JOHNSON v BARRY PARK INVESTMENTS LIMITED [2022] NZHC 3566

JOHNSON v BARRY PARK INVESTMENTS LIMITED [2022] NZHC 3566 [20 December 2022]IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYI TE KŌTI MATUA O AOTEAROATĀMAKI MAKAURAU ROHECIV-2018-404-455[2022] NZHC 3566IN THE MATTER of an application under s 323 of the PropertyLaw Act 2007BETWEEN XANTHE ANNA JOHNSON and MARKANDREW GRAHAMPlaintiffsAND BARRY PARK INVESTMENTS LIMITEDDefendantHearing: 29 November, 1 and 8 December 2022Counsel: K M Quinn and L A Sheppard for PlaintiffsG J Kohler KC and T Nelson for DefendantJudgment: 20 December 2022JUDGMENT OF MUIR JThis judgment was delivered by me on 20 December 2022 at 3.00 pm,pursuant to Rule 11.5 of the High Court Rules.Registrar/Deputy RegistrarDate: .Solicitors: Heimsath Alexander, AucklandClaymore Partners Limited, AucklandIntroduction[1] By my judgment dated 27 March 2019, I declared an encroachment on theplaintiffs' land to be a wrongly placed structure for the purposes of the Property LawAct 2007 and ordered the defendant (BPIL) to remove it.1 Approximately 1,300 dayshave lapsed since my substantive judgment, but the encroachment remains.[2] The plaintiffs now apply pursuant to the Contempt of Court Act 2019 (the Act)for orders for contempt against BPIL on the grounds that it has not complied with myorders, as varied by the Court of Appeal.2 They seek a declaration accordingly,together with a fine in the amount of $100,000. They invite the Court to direct that aportion of the fine, as it considers appropriate, be paid to them. They also seekindemnity costs on their application.[3] A further issue which I am required to address in this judgment is the incidenceof costs on a contemporaneous application for "sundry other orders" which was settledduring the course of the hearing.Background[4] The plaintiffs and BPIL are, respectively, the owners of 24 and 22 TawariStreet, Mount Eden, Auckland. Their underlying dispute relates to a basalt rock wallwhich supports BPIL's land (as well as the house lived in by Mr Martin Burton who isthe person with ultimate beneficial interest in BPIL) and which encroaches onto theplaintiffs' land in a way which precludes, or at least limits, their redevelopmentoptions. I do not intend to recite again the background referred to in my substantivejudgment. Regrettably, however, I am going to have to deal at length with all that hassubsequently followed as it necessarily informs both my assessment of whether BPILhas "without reasonable excuse, knowingly failed to comply" with this Court's order,3and my approach to costs.1 Johnson v Barry Park Investments Ltd [2019] NZHC 597, (2019) 20 NZCPR 562 [High Courtjudgment] at [128].2 Barry Park Investments Ltd v Johnson [2019] NZCA 686, (2019) 20 NZCPR 680 [Court of Appealjudgment] at [89]–[90].3 Contempt of Court Act 2019, s 16(3)(b)(iii).[5] In my substantive judgment I directed that BPIL remove the encroachment by31 March 2020 and directed it to carry out further stabilisation works either inaccordance generally with the methodology identified by the plaintiffs' expert, Mr GuyWood of Thorne Dwyer Structures Ltd (which provided for a replacement engineeredwall within BPIL's property) or as approved by a registered structural and geotechnicalengineer and tabled with the Court by 20 July 2019.4 I also ordered that the costs ofthe removal and stabilisation works be borne by BPIL,5 and reserved to both partiesan ability to apply for ancillary orders.6[6] In making these orders, I had in mind that BPIL may develop an alternativemethodology (briefly discussed in the trial) at considerably less cost than that proposedby Mr Wood and involving (essentially) a series of simple props under Mr Burton'shouse and removal of the basalt encroachment which currently supports it on itswestern edge. I regarded that as a likely scenario because of the advanceddeterioration of Mr Burton's house, his age and the high redevelopment potential ofBPIL's site. Ultimately, BPIL did develop some alternative plans but not of the type Ienvisaged. It also elected to appeal my judgment.[7] In its decision, dated 23 December 2019, the Court of Appeal upheld myfinding that the basalt wall was a wrongly placed structure and all my remedial orders,with the exception that it held that the costs of removal and associated stabilisationworks should be borne equally by the parties.7[8] The Court of Appeal also extended the dates by which any alternate approvedmethodology could be submitted and by which the encroachment was to be removedto 20 March 2020 and 30 October 2020 respectively.8 In so doing, the Court wasapparently unaware that an alternative methodology had already been submitted to theHigh Court. That alternative methodology was ultimately withdrawn and no furtheralternatives can now be advanced by BPIL, consistent with this Court's or the Court4 High Court judgment, above n 1, at [128](b).5 At [128](e).6 At [128](h).7 Court of Appeal judgment, above n 2, at [90].8 At [89].of Appeal's orders. In the result, the methodology which must be followed is thatwhich is generally in accordance with that identified in Mr Wood's expert evidence.[9] The Court of Appeal also upheld my award of costs against BPIL in the amountof $133,716.70.9[10] Following the Court of Appeal's decision, memoranda (dated 27 March 2020by BPIL and 22 April 2020 by the plaintiffs) were filed. Because of delays caused bythe COVID-19 pandemic, these were not forwarded to me until 12 May 2020. MyMinute of that day notes acceptance of the plaintiffs' primary submission that theCourt of Appeal's orders meant greater involvement on their part in both the designand execution of the works was now justified:[3] I accept Mr Quinn's basic submission that the decision of the Court ofAppeal requiring a 50 per cent contribution by his clients to the costs ofremediation somewhat alters the previous dynamic to the extent the plaintiffsmay, it seems to me, now legitimately seek more proactive involvement in thedesign and delivery of the remedial works.