Paros Property Trust Limited v Smith - [2024] NZHC 523

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2019-404-002593

[2024] NZHC 523

BETWEEN
PAROS PROPERTY TRUST LIMITED

Plaintiff

AND

TIMOTHY SMITH

First Defendant

TONI SHAW

Second Defendant

On the papers

Counsel:

L McEntegart and A J Steel for Plaintiff First Defendant in person

No appearance for Second Defendant

Judgment:

12 March 2024

JUDGMENT OF VAN BOHEMEN J

[on costs]

This judgment was delivered by me on 12 March 2024 at 12:30 pm pursuant to r 11.5 of the High Court Rules 2016.

Registrar/Deputy Registrar

……………………………..

Counsel/Solicitors:
L McEntegart and A J Steel, Auckland Brown Partners, Auckland

Copy to: T Smith, Auckland

T Shaw, Auckland

PAROS PROPERTY TRUST LTD v SMITH [2024] NZHC 523 [12 March 2024]

[1] Paros Property Trust Ltd (Paros), the owner of the freehold interest in a townhouse at 54 Napier Street, Freemans Bay, Auckland (the Property) and the lessor under a memorandum of lease (the Lease) over the Property, seeks costs in relation to two hearings of this Court concerning the dispute between Paros and Mr Timothy Smith, a lessee of the Property, over rental payable under the Lease.

[2] Paros says it is entitled to indemnity costs under cl 14(b) of the Lease, which provides that the Lessee shall pay:

All costs, charges and expenses for which the Lessor shall become liable in consequence of or in connection with any breach or default by the Lessee in the performance or observance of any of the terms, covenants and conditions of the Lease.

[3]On that basis, Paros seeks costs of $196,853.54 (including GST) comprising:

(a)$152,270.93 for costs in relation to the first hearing held before Harland J on 14 - 17 June 2021;

(b)$31,889.50 for costs in relation to the second hearing held before me on 10 July 2023; and

(c)$12,693.11 for disbursements.

[4] Mr Smith submits that each party should bear its own costs in relation to the first hearing and but that, if Paros is awarded costs in relation to that hearing, costs should be awarded on a 2B basis. That would result in costs of $54,014. Mr Smith accepts he is liable for costs in relation to the second hearing but says these should also be awarded on a 2B basis. Paros and Mr Smith agree that 2B costs for the second hearing are $12,787.

[5] Mr Smith denies liability for disbursements for expenses incurred before the judgment of the Court of Appeal in which the Court allowed Mr Smith’s appeal of the first High Court decision.

Relevant background

[6] It is necessary to summarise the sequence of decisions that led to Paros’s claim for costs. For convenience, I distinguish between the first phase of the proceeding, which included the hearing before Harland J and the Court of Appeal’s hearing of Mr Smith’s appeal of that decision, and the second phase, which comprised the hearing before me on the questions remitted by the Court of Appeal.

First phase of proceeding

[7] In a…

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.

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Details

Case: [2024] NZHC 523
Decision Date: 12 March 2024

CaseChat Overview and Summary

The case of Paros Property Trust Limited v Smith involved a dispute between Paros Property Trust Limited, the plaintiff and owner of a freehold interest in a townhouse in Auckland, and Timothy Smith, the defendant and lessee of the property. The central issue was the recovery of rental payments under a lease agreement, with Paros seeking indemnity costs from Smith for legal expenses incurred during two hearings of the High Court. The court was required to decide whether Paros was entitled to costs under the lease terms, the appropriate amount of those costs, and whether Smith should cover certain disbursements. In a comprehensive analysis, the court examined the sequence of decisions leading to the current claim for costs, beginning with the initial decision by Harland J that upheld a rent review and ordered Smith to pay increased rental, which was subsequently overturned by the Court of Appeal. The Court of Appeal found that the rent review process was invalid and remitted the matter back to the High Court for reconsideration. The subsequent hearing before Van Bohemen J led to an order for a new rent review and a determination of costs. The court concluded that neither party was successful in the first phase of the proceedings due to the Court of Appeal's ruling that the rent review was invalid. However, Paros was deemed successful in the second phase, leading to the determination of new rental rates. Consequently, the court ruled that Paros was entitled to indemnity costs for the second phase of the proceedings, amounting to $31,889.50 in legal fees and $50 in disbursements, while dismissing the claim for costs from the first phase and all but one of the claimed disbursements. The final order required Smith to pay Paros the specified costs and disbursements from the second phase of the proceedings.

Orders