Published tribunal order
Tenancy Tribunal case 9039404 — Unit Titles in Napier South, Napier
Decided 25 Sept 2023 · Published 25 Sept 2023 · Application 9039404
Mixed / unclear
- Unit Titles
Order
- Kerry June Barrett and Jonathan Harley Barrett must pay Body Corporate 356521 the sum of $5,385.95 immediately in relation to costs.
Reasons
- The Tribunal issued a decision on 15 August 2023, in which the Applicants were unsuccessful in their claims against the Body Corporate. The Body Corporate was legally represented in the proceeding, and has applied for costs. This decision relates to that costs application.
BACKGROUND
- The Applicants are principal unit owners in a unit titled complex. The Applicants are dissatisfied with how the body corporate has been managing the complex, and in particular the involvement and decision making of the chair. That resulted in the Applicants seeking a range of orders from the Tribunal.
- The application was initially made against the Chair of the Body Corporate personally. Following an earlier hearing, the Applicants were advised an application against the Chair could not be made, and the application was amended to be a claim against the Body Corporate (the appropriate respondent given the claims).
- Ultimately the matter came to a hearing on 15 August 2023, from which an order was issued that same day. I summarise the claims and outcomes as follows: a. That the Chairman be declared as unsuitable for the role, and not be eligible for reappointment. This claim was unsuccessful because the Tribunal does not have any ability to make the orders the Applicants seek, which would be contrary to the Unit Titles Act 2010. b. That the Body Corporate undergo a financial audit. This claim was unsuccessful, because the decision on whether a body corporate has the accounts audited is a decision made by the body corporate, and in this case the decision was against auditing. c. The Body Corporate as a whole be advised of the Applicants concerns. This application was largely unsuccessful, but I did set out the relevant law that would apply should the Applicants wish obtain the contact details to communicate with the other unit owners. I indicated that I was confident that this would be settled directly between the parties, but that if there were any problems the Applicants could request further orders from the Tribunal. d. The role of Chair and Building Manager to be split (not held by the same person). This application was unsuccessful, as noted in the order this is a matter for the Body Corporate to decide, not for the Tribunal to impose. e. Reinstatement of 10 committee members. This claim was unsuccessful, as again this would be a matter for the Body Corporate to determine. f. Equal representation on the committee of owners who reside in the complex to those who do not. This claim was unsuccessful, because there is no ability for the Tribunal to make such orders. g. Carparking access and window repair. The carparking issue was resolved by the time of the hearing. I gave a preliminary view on the window claim, that the Body Corporate would be responsible for the repair cost, but noted that if this could not be resolved between the parties directly, that the Applicants could seek a further order on this matter.
- The Body Corporate has claimed costs, and timetabling for the filing of written submissions was provided. BODY CORPORATE’S CASE
- The Body Corporate seeks a cost order of 2/3 rd of it’s actual costs. Reference was made to the District Court decision of Body Corporate 346799 v Ikeda [2020] NZDC 3669. The amount sought therefore was $5,385.95. A copy of the invoices for the respective legal work has been provided, as well as the Ikeda decision. UNIT OWNER’S CASE
- The Unit Owner’s filed submissions opposing the costs claim, summarised as follows: a. The submissions for costs were filed late by the Body Corporate’s representative. b. The Body Corporate could have avoided the proceeding by engaging with the Unit Owners. c. Legal representation was not necessary, and there could have been a local lawyer instructed. d. Some of the other unit owners support the position of the Applicant’s and that should be taken into account. e. The Applicants are working for the betterment of the complex as a whole. f. Although the Applicants had been warned of potential costs being ordered against them, the decision of the Body Corporate to proceed with a lawyer at the hearing, knowing they would win, was a vindictive one.
- The Applicants also sought to have the filing fee refunded on the basis of a stated error in relation to an earlier hearing, and on the basis that the claim should not have been accepted if there was no prospect of success.
ANALYSIS
- This is a dispute that falls within the Unit Titles Act 2010 (UTA). However the UTA confirms at section 176 that the provisions around dispute resolution found in Part 3 of the Residential Tenancies Act 1986 (RTA) apply. In short, Part 3 of the RTA sets out the provisions for the operation of the Tenancy Tribunal.
- Section 102 of the Residential Tenancies Act 1986 (RTA) relates to costs, and this is found in Part 3 of that legislation. Section 102(2) confirms that the Tribunal “may make an order” where “any of the parties was presented by counsel”. Subsection 3 confirms that an order may be made to a party for “the reasonable costs of that other party in connection with the proceedings.”
- It is unusual for a Tribunal or Court in New Zealand to award full indemnity costs against the losing party, that is the full amount of what they had paid for their representative.
