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Hsu v Mahoney [2022] NZHC 372 (8 March 2022)
Last Updated: 15 March 2022
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IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY
I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE
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BETWEEN
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PI-HUI BEATRICE TSAI HSU
First Plaintiff
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AND
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KENNETH TSAI
Second Plaintiff
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AND
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MARGARET ANN MAHONEY and GRAHAM PAUL MCQUEEN
First Defendants (Discontinued)
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AND
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BUSHNELL INVESTMENTS LIMITED
(formerly named BUSHNELL BUILDERS LIMITED)
Second Defendant
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AND
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CHRISTCHURCH CITY COUNCIL
Third Defendant (Discontinued)
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AND
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LANCE PHILIP AUSTIN
Fourth Defendant
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AND
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BUSHNELL BUILDERS LIMITED
Fifth Defendant
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Hearing:
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On the papers
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Appearances:
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R G Smedley and T D Grimwood for Plaintiffs
S P Rennie and A G M Whalan for Second, Fourth and Fifth Defendants
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Judgment:
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8 March 2022
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JUDGMENT OF JUSTICE DOOGUE
(Costs)
HSU v MAHONEY (COSTS) [2022] NZHC 372 [8 March 2022]
This judgment was delivered by me on 8 March 2022 at 9.00 am pursuant to Rule
11.5 of the High Court Rules
Registrar/Deputy Registrar Date:
Introduction
- [1] On
1 July 2021, I issued a liability judgment in which I found Bushnell Investments
Ltd (BIL) had breached:1
(a) the building contract by failing or neglecting to correct defects during the
liability period;
(b) the warranty in the building contract by failing or neglecting to remedy
defective tanking;
(c) its duty of care to the plaintiffs; and
(d) both the pleaded “RW Agreement” and the “CRMBA
Agreement”.
- [2] I also found
that BIL’s counterclaim against the plaintiffs
failed.
- [3] I found the
fourth defendant, Mr Austin:
(a) owed the plaintiffs a duty of care to ensure the remediation attempts he
controlled on behalf of BIL were carried out to the
standard of compliance with
the Building Code;
(b) was negligent and breached the duty of care he owed to the plaintiffs;
and
(c) exacerbated the emotional distress and harm suffered by the plaintiffs.
- [4] I found BIL
and Mr Austin were concurrently liable for general damages
of
$25,000 to each of the plaintiffs.
- [5] The
plaintiffs were unsuccessful in their claim against the fifth defendant,
Bushnell Builders Ltd (BBL2).
1 Hsu v Mahoney [2021] NZHC 1611.
- [6] In a
subsequent quantum judgment dated 11 October 2021, I held that BIL was liable to
the plaintiffs for the net sum of $140,724.42
plus
interest.2
- [7] This
judgment deals with the following issues relating to costs as between the
parties:
(a) some relatively minor divergence on scale costs to be applied;
(b) whether or not the plaintiffs should be entitled to a 25 per cent uplift in
costs from 5 December 2019 to 4 August 2021;
(c) whether the plaintiffs should be entitled to a 75 per cent uplift in costs
from 4 August 2021;
(d) whether there should be a departure from the principle that parties liable
for costs will be jointly and severally liable; and
(e) whether the plaintiffs should pay costs to BBL2.
Divergence on scale costs to be applied
- [8] There
is little between the parties as to the costs that can be claimed against BIL by
the plaintiffs on a 2B basis. The small
difference between them relates to the
amount of time required for a limited number of memoranda filed by the
plaintiffs.
- [9] I am
satisfied that the plaintiffs have not been excessive in any respect in their
claims and therefore costs at scale on a 2B
basis between 16 February 2017 and
31 July 2019 of $28,209.50 are in order.
- [10] The
plaintiffs only seek 50 per cent of their costs for the period from the
commencement of the proceedings to 5 December 2019
(being the date the
plaintiffs discontinued their claims against the first and third defendants) to
reflect that circumstance. That
is a responsible and appropriate concession by
them. Thus, I find costs of $14,582.75 are owed to the plaintiffs by BIL for
this
period.
