Beacham European Limited v 491 GSR Limited
[2025] NZHC 3059
•15 October 2025
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2025-404-1829
[2025] NZHC 3059
BETWEEN BEACHAM EUROPEAN LIMITED
Applicant
AND
491 GSR LIMITED
Respondent
Hearing: On the papers Counsel:
T J P Bowler for Applicant
S P Pope and N Y Murray-Ragg for Respondent
Judgment:
15 October 2025
JUDGMENT OF O’GORMAN J
[As to costs]
This judgment was delivered by me on 15 October 2025 at 12 pm pursuant to r 11.5 of the High Court Rules 2016.
Registrar/Deputy Registrar
…………………………………
Solicitors/Counsel:
Neilsons Lawyers, AucklandThompson Blackie Biddles Ltd, Auckland S P Pope, Bankside Chambers, Auckland
N Y Murray-Ragg, Bankside Chambers, Auckland
BEACHAM EUROPEAN LTD v 491 GSR LTD [2025] NZHC 3059 [15 October 2025]
Introduction
[1] This judgment determines the issue of costs, following my dismissal of an application for relief against forfeiture.
[2] The dispute relates to a commercial property at 491 Great South Road, Penrose, Auckland, which was sold by mortgagee sale. The property was previously owned by Beacham Properties Ltd (BPL), and was mortgaged to MG & SJ Howard Ltd. Following default, the mortgagee took steps to exercise its power of sale. Shortly before a mortgagee auction, the applicant, Beacham European Ltd (BEL) (a company related to BPL), claimed to be the tenant of the property under a lease that allegedly commenced in June 2021 and was said to run until 2033.
[3] The auction nevertheless proceeded, and the property was sold at auction to Key Commercial Ltd, which nominated 491 GSR Ltd (491 GSR) as purchaser. After the sale, 491 GSR as new owner issued a notice to vacate to BEL and other occupants, asserting its entitlement to vacant possession.
[4] BEL disputed the validity of the notice. On 21 July 2025, BEL commenced this proceeding seeking urgent relief to prevent cancellation of the lease and/or re-entry by 491 GSR. That application was referred to me as Duty Judge, and was scheduled for an urgent hearing on 24 July 2025.
[5] As recorded in my minute on that date, after hearing from counsel for both parties, I expressed my concern that there was no disclosed basis for asserting that the unregistered lease continued despite s 103 of the Land Transfer Act 2017. I noted:
(a)Mr Beacham (director of the applicant) provided a statutory declaration dated 5 February 2024 to the mortgagee stating there were no fixed-term leases or tenancies and that none would be entered into while the mortgage was registered.
(b)The existence of the alleged lease was not asserted to the mortgagee until shortly before the auction and there was no evidence whatsoever that the mortgagee had agreed to be bound by it (mere knowledge of it being insufficient).
(c)If unregistered leases are discharged under s 103, then there is no jurisdiction to grant relief from forfeiture because the lease no longer exists.
[6] Mr Bowler for the applicant nevertheless sought the opportunity to file further evidence to address the above issues, and insisted he was not prepared for the merits to be addressed at that mention. For those reasons only, I made timetable orders requiring, by 4 pm on 25 July 2025, the provision of undertakings as to damages in the proper form and payment of security into a solicitor’s trust account. Conditional on those steps, 491 GSR was ordered not to take possession pending a hearing of the opposed application at 2.15 pm on 30 July 2025.
[7] The applicant did not comply with the 25 July 2025 deadlines. Accordingly, after 5 pm on 25 July 2025, 491 GSR gave notice to the applicant that the interim injunction restraining it from taking possession had lapsed, and it asked for possession of the property to be delivered immediately, including by supplying keys and alarm codes.
[8] In submissions dated 29 July 2025, 491 GSR sought orders dismissing the originating application; ancillary orders for vacant possession as agreed between the parties (in a joint memorandum of counsel dated 23 July 2025); and timetable directions for the determination of cost issues.
[9] In a minute dated 30 July 2025, I made those orders, including timetable directions for cost submissions to be filed and served, and for those issues to be determined on the papers.
