Wilson McKay Trustee Company Limited v Van Den Anker Construction Limited
[2024] NZHC 1880
•10 July 2024
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2022-404-2306
[2024] NZHC 1880
UNDER Sections 124 and 144 of the District Court Act 2016 IN THE MATTER
of an appeal from decision [2022] NZDC 20497 of District Court dated 28 October 2022
BETWEEN
WILSON MCKAY TRUSTEE COMPANY LIMITED, ANNE VALERIE NOBES-JESS AND RODNEY NORMAN JESS
Appellants
AND
VAN DEN ANKER CONSTRUCTION LIMITED
Respondent
Hearing: On the papers Counsel:
J A Ruddell for Appellants
I J Stephenson for Respondent
Judgment:
10 July 2024
COSTS JUDGMENT OF PETERS J
This judgment was delivered by Justice Peters on 10 July 2024 at 4 pm pursuant to r 11.5 of the High Court Rules
Registrar/Deputy Registrar Date: ...................................
WILSON MCKAY TRUSTEE COMPANY LTD v VAN DEN ANKER CONSTRUCTION LTD [2024] NZHC 1880 [10 July 2024]
Introduction
[1] I issued a judgment in this matter on 30 November 2023, allowing in part the appellants’ appeal from a District Court judgment dismissing their claim to a set off and/or counterclaim.1 This judgment deals with the matter of costs.
District Court
[2] In late-2018, the respondent commenced proceedings in the District Court, seeking the (principal) sum of $49,920.65 including GST, this being the total of its invoices 5, 7 and 8 for building work to the appellants’ property. The Judge awarded this sum to the respondent.
[3] The appellants sought a set-off for sums said to have been incurred in remedying what they alleged was defective work by the respondent. Alternatively, they counterclaimed for the same sum and also other items. The Judge dismissed the set-off/counterclaim.
[4] Aside from the principal sum referred to in [2], the Judge awarded the respondent interest (computed at a contractual rate) of $43,487; costs of $69,000, this sum also being based on a contractual entitlement; costs of $30,000 on what was then the respondent’s wholly successful defence of the appellants’ claim, that $30,000 comprising scale costs plus 50 per cent; experts’ fees of $24,369; and court filing fees of $10,100. Together with the principal, the total awarded to the respondent was
$227,138.
Appeal to the High Court
[5] The appellants appealed to the High Court. In determining costs, it is necessary to address what was at large on the appeal. However, for the moment, it is sufficient to say that the appellants’ written submissions challenged the Judge’s dismissal of their claims for the cost of remedying what they either contended was deficient work by the respondent or what, as regards the roofing work, the respondent admitted was
1 Wilson McKay Trustee Company Ltd v Van den Anker Construction Ltd [2023] NZHC 3475.
deficient. The principal sum at stake on their appeal was approximately $65,000 plus GST, with some of the included items being abandoned at the hearing.
[6] I allowed the appeal as to $25,817 plus GST, a total of $29,690, being the cost of remedying the work to the roof, but I dismissed the appeal as regards the remaining items. In monetary terms, one (but not the only) effect of my decision was to reduce the principal sum that the respondent recovered in the District Court to approximately
$20,000.
[7]At the end of my judgment on the appeal, I said:
[54] In the absence of agreement by the parties by 4 pm, 15 December 2023:
(a)I remit the matter of costs on the counterclaim in the District Court back to the District Court. The District Court is to give such directions as it sees fit to the parties regarding submissions on that matter.
(b)The parties may file brief memoranda in relation to costs and disbursements in this Court.
Costs on the appeal to the High Court
[8] The appellants seek costs on the appeal on a 2B basis, these being $19,359, plus a single disbursement of $540.
[9] The respondent opposes any award to the appellants, and also seeks its own award of costs, pursuant to High Court Rules 2016 (“Rules”), r 14.16:
14.16Claim and counterclaim both established
The court must award costs as if each party had succeeded in an independent proceeding, unless, in the court’s opinion, the justice of the case otherwise requires, if—
(a)the plaintiff succeeds in his or her proceeding; and
(b)the defendant succeeds in a counterclaim.
[10] The respondent’s application for costs is based on its submission that its success in the District Court was at risk on appeal. It has submitted the attendances for which it seeks costs, again based on the contractual provision.
[11] As to this issue of what was in dispute on appeal, the respondent submits, correctly, that the appellants’ notice of appeal of 25 November 2022 put the entire District Court judgment in issue. That said, the appellants’ submissions, which were filed on 17 April 2023, were confined to the Judge’s dismissal of their claim in the sum referred to in [5] above. So the wholesale attack on the District Court judgment threatened in the notice of appeal did not materialise in fact. The respondent acknowledges this but then contends the appellants broadened their attack again at the hearing.
[12] I do not propose to award costs to the respondent, because the attendances in respect of which it is claiming costs commence on 17 April 2023, that is the date of the appellants’ submissions. Indeed, the opening paragraph of the respondent’s submissions, filed on 5 May 2023, states:
This appeal … concerns a … counterclaim by the appellants who seek to recover part of the costs to complete a residential building contract which was lawfully cancelled by the respondent for non-payment.
[13] Accordingly, whatever may have been the position before the appellants served their submissions, the respondent did not begin to incur costs on the appeal until after those submissions had been received.
[14] Counsel for the respondent submits that, at the hearing of the appeal, the appellant returned to challenge the respondent’s claim. I do not accept that submission but, even if the respondent is correct, any oral submissions that counsel for the respondent made at the hearing had no costs consequences. Hence, I do not propose to make an award of costs to the respondent.
[15] As to the appellants’ application for costs, they acknowledge their appeal succeeded in part only, but submit that partial success is still success for the purposes of costs.