2 Hsu v Mahoney [2021] NZHC 2708.
- [11] Between 6
December 2019 and 4 August 2021, the parties are agreed that the
plaintiffs’ costs at scale are $38,240.00.
- [12] From 5
August 2021 to present, the plaintiffs’ costs at scale are $8,962.50.
Again, there is a divergence in the time period
calculated in respect of a
memorandum which the defendants say is excessive. I do not agree that it is
excessive. I therefore find
the scale costs owing for this period are
$8,962.50.
- [13] As far as
disbursements are concerned, the plaintiffs claim
$45,766.01.
- [14] The
defendants, BIL and Mr Austin, say that the filing fee for the statement of
claim should be reduced by half in recognition
of the discontinuance of the
claim against three of the defendants. I do not accept that is appropriate in
circumstances where settlement
was reached between those
parties.
- [15] I therefore
accept the plaintiffs’ calculation as to disbursements owing. The total of
disbursements is therefore $45,766.01.
- [16] The total
sum payable is $107,551.26.
Costs against Mr Austin
- [17] Scale
costs against Mr Austin are $52,185.75. Disbursements are $18,365.97. This makes
a total of $70,551.72.
- [18] However,
the plaintiffs only had marginal success against Mr Austin, which must be
reflected in a reduced award.
- [19] A
two-thirds reduction against scale costs and disbursements is appropriate in the
circumstances. This reduction is conservative
having regard to the amount
awarded against Mr Austin.
- [20] A
two-thirds reduction results in an award of $23,517.24 for costs and
disbursements.
Should there be a 25 per cent uplift from 5 December
2019?
Plaintiffs’
submissions
- [21] The
plaintiffs claim they are entitled to a 25 per cent uplift in costs for steps
taken during these proceedings from 5 December
2019 onwards pursuant to r 14.6
of the High Court Rules 2016 (the Rules) because the general attitude and
conduct of BIL, Mr Austin
and BBL2 contributed unnecessarily to the time or
expense of the proceeding, by:
(a) failing to comply with directions of the Court;
(b) taking and pursuing arguments which lacked merit; and
(c) failing, without reasonable justification, to admit facts and evidence or to
accept legal argument.
- [22] The conduct
which the plaintiffs submitted gives rise to the 25 per cent uplift in costs is
recorded within the various memoranda
filed by the parties in these proceedings
and the associated minutes of the Court. It includes, and the plaintiffs submit
is characterised
by:
(a) the remaining defendants unsuccessfully opposing the plaintiffs’
interlocutory application for joinder of BBL2, notwithstanding
that they had no
standing to do so;
(b) failing to comply with timetabling directions;
(c) abandoning their limitation defence on the eve of the trial; and
(d) unsuccessfully seeking adjournment of the proceedings on two separate
occasions.
Defendants’ submissions
- [23] The
defendants submitted their opposition to the joinder of BBL2 was done on the
basis that there was no tenable case against
it.
- [24] The
defendants submitted that their failure to comply with directions of the Court
was addressed by the Court in the
23 March 2020 minute of
Associate Judge Lester. They highlighted that, pursuant to that minute, the
plaintiffs were already
awarded costs on a 2B basis, with a 25 per cent uplift,
on the two memoranda filed by the plaintiffs which related to the
defendants’
breach of the timetable.
- [25] The
defendants also submitted the limitation defence was abandoned by them for the
precise reason of avoiding further time and
cost. The abandonment was subject to
a two-paragraph response in the plaintiffs’ opening submissions. The
defendants submitted
it had no material bearing on the time and cost of the
proceeding.
- [26] The
defendants submitted their applications for adjournment were necessary even if
ultimately unsuccessful. The first of the
defendants’ two applications for
adjournment was dealt with by the Court in the 2 July 2020 minute of
Associate Judge
Lester. A trial fixture date had not yet been allocated at that
point. The defendants said the adjournment they sought was merely
a request for
a further case management conference in order to deal with, inter alia, issues
with the plaintiffs’ discovery
and briefs.
