METLIFECARE RETIREMENT VILLAGES LIMITED v JAMES HARDIE NEW ZEALAND LIMITED [2022] NZHC 351

METLIFECARE RETIREMENT VILLAGES LIMITED v JAMES HARDIE NEW ZEALAND LIMITED[2022] NZHC 351 [3 March 2022]IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYI TE KŌTI MATUA O AOTEAROATĀMAKI MAKAURAU ROHECIV-2015-404-3080[2022] NZHC 351BETWEEN METLIFECARE RETIREMENTVILLAGES LIMITEDPlaintiffAND JAMES HARDIE NEW ZEALANDLIMITEDFirst DefendantSTUDORP LIMITEDSecond DefendantJAMES HARDIE NZ HOLDINGSLIMITEDThird Defendant(Continued next page)Hearing: On the papersCounsel: C M Meechan QC, J K Stewart and C L Gordon for PlaintiffJ E Hodder QC, J A McKay and L Fraser for DefendantsJudgment: 3 March 2022JUDGMENT (NO 13) OF WHATA JRe CostsThis judgment was delivered by me on 3 March 2022 at 3.00 pm,pursuant to Rule 11.5 of the High Court Rules.Registrar/Deputy RegistrarDate: .Solicitors:Minter Ellison Rudd Watts, AucklandCommerce Commission, WellingtonRCI HOLDINGS PTY LIMITEDFourth DefendantJAMES HARDIE AUSTRALIA PTYLIMITEDFifth DefendantJAMES HARDIE RESEARCH PTYLIMITEDSixth DefendantJAMES HARDIE INDUSTRIES PLCSeventh Defendant[1] Both the plaintiff, Metlifecare Retirement Villages Limited (Metlifecare), andthe defendant, James Hardie New Zealand Limited (James Hardie), seek costs inrespect of multiple hearings and judgments about discovery. The submissions insupport of both parties are lengthy, raising various and diverse reasons as to why andhow costs and their quanta should be resolved. I have reduced those submissions intoa tabular form for ease of reference at the end of this judgment. I do not address thesubmissions in a granular way, because the claims can be resolved in accordance withthe High Court Rules 2016 (the Rules) without that approach.[2] In addition, as I said in the White costs judgment, there were infringements byboth parties during what was a lengthy discovery process.1 Ultimately, thoseinfringements, except where specifically identified below, do not warrant departurefrom the usual approach, namely that costs follow the events.The plaintiff[3] The plaintiff is Metlifecare. However, at the time of the discovery applications,there were multiple plaintiffs identified as the Waitakere plaintiffs, which includedMetlifecare. For the purposes of this judgment, Metlifecare includes the Waitakereplaintiffs.The claims[4] James Hardie seeks $77,579.00 in scale costs and $220.00 in disbursementsagainst Metlifecare. This claim relates to:(a) Metlifecare's interlocutory application for orders dated 6 December2019;(b) Metlifecare's amended interlocutory application for orders that thedefendants provide compliant discovery dated 15 June 2020;(c) Metlifecare's interlocutory application for leave to file and servesecond amended interlocutory application dated 21 July 2020;1 White v James Hardie New Zealand Ltd (No 9) [2021] NZHC 930 [Judgment No 9] at [26].(d) Metlifecare's second amended interlocutory application for discoveryorders dated 21 July 2020;(e) Metlifecare's cross-application for costs dated 4 November 2021; and(f) Their application for costs dated 7 October 2021.[5] Metlifecare seeks $38,956.12 in scale costs and disbursements ($37,956.12 incosts and $1,000.00 in disbursements) in respect of:(a) 18 December 2019 hearing (in relation to Metlifecare's interlocutoryapplication for orders that James Hardie provide compliant discoverydated 6 December 2019);(b) 18 March 2020 hearing (in relation to Metlifecare's updatingmemorandum dated 11 March 2020, involving Priority DiscoveryIssues);(c) the Independent Counsel Process dated 17 July 2020;(d) 6–7 August 2020 hearing (related to Metlifecare's amendedinterlocutory application that James Hardie provide compliantdiscovery dated 15 June 2020 and amended on 21 July 2020);(e) 17–20 May 2021 hearing (in response to Metlifecare's leave applicationto address the privilege issue);(f) 17 May 2021 Metlifecare's memorandum on late discovery anddisclosure of Allunga Queensland testing documents;(g) the Second Independent Counsel Process dated 26 August 2021;(h) applications for further and better particulars heard on 30 March 2021and determined by this Court in Metlifecare's favour on 1 April 2021;and(i) costs of the memorandum for this judgment dated 4 November 2021.[6] My cost orders are noted at [35] below.Background[7] My discussion of the background to this proceeding in my substantivediscovery judgment (Judgment No 8) provides a useful summary of key events. Irepeat it here:2Background[2] The central claim in both the White and Waitakere proceedings is thatthe defendants (collectively, James Hardie), manufactured, supplied orpromoted defective exterior cladding products, sold under the brand names"Harditex", "Monotek" or "Titan" (the James Hardie products).Approximately 1,246 properties are claimed to be clad with defective JamesHardie products. Of those properties, 1,236 are residential homes, five arecommercial buildings and five are retirement villages. The five retirementvillages are the plaintiffs in the Waitakere proceedings. The primary issuesraised by the plaintiffs in their proceedings are set out in Schedule 1.[3] The hearing of this matter has been split into two stages with thefollowing issues to be addressed at stage one:(a) who is responsible for the design/manufacture/sale of the JamesHardie products and related product information;(b) whether the James Hardie products are defective;(c) whether the defendants knew/ought to have known about anydefects, and(d) whether the defendants breached any common law or statutoryduties in respect of the James Hardie products or James Hardieproduct information.[4] The trial date for stage one was set down to commence on 3 May2021. Tailored discovery orders were subsequently made in two bites, with theresult being that James Hardie was required to discover the following classesof document:A. Product DevelopmentB. TestingC. Promotional Material2 As I did in the White costs judgment in what were then parallel proceedings. See White v JamesHardie New Zealand (No 8) [2020] NZHC 2202 [Judgment No 8] at [2]–[18].D. Customer ComplaintsE. Harditex Improvement ProjectF. Decision to withdraw Old Product and Introduce New Product;G. Industry Study Tour of USA and CanadaH. Technical Literature;I. Documents Identifying Risks or Defects or liability relating toJames Hardie Products;J. Insurance documentsK. Training DocumentsL. Site VisitsM. Customer adviceN. Correspondence with Industry and Regulatory BodiesP. Licensing arrangementsQ. Sales FiguresU. Agency, representation, joint venture or similar arrangements[5] A large set of search terms were also sought by the plaintiffs and lateradopted by James Hardie. Directions were also made for tranches of discoveryby specified defendants to be provided, with a final tranche of discovery to beprovided by all defendants by 13 September 2019.