The Blue Sky claims are remitted to the High Court to determine the quantum of damages.
We remit the determination of costs in the High Court to that Court.

CA66/2009

We remit costs in the High Court to that Court for redetermination in the light of this judgment.

R F Coughlan & Associates is entitled to costs in this Court for a standard appeal on a band B basis and usual disbursements against all of the second appellants except Mr Devlin.
Mr Devlin is entitled to costs in this Court for a standard appeal on a band B basis and usual disbursements against R F Coughlan & Associates.

____________________________________________________________________

REASONS OF THE COURT

(Given by Baragwanath J)

[1] In our judgment in Sunset Terraces[1] we reserved leave to all of the parties to apply to the Court for correction of any material errors and omissions in the judgment.[2] We determined that the respondents in CA673/2008 should have costs for a complex appeal on a Band B basis and usual disbursements. We certified for three counsel. We reserved costs in CA66/2009.[3]

The designer appeal issues

[2] Counsel for the designer, R F Coughlan and Associates, has submitted that its cross-appeal in CA66/2009 had not been dealt with in the judgment. In the High Court, the apartment owners had alleged that the designer was negligent in a number of respects. The designer denied liability. Heath J found that the designer owed a duty of care but that its actions did not cause the owners’ loss. On appeal to this Court the owners argued that the designer was liable. This Court rejected their arguments in large part but allowed the appeal of one of the owners, Mr Devlin. The designer had negligently issued certificates of practical completion in respect of Mr Devlin’s unit, on which he had relied. The designer cross-appealed, arguing it did not owe a duty of care at all. Counsel for the designer, Mr McLean, notes the absence of a reference to the cross-appeal in our judgment, and submits that this issue has not been decided.
[3] It was unnecessary, given our finding that the designer was not negligent in preparing the plans for the development, to determine the cross-appeal on that point. Our finding on Mr Devlin’s claim which related to the certificates of practical completion, that the designer was negligent, necessarily imports the conclusion that it owed a duty of care to Mr Devlin in producing the certificates of practical completion. We do not consider the contrary is arguable.

The Blue Sky claims

[4] With regard to the Blue Sky claims, the parties are agreed that they should be sent back to the High Court and dealt with before Heath J with a view to him fixing the quantum of the claim. We order accordingly.

Costs

High Court

CA673/2008

[5] In a memorandum dated 14 April 2010, counsel for the owners sought that this Court redetermine costs in the High Court in respect of all findings other than the quantum of damages in the Blue Sky appeal, which has been sent back for determination in the High Court, at which stage costs too can be determined. Counsel for the owners made submissions as to costs in the High Court. Counsel for the appellant Council submitted that this Court should not determine costs in the High Court.
[6] We remit the matter for determination by the High Court.

CA66/2009

[7] In this Court the appeal by the first and second respondents against the designer was unsuccessful except in the case of Mr Devlin.
[8] Counsel for the designer appealed against the reduced award of costs in its favour in the High Court. Counsel for the first and second respondents submitted that the High Court award should be varied:

Mr Devlin should be award a 1/17 share of the owners’ costs on a 2B basis and usual disbursements, in order to reflect his success in this Court;

costs should lie where they fall in respect of the other owners or be further reduced.

[9] In the High Court Heath J reduced the costs payable to the designer by the first and second respondents in respect of their (there) wholly unsuccessful claim by 60 per cent.[4] His reasons were that the specifications submitted by the designer to the Council were poorly prepared. While no material losses were held to have been caused to the first and second respondents by any of the deficiencies in the plans and specifications “that was more through good fortune than good management”. The Judge considered r 48D which permits reduction of costs if:

Some ... reason exists which justifies the refusing or reducing the designers costs despite the principle that the determination of costs should be predictable and expeditious.

He observed that there was little guidance in the authorities on that provision but took the view that there were grounds to reduce the designer’s costs. The Judge cited Scales Trading Ltd v Far Eastern Shipping Co Public Ltd.[5] One of the issues in that case was whether there was good reason for the Judge to refuse an order for costs on the ground that the successful party had acted fraudulently. This Court held that the Judge was entitled to take that into account.

[10] It is trite that fraud unravels all. We do not regard the judgment in a fraud case as of material assistance.
[11] The principles applying to determination of costs were stated in what was then r 47 of the High Court Rules, which commenced:

The following general principles apply to the determination of costs:

(a) the party who fails with respect to a proceeding ... should pay costs to the party who succeeds ...

[12] The principle that costs follow the event is the norm and the exceptions must not be permitted to detract significantly from that and the allied principle that “the determination of costs should be predictable and expeditious”.[6] Causation was an essential element of the cause of action. Having failed upon it, it was immaterial to the result that the plans were deficient.
[13] We are satisfied that the departure from general principle (a) was wrong in principle and that the 60 per cent reduction was unjustified.
[14] The designer is entitled in the High Court to 16/17ths of costs assessed on the 2B basis adopted by the Judge.
[15] That costs order is made against the Body Corporate and all of the owners except Mr Devlin. Mr Devlin is entitled to his costs against the designer in the High Court. We remit the issue of their quantum to Heath J for determination in the light of this judgment.

This Court

CA673/2008

[16] In the memorandum dated 4 May 2010, counsel for the appellant advised that costs in this Court, as between the appellant and the first and second respondents, had been settled.

CA66/2009

[17] The designer submits that the ordinary rule that costs follow the event should be displaced in the case of Mr Devlin. Mr McLean records that the sole issue on which Mr Devlin’s appeal succeeded was the negligent issue of certificates of practical completion, which was raised for the first time at the hearing. All other grounds of appeal that the owners pursued, which comprised the entirety of their written submissions, failed. Mr McLean reasons that Mr Devlin is not entitled for costs on any of the steps leading up to the hearing.
[18] Counsel for the owners submits that Mr Devlin should have costs.
[19] We are not persuaded that the normal principles ([12] above) should be displaced in the present case. Mr Devlin’s counsel argued a ground of appeal at the hearing which we accepted. He is entitled to costs according to scale.
[20] Counsel for the designer seeks costs against the remaining owners, jointly and severally, whose appeal against the designer failed in all other respects.
[21] Counsel for the owners submits that costs should lie where they fall, or, in the alternative, be reduced.
[22] The designer, having successfully resisted the appeals of the owners, is entitled to costs on a band B basis against all of them except Mr Devlin, and the first appellant, which took no part in the appeal. Mr Devlin is entitled to costs on a similar basis against the designer.

Solicitors:
CA673/2008
Heaney & Co, Auckland for Appellant
Grimshaw & Co, Auckland for 2nd, 3rd, 4th and 9th named Second Respondents
CA66/2009
Grimshaw & Co, Auckland for 2nd, 3rd, 4th and 9th named Second Appellants
Heaney & Co, Auckland for First Respondent
Kidd Tattersfield Maclean, Auckland for Third Respondents

[1] Sunset Terraces [2010] NZCA 64.
[2] At [132].
[3] At [131].

[4] Body Corporate 188529 v North Shore City Council HC Auckland CIV 2008-404-3230, 2 October 2008.
[5] Scales Trading Ltd v Far Eastern Shipping Co Public Ltd CA61/99, 28 September 1999.
[6] High Court Rules 1985, r 47(g).

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