Tenant ordered to pay $9,436.60 in costs - Tenancy Tribunal Judgment

OUTCOME: Allowed in Part

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[2025] NZTT Auckland | Tāmaki Makaurau 9043864

TENANCY TRIBUNAL AT Auckland | Tāmaki Makaurau

APPLICANT: [redacted]

Owner of a principal unit

RESPONDENT 1: [NAME_1]

[NAME_1]

RESPONDENT 2: [COMPANY_2]

Service contractor

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

ORDER

1. [NAME_1] to pay [COMPANY_1] the sum of $9,436.60

2. The claim for legal costs from [COMPANY_2] is declined.

3. The Tribunal declares that [COMPANY_1] are not liable to contribute to the costs ordered to be paid by the [NAME_1].

4. The claim for costs in relation to application 9043754 is dismissed.

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Reasons:

1. The Tribunal has before it, a claim for costs following an order of the Tribunal dated 24 December 2024.

2. The background in this case is complex, as are the claims considered. The premises in question are known as the [ADDRESS]. In this case, claims were advanced by a unit owner against the [NAME_1], and a service contractor. There were 16 claims presented, and they were wide-ranging, I will not set them out here.

3. The [NAME_1] engaged [COMPANY_2] ([NAME_2]) to provide facilities management at the complex, so would be a service contractor to the [NAME_1]. However BFT also had a contract as the facilities manager. That was via another unit owner. One of the unusual features of this complex is that there is no common property as such, but public and service facilities are provided via a separate and privately owned unit, known as PU1000B. There is a covenant between the owners of the other units, and the owners of PU1000B in relation to access, and how unit PU1000B operate and is funded.

4. The Applicant is [COMPANY_1] – [NAME_1].

5. There are two respondents, the [NAME_1] and [NAME_2]. The claim in relation to [NAME_2] was withdrawn at the hearing. Following discussion [NAME_1] accepted that the claim could not succeed, as any claim against a service contractor needed to be made by the respective [NAME_1], because there was no contractual relationship between the service contractor and any individual unit owner.

6. However the claims in relation to the [NAME_1] was in large part successful.

7. Applications for costs have been made, and are considered in this decision.

[COMPANY_1] SUBMISSIONS ON COSTS AGAINST THE [NAME_1]

8. The Applicant, [NAME_1], seek costs only against the [NAME_1], I summarise those submissions as follows:

a. The claim against the [NAME_1] was mostly successful.

b. 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).

c. The proceeding was lengthy .

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d. 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.

e. Costs are sought of $14,489.75 in relation to application 9043754.

f. The filing fee of $850.00 is claimed.

g. An order should further be sought that [NAME_1] not be required to contribute to this cost order with reference to [NAME_1] 198900 v Bhana [2015] NZHC 2787.

h. Any costs order in favour of [NAME_2] should be declined. SNL submit:

We also request that if a costs award would be made against the Applicant in relation to [NAME_2]’s legal costs, it is seeks that the [NAME_1] be ordered to reimburse those costs as the [NAME_1] has failed to hold [NAME_2] to account in terms of its obligations, and [NAME_2] has resigned because of the issues raised.

BODY CORPORATES SUBMISSION ON COSTS

9. I summarise submissions for the [NAME_1] as follows:

a. [NAME_1] was only partly successful in its claims.

b. Reference was also made to the Holden factors when considering costs claims.

c. Costs should lie where they fall.

d. The costs claimed are poorly specified.

e. Many of the claims were outside of the Tribunal’s jurisdiction.

f. The issues are inherent in the ownership structure of this complex.

g. In relation to the application to order that costs be paid by the [NAME_1], the [NAME_1] is not responsible for the applicant’s decision to file proceedings against [NAME_2], or withdraw those proceedings.

[NAME_2] SUBMISSIONS ON COSTS

10.[NAME_2] seek costs against [NAME_1], and I summarise those submissions as follows:

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a. [NAME_2] is a service contractor to the [NAME_1] and also as facilities manager.

b. The claim should never have been filed against [NAME_2], as they did not have an actionable legal duty to [NAME_1].

c. The claim against [NAME_2] was only withdrawn at the hearing, after considerable expense had been incurred by [NAME_2], given [NAME_2] needed to prepare to respond to all claims.

d. The material presented in support of the claim was excessive, and the claims not sufficiently clear.

e. In the circumstances of this case, costs over the usual range (40 – 70%) should be ordered.

f. Costs of $17,905.50 are claimed (note total costs are split with application 9040364.

[COMPANY_1] SUBMISSIONS ON COSTS CLAIMED BY [NAME_2]

11. I will address separately the submissions on costs claimed by [NAME_2], as those submissions are extensive:

a. While the claim against [NAME_2] was withdrawn at the hearing, complexities arise.

b. [NAME_2] was operating in a role for the [NAME_1] without any contract, despite claiming significant fees, outside the industry norm.

c. [NAME_2] did not earlier object to being deemed a party to the proceeding.

d. [NAME_2] withdrew its service to the [NAME_1] and as facilities manage, given the claims raised against it.

e. The Tribunal found significant failings in the management practices of [NAME_2].

f. A significant and egregious conflict of interest arose with [NAME_2] given it varied roles.

g. The claim was not frivolous or vexatious, presenting serious issues to be determined.

h. [NAME_2] appointed two legal counsel (one for its role with the facilities management, and one for its role with the [NAME_1]), when one would have sufficed.

