Westgate Town Centre Limited v Auckland Council
[2024] NZHC 1823
•5 July 2024
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2018-404-000380 [2024] NZHC 1823
BETWEEN WESTGATE TOWN CENTRE LIMITED
First Plaintiff
WESTGATE PROPERTIES LIMITED
Second Plaintiff
NZRPG MANAGEMENT LIMITED
Third Plaintiff
(Continued overleaf) AND
AUCKLAND COUNCIL
First Defendant
AUCKLAND TRANSPORT
Second Defendant
Hearing: 6 March 2024 Appearances:
B D Gray KC and G N M Tompkins for Plaintiffs R B Lange and L B Harrison for Defendants
Judgment:
5 July 2024
JUDGMENT OF VAN BOHEMEN J
[on costs]
This judgment was delivered by me on 5 July 2024 at 12:30 pm pursuant to r 11.5 of the High Court Rules 2016.
Registrar/Deputy Registrar
……………………………..
Counsel/Solicitors:
B D Gray KC, Auckland Wilson Harle, Auckland Simpson Grierson, Auckland
WESTGATE TOWN CENTRE LTD v AUCKLAND COUNCIL [2024] NZHC 1823 [5 July 2024]
WESTGATE TOWN CENTRE (2017) LIMITED
Fourth Plaintiff
WESTGATE PROPERTIES (2017) LIMITED
Fifth Plaintiff
NZRPG MANAGEMENT (2017) LIMITED
Sixth Plaintiff
[1] In my judgment dated 12 June 2023, I dismissed all claims brought by the plaintiff companies, which comprise parts of the New Zealand Retail Property Group (NZRPG), against the defendants, Auckland Council and Auckland Transport, for alleged breaches of contracts relating to the development of the Westgate Town Centre that were concluded between NZRPG entities and the Waitakere City Council and, following the amalgamation of the Auckland territorial authorities and the Auckland Regional Council into Auckland Council, between NZRPG entities and Auckland Council.1
[2] I held that, as the successful parties, the defendants are entitled to costs. I recorded my understanding that the parties had agreed that costs should be assessed on a Category 3 Band C basis but made timetable directions for counsel to file memoranda.2
[3] The timetable was extended a number of times by consent to enable the parties to continue discussions. In the event, the parties were able to agree on some categories of costs but were unable to agree on others.
[4] By memorandum dated 29 November 2023, counsel for the defendants set out the defendants’ position on costs, which is that they seek an award of:
(a) $1,563,592.00 for costs; and
(b) $527,602.60 for disbursements.
[5] The memorandum explained the defendants’ starting position on costs, identified where the parties had been able to agree, and set out the issues on which the parties differed.
[6] By memorandum dated 13 December 2023, counsel for the plaintiffs set out the plaintiffs’ position on costs, which is that they consider an appropriate award is:
1 Westgate Town Centre Ltd v Auckland Council [2023] NZHC 1455 [Substantive Judgment].
2 At [676]–[678].
(i)$744,279.00 for costs; and
(ii)$408,835.00 for disbursements.
[7] The memorandum explained the plaintiffs’ position on the issues where the parties differed.
[8]Further memoranda were exchanged in December 2023 and February 2024.
[9] A two-hour hearing was held on 6 March 2024 during which counsel addressed me on the issues in dispute. In advance of the hearing, counsel helpfully filed a joint list of issues. I follow that list in the discussion below.
Preliminary observations
[10] I begin by recalling that, in a joint memorandum dated 15 June 2018 filed in advance of a case management conference that was to be held on 20 June 2018, counsel for both sets of parties stated:
8. The parties consider that this proceeding should be categorised as a category 3 proceeding under HCR 14.3. It is likely that most steps will be Band C under HCR 14.5. The parties agree that it is a complex defended proceeding as further case management conferences will be required.
[11] That shared understanding has been generally reflected in the parties’ approaches to costs. However, on specific items, either the plaintiffs or the defendants (and occasionally both), argue for a variation from a standard Band C calculation.
Relevant provisions of High Court Rules 2016
[12] Rule 14.2(1) of the High Court Rules 2016 provides that the following general principles apply to the determination of costs:
(a)the party who fails with respect to a proceeding or an interlocutory application should pay costs to the party who succeeds:
(b)an award of costs should reflect the complexity and significance of the proceeding:
(c)costs should be assessed by applying the appropriate daily recovery rate to the time considered reasonable for each step reasonably required in relation to the proceeding or interlocutory application:
(d)an appropriate daily recovery rate should normally be two-thirds of the daily rate considered reasonable in relation to the proceeding or interlocutory application:
(e)what is an appropriate daily recovery rate and what is a reasonable time should not depend on the skill or experience of the solicitor or counsel involved or on the time actually spent by the solicitor or counsel involved or on the costs actually incurred by the party claiming costs:
(f)an award of costs should not exceed the costs incurred by the party claiming costs:
(g)so far as possible the determination of costs should be predictable and expeditious.
[13]Under sch 2, the daily recovery rate for Category 3 proceedings is $3,530.
