Tenant Entitled to Costs for Breach of Storage Rules - Tenancy Tribunal Decision

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[2025] NZTT Auckland | Tāmaki Makaurau 9038104

TENANCY TRIBUNAL AT Auckland | Tāmaki Makaurau

APPLICANT: [redacted] Owner of a principal unit

RESPONDENT: [redacted] Owner of a principal unit

[COMPANY] Service Contractor

UNIT ADDRESS: Unit/[ADDRESS], [POSTCODE], [ADDRESS]

ORDER

1. [NAME] to pay [COMPANY] the sum of $9,706.00.

2. [COMPANY] to pay [COMPANY] the sum of $7,138.00

3. The Tribunal declares that [COMPANY] are not liable to contribute to the costs ordered to be paid by the [NAME].

4. The application for costs in relation to [NAME] is dismissed.

Reasons:

1. The Tribunal must consider claims for costs following an order of the Tribunal dated 8 August 2024.

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2. The background in this case is complex. The premises in question are known as the [ADDRESS]. In this case, claims were advanced by a unit owner against the [NAME], and a ‘service contractor’. The claim related to the storage and management of rubbish on the complex.

3. In very brief summary, there is no effective common property at the complex. The public and service areas of the complex that would normally be common property, are in fact an individual unit, known as [NAME].

4. The [NAME] engaged [COMPANY] ([NAME]) to provide facilities management at the complex, so [NAME] would be a service contractor to the [NAME].

5. The Applicant ([COMPANY] - [NAME]), filed a claim as it related to how rubbish is stored and managed, In short the concern for the applicant is that the rubbish is stored around the Applicants unit and because of how it is stored and managed was causing a significant nuisance for the tenants in its unit.

6. The application in relation to [NAME] was dismissed. That was because the evidence supported that [NAME] were engaged by the owners of [NAME] as facilities managers, and it was in that capacity that they managed the rubbish. To put that another way, [NAME] were contracted not to the [NAME], but to another unit owner. I noted that there was no provision in the Unit Titles Act 2010 which allowed one unit owner to bring a claim under the UTA against a contractor for another unit owner.

7. However the claim in relation to the [NAME] was successful. The Tribunal issued a declaration that the:

[NAME] has failed to ensure that the [NAME] rules in relation to the storage of rubbish have been complied with, in relation to rubbish on principal unit 1000B.

8. The Tribunal accepted that the rubbish that was being stored and managed on [NAME] was not kept in a way that complied with the obligations held by the owners of [NAME], and that the [NAME] had failed to adequately respond to that breach. Therefore the claim against the [NAME] was successful.

[COMPANY] SUBMISSIONS ON COSTS

9. The Applicant, [NAME], seek costs only against the [NAME], I summarise those submissions as follows:

a. [NAME] accept now that a claim could not be brought against [NAME], given [NAME] does not provide services around rubbish for the [NAME].

b. However the claim against the [NAME] was successful.

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c. Reference was made to Holden v Architectural Finishers Ltd [1997] 3 NZLR 143, as setting out the relevant legal considerations for costs claims (I will summarise that below).

d. The proceeding was lengthy .

e. Representation was made in relation to two separate claims, this claim 9038104, and a second claim from another unit owner being 9043754, the total legal costs incurred for both were $26,836.63. However splitting those costs between the two claims, means the total costs for this application is $13,418.32.

f. Invoices were presented.

g. [NAME]’s tenant, [NAME], had claimed $10,432.81 for cleaning costs.

h. If the [NAME] had engaged in good faith, the costs could have been avoided.

i. An order is requested that [NAME] not be required to contribute to this cost order with reference to [NAME] 198900 v Bhana [2015] NZHC 2787.

j. Any costs order in favour of [NAME] should be limited, given the limited hearing engagement of counsel, and that two senior counsel appearing was excessive.

k. A conflict of interest arises for [NAME].

10. I record for completeness that a range of matter were raised relating to substantive disputes between [NAME] and the [NAME]. I will not summarise or address those here. The only matter now before the Tribunal are claims for costs, and my focus will be on those claims – although I will address two further matters below.

[NAME] ON COSTS

11. I summarise the submissions from the [NAME] as follows:

a. The approach required is that set out in [NAME] v [COMPANY]. The requires a scaling down of the order starting from the actual costs claimed.

b. It is agreed the case was complex, with overlapping legal and contractual relationships between the parties.

c. It is not clear what the costs relate to specifically.

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d. There is no basis to order costs for LDE as they are not a party to the dispute.

e. Any costs order should be in the range of 40 – 60% plus the filing fee.

[NAME] SUBMISSIONS ON COSTS

12.[NAME] seek costs against [NAME], and summarise those submissions as follows:

a. The costs incurred by [NAME] total $10,815.75 (including GST).

b. As a wholly successful party, [NAME] are entitled to a costs award.

c. The approach taken by the Tribunal is normally to apply the approach in [NAME] v [COMPANY], and around 2/3rds of the actual costs.

d. However, this would be a case were indemnity costs should be ordered, as there are jurisdictional issues, and mootness became an issue when [NAME] resigned. Those issues were raised at the outset with [NAME].

e. The Applicants could have advanced the case on a more simple basis to limit time to prepare and respond.

f. It is disputed that there was a limited response to the claims.

