King v Queenstown Pharmacy 2008 Limited [2014] NZHC 545 (21 March 2014)

Last Updated: 27 March 2014

IN THE HIGH COURT OF NEW ZEALAND BLENHEIM REGISTRY

CIV-2014-406-000001 [2014] NZHC 545

BETWEEN THOMAS FREDERICK KING and

JUDITH RUTH KING Applicants

AND QUEENSTOWN PHARMACY 2008

LIMITED Respondent

Submissions filed: 13 March 2014 and 17 March 2014

Appearances: Applicants in person

J C D Guest for Respondent

Judgment: 21 March 2014

JUDGMENT OF ASSOCIATE JUDGE OSBORNE

_{as to costs}

[1] Mr and Mrs King had previously applied for an order that a caveat not lapse. They subsequently withdrew the application.

[2] The respondent now seeks costs on the basis that they should follow the event in the usual way.

The relevant steps in this proceeding

[3] It is convenient to identify the relevant steps in this proceeding through the chronology which follows.

KING v QUEENSTOWN PHARMACY 2008 LIMITED [2014] NZHC 545 [21 March 2014]

Chronology

20 January 2014 Mr and Mrs King apply (in time) for an order that caveat not lapse.

Court allocates hearing date of 10 March

2014.

3 February 2014 Respondent (through Mr Guest) files defence to application and supporting evidence.

7 February 2014 Mr Guest files a memorandum suggesting allocation of a fixture.

11 February 2014 Court issues Minute directing the case be called on 10 March 2014 as scheduled, with arrangements then to be made for

the fixture. Associate Judge Matthews records a prior involvement with one party and asks Mr Guest to file a memorandum as to that issue.

18 February 2014 Mr Guest files a memorandum recording details of the prior involvement and suggesting that another Associate Judge deal with substantive matters. Mr Guest again requests that matters relating to the fixture be dealt with before the list date on 10 March 2014.

21 February 2014 I issue a Minute convening a telephone conference on 24 February 2014. I record that the strict time limits under

s 145 Land Transfer Act 1952 and r 39

Land Transfer Regulations 2002 appear not to have been met so that the caveat was deemed to have lapsed.

24 February 2014 Mr King files a memorandum withdrawing the application.

25 February 2014 Conference held following which I issue a minute reserving costs and directing

the filing of memoranda if costs are not agreed.

Issues as between applicants and respondent

[4] If costs were to be awarded to the respondent on a 2B basis in this case the award will be $3,980 (Item 38, Schedule 3, High Court Rules. The single disbursement is a filing fee of $112.

[5] The application of the general principle (under r 14.2(a)) that the party who fails with respect to a proceeding should pay the costs of a party who succeeds would mean that the applicants pay costs and disbursements to the respondent.

[6] Mr Guest submitted that the appropriateness of applying the usual rule is reinforced in this case by the fact that the interest claimed by the applicants in their caveat was unsustainable. Mr Guest provided a copy of the draft submissions which he had prepared in anticipation of the caveat hearing. He provided also a copy of the judgment of this Court in King v PFL Finance Limited,¹ the detailed reasons of which were delivered by Peters J on 21 February 2014.

[7] In this caveat proceeding, Mr and Mrs King asserted that the respondent had come to own the caveated property (previously owned by the applicants) through equitable fraud committed in concert with the parties who had been defendants (PFL Finance Limited and Craig Beecroft) in King v PFL Finance Limited. PFL was a secured creditor in relation to interests associated with the applicants. Mr Beecroft was a receiver appointed by PFL pursuant to its security. Mr Guest correctly characterises the judgment in King v PFL Finance Limited as establishing that the defendants in that case did not commit equitable fraud. Accordingly, the interests claimed by the applicants in their caveat were unsustainable.

[8] Mr Guest submits that the unsustainable nature of the caveat reinforces the proposition that the general principle as to costs should be applied.

[9] Mr Guest records that the applicants have not since this application was withdrawn on 24 February 2014 applied to the Court under s 148 Land Transfer Act

1952 for an order that they might lodge a second caveat. Given that the subject property is in the process of being sold, Mr Guest submits that the absence of an application under s 148 is yet further reinforcement of the hopelessness of the applicants’ substantive claims.

[10] The applicants respond that they had an honest belief in the justification for the caveat. They inform me that they intend to appeal the judgment in King v PFL

¹ King v PFL Finance Limited [2014] NZHC 250.