[14] Schedule 3 sets out the time allocations for itemised steps in general civil proceedings for each band.
[15] Under r 14.5, where sch 3 applies, determination of what is a reasonable time for a step must be made by reference:
(a)to band A, if a comparatively small amount of time is considered reasonable; or
(b)to band B, if a normal amount of time is considered reasonable; or
(c)to band C, if a comparatively large amount of time for the particular step is considered reasonable.
Rule 14.6(3)(a) provides that the Court may order increased costs if:
… the nature of the proceeding or the step in it is such that the time required by the party claiming costs would substantially exceed the time allocated under band C;
[17] Under r 14.12(2), a disbursement must be included in the costs awarded for a proceeding if it is approved by the court of the purposes of the proceeding to the extent it is:
(b)specific to the conduct of the proceeding; and
(c)reasonably necessary for the conduct of the proceeding; and
(d)reasonable in amount.
[18] However, under r 14.12(3), a disbursement may be disallowed or reduced if it is disproportionate in the circumstances of the proceeding.
Item 11: Filing of memoranda for case management conferences
[19] The parties agree that the defendants filed, either jointly with the plaintiffs or on their own account, 16 memoranda for case management conferences.
[20] Under sch 3 of the High Court Rules, the per day time allocations for this step are: Band A: 0.2; Band B: 0.4; and Band C: 1.0.
[21] The defendants recognise that some memoranda required less preparation time than others and accept that it would not be appropriate to allocate a full day to the preparation of all 16 memoranda — which would result in a total cost for this step of
$56,480. Instead, they propose that eight of the memoranda be costed at Band C and eight be costed at Band B, which would result in a total cost of $39,536.
[22] The plaintiffs say that they prepared all but one of the memoranda; that many of the directions were by consent; that there were few contentious issues; and that several of the memoranda would more appropriately be classified as Band A. They propose, therefore, that all memoranda be costed at Band B, as a convenient middle ground. That would result in a total cost of $22,592.
Analysis
[23] From a review of the file, it is apparent that preparation and consideration of some memoranda would have required a comparatively small amount of time and would warrant costing under Band A. However, given the complexity and significance of the issues and the length and detail of the pleadings, consideration of some memoranda would have required a comparatively large amount of time, even if a memorandum was not particularly long.
[24] As both parties accept, some equalisation of cost is appropriate. The defendants’ approach does not take into consideration memoranda that would warrant costing at Band A. The plaintiffs’ approach does not take into consideration that the time allocation for Band B is less than half of that for Band C and is not an average of the three allocations.
[25] I consider that a more appropriate approach is to allocate the 16 conferences across the three bands as follows: five at Band A (1 day); five at Band B (2 days); and six at Band C (6 days). This results in a total cost for this step of $31,770.
Item 20: Lists of documents on discovery
[26] The parties agree that this step is to be costed at Band C. The time allocation for this step in sch 3 of the High Court Rules is seven days. Given that there are two defendants, the plaintiffs say the starting point is 14 days. The defendants say that a further seven days should be added to take into account the further discovery ordered by Wylie J in April 2021.3 That is opposed by the plaintiffs who say that the further discovery was to remedy deficiencies in Auckland Council’s original list of documents. In any event, both parties accept that an increase from the Band C allocation is appropriate in the circumstances of this proceeding.
[27] The defendants seek an increased allocation of 142 days which they say equates to 40 per cent of estimated actual time (355 days) spent on the initial tranche of discovery. They say that, in that tranche, they reviewed approximately 350,000 documents over a period of two-and-a-half years to complete their initial lists of documents, comprising over 22,000 documents. They note that the plaintiffs required the same period of time to complete the plaintiffs’ list of documents, comprising over 20,000 documents. The defendants also say they undertook a further review of several tens of thousands of documents over a period of three months to prepare Auckland Council’s second list of documents, comprising 2,200 documents.
[28] The defendants submit that the present case has similarities to other complex cases where increased costs have been awarded based on increased time allocations
3 Westgate Town Centre Ltd v Auckland Council [2021] NZHC 858 [Westgate Discovery Judgment].
beyond Band C. They refer in particular to Transpower Ltd v Commissioner of Inland Revenue,4 Strathboss Kiwifruit Ltd v Attorney-General,5 Mainzeal Property and Construction Ltd v Yan,6 and Cridge v Studorp.7
[29]The defendants note that, in those decisions, the Court observed that:
(a)The actual time spent on a step in a proceeding is relevant to determining the reasonable time spent in a proceeding and may be a useful tool for assessing the complexity and significance of the proceeding and as a starting point for determining whether the step is such that the time required by the party claiming costs would substantially exceed the time allocated under Band C. (Trustpower)8
(b)The costs regime is not intended to be based around the actual time and costs of the claiming party, and actual time should only be taken into account as a general guide to what a reasonable amount of time would be. (Mainzeal)9
(c)The general idea of the costs award representing two-thirds of actual reasonable expenditure is built into the daily recovery rates but is not built into the time allowances. The time allowances should be based on the time considered reasonable for such a step. While that is a difficult assessment, it is a matter of evaluating the time considered reasonable for the steps in the case before the Court. (Mainzeal)10
(d)While it has been said that any uplift from scale is not to be calculated as a proportion of the actual, the time spent assists with the analysis. (Cridge)11