- [27] The
defendants’ second request for the trial to be adjourned, made by
memorandum of counsel dated 10 February 2021, was
triggered by counsel for the
defendants’ concern that the Court timetable was not being upheld and that
a common bundle was
not yet finalised.
- [28] The
defendants submitted the plaintiffs have provided no specific instance of the
alleged failure without reasonable justification
to admit facts and evidence or
to accept legal argument.
- [29] The
defendants submitted that, in light of the above, there is no basis for any
costs uplift. Discrete uplift issues have already
been dealt with by the Court
and, outside of this, the parties’ respective positions, successes and
failures, at both the case
management level and the substantive level, cannot be
said to be anything out of the ordinary in the cut and thrust of hard-fought
High Court litigation where successes and failures are an unavoidable part of
the process.
Discussion
- [30] Whilst the
opposition to joinder was unsuccessful, BBL2’s position was vindicated at
trial and therefore an uplift in relation
to that opposition is not
justified.
- [31] The failure
to comply with the Court’s directions has already been addressed by the
Court by way of an uplifted costs award.
There is no appropriate basis upon
which to justify a further uplift against unrelated costs.
- [32] As to the
limitation defence being abandoned on the eve of the trial, I agree with the
defendants that it had no material bearing
on the time and cost of the
proceeding and no uplift is justified for this reason.
- [33] The
defendants’ first request for adjournment was not granted by the Court,
but it represented nothing out of the ordinary
in terms of case
management.
- [34] Whilst the
defendants’ second request for adjournment was denied, it did not
necessitate a further case management conference
or increase the time or expense
in conducting the proceeding. Indeed, no such increase is identified by the
plaintiffs.
- [35] As far as
the alleged failure to admit facts and evidence or to accept legal argument is
concerned, I find that the evidence,
particularly the expert evidence, was in
dispute with proper justification. Much of the factual contest surrounded the
knowledge,
understandings and intentions of the parties to the dispute, which
was the proper subject of cross-examination and there were clearly
bona fide
legal arguments. The law in relation to Mr Austin’s liability alone is
subject to six pages of the liability judgment.
- [36] I agree
with the defendants that the plaintiffs cannot discharge their onus to establish
a justification for an uplift nor how
BIL or Mr Austin have caused a 25 per cent
increase in the time or expense across all steps in the proceeding
from
5 December 2019 given that it is “only on that basis that any
percentage uplift would be justified”.3
- [37] The
application for a 25 per cent uplift from 5 December 2019 is declined for the
above reasons.
Should there be a 75 per cent uplift from 4 August
2021?
Plaintiffs’
submissions
- [38] On 28 July
2021, the plaintiffs wrote to the remaining defendants without prejudice except
as to costs and made an offer to settle
the remaining issues within the
proceeding for $64,697.98 under r 14.10 of the Rules.
- [39] That offer
was communicated to remain open for acceptance for seven days (or until 4 August
2021).
- [40] The
remaining defendants did not respond to the plaintiffs’ offer and it
lapsed.
- [41] The matter
proceeded by way of formal proof on 6 October 2021.
- [42] The
plaintiffs’ offer under r 14.10 represented less than the amount that BIL
was ultimately found liable to pay, and by
failing to accept the
plaintiffs’ offer it was submitted the remaining defendants unreasonably
and unjustifiably contributed
to the time and expense of the
proceeding.
- [43] The
plaintiffs submitted they should be entitled to an uplift in costs of
75 per cent as against the remaining defendants
pursuant to r 14.6(3)(b)(v)
from 4 August 2021 onwards.
3 Strachan v Denbigh Property Ltd HC
Palmerston North CIV-2010-454-232, 3 June 2011 at [28], citing Commissioner
of Inland Revenue v Chesterfields Preschools Ltd [2010] NZCA 400, (2010) 24
NZTC 24,500 at [165].
