FORD v BLUNDELL [2023] NZHC 741

FORD v BLUNDELL [2023] NZHC 741 [4 April 2023]IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYI TE KŌTI MATUA O AOTEAROATĀMAKI MAKAURAU ROHECIV-2021-404-001125[2023] NZHC 741IN THE MATTER OF an originating application for relief unders 339 of the Property Law Act 2007BETWEEN SONYA LOUISE FORDApplicantAND GRAHAM GEORGE BLUNDELL andNGAIRE ANN BLUNDELLFirst RespondentsROXY TRUST LIMITEDSecond RespondentKATHRYN ANNE FORDThird RespondentKYUNG HO YU and SUNGNYEON KIMFourth RespondentsHearing: [On the Papers]Appearances: S E Wroe and A R Nicholls for ApplicantJ T Burley and M C Staines for First, Second andFourth RespondentsJudgment: 4 April 2023JUDGMENT OF EDWARDS JThis judgment was delivered by me on 4 April 2023 at 4.00 pmpursuant to r 11.5 of the High Court Rules.Registrar/Deputy RegistrarCounsel/Solicitors:S W Wroe, AucklandNicholls Law Ltd, AucklandMcVeagh Fleming, Auckland[1] In my judgment dated 12 December 2022, I granted the applicant's applicationfor sale of the parties' cross-lease property.1 The application was supported by thethird respondent. The second respondent did not participate at trial.[2] The parties have been unable to agree costs. The applicant seeks scale costs of$31,667.50 with a 50 per cent uplift. The applicant also seeks disbursements in thesum of $53,372.97 which includes expert fees.[3] The first and fourth respondents (jointly referred to as respondents) challengethe calculation of scale costs and oppose the award of increased costs. They alsooppose an award for disbursements in the quantum claimed.Scale costs[4] The applicant has calculated scale costs as totalling $31,667.50.[5] The respondents challenge four of the steps in this calculation. I have read therelevant submissions. It is unnecessary to go into the competing arguments in anydetail. My findings on each of the contested steps are as follows.[6] First, I allow the costs claimed for filing the interlocutory application forinvasive testing and filing further evidence. While the invasive testing aspect of theapplication was ultimately resolved, it was done so in the same manner proposed bythe applicant prior to filing that application. Furthermore, the application was largelysuccessful in relation to the further evidence to be filed.[7] Second, the filing of a memorandum in support of the application to commencean originating application is allowed. Leave was granted to bring the proceeding byway of originating application and so costs should follow the event. The reservationsexpressed in the judgment about the appropriateness of the originating applicationprocedure in this case do not detract from that fact.1 Ford v Blundell [2022] NZHC 3340.[8] Third, I accept that a memorandum for the mention of the applicant'sinterlocutory application was filed, and the costs claimed in respect of thismemorandum are justified.[9] Fourth, the allowance for hearing time in relation to the interlocutoryapplication is allowed in full. The application was argued as part of the trial. There isno double up in terms of the hearing time for this application, and the hearing time attrial. The time spent on Sonya Ford's affidavit, parts of which were ruled admissible,does not justify a reduction in scale costs for this step.[10] Fifth and finally, I allow the claim for preparation of hearing by way of analogywith step 32, preparation for an affidavit hearing. While the application was broughtby way of originating application, the trial proceeded as if it was a full hearing. Anallowance for the time spent preparing for the hearing, and examining and cross-examining witnesses, is appropriate.[11] It follows that the applicant's calculation of scale costs is allowed.Increased costs[12] The applicant seeks a 50 per cent uplift on scale costs. It proposes that this isshared 25 per cent between the first and fourth respondents jointly and severally, withthe remaining 25 per cent awarded against the first respondents only.[13] The applicant seeks an uplift for three reasons:(a) First, for failing to accept expert evidence that the units would need tobe repaired and sold together to maximise return.(b) Second, for failing to accept settlement proposals set out in letters dated25 June 2021 and 22 August 2022.(c) Third, the first respondents' conduct in changing their position at trial.[14] As for the first ground, I accept that there was a degree of commonalitybetween the experts engaged for the parties which diminished the force of theopposition to the application.[15] As for the second ground, I am not satisfied that any uplift is warranted for theletter sent on 25 June 2021. It did not contain an offer capable of acceptance. Inaddition, the fourth respondents were not parties to the claim at that time and were notrepresented by counsel.[16] However, the first and fourth respondents were parties to the proceeding whenthe letter dated 22 August 2022 was sent. This letter proposed a collective sale. It wasmade after the expert evidence was served. The offer was rejected in a letter dated30 August 2022.