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Water Mart told to pay legal fees

Lawyers rates ruled ‘reasonable’

A Wairarapa plumbing company has been ordered by a High Court judge to pay its landlord $27,820 in legal fees after a rent dispute.

It is the latest in a tense relationship between Water Mart Wairarapa and its landlord Villa Street Holdings, High Court documents show.

Water Mart Wairarapa failed to pay rent to its landlord Villa Street Holdings Ltd on March 1 this year.

On March 5, Villa Street served Water Mart a notice requiring the overdue rent to be paid.

Judge Kenneth Johnston said the notice “[appeared] to have been ignored”, and on March 24, Villa Street sought orders to terminate the lease, granting it possession, ordering the payment of outstanding rent, interest, compensation, and costs.

On April 22, Water Mart filed and served a notice of opposition and the lease dispute was “ultimately settled”.

However, the companies had been unable to resolve the issue of outstanding legal costs from it and asked the High Court to do so.

Judge Johnston said the standout feature of the case was that the lease dispute took place against the backdrop of a commercial dispute.

A High Court document stated Villa Street’s managing director Rodney Miller, and Water Mart’s managing director Richard McNaughton, are both plumbers.

Miller formerly ran a plumbing business, through another company, from the property owned by Villa Street.

That business was acquired by McNaughton through Water Mart and has since been run by him from the property.

“Since the sale and purchase of the business, there has been considerable tension between Mr Miller and Mr McNaughton, with the latter making serious allegations, including an allegation of fraud, in connection with the sale and purchase of the business,” Judge Johnston said.

Water Mart’s counsel argued that the legal costs incurred by the landlord in the rent dispute were “not reasonable” and that a significant proportion of the costs were incurred in relation to their commercial dispute, rather than the rent dispute.

Villa Street’s counsel argued that McNaughton “persisted in raising and re-raising issues relating to the commercial dispute in the context of the proceeding and that this added materially to the costs”.

Judge Johnston ruled that the costs appeared “higher than would normally be expected” but that it could be explained by McNaughton’s actions.

“The costs are nevertheless reasonable,” Judge Johnston said.

Against the background of the commercial dispute, “it is not at all difficult to envisage how Villa Street’s solicitors and counsel were obliged to devote more time to each aspect of the lease dispute than might ordinarily be expected”, he said.

“The hourly rates charged by Villa Street’s solicitors [$260] and counsel [$350] appear to me to be well within the range that would be regarded as reasonable.”

He ruled that Villa Street was entitled to recover the full amount claimed which was $27,820 [$27,280 in respect of costs and $540 in respect of disbursements].

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