Defendants’ submissions
- [44] The
defendants submitted that the Court had already determined Mr Austin and BBL had
no liability and it cannot have been unreasonable
for Mr Austin and BBL to
decline to accept the offer in those circumstances.
- [45] Further,
they submitted that, as all parties were well aware, BIL has no assets. The
defendants expressed reservations as to
whether the directors of BIL could have
responsibly committed BIL to accepting the offer in circumstances where it did
not have the
means to meet the terms of the offer. In such circumstances it was
submitted that BIL had “reasonable justification”
not to accept the
offer given its insolvency.
- [46] The
defendants emphasised that counsel for the plaintiffs has not cited any
authority where an increased award of costs has been
made against a defendant on
account of a Calderbank offer where the defendant was known by the offeror to be
financially incapable
of meeting the terms of the offer. The defendants
submitted that such a precedent would create some peculiar incentives on
litigants
dealing with insolvent entities and could also unfairly affect other
creditors of the insolvent entity.
- [47] I agree
with the reasoning advanced by the defendants on this issue and decline the
application for a 75 per cent uplift in these
circumstances.
Should Mr Austin be jointly and severally liable for costs
awarded to the plaintiffs?
Plaintiffs’
submissions
- [48] The
plaintiffs submitted that:
(a) the plaintiffs should be entitled to costs as against BIL and Mr Austin;
and
(b) BIL and Mr Austin should be liable for such costs jointly and
severally.
- [49] The
plaintiffs rely on the principle that, “the party who fails with respect
to a proceeding or an interlocutory application
should pay costs to the party
who succeeds”.4
- [50] The default
position is that parties liable for costs will be liable jointly and severally,
except by direction of the Court.5
- [51] Kós
J summarised this general principle in Hong v
Deliu:6
... While the default position under r 14.14 of the High Court
Rules is joint and several liability among defendants, that is subject
to the
Court’s overriding discretion. In our view, where the case is out of the
ordinary in some significant way, consideration
must be given to whether to
alter that burden.
...
- [52] The general
principle is only to be departed from where a particular case is out of the
ordinary in some significant way, for
example where a party has played a reduced
role in proceedings (in the context of a judicial review) by abiding the
decision of the
Court.7 A disparity between parties’ respective
levels of liability will not of itself justify a departure from this general
principle.8
- [53] The general
principle summarised in Hong v Deliu was further expanded upon in
Rochdale Precinct Society Inc v Christchurch City Council, where it was
confirmed that the ultimate task of the Court is to make an assessment of
overall justice as between the particular
parties:9
[22]
In summary, unsuccessful parties are prima facie jointly and severally liable.
That rule may be varied because the ultimate task
of the Court is to make an
assessment of overall justice as between the particular parties, in the
particular circumstances. Relevant
considerations include whether and in what
manner the parties participated in the proceedings, the extent to which one
party was
in error, and what measure of reliance was placed on the error by the
other party.
4 High Court Rules, r 14.2(1)(a).
5 High Court Rules, r 14.14.
6 Hong v Deliu [2016] NZCA 75, [2016] NZAR 667 at [24]
(footnote omitted).
7 Hong v Deliu, above n 3 at [24].
8 Palmer v Hewitt Building Ltd [2021] NZHC 2435 at
[3]–[4].
9 Rochdale Precinct Society Inc v Christchurch City Council
[2018] NZHC 1708.
- [54] The
plaintiffs submitted that this case is not out of the ordinary in any
significant way such as to warrant a departure from
the general
principle.
