Wheeldon v Body Corporate 324525
[2017] NZHC 985
•18 May 2017
IN THE HIGH COURT OF NEW ZEALAND WHANGAREI REGISTRY
CIV-2014-488-0122 [2017] NZHC 985
BETWEEN DEREK PETER WHEELDON AND
CAROL ANN WHEELDON, ANTHONY JOHN BUTCHER AND RUTH BARBARA ROGERS, LARRY LAWRENCE SMALL AND KM TRUSTEE SERVICES LTD, IVOR ANTHONY MILLINGTON AND NEVILLE EADE
Plaintiffs
AND
BODY CORPORATE 324525
DefendantROBYN KATHLEEN STENT Counterclaim Defendant
Hearing: On the papers Counsel:
B E Brill for the Plaintiffs and Counterclaim Defendant
S F Powrie for the DefendantJudgment:
18 May 2017
COSTS JUDGMENT OF MUIR J
This judgment was delivered by me on Thursday 18 May 2017 at 4.00 pm
Pursuant to Rule 11.5 of the High court Rules.
Registrar/Deputy Registrar
Date:…………………………
Counsel/Solicitors:
B E Brill, B E Brill Ltd, Paihia
S F Powrie, Darlow & Partners, Auckland
WHEELDON v BODY CORPORATE 324525 [2017] NZHC 985 [18 May 2017]
Introduction
[1] This judgment corrects all previous judgments where the Body Corporate has been incorrectly recorded as Body Corporate 342525. The correct title is Body Corporate 324525.
[2] On 11 May 2017 the parties’ memoranda in respect of costs were forwarded to me. The Registry apologises for the oversight in not having earlier done so.
[3] Prior to delivery of this judgment I issued a number of Minutes inquiring as to various aspects of the defendant’s calculations and its disbursement claims. There have been multiple communications from counsel as a result.
[4] In my final judgment1 I awarded costs on a 2B basis in relation to the defendant’s successful defence of the proceedings. I did so with the provisional indication that I considered an allowance for second counsel appropriate, which I now confirm. The proceedings were of sufficient complexity and raised sufficient discrete issues both factually and legally for such an allowance to be made.
[5] I also indicated that the defendant was entitled to costs on its counterclaim against the various plaintiffs for outstanding levies. Such counterclaim totalled
$36,900.75.
[6] At an earlier stage in the proceedings the defendant had sought 2B costs in relation to the issues determined in my interim judgment,2 discounted by 10 per cent to reflect the issues ultimately determined in my final judgment. In its memorandum dated 16 February 2017 it sought indemnity costs equivalent to 10 per cent of its actual costs (totalling $151,198.00) on account of the plaintiffs second cause of action and the counterclaim (both determined in the final judgment). In the
alternative, it sought scale costs with an uplift of 50 per cent.
1 Wheeldon v Body Corporate 342525 [2017] NZHC 87.
2 Wheeldon v Body Corporate 342525 [2015] NZHC 884 (2015) 16 NZCPR 829 (relating to the first cause of action).
Discussion - costs
[7] As the defendant was successful in respect of the issues addressed in both interim and final judgments, I consider the correct course is now to allow costs on defence of the entire proceeding on a 2B basis.
[8] In that respect the defendant claimed $68,623.50, although it later accepted there was an error in its calculation and reduced this amount by $1,461.00.
[9] The plaintiffs claim that the correct scale calculation is $47,959.
[10] The two principal areas of dispute relate to a claim for $10,746.00 relating to various documents filed for the purposes of an interlocutory hearing on 25
November 2014 and a claim of $7,164.00 for seven memoranda filed subsequent to delivery of my interim judgment.
[11] In relation to the first of these I accept the plaintiffs’ argument. In his
decision on the interlocutory applications Bell AJ held:3
There have been mixed results. I make no order for costs. Costs on the hearing today are to follow the final outcome of the proceeding.
(Emphasis added)
This was a final decision on costs which was not the subject of appeal. Clearly because of the respective wins and losses his Honour considered that costs appropriately lay where they fell other than in the limited respect that costs of the half-day hearing were to follow the ultimate outcome of the trial. Nor is it appropriate that a second counsel allocation be made in relation to the hearing. My provisional indications in relation to certification of second counsel related to the trial itself. Routine interlocutories will not ordinarily attract such an allowance.
[12] In respect of the seven memoranda, I allow the defendant’s claim by reference to or analogy with the scale. This is a case where an interim judgment was issued on what I considered to be the key issues so that the Body Corporate could
advance its remediation plans. Reservation of a number of technical issues and the
3 Wheeldon v Body Corporate 324525 [2014] NZHC 2990, at [39].
interrelationship of these issues with those engaged in the subsequent Butcher proceedings necessitated multiple conferences. Ultimately, despite earlier indications from counsel that the subsidiary issues might be resolved or abandoned, I was required to give a judgment on them. The memoranda were filed in the context of what remained live issues in the Wheeldon proceedings.
