Nee Harland v Asset Finance Limited HC Napier CIV-2011-441-143 [2011] NZHC 633 (20 May 2011)

Last Updated: 9 July 2011

IN THE HIGH COURT OF NEW ZEALAND NAPIER REGISTRY

_{CIV-2011-441-143}

UNDER the Land Transfer Act 1952

IN THE MATTER OF an application pursuant to section 145 of

the Land Transfer Act 1952 that Caveat No.

8686539.1 not lapse

BETWEEN PETER ANDREW NEE HARLAND Applicant

AND ASSET FINANCE LIMITED Respondent

Hearing: 19 May 2011 (Heard at Napier)

Counsel: P.A. Nee Harland - Applicant in person

No appearance for the Respondent

Judgment: 20 May 2011 at 11:00 AM

_{JUDGMENT AS TO COSTS OF ASSOCIATE JUDGE D.I. GENDALL}

This judgment was delivered by Associate Judge Gendall on 20 May 2011 at 11.00 pm under r 11.5 of the High Court Rules.

Solicitors: Osborne Attewell Clews, Solicitors, PO Box 641, Whakatane

_{P.A. Nee Harland, Solicitor, PO Box 8025, Havelock North}

PA NEE HARLAND V ASSET FINANCE LIMITED HC NAP CIV-2011-441-143 20 May 2011

[1] On 25 March 2011 I gave a judgment in this proceeding dismissing first, an application to sustain a caveat the applicant had registered over a Havelock North property owned by his wife Mrs Jenny Lucy Nee Harland (Mrs Nee Harland) and secondly, an alternative oral application made by the applicant at the time for consent to register a second caveat.

[2] In that 25 March 2011 judgment I reserved costs. In doing so, I indicated that if counsel were unable to agree on the issue of costs then they could file memoranda (sequentially) and I would decide the issue based upon the material before the Court in the absence of either party indicating they wished to be heard on the matter.

[3] The parties have been unable to agree upon the issue of costs. Thus, on 18

May 2011 the applicant filed in this Court his memorandum on the costs question. This essentially sought an adjournment of the costs determination in this proceeding to 5 July 2011 being a date for call in this Court of another proceeding (CIV-2011-

441-207) in which Mrs Nee Harland, is pursuing an action against the respondent.

[4] Counsel for the respondent in turn filed a costs Memorandum also dated 18

May 2011. In this, he maintained that the present proceeding was entirely separate from the other proceeding involving Mrs Nee Harland. The present proceeding involved only the applicant’s caveat and had been finally determined by this Court except as to the question of costs.

[5] The applicant also appeared before me yesterday, 19 May 2011 in support of his earlier Memorandum.

[6] Again, the applicant requested that costs with regard to the present caveat matter be stood over and dealt with at the same time as the issue of costs is addressed in Mrs Nee Harland’s proceeding against the respondent, CIV-2011-441-207 on 5

July 2011.

[7] He contended that all costs matters relating to the present caveat issue and his wife Mrs Nee Harland’s claim against the respondent should be dealt with as a group together as there were overlapping issues.

[8] Counsel for the respondent disagreed and maintained that costs on the present caveat matter are discrete and should be dealt with now.

[9] Under all the circumstances here, I agree with the approach urged upon me by counsel for the respondent. In the present proceeding, the applicant sought to justify and preserve the caveat he had lodged against the title to property owned by his wife Mrs Nee Harland. This was, in my view, designed to effectively prevent the progress of a mortgagee sale of this property. That caveat application together with Mr Nee Harland’s oral application to register a second caveat was dismissed. I see no reason why costs on that application should not follow the event in the normal way and be awarded now. By analogy with costs to be awarded on interlocutory applications under r 14.8 High Court Rules, the best person to deal with costs on a caveat application such as the present application, is the Judge that decided it and those costs are best fixed around the time that decision is made – see McGechan on Procedure at HR14.8.02. And, in any event, the other proceeding brought by Mrs Nee Harland, CIV-2011-441-207, as I understand it, relates now to a damages claim for alleged failure by the respondent to carry out the mortgagee sale of her property in a proper manner. This is an entirely separate issue to the applicant’s present caveat proceeding.

[10] For all these reasons, costs on the present application need to be dealt with now and, in my view, must follow the event in the usual way. As the successful party, the respondent is entitled to an award of costs against the applicant on its opposition to his present application, and an award is to be made now.

[11] As to quantum, counsel for the applicant seeks an award of costs here on a

Category 2B basis totalling $5,264.00 with a 50% uplift to make an overall total of

$7,896.00.

