Roberts v Jules Consultancy Limited
[2020] NZHC 303
•27 February 2020
IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY
I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE
CIV-2017-485-130
[2020] NZHC 303
UNDER the Fair Trading Act 1986 BETWEEN
MICHAEL DOUGLAS ROBERTS
Plaintiff
AND
JULES CONSULTANCY LIMITED
First Defendant
JULES LELOIR
Second Defendant
On the papers Counsel:
B M Easton and H E T Thomson for Plaintiff J K Mahuta-Coyle for Defendant
Judgment:
27 February 2020
JUDGMENT OF THOMAS J (COSTS)
Introduction
[1] In my judgment dated 25 March 2019 (the liability judgment), I held that the defendants, Jules Consultancy Limited and Mrs Jules Leloir, engaged in misleading and deceptive conduct, and made false and misleading representations1 in connection with the sale of Unit 812 (the Apartment) of the Sirocco Apartments in Wellington.2 The behaviour at issue concerned the defendants’ representations that, although the Sirocco Apartments had weathertightness issues, they related only to the walkways
1 In breach of ss 9 and 14 of the Fair Trading Act 1986.
2 Roberts v Jules Consultancy Ltd [2019] NZHC 555.
ROBERTS v JULES CONSULTANCY LIMITED [2020] NZHC 303 [27 February 2020]
and had been rectified. In fact, the Sirocco Apartments suffered from systemic weathertightness issues and the defendants possessed information about those issues.
[2] In my judgment dated 17 December 2019 (the quantum judgment), I awarded the plaintiff, Mr Roberts, $93,500 (diminution in value of the Apartment at $110,00 less contributory negligence at 15 percent), plus $25,000 general damages.3
[3] The plaintiff now seeks costs on a 2B basis, except in relation to the preparation of evidence for the liability hearing, for which he seeks increased costs. The plaintiff also seeks disbursements (counsel’s travel and accommodation costs, and expert witness fees).
[4] The defendants accept that costs should follow the event but submit the scale and disbursement costs assessed by the plaintiff require adjustment and that the Court’s discretion to reduce costs should be exercised in view of the outcome.
[5]The parties agree that the interest to be paid on the judgment sum is
$26,692.23.
The law
[6] Costs are at the discretion of the Court, qualified by the principles in the High Court Rules 2016 (the Rules).4 The intent of the Rules is to provide reliable and expeditious costs decisions and to do justice to both parties.5 The general principle is that costs follow the event unless particular considerations indicate otherwise.6
Increased costs: preparation for liability hearing
[7] The plaintiff seeks increased costs from two and a half days to five days for evidence preparation for the liability hearing.7 The uplift is sought on the basis of the
3 Roberts v Jules Consultancy Ltd [2019] NZHC 3342.
4 Rule 14.1(1)–(2); Manukau Golf Club Inc v Shoye Venture Ltd [2012] NZSC 109, [2013] 1 NZLR 305 at [7]–[8].
5 High Court Rules 2016, r 14.2(g).
6 Rule 14.2(1)(a); Shirley v Wairarapa District Health Board [2006] NZSC 63, [2006] 3 NZLR 523 at [19].
7 This is the time allocated under Band C.
defendants’ failure to admit any of the facts served on them by the plaintiff and the defendants’ responses to interrogatories.
[8]Rule 14.6 provides:
(3) The court may order a party to pay increased costs if—
…
(b)the party opposing costs has contributed unnecessarily to the time or expense of the proceeding or step in it by—
…
(iii) failing, without reasonable justification, to admit facts, evidence, documents, or accept a legal argument;
Notice to Admit Facts
[9]Rule 8.47 states:
(1)A party who is entitled to serve a notice under rule 8.34 may at any time serve on another party a notice requiring the party to admit, for the purpose of the proceeding only, the facts specified in the notice.
…
(4) If the party on whom a notice to admit facts has been served under subclause (1) refuses or neglects to admit the facts within 5 working days after the day of service or within any longer time allowed by a Judge, the costs of proving the facts must be paid by that party, unless a Judge otherwise orders.
[10] On 16 July 2018, the plaintiff served Notices to Admit Facts (the Notices) on both defendants. The Notices were identical. Broadly, they asked the defendants to admit:
(a)the defects at the Sirocco Apartments;
(b)the accuracy of the findings about those defects reached by Maynard Marks Property and Building Consultants (Maynard Marks) following inspection;
(c)as originally constructed, the Sirocco Apartments do not comply with the New Zealand Building Code clauses B2 or E2; and
(d)the Sirocco Apartments require remedial works and the plaintiff’s share of the costs thereof.