4 Trustpower Ltd v Commissioner of Inland Revenue [2014] NZHC 3072.
5 Strathboss Kiwifruit Ltd v Attorney-General [2019] NZHC 62.
6 Mainzeal Property and Construction Ltd (in liq) v Yan [2019] NZHC 1637.
7 Cridge v Studorp [2022] NZHC 2024.
8 Trustpower Ltd v Commissioner of Inland Revenue, above n 44, at [22].
9 Mainzeal Property and Construction Ltd (in liq) v Yan, above n 66, at [42].
10 Mainzeal Property and Construction Ltd v Yan, above n 6, aAt [42].
11 Cridge v Studorp, above n 77, at [71].
[30] The defendants acknowledge that 40 per cent of actual time spent is a higher proportion of actual time than was adopted in Trustpower and Mainzeal, where costs awarded for discovery were approximately 35 per cent of actual time.12 However, they say the circumstances of this case warrant a higher proportion of actual time. They note that, in Trustpower, 70 days were allowed for discovery that required the review of 70,000 documents whereas the present case involved the review of well over 350,000 documents.
[31] The plaintiffs observe that, in accordance with the High Court Rules, any uplift is from scale and not based on actual costs. They submit that the 142 days sought by the defendants is excessive and unprecedented and significantly exceeds what has been awarded in comparable cases. They also say that the scope of the defendants’ discovery was not so extraordinary to justify such an award, given that Band C discovery in Category 3 cases already reflects proceedings that are of the highest complexity and significance. The plaintiffs have also analysed the amount of time spent by the defendants in undertaking the two tranches of discovery and seek to draw an adverse inference from the fact that the defendants took 316 days to discover 22,000 documents in the first tranche and 39 days to discover 2,200 documents in the second tranche. The plaintiffs also resist any comparison with the time spent on the plaintiffs’ discovery. They say they had to collate and review documents held by 12 third party agents whereas the defendants’ discovery was largely limited to their own documents or documents held by their solicitors.
[32] The plaintiffs submit that an award of 80 days appropriately and fairly reflects an objective assessment of the time reasonably necessary.
Analysis
[33] I agree with the plaintiffs that the nominal starting point is 14 days and not 21 days. Wylie J ordered further discovery because he considered that the defendants had not carried out their original discovery obligations.13 No doubt, for that reason, he also ordered the defendants to pay the plaintiffs’ costs on a 2C basis on the
12 Trustpower Ltd v Commissioner of Inland Revenue, above n 4, at [29]; and Mainzeal Property and Construction Ltd v Yan (in liq), above n 6, at [43]–[45].
13 Westgate Discovery Judgment, above n 3, at [54].
application for further discovery.14 Given that both sets of parties agree that there should be an increase on the allowance in Band C, little would seem to turn on the issue. I note, however, that the fact the defendants had to spend another three months to complete further discovery is relevant to the overall assessment of what was a reasonable time for the defendants’ discovery in the proceeding.
[34] There is no doubt that the case required review by the defendants of a very large number of documents. That was partly the consequence of the plaintiffs’ position that the contracts at issue had to be interpreted in the light of the large number of legislative instruments and policy and planning documents that related to the development of the Auckland region, to Waitakere City and to the Westgate Town Centre. Reviewing all those documents, and the documents relating to the almost 14 years between signature of the initial memorandum of understanding in July 2004 and the commencement of proceedings in March 2018, was a very large task, as I found when writing the judgment. While the documents were not technically complex, they were many in number and considerable care had to be taken in understanding how they related to each other.
[35] As Cooke J observed in Mainzeal, actual time spent should only be taken into account as a general guide in assessing what a reasonable amount of time may be.15 Even so, the fact that both sets of parties took about the same amount of time to prepare their initial lists of documents provides a broad assurance that the 355 days taken by the defendants to complete their initial lists was reasonable, irrespective of any differences in the nature of their respective tasks. To take any lesser number of days as a starting point would be arbitrary. I do not find the plaintiffs’ comparisons of the time taken over the defendants’ two tranches to be particularly helpful, given that the documents reviewed in the second tranche would have been of a narrower range than the initial tranche.16
14 At [54].
15 Mainzeal Property and Construction Ltd v Yan (in liq), above n 6, at [42].
16 The further discovery was focused on documents created or controlled by the Waitakere City Council or its agents prior to 1 November 2010. See Westgate Discovery Judgment, above n 3, at [53].
[36] It is noteworthy that the defendants do not seek to bring that additional time into consideration in setting the starting point of 355 days for assessing what percentage of actual time would be reasonable. Yet, it must be the case that, if the defendants had included in their initial discovery the documents ordered for discovery by Wylie J, the actual time spent on discovery would have been considerably greater than the 355 days used by the defendants in setting that starting point.