Submissions
[10] In submissions dated 13 August 2025, 491 GSR seeks indemnity costs, or in the alternative increased costs, on the following grounds:
(a)The proceeding was hopeless. The facts of this case could not sustain the application; the application of s 103 to unregistered leases is a matter of settled law; and BEL sought an interim injunction without evidence that BEL could meet its undertaking as to damages; and
(b)BEL acted unnecessarily in bringing the claim, despite being on notice of the obstacles to its claim succeeding, including by letter of the respondent’s solicitors dated 17 July 2025.
[11]The quantum calculations set out in 491 GSR’s submissions are as follows:
(a)Actual costs for attendances for this proceeding (a subset of broader commercial attendances) up to sealing the judgment on 1 August 2025 of $57,729.50 excluding GST.
(b)A schedule showing that scale costs on a category 2 band B basis for the same steps are $21,271. Applying a 50 per cent uplift would produce a total of $31,906.50.
(c)Disbursements (notice of opposition and sealing fee) were $182.75 excluding GST.
(d)Scale costs for preparing submissions on costs are $3,585 (calculated on a 2B basis).
[12] The applicant has not filed any submissions in response on costs, despite a timetable to do so within 10 working days of receiving the respondent’s submissions.
Legal principles
[13] The Court has a general discretion to award costs under r 14.1 of the High Court Rules 2016.
[14] Subject to that discretion, r 14.2 provides the principles to be applied in most cases:
(a)Under r 14.2(1)(a), the party who fails with respect to a proceeding or an interlocutory application should pay costs to the party who succeeds.
(b)Under r 14.2(1)(b), an award of costs should reflect the complexity and significance of the proceeding. For those purposes, r 14.3 provides for three categories of proceeding (1, 2 or 3).
(c)Rule 14.2(1)(c) provides that costs should generally be assessed by applying the appropriate daily recovery rate to the time considered reasonable for each step reasonably required in relation to the proceeding or interlocutory application. The reasonable determination of time is set out in r 14.5 by band (A, B or C).
(d)Rule 14.2(1)(f) provides that an award of costs should not exceed the actual costs incurred by the party.
[15] The above position of limiting a losing party’s liability for costs to scale in most cases is supported by access to justice considerations.1 Other objectives are that the determination of costs should be predictable and expeditious.2
[16] Rule 14.6 provides for increased and indemnity costs. Relevantly, rr 14.6(3) and (4) provide:
1 Bradbury v Westpac Banking Corp [2009] NZCA 234, [2009] 3 NZLR 400 at [10]; and Ben Nevis Forestry Ventures Ltd v Commissioner of Inland Revenue [2014] NZCA 348, (2014) 22 PRNZ 322 at [13].
2 Lawrence v Glynbrook 2001 Ltd [2015] NZHC 1005 at [18]–[20], citing North Shore City Council v Body Corporate 188529 [2010] NZCA 234, (2010) 20 PRNZ 740 at [12].
(3) The court may order a party to pay increased costs if—
…
(b)the party opposing costs has contributed unnecessarily to the time or expense of the proceeding or step in it by—
…
(iii) failing, without reasonable justification, to admit facts, evidence, documents, or accept a legal argument; 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
…
(4) The court may order a party to pay indemnity costs if—
(a)the party has acted vexatiously, frivolously, improperly, or unnecessarily in commencing, continuing, or defending a proceeding or a step in a proceeding; or
…
(f) some other reason exists which justifies the court making an order for indemnity costs despite the principle that the determination of costs should be predictable and expeditious.
[17] Indemnity costs are exceptional. Indemnity costs under r 14.6(4)(a) can be awarded if a party has acted vexatiously, frivolously, improperly, or unnecessarily. This requires that the unsuccessful party has pursued a “hopeless case”,3 being a position “totally without merit” 4 and “bound to fail”,5 or one commenced or continued for an ulterior motive or where there has been wilful disregard of the known facts or the clearly established law.6 A party’s misconduct can lead to indemnity costs if it is “flagrant”,7 or constitutes “exceptionally bad behaviour”.8
3 Ben Nevis Forestry Ventures Ltd v Commissioner of Inland Revenue, above n 1, at [17].
4 TheCircle.co.nz Ltd v Trends Publishing International Ltd (in liq and in rec) [2021] NZCA 235, (2021) 25 PRNZ 766 at [34].