[6] Discovery did not go smoothly. Deadlines for making discovery werenot met and the plaintiffs' demands for further and better discovery continuedto evolve. Illustrative of this, the plaintiffs have – since my first discoveryorders – filed a further six applications. Three of them are described, togetherwith the supporting evidence, in my judgment issued on 3 April 2020(Judgment No 7). Some of what the Waitakere plaintiffs called "prioritydiscovery" issues were resolved by that judgment, with other issues deferredfor later consideration.[7] My Minutes 31 – 37 then followed, all dealing with discovery. In myMinute 31, I set down a timetable for the resolution of the remaining discoveryissues. The White plaintiffs were to file a second amended interlocutoryapplication in relation to discovery by 8 May 2020, and the Waitakereplaintiffs were to file an updating memorandum that same day. Any notice ofopposition and memorandum in reply were to be filed by 22 May 2020. JamesHardie were to provide an updated discovery list (in accordance with theamended schedule of document types agreed with the Waitakere plaintiffs) by1 June 2020. A hearing was to be fixed after 5 June 2020, including in respectof James Hardie's further application for security for costs. That timetable wasoptimistic.The remaining applications[8] In their memoranda of 8 May 2020, the Waitakere plaintiffs identifiedthe remaining discovery issues and proposed timetabling orders. They alsoforeshadowed a problem with the generic listing of "James Hardie" in the"Author/Receipt Fields" and the lack of job titles for the custodian ofdocuments.The White plaintiffs' second amended and supplementary applications[9] The White plaintiffs, in their 8 May 2020 application, soughtadditional orders that:(a) the defendants file further affidavits as to the methodologyemployed by the defendants, why and how custodians wereidentified, confirmation as to whether certain archives hadbeen searched and relevant documents discovered and, if not,why not;(b) the defendants shall treat an additional 50 persons ascustodians;(c) the defendants provide a further affidavit in relation tocategories of documents listed in Schedule 3 to theapplication;(d) the defendants search for and discover relevant non-privileged documents using additional search terms listed inSchedule 4 to the application;(e) the defendants produce copies of the documents listed inSchedule 5 to the application (privileged documents) forinspection by the Court for the purpose of deciding thevalidity of the privilege claimed; and(f) the defendants produce copies of the documents listed inSchedule 6 to the application (masked documents) forinspection by the Court.[10] Further issues arose out of the defendants' provision of furtherdocuments on 8 May 2020, culminating in the White plaintiffs' supplementaryapplication of 22 May 2020 in which they seek orders:(a) for production of documents relating generally tomanagement reports and related documents (as identified inSchedule 1 to the application);(b) for the defendants to produce copies of documents inSchedule 2 to the application (specified documents identifiedby the defendants as privileged documents) for inspection bythe Court;(c) for the unmasking of specified documents; and(d) specifying a final date for discovery.[11] As a result of the various memoranda, a hearing date for one to twodays to hear all remaining matters was set down for 6 July 2020. 10 priorityissues which remained to be resolved were identified. Given this, expertcaucusing and the appointment of independent counsel to assist on reportingon the outstanding discovery issues was mooted. It was envisaged thatmembers for each of the discovery teams should be able to caucus and reachagreement in relation to seven of the remaining issues and that independentcounsel should be able to report on the balance of matters.[12] Minute (No 34) recorded the agreement of the parties to theappointment of independent counsel and conferral between the discoveryteams, and a timetable for conferral was fixed. The independent counselprocess had to be deferred, given issues relating to identification and anappropriate person to assist.[13] In Minute (No 35), the role of independent counsel was revisited. Adirection was made that independent counsel should address all remainingissues and report to the Court on the proper management of those issues. Theissue of independent counsel was revisited in Minutes (No 37) and (No 38).9A fixture was also allocated and a timetable set down for that purpose.[14] Minute (No 39) refers to and attaches a copy of instructions toindependent counsel. The instructions noted the primary task was to assist theparties and the Court in the resolution of the remaining discovery issues.Amended interlocutory application by Waitakere plaintiffs[15] On 15 June 2020, the Waitakere plaintiffs filed an amendedapplication. It has been overtaken by a second amended application of 21 July2020. As that application requires leave, it remains necessary to describe the15 June application. In summary that application seeks four orders. First, anorder for compliant discovery in relation to Class J and Class I categories onthe grounds that the defendants have discovered incomplete documents inboth these categories. Second, an order that the defendants search fordocuments in the control of six persons (Messrs Gustafson, Gries, Salter,Baker, Fisher, Loduwick) on the grounds that James Hardie holds mailboxesfor them and no proper basis for excluding searches of them has beenprovided. Third, that leave be reserved to the plaintiffs to apply for suchfurther orders as may be necessary in relation to above. Fourth, that the costsof the application, and incidental costs, should be awarded to the plaintiffs.Caucusing and independent counsel process[16] The independent counsel process below is addressed below.Caucusing of the discovery teams took place on one occasion, on 15 June2020. No report on that process was produced. That is regrettable because theCourt has no clear understanding as to the outcomes of that process.Unhelpfully, correspondence between the parties concerning the mattersdiscussed at the conferral is included in the bundles provided by the parties. Itis not the function of this Court to wade through volumes of correspondenceto ascertain material outcomes of the caucusing process or other discussionsbetween the parties. I simply understand that it facilitated resolution of someissues but also triggered new issues and/or the refinement of issues. It seemsthat second amended application by the Waitakere plaintiffs refers to some ofthese new and/or refined issues.[17] As mentioned above, on 21 July 2020 the Waitakere plaintiffs filed asecond amended interlocutory application for orders that:(a) In respect of Class J documents (insurance documents), thedefendants:(i) discover specified documents (e.g. proposal orrenewal forms, notifications, insurance policies, orother specified documents referred to in discovereddocuments) or otherwise confirm that they do notexist;(ii) confirm they have correctly applied the test forrelevance in relation to specified documents; and(iii) provide copies of their documentretention/destruction policies for the period 1980 to2006.