Taylor v Small

[2018] NZHC 3270

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2018-404-864

[2018] NZHC 3270

UNDER

the Declaratory Judgments Act 1908

IN THE MATTER

of an application for a Declaratory Judgment

BETWEEN

WILLIAM PETER TAYLOR AND SUSAN MARY TAYLOR

First Plaintiffs

SCOTT KERRY JACKSON AND SARAH ANNE JACKSON

Second Plaintiffs

RICHARD DONALD JOHNSTON AND RACHEL ELIZABETH JOHNSTON

Third Plaintiffs

TREVOR FRANK SAVORY AND SALLIE ANN RENWICK

Fourth Plaintiffs

AND

GEOFFREY CLEMMENT SMALL AND ARIA SMALL

First Defendants

…./cont

Hearing:	On the papers
Counsel:	R Brabant and S Darroch for the Plaintiffs A Simkiss for the First Defendants
Judgment:	12 December 2018

JUDGMENT OF GORDON J

[As to costs]

This judgment was delivered by me on 12 December 2018 at 3.30 pm, pursuant to r 11.5 of the High Court Rules

Registrar/Deputy Registrar  Date:

TAYLOR v SMALL [2018] NZHC 3270 [12 December 2018]

BOMBAY INVESTMENTS LIMITED

Second Defendant

Introduction

[1]                 This is an application by the first defendants, the Smalls, for costs and disbursements following my judgment of 29 October 2018,1 which was largely in their favour.

[2]                 The application is opposed by the first to fourth plaintiffs (the plaintiffs) who say that there should be a reduction in the costs as sought.

Substantive decision

[3]                 The plaintiffs brought an application under the Declaratory Judgments Act 1908 seeking declarations in relation to the interpretation of restrictive covenants, namely that:

(a)Only three dwelling houses may be built on the land that the Smalls purchased from the first plaintiffs, the Taylors, in 2013 (the Smalls’ land); and

(b)The equestrian facilities building (the building), which the Smalls have already constructed on that land, is in breach of the terms of the restrictive covenants.

[4]                 The plaintiffs further sought injunctions restraining the Smalls (or subsequent purchasers from them) from constructing any more than three dwelling houses on the Smalls’ land and ordering the Smalls to remove the building.

[5]                 I found in favour of the Smalls in relation to the number of dwelling houses and declined to make the declaration sought as referred to in [3](a) above. I therefore refused injunctive relief.

[6]                 Although I found in favour of the plaintiffs on the second issue and made the declaration sought as referred to in [3](b) above, I refused injunctive relief.

1      Taylor v Small [2018] NZHC 2785.

[7]                 My refusal was based on the fact that the building could not be said to be an “outbuilding” (as referred to in the restrictive covenants) in the absence of a house (which the Smalls are proposing to build on the property). I went on to state:

[171]     I have found, significantly, the building complies with the qualitative controls in the clause. Furthermore, I note that the Smalls have prepared a building site for a dwelling house. They have not yet constructed a dwelling house, as they have been awaiting the outcome of these legal proceedings.

[172]     The grant of an injunction is discretionary. In these circumstances, I do not consider it would be equitable to require the building to be taken down and removed, only to have it restored once a new dwelling house was constructed.

[173]     I therefore refuse to grant injunctive relief as sought in relation to the building. I refuse this relief on the basis that the Smalls will construct a dwelling house.

(Citations omitted)

[8]                 I expressed the preliminary view that the Smalls were entitled to costs, on a 2B basis.2 The parties have been unable to come to an agreement on costs and separate memoranda have been filed.

Principles

[9]                 Costs are at the discretion of this Court.3 The High Court Rules (the Rules) provide guidance as to how the discretion might be exercised.4

[10]              The general principle is that the party who fails with respect to a proceeding should pay costs to the successful party.5 But the overriding consideration when exercising the discretion to award costs is that any award ought to do justice between the parties.6

2 At [177].

3      High Court Rules, r 14.1(1).

4      Rules 14.2-14.7.

5      Rule 14.2(1)(a).

6      Packing In Ltd (in liq) v Chilcott (2003) 16 PRNZ 869 (CA) at [5].

Submissions

[11]              Ms Simkiss, for the Smalls, submits that the Court should make an order in accordance with the claimed schedule of costs and disbursements set out in Annexure A to this judgment.

[12]              Ms Simkiss submits that the plaintiffs obtained no relief and were not successful. Although the Court made only one of the two declarations sought, it declined further relief and declined to order an injunction.

[13]              Mr Brabant, for the plaintiffs, submits that a reduction in the costs sought is appropriate to recognise that the plaintiffs were successful in respect of the second cause of action, the Court having made the declaration sought under that cause of action. He submits that a reduction in the amount of costs that might otherwise be ordered to a party that has succeeded overall is justified where the party that is successful overall has added to the costs of the proceedings by pursuing a legal argument that has no merit.

[14]              Mr Brabant submits that the appropriate reduction of the costs claimed would be one-third. That is calculated on the basis that the Smalls succeeded on two of the matters for determination, namely the first cause of action and the request for injunctive relief, while the plaintiffs succeeded in respect of the second cause of action.