[11] I subsequently scheduled a telephone conference for 15 May 2020. At thatconference, proposed amendments to the substitute design tabled by BPIL on 18 July2019 were foreshadowed. I noted that the plaintiffs did not necessarily oppose thenew design but needed further information in terms of feasibility and indicative cost.I agreed to adjourn the conference until 8 June 2020 for the provision of furtherinformation. I noted that it was my "expectation that by that time the parties will haveagreed the methodology to be adopted and a timetable for procurement and completionof the works". I indicated that I considered myself at liberty to extend the completiondate by consent if required but that, in the absence of consent, the matter may need tobe readdressed by the Court of Appeal.[12] On 8 June 2020, I was asked to adjourn the next telephone conference which Idid until 2 July 2020. By consent, a further adjournment was sought until 23 July2020.9 At [91].[13] By 23 July 2020, BPIL's proposed alternative methodology had beenabandoned. The plaintiffs, in turn, indicated that in their view, no substantive progresshad been made in engaging experts and contractors settling the scope of works oragreeing a plan by which such scope could be put into effect and funded. Theyaccordingly sought orders that the methodology adopted be that identified by MrWood, that an independent contract administrator be engaged and that CLL Serviceand Solutions Ltd be engaged as head contractor.[14] In response, BPIL criticised the plaintiffs for failing to provide plans for theremoval of various naturally occurring basalt outcrops and formations, which both myjudgment and that of the Court of Appeal said were to be to the plaintiffs' ultimateaccount.10[15] My Minute in respect of the 23 July 2020 conference set out my assessment inreasonably direct terms:11(a) Seven months have now elapsed since delivery of the Court ofAppeal's judgment.(b) In terms of that judgment, the works are to be completed by 30October 2020. Accordingly only a little over three months remains todo so.(c) Absent agreement between the parties to an adjusted compliance date,application would need to be made to the Court of Appeal to amendor vary its judgment.(d) In terms of my judgment, as modified by the Court of Appeal, it is thedefendant's obligation to remove the encroachment by the assigneddated. Failure to do so engages a range of potential outcomes,including the possibility of a contempt finding.(e) Given that the defendant no longer pursues an alternativemethodology (and is now time-barred from developing any furtherplans) removal of the encroachment is to be undertaken "inaccordance generally with the methodology identified by theplaintiffs' expert Mr G N Wood and appended to his brief of evidencedated 1 February 2019 as Schedule A["].(f) My orders, as modified by the Court of Appeal, do not provide forinstalment contribution by the plaintiffs to the costs of removal of theencroachment, whatever the utility of such arrangements. In theresult, unless the parties are able to reach a sensible commercial result,10 High Court judgment, above n 1, at [128](f)(i) and Court of Appeal judgment, above n 2, at [88].11 Footnote omitted.the work will have to be undertaken by the defendant at its cost andwith the defendant seeking subsequent recovery. Moreover, in theevent there are disputes in terms of what is ultimately recoverable,they will need to be separately litigated.(g) It appears wrong in principle for the defendant to be delayingcommencement of the works pending plans from the plaintiffs forremoval of the solid basalt outcrop at the southern-most portion oftheir driveway. The Court of Appeal's judgment contemplates in para[88] footnote 32 that it will be the contractors "clearing theencroachment" who remove the basalt outcrop in "the same scope ofworks". It will ultimately be for the contractors, and in the event ofdispute for a Court, to apportion the appropriate sum paid by theplaintiffs for this work.[16] At the conclusion of my Minute, I indicated that I would resume the conferencethe following day at 9 am. I pointed out that the parties should consider themselveson notice that costs were currently at large in respect of the multiple post-judgmentattendances which had been necessary.[17] At the resumed conference, counsel for the plaintiffs advised that someprogress had been made and that I could expect a consent memorandum later in theday. This was duly filed. It provided for appointment of a contract administrator; acommitment that the parties, under the direction of the contract administrator, wouldapply for all necessary local authority consents; and for a timetable which would resultin an invitation to tender being issued on 14 August 2020 and selection of a contractorby 11 September 2020. The consent memorandum also stipulated that payment forthe works would, at first instance, be by BPIL. The parties further noted that they hadbeen unable to agree on the identity of the contract administrator and advanced twonames (on a blind basis) for me to make the necessary selection.[18] Later, on 24 July 2020, I made my selection, appointing Mr Martin Hill as thecontractor administrator. It transpires that Mr Hill was BPIL's nominee.[19] Significantly, in one of my two Minutes, dated 24 July 2020, I recorded that"the Court would be happy to assist in respect of any 'roadblocks' which might occurbetween the parties". That has remained my position throughout.[20] At that point, my expectation was that the encroachment would be removedand a new retaining wall built within a matter of months. Regrettably, over two yearslater, that is still not the case. How conceivably could this have occurred?[21] My narrative starts nearly two weeks after the conference when the solicitorthen acting for BPIL, Mr Doug Cowan,12 unhelpfully, wrote to the contractadministrator, Mr Hill, with the following opening comment about the plaintiffs:I need to break this down for you as Xanthe (not her partner Mark) tends tomislead people. She is very sly/cunning but not as smart as she thinks she is.[22] At the conclusion of the letter, Mr Cowan blamed the passage of time onMs Xanthe Johnson's "own stubbornness and refusal to cooperate". He said that shewas "itching for a legal fight".