(b) In respect of Class I documents (documents identifying risks,defects or liability relating to James Hardie Products), thedefendants:(i) discover (or otherwise confirm that they do not exist),all relevant board materials, documents related toTeam management, Group Business Results thatdiscuss or identify risks, defects and/or liability,product development monthly reports, and productdevelopment meeting minutes;(ii) produce documents incorrectly listed as privileged;and(iii) confirm that they have searched allrepositories/locations where the relevant materialsare likely to be stored.(c) The defendants provide their document retention/destructionpolicies and information as to why certain documents are notrecoverable.(d) The defendants treat six persons (Messrs Gustafson, Gries,Salter, Baker, Fisher, Loduwick) as custodians and discoverall relevant documents obtained from them.(e) The Court set aside or modifies the defendants' claim toprivilege over specified documents (which also appear toinclude insurance-related documents).[18] Given the lateness of this amended application, leave to file theapplication was required(citations omitted)[8] As I noted in White v James Hardie New Zealand,3 a costs judgment ondiscovery issues:[7] Judgment (No 8) also sets out in detail the background to the discoveryprocess undertaken by James Hardie. It is not necessary to repeat it here. I simply notethe following:"(a) the discovery undertaken was vast, comprising a discovery universe of1,710,428 documents, a review set of 233,811 documents and a disclosure setof 28,495 documents, which, in the end, was thorough and beyond seriouscriticism;(b) however, reflecting the sheer scale of the exercise, the discovery processwas iterative and the rationale behind it was not always clear;(c) various timetabled deadlines for discovery were also missed;(d) the plaintiffs, bewildered by the scale, nature and form of the discoveryand concerned about delay, pressed hard for clarity as to the scope and timingof the discovery. This manifested itself in multiple evolving applications,corresponding affidavits and culminated in hearings in December 2019,March 2020 and August 2020;(e) in order to bring some definitive clarity to the discovery process andoutputs, the parties (eventually) agreed to expert caucusing and anindependent counsel process;(f) the caucusing process proved largely futile, but the independent counselprocess succeeded in bringing the requisite clarity. As I noted in Judgment No8:[121] Ms O'Gorman's report was thorough, careful andbalanced. She had undertaken the type of fine-grained review I hadenvisaged. It was of considerable assistance to me. Her substantiveanalysis was not seriously criticised by any counsel. The primarycomplaints of the plaintiffs were that Ms O'Gorman was said to havetrespassed outside her brief into an adjudicative role, failed to takeinto account all the post-caucusing proposals and did not accuratelyrecord the White plaintiffs' position. I do not accept these complaints.As noted, Ms O'Gorman was tasked with assisting the parties andthen the Court with the resolution of the remaining issues and she hasdone exactly that. In short, she has assessed whether and to whatextent, if at all, the issues raised by the plaintiffs require further actionby the defendants. She has made recommendations that correspondto that assessment. Any purported failure to take into account post-caucusing proposals or the position of the parties does not materiallyderogate from the substance of her recommendations.3 Judgment No 9, above n 1, at [7].(g) The plaintiffs pressed on with their remaining issues which, as I havenoted, the defendants largely showed to be inconsequential."Costs principles[9] I adopt the statement of cost principles I made in the White costs judgment.The party who succeeds is usually entitled to their costs according to scale.4 That scaleis usually 2B, but in complex cases the scale might properly be adjusted in whole orpart to 3B or 3C.5 Costs however may be increased or decreased depending on, amongother things, the conduct of the parties to the litigation.6 In some cases costs may beshared, but success on more limited terms is still success.76 December 2019 – Metlifecare's application for compliant discovery[10] Metlifecare sought orders requiring, in short, that James Hardie providediscovery by individual defendant. My judgment granting the application wasreversed by the Court of Appeal.8 Metlifecare accepts that it must pay costs in thisCourt on this application, but challenges James Hardie's claim for costs in respect oftwo affidavits by reference to step 30 of Schedule 3 of the Rules. It says that JamesHardie's costs on the affidavits comes within steps 22 and 23 of the Schedule. JamesHardie responds that costs awards on complex affidavits may be increased by analogyto step 30, noting that this approach was endorsed in the White costs judgment.[11] The issue of affidavit costs was recently addressed by Katz J in Tandem.9 Icannot improve on the Judge's reasoning in that case:[15] Item 30 of sch 3 of the Rules originally appeared under the hearing[sic] "Trial preparation and appearance" and provided for a cost allocation tobe made for "Plaintiff's or defendant's preparation of briefs or affidavits". Therelevant rules were amended in August 2019 to separate out the costallocations that could be claimed for affidavit hearings and witness hearings.Item 30 now appears under the heading "Preparation for affidavit hearing" andallows for a cost allocation for the preparation of affidavits for such hearings.Item 33, on the other hand, relates to the preparation of briefs for a witnesshearing. It is clear, however, that the recent amendments to the Rules were not4 Judgment No 9, above n 1, at [8]; and High Court Rules 2016, r 14.2.5 Rules 14.3 and 14.5.6 Rules 14.6 and 14.7.7 See Packing In Ltd (In Liq) v Chilcott (2003) 16 PRNZ 869 (CA) at [5] per Tipping J; and Weaverv Auckland Council (2017) 24 PRNZ 379 (CA) at [26].8 James Hardie New Zealand Limited v White [2020] NZCA 142.9 Tandem Group Limited v ASB Bank Limited [2021] NZHC 1135 at [14]–[16].intended to expand the ambit of the previous rule and allow parties to claimfor the preparation of affidavits for interlocutory hearings as of right. Rather,the preparation of interlocutory affidavits is covered by item 22 (filinginterlocutory application) and item 23 (filing opposition to interlocutoryapplication). (I note in this context that rules 7.20 and 7.25 respectivelyprovide that supporting affidavits must be filed contemporaneously with aninterlocutory application or notice of opposition.)