Reeves v Lakes Environmental Limited - [2014] NZHC 3338

IN THE HIGH COURT OF NEW ZEALAND INVERCARGILL REGISTRY

CIV-2013-425-000117 [2014] NZHC 3338

BETWEEN
TREVOR AND MARIA REEVES

Plaintiffs

AND

LAKES ENVIRONMENTAL LIMITED Defendant

Hearing: 18 December 2014 (On the papers)

Appearances:

B C Nevell for the Plaintiffs
M E Parker and A J Nash for the Defendant

Judgment:

19 December 2014

JUDGMENT OF DUNNINGHAM J RE: COSTS DECISION

[1] On 6 November 2014, I delivered the substantive judgment in this proceeding, finding largely in favour of the Reeves.1

[2] Notwithstanding my view that this was a straightforward case where the plaintiffs were entitled to an award of 2B costs, both parties sought to be heard on the issue of costs.

[3] I have now received submissions from both parties. The plaintiffs’ position is

as follows:

(a) On 5 March 2008 they made “a full and final offer of settlement” in the amount of $50,000. That followed communications where both parties acknowledged that the foundations had been improperly constructed, and the work had not been carried out, nor inspected, in
accordance with the approved plans. The offer was a Calderbank

1 Reeves v Lakes Environmental Ltd [2014] NZHC 2760.

REEVES v LAKES ENVIRONMENTAL LIMITED [2014] NZHC 3338 [19 December 2014]

offer and, under r 14.6(3)(b)(v), the failure to accept such an offer can lead to an award of increased or indemnity costs. The plaintiffs say it was unreasonable for the defendant to reject the offer and to put the plaintiffs to the unnecessary cost of the five day High Court hearing.

(b)If the Court does not award indemnity costs, then increased costs are sought on the basis that the defendant took or pursued arguments that lacked merit. These include:

(i)that the defendant had not been negligent because the work was not in breach of the building code, even if it was in breach of the building consent;

(ii) the defendant’s negligence was not causative of the plaintiffs’

loss;

(iii)that the defendants were acting as project managers when the builder charged a fee for the same; and

(iv)the defendants should have inspected the builder’s work to ensure it was being built in accordance with the building consent.

(c) The defendant put the plaintiffs to unnecessary cost by:

(i)late amendments to pleadings to include, for example, the claim that the defendant’s actions were in breach of the building consent but not in breach of the building code; and

(ii)by putting the plaintiffs to proof on matters where that was not necessary.

[4] Importantly, the plaintiffs note that their actual costs are not significantly greater than the costs they will receive if they are awarded 2B costs, as their actual costs are $46,273.12 including GST when scale costs come to $45,571 including

GST. The plaintiffs submit that if indemnity or increased costs are allowed, they should be awarded payment of:

(i) the difference between 2B costs and actual costs - $702.12; (ii) the Constructive QS invoice - $1,983.75;2
(iii) unclaimed disbursements - $532.05.3

[5] The defendants, in response, say that there are…

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: [2014] NZHC 3338
Decision Date: 19 December 2014

CaseChat Overview and Summary

Reeves v Lakes Environmental Limited is a case where the plaintiffs, Trevor and Maria Reeves, sought damages against Lakes Environmental Limited for construction defects in their home. The substantive judgment largely favoured the Reeves. The matter then proceeded to a costs hearing, where the plaintiffs sought increased costs based on the defendant's rejection of a Calderbank offer, and the defendant sought a reduction in costs due to the plaintiffs' failure to disclose certain documents and their unsuccessful application to adduce further evidence. The court considered the reasonableness of the Calderbank offer and the merits of the arguments presented by both parties. It found that while the defendant's rejection of the offer was not unreasonable, the plaintiffs' failure to provide appropriate redactions of Mrs. Reeves' diaries led to additional costs for the defendant. The court awarded the plaintiffs 2B costs, reduced by $1,990 for the failure to disclose the diaries appropriately. The defendant was awarded 2A costs for opposing the plaintiffs' application to adduce further evidence.

The court concluded that the plaintiffs' actual costs were effectively indemnified by the 2B costs award, and no further uplift was necessary. The court did not consider the Calderbank offer as a strong basis for an uplift since it was made at a stage when there was insufficient information about the options for rectifying the defect. Additionally, the court found the defendant's arguments to be largely unmeritorious, but the unsuccessful application to adduce further evidence warranted separate costs. The plaintiffs' failure to disclose Mrs. Reeves' diaries led to additional costs for the defendant, which were appropriately sanctioned by reducing the plaintiffs' costs by $1,990. The defendant's costs for opposing the application to adduce further evidence were awarded on a 2A basis.

Orders