[37] For that reason, I agree with the defendants that there is a justifiable basis in this case for using a slightly higher percentage of actual time than those adopted in Trustpower and Mainzeal when assessing what would be a reasonable expenditure on discovery. I agree, therefore, that the defendants should be awarded 142 days for completion of discovery, being 40 per cent of the actual time spent on the first tranche of discovery. The award for this step is $501,260.
Item 21: Inspection of documents
[38] The parties agree that this step should costed at Band C. The time allocation for this step in sch 3 of the High Court Rules is six days.
[39] The two defendants used the same counsel and solicitors and do not seek to double that allocation. However, they say the time required for inspection substantially exceeded the six days allocated under Band C. They note that, in addition to inspecting the 20,000 documents discovered by the plaintiffs, they needed to inspect a further 9,202 documents provided in seven tranches, following directions for further specified discovery made on 30 July 2021.17
[40] The defendants seek a time allocation of 26 days, which equates to 40 per cent of actual time spent on inspection (65 days). This would produce a costs award of
$91,780.
[41] The plaintiffs say that, while the 29,000 documents they discovered were significant, it is not out of step with what is expected of Category 3 proceedings and that, apart from the number of documents, the defendants have not raised any
17 Westgate Town Centre Ltd v Auckland Council HC Auckland CIV-2018-404-000380, 30 July 2021 (Minute of Wylie J).
circumstances that justify a time allocation for inspection substantially in excess of the allocation in Band C. The plaintiffs say that, if the Court accepts that an increase in time is appropriate, the maximum reasonable award would be 15 days. That would produce a costs award of $52,950.
Analysis
[42] There is some force in the plaintiffs’ submission that the 29,000 documents they discovered is not out of step with what is expected of Category 3 proceedings. At the same time, as Cooke J observed in Mainzeal, the general idea of the costs award representing two-thirds of actual reasonable expenditure, as reflected in r 14.2(1)(d) is built into the daily recovery rates but not in the time allowances. The fact that the defendants took 65 days for inspection is a strong indication that the Band C time allowance does not reflect what was reasonably required for inspection in this proceeding.
[43] As with discovery, the actual time taken for inspection is a general guide as to what a reasonable time period would be. As was also the case with discovery, inspection was not a singular exercise. As directed in Wylie J’s minute of 30 July 2021, the plaintiffs were required to provide further discovery by 26 August 2021, “with iterative tranches of documents to be provided as documents become ready for discovery/inspection.”18 The defendants say, and the plaintiffs do not deny, that the documents were provided in seven tranches. Inevitably, that would have increased the time taken for inspection. Accordingly, I agree with the defendants that, in the circumstances of this proceeding, a time allocation of 26 days, being 40 per cent of the actual time incurred is reasonable.
[44]The award for this step, therefore, is $91,780.
Item 33: Preparation of briefs, list of issues, authorities, and agreeing common bundle
[45] The standard time allocation for all bands in sch 3 of the High Court Rules for preparation of briefs, list of issues, authorities, and agreeing common bundle is:
18 Westgate Town Centre Ltd v Auckland Council, above n 17, at [4(b)].
1 per day for first to fifth hearing days:
0.75 per day from sixth to tenth hearing days:
0.5 per day from then on
[46]The parties agree that a standard Band C allocation for this step is 19.75 days.
[47] The defendants say the time required to complete this step substantially exceeded the scale allocation. They seek an increased time allocation of 60 days. They say this amounts to approximately 50 per cent of actual time spent on this step and note that the step covers not only the preparation of briefs but other items including the defendants’ contribution to preparing the common bundle.
[48] Bearing in mind that the defendants called two key fact witnesses, Mr Beckerleg and Mr Stokes, and four expert witnesses, the defendants say that their proposed allocation equates to an allocation of 10 days per brief if the cost is allocated equally across all six witnesses. Alternatively, given the key factual evidence given by Mr Beckerleg and Mr Stokes, they say an alternative notional allocation would be 15 days for preparation of the briefs of those key witnesses and seven-and-a-half days for each of the four expert witnesses.
[49] The defendants note that the days per brief approach was adopted or used as a cross-check for assessing costs in similarly complex proceedings and that, in Cridge,
Simon France J summarised the awards in comparable cases as being:19
(a)Mainzeal — 5.3 days on average;
(b)Trustpower — 5.8 days on average (although costs were calculated on a witness-by-witness basis); and
(c)Strathboss — four days per brief.
[50] The defendants note that, while the days per brief approach was referenced in the calculation of time increases in Mainzeal and Strathboss, the time increases
19 Cridge v Studorp, above n 7, at [83] and [88].
allocated were recognised as equating to approximately two-thirds of actual time spent.20 They also note that, in Cridge, Simon France J applied the Strathboss figure of four days per brief and added 20 days for the primary witness.21
[51] The plaintiffs say the standard Band C allocation of 19.75 days is appropriate and that the defendants have not discharged their burden of showing that, objectively assessed, the nature of the evidence preparation required preparation time substantially in excess of the standard allocation. They also say the factual evidence of Mr Beckerleg and Mr Stokes did not substantially exceed what is generally expected for a 3C proceeding, for which an eight-week trial was scheduled. They note that the factual briefs, while lengthy, narrated chronological events that, in the main, stepped through the documentary evidence, and were not technically complex.