[16] In some cases, however, particularly where affidavit evidence iscomplex and comprehensive, an additional award of costs may be justified.As Cooke J observed in Re Miah the most natural way to address this wouldbe to allow a party to make a claim under time band C for item 22 or 23, ratherthan time band B (if that is the appropriate band for other steps). In Miah,however, his Honour was satisfied that much of the affidavit preparation wascovered by the disbursement and the allowance provided for the other stepsand to make a further cost allocation for the preparation of affidavits wouldinvolve double counting.(citations omitted)[12] Therefore, I proceed on the basis that step 30 does not provide the correctformula for assessing the costs of affidavits in interlocutory proceedings. However,in complex cases, the costs of the affidavits may be increased to time band C.On the merits, there are competing considerations here. The affidavits weresubstantial, dealing at length with the process adopted by James Hardie. But part ofthat was necessary so as to comply with the requirements of the discovery process inany event. Furthermore, James Hardie had approved timetabling on the basis thatdiscovery would be undertaken by individual defendants. An explanation fordeparting from that starting point was necessary. I am satisfied that costs on the 3Bbasis (including a 50 per cent reduction to reflect time spent at the hearing in relationto the White proceedings) as otherwise sought by James Hardie are appropriate. Forcompleteness, there was no definitive ruling on quantification by reference to step 30in the White No 9 Judgment. I place no significance on the order made in thatjudgment.Metlifecare's updating memorandum of 11 March 2020 and Judgment (No 7)dated 3 April 2020.[13] By way of memorandum of 11 March 2020 Metlifecare identified "prioritydiscovery issues" recorded in my Judgment No 7 as follows:1010 White v James Hardie New Zealand Ltd (No 7) [2020] NZHC 685 [Judgment No 7] at [61].[61] The Waitakere plaintiffs identify the following key issues for resolution:(a) Compliance with listing and exchange protocols;(b) the failure to provide a schedule listing the position of each of thedefendants' employees; and(c) incomplete provision of documents regarding:(i) Class B – testing;(ii) Class L or I – risks, defects or liability, e.g. board materials; and(iii) Class J – insurance documents.[14] On each of these issues I found largely in favour of Metlifecare,11 save that Idid not impose an unless order sought. Costs were reserved pending outcome ofprocesses envisaged by the judgment. These specific matters were ultimately resolvedwithout further recourse to the Court. I reject James Hardie's claim for reduction onthe costs award. Any success enjoyed by James Hardie on this was modest only. Itfollows that Metlifecare is the successful party and entitled to its costs on a 3B basisas sought for their attendances in respect of these matters.Independent Counsel Process[15] James Hardie submits that Metlifecare did not meaningfully engage in theIndependent Counsel Process. James Hardie identifies various steps taken byMetlifecare, which it says demonstrates this claim. It seeks costs on their statementof position lodged with Independent Counsel on an analogous basis to submissions.Metlifecare rejects James Hardie's complaint, highlighting various steps taken by itwhich are said to show meaningful engagement.[16] I do not propose to make an award of costs on the Independent Counsel Processfor following reasons:11 At [69], [73], and [75].(a) The use of Independent Counsel was not advanced on the basis that itwas a step in the proceedings that might subsequently attract a costsaward;(b) The costs of the Independent Counsel Process were agreed by theparties and it would be unfair now to impose an order for costs inrespect of that process; and(c) Rule 14.6 of the Rules might provide a basis for increasing a costsaward in circumstances where the conduct of the party was plainlyunreasonable, but this is not such a case.6–7 August 2020 — substantive application[17] As with the White proceedings, James Hardie was the successful party inrespect of the August hearing. As noted in Judgment No 8:[184] The following issues were live insofar as concerns the Waitakere plaintiffs atthe commencement of the hearing:(a) Whether the defendants complied with the tailored discovery ordersin respect of Categories I and J.(b) Whether six managers/directors identified by the Waitakere plaintiffsshould be treated as custodians.Subject to leave(c) Whether the defendants should be ordered to produce copies of theirdocument retention/destruction policy.(d) Whether the defendants should produce documents listed in ScheduleB to the Waitakere plaintiffs' second amended application.[185] I understand that the Waitakere plaintiffs no longer seek orders in respect ofthe six additional custodians because the defendants had agreed to run a search inrelation to one of them, a Mr Loduwick. If I am wrong about that, for the reasonsexpressed above at [157]–[160] in respect of the similar request made by the Whiteplaintiffs, I would refuse to add the three additional custodians not already included.[18] On the remaining substantive issues, I concluded that James Hardie haddischarged their obligations in respect of the specified categories of documents12 andI was not persuaded that James Hardie should be directed to confirm that BoardMaterials do not exist. Instead, I found that it was sufficient for James Hardie to averto the fact that those materials were not located or that they have been located but notdiscovered. Therefore, James Hardie was the successful party in this proceeding.[19] Metlifecare submits however, in short, that the resolution of these issuesrepresents the outcome of a lengthy discovery process, involving multiple steps byboth parties, compromise and when viewed in the round, ultimately Metlifecare wasbroadly successful in its challenges in respect of James Hardie discovery. I disagree.James Hardie successfully defended the remaining applications and is entitled to itsscale costs.[20] Metlifecare nevertheless maintains costs should be reduced to reflect that:(a) A significant amount of day two was spent on the White security forcosts application;(b) James Hardie should not be entitled to costs on the affidavits;(c) James Hardie did not engage with Metlifecare about the reasons for notconfirming the existence of Board Materials;(d) Metlifecare requested a custodian schedule in November 2019, whichwould have enabled it to assess the defendants' claims to privilegemuch earlier:(e) Metlifecare refined its position following conferral and receipt ofcustodian schedule; and12 Judgment No 8, above n 2, at [197].(f) Metlifecare also claims that James Hardie have claimed costs in respectof memoranda that relate to general procedural matters and also relateto the White proceedings.