Northwest Developments Limited v Zhang - [2020] NZHC 2225

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA

TĀMAKI MAKAURAU ROHE

CIV-2017-404-936

[2020] NZHC 2225

BETWEEN NORTHWEST DEVELOPMENTS LIMITED
Plaintiff

AND

CHENG ZHANG, JIN KUK JUNG and PILL SOON SO

Defendants

Hearing: On the papers (and telephone conference on 26 August 2020)

Counsel

M J Fisher and J J Yoon for the Plaintiff J Burley and S Pala for the Defendants

Judgment:

28 August 2020

JUDGMENT OF GAULT J

(Costs)

This judgment was delivered by me on 28 August 2020 at 3:00 pm pursuant to r 11.5 of the High Court Rules 2016.
Registrar/Deputy Registrar

……………………………………

Solicitors / Counsel:
Mr M J Fisher and Mr J J Yoon, Barristers, Auckland
Mr C Girven (plaintiff’s instructing solicitor), Castle Brown, Auckland Mr J Burley and Ms S Pala, McVeagh Fleming, Auckland

NORTHWEST DEVELOPMENTS LIMITED v ZHANG, JUNG and SO [2020] NZHC 2225 [28 August 2020]

[1] In my judgment dated 28 May 2020,1 I concluded that the plaintiff is entitled to costs against the defendants in the CIV-2017-404-936 proceeding, subject to any agreement as to costs in the partial resolution.

Plaintiff’s cost claim

[2] The plaintiff claims solicitor and client costs pursuant to cl 42(b) of the Five Owners’ Agreement in respect of steps taken to require the defendants to pay the infrastructure costs, and scale costs on a 2B basis in respect of steps taken to require the defendants to pay damages for breach of contract.

[3] Mr Fisher, for the plaintiff, submits that it is not possible to distinguish with precision between these categories because many of the steps taken were required in the pursuit of both heads of relief. In short, there is a substantial degree of overlap. In those circumstances, he submits a broad-brush approach is required to achieve a realistic and robust apportionment of costs as between costs payable under cl 42(b) of the Five Owners’ Agreement and costs payable under the High Court Rules (HCR). He proposed what he described as a conservative methodology:

(a)identify the steps taken by the plaintiff’s legal advisors in recovering the sums sought in the prayer for relief in the statement of claim and quantify the professional fees incurred;

(b)quantify the amount payable under the Five Owners’ Agreement (i.e. the amount payable for infrastructure costs, for default interest, and provisionally for professional fees2);

(c)quantify the amount payable in damages plus interest;
(d)by reference to the figures derived in paragraphs (b) and (c) above, adopt the formula [ ^(푏푏) ], input the applicable figures, and then

(푏푏)+(푐푐)
express the resulting fraction as a percentage;
(e)discount the amount quantified in paragraph (a) by applying the percentage in paragraph (d) to arrive at the amount of professional expenses payable under clause 42(b) of the Five Owners’ Agreement;

(f)next, identify the steps and calculate the costs payable to determine costs under the HCR on Category 2 and Band B basis;

1 Northwest Developments Ltd v Zhang [2020] NZHC 1151.
2 The professional fees are provisional in the…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Northwest Developments Limited v Zhang

Details

AGLC: Northwest Developments Limited v Zhang [2020] NZHC 2225
Case: [2020] NZHC 2225
Decision Date: 28 August 2020

CaseChat Overview and Summary

Northwest Developments Limited brought proceedings against Cheng Zhang, Jin Kuk Jung, and Pill Soon So in the High Court of New Zealand. The plaintiff sought to enforce infrastructure costs pursuant to the Five Owners' Agreement and damages for breach of contract. The court was required to decide on the allocation of costs between the parties, specifically the costs incurred by the plaintiff in pursuing both the infrastructure costs and damages. The court also had to determine the reasonableness of the plaintiff's costs, considering factors such as the complexity of the case, the necessity of certain tasks, and the reasonableness of the rates charged.

The court applied a broad-brush approach to apportion the costs between the infrastructure costs and damages, using a proposed methodology by the plaintiff's counsel. This methodology involved quantifying the professional fees, determining the amount payable under the Five Owners' Agreement, calculating the damages plus interest, and then applying a percentage discount to arrive at the costs payable under each category. The court found this methodology to be reasonable and adopted it. The court adjusted the apportionment to reflect that approximately half of the costs were likely incurred pursuing the infrastructure costs and interest, reducing the proportion from 59 per cent to 50 per cent. The court also found that the increases in hourly rates were reasonable and that the time spent on various tasks was not excessive, given the complexity of the case. The court disallowed certain items of scale costs that were not properly attributable to the damages claim.

The plaintiff was awarded costs of $230,111 plus disbursements of $25,963.80. The court concluded that the plaintiff was entitled to solicitor and client costs for the infrastructure claim and scale costs for the damages claim, subject to the adjustments and disallowances made by the court. The defendants' arguments regarding certain aspects of the costs incurred were considered and either rejected or adjusted as appropriate. The court exercised its discretion to determine the reasonableness of the costs claimed and found the plaintiff's approach to be fair and reasonable.

Orders