[13] In the result, I allow scale costs on the defence of $55,919.00 calculated in accordance with Schedule 1 attached.
[14] As to costs on the counterclaim the defendant submits that an indemnity award is warranted having referred to s 124(2) of the Unit Titles Act 2010 which relevantly provides that:
The amount of any unpaid levy, together with any reasonable costs incurred in collecting the levy, is recoverable as a debt due to the body corporate…
[15] I do not consider myself in a position to make any reasonable calculation of costs for the purposes of an indemnity award, even if I might otherwise consider it appropriate. As the defendant’s memorandum acknowledges, it is impossible for counsel to identify from their time records attendances specifically directed to the counterclaim. The suggestion that 10 per cent of actual costs be so attributed paints too broad a brush, and in any event my assessment is that the time spent in relation to this aspect of the proceedings would have been considerably less than that. Judgment on the counterclaim followed inevitably from rejection of the arguments advanced on the claim. In that sense it did not raise discrete issues.
[16] The alternative claim for increased costs is said to be based on r 14.6(3)(d) of the High Court Rules 2016 and relies principally on the same grounds under the Unit Titles Act 2010 as advanced in relation to the claim for indemnity costs. I do not consider that a statutory entitlement to recover actual reasonable costs (if adequately proved) represents a proper basis for an increased award on scale in circumstances where no such proof is available. Rule 14.6(3) is primarily directed to issues arising out of conduct of the litigation. An egregious underlying breach has also been
recognised as a ground for an increased award.4 I accept that in terms of r 14.6(3)(d)
4 Willburn Furniture and Restorations Ltd (in liq) v Gledhill [2016] NZHC 549 at [8]-[14].
the categories are not closed. But I do not see the Rules as permitting something akin to a backstop for an unproven (and unprovable) indemnity claim.
[17] The award I make is therefore confined to scale costs on the counterclaim.
[18] In this respect, items 3 and 4 in Schedule 3 to the High Court Rules apply directly (counterclaim and reply to defence to counterclaim). In addition, the defendant claims for preparation of evidence, preparation for hearing and appearance at hearing (including second counsel) and for the seven memoranda following the issue of my interim judgment. It does so on a basis of 10 per cent of the equivalent allowance for its defence in relation to the same steps. I accept that in relation to the prosecution and hearing of a counterclaim some adaptation of the Schedule is required to reflect an assessment of additional attendances required for that purpose, over and above those related to the defence. In the present case my assessment is that such additional time was low for the reasons referred to in [14] above. I allow five per cent of equivalent costs for the relevant steps. I do not in this context allow for second counsel as the counterclaim did not of itself justify it.
[19] Accordingly, I allow:
Item Description Days Amount 4
Counterclaim
1.6
$3,184.00
3
Reply to defence to counterclaim
0.8
$1,592.00
30
Preparation of evidence (5% apportionment)
0.125
$ 248.75
33
Preparation for hearing (5% apportionment)
0.1
$ 199.00
34
Appearance at hearing (5% apportionment)
0.35
$ 696.50
11
Post trial memoranda (5% apportionment)
0.14
$ 278.60
Total
$6,198.85
Discussion - disbursements
[20] The defendant claims disbursements of $44,074.33 in accordance with the attached Schedule 2. With the exception of the Veron/GBC Invoice 0285 in the amount of $9,496.74 and the item identified in [24] below, I consider such disbursements reasonably necessary and reasonable in amount for the purposes of r 14.2(2)(c) and (d) of the High Court Rules.5
[21] In their memorandum dated 15 May 2017 the plaintiffs refer to the recent settlement of the Body Corporate’s claims against Far North District Council (FNDC) and to the possibility that claims in those proceedings for Veron/GBC costs may overlap with claims for disbursements in the present proceedings.
[22] In response I have received a memorandum of counsel for the defendant advising that:
The Body Corporate manager has confirmed that none of the invoices comprising the total sum $110,496.00 for Veron/GBC invoices claimed in the Far North District Council proceedings are claimed in the Butcher or Wheeldon proceedings.
[23] On the basis of that assurance I do not consider it necessary to refer the disbursements for review by the Registrar as the plaintiffs submit I should.6
However, if at any future time the assurance is shown to be inaccurate I would consider an application for recall of the present judgment and for Registrar review.
[24] In respect of Invoice 0285 it simply records 49.25 hours with various disbursements but there is no further narration or explanation. In response to an inquiry from the Court, counsel advises;
… we have contacted Andrew Gray regarding Veron Invoice 0285. Mr Gray is not aware of any breakdown for this invoice but has confirmed that all work relating to invoice 0285 dated 4 March relates to this proceeding.
5 Including electronic outsourcing costs on the principle that this encourages the most efficient and cost-effective approach to discovery. The defendant’s initial claim included GST, but this was abandoned following a Minute from me referring to New Zealand Venue and Event Management Ltd v Worldwide NZ LLC [2016] NZCA 282, (2016) 23 PRNZ 260.