[52] The plaintiffs also note that, apart from the limited historical commentary in the evidence of Mr Beckerleg, the evidence of the two factual witnesses did not address events prior to October 2010. They say that the defendants’ decision not to call evidence covering the preceding period significantly reduced the level of work required in witness briefing. They also say that the nature of the expert evidence was such that it would have been largely prepared by the experts themselves — as is confirmed by the fees charged by the experts, which are recorded as disbursements.
Analysis
[53] As the plaintiffs emphasise, any uplift is from scale. However, as Cooke and Simon France JJ observed in Mainzeal and Cridge, actual time spent can be a useful guide in assessing what time might be reasonable. As Cooke J also observed, the general assumption that scale costs represent about two-thirds of actual reasonable expenditure is built into the daily recovery rates but is not built into the time allowances, and time allowances should be based on the time considered reasonable for such a step. While the day per brief metric has been used in some cases in assessing what is reasonable, that metric has no basis in the High Court Rules.
20 Mainzeal Property and Construction Ltd v Yan (in liq), above n 6, at [49]–[52]; and Strathboss Kiwifruit Ltd v Attorney-General, above n 5, at [26]–[30].
21 Cridge v Studorp, above n 7, at [88].
[54] The difficulty in assessing what is reasonable is illustrated by the following analysis of what scale provided, what was asked for, and what was awarded in the cases referenced by the defendants:
(a)In Trustpower, the scale allocation was five days; the actual time spent was 89.7 days; the allocation sought was 39.85 days (being half the time sought, less the five days allocated under the scale); the allocation ordered was 29 days, which was less than a third of actual time but almost six times the scale allocation.22
(b)In Strathboss, there was no reference in Mallon J’s judgment to the scale allocation; the actual time spent was 186.4 days; the allocation sought was 124.33 days or two-thirds of actual time spent; the allocation ordered was 124 days, which was, in effect two-thirds of actual time.23
(c)In Mainzeal, the scale allocation was five days; the allocation sought was 79.8 days or two-thirds of actual time spent; the allocation ordered was 80 days, which was two-thirds of actual time and 16 times the scale allocation.24
(d)In Cridge, there was also no reference in Simon France J’s judgment to the scale allocation or to the actual time spent. The allocation sought was 216 days, based on an allocation of five days for each of the 27 primary briefs, three days for each of the 16 supplementary briefs and 33 days for the primary defence witness. The allocation ordered was 198 days (based on four days per brief for all briefs and an additional 20 days for the primary witness).25
[55] While the allocations ordered in the above cases can be explained by a days per brief allocation of between four and 5.8 days, they also show that the courts are
22 Trustpower Ltd v Commissioner of Inland Revenue, above n 4, at [36]–[42].
23 Strathboss Kiwifruit Ltd v Attorney-General, above n 5, at [26]–[30].
24 Mainzeal Property and Construction Ltd v Yan (in liq), above n 6, at [49]–[52].
25 Cridge v Studorp, above n 7, at [82]–[88].
prepared to allocate time in multiples significantly greater than scale, where they are satisfied that is appropriate and, at least in two cases, to allocate two-thirds of actual time spent.
[56] By contrast, the defendants seek an allocation that is half of actual time spent and three times the scale allocation. The fact that the scale allocation is 19.75 days, as compared with the five days provided for in Trustpower and Mainzeal and where time allocated significantly exceeded scale, suggests the evidence in the present case was of a different order from those cases. Given that scale allocations were not even referenced in Strathboss and Cridge, I consider it likely they were not considered a useful comparator in the circumstances of those cases. For these reasons, I do not consider it useful to try to assess what a reasonable time allocation might be on a days per brief basis.
[57] The evidence in the present case comprised two substantial briefs from the factual witnesses, Mr Beckerleg and Mr Stokes, three substantial expert briefs from Mr Gamby, Mr Roberts and Mr Innes, and one less substantial brief from Mr Fourie. These briefs were as follows:
(a)Mr Beckerleg’s substantive brief, excluding appended maps, plans and photographs, came to 61 pages. It covered the seven-and-a-half-year period from the establishment of the Auckland Council in October 2010 to the commencement of the proceeding in March 2018. It also covered, at a high level, the historical background to the project.
(b)Mr Stokes’ substantive brief, excluding appended photographs, came to 94 pages. It covered the almost seven years of his involvement in the Westgate project, dating from May 2011 to the commencement of the proceeding.
(c)The brief of Mr Gamby, the defendants’ principal witness on valuation issues, came to 56 pages, excluding an appended curriculum vitae, experience, publications, statement of assumptions underlying his evidence and schedule of Westgate tenancies.
(d)The brief of Mr Roberts, whose evidence was the defendants’ principal response to the plaintiffs’ valuation expert, Mr Winfield, came to 38 pages, excluding an appended statement of underlying assumptions and other material.