[11] On 20 August 2018, the defendants notified the plaintiff that they did not admit any of the facts set out in the Notices.
[12]The plaintiff then incurred the cost of:
(a)calling Mr Ingham, a chartered building surveyor at Maynard Marks, to give evidence on the defects affecting the Sirocco Apartments, the damage caused by those defects, and the remedial work required to repair them;
(b)engaging Mr Gray, a registered building surveyor, to carry out an investigation of the Sirocco Apartments, and give evidence; and
(c)engaging Mr Hanlon, a registered quantity surveyor, to provide an estimate of the cost of repairing the Sirocco Apartments and the costs attributable to the Apartment.
[13] The defendants submit that the Notices were “largely unnecessary”, as they principally concerned the existence of defects as identified by Maynard Marks. The defendants say they had admitted Maynard Marks’ findings in their first statement of defence. The defendants also submit that, to the extent the Notices went beyond that, it was not reasonable to demand that they admit detail well beyond their knowledge.
Conclusion
[14] I do not accept that the Notices were “largely unnecessary”. The Notices concerned the Sirocco Apartments’ defects, damage and the cost of repair work attributable to the Apartment. These were matters essential to the plaintiff’s claim. The defendants’ statement of defence admitted the fact (but not the accuracy) of the
Maynard Marks report. As a result, the plaintiff was put to proof as to the defects, damage and cost of repair. The defendants offered no evidence to the contrary.
[15] The plaintiff engaged Messrs Ingham, Gray and Hanlon only after the defendants refused to admit the facts. Rule 8.47 is clear that if a party refuses to admit the facts, the costs of proving the facts must be paid by that party. I see no reason why this presumption should not apply here. I do not consider there was any reasonable justification for refusing to admit the facts for the purposes of r 14.6(3)(b)(iii).
[16] For these reasons, I allow the uplift for the preparation of evidence from two and a half days to five days.
Defendants’ response to interrogatories
[17] On 16 July 2018, the plaintiff served a notice on the second defendant to answer interrogatories, asking her to admit her knowledge of the defects affecting the Sirocco Apartments beyond those in the level 6 and 8 walkways. The second defendant denied knowing of any further defects, although admitted being aware of leaks and damage. As a result, the plaintiff had to adduce substantial evidence from Mr Gray detailing the evidence of the building defects over many years.
[18] I see some merit in the plaintiff’s submission, although the interrogatories went to the real nub of the case. As counsel for the defendants notes, an award for increased costs on this point would essentially amount to suggesting that the defendants should never have mounted a defence to the plaintiff’s principal claim (and there is some force in that suggestion, in respect of liability anyway).
[19]On balance, however, I am not satisfied an increase is warranted on this ground.
Discovery
[20] The parties agree that 2.5 days for preparation of the plaintiff’s first affidavit of documents is appropriate. The plaintiff also seeks 0.7 days for each of the two supplementary affidavits, under Band A. This is appropriate.
Notice to admit facts
[21] The plaintiff accepts that, given the Notices served on the two defendants were identical, he should be able to claim for one Notice only.
Evidence and hearing preparation
Wrong step used for liability hearing
[22] The defendants say that the plaintiff has claimed preparation of his evidence under the wrong step. However, as counsel for the plaintiff notes, the defendants appear to have overlooked the changes made to the Rules which came into effect on 1 August 2019. The sums claimed by the plaintiff before 1 August are claimed pursuant to sch 3 that was current at the time.
Preparation time for quantum hearing
[23] The defendants claim that only a comparatively small amount of preparation time for the second hearing is reasonable, not the two days the plaintiff has claimed.
[24] I am satisfied two days is a reasonable amount of time to prepare for the second hearing. As the plaintiff submits, there was a need to review the evidence and prepare for cross-examination and submissions.
Conclusion as to scale costs
[25]I accept the plaintiff’s calculation of costs.
Disbursements
[26] The defendants say that, because the plaintiff could have instructed Wellington-based counsel, disbursements for counsel’s travel and accommodation should not be allowed.
[27] Whether travelling expenses are a “reasonably necessary” disbursement for the purposes of r 14.12(2)(c) will depend on the circumstances of the case.8 The plaintiff
8 Buis v Accident Compensation Corporation (2010) 19 PRNZ 585 (HC) at [25].
engaged Grimshaw & Co when they had an office in Wellington. When that office closed in March 2017, the plaintiff continued to instruct them. This was a reasonable decision. Equally, many of the experts engaged by the plaintiff were in Auckland, making it easier for them to prepare evidence with the Auckland-based lawyers.