6 In the Butcher proceedings I sought certification by counsel that no duplications had occurred in the claims against FNDC. No similar certification was sought in the present proceeding but to the extent it was assumed I withdraw that requirement.
[25] This is unsatisfactory and detracts from proper assessment under the relevant Rule. I have come to the conclusion that although Mr Gray was undoubtedly an important witness for the defence, a claim for 49.25 hours excluding briefing and preparation of his evidence (which was included in invoice 1054) is excessive and that some allowance is necessary in the plaintiffs’ favour. I reduce the amount awarded by 19.25 hours at $175 per hour on the basis that I cannot accept more than
30 hours’ work was required to prepare for and attend the trial.
[26] I also delete from Veron/GBC Invoice 0148 attendances totalling $175 for which the line item is “Review defect list for statement of claim. Discuss with Grimshaw & Co 16/09/2014”. I am not satisfied that this relates to the present claim as opposed to the FNDC proceedings. The proposition that the review was “for” the statement of claim confirms me in that view. The defect list was not relevant to the counterclaim in the present proceedings and the reference can only therefore be to
the body corporate claim against FNDC.7
Result
[27] I award costs and disbursements in favour of the defendant in the amount of
$102,648.43.
(a) Scale 2B costs on defence of the claim $ 55,919.00 (b) Disbursements on defence of the claim $ 40,530.58 (c) Scale 2B costs on the counterclaim $ 6,198.85
Total $102,648.43
Muir J
7 The defendant’s Schedule 2 (annexed) refers to the invoice as having been “adjusted” but that is
not the case. The full invoice (excluding GST) was for the $2,826 claimed.
Costs Schedule for Ordinary Proceeding – Category 2B basis
Item Description Allocated
Days
Daily
Recovery
Rate
Total Commencement 2 Commencement of
Defence by defendant
2 1,990 $ 3,980.00 Interrogatories, discovery and inspection 20 List of documents on
Discovery
2.5 1,990 $ 4,975.00 Case management 10 Preparation for first case
management conference
0.4 1,990 $ 796.00 11 Filing memorandum for first
case management conference
(x4)0.4 1,990 $ 3,184.00 13 Appearance at first or
subsequent case management conference
0.3 1,990 $ 597.00 Interlocutory applications 26 Appearance at hearing of
principal counsel
0.5 1,990 $ 995.00 Trial preparation and appearance 30 Preparation of briefs or
affidavits
2.5 1,990 $ 4,975.00 32 Preparation of list of issues,
authorities and common bundle
2 1,990 $ 3,980.00 33 Preparation for hearing 3 1,990 $ 5,970.00 34 Appearance at hearing for
principal counsel
7 1,990 $ 13,930.00 35 Appearance at hearing for
second counsel
3.5 1,990 $ 6,965.00 Post-trial 11 Filing memorandum of counsel
x 7 (16/03/15;
18/06/15; 02/07/15;
08/07/15; 09/07/15;
31/07/15; 10/06/16)0.4 1,990 $ 5,572.00 Total: $ 55,919.00
Schedule of Disbursements
Description Amount (excl GST) Copying (Authorities and Supplementary Common
Documents Bundles)
$ 546.00 Ministry of Justice filing fee (interlocutory application for
directions)
$ 500.00 Ministry of Justice filing fee (interlocutory strike-out
application)
$ 500.00 Ministry of Justice filing fee (statement of defence) $ 110.00 Ministry of Justice filing fee (Notice of Opposition –
Particulars)
$ 110.00 Ministry of Justice filing fee (Amended Statement of
Defence and Counterclaim)
$ 1,350.00 Ministry of Justice filing fee (Notice of Opposition –
Discovery)
$ 110.00 New Zealand Law Society research #REG165017 $ 40.00 Streamlined Litigation Support – Tax Invoice 16324 $ 672.59 Streamlined Litigation Support – Tax Invoice 16323 $ 356.90 Veron Limited – Invoice INV-0285 $ 9,496.74 Veron Limited – Invoice – INV-0241 $ 7,010.95 Veron Limited – Invoice – INV 0322 (20/07/2015) $ 348.75 Veron Limited – Invoice – INV 0148 (21/10/14)
(adjusted to remove attendances in FNDC litigation)
$ 2,826.00 Quantum Limited – Invoice Q285-07 (in part) $ 2,775.00 Quantum Limited – Invoice Q285-08 $ 2,156.90 Yeomans Survey Limited – Invoice 7377 $ 5,200.00 Accommodation (Tim Allan; Tim Gavigan) $ 200.00 Resolution Architecture – Invoice 1115 – Expert witness fee $ 3,664.50 Gribble Churton Taylor Invoice F/13/142 – Expert witness
fee
$ 6,100.00 TOTAL (excl. GST) $44,074.33
0
4
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