Published tribunal order
Tenancy Tribunal case 9032941 — Tenancy dispute in Woburn, Lower Hutt
Decided 11 Aug 2023 · Published 11 Aug 2023 · Application 9032941
Landlord favoured
- Costs
- Unit Titles
Order
- Margaret Jeule Wells, Jennifer Belworthy, and Daphne Coleman, must pay Adrienne Jean Bremner $10,200.00 immediately, calculated as follows: DescriptionsApplicantRespondent Costs: Legal Costs (incl GST)$6,900.00 Filing Fee$3,300.00 Total award$10,200.00 Total interest Total award with interest$10,200.00 Total payable by Respondent to Applicant $10,200.00
Reasons
- On 24 May 2022 the applicant submitted this application naming Body Corporate 51615 and various unit owners as respondents.
- Although current cost submissions indicate she had sought legal advice on the application the Tribunal was sufficiently concerned by its contents as to recommend legal advice be sought. Subsequently the applicant sought leave to appoint legal counsel, which was granted.
- Subsequently the body corporate and one of the respondents, Mrs Coleman, also sought representation.
- At a hearing on 9 March 2023 the Tribunal was advised that the number of issues had been reduced to 6, in respect of which orders could be made by consent. In the course of the hearing, another of the issues was resolved and a further issue withdrawn, leaving only the question of costs.
- Orders, in terms agreed by counsel, were subsequently made, again reserving the question of costs for submissions which were subsequently duly received by the Tribunal. This order addresses those submissions.
- The Tribunal apologises for the time taken to deliver this decision, which is due to unexpected major surgery and an unexpectedly long period for recuperation. Entitlement to Costs
- Submissions for the applicant proceeded on the basis that costs follow the event. I.e. the applicant is entitled to costs, presumably on the basis that she was the successful party although that is not explicitly stated 1 . Submissions for the respondent accept that proposition but only to the extent that the applicant had been partially successful and even then it is argued that the costs claimed are excessive and therefore unreasonable 2 .
- The applicant principally relies on the decision of the Tribunal in Body Corporate 191561 v Roto Property Investments Ltd 3 , which in turn adopted the approach in Holden v Architectural Finishers Ltd 4 . Its submission 5 cites the factors listed as relevant in the latter.
- The respondents principally rely on Exuberant Limited v Quinovic Management Ltd 6 Their submissions cite the factors listed as relevant in that case. It is pertinent to note that in recent times the Tribunal has tended to adopt the approach in Exuberant 7 , which has also been adopted by the District Court although the actual application by the Tribunal has not met universal acceptance from the District Court 8 . 1 Applicant’s Submissions, para.2. 2 Respondent’s’ Submissions, para 2. 3 11/0028/UT & 11/0033/Ut, 17/10/2012 4 [1997] 3 NZLR 143 5 At para 13 6 [2021] NZHC 3533 7 E.g, Body Corporate 346799 v Kang [2023] NZTT 9026601; Body Corporate137295 v Kang [2022] NZTT 9031661; Coolatee Trust Craig Dickson v Body Corporate 86105 [2022] NZTT 9017302; Body Corporate 45131 v 88 Chi Ltd [2022] NZTT 9035821; Waterston v Body Corporate 307161 [2022] NZTT 9025482. 8 Body Corporate 85928 v Sherry [2022] NZDC 11535; Body Corporate 45131 v 88 Chi Ltd [2023] NZDC 9036.
- The approach to be adopted following Exuberant is usefully summarised by the District Court in 88 Chi Ltd as follows 9 - a. First, ask whether the work that was done was reasonably necessary; b. Second, ask whether the amount charged for the reasonably necessary work was reasonable; c. In both instances the NZLS Rules, and Rule 9 in particular, are a prime reference point when assessing reasonableness; d. Third, test the analysis against other reference points.
- The District Court went on to note that this methodology is different from – a. Accepting actual solicitor client costs without checking for reasonableness; b. Substituting a personal view as to what legal services should cost or are worth; c. Scaling costs: having regard to scale costs as a point of reference is available but it was not expected that information on scale costs would be especially influential.
- However the Tribunal also notes that the District Court has taken the view that scale costs, while not strictly applicable, do provide some guidance as to what a reasonable contribution may be 10 , and recently the High Court has taken the view that the difference between the actual costs claimed and what would be awarded under the scale costs regime is a relevant factor in determining whether costs 11 claimed are reasonable. 12 This decision was apparently not drawn to the attention of the District Court in 88 Chi Ltd as it is not referred to. The Claim
- The work undertaken for the applicant is set out extensively in attachments to its submissions.
