Henry v Beet HC Auckland CIV 2010-404-2167 [2010] NZHC 1214 (10 June 2010)

Last Updated: 27 July 2010

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

_{CIV 2010-404-002167}

UNDER the Land Transfer Act 1952

IN THE MATTER OF an application for order that caveat not lapse under Section 145 of the Land Transfer Act 1952

BETWEEN BIANCA JADE MANA HENRY, ED JOHNSTON & CO TRUSTEES LIMITED AND DEBRA BONNO

Applicants

AND CLAUDE ROBERT BEET Respondent

Hearing: on papers

Counsel: M G Locke for applicants

R T Fenton for respondent

Judgment: 10 June 2010 at 4:00pm

_{COSTS JUDGMENT OF ASSOCIATE JUDGE ABBOTT}

This judgment was delivered by me on 10 June 2010 at 4:00pm, pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Solicitors:

Ed Johnston & Co, PO box 21 850, Henderson for applicants

_{Birdsey & Associates, PO Box 34 0387, North Shore City for respondent}

HENRY & ORS V CLAUDE ROBERT BEET HC AK CIV 2010-404-002167 10 June 2010

[1] This application for an order that a caveat not lapse was determined on 4 May

2010 when an order was made, without opposition by the applicant, that the caveat in question lapse.

[2] The caveat had been lodged to protect an interest under an unregistered mortgage. The respondent had requested removal of the caveat to allow a sale of the caveated property. The applicants did not pursue their application after the respondent demonstrated that the sale proceeds would be insufficient to clear the sum owed under a registered first mortgage.

[3] The parties could not agree as to whether costs should be payable, or by whom. Directions for filing of memoranda as to costs were given at the time that the application was determined. The respondent filed his memorandum in accordance with that timetable. The applicants have not filed a memorandum (notwithstanding extension of the timetable for doing so).

[4] The respondent has applied for costs of $4,160 (calculated on a scale 2B basis). Although not expressly articulated in these terms, I infer that he claims costs as the successful party. He also contends that he was put to unnecessary costs in having to oppose the application, although he is not advancing a claim for increased costs.

[5] As I understood counsel for the applicants at the hearing, he contended that the applicants had a prima facie basis for bringing the application, they did not pursue it when it became apparent that there could be no benefit to them from sustaining the caveat, and it was appropriate to let costs lie whether they fall.

[6] Although the court has a discretion in relation to costs (r 14.1 of the High Court Rules), that discretion is exercised in accordance with general principles summarised in r 14.2 and amplified in succeeding rules. As the respondent is seeking costs only on a standard category 2 time band B basis, the two principles of relevance in the present application are:

14.2 Principles applying to determination of costs

The following general principles apply to the determination of costs:

(a) the party who fails with respect to a proceeding or an interlocutory application should pay costs to the party who succeeds:

...

(g) so far as possible the determination of costs should be predictable and expeditious.

[7] I cannot see that there is any reason to depart from the general principle that costs should follow the event. The best argument that could be advanced to the contrary would be that the applicants acted reasonably in bringing their application, and did not pursue it once they became aware that there would be no benefit to them in retaining the caveat. I will address those two points.

[8] On first impression, there appeared to be a reasonable basis for bringing the application. There is no question that the applicants had a caveatable interest by virtue of their unregistered mortgage. The statutory time limits for filing an application to sustain a caveat can mean that a caveator has to file an application before obtaining all the relevant facts. In such cases, it may not be unreasonable to file an application even if it proves to be unsustainable. However, I do not regard this as one of those cases for the following reasons:

a) The first impression cannot stand in context. The applicants claimed that they would suffer irreversible prejudice (in the form of loss of security for their advance) if the caveat was removed. There is no evidence of any inquiry to establish the reason for the respondent having applied to Land Information New Zealand for lapse of the caveat or as to whether there is likely to be any practical benefit to them in retaining the caveat.

b) The applicants were aware that the respondent had been in financial difficulty for some time. They have given evidence that the respondent had been in default under their mortgage since December

2007, and was known to have been unable to repay a loan in respect of another property (where there was a shortfall following mortgagee sale of the property).

c) Even allowing for the limited time available to bring an application, one would think that an inquiry would have been made as to the circumstances of sale and whether there was any likelihood of any sale proceeds becoming available particularly as there was long- standing default under the applicant’s mortgage. An inquiry would have quickly established that a prior mortgagee was seeking sale.

d) If inquiries had been made but had been ignored, that might have given the applicant some basis for bringing the application, but this was not the case.

e) An inquiry as to whether there would be any surplus on sale was made, and responded to, after the first call of the application.

[9] The applicants cannot avoid an order on the basis that they did not pursue their application. They delayed in advising their intention to withdraw the application, obliging the respondent to prepare and file notice of opposition, and to instruct counsel appear at the hearing on 4 May 2010.

[10] In these circumstances, I find that the respondent is entitled to costs. Counsel for the respondent has provided a schedule of the costs being claimed. They are all justified in terms of schedule 3 to the High Court Rules. Indeed, I note that the applicants have not challenged them.

[11] I make an order that the applicants pay the respondent costs of $4,160, as set out in the respondent’s memorandum dated 18 May 2010. I record that this sum includes the amount for the order for wasted costs made by Associate Judge Sargisson on 21 April 2010 (in respect of the respondent’s appearance on 20 April

_2010).

Associate Judge Abbott