[21] On these matters:(a) I accept that a larger amount of time was spent on the White priorityissues and the security application at the August hearing. Exemplifyingthis, the August hearing engaged two substantive White applicationsand attracted a costs order in respect of those applications of$53,832.50.13 Therefore, I consider that a discount of 60 per cent (not50 per cent) for steps 26 and 27 is necessary to meet this issue;(b) In terms of the affidavits, while step 30 is not engaged directly or byanalogy, I am satisfied that the complexity and usefulness of theaffidavit evidence warrants a 3C scale award in respect of step 23.Judgment No 8 at [19]–[47] is sufficient evidence to support this;(c) James Hardie's conduct does not engage r 14.6 of the Rules; and(d) I am not in a position to unpick the content of individual memoranda.But the memoranda appear to coincide with major steps in thediscovery process, the time claimed appears reasonable, and the 60 percent discount adequately apportions costs to the White proceedings. Nofurther adjustment is therefore needed for James Hardie's claim.6– 7 August — leave application[22] Metlifecare applied for leave to make application for orders to produce theirdocument retention/destruction policy and for the production of specified documentsthe defendants claimed were privileged. It obtained leave in relation to the issue ofprivilege. I did not grant leave in relation to the document retention/destruction policy13 Judgment No 9, above n 1, at [30(b)].issue. I previously indicated that Metlifecare should have its costs on the applicationfor leave.[23] James Hardie submits that costs should lie where they fall because counsel forMetlifecare indicated to the Court that it was content for Independent Counsel toreview the challenged document and that this was material to the decision to grantleave, but counsel later recanted and demanded a substantive determination of theissue of cogency. It is also noted that James Hardie was successful insofar as leavewas not granted on one of the two issues.[24] I remain content that Metlifecare should have its costs on the application. Asit submitted, some success is still success.14 The issue in relation to IndependentCounsel goes to costs on the substantive application to which I will now turn.Judgment (No 11) – the issue of cogency[25] In my judgment granting leave to apply for orders in respect to privilegedocuments, I referred to counsel indicating that Metlifecare would be content forindependent counsel to review specified documents and I indicated that Metlifecare'srequest is amenable to that approach. James Hardie subsequently indicated that theywere happy with that approach, but Metlifecare insisted on a substantive determinationof whether there was cogent evidence of an erroneous claim to privilege. Asmentioned in Judgment 11, I found this perplexing, given that the end result may bereferral to Independent Counsel in any event.15 In the result, I doubted that there wascogent evidence of the alleged error, but referred the documents to IndependentCounsel because that was the most efficient course.16[26] Against this background, James Hardie is the successful party, and to becommended for its pragmatic approach. Conversely, the two step approach demandedby Metlifecare was unnecessarily technical and an inefficient use of court time,triggering r 14.6(3)(b)(ii). I am satisfied this should be reflected in an increased costsaward of 15 per cent on 3B scale costs.14 Weaver v Auckland Council, above n 7, at [26].15 Waitakere Group Ltd v James Hardie New Zealand [2021] NZHC 1111 [Judgment No 11] at [2].16 At [11].[27] Metlifecare submits that James Hardie's claim in respect of memoranda shouldbe rejected because they relate to general matters and that James Hardie's cost claimshould be reduced from $11,296.00 to $8,454.00. I have reviewed these memorandadated 21 August 2020 and 17 September 2020. I reject Metlifecare's claim. I amsatisfied that these matters plainly relate to discovery matters and are claimable.Second Independent Counsel Process[28] James Hardie seeks $2,118.00 in costs against Metlifecare for the secondIndependent Counsel Process. It submits the Independent Counsel favoured itsanalysis on every material matter still in issue. Further, James Hardie submits itwaived privilege on a document, which reduced all parties' costs. It says that if thatpragmatic decision meant it was unable to recover costs on its successful defence ofMetlifecare's application, that would disincentivise sensible concessions. Metlifecaresubmits that costs should lie where they fall and that as James Hardie maintained itsclaim to privilege, verification remained necessary.[29] For the reasons expressed above at [16], I make no order for this. TheIndependent Counsel Process was not a step in the proceeding. Rather, it was anagreed step designed to avoid further hearing costs. That it did not entirely achievethat outcome is addressed by the above costs determination. But save for that, I seeno reason to make a costs order in respect of it.Costs on particulars[30] In my judgment on particulars, I resolved that Metlifecare should have its costson a 2B basis less 25 per cent.17 James Hardie says that the costs for items 25 and 26should be reduced by 50 per cent to reflect that the hearing and bundle substantiallyconcerned the plaintiffs own application and disagree that costs ought to be payablefor a second counsel.[31] I am content that my order, given while the matter was fresh, should remainintact. James Hardie's complaint is too fine grained. Regarding second counsel, as17 Waitakere Group Ltd v James Hardie [2021] NZHC 722 at [44].counsel in both the White and Metlifecare proceedings have emphasised throughout,this is a complex proceeding, justifying second counsel, even in respect of a relativelydiscrete application for particulars.Costs on memorandum filed in respect of late discovered documents[32] Metlifecare seeks an award of costs for a memorandum and associated caseconference dealing with late discovered documents relating to the testing of materialsin May 2021. This all came to prominence because of exchanges about thesedocuments in the White trial. Problematically, Metlifecare did not submit anapplication, initiate a proceeding or file an interlocutory order against which a costsorder might be readily attached. Although the step instigated by Metlifecare was notunreasonable, I am not satisfied it reveals conduct on the part of James Hardie thatshould attract an order for costs at this stage. In my view, costs in relation to this stepare more properly addressed when the merits of the proceeding are resolved.Costs on the costs memoranda[33] I make no order for costs on the memoranda. The costs regime envisages quickdisposition of costs matters. Lengthy costs memoranda and subsidiary litigation ofthe present kind are to be discouraged. In any event, success (and defeat) has beenlargely shared across the six steps for which claims for costs were made.18Costs on disbursements[34] James Hardie seeks an order for disbursements in relation to filing fees forMetlifecare's application dated 6 December 2019 and amended application dated 15June 2020. No submissions explaining this claim were provided. I propose to simplyapproach this issue by awarding disbursements to the successful party where relevant.Outcome[35] I make the following orders:18 See Body Corp v Mehta [2013] NZHC 213 at [87]. Allan J refused to order a costs award for thedefendant's memorandum because the defendant lost on a major issue and needed to file further costssubmissions. The plaintiff had enjoyed some success on the costs memorandum too.