- Initially Parker and Associates were instructed. Summarised, attendances were: a. Initial work involved obtaining instructions, considering the Unit Titles Act, and assisting with the Tenancy Tribunal application: $3500.00 plus GST) (discounted ); b. Subsequent attendances reviewing the application, further research and editing the application:$4290.00 plus GST; c. Further attendances amending the application, $1485.00 plus GST; d. Attendances in relation to a proposed mediation and possible representation: $778 plus GST; e. Further advice on the mediation (vacated) and advice on pre-settlement disclosure statements, “general advice “ and assistance with EGM documentation; $1748.00 plus GST; f. Assistance with AGM documentation; preparation for the mediation, and reviewing EGM outcomes:.$7976 plus GST; 9 Fn.9, at [6]-[8]. 10 French v Ryan DC Akld CIV-2012-004-711 11 Criffel Deer Ltd v ANZ Bank New Zealand Ltd [2022] NZHC 2418, at [23]-[26], citing Bradbury v Westpac Banking Corporation (2008) 18 PRNZ 859 at [9], upheld [2009] NZCA 234. 12 The High Court referred to indemnity costs but for these purposes the Tribunal considers indemnity costs and reasonable costs to be synonymous. g. Preparation for the AGM, advice on the outcome, and applying to represent the applicant; $2756 00plus GST; h. Advice on forthcoming hearings, and review of insurance documents; $1516.00 plus GST; i. Advice on options, including reviewing progress to date: $2280.00 plus GST.
- Only parts of these invoices are claimed. Specifically, costs relating to EGM and AGM advice, disclosure statements, insurance documents and what appears to be general advice have not been claimed.
- At this point present counsel were instructed. They reviewed matters to date, provided advice, prepared submissions and attended hearings by teleconference. They have invoiced $2585.00 plus GST.
- The filing fee, $3300.00 is also claimed.
- In total costs of $19,825.00 are claimed.
- The respondent submits that- a. Costs have in part been contributed to by the fact that the applicant’s initial claim was not particularly well formulated; b. Orders were sought against the body corporate and three of the other owners but not the remaining two although they were named; c. Some of the orders sought were inappropriate and this was not finally clarified until December 2022 when present counsel were instructed; d. 4 of the orders initially sought were abandoned; e. the application was amended to include an additional application in March 2023; f. the issues that were ultimately resolved by consent order were not legally or factually difficult; g. the costs sought are excessive by comparison to scale costs, using District Court scale costs as a comparator. Award
- In terms of the first step identified in Exuberant, the work done appears to have been reasonably necessary. While it is fair comment that the applicant’s initial claim was not particular well formulated, legal costs were not incurred at that point and (with encouragement from UT Services and the Tribunal), the costs which were subsequently incurred were reasonable to incur to bring some sense to the claims. The items which have been excluded are matters of which the Tribunal would have questioned the relevance to the application but the balance are attendances which could be reasonably expected in relation to the application. The applicant notes that in part these were wasted costs – specifically in relation to mediation - because the other parties failed to engage but they were nevertheless incurred and the applicant is entitled to claim them.
- This leaves however the question whether the amount charged for the reasonably necessary work was reasonable.
- Summarised, Parker’s charges for attendances in relation to the preparation and filing of the application amount to $8040.00.
- There is a standard 4 page application form for these matters and it appears that it was initially prepared by the applicant herself as it was filed on 22 October 2021 prior to engagement of counsel. It was accompanied by copious supporting documentation. It listed 6 issues and was immediately queried by UT Services as it included an application to appoint an administrator, an application which the Tribunal does not have jurisdiction to hear. The applicant advised that she would seek legal advice.
- The Tribunal agrees with the respondent that the issues were not legally or factually difficult, nor particularly complex or novel. Against that it needs to be acknowledged that unit titles are a relatively specialist area, and Parkers bought a degree of skill, specialised knowledge and experience to the matter, although this goes more to the question of charge out rate than time spent. . In that regard, it is noted that there were both a senior partner and a staff solicitor involved. While it is apparent that there was some discounting of costs for that reason, mainly as regards the staff solicitor’s costs, the necessity for the extent of the involvement of 2 persons is not apparent.
- What is apparent from the proceedings and the material presented to the Tribunal both in the form of submissions and at hearings is the degree of confusion and lack of knowledge on the part of the applicant. In the assessment of the Tribunal, it contributed markedly to the complexity and length of the proceedings. The applicant should not be compensated for that.
- Referencing District Court scale costs as a comparator, the Tribunal considers category 1B costs as more appropriate than either category 1A or category 2. This allows a cost of $1270 for preparation of a statement of claim, based on a time allowance of 1.5 hours. Bearing in mind that scale costs are assessed at 60 – 70% of solicitor/client costs, this extrapolates to $1950 (rounded). This is approximately one quarter of the costs claimed, which calls into question the justification for them.