5 Big Basin Ltd v Stockco Ltd [2023] NZHC 2130 at [45].
6 Ben Nevis Forestry Ventures Ltd v Commissioner of Inland Revenue, above n 1, at [17]; and Big Basin Ltd v Stockco Ltd, above n 5, at [53].
7 Batley v MacDonald [2025] NZHC 2122 at [17], citing Bradbury v Westpac Banking Corp, above n 1; and Prebble v Awatere Huata (No 2) [2005] NZSC 18, [2005] 2 NZLR 467 at [6].
8 Phillips v Heremaia [2025] NZCA 394 at [14], citing Bradbury v Westpac Banking Corp, above n 1, at [28].
[18] Rule 14.6(3) of the High Court Rules sets out the circumstances where an order for increased costs may be appropriate. They include where there is a failure by the paying party to act reasonably,9 or where the party opposing costs has contributed unnecessarily to the time or expense of the proceeding by pursuing an argument that lacks merit, failing to accept a legal argument or for some other reason justifying the Court making an order for increased costs. In such a case, the Court must consider the extent to which the failure to act reasonably contributed to the time or expense of the proceeding and it is only to that extent that any percentage uplift from scale can be justified.10
[19] There is no inflexible rule that a party who is awarded costs is “entitled” to costs associated with the application for costs.11 Costs for each step in a proceeding are always at the discretion of the court. Relevant considerations are whether it has been addressed by memoranda only (making an award less likely), and the extent to which the parties succeeded on the disputed cost issues.12
Analysis
[20] I accept that indemnity costs are appropriate in the exceptional circumstances of this case, and consider the amounts reasonable given the volume of materials in preparation for and subsequent to the hearing to achieve vacant possession.
[21] As noted in the minute on the first call of this matter, there was no disclosed basis for asserting any affirmative acknowledgement by the mortgagee prior to the mortgagee sale that it agreed to be bound by the lease terms. That is not something that arose as an issue requiring evidence in reply. Rather it was a prerequisite for the application itself, particularly when the applicant was aware of these legal arguments before finalising its evidence in support.
9 Bradbury v Westpac Banking Corp, above n 1, at [27].
10 Commissioner of Inland Revenue v Chesterfields Preschools Ltd [2010] NZCA 400, (2010) 24 NZTC 24,500 at [165].
11 Harrington v Wilding [2019] NZCA 605 at [45].
12 See Jeffreys v Morgenstern [2013] NZHC 1361 at [40]; DGL Manufacturing Ltd v Simmonds
[2022] NZHC 1434 at [18]; and Legler v Formannoij [2022] NZHC 1804 at [12].
[22] Accordingly, it has been clear from the outset that this was a “hopeless” case and the application should not have been made. Furthermore, the recent assertion of a lease (immediately before a mortgagee sale) conflicted with a statutory declaration by Mr Beacham (director of both BPL and the applicant) dated 5 February 2024 stating there were no fixed-term leases or tenancies and that none would be entered into while the mortgage was registered. On the face of that documentation, Mr Beacham’s conduct has been improper.
[23] I also consider it appropriate to grant costs on the costs application, given that the applicant has failed to comply with timetable orders requiring engagement on cost issues.
Result
[24]I make the following orders:
(a)The applicant is to pay all of the respondent’s legal costs and disbursements in the amount of $57,729.50 (excluding GST).
(b)The applicant is to pay the respondent 2B costs on its costs application in the amount of $3,585.
(c)The applicant is to pay the respondent interest on the above sums calculated in accordance with the Interest on Money Claims Act 2016 from the date of the costs judgment until payment in full.
O’Gorman J
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