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i. The fact of [NAME_2] withdrawing its services shortly before the hearing, made matters somewhat moot.

j. If any order of costs was made, it should be at the lower end of the scale taking account of the actions of [NAME_2].

k. Claims for time have made when those would not be reasonably justified.

l. Any costs order would be that the [NAME_1] pay [NAME_2]’s costs.

RELEVANT LEGAL CONSIDERATIONS

12. 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.”

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

14.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…

15.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.

16.Similarly in the judgment of [COMPANY_3] v [COMPANY_5] (No 2) [1988] 1 PRNZ 162, Tompkins J considered a costs issue where the party was represented, and held:

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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

Costs against the [NAME_1] were largely successful in the claim against the [NAME_1].

18.Taking into consideration the Holden factors, I consider that costs at 2/3rds of the actual cost of [NAME_1] should be ordered. I have taken into account the following factors:

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. There were significant financial consequences for the parties with some of these claims.

c. This was a particularly factually and legally complex case.

d. There was significant importance for all parties.

19.The actual costs claimed by [NAME_1] is $13,418.32. That cost is not surprising given the complexity of the matters at hearing. Ordering 2/3rds of that cost mean the legal costs ordered are $8,936.60.

20.[NAME_1] is also entitled to have the filing fee refunded, which was $500.00. That is also ordered, meaning the [NAME_1] must pay the sum of $9,436.60.

21.However, [NAME_1] have claimed costs in relation to an application 9043754. That claim is declined. The Tribunal has not issued any decision in relation to that application, in fact no valid application has been filed under the number. Without having adjudicated that matter, there is no basis to order costs for that.

Costs claim from [NAME_2]

22. It is the case [NAME_2] elected to instruct different legal counsel for this claim, and 9038104. [NAME_2] have decided to manage services delivered to the [NAME_1] separately to services delivered to the owners of PU1000B under the facilities management contract. While it was able to do so, the respondent company was the same, and there is considerable overlap.

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23. I agree with [NAME_6] that this has resulted in a doubling of counsel and costs, and I cannot see any justification for the [NAME_1] in effect paying twice.

24. I have made a full order of costs (2/3rds of the costs claimed) under 9038104, and it would not be reasonable to make that order for a second time. I decline further costs to [NAME_2].

25. I record however that had I not taken that approach, it is unlikely I would have ordered costs for [NAME_2], because for the reasons I have set out in the December 2024 order, the [NAME_1] fell well short in its management obligations under the UTA. I cannot know the advice [NAME_2] provided the [NAME_1] around management of the complex, therefore I do not know where effective responsibility would fall. But if any dispute arises between the [NAME_1] and [NAME_2] as to cost incurred around these proceedings, that could be the subject of a separate claim between the [NAME_1] and its service contractor.

R Woodhouse 11 March 2025

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Please read carefully:

SHOULD YOU REQUIRE ANY HELP OR INFORMATION REGARDING THIS [COMPANY_7] [PHONE].

MEHEMA HE PĀTAI TĀU E PĀ ANA KI TENEI TAKE, PĀTAI ATU KI TE [COMPANY_7] [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_7] [PHONE].

Rehearings:

You may make an application to the Tenancy Tribunal for a rehearing. Such an application must be made within five working days of the order and must be lodged at the Court where the dispute was heard.

The only ground for a rehearing of an application is that a substantial wrong or miscarriage of justice has or may have occurred or is likely to occur. Being unhappy or dissatisfied with the decision is not a ground for a rehearing. (See ‘Right of Appeal’ below).

Right of Appeal:

If you are dissatisfied with the decision of the Tenancy Tribunal, you may appeal to the District Court. You only have 10 working days after the date of the decision to lodge a notice of appeal.

However, you may not appeal to the District Court:

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1. Against an interim order made by the Tribunal.

2. Against an order, or the failure to make an order, for the payment of money where the amount that would be in dispute on appeal is less than $1,000.

3. Against a work order, or the failure to make a work order, where the value of the work that would be in dispute on appeal is less than $1,000.

There is a $200.00 filing fee payable at the time of filing the appeal.

Enforcement:

Where the Tribunal made an order that needs to be enforced then the party seeking enforcement should contact the Collections Office of the District Court on [PHONE] or go to www.justice.govt.nz/fines/civil-debt for forms and information.

Notice to a party ordered to pay money or vacate premises, etc:

Failure to comply with any order may result in substantial additional costs for enforcement. It may also involve being ordered to appear in the District Court for an examination of your means or seizure of your property.

http://www.justice.govt.nz/fines/civil-debt

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R Woodhouse

24 December 2024

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Please read carefully:

Rehearings:

Right of Appeal:

However, you may not appeal to the District Court:

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4. Against an interim order made by the Tribunal.

5. Against an order, or the failure to make an order, for the payment of money where the amount that would be in dispute on appeal is less than $1,000.

6. Against a work order, or the failure to make a work order, where the value of the work that would be in dispute on appeal is less than $1,000.

Enforcement:

http://www.justice.govt.nz/fines/civil-debt