[17] The pursuit of the opposition to the application in the face of the expertevidence lacked commercial realism, and I consider the rejection of the offer wasunreasonable. A 20 per cent uplift on all steps taken after 31 August 2022 is warrantedfor the failure to accept the settlement proposal in this letter.[18] As for the third ground, it is curious that the first respondents did not disclosetheir desire to sell and move from their unit, nor the steps taken to list the unit for sale,in their affidavits. It is not clear to me whether this was known to the first respondents'solicitors, or whether it also caught them by surprise.[19] The first respondents' steps to sell their unit (albeit not on a collective basis)were highly relevant to the question of relative hardships, on which the applicationessentially turned. If the applicant had known of the true position, it is possible thatthe consensus reached during the hearing would have been reached much earlier. Thismay have reduced the costs of the trial.[20] Against that, however, is the fact that the costs of the trial still had to beincurred due to the fourth respondents' continued opposition. Accordingly, anyadditional cost caused by the first respondents' conduct was marginal. There is also adegree of overlap between the failure to accept the expert evidence, the rejection ofthe settlement offer on 22 August 2022, and the change in position of the firstrespondents. Looking at these factors cumulatively, I do not consider a separate upliftagainst the first respondents is justified.[21] For completeness, I reject counsel for the respondents' submission that it wasthe applicant's own actions or inactions that contributed unnecessarily to the cost ofthe proceeding.Disbursements[22] The applicant claims disbursements of $53,372.97 divided as follows:(a) Expert fees: $47,446.50;(b) Court fees: $3,990; and(c) Other disbursements: $1,936.47.[23] The opposition is primarily to the experts' fees incurred, which the respondentssay were unreasonable in all the circumstances. That was because of the number ofexperts instructed, and the date of their engagement.[24] I make the following findings in relation to each expert witness, and expertfees:(a) Maynard Marks. These fees, including those relating to the preparationof the weathertightness report, were reasonably necessary for theproceeding. The condition of the property was a key feature of theproceeding and was a driver of the application. I referred to aspects ofthe weathertightness report in my judgment (at [42]). These areallowed.(b) Mr Bates. The valuation reports produced in August andNovember 2019 formed the basis of Mr Bates' affidavit filed for theproceeding. These reports were also considered and referred to in myjudgment (at [46]–[49]). The expert fees were reasonably incurred andare allowed as a disbursement.(c) Mr Moodie. Mr Moodie's reports and expert fees were reasonablynecessary for the proceeding and reasonable in amount. These areallowed.(d) Prendos/Mr O'Sullivan. Mr O'Sullivan's report was referred to byMr Moodie, but Mr O'Sullivan was not called to give evidence at trial.It is not clear to me that this report was reasonably necessary given theother experts involved. I decline to allow the expert fees for thiswitness.(e) Fraser Thomas – engineer. Mr Thomas was not called to give evidenceand his report was not relied on in the proceeding. His expert fees aredisallowed.(f) Precision Construction. I accept that the invasive investigation of theproperty was reasonably necessary for the conduct of the proceeding.These expert fees are allowed.(g) We Subdivide (Keith Aldous). Mr Aldous prepared an affidavit andgave evidence at trial. Some of his fees relate to a report he preparedin July 2016 which was annexed to his affidavit. While I accept thathis evidence was reasonably necessary for the proceeding, a discount isappropriate to reflect the age and purpose of the original report. I allow20 per cent of these expert fees.[25] The other disbursements (court fees, process servers, printing costs) arereasonably incurred, as is the filing fee for the interlocutory application for invasivetesting and filing further evidence.[26] I allow for the GST component on each of the invoices.Result[27] The applicant is awarded costs and disbursements against the first and fourthrespondents as follows:(a) Scale costs in the sum $31,667.50; plus(b) A 20 per cent uplift on scale costs on steps taken after 31 August 2022.(c) Disbursements in the sum of $44,092.57 comprising the following:(i) Maynard Marks' fees: $23,215.25.(ii) Bates Valuations' fees: $7,644.(iii) Paul Moodie fees: $5,481.59.(iv) Precision Construction fees: $1,572.26.(v) We Subdivide (Keith Aldous) fees: $253.(vi) Court fees: $3,990.(vii) Other disbursements: $1,936.47.___________________Edwards J