- [55] In
assessing the overall justice as between the parties, the plaintiffs submitted
that there are compelling reasons why the Court
should not depart from the
general principle:
(a) BIL and Mr Austin were found to have breached duties owed to the plaintiffs
and so both substantially contributed to the harm
caused to the plaintiffs;
(b) BIL and Mr Austin were found to be concurrently liable for general
damages;
(c) the remaining defendants:
(i) were all represented by Rhodes & Co;
(ii) relied on the same pleadings which were drafted as single documents;
(iii) relied on the same three witnesses, including Mr Austin who gave evidence
on behalf of the remaining defendants;
(iv) actively participated in the proceedings, in that none of the remaining
defendants participated in a reduced or diminished capacity
(for instance by
making any significant admissions in respect of, or declining to defend, any
aspect of the plaintiffs’ claims);
and
(v) otherwise co-ordinated their defences of the proceeding such that the
remaining defendants cannot be said to have operated separately
or
individually;
(d) the legal and factual issues as between the remaining defendants were all
largely common, or otherwise overlapped significantly,
and the vast majority of
the evidence and hearing time was dedicated to the defective tanking issue,
which was accepted by the remaining
defendants, and whether it had been
effectively remediated, which was disputed by all of the remaining
defendants;
(e) costs (uplifted by 25 per cent) were awarded against the remaining
defendants jointly by Associate Judge Lester in the minute
dated 23 March
2020; and
(f) the extent of Mr Austin’s control and influence over the other
remaining defendants in these proceedings should weigh in
favour of joint
liability for costs.
- [56] The extent
of control which a party has exerted over another party during proceedings, as
well as the extent to which a party
may stand to benefit from another
party’s participation in proceedings, are both relevant considerations in
respect of orders
for costs as against non-parties. In S H Lock (NZ) Ltd v
New Zealand Bloodstock Leasing Ltd10 the Court set out these
relevant principles (referring to the Privy Council’s judgment in
Dymocks Franchise Systems (NSW) Pty Ltd v Todd (No
2)):11
(a) cost orders against non-parties are exceptional in the sense that they are
outside the ordinary class of cases where parties
pursue claims for their own
benefit and at their own expense;
(b) the ultimate question in any exceptional case is whether in all the
circumstances it is just to make the order, thereby requiring
a fact specific
inquiry;
(c) as a general rule, third party litigation funders are only liable for costs
where they not only fund proceedings but substantially
control it or “at
any rate [are] to benefit from them” – that is because the funder is
gaining access to justice
for its own purposes and is in effect the real party
to litigation;
10 S H Lock (NZ) Ltd v New Zealand Bloodstock
Leasing Ltd [2011] NZCA 675 at [14].
11 Dymocks Franchise Systems (NSW) Pty Ltd v Todd (No 2
[2004] UKPC 39, [2005] 1 NZLR 145 at [25].
(d) the most difficult cases are those where non-parties fund receivers or
liquidators in litigation which is designed to advance
the funders’ own
financial interests – in that case, again as a general rule, the funder
pursuing its own interests should
not be able to escape without risk to
liability for costs if the proceeding fails.
- [57] While the
plaintiffs are not seeking an order for non-party costs, they submitted that the
principles outlined in the authorities
in [51] are relevant to the Court’s
assessment of the overall justice as between the parties and further weigh in
favour of
joint liability for costs as between BIL and Mr
Austin.
- [58] Applying
the above principles to these proceedings, it was submitted that Mr Austin was
both substantially in control of the
remaining defendants and also stood to
benefit from any success of the remaining defendants for the following
reasons:
(a) Mr Austin:
(i) was one of two directors of BIL and a shareholder;
(ii) as a shareholder of BIL, Mr Austin would have benefitted had BIL either
successfully defended these proceedings or succeeded
in its counterclaim;
(iii) was sole director and majority shareholder of BBL2; and
(iv) gave evidence on behalf of the remaining defendants and was the only
witness of fact of the remaining defendants;
(b) the remaining defendants were all represented by Rhodes & Co, relied on
the same pleadings which were drafted as single documents
and relied on the same
three witnesses;
(c) in answer to the question, “Did Mr Austin exert a sufficient degree of
control over the relevant acts or omissions [of
BIL]?” the Court’s
judgment noted:12
12 Hsu v Mahoney, above n 1.
[219] I find Mr Austin’s evident control of the remediation attempts,
personal actions in undertaking water testing and repairs,
and reassurances
given to Mr Mahoney and the Tsais mean he owed a duty.