[23] Unsurprisingly, Mr Hill did not consider he could perform the functions ofcontract administrator in this environment. He resigned the same day. A new contractadministrator therefore had to be appointed. The parties ultimately agreed on Mr SamJackman, who assumed the role in late September 2020.[24] On 7 October 2020, BPIL filed a building permit application for thereplacement wall. It did not seek the plaintiffs' consent to the plans. Such consentwas necessary because the footings for the proposed wall extended significantly intothe plaintiffs' property. The absence of consent was immediately identified by Counciland the application went no further.[25] The plaintiffs say that this unilateral consent application was in breach of theagreement made and endorsed by the Court on 24 July 2020, that the parties would"under the direction of the contract administrator cooperate to apply for allconsents". They do not, however, allege a contempt in this respect. They simply12 At trial the solicitors representing BPIL were Ellis Gould. Subsequently, Mr Cowan was engaged.His services were, in turn, terminated sometime in February 2021. Jackson Russell Lawyers werethen engaged. Their services were, likewise, terminated sometime in early 2022 and ClaymorePartners were engaged. At the point contempt proceedings were filed, active carriage of theproceedings had been assumed by solicitors Mr Patrick Castle and Mr Miles Brown, the principalsof Castle/Brown, who are also the directors of BPIL. They continue to retain Claymore Partnersas the BPIL's solicitors.highlight what occurred as an example of the frustrations with which they have had tocontend.[26] They, likewise, say that BPIL's unilateral decision to terminate the services ofThorn Dwyer Structures Ltd and substitute Envivo Ltd (Envivo) as structuralengineers for the project, and to replace geotechnical engineers, Riley Consultants Ltd,with Babbage Consultants Ltd,13 was a breach of the 24 July 2020 agreement.[27] When the design was ultimately shared with the plaintiffs later in October2020, they identified various concerns, including that it appeared, from theirperspective, to be considerably in excess of what was required to support BPIL'sproperty. They suggested that there were "simple solutions" which would involve lessof a burden on their land14 and that the proposed ground beams were "very undesirablein terms of our service connections with the public lines".[28] On 30 October 2020, the enlarged completion date specified by the Court ofAppeal expired.[29] By early 2021, no further progress had been made. Mr Jackman proposed ameeting on site to resolve the outstanding differences. The response from Mr Burton,through his intermediary, Mr Hadi Younan, was that "a meeting would not serve anyuseful purpose at this stage". Despite that indication a meeting did occur on 16February 2021. Mr Cowan attended on behalf of BPIL. In an email later that day toMr Jackman and all interested parties, he said:That was a productive session with the professionals to further meet to finalisethe scope of works. Thanks.[30] Two days later, Mr Jackman also wrote to the interested parties. He describedthe meeting in similar terms to Mr Cowan:13 Both replacements appear to have occurred between 24 July 2020 and submission of the buildingconsent application on 7 October 2020 and neither of which was discussed with the plaintiffs.14 The footings for the wall will necessarily be on the plaintiffs' land. My substantive judgmentprovided for easements in favour of the defendant accordingly: High Court judgment, above n 1,at [128](g).Thanks to those of you who attended the meeting on Tuesday, as anticipatedthis was invaluable in getting a clear way forward on resolution of thetechnical queries.[31] On or about 24 February 2021, however, Mr Cowan's services were terminatedby BPIL. In a letter of the same date, Mr Cowan advised:I no longer have instructions. Please contact Martin [Burton] direct.[32] By late May 2021, none of the progress envisaged at the February meeting hadoccurred. In response to a letter from Mr Burton, ostensibly raising new issues aboutthermal gain and turning circles, Mr Jackman wrote to Mr Younan saying:Your response is very disappointing and I am beyond frustrated here with whatappears to be the continued obstruction of the project and the delay in closingit out. I expect this will be met with consternation by No. 24 [the plaintiffs]and will leave it to them (or the legal representation) to respond accordingly.[33] I interpolate here that, although my substantive judgment reservedcomprehensive rights to the parties to approach the Court for ancillary orders, noapplication was made by BPIL either at this point or, indeed, any later time. Since itwas ultimately its responsibility to remove the encroachment by the nominated date,any inability to do so should, in my view, have been the subject of timely applicationby it to the Court.[34] Despite the ongoing frustrations, a building consent application in a formacceptable to both parties was ultimately filed in June 2021. The application resulted(initially) in two Council requests for information (RFIs), dated 6 and 7 July 2021. By30 August 2021, Envivo's Mr Mike Edwards had responded to the points raised. Oneof the points related to the construction of a barrier fence at the top of the wall.Exchanges occurred between Mr Jackman, Mr Edwards and the parties, resulting inthe design of a timber barrier. This formed part of the RFI response on 30 August2021.[35] On 20 September 2021, Council raised a further RFI. In an email dated22 September 2021 to the parties, Mr Edwards described the position as follows:Council have come back earlier this week with a few more queries that we areworking on a response to right now. Mainly minor things around specificnotes and references relating to geotechnical to be added to drawings. Theyhave also asked for a couple of things to be checked and confirmed relating tothe wall design.We will have a response back to them by Friday latest [24 September 2021].