[15]              Therefore, Mr Brabant submits that a reduction under any of r 14.7(d), (f)(ii) and (iii) of the Rules is appropriate.

Is a reduction appropriate?

[16]Rule 14.7 of the Rules relevantly provides:

14.7     Refusal of, or reduction in, costs

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

(iii)failing, without reasonable justification, to admit facts, evidence, or documents, or accept a legal argument; or

…

[17]              As to r 14.7(d), the test I must apply is whether the issue in respect of which the defendants failed has “significantly increased the costs of the party opposing costs”.7

[18]              The Smalls failed on two arguments. The first was based simply on the plain meaning of the word “outbuilding”. I determined that, in the absence of a dwelling house, the building could not be said to be an outbuilding or ancillary building.8

[19]              Second, I held that the issue of whether the building is of a “nature, design or style” in keeping with the dwelling house could not be tested in the absence of a dwelling house.9

[20]              Each of these two arguments is relatively straightforward. I do not consider it could be said that, in pursuing these arguments, the Smalls “significantly increased the costs of the party opposing costs”.

[21]              Nevertheless, I am of the view that the Smalls pursued an unnecessary argument that lacked merit under r 14.7(f)(ii). It was clear, based on the plain meaning of the words, that in the absence of a dwelling house, the building could not be said to be an outbuilding or ancillary building. Nor could the building be of a “nature, design or style” in keeping with the dwelling house.

7      See Weaver v Auckland Council [2017] NZCA 330 at [26].

8      Taylor v Small, above n 1, at [99].

9 At [112].

[22]              I am not certain that r 14.7(f)(iii) easily applies. However, having found in favour of the plaintiffs on r 14.7(f)(ii), a consideration of r 14.7(f)(iii) is not necessary.

[23]              In my view, a reduction of one-third is too high. As I have noted, the arguments were relatively straightforward. A reduction of 20 per cent is appropriate. However, the reduction should only apply to items 40 and 42. There is no connection between the issues on which the Smalls were unsuccessful and items 11 and 12. Any connection with items 9 and 38 would be relatively insignificant. It was under items 40 and 42 that the Smalls contributed unnecessarily to the time or expense of the proceedings.

The remaining costs and disbursements

[24]I am satisfied that the costs sought are otherwise appropriate.

[25]              In relation to disbursements, Ms Simkiss claims costs of $2,843.95 invoiced by the expert witness engaged by the Smalls, Michael Campbell. She has annexed an invoice from Mr Campbell and submits that the sum should be awarded as a disbursement.

[26]              I refuse to award Mr Campbell’s costs as a disbursement. They do not fall within r 14.12(2)(a)(i) of the Rules. More specifically, they were not reasonably necessary for the conduct of the proceeding.10 I explicitly stated in the substantive judgment that I did not take into account the evidence of Mr Campbell.11 It was not necessary for the purposes of my decision.

Conclusion

[27]              The Smalls are entitled to costs of $15,610 and disbursements of $220. I set out the costs and disbursements as awarded in Annexure B to this judgment.

10     Rule 14.12(2)(c).

11     Taylor v Small, above n 1, at [126].

[28]I make an order accordingly.

Gordon J

Annexure A – the Smalls’ claimed costs and disbursements

Item	Description	Category 2 Daily Rate	Band B	Total
38	Filing notice of opposition and supporting affidavits	$2,230.00	2	$4,460.00
9	Pleading in response to amended pleading	$2,230.00	0.6	$1,338.00
11	Filing memoranda for first and subsequent case management conferences (5 x 0.4)	$2,230.00	2	$4,460.00
12	Appearance at mentions hearing or callover (2 x 0.2)	$2,230.00	0.4	$892.00
40	Preparation of written submissions	$2,230.00	1.5	$3,345.00
42	Appearance at hearing for principal counsel	$2,230.00	1	$2,230.00
Total costs	$16,725.00
Disbursements
Filing fee for statement of defence	$110.00
Filing fee for amended statement of defence	$110.00
Michael Campbell – expert witness fees	$2,843.95
Total disbursements	$3,063.95

Annexure B – costs and disbursements awarded

Item	Description	Category 2 Daily Rate	Band B	Total
38	Filing notice of opposition and supporting affidavits	$2,230.00	2	$4,460.00
9	Pleading in response to amended pleading	$2,230.00	0.6	$1,338.00
11	Filing memoranda for first and subsequent case management conferences (5 x 0.4)	$2,230.00	2	$4,460.00
12	Appearance at mentions hearing or callover (2 x 0.2)	$2,230.00	0.4	$892.00
40	Preparation of written submissions	$2,230.00	1.5	Discount of 20 per cent	$2,676.00
42	Appearance at hearing for principal counsel	$2,230.00	1	Discount of 20 per cent	$1,784.00
Total costs	$15,610.00
Disbursements
Filing fee for statement of defence	$110.00
Filing fee for amended statement of defence	$110.00
Total disbursements	$220.00