RELEVANT LEGAL CONSIDERATIONS

13. While this is a case under the Unit Titles Act 2010, the UTA confirms that the mechanical provisions around the operation of the Tenancy Tribunal, are those found in the Residential Tenancies Act 1986 (RTA). Section 102 of the RTA relates to costs. 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.”

14. It is unusual for a Tribunal or Court in New Zealand to award full indemnity costs against the losing party.

15.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

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determined falls within a middle range, say 40% to 70%,there is a feeling of some comfort…

16.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.

17.Similarly in the judgment of [COMPANY] v [COMPANY] (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.

ANALYSIS

18. I say at the outset, that my decision in this matter is to take the same approach to the costs claim for [NAME] and [NAME].

19.Both parties were successful. [NAME] succeeded entirely in its claim against the [NAME], and [NAME] succeeded entirely in its defence to the claim of [NAME].

20. I am not persuaded that costs for [NAME] can be avoided on the basis that the claim against them was moot. It is the case that [NAME] only withdrew its services to the [NAME] and [NAME], in the few months prior to the hearing – well after the proceeding has been commenced. Further, depending on the outcome of the application, if the Tribunal had found that there was a breach on the part of [NAME] and that it fell within the jurisdiction of the Tribunal, then presumably the Applicant (or other unit owners) could have pursued claims against it.

21. I cannot see any reason to depart from the usual approach that costs be awarded, but this is not a case were indemnity costs could reasonably be ordered.

22. I have considered the submission of [NAME] to the extent that they had succeeded on largely jurisdictional grounds. I agree that is the case, but I am also minded that the Tribunal only in effect convened one hearing where that matter was decided. The Tribunal is required by statute to operate in an expeditious way, and addressing the jurisdictional argument at the substantive hearing was not inconsistent with that. The jurisdictional issue could have been addressed at a separate hearing, but that would still have required [NAME] to prepare and address that matter.

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23.Taking the factors set out in the case law into account, I conclude:

a. The hearing was lengthy, but that was commensurate with the very unique nature of the unit titled complex, the unique governance of the complex and the issues arising in the dispute. To that extent, the amount of the legal fees is not particularly surprising.

b. While this was not a claim for money as such, I accept that the financial consequences that arise around how rubbish is managed would be significant for the parties or tenants.

c. This was a factually and legally complex case.

d. There was significant importance for all parties.

24.[NAME] submitted a claim for costs at 2/3rds of the actual cost, and I consider that to be reasonable in the circumstances, and is ordered. I cannot see any sustainable basis to have a costs end point higher or lower.

25.Accordingly, costs are ordered as follows:

a. [NAME] to pay [NAME] the sum of $8,856.00, plus the filing fee of $850.00, totalling $9,706.00

b. [NAME] to pay [NAME] the sum of $7,138.00

26. I agree it would not be reasonable for [NAME] to be required to contribute to any levy raised to pay the costs ordered by the [NAME], and that is ordered.

CLAIM FOR CLEANING COSTS FOR [NAME]

27.[NAME] have claimed costs for cleaning undertaken by its tenant [NAME]. This claim must be dismissed. Broadly, a claim of that nature is a compensation claim which could have been the subject of the original substantive application to the Tribunal. But the substantive decision has been issued, what remains is the question of costs. Costs relate to charges incurred by parties in prosecuting or defending the claim in the Tribunal, so includes for example the filing fee, lawyers charges and disbursements. But I could not include a fresh compensation claim within the costs consideration.

CLAIM AGAINST THE SECOND RESPONDENTS – OWNERS OF [NAME]

28.Ms [NAME] has raised the question of whether orders will be made against the second respondents, that is [NAME] and [NAME], the owners of [NAME], and the second respondents.

29.The answer to that is no. The order issued on 8 August 2024 was a final order. It addressed the arguments made at the hearing. If the [NAME] consider that the order

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was wrong, and failed to make orders against the second respondents, then it carried a right or rehearing and appeal. Beyond that, the 8 August 2024 order was a final order against all respondents.

FURTHER ISSUES WITH RUBBISH

30.[NAME] have raised concerns over rubbish management at the premises following the hearing and Tribunal order of 8 August 2024. I will express no view on that, because I have no jurisdiction to do so. Again once the order was issued on 8 August 2024, it was a final resolution of the matter before the Tribunal (other than costs). If further issues with rubbish arise, then that is a new and separate matter. But what I have indicated in the August 2024 order is that the [NAME] has obligations around rubbish, and presumably that would be where [NAME] would start with raising these further concerns.

R Woodhouse 11 March 2025

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Please read carefully:

SHOULD YOU REQUIRE ANY HELP OR INFORMATION REGARDING THIS [COMPANY] [PHONE].

MEHEMA HE PĀTAI TĀU E PĀ ANA KI TENEI TAKE, PĀTAI ATU KI TE [COMPANY] [PHONE].

AFAI E TE MANA’OMIA SE FESOASOANI E UIGA I LENEI MATAUPU FA’AMOLEMOLE IA FA’AFESO’OTAI’I LOA LE OFISA O LE [COMPANY] [PHONE].

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