[36] The response necessitated some updated building consent drawings. On11 November 2021, Mr Edwards wrote to Mr Younan saying:Attached updated BC drawing set with front yard wall amended as perMartin's direction.Could you please pass this to him to check and approve (as he requested)before I forward to Mark & Xanthe to sign.[37] The response from Mr Burton, dated 13 November 2021, a Saturday, was asfollows:These drawings are not adequately updated to return to Council, so do notforward to #24 [the plaintiffs] for signing until fence detail contradictions, asdiscussed at great length, are attended to. Please be mindful that the safetycompliance of the fence is an integral part of the Council RFI.[38] Mr Jackman replied the same day, saying: "Please elaborate as to what the'fence detail contradictions' are." He pointed out that on 1 November 2021, he hadreceived confirmation from Mr Edwards that all outstanding issues had been resolvedwith Mr Burton and incorporated into the most recently revised building consent plansand, in the days that followed, Mr Jackman indicated that he was perplexed with whythe fence issue was being raised again, given that it had been dealt with in response tothe Council's first two RFIs.[39] It is from this point onwards that the plaintiffs say I can most readily concludethat BPIL was acting in contempt as Mr Burton was the only person who thought thelatest iteration of the drawings were not sufficiently updated to return to Council.[40] The extensive email chain then identifies disputes in relation to a proposedpilaster on the street corner of Number 22 and the location of a services box. On 16December 2021, Mr Jackman proposed a Microsoft Teams or Zoom meeting to "goover the remaining matters". Mr Burton responded by text: "Unfortunately there seemto be opposing views on the technical issues, so another talkfest is likely to becounterproductive."[41] By 20 December 2021, Mr Burton suggested to Mr Jackman that matters wereat an "impasse" and that he found it "extraordinary that you appear, to me, to be'stonewalling' still on this subject".[42] Mr Jackman responded the same day, noting that, as far as he was aware fromdiscussions earlier in the day, BPIL's solicitors (at that point, Jackson Russell) wereawaiting instructions to confirm a meeting "which they agreed is the best way to closematters out". He continued:As a suggestion and to prevent ongoing time wasting and costs, being thefourth time this correspondence has been sent and given you've had monthsto do so, it would be appreciated if you could please take the time to reviewand digest this information before we go any further as it appears that youhave not done so to date given your ongoing requests to contest designdecisions from almost 12 months ago.To be clear, CKL [Mr Jackman's firm] is not stonewalling and implying blameon our part for the delays is unreasonable. In summary, this is all over to you to resolve and advise us of the outcome.You've had months to sort out the RFI with your consultant team includingyour concerns over the front yard, which appear unfounded given a designoutcome was detailed in Envivo's BC design of which you approved for issueback in June at the time of the BC submission. Until advised further, wereiterate that CKL are at an impasse and cannot do anything further, which isfurther compounded by your ongoing unwillingness to meet or even discussvia phone.[43] The following day, Mr Jackman sent another email which noted:In conclusion, to get to December 2021 without the works completed and infact not even having a consent nor a final design for that matter is extremelydisappointing considering that we have now spent the best part of 15 months(since our involvement) making very limited progress on a job that shouldhave been completed by October 2020, now further stalled by your recentcontesting of the design at a late stage. Until you are willing to engagemeaningfully, CKL do not see how we can assist you to progress the projectof which we are trying to do so as per the instructions of the court but arehaving ongoing difficulty doing so compounded by your refusal to discuss inperson or to meet. We further note that none of the suggestions in our 29thSeptember 2021 letter sent to BPI almost 12 weeks ago have been acted uponother than a limited attempt by Jackson Russell over the past week or so tofacilitate things, of which they are clearly hamstrung without your instructionor direction.We are at a loss as to how to progress things further, so perhaps once you areat a point where you wish to engage in a proper, professional manner and canconfirm how the design, consent and RFT documentation/process will befinalised, please let us know and we can continue or involvement. Until then,unfortunately we don't have much to add nor do we see the point in respondingfurther.[44] It is clear from contemporaneous correspondence that Mr Burton had, at thispoint, lost confidence in Mr Jackman whom he considered unresponsive to hisrequirements. From Mr Jackman's perspective (and that of the plaintiffs), it was acase of Mr Burton stonewalling and/or wishing to constantly revisit matters alreadyresolved.[45] The first few months of 2022 saw no further progress. Even though, by thispoint, more than 14 months had elapsed since the due date for completion of the wall.Again, BPIL did not see fit to return to the Court for directions.[46] In April 2022, the plaintiffs decided to change tack, believing that whiledelivery of the project remained in the hands of Mr Burton, it would never becompleted. They wrote to the directors of the company, Mr Patrick Castle andMr Miles Brown, the principals of Castle/Brown. Both are senior property andcommercial lawyers.[47] Their letter of 13 April 2022 gave, pursuant to para [128](i) of my substantivejudgment,15 14 days' notice of the plaintiffs' intention to apply to the Court for ordersthat BPIL be found in contempt of Court and requiring the directors to purge thecontempt and pay a fine.[48] In his affidavit in opposition to the contempt application, Mr Castle explainsthat up until this point, the directors considered it appropriate that matters be left inMr Burton's hands, as the party with the ultimate beneficial interest in BPIL.