(a) James Hardie is entitled to its 3B costs of $12,796.25 anddisbursements in respect of the 6 December 2019 application(Judgment (No 5)) without separate provision for the affidavits byanalogy to step 30;(b) Metlifecare is entitled to its 3B costs of $18,086.00 and disbursementsin respect of Metlifecare's updating memorandum of 11 March 2020and Judgment (No 7) dated 3 April 2020;(c) James Hardie is entitled to its scale costs of $30,711.00 anddisbursements for the 6–7 August 2020 substantive application andJudgment (No 8) comprised as follows:(i) 3B scale costs for all steps except step 23;(ii) 3C scale costs in respect of step 23 ($7,060.00);(iii) Steps 26 and 27 reduced by 60 per cent (step 26: $2,118.00 andstep 27: $1,059.00); and(iv) no separate provision by analogy to step 30;(d) Metlifecare is entitled to its 3B costs of $7,413.00 and disbursementson the application for the 6–7 August 2020 leave application;(e) James Hardie is entitled to its 3B costs and disbursements in respect ofthe cogency issue, Judgment (No 11) uplifted by 15 per cent($1,694.40), amounting to $12,990.40; and(f) Metlifecare is entitled to its 2B costs (reduced by 25 per cent) of$6,184.12 and disbursements on its application for particulars,including for second counsel.[36] There shall be no orders in respect of the Independent Counsel Processes, formemoranda in relation to late discovery documents or for the costs on costsmemoranda.Appendix 1Schedule of counsels' submissions for Metlifecare v James HardieHearing Related application/s andjudgment/sDefendant's (James Hardie's)submissionsPlaintiffs' (Metlifecare's) submissions18 December 2019 Metlifecare's interlocutoryapplication for orders that thedefendants provide compliantdiscovery dated 6 December2019.Judgment (No 5) dated 19December 2019.19 Court foundfor the plaintiffs. However,Court of Appeal overturned thedecision.20James Hardie submits it was thesuccessful party in this hearing becausethe Court of Appeal overturned thejudgment from this hearing, whichfavoured Metlifecare. It seeks costs forthe preparation of two substantialaffidavits due to what they claim is theCourt's approval in Judgment No 9.21James Hardie claims 3C scale costs usingthe same scale costs as item 3022,calculated on the basis of the duration ofthe interlocutory hearing that the specificaffidavit related to. This claim alsoincludes a claim for the cost of preparinga common bundle named 'Defendants'common bundle for interlocutory hearingrelating to discovery on 18 December2019' dated 17 December 2019.Metlifecare accepts it is liable for scalecosts on a 3B basis in connection withthe 18 December 2019 hearing.However, Metlifecare rejects JamesHardies' claim for the affidavitsprepared in opposition to its application.It submits that James Hardie's claim forcosts of preparing the affidavits ispredicated on affidavits in opposition toan interlocutory application not beingexpressly referred to in item 23 of sch 3of the High Court Rules 2016 (theRules). It says the Court has previouslyupheld the proposition that affidavits forinterlocutory applications are covered bystep 22 or 23 of the Schedule.23 TheCourt also rejected the use of step 30 as19 White v James Hardie New Zealand (No 5) [2019] NZHC 3459.20 James Hardie New Zealand Limited v White [2020] NZCA 142 at [98].21 White v James Hardie New Zealand Ltd [2021] NZHC 930 [Judgment No 9 — White costs judgment] at [28].22 High Court Rules 2016, sch 3.23 See Tandem Group Limited v ASB Bank Limited [2021] NZHC 1135 at [14]–[16].For this hearing, James Hardie seeks$15,443.75 against Metlifecare.a mechanism to claim costs for affidavitsfor interlocutory applications.24Metlifecare accepts the calculation ofcosts less the costs for preparing theaffidavits, which amounts to $12,796.25.18 March 2020 Metlifecare's updatingmemorandum dated 11 March2020 (Priority Discovery Issues)Judgment (No 7) dated 3 April2020.25James Hardie submits costs should liewhere they fall because the Courtpreviously found in White v JamesHardie New Zealand that costs should liewhere they fall regarding this hearing.26Further, James Hardie submits bothparties enjoyed a measure of success.James Hardie says this Court found infavour of Metlifecare regarding therelisting of author/recipient informationand the custodian schedule. JamesHardie was successful in allegingincomplete provision of certain types ofdiscovery against Metlifecare. Bothparties cooperated on document types,which avoided the need for a Court order.James Hardie submits that if this Courtfinds Metlifecare is entitled to costs onthe March 2020 hearing, the timeMetlifecare rejects James Hardie'sposition that costs should lie where theyfall in respect of the priority discoveryissues (18 March 2020 hearing).Metlifecare submits it is the successfulparty because the Court favoured it oneach issue. Specifically, the Courtgranted the orders Metlifecare sought for"Protocol non-compliance" and failureto provide custodian schedule. TheCourt reserved leave to Metlifecare toreport to the Court on the progress ofJames Hardie for the Document Gapsissue, the Court directed James Hardie toagree to an amended schedule ofdocument types within 10 working days,and the Court reserved leave toMetlifecare and reserved costs.24 See Du v M5 Holdings Limited [2020] NZHC 28 at [12].25 White v James Hardie New Zealand Ltd (No 7) [2020] NZHC 685 at [79].26 Judgment No 9 — White costs judgment, above n 21, at [4], [16] and [31].allocation should be reduced by 50 percent under r 14.7(d) of the HCR, citingWeaver v Auckland Council.27 JamesHardie submits that Metlifecare shouldnot be entitled to recover costs for a fullday in the hearing. They submit amajority of the hearing concerned theWhite plaintiffs' discovery applications.In response to James Hardie, Metlifecaresubmits that just because the Courtconcluded costs should lie where theyfall in the White proceeding does notmean that the same result should applyhere. In addition, Metlifecare rejectsJames Hardie's claim for a reduction incosts award because seeking an unlessorder was appropriate in thecircumstances and the Court reservedleave to Metlifecare to seek orders itconsidered necessary to secure finaldiscovery.It accepts, as James Hardie submits, thatthe time allocation for this hearingshould be reduced due to the Whiteplaintiffs' involvement.Metlifecare seeks $18,086.00 againstJames Hardie for this hearing.17 July 2020IndependentCounsel ProcessOn 22 June 2020, Courtappointed Ms Laura O'Gormanas independent counsel.Report dated 17 July 2020.James Hardie submits Metlifecare failedto meaningfully engage in the firstIndependent Counsel Process. Inparticular, James Hardie says:Metlifecare rejects James Hardie's claimto costs and submits costs should liewhere they fall regarding the firstIndependent Counsel Process.27 Weaver v Auckland Council (2017) 24 PRNZ 379 (CA) at [26].