Cap D'Amarres Residents' Association Incorporated v Edwards [2012] NZHC 2204 (29 August 2012)

Last Updated: 17 September 2012

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV 2011-404-006434 [2012]NZHC 2204

IN THE MATTER OF a claim for equitable relief and damages

BETWEEN CAP D'AMARRES RESIDENTS' ASSOCIATION INCORPORATED First Plaintiff

AND ALAN FLITCROFT AND CHRYSTINE FLITCROFT

Second Plaintiffs

AND IAN CLARENCE JONES, SHIRLEY GWENDOLINE JONES AND SHALE CHAMBERS

Third Plaintiffs

AND SIMON JEREMY REI EDWARDS, KIT PING TANG AND CST TRUSTEES LIMITED

First Defendants

AND DAVID DONALD MORGAN, GLENNIS DOREEN MORGAN AND SPICERS TRUSTEES COMPANY (2005) LIMITED Second Defendants

AND JOHN WINTER, ANNA KARIN ELISABETH WINTER AND AUCKLAND TRUSTEES & EXECUTORS LIMITED

_{Third Defendants}

On the papers

Appearances: S A Barker and P J Niven for the second and third plaintiffs

J M von Dadelszen and P McKendrick for the first to third defendants

Judgment: 29 August 2012

COSTS JUDGMENT OF GILBERT J [On Rule 1.20 Application]

CAP D'AMARRES RESIDENTS' ASSOCIATION & ORS V EDWARDS & ORS HC AK CIV 2011-404-

006434 [29 August 2012]

This judgment was delivered by me on 29 August at 2.00 pm

Pursuant to Rule 11.5 of the High Court Rules

Registrar/Deputy Registrar

Date:..................

Counsel: M von Dadelszen, Hastings [e-mail]

Solicitors: Lee Salmon Long, Auckland: [e-mail]

Buddle Findlay, Wellington: [e-mail]

[e-mail]

Glaister Ennor, Auckland [e-mail]

[1] On 4 May 2012 the defendants applied under r 1.20 of the High Court Rules for an order disqualifying the plaintiffs’ former solicitor from acting in this proceeding. They filed an amended application on 7 June 2012 seeking the same orders but also seeking an order disqualifying the second and third plaintiffs’ current solicitors, Buddle Findlay, from acting for the second and third plaintiffs and a non-party which they sought to join to the proceeding. Neither of these applications proceeded. The plaintiffs’ former solicitor applied on 12 June 2012 under r 5.41 for an order that he had ceased to be the solicitor on the record for the first plaintiff. The second and third plaintiffs had already replaced him with Buddle Findlay.

[2] The defendants claim that they have been put to needless expense in having to bring their applications. They seek costs on an indemnity or increased basis against the plaintiffs’ former solicitor or, alternatively, against the second and third plaintiffs. This judgment deals with this application for costs.

[3] In a separate judgment issued today, I determined an application by the second and third plaintiffs to rescind an interim injunction granted by Peters J on

23 December 2011. I also dealt with the second and third plaintiffs’ application to join the Gulf Harbour Marine Village Residents’ Association Incorporated (the Village Association) as a party to this proceeding. The relevant background is set out in that judgment and I do not repeat it here. It is sufficient to note that the second and third plaintiffs and the defendants are members of the first plaintiff body corporate. The members of the body corporate are in dispute over access rights for sublicensees of marina berths and their invitees. Broadly, there are two factions, being the owners who have built on their properties and live at Cap d’Amarres, and those owners who have not yet built and who have sublicensed their marina berths to third party non-residents. These groups disagree about the meaning of the relevant body corporate rules. Each group has sought to gain control of the board of the body corporate.

[4] The defendants’ solicitors wrote to the plaintiffs’ former solicitor on

9 and 12 March 2012 asserting that he could not continue to act for the plaintiffs due

to a conflict of interest. The plaintiffs’ former solicitor says that he recognised the

potential conflict following an order I made on 7 March 2012 regarding the constitution of the board of the first plaintiff. On 23 April 2012 the board determined that there was a conflict and that the first plaintiff required separate representation. The plaintiffs’ former solicitor received a copy of this resolution. He wrote to the defendants’ solicitors on 3 May 2012 confirming that he could not act for the first plaintiff. However he indicated that he would continue to act for the second and third plaintiffs.

[5] This advice prompted the defendants to file their application under r 1.20 on

4 May 2012. The defendants say that they were not advised until 24 May 2012 that Buddle Findlay was now acting for the second and third plaintiffs and the Village Association. Despite this advice, the defendants claim that they had to continue to prepare for the hearing of their application because the plaintiffs’ former solicitor remained on the record for the first plaintiff and did not apply to be removed until

12 June 2012, only two days before the hearing. The defendants say that by that time virtually all preparation costs for the application had been incurred.

[6] The defendants contend that the plaintiffs’ former solicitor delayed

unreasonably from the time he recognised that there was a potential conflict on

7 March 2012 to the time he applied to the Court on 12 June 2012 for an order declaring that he had ceased to be the solicitor on the record for the first plaintiff. In these circumstances they argue that indemnity costs in respect of the defendants’ disqualification applications should be awarded under r 14.6(4). Alternatively they seek increased costs under r 14.6(3). These costs are sought against the plaintiffs’ former solicitor personally or, alternatively, against the second and third plaintiffs.

[7] The second and third plaintiffs oppose any costs award being made against them. They say that they acted throughout in accordance with their former solicitors’ legal advice and sought separate representation when they were advised to do so. They also argue that the defendants’ r 1.20 application has not yet been determined and not all of it has been overtaken by the plaintiffs’ former solicitor’s withdrawal. They point out that the defendants’ application to disqualify Buddle Findlay from acting for the second and third plaintiffs and the Village Association has not yet been heard or determined. They also say that the application was not necessary because

following the 7 March 2012 order the defendants controlled the board and were therefore able to terminate the first plaintiff’s solicitor’s retainer. They did not need to apply to the Court to achieve this. In fact, the board of the first plaintiff passed a resolution on 21 May 2012 appointing LeeSalmonLong to act for it.

[8] The plaintiffs’ former solicitor says that he ceased acting for the second and third plaintiffs on 3 May 2012 but acknowledges that he did not advise the defendants of this until 23 May 2012. He says that he would consent to an order being made requiring him to pay scale costs for any steps taken by the defendants in relation to the application during the period from 3 May and 23 May 2012.

[9] In my view the defendants did not need to apply for an order disqualifying the plaintiffs’ former solicitor from acting for the first plaintiff. He had already advised them that he would not do so. The first plaintiff was able to instruct alternative solicitors to act for it and did so.

[10] The plaintiffs’ former solicitor ceased acting for the second and third plaintiffs on 3 May 2012 having accepted by then that he could not continue to act. However, he failed to advise the defendants of this until 23 May 2012. In those circumstances the defendants were entitled to apply for an order disqualifying him from continuing to act for any of the plaintiffs or for the proposed non-party. However, I do not accept that his delay in providing this notification is a sufficient reason to award indemnity or even increased costs. I consider that he should pay costs on a 2B basis for the preparation and filing of the 4 May 2012 application and for any other steps taken in relation to it until 23 May 2012. I do not consider that the second or third plaintiffs should be responsible for these costs.

[11] The additional application for orders in relation to Buddle Findlay have not yet been heard or determined. Costs on that application should be left for later consideration.

[12] If the parties are unable to resolve the quantum of costs then they should file

_{memoranda and I will deal with the matter on the papers.}

M A Gilbert J