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BODY CORPORATE NO 188529 AND ORS V NORTH SHORE CITY COUNCIL AND ORS HC AK CIV 2004-404-3230 [2009] NZHC 87 (11 February 2009)

IN THE HIGH COURT OF NEW ZEALAND
AUCKLAND REGISTRY
                                                            CIV 2004-404-3230



             BETWEEN                  BODY CORPORATE NO 188529 AND
                                      ORS
                
                     Plaintiffs

             AND                      NORTH SHORE CITY COUNCIL
                                
     First Defendant

             AND                      ROBERT HENRY GRAHAM BARTON
                                      AND
KAY BARTON
                                      Second Defendant

             AND                      R F COUGHLAN & ASSOCIATES
                                      Third Defendant


Hearing:     11 February 2009

Counsel:     A Hough for Plaintiffs
     
       A Maclean for Third Defendant
             No appearance by or on behalf of First and Second Defendants

Judgment:    11 February
2009


                 (ORAL) JUDGMENT (NO. 6) OF HEATH J




Solicitors:
Grimshaw & Co, Auckland
Heaney & Co, Auckland
George Boggiatto,
Auckland
Kidd Tattersfield Maclean, Auckland

BODY CORPORATE NO 188529 AND ORS V NORTH SHORE CITY COUNCIL AND ORS HC AK CIV
2004-404-3230
11 February 2009

Introduction


[1]    The third defendant (the designer) seeks an order that a charging order nisi be
made absolute.
The plaintiffs seeks a stay of execution of the relevant judgment,
pending appeal.


[2]    In a judgment given on 30 April 2008
(now reported as Body Corporate
188529 v North Shore City Council  [2008] 3 NZLR 479 (HC)), I made findings in
relation to liability on the part of three defendants on claims brought by the Body
Corporate (of what
is known as the Sunset Terraces development) and individual
owners. I did not enter judgment at that stage.


[3]    Counsel subsequently
conferred and a judgment on damages was given on 30
September 2008, followed by a costs judgment on 2 October 2008.


[4]    The
outcome of the various judgments is complex. For present purposes, I
summarise relevant components as follows:


       a)      The
Body Corporate obtained judgment against the developers


       b)      Some individual proprietors obtained judgment against the
Council


       c)      The designer obtained judgment against the Body Corporate and
               individual owners.


[5]  
 In my costs judgment of 2 October 2008, I made orders for costs in favour of
successful individual owners on their claims against
the Council. Those orders
involved four of the individual owners and in total the award of costs was $100,000.
I made it clear that,
before payment of costs was made, the solicitors for the
identified plaintiffs were required to provide satisfactory evidence to
the solicitors
for the Council that those parties had contributed at least the amount ordered to the
cost of the proceeding. If less
were contributed, the lower sum would be paid. I
refer to paras [29] and [30] of the costs judgment.

[6]    The designer was awarded
costs against the plaintiffs on a reduced basis.
Costs were fixed on an amount calculated as 40% of the combined amount of costs
and disbursements calculated on a 2B basis: see para [49] of the costs judgment.


[7]    The designer has sealed the judgment for
costs against the relevant plaintiffs
in the sum of $72,941.39. A charging order nisi was obtained to begin the execution
process.


The execution process


[8]    On 12 December 2008, the charging order nisi was issued to charge payment
of the costs awarded in
favour of the designer against the sum of $100,000, held by
the solicitors for the Council in respect of those costs awarded in favour
of
successful plaintiffs. Those moneys are held in trust by the solicitors pending the
Council's appeal against that part of the
costs judgment.


[9]    A complicating factor is that the solicitors for the plaintiffs have only
confirmed that two of the plaintiffs
in favour of whom costs were ordered, have
contributed in excess of the amount ordered. In respect of those two plaintiffs, the
costs
total $60,000. The evidence before me indicates that, on 13 November 2008,
the solicitors for the plaintiffs confirmed that position
to the solicitor for the Council,
adding that they "will confirm payment of legal and expert costs" for remaining
plaintiffs "shortly".


[10]   The designer applies to have the charge order nisi made absolute.              The
charging order nisi was made under r
580 of the High Court Rules, in the form in
which they stood prior to 1 February 2009. Mr Maclean, for the designer, has drawn
my
attention to s 9(6) of the Judicature (High Court Rules) Amendment Act 2008.


[11]   Section 9(6) provides:

       9. Transitional
provisions

       ...

       (6) If judgment has been sealed in a proceeding commenced before the
           commencement of section
8, any enforcement process permitted by the
           new High Court Rules as substituted by that section may be issued, but
  
        any execution or enforcement process that has been issued but not
           completed before that commencement must be completed
as if section 8
           had not been enacted.

       ....

Section 9 has the effect of requiring any enforcement process commenced
under the
old form of the Rules to be continued under those Rules, notwithstanding
promulgation of the new form of the Rules.


The
application to stay execution pending appeal


[12]   I deal first with an application made by relevant plaintiffs to stay execution
of
the judgment for costs pending appeal.