[12] This 50% uplift is sought on the basis that the respondent maintains as early as 27 January 2011 that the applicant was asked to release his caveat on the basis that it was unsustainable but nevertheless in the face of this he brought the present proceeding endeavouring to preserve the caveat. Next, the respondent notes that the applicant persisted with the caveat proceeding despite the fact that his caveat had

already lapsed by operation of law and the Court had no jurisdiction to grant the relief sought. Finally, the respondent contends that the applicant pursued an oral application for leave to issue a second caveat despite what the respondent says is his acknowledgement that the relevant authorities clearly establish that his caveat was quite unsustainable.

[13] On this, the respondent refers to r 14.6.3 High Court Rules which permits an order for increased costs in the following circumstances:

(b) the party opposing costs has contributed unnecessarily to the time or expense of the proceeding or step in it by –

(i) failing to comply with these rules or with a direction of the court; or

(ii) taking or pursuing an unnecessary step or an argument that lacks merit; or

(iii) failing, without reasonable justification, to admit facts, evidence, documents, or accept a legal argument; or

(iv) failing, without reasonable justification, to comply with an order for discovery, a notice for further particulars, a notice for interrogatories, or other similar requirement under these rules; or

(v) failing, without reasonable justification, to accept an offer of settlement whether in the form of an offer under rule 14.10 or some other offer to settle or dispose of the proceeding; or

(d) some other reason exists which justifies the Court making an order for increased costs despite the principle that the determination of costs should be predictable and expeditious.

[14] It is clear the party claiming increased costs carries the onus of persuading the Court that their award is justified – Radfords Limited v Advertising Work New Zealand Limited trading as Ogilvie Advertising Works, High Court, Auckland, 26

April 2006, Associate Judge Faire, CIV-2006-404-325.

[15] The Court of Appeal noted in Bradbury v Westpac Banking Corporation

[2009] 3 NZLR400 at [27] that:

Increased costs may be ordered where there is failure by the paying party to act reasonably.

And, a Court should consider the extent to which a failure to act reasonably contributed to the final expense of the proceeding. It is only on that basis that any percentage uplift would be justified – Commissioner of Inland Revenue v Chesterfield Preschools Limited [2010] NZCA 400 at [165].

[16] Here, counsel for the respondent submits that, as the applicant failed to heed the warnings in the 27 January 2011 communication when he was requested to release the caveat, clearly this is a situation where r 14.6(3)(b)(ii) (taking or pursuing an unnecessary step or an argument that lacks merit) and r 14.6(3)(b)(iii) (failing without reasonable justification to admit facts, evidence, documents or accept a legal argument) are applicable.

[17] Next, when the caveat application initially came before this Court, as I have noted at para [25] of my 25 March 2011 judgment, the applicant accepted that under all the circumstances prevailing here, the respondent’s right as mortgagee to sell the property in question to realise its security would trump and take priority over the ability of Mrs Nee Harland as registered proprietor to sell the property to any third party. That said, counsel for the respondent contends that r 14.6(3)(b)(ii) (taking or pursuing an unnecessary step or an argument that lacks merit) in attempting to maintain the caveat and obtain consent to register a second caveat and r

14.6(3)(b)(iii) (failing without reasonable justification to admit facts, evidence, documents or accept a legal argument) and r 14.6(3)(d) (some other reason exists which justifies the Court making an order for increased costs) are all applicable.

[18] Finally, counsel for the respondent submits that here, the applicant clearly persisted with this caveat proceeding despite the fact that the caveat had already lapsed by operation of law and the Court had no jurisdiction to grant the relief sought by the applicant, all this in clear breach of r 14.6(3)(b)(ii) and r 14.6(3)(b)(iii).

[19] In my view, there is merit in these submissions advanced to me by the respondent.

[20] As I see it, the failure by the applicant to remove his caveat in response to the

27 January 2011 request, and his subsequent pursuit of these proceedings can only be seen as unreasonable in all the circumstances. The applicant’s caveat application was doomed to failure from the outset. In my judgment, the position here is similar to that which prevails where parties proceed with an inappropriate statutory demand in the face of a warning by the recipient company, and increased costs are routinely awarded.

[21] I accept the contentions advanced to this Court by counsel for the respondent noted at paras [16], [17] and [18] above. The failure on the part of the applicant to act reasonably in all the circumstances here has clearly contributed to the final expense of this proceeding. In my view, an award of increased costs is appropriate here.

[22] Although it is clear that any increase in scale costs above 50% is rare (Holdfast NZ Limited v Selleys Pty Limited (2005) 17PRNZ 897 (CA)) here, as I see it, the circumstances justify an increase of 50% on the prevailing scale costs.

[23] For all these reasons I find that the respondent here is entitled to an award of costs against the applicant of $7,896.00 being Category 2B costs plus a 50% uplift as outlined at para [11] above, together with disbursements as fixed by the Registrar.

‘Associate Judge D.I. Gendall’