(e)The brief of Mr Innes, who gave evidence comparing the existing traffic environment with that that would exist if Westgate had been developed as the plaintiffs contended it should have been, came to 56 pages, excluding an appended statement of underlying assumptions.
(f)The brief of Mr Fourie, which concerned how the Auckland Council’s development contributions are assessed, came to 10 pages.26
[58] The briefs of Mr Beckerleg and Mr Stokes were far more comprehensive than the equivalent briefs from the plaintiffs’ equivalent factual witnesses; in particular, Mr Gunton, Mr Barbour, Mr Hay and Mr Robertson. Their briefs were essential to understanding both the overall narrative of events that occurred over a lengthy period and some of the detail. There was nothing superfluous in the briefs. If anything, the Court would have benefited from more textured analyses and more detail than that put forward. That may have reduced the amount of time the Court had to spend reading through the extensive documentary record. Even so, I accept that a considerable amount of counsel time would have been spent in preparing these briefs.
[59] I agree that the defendants’ experts briefs would have been prepared largely by the witnesses themselves. That is particularly so for the briefs of Mr Innes and Mr Fourie. However, as Mallon J observed in Strathboss, experienced counsel still have a significant role to play in overseeing the preparation of expert briefs.27 I consider that to be particularly so for the briefs of Mr Gamby and Mr Roberts, whose evidence was important in setting out the defendants’ approach to valuation (in the case of Mr Gamby) and in responding to the evidence of Mr Winfield (in the case of Mr Roberts).
26 Mr Fourie did not give evidence because this aspect of the plaintiffs’ claims settled before the hearing. It is not in dispute, however, that this brief was properly prepared.
27 Strathboss Kiwifruit Ltd v Attorney-General, above n 5, at [29].
[60] Overall, with the exception of the brief of Mr Flourie, the defendants’ factual and expert briefs were both broad in scope and covered considerable detail — as was required to respond to the breadth and detail of the plaintiffs’ allegations and the scale of the plaintiffs’ claims for damages.
[61] For these reasons, I accept that the time allocation sought of 60 days is reasonable and order accordingly. The plaintiffs’ award under this item, therefore, is
$211,800.
Item 33B: Preparation for hearing
[62] The standard time allocation for all bands in sch 3 of the High Court Rules for preparation for hearing is the same as for item 33. As was the case for item 33, the scale allocation in this case is 19.75 days.
[63] The defendants estimate actual time spent on trial preparation was 148 days. They seek an increased time allocation of 74 days, which is 50 per cent of the estimate of actual time. By reference to r 14.6(3)(b)(v) of the High Court Rules, the defendants also seek an uplift of costs of 40 per cent on the basis that the plaintiffs failed, without reasonable justification, to accept two offers of settlement made on 2 December and 21 December 2021. On the defendants’ calculation, this would result in an award for this step of $353,706.
[64] With respect to the time allocation, the defendants say that, in complex lengthy cases, the Court has approached the allocation of time for this step on a “days per day of hearing time” basis and refer to uplifts made on that basis in Mainzeal (almost 2.5 days);28 Trustpower (1.875 days);29 Strathboss (1.6 days);30 Cridge (almost 2 days);31 Sovereign Assurance Company Ltd v Commissioner of Inland Revenue (2.3 days); 32 N-Tech Ltd v Abooth Ltd (2 days);33 and Kidd v van Heeeren (10 days).34 The
28 Mainzeal Property and Construction Ltd v Yan (in liq), above n 6, at [56].
29 Trustpower Ltd v Commissioner of Inland Revenue, above n 4, at [50].
30 Strathboss Kiwifruit Ltd v Attorney-General, above n 5, at [34].
31 Cridge v Studorp, above n 7, at [89] and [92].
32 Sovereign Assurance Company Ltd v Commissioner of Inland Revenue [2012] NZHC 3573 at [15].
33 N-Tech Ltd v Abooth Ltd [2012] NZHC 1167 at [125(d)].
34 Kidd v van Heeren [2015] NZHC 3191 at [102].
defendants say their proposed increased allocation of 74 days equates to 2.31 days per hearing day.
[65] With respect to the proposed uplift, the defendants refer to correspondence exchanged between the parties’ solicitors in December 2021 and January 2022 on a “without prejudice save as to costs” basis, in which the defendants made two settlement offers of $5 million and $8 million, and the terms of the plaintiffs’ replies rejecting those offers. Having regard to the factors identified by Katz J in Weaver v HML Nominees Ltd as relevant to the assessment of whether increased costs should be awarded, and, if so, the extent of any increase,35 the defendants say an uplift of 40 to 50 per cent is warranted but are content with a 40 per cent uplift.
[66] The plaintiffs say the scale allocation of 19.75 days is sufficient and submit that time allocation, based on the length of hearing, takes into account complexity and scope which, in the present case, was consistent with expectations for an eight-week trial in a 3C proceeding. On the basis that Kidd v van Heeren was an outlier, they say the defendants’ proposed multiplier of 2.31 days per day of hearing time is at the upper end of multipliers used in other cases.