[13]   In common with other features of this proceeding, the position with regard to
appeals is also complex. In
summary:


       a)     The Council has appealed against my substantive judgment holding it
              to be liable to successful
individual owners. The appeal grounds
              include a challenge to my finding that duties of care established in
       
      Invercargill City Council v Hamlin [1994] 3 NZLR 513 (CA), [1996]
              1 NZLR 513 (PC) applied, in the context of
a multi-unit development,
              in respect of claims by those who acquired units for purposes other
              than as
"owner-occupier" and in respect of those who brought claims
              after the existence of weathertightness issues was known
to a relevant
              plaintiff and at a time those issues were reasonably discoverable.


       b)     The Council also challenges
my costs judgment in relation to the
              award of $100,000 in favour of the four successful unit owners. That
        
     challenge impacts directly on the amount held by the solicitors for the
              Council which the designer seeks to charge.

       c)      The plaintiffs appeal against entry of judgment in favour of the
               designer.     A number of grounds
of appeal are factual in nature.
               However, some legal issues arise, particularly whether it was
               necessary
to prove actual reliance on a certificate of practical
               completion and whether the relationship between one of the
owners
               and the designer was sufficiently proximate to give rise to a duty of
               care in respect of that
certificate. Wider issues are also raised as to
               the extent of the duty owed by the designer, which I infer challenge
               the substantive legal basis on which I ruled in favour of him.


[14]   If the appeal against judgment being entered
in favour of the designer were
successful, it would follow that the order for costs in his favour would also fall.


[15]   The individual
plaintiffs who have the benefit of the order for costs against
the Council seek a stay of execution of the order for costs made against
them in
favour of the designer, pending resolution of the appeal.


[16]   The principles on which a stay will be granted are set
out in Dymocks
Franchise Systems (NSW) Pty Ltd v Bilgola Enterprises Ltd  (1999) 13 PRNZ 48 (HC
and CA). In the course of his judgment at first instance, Hammond J identified
factors that the Courts will address. His Honour
said:

       [9] The factors to which Courts conventionally address themselves to find
       this balance include the following:

       (1) If no stay is granted will the applicants' right of appeal be rendered
       nugatory?

       (2) The bona fides of
the applicants as to the prosecution of the appeal.

       (3) Will the successful party be injuriously affected by the stay ?

       (4) The effect on third parties.

       (5) The novelty and importance of the question involved.

       (6) The public interest
in the proceedings.

       (7) The overall balance of convenience.

       [10] I add, that these factors are not comprehensive.
A review of them serves
       merely to show the breadth of the matters which, in any given case, may
       have to be addressed
by a Court to balance the overall interests of justice.

[17]   I add, as an additional factor (to the extent that it can be measured),
the
question whether there is an arguable appeal point and, if so, its likely strength.


[18]   The Court of Appeal did not question
the factors identified by Hammond J
when upholding his decision in Dymocks.


[19]   Rule 12 of the Court of Appeal (Civil Rules)
2005 provides first instance
jurisdiction for this Court, on an application for stay. If a stay were refused, there is
an ability
to apply directly to the Court of Appeal.


[20]   There is no doubt that, if the charging order nisi were made absolute and
subsequently
enforced through writ of sale, the proceeds would find their way
(legitimately) into the hands of the solicitors for the designer
who are owed
outstanding costs. That is not a criticism. Rather, I make the point to demonstrate
that, if the costs were paid, they
would go beyond the designer, leaving no security
for the plaintiffs to recover in the event that they were successful in their appeal
to
the Court of Appeal.


[21]   While that state of affairs does not render the right of appeal nugatory, it does
have a significant
impact on whether it is just to require payment in advance. Other
factors pointing in favour of a stay include the bona fide nature
of the appeal, the
novelty and importance of the questions raised and the public importance of the
issues to be debated on appeal,
given the large number of "leaky homes" cases
pending before this Court and a statutory tribunal.


[22]   I do have concerns, however,
about the plaintiff's failure to crystalise the
amount of costs payable by the Council, given some months have now elapsed since
the costs judgment was delivered. I propose to add a condition to a stay which will
require that position to be crystalised within
14 days, failing which the stay will
lapse, if not confirmed.


[23]   As indicated from what I have just said, I am satisfied that
a stay is justified.

Should the charging order be made absolute?


[24]     I will make an order for stay but will first discuss
the question of making the
charging order absolute. I can see no reason why the designer should not have the
protection of a charging
order absolute against the moneys, provided the plaintiffs
are safeguarded against the possibility that the moneys will be disbursed
while the
appeals are pending.


[25]     On that basis I make a charge order absolute under r 585 of the old form of
the High Court
Rules but stay execution of that order pending determination of the
plaintiffs appeal against the judgment entered in favour of the
designer by the Court
of Appeal.


Result


[26]     To sumamrise:


         a)     I make a charging order absolute in respect
of the sum of $100,000.
                The charging order absolute is made in respect of the costs award
                judgment
against the plaintiffs in favour of the designer. Depending
                upon the outcome of the information provided under the
condition
                imposed on the stay, some variation to that order may be required.


         b)     I grant a stay of execution of the judgment for costs
entered in favour
                of the designer against the named plaintiffs pending determination of
                the appeal
against that judgment in the Court of Appeal. That order is
                conditional on a memorandum being filed and served by
the solicitors
                for the plaintiffs on or before 20 February 2009 confirming the
                amount of costs payable
by the Council to the individual plaintiffs in
                terms of my orders.


         c)     Leave to apply is reserved,
generally.

[27]   So far as costs on the present applications are concerned, they will be fixed
on a 2B basis together with reasonable
disbursements. The incidence of those costs
is reserved and shall follow the outcome in the Court of Appeal.




               
                                    __________________________
                                                                 
  P R Heath J