[16] The respondent submits that I should refuse or reduce any award of costs to the appellants pursuant to rr 14.7(d), (f)(i) and (f)(v).
Discussion
[17] As the appellants submit, success on something less than the full extent of a claim is still success.2 So as a matter of principle, the appellants are entitled to an award of costs.
[18] The issue is whether a refusal or reduction of those costs is warranted. This is not a case for refusal, but I accept there should be some reduction pursuant to r 14.7(d), that is the appellants’ failure in relation to the items of work other than the roof.
[19] As to how much of a reduction, I propose to allow a 25 per cent reduction for these reasons.
[20] To succeed on appeal, the appellants had to establish that the work in respect of which they were claiming was defective, in breach of the contract between the parties, and that they had a cause of action in respect of that breach which accrued prior to cancellation. Most of the argument at the appeal was whether a cause of action could have accrued prior to cancellation, given two authorities on which the respondent relied. The written submissions, and the argument at the hearing of the appeal, centred on the terms of the contract; those two authorities; and the correspondence between the parties.
[21] If the appellants prevailed on those two points, they had to show that the particular items of workmanship in dispute were deficient. The roof was in a different category to the other items because the respondent admitted that work was deficient. However, the other items were in dispute. The Judge had weighed the expert evidence on all of them and reached the conclusion she did. Hence my dismissal of that part of the appeal.
[22] As those other items total more than 50 per cent of the sum in issue on appeal, I have considered whether a more substantial reduction is required. However, in making a reduction under 14.7(d) it is necessary to do more than a straight arithmetical calculation. It is necessary to evaluate the extent to which the matters on which a party
2 Weaver v Auckland Council [2017] NZCA 330 at [26].
has failed can be said to have contributed to an increase in the opposing party’s costs. In this instance, the vast majority of the submissions and hearing time were given over to the legal issues, not the individual deficiencies. Hence the 25 per cent.
[23] The respondent also submits the appellants contributed unnecessarily to the time or expense of the proceeding by failing to comply with the Rules or directions (r 14.7(f)(i)).
[24] It is correct that the appellants did not comply with the Court’s timetabling directions. However, the failures on which the respondent relies all pre-date 17 April 2023. Given that, no reduction is available on this ground.
[25] The respondent also relies upon r 14.7(f)(v). This permits the Court to reduce an award of costs if the party concerned has failed without reasonable justification to accept an offer to settle or dispose of the proceeding.
[26] The respondent relies on two such offers. One was made in October 2018 and the other in November 2019, being a response to the appellants’ own offer of 7 October 2019.
[27] Neither of the respondent’s offers warrants a reduction, and nor is the appellants’ of any consequence. This is because none were made to dispose of the appeal, and that is the “proceeding” with which I am concerned.3
[28] If I am wrong in this, the respondent’s October 2018 offer cannot be considered one to “settle or dispose of the proceeding” because no proceeding at all was on foot at that time.
[29] By the time of the appellants’ offer in October 2019, a proceeding was on foot. However, their offer was for a round sum of $20,000 and did not take into account the respondent’s contractual right to interest and costs. So it was not unreasonable for the respondent to decline that offer.
3 Tournament Parking Ltd v The Wellington Company Ltd HC Wellington CIV-2009-485-2508, 19 October 2010.
[30] Turning to the respondent’s second offer, on 4 November 2019, the respondent offered to accept $112,844.05 including GST in full and final settlement of all claims between the parties. This comprised the principal sum plus the legal and expert costs that the respondent said it had incurred to that date. The respondent’s concession was to offer to forgo interest and its (ultimately unsuccessful) loss of profits claim.
[31] A failure to accept this offer was not without reasonable justification. The offer required the appellants to pay for the roofing work that, come the trial, the respondent admitted was defective. Indeed, by this time the appellants had been telling the respondent for a year that the work was unsatisfactory.
[32] Lastly, the District Court Judge took both of the respondent’s earlier offers into account in her costs award. To do so again runs the risk of double-counting.
Two days
[33]The final point to address is the appellants’ claim for two days of hearing time.
[34] Step 57 of Schedule 3 of the Rules provides for the time occupied by the hearing to be measured in quarter days. In this case, that was two half days or four quarters, i.e. one day. Therefore, I allow one day of hearing time. This reduces the costs claimed for appearance of counsel at hearing from $4,780 to $2,390.
Interest
[35] The parties are agreed as to the matter of interest.4 By consent, I reduce the award of interest made to the respondent in the District Court to $22,138.68 as of 15 December 2023. Interest accrues thereafter at a daily rate of $11.50 until the date of payment.
Costs in the District Court
[36] As counsel then appearing for the appellants sought at the hearing of the appeal, I remitted the matter of costs on the appellants’ counterclaim back to the
4 This agreement is subject to the respondent’s appeal against my judgment if any successful application for leave is made.
District Court (see [7] above). The appellants now seek an additional order, not sought at the hearing, that I remit all other matters concerning costs back to the District Court.
[37] The respondent submits that it was entitled to the costs it was awarded on its claim and that I should not enlarge the order I made.
[38] I do not propose to make the additional order the appellants now seek. I consider I am functus officio, having already decided the issue of what would be remitted to the District Court.
Result
[39]By my calculations, the orders in [22] and [34] reduce the appellants’ costs to
$12,726.75 plus a disbursement of $540. It may be that the parties arrive at a different amount, in which case that is the sum that should be paid.
[40] The interest owing on the respondent’s claim to 15 December 2023 is reduced to $23,138.68, with interest to be paid at a daily rate of $11.50 until the date of payment.
Peters J
Solicitors: Wilson McKay, Auckland
Lane Neave, Auckland
Counsel: J A Ruddell, Auckland
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