Samols v South Taranaki District Council

[2022] NZHC 2853

IN THE HIGH COURT OF NEW ZEALAND NEW PLYMOUTH REGISTRY

I TE KŌTI MATUA O AOTEAROA NGĀMOTU ROHE

CIV-2021-443-7

[2022] NZHC 2853

BETWEEN

MICHAEL SAMOLS and SUSAN SAMOLS

Plaintiffs

AND

SOUTH TARANAKI DISTRICT COUNCIL

Defendant

IMPACT STEEL FRAMES LIMITED
First Third Party

ARCHITEX NEW ZEALAND LIMITED
Second Third Party

ANDRE GERRITT HODGSKIN
Third Third Party

CONRAD JOHN KURIGER

Fourth Third Party

Hearing:

On the papers

Appearances:

No appearance for Plaintiffs or Second, Third or Fourth Third Parties

C Harpur and T Fu for Defendant D Shore for First Third Party

Judgment:

2 November 2022

JUDGMENT OF ASSOCIATE JUDGE JOHNSTON

[1]    In January 2021, the plaintiffs, Michael and Susan Samol, a couple who are the joint owners of a residential property in Warea, South Taranaki, commenced this

SAMOLS v SOUTH TARANAKI DISTRICT COUNCIL [2022] NZHC 2853 [2 November 2022]

proceeding against the South Taranaki District Council. The proceeding concerns alleged defects in a dwelling built on the property between 2009 and 2010.

[2]    The Samols allege that the Council acted negligently in discharging its statutory obligations in relation to the build, and seek damages which are said to reflect the cost of rectification of the alleged defects.

[3]    In April 2022, the Council issued third party proceedings against the first to fourth third parties.

[4]    In September 2022, the Council filed and served a notice of discontinuance of its claim against the first third party, Impact Steel Frames Ltd. For reasons which will become clear, Impact Steel Frames had not entered an appearance in the proceeding prior to the filing and service of the notice of discontinuance.

[5]    The claim having been discontinued without the parties having first resolved costs, Impact Steel Frames now seeks a costs order against the Council. This application was made by a memorandum dated 27 September 2022 apparently filed by McCaw Lewis, which firm appears to be acting for the company. There is no statement at the foot of the memorandum attesting to McCaw Lewis, or the principal of that firm who has signed the memorandum, Mr Daniel Shore, having authority to act in the matter. But the Council does not take this point, and I am prepared to assume that McCaw Lewis and Mr Shore are duly authorised.

[6]    The bases upon which Impact Steel Frames asserts an entitlement to an award of costs are that:

(a)the Council was in error in concluding that it — Impact Steel Frames

— had any involvement with the property;

(b)if the Council had looked into the matter thoroughly it would have become aware of this;

(c)as soon as the third party proceeding was served, Impact Steel Frames explained the position to the Council and provided it with all necessary information to enable it to check;

(d)the Council persisted in its claim for a time which effectively meant that Impact Steel Frames had to commit resources to the matter between April and September 2022;

(e)the parties were unable to reach agreement in respect of costs;

(f)in the exercise of its discretion, the Court should make an award of costs against the Council in favour of Impact Steel Frames; and

(g)the correct measure of the cost is the latter’s actual and reasonable costs, that is to say an indemnity award.

[7]In response the Council says that:

(a)it acknowledges its original error, but contends that it was an understandable one in the circumstances;

(b)it acted reasonably throughout;

(c)ultimately (albeit perhaps not as quickly as Impact Steel Frames would have liked), it accepted that the claim should be withdrawn;

(d)there were attempts to resolve costs issues but when that proved impossible it acted responsibly in discontinuing in any event;

(e)it agreed from the outset that Impact Steel Frames was not obliged to take any formal step in the proceeding until its status was resolved;

(f)Impact Steel Frames did not, and has still not, taken any formal steps;

(g)the only step it has taken that has involved the Court is to file and serve its memorandum seeking costs;

(h)this is not a case that would justify the Court in making an award of indemnity costs which is reserved for situations in which a party has acted inproperly or otherwise wrongfully; and

(i)there is no foundation for an award of scale costs because Impact Steel Frames has not taken any formal steps in the proceeding referable to the categories of costs identified in sch 3 of the High Court Rules 2016.

[8]    There is some force in the submissions advanced on behalf of both parties. On the one hand, the Council clearly identified an incorrect party and put that party to some expense as a result. There is an argument for the Court recognising that litigants ought to be circumspect before issuing proceedings, and that the cost regime is the proper vehicle for doing so.

[9]    On the other hand, I agree with Ms Harpur that the mere fact that a party makes an error and identifies an incorrect party, is not, in and of itself, a basis for an award of indemnity costs. That said, nor do I accept that the mere fact that the costs that have been incurred are not directly referable to items identified as recoverable in sch 3 of the High Court Rules precludes the Court from making a costs award.

[10]   Costs are quintessentially a matter for the Court’s discretion, although, like all discretions, it is one that must be exercised on a principled basis.1

[11]   McCaw Lewis’ actual costs (charged and uncharged) which are itemised in Mr Shore’s memorandum of 27 September 2022 total $8,595.10. I can see no particular issue arising as to the reasonableness of these.

[12]   The costs regime in the High Court Rules is intended to bring a degree of objectivity and predictability to costs awards.2 At the very broadest level it is said to

1      High Court Rules 2016, r 14.1.

2      High Court Rules 2016, r 14.2(1)(g).

be intended to compensate the successful party in the litigation by awarding costs which reflect approximately two thirds of what the Court would expect to be the costs of the litigation, having regard to its complexity.3

[13]   In those circumstances, it appears to me that substantial justice will be done if I exercise the Court’s overarching discretion and make a costs award that reflects approximately two thirds of Impact Steel Frames’ actual costs which I have already concluded appear to be reasonable.

[14]   The Council will pay costs to Impact Steel Frames on the discontinuance of the claim against that company of $5,500. No disbursements are sought.

Associate Judge Johnston

Solicitors:

Young Carrington & Usher, New Plymouth for Plaintiffs Rice Spier, Auckland for Defendant

McCaw Lewis, Hamilton for First Third Party

MacDonald Lewis Law, Auckland for Second and Third Third Parties Connect Legal, New Plymouth for Fourth Third Party

3      High Court Rules 2016, rr 14.2(1)(a)–(c).