[67] With regard to the defendants’ settlement offers, the plaintiffs say their rejection of the offers was not unreasonable and no uplift is warranted. They note that the sums offered represented about five and 10 per cent of the plaintiffs’ claim and were not made by reference to the claims advanced. They also note the offers were made relatively close to the commencement of the hearing of a proceeding that had been almost four years in preparation. They also say that the timing of the offers and the periods they were open for acceptance suggest the offers were made for tactical reasons rather than any genuine attempt to settle.
[68] If any uplift is ordered, the plaintiffs say 40 per cent is appropriate for only egregious cases and that any uplift should be no more than 20 per cent.
35 Weaver v HML Nominees Ltd [2016] NZHC 473 at [30].
Analysis
[69] I accept that the scale allocation of 19.75 days is insufficient to reflect the amount of time that would reasonably be expected to prepare for this case, given the breadth and detail of the plaintiffs’ allegations, the significant time period to which those allegations related, and the scale of the plaintiffs’ claims for damages.
[70] I accept that the increased time allocation of 74 days is reasonable. It is half of the estimated actual time. Using the days per day of hearing time assessment, it is, as the plaintiffs accept, within range of the multipliers used in other complex cases, leaving aside Kidd v van Heeren.
[71]As to the settlement offers, it is relevant to note the following:
(a)The defendants’ initial offer on 2 December 2021 to pay $5 million in settlement of the plaintiffs’ substantive claims relating to the design and operation of the Westgate Town Centre was met with a counterproposal that included, but was not limited to, the defendants agreeing to build the Town Centre with the form and function that the plaintiffs alleged it was supposed to have had and to paying the plaintiffs $18.731 million in compensation.
(b)The plaintiffs’ response to the defendants’ offer on 21 December 2021 to pay $8 million in settlement of the plaintiffs’ Town Centre claims was sent 18 days after the nominated date for acceptance and said simply that the plaintiffs remained open to settlement of the Town Centre claims by a combination of the defendants committing to undertake the works sought by the plaintiffs and paying the plaintiffs appropriate compensation for losses.
[72] As the defendants accept, the reasonableness of any response to a settlement offer is to be assessed at the time of the offer and not in the light of the final result. The fact that the plaintiffs were entirely unsuccessful in their claims does not, of itself, mean that their refusal to accept settlement offers of $5 million and $8 million was unreasonable. However, given the nature of the claims, the state of trial preparation
and the terms of the plaintiffs’ responses to the settlement offers, I am satisfied that the plaintiffs’ refusal to accept the offers was unreasonable. I do not accept, however, that an uplift of 40 per cent is warranted, even if, as the defendants note, 40 per cent uplifts are not necessarily limited to egregious cases.
[73] Having regard to the factors identified by Katz J in Weaver, as discussed in the submissions of the parties, I note the following.36
[74] First, the offers were made at a time when the plaintiffs were well placed to evaluate them realistically, even if the offers were made a few months before the hearing and close to the end of the year. The plaintiffs’ preparation would have to have been well advanced. Even if their case with respect to Fred Taylor Drive was arguable, the plaintiffs should have appreciated that they faced considerable difficulties with the contractual and factual bases for the balance of their claims concerning the construction and operation of the other disputed elements of the Town Centre. As a corollary, the plaintiffs should have appreciated that they faced considerable difficulties with their claims for damages, which were premised on the Town Centre being designed and functioning as the plaintiffs asserted it should have been. The plaintiffs did not need evidence and argument from the defendants to appreciate these difficulties. Moreover, there was no uncertainty as to the applicable law and the plaintiffs would have been well aware of the possible costs consequences of rejecting the offers if they did not succeed in their claims.
[75] Secondly, while the sums offered were well short of the damages sought by the plaintiffs, they were substantial, particularly when account is taken of the fact that the defendants are public bodies and are necessarily constrained in their use of public funds.
[76] Thirdly, the plaintiffs’ responses were not serious counterproposals. They effectively required the defendants to concede the entirety of their defence, take on significant works for which funding may not have been immediately available and pay the plaintiffs’ compensation at a level that was more than twice the defendants’ higher settlement offer.
36 Weaver v HML Nominees Ltd, above n 35, at [30].
[77] However, in the context of the long and difficult history between the parties that had led to this proceeding, the plaintiffs’ position was hardly surprising. Against that history, and given the damages sought by the plaintiffs and the relative proximity of a long-scheduled hearing, I doubt the defendants had a serious expectation of their offers being accepted. In addition, while the relevant legal principles were clear, their application to the facts was far from straightforward.
[78] Even so, the plaintiffs’ refusal to accept or even engage seriously with the settlement offers undoubtedly had a significant impact on subsequent preparations for the hearing and the hearing itself. In that respect, the present case is quite different from that considered by Tahana J in Body Corporate 207624 v Grimshaw & Co, where an uplift of 25 per cent was ordered.37
[79]For all these reasons, I am satisfied that an uplift of 30 per cent is appropriate.
[80] Accordingly, and adopting the defendants’ methodology, which is not contested by the plaintiffs, the defendants’ award under this item is $330,584.50.