[49] However, the letter clearly had the effect of concentrating the minds of thedirectors in terms of their ultimate responsibility for compliance with the Court'sdirections and, on 4 May 2022, Claymore Partners responded on behalf of BPIL. Theysaid that Jackson Russell were not willing to act in the event that litigation was inprospect and that they were now instructed. They rejected the proposition that theimpasse was the responsibility of BPIL, stating that, in BPIL's view:15 High Court judgment, above n 1. there is more than a respectable basis on which to attribute responsibilityfor the delays to the plaintiffs, including the delays associated with the designchanges they caused to be made to the area below the front garden.They went on to say that their instructions were to respond "constructively".[50] What followed, however, was regarded by the plaintiffs as far fromconstructive. Although Claymore Partners conceded that Mr Jackman could stay inhis position, this was expressed to be on the "condition" that the parties reverted to theplans prepared by Envivo in September 2020 (those which the BPIL had lodged withCouncil without seeking the plaintiffs' consent). The plaintiffs' response waspredictable:The conditions you seek to impose in paragraph 2 of your letter are a furtherexample of Mr Burton's ongoing tactic to avoid compliance with the CourtOrder by revisiting issues and complicating the process in a rather obviousway so as to tie the matter in knots. The suggested plans and some of the otherrequirements are not acceptable, and this will come as no surprise toMr Burton We do not intend to go through this all again, point by point, as it just suppliesMr Burton with more string to tangle.[51] The plaintiffs then proceeded to prepare their application which was styled:"Interlocutory application for contempt orders against the respondent and for sundryother orders to progress the matter." The "sundry other orders" broadly sought MrJackman's appointment as project manager with power to negotiate all relevantcontracts and with an immunity from suit. The applications were filed on 27 July 2022and the matter came before the Duty Judge on 1 August 2022, at which pointtimetabling directions were made and the matter set down for trial before me.[52] Review of the documentary record indicates that in the following weeks,Mr Castle took the matter, in Mr Quinn's words, "by the scruff of the neck". On6 September 2022, he wrote to Envivo, pointing out that the matter was to be heard inthe High Court where BPIL would be required "to explain why the re positioning ofthe boundary wall has not been completed". He emphasised the importance ofurgently obtaining a building consent.[53] On 7 September 2022, Mr Phuong of Envivo (who had by this time replacedMr Edwards) responded saying that his team had been "working overtime to revisethe structural calculations, and structural drawings as requested by council'sengineer". Later the same day, Mr Phuong wrote to the Council enclosing the variousstructural drawings and additional calculations necessary to meet the outstandinginformation request. Clearly, therefore, the outstanding issues were capable ofreasonably prompt resolution with appropriate instruction and the commitment ofnecessary resource.[54] The revised plans were not, at this stage, given to the plaintiffs. Indeed, thatdid not occur until approximately one month later. They took issue with the plans,particularly in respect of wall and footing strengthening in relation to the nine metresection of the wall south of Mr Burton's house. Again, they suggested the newspecification was over-engineered.[55] When the matter came on for hearing before me, I elected, first, to focus on theancillary order applications. I did so cognisant of the fact it was approaching fouryears since delivery of my substantive judgment, with no practical progress towardsremoval of the encroachment. I requested (but did not direct) Mr Castle to attendCourt. He agreed to make himself available to answer any questions of counsel forthe plaintiffs or by me. In so doing, he provided the plaintiffs with sufficientconfidence in delivery of the project for them to contemplate consent orders. Thesewere ultimately made by me after approximately one and a half days of (effectively)facilitated negotiation. Concessions were made on both sides, with Mr Jackmanreplaced as the contract administrator, Babbage Consultants confirmed as thegeotechnical engineers and the plaintiffs agreeing to countersign the latest version ofEnvivo's plans16 but with the basic structure of their proposed orders accepted byBPIL. Costs in relation to the consent orders were reserved, to be ultimately dealt within this judgment.[56] Following that agreement, I heard submissions in relation to the contemptapplication. A further one day's sitting time was required.16 Reserving a new right to argue betterment in favour of BPIL.The legal test under the Contempt of Court Act[57] Section 16 of the Act provides:16 Certain court orders and undertakings may be enforced(1) This section applies to—(a) any interim or final order, decision, decree, direction, orjudgment of a court (a court order) to do or abstain fromdoing something, except as provided in section 17:(b) any undertaking given to the court if, on the faith of theundertaking, the court has sanctioned a particular course ofaction or inaction.(2) A court may enforce the court order or undertaking against the party,non-party, or other person bound by the order or undertaking by takingaction provided for in subsections (3) and (4) on application by—(a) the party who sought the order or undertaking being enforced;or(b) a person who benefits from, or has an interest under, the orderor undertaking; or(c) the Solicitor-General, if the Solicitor-General is satisfied thatthere is a high degree of public interest in enforcing the orderor undertaking.