• Metlifecare attempted to recuseMs O'Gorman due to allegedbias, which James Hardie sayswas a substantively meritlessapplication;• Metlifecare did not engage withJames Hardie on a joint report onthe outcome of the caucusingprocess;• Metlifecare objected to MsO'Gorman's cost estimate andproposed to restrict her processfor considering discovery issues,despite this Court directing thatany issues regarding costs ofcounsel assisting should bereferred to her; and• Metlifecare sought to limit MsO'Gorman's role.James Hardie says it proposed theprocess, Metlifecare opposed it, but theCourt ordered the process.James Hardie claims costs outlined in theStatement of Position dated 22 June2020. James Hardie says that theIndependent Counsel agreed with themMetlifecare also refers to itsmemorandum (filed jointly with theWhite plaintiffs) recording that there wasno reason to depart from the originalallocation of costs of the report (eachparty contributes one-third share of thecosts).Further, Metlifecare submits it engagedmeaningfully with the process, referringto the following examples:• Metlifecare's counsel held ameeting with James Hardie'scounsel, which focused onnarrowing the issues between theparties;• At the meeting the parties agreedto populate a table identifyingareas of agreement;• Metlifecare continued to engagein correspondence with JamesHardie after the meeting;• Metlifecare filed a jointmemorandum with the Whiteplaintiffs recording they hadengaged in an effort to reachagreement and there was noreason to depart from the originalon every discovery issue in dispute intheir report dated 17 July 2020.allocation of costs of the report;and• At the end of the meeting,counsel from both Metlifecareand James Hardie agreed thatthere was little point in preparinga joint report on the outcomes ofthe meeting. Nevertheless,James Hardie circulated a jointreport to Metlifecare. It thencriticised Metlifecare for notcooperating with the report.6–7 August 2020(substantiveapplication)Metlifecare's amendedinterlocutory application thatdefendants provide compliantdiscovery dated 15 June 2020(amended again on 21 July2020).Judgment (No 8) dated 27August 2020.28James Hardie submits scale costs of$35,388.25 against Metlifecare isappropriate for the 6–7 August hearing(including the leave application). That isbecause James Hardie was the successfulparty on both the tailored discovery andcustodian issues. Also, this Courtordered the White plaintiffs to pay costsfor the hearing.James Hardie also claims the cost ofpreparing two substantial affidavits: theaffirmation of Mikhaila Nola affirmed 27May 2020 and the affirmation ofAlexander Petrie affirmed 27 May 2020.Metlifecare rejects James Hardies' claimto be entitled to costs and says costsshould lie where they fall regarding thishearing. It makes this submission inlight of the fact that when taking intoaccount the whole context, it was thesuccessful party.In summary, Metlifecare submits it wasthe successful party because:• James Hardie's approach todiscovery has been characterisedby a "drip-feeding" ofdocuments, which meant issuesebbed and flowed. Therefore,28 White v James Hardie New Zealand Ltd (No 8) [2020] NZHC 2202.James Hardie does not apply a reductionto the costs claimed in regard to the twoaffidavits because the content was notinformation required to be proved as partof the discovery process. Rather, theyseek costs calculated on the basis of theinterlocutory hearing that the affidavitsare in relation to. They also claim the costof producing the defendants' bundle.James Hardie submits Metlifecare'sopposition to including the cost ofpreparing affidavits in the costs claim for6–7 August 2020 hearing ismisconceived. James Hardie submits thatthe issue of whether an additional awardof costs for preparing affidavits isjustified is a contextual question. Theysay they only sought costs for complexand lengthy affidavits, which isappropriate due to the unusual scale andcomplexity of Metlifecare's discoverycomplaints and the evidence required torespond to the complaints.Further, James Hardie says they reducedthe scale costs sought from Metlifecareby 50 per cent in respect of the stepstaken up until 6–7 August 2020 hearingsome issues were resolved andothers emerged as counselprovided further documents andinformation to the Court;• James Hardie had a narrowposition on costs, which does notproperly account for the breadthof issues between the parties; thepiecemeal nature of JamesHardie's discovery; and the factMetlifecare filing theapplications led to many of theissues between the parties beingresolved before the Court wasrequired to address them;• Appreciating the underlyingbackground is fundamental todetermining the successful party.With that approach, Metlifecareis substantively the successfulparty.In regard to the 6–7 August 2020hearing, Metlifecare says it agreed toadopt a pragmatic approach to agree toJames Hardie confirming the extent ofthe search in respect of board materialson behalf of James Hardie, which meant6–7 August 2020(leave application)to take into account the White plaintiffs'applications.In regard to the leave application on 6–7August 2020, James Hardie submits costsshould lie where they fall due to thereversal of the position by Metlifecare ona critical matter. James Hardieacknowledges that the Court indicatedMetlifecare was entitled to costs on theleave application. However, JamesHardie submits:• both parties enjoyed a measure ofsuccess as James Hardie wassuccessful in opposing leave forthe document retention policy,while Metlifecare was successfulin obtaining leave in respect ofthe challenges to privilege.