...
and;
(d) counsel for BIL has indicated that BIL will likely be liquidated and so it
is unlikely to be able to fully satisfy any costs
award.
- [59] The
plaintiffs submitted that departing from the general principle that parties
liable for costs will be liable jointly and severally
would enable Mr Austin to
escape without risk of liability in circumstances where he was substantially in
control of BIL and pursuing
his own interests in the proceeding via
BIL.
Defendants’ submissions
- [60] The
defendants submitted the plaintiffs had only marginal success against Mr Austin
(general damages of $50,000) and that this
must be reflected in a reduced costs
award.
- [61] The
defendants stated that the plaintiffs failed in their primary claim against Mr
Austin for remedial and consequential costs.
They succeeded only in an ancillary
claim for general damages. The defendants submitted that while this does not
displace the plaintiffs’
success against Mr Austin it requires an
appropriate reduction in costs.
- [62] They relied
on Weaver v Auckland Council where it was
found:13
[26] In the present case, however, the only party to have
succeeded by any “realistic appraisal” were the appellants.
It is
true that they did not succeed to the full extent of their claim but only to
roughly half that extent, yet success on more
limited terms is still success. We
do not therefore see a proper basis upon which the usual rule that the party who
fails with respect
to a proceeding should pay costs to the party who succeeds
should not apply. That said, it is appropriate that the costs ultimately
awarded
to the appellants should be reduced in accordance with r 14.7(d) because,
although the appellants succeeded, the time and
resources necessary for the
respondent to meet ultimately unsuccessful arguments significantly increased its
costs. Like Katz J,
we assess that increase at around 100 per cent or roughly a
doubling of effort and time. A reduction in entitlement by half is therefore
appropriate.
13 Weaver v Auckland Council [2017] NZCA 330,
(2017) 24 PRNZ 379.
- [63] The
authorities make it clear that, in considering the discount, it is necessary to
make a realistic appraisal of the end result
and that “[a] broad-brush
approach will often be required in reducing the amount of costs that would have
been appropriate
had full success been
achieved”.14
- [64] In this
case, the amounts awarded to the plaintiffs comprised net remedial costs of
$140,724.42 plus $50,000 of general damages
– a total of $190,724.42.
Remedial costs were sought against Mr Austin but declined. The defendants
submitted that the level
of success the plaintiffs had against Mr Austin was
therefore substantially less than in Weaver ($50,000 out of the
$190,724.42 awarded amounts to 26 per cent here as opposed to success as to
roughly half the extent of the claim
in Weaver) and
that
$50,000.00 in the context of High Court litigation is a relatively nominal sum.
In addition, the core argument against Mr Austin
(his liability in terms of the
remedial costs of the wall/tanking) was unsuccessful and this issue comprised
the majority of the
time and expense of the case.
Discussion
- [65] I find an
appropriate award against Mr Austin, having regard to the limited success of the
plaintiffs against him, is one third
of the claimable scale
costs.
- [66] The
starting point is that BIL and Mr Austin should be jointly and severally liable
for costs claimed by the plaintiffs. However,
r 14.14 applies only to the extent
that Mr Austin is “ordered to pay costs”. The rule does not impinge
on the primary
analysis that must first be undertaken, namely the extent of the
costs that must be paid by Mr Austin to the plaintiffs (including
having regard
to the failures the plaintiffs had vis-à-vis Mr Austin). He would then be
jointly and severally liable for that
amount with BIL.
- [67] Rule 14.14
does not operate to visit BIL’s liability for all the properly assessed
costs on Mr Austin, who only has a liability
for some of the
costs.
14 Body Corporate S73368 v Otway [2018] NZHC
1095 at [8].
- [68] This is not
therefore a case where the Court is being asked to make an exception to r 14.14.
Mr Austin is not suggesting that
some of the costs he is liable for ought to
only be recoverable by the plaintiffs from BIL, nor is BIL suggesting that some
of the
costs it is liable for ought to only be recoverable by the plaintiffs
from Mr Austin. To the extent that these two defendants have
a co-existent
liability for costs, that liability will be joint and
several.