(3) The court—(a) must not proceed further under this section unless it issatisfied that other methods of enforcing the court order orundertaking have been considered and are inappropriate orhave been tried unsuccessfully; and(b) if so satisfied, must make a finding as to whether it is provedbeyond reasonable doubt that—(i) the court order or undertaking being enforced hasbeen made in clear and unambiguous terms and isclearly binding on the person; and(ii) the person had knowledge or proper notice of theterms of the court order or undertaking beingenforced; and(iii) the person has, without reasonable excuse, knowinglyfailed to comply with the court order or undertakingbeing enforced.(4) On finding beyond reasonable doubt that the requirements ofsubsection (3)(b)(i) to (iii) are met, the court may—(a) do any of the following:(ii) issue a warrant committing the person or a director oran officer of the body corporate, as the case may be,to a term of imprisonment not exceeding 6 months:(ii) impose a fine,—(A) in the case of an individual, not exceeding$25,000; or(B) in the case of a body corporate, not exceeding$100,000:(iii) order the individual or a director or an officer of thebody corporate, as the case may be, to do communitywork, not exceeding 200 hours, as the court thinks fit:(b) if the court is the High Court, make a sequestration order inaccordance with the rules of court.(5) An applicant may apply under subsection (2) on 1 or more occasionsto enforce the same court order or undertaking, and the court may takefurther action under subsections (3) and (4) as it thinks necessary toenforce the order or undertaking.(6) Any enforcement action under this section does not operate toextinguish or affect the liability of the person to comply with a courtorder or an undertaking.[58] Accordingly, before I can contemplate any of the actions specified in s 16(4),I must be satisfied:(a) on the balance of probabilities that the threshold criteria in s 16(3)(a)are satisfied; and(b) beyond reasonable doubt that each of the requirements in s 16(3)(b) aremet.[59] There appears to be no contest that BPIL had "knowledge or proper notice ofthe terms of the court order". There is, therefore, no issue arising in respect ofs 16(3)(b)(ii). I agree with the plaintiffs that given the history of the proceeding, thatconclusion, at least, is clear.DiscussionThe threshold question[60] BPIL argues that this issue is effectively resolved against the plaintiffs byreference to the terms on which their application was brought, in particular, the factthat it seeks both an order for contempt and "sundry other orders to progress thematter". It says that it has always been open to the plaintiffs to seek the Court'sintervention and that, the fact they finally elected to do so, reinforces the conclusionthat, in terms of s 16(3)(a) of the Act, they had not adequately considered othermethods of enforcement beforehand.[61] The plaintiffs say that this approach belies the reality of what has occurred overthe last three years. They emphasise their engagement with the Court in mid-2020which they say was necessary to bring assessment of Mr Burton's proposed alternativemethodology to a head. They point out that this alternative methodology wasultimately abandoned and that they then sought appointment of a contractadministrator to take control of the process off BPIL (including application for thenecessary consents). They emphasise also the Court's warning on 23 July 2020, thatit was BPIL's obligation to remove the encroachment and that failure to do so engageda range of potential outcomes, including the possibility of a contempt finding.Although that "shot across the bow" resulted in appointment of a contractadministrator, they say that the process was then almost immediately subverted byMr Cowan's unhelpful letter and BPIL's replacement of both the structural andgeotechnical engineers on the project. Throughout, they point to their efforts tocooperate, including payment of 50 per cent of the costs of the contract administrator.This, they say, should have been sufficient to ensure delivery of the wall by the duedate.[62] Mr Quinn submits that there was not, strictly speaking, any other way of"enforcing" the Court's order other than by applying under the Act. He emphasisesthat my order was a final order of the Court so that remedies like "unless orders",strike-out orders or orders debarring a delinquent party from further pursuing its casewere unavailable.[63] The fact that my substantive judgment reserved a general right to apply forancillary orders and directions, which was exercised in 2020 and again as part of thecurrent application, does not, in my view, preclude an application under s 16. I acceptthat "enforcement" and "further directions" are conceptually different species. At thepoint the current applications were filed, further directions were necessary irrespectiveof the outcome on the contempt pleading — if only to fix a new date for removal ofthe encroachment, but realistically also to address a number of the other differenceswhich had bedevilled the project to that point. So, the fact that the application invokedthe residual jurisdiction in my substantive judgment cannot of itself be said to resolvethe threshold question against the plaintiffs.[64] Moreover, irrespective of a right to further apply, there must come a point in acase such as this where the passage of time is so significant, where the Court hasalready so frequently been engaged, where the parties have seemingly reachedagreement only for one party to reopen technical issues, and where even theindependent contract administrator appears to have become "beyond frustrated", thata plaintiff may legitimately consider a contempt application as the only appropriateway to sufficiently concentrate the mind of a defendant.[65] To some extent, events subsequent to filing the applications speak forthemselves. No longer could the directors of BPIL responsibly leave delivery of theproject to Mr Burton (if ever that were the case). Mr Castle immediately stepped intothe breach. He applied himself diligently to finalisation of plans and lodgement of thebuilding permit application. My assessment is that this would not have happened, orat least not nearly as promptly, if the contempt proceeding had not been filed.