Spak (1996) Limited v Leroy

[2021] NZHC 613

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2020-404-1483

[2021] NZHC 613

BETWEEN

SPAK (1996) LIMITED

Plaintiff

AND

REECE LEROY

Defendant

Hearing:	On the papers
Appearances:	E Boshier for the Plaintiff C Fraser for the Defendant
Judgment:	25 March 2021

JUDGMENT OF GORDON J

[As to costs]

This judgment was delivered by me on 25 March 2021 at 3 pm, pursuant to

r 11.5 of the High Court Rules

Registrar/Deputy Registrar Date:

Solicitors:           Duncan Cotterill, Auckland

K3 Legal Ltd, Auckland

SPAK (1996) LTD v LEROY [2021] NZHC 613 [25 March 2021]

[1]This is an application for costs. The brief background is as follows.

[2]        The plaintiff, Spak (1996) Ltd (Spak) operates the Stamford Plaza Hotel, situated at 22-26 Albert Street, Auckland (hotel). Connected to the hotel is a complex of residential apartments formerly known as the Stamford Residences, but now known as the Residences (Residences). Body Corporate 407404 is the Body Corporate for the Residences (Body Corporate).

[3]        The defendant, Reece Leroy, was engaged by the Body Corporate to provide building management services for the Residences. There are facilities and areas shared by both the hotel and the Residences with corresponding access easements and a shared facilities agreement.

[4]        Both the substantive proceeding for trespass and an interim injunction application, determined by Davison J on 5 October 2020,1 arose in the context of the hotel commencing operations in the Covid-19 pandemic as a managed isolation facility.

[5]        Turning to the procedural background, the claim was set down for a formal proof hearing on 3 February 2021 as Mr Leroy had taken no steps in the proceeding.

[6]        On that date, counsel  for Mr Leroy appeared  and advised the Court that    Mr Leroy would be seeking leave to file a statement of defence out of time. The formal proof hearing did not proceed and instead a new date of 31 March 2021 was scheduled for a hearing of the application by Mr Leroy for leave to file a statement of defence out of time, or alternatively for formal proof.

[7]        Mr Leroy then filed his application for leave to file a statement of defence out of time together with affidavits in support and a memorandum of submissions of counsel.

[8]        Spak was to have filed its notice of opposition and any further evidence by 11 March 2021. Those documents were not filed.

1      Spac (1996) Ltd v Leroy [2020] NZHC 2609.

[9]        Instead, counsel have agreed that the leave application should be granted. I made an order accordingly. Counsel also agreed that I should determine costs on the papers.

[10]Spak seeks wasted costs on the formal proof application in the sum of

$5,377.50; costs on the interlocutory application for an interim injunction (which had been reserved in the judgment granting the application2) in the sum of $6,214.00 and disbursements of $533.00 all relating to the interim injunction. The total sum is

$12,124.50. Spak seeks what it describes as a modest further award associated with reviewing Mr Leroy’s application to file a statement of defence out of time and the affidavit evidence in support. Mr Boshier, for Spak, submits that total costs of $13,000 should be awarded.

[11]      Mr Fraser, for Mr Leroy, submits, first in relation to the interim injunction application, the costs having been reserved, Spak cannot now seek to reopen the issue over five months later before the substantive proceeding has been disposed of. He submits the costs on the interim injunction application should remain reserved pending the substantive hearing.

[12]      As far as the application for wasted costs is concerned, Mr Fraser acknowledges that Walker J, in her minute of 3 February 2021, stated that Spak was entitled to wasted costs on a 2B basis for the application for formal proof and preparation of affidavit evidence. Mr Fraser says Mr Leroy accepts that a wasted costs order will be made against him based on 2B scale costs for the relevant steps, but because the work required in preparing the formal proof affidavit is not necessarily wasted, as this would have been required for the trial in any event, this would justify a downwards adjustment.

[13]      So far as the costs in respect of the leave application is concerned, Mr Fraser submits that costs should be reserved pending the outcome of the substantive proceeding.

2 At [17].

[14]      First, in relation to costs for the interim injunction application, I consider costs should remain reserved. It is not appropriate to seek to reopen the issue five months later on another interlocutory application. There is limited, if any linkage between the issues on the interim injunction application and the application to file a statement of defence out of time. I do not consider it is proper that the costs, having previously been reserved, be re-opened on this application.

[15]      As far as wasted costs are concerned, I have examined the affidavit filed on behalf of Spak for the formal proof hearing. It is not extensive but I nevertheless accept that the work undertaken in preparing the affidavit will not have been wasted as it will be required for trial in any event. I am therefore prepared to make a deduction of $1,195.00 (being half the category 2 daily recovery rate of $2,390) to the amount claimed. I therefore award the sum of $4,182.50 in relation to the wasted costs application.

[16]      Thirdly, as regards the claimed uplift for work in relation to the application for leave to file a statement of defence out of time, I do not consider costs should be reserved. It is generally appropriate to award costs at the time of an interlocutory application rather than reserving costs to the substantive hearing. I agree with Mr Boshier it is appropriate that a modest award be made. I allow a quarter day, which at the category 2 daily recovery rate of $2,390 is $597.50.

[17]Costs are awarded in the sum of $4,780.00 in favour of Spak against Mr Leroy.

Gordon J