Finance Limited. They also inform me that in the last week there have been “moves afoot to resolve matters”.

[11] Apart from those matters affecting the merits of the interest claimed by the applicants, the applicants refer also to the Court’s administration of the file, to which I return below.

The Court’s administration of the file in this proceeding

[12] When the applicants on 20 January 2014 filed their application for an order that the caveat not lapse (and paid the $540 filing fee), the Court allocated 10 March

2014 as the first call date.

[13] That date was outside the period in which the applicants must obtain a High Court order if the caveat is not to automatically lapse. In the event the caveat did automatically lapse.

[14] The applicants were litigants in person. By their 24 February 2014 memorandum in which they withdrew their application because of the automatic lapsing, the applicants set out what they say were the circumstances which led to the allocation of the 10 March 2014 hearing date. They say that they met the times required under the Land Transfer Act for filing their application. They refer to discussions with Court staff and the explanation they received as to why the 10

March 2014 hearing date was allocated. They assert that the application was frustrated by Ministry resourcing issues which led to a miscarriage of justice.

[15] For the reasons previously set out, I cannot regard the applicants’ caveat as having been sustainable in any event. On a party/party cost basis the applicants are therefore left to meet the order as to costs and disbursements which I will make. Mr Guest submitted, correctly in my view, that any mistakes or unfortunate consequences of the way in which the Court allocated the first hearing date to the proceeding should not impact on the respondent. Mr Guest submitted that if anyone should pay for any loss to the applicants it should be the Court or Ministry.

[16] The applicants similarly concluded that the Ministry should bear the burden of cost. However, the respondent itself did not apply for costs against the Ministry – it sought its costs from the applicants.

[17] Mr and Mrs King were unsuccessful in their application. Even assuming that the Court’s jurisdiction to award costs and disbursements against non-parties is extensive, this would not be an appropriate case in which to consider the exercise of that jurisdiction. The caveat to which the proceeding relates was unsustainable. The history of the King’s litigation, both in this proceeding and previously, indicates that they would almost certainly have pursued, unsuccessfully, an application to sustain the caveat.

[18] That said, the Kings incurred a filing fee of $540 in relation to a hearing allocated outside the time within which an order could be made. There ought to have been an administrative arrangement in place within the Registry to ensure that a proceeding with strict statutory deadlines such as the present was allocated an initial hearing date (if necessary by telephone conference) within the statutory period for any necessary order.

[19] It would seem logical (regardless of any other steps they might have taken in relation to a caveat and the sustaining of the caveat) that had the Kings, on the day of filing their application, been advised that a hearing could not be allocated within the period which was meaningful under the Land Transfer Act, they would not have parted with their $540 (or possibly would have insisted that the file be promptly referred to a Judge). The awarding of costs in this proceeding is not the appropriate context in which to address those consequences. Mr and Mrs King are entitled to address their concerns in this regard to the Services Delivery Manager at Nelson.

[20] I have previously requested the civil case flow manager at Christchurch to refer this file to the Services Delivery Manager and understand that that has been done. I direct that a copy of this judgment be forwarded to the Services Delivery Manager for consideration, including consideration as to whether the fee paid by Mr and Mrs King should be refunded or, if such jurisdiction does not exist, whether another form of compensatory payment should be made to Mr and Mrs King.

Conclusion

[21] As matters stand, it is appropriate that there be a costs order which follows the event. The applicants’ withdrawal of their application meant (albeit for reasons forced upon them by the automatic lapsing of the caveat) the respondent is the successful party in the proceeding. The appropriateness of the application of the usual principle is then reinforced by the clear conclusion reached at the trial in King v PFL Finance Limited, namely that the applicants had no sustainable claims against either PFL Finance Limited or Craig Beecroft. Absent underlying misconduct on the part of one or both of those parties, the caveat (based on the respondent’s actual or constructive knowledge of the equitable fraud of others) was unsustainable.

[22] The just outcome is that the applicants pay the defendant the costs and disbursements of the application on a 2B basis. Orders will follow accordingly.

Order

[23] I order the applicants to pay to the respondent the cost of this application which I fix in the sum of $3,980.00 together with disbursements of $112.00.

Associate Judge Osborne

Solicitors:

Downie Stewart, Dunedin