2625 at [33]; Jefferys v Morgenstern [2013] NZHC 1361 at [40]; Barry Park Investments Ltd v Body Corporate Number 95388 [2016] NZHC 1527 at [25]; Epsom Woods Ltd v Waitakere Farms Ltd [2020] NZHC 3137 at [4]; Norrie v Crown Range Holdings Ltd [2022] NZHC 898 at [28]; DGL Manufacturing Ltd v Simmonds [2022] NZHC 1434 at [18]; and Legler v Formannoij [2022] NZHC 1804 at [12].
38 See Body Corporate Administration Ltd v Mehta (No 4) [2013] NZHC 213 at [85].
39 Gibson v Official Assignee of New Zealand [2015] NZHC 3200 at [14].
(d)An uplift of 35 per cent is awarded for all steps taken after 22 June 2021.
(e)The claim for BMC’s consulting fees is reduced to $60,000.
(f)All invoices for costs associated with claims for other buildings that apportion those costs at 75 per cent or more to the current claim are reduced to an apportionment of 66 per cent.
(g)The amount claimable for items 121 and 124 is reduced to 35 per cent of the total.
[107]I certify for second counsel.
[108]Costs on this application are to lie where they fall.
[109] I reserve leave to the parties to revert to the Court for clarification of any issue relating to costs, although I would encourage the parties to reach pragmatic resolutions wherever possible.
Solicitors:
Rhodes & Co., Christchurch Fee Langstone, Auckland
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