- What is considered to be ‘reasonable costs’ will depend on a range of factors. In Holden v Architectural Finishes Ltd [1997] 3 NZLR 143 Justice McGechan, in his reserved costs decision, held that: ...the sum in issue is a ‘reasonable’ ‘contribution’. It is not some mere gesture. It is not some virtual payment in full. It is merely a contribution, and a reasonable one. At the outer limits, proportions of reasonable actual fees can afford some guidance. A 10% or even 20% contribution – very little indeed – may seldom qualify. A 90% or 80% contribution, virtually the total, may be regarded as likewise...if the ‘reasonable contribution’ earlier determined falls within a middle range, say 40% to 70%,there is a feeling of some comfort...
- The High Court confirmed that when a party is represented by counsel, that the following factors are relevant to be considered when assessing costs: a. The length of the hearing. b. The sum of money involved. c. The legal and factual complexity. d. Whether the argument lacking substance was advanced, and e. The degree of success achieved by the parties.
- Similarly in the judgment of David Blair Ltd v Hawkins Arms and Engineering Ltd (No 2) [1988] 1 PRNZ 162, Tompkins J considered a costs issue where the party was represented, and held: In addition to the length of the hearing, matters such as the amount of money involved, the importance either to the parties or generally of the issues, monetary or non monetary, the legal and factual complexities, the amount of time required for effective preparation, the number and complexity of interlocutory applications and the likely or actual solicitor and client costs incurred, may, in appropriate cases, be relevant to the exercise of the discretion.
- In his submissions, Mr Baker referred to the District Court decision of Body Corporate 346799 v Ikeda [2020] NZDC 3669. That was a case where the District Court needed to consider an appeal against a decision of the Tenancy Tribunal which made a costs order in similar circumstances, that is a dispute arising in a unit titled premises.
- The District Court confirmed that the Tribunal can order reasonable costs when a successful party is legally represented, as is the case here. The Court accepted that an order of 66% of the actual costs would be reasonable. That is the same claim made in the costs request before me.
- I have taken into account the submissions from the Barrett’s which I have summarised above. However I do not consider they provide sufficient reason why costs should not be ordered, or ordered at a significantly reduced level.
- I accept that the submissions were filed late, but I cannot see any prejudice arising from that.
- My impression from the submissions on costs, is that the Applicants considered that if the Body Corporate had simply done what the Barrett’s wanted, then the proceeding could have been avoided. For example the Barrett’s state: The Body Corporate could have accepted our offer to withdraw the complaint, if Mr Ahrens had agreed to not seek nomination for Chairman position at the next AGM After 13+ years in the role and numerous complaints against him, this was not an unreasonable request. Mr Ahrens preferred to spend over $8k of Body Corporate funds, rather than let somebody else take a turn at the role
- The law does not work like that. The Body Corporate did not need to simply accept what the applicants wanted to avoid litigation. The Body Corporate was correct in the position it took, and in fact that position taken by the Applicants was quite contrary to the approach the UTA takes, which is governance based on voting rights, not simply agreeing to something a minority wishes, on the risk of litigation.
- At the end of the day the Applicants had filed an application which was complex. I am not at all surprised given the complexity of the matter that the Body Corporate elected to instruct specialised legal representation. I note that the Applicants also confirmed that they had wished to have their own legal representative: Ideally, we would have liked to have had our own lawyer involved but the excessive fee paid to the Tribunal meant we could not afford both.
- That does give an indication around the complexity of the matter, and supporting the Respondents wish to be legally represented.
- Taking into account the factors set out in Holden v Architectural Finishes Ltd [1997] 3 NZLR 143, I consider the costs claim of 66% of actual costs is reasonable, in that: a. The hearing was scheduled for a full day, and there were also pre- hearing engagements. b. This was a case not so much about money, but rights and governance, and those matters were of significance to all parties. c. The issues were legally and factually complex. d. I consider that most of the claims and arguments lacked legal substance. e. The degree of success for the applicants was very limited.
- I order costs at 66% of the actual costs incurred.
- Finally the Applicants seek to have an order that the filing fee be reimbursed to them. I cannot see I have any legal authority to make that order, but even if I were wrong on that, there would be no basis to set the filing fee aside.
- Based on the filing fee, the Applicants have had two full-day hearings in the Tribunal. One for the claim against the Chair, the other against the Body Corporate. That does not take into account time in administering those claims, and preliminary matters.
- It was also claimed that Tenancy Services should have advised the claims had no merit, and should not be filed. That is not the role of Tenancy Services. When acting in a registry capacity, it would be wrong of Tenancy Services to state claims were unmeritorious. The people dealing with the claims are not normally legally qualified, and assessment around merits is only made after hearing submissions from both parties, and evaluating the evidence.