Body Corporate 328392 v Northern Trustee Services (No 145) Limited [2019] NZHC 3153

Body Corporate 328392 v Northern Trustee Services (No 145) Limited [2019] NZHC 3153 [2 December 2019]IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYI TE KŌTI MATUA O AOTEAROATĀMAKI MAKAURAU ROHECIV-2019-404-871[2019] NZHC 3153IN THE MATTER of Sections 319 and 320 of the Property LawAct 2007IN THE MATTER of an application under Part 19, Rule 19.5High Court Rules 2016BETWEEN BODY CORPORATE 328392ApplicantAND NORTHERN TRUSTEE SERVICES (NO145) LIMITEDRespondentHearing: On the papersCounsel: ML Thornton for applicantGR Grant and MC Frogley for respondentJudgment: 2 December 2019JUDGMENT OF FITZGERALD J[As to wasted costs]This judgment was delivered by me on 2 December 2019, at 3:30 pmpursuant to Rule 11.5 of the High Court Rules.Registrar/Deputy RegistrarDateSolicitors: Michael Thornton, AucklandRainey Law, AucklandIntroduction[1] The applicant applied under the Property Law Act 2007 (PLA) for ordersauthorising entry onto and over part of the respondent's neighbouring land in order toundertake repairs to a building on the applicant's land.[2] The application was originally filed on 9 May 2019, and the respondent filed anotice of opposition (supported by expert evidence) in June 2019.[3] The application was scheduled to be heard by me on 6 September 2019.However, a matter of days prior to that hearing, the applicant sought an adjournmentof the hearing, given its then view that the scope of the works proposed to be carriedout on its property might well change, which would impact on the access required overthe respondent's property (including excavation and/or installation of a drain).[4] While understandably frustrated at this turn of events, the respondentacknowledged that the hearing would need to be adjourned. By minute dated3 September 2019, I accordingly vacated the 6 September 2019 hearing.[5] The hearing has since been re-scheduled for 21 February 2020. The applicantis to file and serve any amended PLA application, and any further affidavits fromstructural/geotechnical engineers, on or before 10 December 2019.[6] When (effectively) consenting to the adjournment application, the respondentsought its wasted costs to date. In dealing with the adjournment, I made timetablingorders for the parties to file further memoranda in relation to the application for wastedcosts.[7] The parties have not agreed on the wasted costs application, and this judgmentaccordingly determines that issue.The parties' respective positionsRespondent's submissions[8] The respondent seeks:(a) scale costs for filing its original notice of opposition and supportingaffidavits;(b) scale costs for filing memoranda and appearing at a telephoneconference dealing with the adjournment and the subsequentapplication for wasted costs;(c) a 50 per cent contribution to experts' fees incurred to date (which totalapproximately $15,000).[9] The respondent says that while the precise scope of its costs which will havebeen wasted as a result of the adjournment cannot be ascertained, it is inevitable thatthere are significant wasted costs, because the respondent will need to "gear up"counsel and experts to deal with the application for a second time (even if it proceedsin an unamended form).[10] Counsel for the respondent refer to two earlier decisions of this Court, Jeffreysv Morgenstern and Fu Hao Construction Ltd v Landco Albany Ltd, in which costs wereawarded upon a fixture being vacated or abandoned, including 50 per cent of the feesof expert witnesses.1Applicant's submissions[11] The applicant, on the other hand, says the Court cannot award costs on aninterlocutory application (i.e. its PLA application for access) until it has beendetermined. It says the Court is accordingly unable to determine at this stage whetherthe costs incurred by the respondent have been wasted, and there remains thepossibility that the underlying application could proceed in its original form.[12] The applicant submits that the only steps that could be said now to be wastedcosts are those specifically incurred in responding to the applicant's request for anadjournment. But even in relation to those costs, it says the "prudent course" wouldbe for the Court to consider all costs issues when it determines the application. It says1 Jeffreys v Morgenstern [2013] NZHC 1361; Fu Hao Construction Ltd v Landco Albany Ltd,HC Auckland, CIV-2004-404-6608, 23 May 2008this is a prudent course because the Court at that stage will be able to properly considerthe issue of wasted costs in light of the steps, if any, the applicant takes to resolve theapplication, as well as the final outcome.Approach[13] There is no dispute as to the overriding jurisdiction and approach. That isconveniently set out and summarised by the learned authors of McGechan onProcedure as follows:2(1) Jurisdiction The jurisdiction is obviously an exception to the usual rule thatcosts follow the event, because here there has been no "event". It isnot provided for in the Rules. The rationale for the jurisdiction istwofold:(i) To compensate the other party or parties not in default whohave wasted costs (including disbursements and the fees ofexpert witnesses);(ii) To impose a sanction on the defaulting party, in an effort toavoid future wastage of costs and of judicial and courtresources, and inconvenience to other parties awaitingfixtures in the court.(2) Fixture vacatedCosts are routinely awarded against a party whose default results in afixture being vacated, and the costs of preparation for that fixturethrown away.(4) QuantumOnly costs directly thrown away as a result of the vacating ordiscontinuing of the hearing are awarded. When a fixture is vacatedbeforehand these comprise "trial focused" costs – costs thrown awaybecause they will have to be incurred all over again in preparation forthe fresh fixture.The amount awarded is very much a matter "of impression and bestjudgment of the Court at the time."2 R Osborne and others, McGechan on Procedure (online loose-leaf ed, Thomson Reuters) at[Pt14.16A].Discussion[14] The applicant's suggestion that the respondent's application for wasted costs isa determination of costs on the underlying PLA application (which is yet to bedetermined) is misconceived.[15] No formal interlocutory application was filed by the applicant seeking ordersvacating the September 2019 fixture. Rather, that request was made by way ofmemorandum. But that procedural point cannot obviate the fact that the applicantapplied for and was granted an adjournment of the September 2019 date, and a newdate (in February 2020) was scheduled. As such, the wasted costs arise on thatapplication, not the underlying substantive application.