[28]Costs for counsel’s travel and accommodation are allowed.
Expert witness fees
[29] The defendants dispute the expert witness fees of Mr Hanlon on the basis that Mr Hanlon offered evidence as to the cost of cure of the defects, which was not the correct measure of loss. Accordingly, the defendants submit that Mr Hanlon’s evidence was unnecessary, of no assistance to the Court and the cost of it was not reasonably incurred.
[30] Although Mr Hanlon’s briefs were prepared before the quantum hearing and before it was established that it would be uneconomic to repair the Sirocco Apartments, that possibility was raised by the defendants at the liability hearing. However, I do not accept that the plaintiff was incorrect to adduce evidence of the cost of repair. There is a line of authorities where the cost of repair was held to be the correct measure of loss in claims under the Fair Trading Act and it was therefore reasonable for that issue to be addressed in evidence.
[31] Furthermore, as said in the quantum judgment, cost of cure is a relevant consideration in assessing market value.9
[32] Mr Hanlon’s evidence could have been taken as read, as counsel for Mr Roberts suggested. The defendants did not agree, however, requiring him for cross-examination. Mr Hanlon then had to travel to Wellington.
[33]In the circumstances, Mr Hanlon’s fees are payable by the defendants.
9 Roberts v Jules Consultancy Ltd, above n 2, at [99].
Discretion to reduce costs
[34] The defendants submit that the circumstances of the case justify use of the Court’s discretion to reduce costs under r 14.7 by 20 per cent. They rely on the success of the contributory negligence defence and the fact the plaintiff’s success as to quantum was tempered because of the measure of loss that was awarded.
[35] The plaintiff submits that the contributory negligence defence only enjoyed limited success (the Court awarded 15 per cent and not 70 per cent as was argued) and that no grounds in r 14.7 have been made out in relation to the incorrect measure of loss being argued.
The law
[36]Rule 14.7 provides:
Despite rules 14.2 to 14.5, the court may refuse to make an order for costs or may reduce the costs otherwise payable under those rules if—
…
(d)although the party claiming costs has succeeded overall, that party has failed in relation to a cause of action or issue which significantly increased the costs of the party opposing costs; or
…
(f)the party claiming costs has contributed unnecessarily to the time or expense of the proceeding or step in it by—
…
(ii)taking or pursuing an unnecessary step or an argument that lacks merit; or
…
(g)some other reason exists which justifies the court refusing costs or reducing costs despite the principle that the determination of costs should be predictable and expeditious.
Defendants’ defence of contributory negligence
[37] I accept that the defendants should receive a reduction for the success of the defence of contributory negligence. As stated in the quantum judgment:10
Mr Roberts was on notice of problems and made limited but insufficient inquiries. A reasonable person would have made further inquiry.
[38] The fact the defendants were successful in the defence of contributory negligence justifies the Court reducing costs for the purposes of r 14.7(d). The plaintiff failed in its denial of contributory negligence and I accept that issue significantly increased the defendants’ costs, the defendants calling expert evidence in support of their position.
Plaintiff ’s success tempered
[39] The defendants then submit that the plaintiff’s success was tempered because of the failure of the cost of cure ground. They submit that, if the plaintiff had initially pleaded losses in accordance with diminution in value, the Court may not have been “troubled with five days of hearing time and two substantive judgments”.
[40]For the reasons set out in [29]–[31] above, I do not accept this submission.
[41] The defendants then make the point that, if the plaintiff’s claim had been limited to $110,000 from the start, five days of hearing time might not have been required. It was of course always open to the defendants to make a Calderbank offer which would then have given some weight to this submission when it came to costs. They did not.
Conclusion as to reduction
[42] I allow a 15 per cent reduction in scale costs to the defendants to reflect the contributory negligence finding.
10 Roberts v Jules Consultancy Ltd, above n 2, at [60].
Result
[43] For the reasons given, the plaintiff is awarded interest of $26,692.23 plus costs and disbursements totalling $132,386.15. These comprise costs of $67,647.25 (scale costs reduced by 15 per cent), disbursements of $21,542.10 and expert witness fees of
$43,196.80.
Thomas J
Solicitors:
Grimshaw and Co, Auckland for Plaintiff P H Mitchell, Wellington for Defendants
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