• Further, the Court granted leaveon a material misapprehension ofthe facts because Metlifecarereversed their position on acritical matter material to theCourt's decision.Finally, James Hardie submits that whileMetlifecare obtained leave, ultimately,James Hardie was the successful party inthe Court was not required to determinethis aspect of Metlifecare's application.In addition, Metlifecare says the Courtconfirmed their change in focusregarding privilege as "appropriate" inrespect of Category J and in respect ofCategory I the Court ordered inMetlifecare's favour.In respect of the issue of privilege, theCourt considered there would be atenable basis for concerns raised byMetlifecare. The Court declined leave inrespect of James Hardie's documentretention policy. It granted Metlifecareleave for its application regardingprivileged documents.For the reasons above, Metlifecare saysthat it was the successful party.If the Court finds James Hardie is thesuccessful party, Metlifecare submitsJames Hardie's cost award should bereduced because:• The second day of the hearingconcerned James Hardie'sapplication for security for costs;the second Independent Counsel process,where the challenges to privilege wereassessed.• James Hardie is not entitled tothe costs of preparing affidavits;• A reduction of 50 per cent of thecosts is warranted ($35,388.25claimed less $7,060.00 for thememoranda and $8,825 for theaffidavits).17–20 May 2021 Metlifecare's leave applicationto address the privilege issue.Judgment (No 11) dated 20 May2021.29James Hardie seeks increased costs of$16,944.00 (scale costs of $11,296.00plus 50 per cent uplift) on every step afterthe Court granted leave to Metlifecare'sprivilege application. James Hardie saysMetlifecare insisted the Court issue adetermination on whether there was acogent basis for going behindMetlifecare's representations as toprivilege. The Court concluded it wasnot fully convinced there was "cogentevidence" of James Hardie's allegedprivilege failings. Also, the Courtindicated costs on the substantiveapplication should go to James Hardie.Metlifecare rejects James Hardie's claimto increased costs in relation toJudgment (No 11). It accepts it is liablefor scale costs on a 3B basis and acceptsJames Hardie's calculations of its scalecosts (i.e., excluding the claimed 50 percent uplift). It also rejects JamesHardie's claim regarding memorandathat relate to general matters. It says thatthe costs James Hardie claims inSchedule A ($11,296.00) should bereduced to $8,454.00.Metlifecare seeks a costs order againstJames Hardie of $7,413.00 for the leaveapplication. It says Court determinedthat Metlifecare was entitled to costs on29 Waitakere Group Ltd v James Hardie New Zealand Limited [2021] NZHC 1111 (Judgment No 11).James Hardie submits this is anappropriate step for an award ofincreased costs (scale costs with an upliftof 50 per cent) as it prolonged the disputeand contributed unnecessarily to the timeor expenses of the proceeding in it bytaking or pursuing an unnecessary step oran argument that lacks merit. It refers toHoldfast NZ v Selleys Pty as authority forthe increased costs award.30James Hardie says the total costs claimedincludes the cost of obtaining judgmentwithout appearance.this issue in Judgment (No 8).Metlifecare says costs on this issueshould be determined based on theconduct at the time of the hearing andnot before or after it.17 May 2021 (not ahearing)Memorandum dated 17 May2021.James Hardie submits there is noreasonable basis for Metlifecare to seekcosts on this basis. It states there was noapplication relating to those documents,no orders were made by the Court, therewas no failure on the defendants' party tocomply with their discovery obligations,and no prejudice raising to the plaintifffrom the disclosure.Metlifecare seeks an order that JamesHardie pays $3,883.00 in 3B costs toMetlifecare for its memorandum of 17May 2021 and appearance at any urgentconference on 20 May 2021 in relationto the late discovery of the Allungatesting documents.26 August 2021 Second Independent CounselProcess (following on fromJudgment (No 11) to reviewcertain documents for privilegeJames Hardie seeks $2,118.00 in costsagainst Metlifecare for the secondIndependent Counsel Process. It submitsthe Independent Counsel favoured itsMetlifecare rejects James Hardie's claimto costs and submits costs should liewhere they fall. It submits that JamesHardie maintained a claim to privilege30 Holdfast NZ Ltd v Selleys Pty Ltd (2005) 17 PRNZ 897 (CA) at [47].SecondIndependentCounsel Processand resulting in a report dated 26August 2021).analysis on every material matter still inissue. Further, James Hardie submits itwaived privilege on a document, whichreduced all parties' costs. It says that ifthat pragmatic decision meant it wasunable to recover costs on its successfuldefence of Metlifecare's application, thatwould disincentivise sensibleconcessions.James Hardie also seeks costs on thepreparation of a bundle for this process.James Hardie acknowledges Metlifecarereserved its position on the cost of thisstep.that Metlifecare could not verify withoutassistance of the Independent Counsel.Therefore, costs should lie where theyfall.Other claims Defendant's (James Hardie's) submission Plaintiff's (Metlifecare's) submissionCosts on costs(memorandum for thisupcoming costsjudgment)James Hardie seeks $2,390.00 for the costs of preparingthe 7 October 2021 memorandum on a 2B basis. Theyseek costs for a one day time allocation, referring toPrattley Enterprises Ltd v Vero Insurance New ZealandLtd as precedent for this claim.31James Hardie notes the question of whether JamesHardie's claim for costs on costs in the WhiteMetlifecare seeks $2,390.00 on a 2B basis from JamesHardie for the costs of preparing the 4 November costsmemorandum.For all the reasons discussed above, Metlifecare rejectsJames Hardie's claim to costs on costs.31 Prattley Enterprises Ltd v Vero Insurance New Zealand Ltd (2017) 23 PRNZ 484 at [39].proceeding was referred to in Judgment (No 9)32, butwas not ultimately resolved.Particulars (heard on 30March 2021)James Hardie accepts costs are payable in relation toJudgment (No 9).33 However, James Hardie considerscosts for items 25 and 26 should be reduced by 50 percent to reflect the fact the hearing (and bundle)substantially concerned Metlifecare's own application,which was heard at the same time as the defendants'application on which costs are payable.Metlifecare disagrees that costs ought to be payable fora second counsel on a straightforward and shortparticulars hearing.Following Judgment (No 9), Metlifecare seeks costsand disbursements of $6,184.12. In Judgment (No 9),Metlifecare was awarded costs in relation to JamesHardie's application for further and better particulars ofMetlifecare's fourth statement of claim.Metlifecare's applicationfor joinder and recusal ofChapman Tripp dated 11September 2020Metlifecare reserves the right to file memorandaseeking costs for this issue.Metlifecare's applicationthat James Hardie answerinterrogatories dated 21December 2020,Judgment (No 10) dated29 April 2021 andJudgment (No 12) dated15 June 2021Metlifecare reserves the right to file memorandaseeking costs for these issues.32 Judgment No 9 — White costs judgment, above n 21, at [28].33 Waitakere Group Ltd v James Hardie [2021] NZHC 722 [Judgment No 9].Overall costs claimed:James Hardie: $77,579.00 in 3B and 3C scale costs and $220.00 in disbursements.Metlifecare: $37,956.12 in 3B scale costs, 2B scale costs and $1000 in disbursements.