- [69] Even if the
rule could be interpreted so that Mr Austin might have a default liability for
all of the plaintiffs’ costs,
this case is clearly “out of the
ordinary”, warranting a departure from the rule because Mr Austin
successfully defended
the allegation against him that he was personally liable
for the remediation of the defects and this was the main allegation both
in
terms of quantum and procedural cost/time of the
proceeding.
- [70] Indeed, the
plaintiffs have accepted that “the vast majority of the evidence and
hearing time was dedicated to the defective
tanking issue”. There is no
rational basis for Mr Austin to contribute to the costs incurred by the
plaintiffs in their unsuccessful
attempt to prove he had liability to remedy the
defects.
- [71] Ultimately,
in circumstances where the plaintiffs only succeeded in establishing that Mr
Austin had a concurrent liability for
26 per cent of BIL’s liability,
common sense dictates that Mr Austin’s liability for costs must be
substantially less
than that of BIL.
- [72] The
plaintiffs’ submission, that the extent of Mr Austin’s control over
BIL and BBL2 should mean that he ought equally
be liable for the costs BIL is
liable to pay, amounts to suggesting he ought to act as
indemnifier.
- [73] Any company
has to be “controlled” by someone, in this case Mr Austin as a
director and shareholder. There was nothing
unusual about this company
structure. BIL and Mr Austin were separate parties in their own right.
- [74] To visit
costs which are properly only payable by BIL on Mr Austin would ignore the
principles of a company being a distinct
legal personality from its directors
and shareholders.
- [75] I refer to
the plaintiffs’ submission that Mr Austin would have benefitted had BIL
successfully defended the proceeding.
That can generally be said of any
shareholder in a closely held defendant company but it does not make that
director/shareholder
personally liable for the company’s costs
liability.
- [76] I find Mr
Austin ought to be liable for scale costs down to the completion of the
liability trial and reduced to one third. Mr
Austin cannot rationally have any
liability, partial or otherwise, for the subsequent quantum formal proof hearing
given that this
was to fix an amount of damages for which he was never
liable.
Scale costs
Joinder of BBL2
- [77] The
plaintiffs submitted that having regard to all matters and the overall justice
as between the parties there should be no
costs consequences in respect of the
plaintiffs’ joinder of BBL2.
- [78] The
defendants submitted BBL2 wholly succeeded in its defence and that it is
entitled to an award of scale costs and disbursements
against the plaintiffs.
They submitted this ought to be apportioned as to one third, given the
commonality of defence with BIL and
Mr Austin.
- [79] In the
liability judgment, I found that at the time BBL2 was incorporated the defects
had already occurred and that any failure
in relation to remediation attempts
did not cause the defects. Therefore the claim against BBL2 could never have
been successful.15
- [80] I see no
reason to depart from the usual rule that costs follow the event. BBL2 is
entitled to an award of scale costs and disbursements
against the
plaintiffs.
15 Hsu v Mahoney, above n 1, at [93] and
[232].
- [81] Scale costs
are $50,528.00 and disbursements are $220.00, making a total
of
$50,743.00 owing by the plaintiffs to BBL2.
- [82] This ought
to be apportioned as to one-third of those costs given the commonality of the
defence with BIL and Mr Austin. The
plaintiffs shall therefore only pay costs
and disbursements to BBL2 of $16,914.33.
Result
- [83] I
order BIL to pay costs and disbursements to the plaintiffs in the sum
of
$107,551.26.
- [84] Of the
$107,551.26, I order Mr Austin be jointly and severally liable to pay costs and
disbursements to the plaintiffs in the
sum of $23,517.24.
- [85] I order the
plaintiffs to pay costs and disbursements to BBL2 in the sum
of
$16,914.33.
Doogue J
Solicitors:
Anthony Harper, Christchurch Rhodes & Co, Christchurch
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