[66] Accordingly, I find the threshold test met.The requirements of s 3(b)(i)[67] In terms of s 3(b)(i), I must be satisfied beyond reasonable doubt that the ordersought to be enforced was one in "clear and unambiguous terms" and is "clearlybinding".[68] At first blush, there seems no contest in this respect. My order was craftedwith careful reference to the particulars of the encroachment, referenced amethodology linked to expert evidence in the case and specified a due date forcompletion. It was not part of BPIL's appeal that my orders lacked clarity. Nor, whenthe matter reverted to the High Court in mid-2020, did BPIL raise any doubt oruncertainty over what it was required to do. Nor, if clarification was necessary, did itat any time exercise the leave reserved to both parties my judgment to apply forancillary orders to that effect. As Mr Castle conceded in his affidavit in opposition,"prima facie [BPIL] is not in compliance with the orders of this honourable Court andthe Court of Appeal".[69] However, I need to acknowledge at this point the complicating feature of theCourt of Appeal's changes to cost attribution. As I have previously indicated, myorders provided for BPIL to remove the encroachment, on whatever basis it chose(provided the methodology was approved by a registered structural and geotechnicalengineer), by a particular date and at its cost. However, at the point that the Court ofAppeal provided for construction costs to be borne equally, a tension automaticallyarose between BPIL's obligation to deliver the project and the plaintiffs'understandable desire to be consulted about how and when the project was going tobe delivered and at what cost to them. From that point on, what was in reality requiredwas a cooperative approach between parties who, for the previous five years, had, forwhatever reason, been able to agree very little. Although at the point BPIL withdrewits alternative methodology, the encroachment had to be removed "in accordancegenerally with the methodology identified by the plaintiffs' expert, Mr G N Wood, andappended to his brief of evidence dated February 2019 as Schedule A",17 that still leftsufficient potential for disagreement among parties with an equal interest in theminutiae of the project and its cost, such that three years later the wall has still notbeen built.[70] For the purposes of this judgment, I am prepared to find s 3(b)(i) satisfied butonly on the basis that the issue identified above is carried forward into my s 3(b)(iii)assessment.17 High Court judgment, above n 1, at [128](b).The requirements of 3(b)(iii)[71] In terms of s 3(b)(iii), I must be satisfied beyond reasonable doubt that BPILhas, without reasonable excuse, knowingly failed to comply with the Court's order.Two issues are engaged: existence of reasonable excuse and knowing failure. In myview, the case stands or falls on the latter.[72] I am strongly critical of BPIL for not having exercised the reservation in para[127] of my substantive judgment at the point roadblocks developed in finalisation ofthe plans and specifications. Mr Castle himself acknowledges the potency of thatcriticism, noting in his affidavit that "at the least [BPIL] ought to have soughtextensions of time for compliance with the orders". He then apologises to the Courtfor failing to do so. The apology was equally due to the plaintiffs and provided on thatbasis when he subsequently made himself available to the Court. Some criticism isalso appropriate in respect of the directors for having left delivery of the project to MrBurton for so long when a fixed delivery date was specified and had clearly expired.[73] I am also critical of Mr Burton for his approach to negotiations. Not only theplaintiffs but also the independent contract administrator regarded this as highlyfrustrating. Whether as a result of initially overlooking issues which later exercisedhim or because of miscommunications about his requirements, the history of theproject is now littered with false starts. I can readily appreciate that this has resultedin a degree of exasperation on the plaintiffs' part. I can also readily appreciate thatonly by elevating the matter to an application under s 16 and thereby securing theattention of the directors, did the plaintiffs consider a satisfactory conclusion wouldever be reached. Mr Burton's direction on 13 November 2021 not to provide theamended consent drawings to the plaintiffs for signing, despite all that had occurredin the previous two months and the requirement (expressed through ClaymorePartners) on 4 May 2022, that the plaintiffs agree to "reinstate the September 2020design" (despite the defendant signing off on a new design in the interim) are theclearest examples of this frustrating tendency. I note also Mr Burton's periodic refusalto attend meetings designed to address various impasses.[74] However, I find myself unable to conclude beyond a reasonable doubt thatBPIL knowingly failed in its obligations. I require no convincing that Mr Burton hasnever been enthusiastic about removal of the encroachment. He devoted significantresources to the defence of the plaintiffs' initial claim, arguing that the basalt wall wasnot a wrongly placed structure for the purposes of the Property Law Act. Hemaintained that position at the Court of Appeal. He has chopped and changedadvisors, both legal and engineering, as he grappled with the reality that somethingwould need to be done and that he would have to engage with the plaintiffs aboutplacement, dimensions, footings, relocation of services and related matters. But thereis, in my mind, the reasonable possibility that he is simply a difficult, at timesuncooperative and pedantic personality, somewhat obsessed with the security of hisdilapidated house and overgrown yard but who, nevertheless, has not knowingly failedto comply with the Court's orders in the sense that he has actively turned his back onthem.