[16] It would be quite wrong for the question of wasted costs arising from theSeptember 2019 hearing being vacated simply to be reserved into the determinationof costs on the PLA application. The two are quite separate matters. Further, there isno doubt that last minute adjournments of substantive fixtures cause not only theopposing party inconvenience and inevitable wasted costs, but also has broader flow-on effects. As Venning J observed in Jeffreys v Morgenstern:3As this Court has previously observed in the case of Fu Hao Construction Ltdv Landco Albany Ltd default that leads to vacation of fixtures leads toinconvenience and costs not only to the other parties to that proceedings butto other parties awaiting fixtures in the Court. Fixtures allocated by this Courtare commitments of limited judicial and Court resources. Time is booked forthe case. Other parties who might otherwise have had their cases allocatedhearing time are disadvantaged by default which leads to late vacation offixtures.[Citation omitted][17] Given the consequences of last minute adjournment of fixtures, wasted costsare routinely awarded. As Venning J noted in Jeffreys v Morgenstern, the outcome ofthe substantive hearing will not affect the fact that the original hearing could not takeplace because of the applicant's conduct.43 Jeffreys v Morgenstern, above n 1, at [31].4 At [21].[18] I accept, however, the applicant's submissions that it cannot yet be determinedat this stage the extent to which costs incurred by the respondent to date will truly bewasted. The extent of wasted costs will turn in part on whether the underlying PLAapplication is amended, and if so, to what extent.[19] Nevertheless, I am fully satisfied there will have been some wasted costs dueto the fixture being vacated so close to its scheduled hearing date. There is aninevitable "gearing up" process as a hearing date approaches. Further, even if the PLAapplication is not amended, or is amended in a very minor way, there will inevitablybe further costs associated with re-engaging with the experts and getting them "backup to speed" on the file. They will have turned their minds away from these mattersand on to other projects in the intervening period.[20] Turning therefore to the wasted costs sought by the applicant, I am satisfiedthe costs associated with memoranda and appearance at a telephone conference inrelation to the adjournment itself are properly categorised as wasted costs. Those areitems 11 and 12 in the schedule of scale costs sought in the respondent's memorandumdated 5 October 2019. It is also appropriate that the respondent is awarded scale costsfor a second item 11, being its memorandum in relation to this wasted costsapplication.[21] The respondent also seeks scale costs for item 38, namely filing a notice ofopposition and supporting affidavits. That item makes up a significant portion of thescale costs sought. I am not persuaded it is appropriate to award those costs, at leastat this time. If, for example, the PLA application proceeds unamended, then the costsassociated with the original notice of opposition and supporting affidavits will nothave been wasted. Further, if the application is amended, it will only be afterdetermination of the amended application that the Court will have before it thematerials necessary to establish if, and to what extent, the original notice of oppositionand supporting affidavits were wasted. For example, it may be that a further notice ofopposition is filed but draws heavily on the original notice of opposition. A similarsituation may result with the supporting affidavits.[22] I accordingly decline to make an award of costs at this stage for item 38.[23] That leaves the 50 per cent contribution sought in relation to expert fees.Again, the extent to which these fees are wasted cannot be ascertained with anyprecision until after the substantive hearing.[24] But I do consider some award ought to be made in relation to the expert feesincurred to date, given there will inevitably be some wasted costs in relation toengaging with the experts and "gearing up" for the original hearing, which will needto be incurred again, in advance of the February 2020 hearing (and even if the PLAapplication proceeds in an unamended form). But I do not agree that 50 per cent ofexperts' fees incurred to date should be ordered. To the extent this draws on theauthorities relied on by the respondent, I note that in Jeffreys v Morgenstern, there wasfurther information before the Court as to the additional fees expected to be incurreddirectly as a result of the vacation of the fixture in that case (in the form ofcorrespondence from the experts concerned confirming the likely additional costs thatwould be incurred by them).5 Similarly, in Fu Hao Construction, the 50 per centcontribution was applied only to that portion of the expert fees which had beenincurred after setting down in the expectation that the fixture would proceed.6[25] As the commentary set out at [13] above makes clear, the approach toquantifying wasted costs will be one of impression and best judgment. Particularlygiven the full extent of wasted expert fees will only be able to be ascertained after anyamended PLA application (and supporting materials) has been filed, and therespondent's approach to opposing that is known, a relatively cautious approachshould be adopted at this stage of assessing wasted costs. It would be wrong, forexample, to award a significant portion of the experts' fees as wasted if the underlyingPLA application is unamended, or amended in only very minor respects.[26] Nevertheless, to reflect the inevitable wasted costs of having to re-engage withthe experts and gear up for the new hearing, I propose to make an award of $2,000,which represents just under 15 per cent of the actual expert fees incurred to date.Depending on the nature and shape of the PLA application as it actually proceeds, it5 Jeffreys v Morgenstern, above n 1, at [38]-[39].6 Fu Hao Construction Ltd v Landco Albany Ltd, above n 1, at [9].may well be a greater proportion of these fees are properly categorised as wasted. Atthis time, however, the Court is not in a position to assess that.Result[27] There an award of costs in favour of the respondent against the applicant in thesum of $4,390, as set out in the schedule attached to this judgment.____________________Fitzgerald JSCHEDULEStep Description Days Allowance11 Filing memorandum – 3 September 2019 0.4 $95612 Appearance at mentions hearing 0.2 $47811 Filing memorandum – 5 October 2019 0.4 $956Allowance for expert fees $2,000Total $4,390