- The respondents do not appear to object in principle to some allowance for the mediation, although their assessment is only 0.25 hours. The Tribunal considers that insufficient and would allow one hour.
- Under Rule 9.1, a relevant consideration is the fee customary charged in the market and locality for similar legal services. In that regard, the Tribunal considers it is entitled to take into account that the charge by present counsel is $2585 plus GST, which encompasses reviewing material supplied, taking instructions, liaising with the Tribunal, preparing written submissions, attendance at hearings and (presumably) negotiations for settlement. In short, present counsel achieved for his costs what previous counsel had failed to achieve for considerably more. There is a degree of duplication in this work but also an element of equivalence which the Tribunal considers it is relevant to take into account in assessing the reasonableness of the Parker charges. It is a relevant reference point 13 13 Para.10 above
- In Exuberant the High Court noted that the conduct of the parties is relevant to an assessment of costs. That was directed to the conduct of the other party but, in the view of the Tribunal, is equally relevant to the conduct of the claimant. In this case, what was readily apparent was the relative lack of knowledge of both applicant and respondents, leading to a considerable degree of “handholding” and in that respect, the Tribunal does not differentiate between the parties.
- The applicant also points to alleged lack of co-operation from the respondents, notably in respect of the mediation. In that respect the Tribunal notes that in Body Corporate 198900 v Bhana Investments Ltd 14 , a case which the applicant cites for other reasons, the High Court was not prepared to give any weight to this factor.
- The results achieved are also relevant in the context of Rule 9.1. That is assumed to mean the results achieved by counsel. In that regard, it is fair to say that Parkers achieved little but present counsel needs to be given credit for bringing the matter to a sensible conclusion.
- It would be unfair to allow costs to lie where they fall as counsel for the respondents submits. This was a relatively small body corporate of 6 units where all unit owners were actively involved in its operation. There were clearly differences of opinion, on the evidence not based in law, and the respondents have to be considered as having contributed to the situation which eventuated. It is only reasonable that they contribute to the costs incurred.
- The High Court has noted that assessment of costs is not an exact science and the approach which to be adopted should emphasise an assessment of the overall reasonableness of the costs charged bearing in mind the Rules, as opposed to a weighting to time expended. Although not referred to in detail, the Rules have been taken into account. Adopting that approach, the Tribunal is prepared to allow – a. preparation and filing of claim$3000; b. mediation$ 500; c. hearings/settlement$2500. Total$6000. GST is allowed in addition. Disbursements
- No separate award is made in respect of disbursements, which largely seem to consist of standard office service charges. Filing Fee
- The exception is the filing fee. S.102(4) of the Residential Tenancies Act applies by virtue of s.176(1) of the Unit Titles Act. The applicant can only be considered to have been partially successful and the Tribunal has a discretion as to whether to award the fee. There does not appear to be a discretion to award part of the fee. The history of this matter is such that the Tribunal takes the view that it would not have been resolved without recourse to the Tribunal and it is therefore reasonable to award the fee. 14 Body Corporate 198900 v Bhana Investments Ltd, [2015] NZHC 2787 Contributions to Costs
- The submission is made in addition that the applicant should not contribute to any costs awarded against the body corporate, citing Body Corporate 198900 v Bhana Investments Ltd 15 .
- No submissions were made as to whether costs awarded should be apportioned between the respondents although counsel for the respondents notes that no orders were obtained against Margaret Wells or Jennifer Bellworthy specifically.
- The Bhana case notes 16 that, in that case, the effect of named defendants’ obligations to contribute a proportionate share to the operating expenses of the body corporate was that they were required to make a contribution to the cost of proceedings brought against them unsuccessfully It references Tremont Holdings Ltd v Body Corporate 401803 17 where the Court of Appeal noted the inherent unfairness in such a situation, observing that it is open to the Court to exercise its costs discretion in a way which rectifies any such unfairness. However it is also noted that the situation in Bhana was different, the successful defendants in question having been named as parties to the proceedings simply as members of the Body Corporate. The High Court’s actual decision was to increase the award to the defendants in question by the amount of their proportionate contribution to costs which had previously been levied.
- The situation in this case is again somewhat different, no award having been made as yet against the body corporate. If the applicant’s submission was accepted it would effectively mean that the contributions by each of the other owners would have to increase proportionately. The salient point to emerge from the cases is that there is a discretion. There is a simpler way to deal with that issue, which is to simply make the award against the other owners who were, in any event, named respondents. From the applicant’s perspective the outcome is the same. She does, of course, remain liable for the costs which she has incurred and has not been awarded.