[81]This award is calculated as follows:
74 days at $3,530 $261,220.00
65.5 days at $3,530 $231,215.00
(costs incurred after 2 December 2021 offer)
30 per cent uplift of $231,215: $69,364.50
Total $330,584.50
Item 34: Appearance at hearing for principal counsel
[82] Under sch 3 of the High Court Rules, for this item, the defendants are entitled to the time occupied by the hearing measured in quarter days. In the present case, that is 32 days.
[83] There is no dispute over this entitlement. However, the defendants seek a 40 per cent uplift because the plaintiffs’ failure to accept their settlement offers was
37 Body Corporate 207624 v Grimshaw & Co [2023] NZHC 3381.
unreasonable. The defendants say no uplift is justified but say that, were an uplift to be ordered, it should be no more than 20 per cent.
Analysis
[84] The positions of the parties mirror their positions under the previous item, on the basis that the same considerations apply.
[85] I consider that the same considerations apply as under item 33B. Had the plaintiffs accepted one of the offers, these costs would have been avoided. Accordingly, I order an uplift of 30 per cent for the same reasons as under the previous item.
[86] The defendants’ award under this item is $146,848. This is calculated as follows:
32 days at $3,530 $112,960 30 per cent uplift
$33,888
Total
$146,848
Item 35: Second and subsequent counsel
[87] Under sch 3 of the High Court Rules, for this item, the defendants are entitled to 50 per cent of the allowance for the appearance of principal counsel, if allowed by the Court.
[88] The parties agree that there should be a 50 per cent allowance for second counsel and 25 per cent allowance for third counsel. The only area of disagreement is whether there should be any uplift for this step, based on the plaintiffs’ failure to accept the defendants’ settlement offers.
Analysis
[89] I agree that provision for second and third counsel is appropriate. If that provision is appropriate, I see no reason for not applying the same uplift as for the
previous two items. As with those items, these costs would have been avoided if there had been a settlement.
[90]Accordingly, the award under this item is $110,136, based as the following:
50 per cent of 32 days at $3,530 $56,480 25 per cent of 32 days at $3,530
$28,240
30 per cent uplift
$25,416
Total
$110,136
Disbursements
[91] The plaintiffs take issue with the claims for the costs for the preparation of the evidence of the defendants’ two valuation experts, Mr Gamby and Mr Roberts. The amounts claimed are $232,592 and $163,300 respectively. The plaintiffs seek a reduction of these costs by 30 per cent.
[92] The plaintiffs submit that the costs are prima facie out of step with what is to be expected for the costs of expert witnesses in comparable cases and that the defendants have not discharged their evidential burden of establishing that all claimed attendances were reasonably necessary and reasonable. The plaintiffs refer to Auckland Waterfront Development Agency Ltd v Mobil Oil New Zealand Ltd, in which Katz J reduced by 30 per cent disbursements claimed for experts’ fees, in respect of which her Honour was not satisfied the fees were reasonably necessary for the conduct of the proceeding and reasonable in amount.38
[93] The plaintiffs raise various questions about the amount of time the witnesses spent participating in or preparing for meetings with each other or with the defendants’ solicitors, and the time claimed for work undertaken by employees reviewing databases. They also say the costs are over 100 per cent higher than the costs charged by their valuer, Mr Winfield, and note that the defendants chose to call two witnesses to give what they say was essentially the same evidence.
38 Auckland Waterfront Development Agency Ltd v Mobil Oil New Zealand Ltd [2015] NZHC 470, (2015) 23 PRNZ 200 at [51]–[54].
[94] The defendants say the valuers’ evidence was specific to the conduct of the proceeding, reasonably necessary for the conduct of the proceeding and reasonable in amount. They say that, in the context of a claim for almost $90 million, it cannot be said that the valuers’ costs were disproportionate in the circumstances of the proceeding and that there is no good reason why the costs claimed should not be awarded in full.
Analysis
[95] I agree with the defendants. In the context of the scope, detail and amount of the plaintiffs’ claims, the valuers’ evidence and the time and care taken in its preparation are not disproportionate. They were an inevitable and predictable response to those claims. I see few parallels with the situation considered by Katz J in Auckland Waterfront Development Agency. The fact that Mr Winfield’s costs were significantly lower no doubt reflects his greater knowledge and experience of the Westgate area, as was apparent from his evidence.
[96] I order that the plaintiffs pay the costs of Mr Gamby and Mr Roberts in full; namely $395,892.
Result
[97] For all the above reasons, I award the defendants costs in respect of the disputed items as follows:
Item 11: Memoranda for case management conferences $31,770.00 Item 20: Lists of documents on discovery $501,260.00 Item 21: Inspection of documents $91,780.00 Item 33: Preparation of briefs of evidence $211,800.00 Item 33B: Preparation for hearing $330,584.50 Item 34: Principal counsel $146,848.00 Item 35: Second and subsequent counsel: $110,136.00 Disbursements: Fees of Mr Gamby and Mr Roberts $395,892.00
G J van Bohemen J
0
12
1