[75] In coming to that conclusion, I have carefully reviewed the correspondence,particularly that in the period between October and December 2021, which is theperiod I consider an adverse inference is most readily available against him. I am leftin no doubt that the issues which he raised in November 2021 about the security fenceon top of the wall and about the pilaster on the street corner of Number 22 and locationof the services box should have been resolved earlier. The plaintiffs thought that theyhad been, but clearly from Mr Burton's perspective there were various details stilloutstanding. I cannot rule out the reasonable possibility that he regarded these asgenuine concerns and not just confections designed to delay the inevitable. In thisrespect, I take into account the very considerable energy (and costs) Mr Burton hadalready invested in the project to that point.[76] Again, the overlay of the Court of Appeal's decision is relevant. Where anoutcome has, in effect, to be negotiated, it will always be a more difficult task toestablish a knowing failure to comply. Regrettably, that is the dynamic which emergedfrom the Court's judgment.[77] Ultimately, of course, the directors are responsible for BPIL's adherence to theCourts' orders. Messrs Castle and Brown did not knowingly fail to comply. Theybelieved that the process was being adequately addressed by Mr Burton. Notably,however, they did not follow up Mr Burton's efforts. As they have acknowledged,their failure to apply to this Court for further directions properly warranted an apology.Clearly, now that they are seized of the project and have committed to its deliverythrough consent ancillary orders, they can expect a high level of judicial oversight inensuring such delivery occurs.Costs[78] As Pankhurst J observed in Shotover Jet Ltd v Butterfli Enterprises Ltd,18 casessuch as this invoke "a broad discretion in relation to costs",19 necessitating that justicebe done between the parties "in all the circumstances of the case".20 Although HisHonour concluded that no wilful disobedience or neglect had been established in thatcase, he was satisfied that there had been a breach of the Court's orders and awardedthe plaintiff costs of $20,000 which was approximately twice scale.21[79] Likewise, in Douglas Pharmaceuticals Ltd v Nutripharm NZ Ltd (No 2)22 andJones v Sky City Auckland Ltd,23 the High Court made costs awards (In Jones on anindemnity basis) in favour of plaintiffs who had established a breach of undertakingsto the Court but not on a deliberate or wilful basis.[80] In the present case, there is the additional feature that I am also required to fixcosts on the second part of the plaintiffs' application which resulted in consent orders.In that context, some determination of the parties' relative success is necessary.24[81] As indicated, settlement came after one and a half days of hearing punctuatedby various negotiations and after Mr Castle had made himself available forquestioning. As indicated, there were some concessions on the plaintiffs' part in termsof identity of contract administrator/engineer and geotechnical advisor and in respect18 Shotover Jet Ltd v Butterfli Enterprises Ltd HC Christchurch CIV-2005-454-000593, 24 May2006.19 At [40].20 At [41].21 At [41].22 Douglas Pharmaceuticals Ltd v Nutripharm NZ Ltd (No 2) (1998) 12 PRNZ 176 (HC).23 Jones v Sky City Auckland Ltd (2001) 15 PRNZ 432 (HC).24 Wheeldon v Body Corporate 342525 [2016] NZHC 862 at [12].of the plans to be submitted for Council approval, but the latter was subject to newreservations allowing the plaintiffs to later argue betterment and/or excessspecification. Overall, the plaintiffs succeeded in putting in place a structure, in part,under the exclusive control of the contract administrator/engineer, Mr Martin Webb,and, in part, requiring Messrs Castle and Webb to work together which:(a) they can have reasonable confidence will now deliver the project; and(b) in my view, would never have been achieved, at least in a timelyfashion, without their application to the Court.[82] I take into account also that a new completion date has now been ordered,something which was always necessary and which I have already indicated BPILshould long ago have applied for, with such ancillary orders as were necessary toachieve it.[83] Against this background, either an order letting costs lie where they fall or evenallowing scale costs in favour of the plaintiffs25 would not, in my view, do justicebetween the parties. Neither alternative would adequately recognise the stronglyexpressed criticisms in this judgment, including the considerations which motivatedMr Castle's apology. I regard it as unsatisfactory that the plaintiffs should have beenrequired to bring the matter to a head in the way that was ultimately necessary.Accordingly, the contempt application was, in my view, a legitimate step in ensuringthe matter was appropriately elevated and that it will now been adequately progressed.[84] My inquiries of counsel for the plaintiffs indicate that actual costs on theapplications, including GST (which is recoverable, given that the plaintiffs are notregistered), total $95,680, excluding second counsel.[85] I intend to adopt a similarly robust approach to other judges who, althoughdeclining to find a contempt proven to the requisite standards, have neverthelessconsidered the application before them broadly justified. I take into account the primafacie position recognised by Mr Castle; the extraordinary period of delay in giving25 Which I calculate at $10,516, including appearance at the mention hearing.effect to the Courts' orders; Mr Burton's frustrating and uncooperative approach to theresolution of differences; and BPIL's failure to seek further orders at the point itbelieved an impasse had occurred. I allow costs in the sum of $60,000 in favour ofthe plaintiffs. My only reason for not allowing a full indemnity is because of what Iconsider to be the implications of the Court of Appeal's decision, giving Mr Burtonthe maximum benefit of the doubt in that respect.Result[86] I dismiss the application for orders pursuant to s 16(4) of the Contempt of CourtAct 2016.[87] I award costs in favour of the plaintiffs in the sum of $60,000 plus reasonabledisbursements as fixed by the Registrar._______________Muir J