Birch v Bank of New Zealand

[2013] NZHC 769

IN THE HIGH COURT OF NEW ZEALAND PALMERSTON NORTH REGISTRY

CIV-2012-454-637 [2013] NZHC 769

BETWEEN  VANYA BIRCH Applicant

ANDBANK OF NEW ZEALAND Respondent

Judgment:      16 April 2013

JUDGMENT AS TO COSTS

OF ASSOCIATE JUDGE D.I. GENDALL

This judgment was delivered by me on 16 April 2013 at 3.30 pm pursuant to r 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date:   ..................................................................

Solicitors:           Sanderson Weir, Solicitors, PO Box 856, Shortland Street, Auckland

V BIRCH V BANK OF NEW ZEALAND HC PMN CIV-2012-454-637 [16 April 2013]

[1]      This judgment relates to a costs order which the respondent Bank of New Zealand (BNZ) now seeks against the applicant, Vanya Birch (Ms Birch) in this proceeding following its discontinuance.

[2]      This particular proceeding it seems involved an application filed 26 October

2012 by Ms Birch pursuant to s 145A Land Transfer Act 1952 to sustain caveats numbers 9139017.1, 9139017.2, 9141233.1 and 9164575.1 registered over property at College Street, Palmerston North.  The involvement of Ms Birch with this College Street, Palmerston North property has a reasonably long and complex history. Originally Ms Birch as the owner of the College Street property had given to the BNZ a registered first mortgage over the property which fell into default.  A default notice was issued in February 2012 which expired unremedied.  According to the BNZ, no payment had been made on its loans since December 2011.

[3]      In late May 2012 Ms Birch purported to transfer the College Street property to a Ms Elizabeth Lambert (Ms  Lambert) without the consent of the BNZ and subject to the BNZ’s first registered mortgage.  Certain caveats were then registered over the property and related properties which it seems had the purpose of endeavouring to interfere with a mortgagee sale process which was being undertaken at the time by the BNZ.

[4]      On 4 July 2012, the College Street security property was sold at a BNZ mortgagee sale auction to a third party purchaser.  Settlement under this sale was due on 1 August 2012.

[5]      Original caveats which had been registered against the property were then removed it seems around 25 July 2012.  Further caveats, however, were registered against the title to the properties purporting to relate to claimed interests under a number of complicated lease and buy-back arrangements all dated around July 2012 orchestrated it seems by Ms Birch and Ms Lambert.  It can only be concluded that these arrangements were again intended to upset the mortgagee sale of the properties in question to the third party due for settlement on 1 August 2012.

[6]      The BNZ then arranged for notice to be given by the Registrar General of

Land to the caveators in question including Ms Birch for the lapse of the caveats.

[7]      Ms Birch it seems was then out of time to obtain any order from the Court that  her  caveats  not  lapse  and  accordingly  the  caveats  lapsed.    Then,  on  29

November 2012 leave was granted to Ms Birch to discontinue the present proceeding which had endeavoured to sustain the caveats.

[8]      In doing so,  I indicated in a Minute issued on that date that costs were reserved and if they were in issue between the parties they were to be the subject of memoranda filed sequentially.

[9]      Costs are in issue here as the BNZ in particular seeks costs on the proceeding. Memoranda on costs have now been filed on behalf of the BNZ and by Ms Birch.

[10]     BNZ  seeks   costs   here   on   a  category  2B  scale  basis   together  with disbursements in accordance with r 15.23 High Court Rules. This rule states:

HR 15.23         Costs

Unless the defendant otherwise agrees or the Court otherwise orders, a plaintiff who discontinues a proceeding against a defendant must pay costs to the defendant of and incidental to the proceeding up to and including the discontinuance.

[11]     In the present case Ms Birch as the discontinuing applicant to sustain her caveats is effectively in the position of a plaintiff with regard to that discontinued application.

[12]   The principles to be applied by the Court in considering costs on a discontinuance  are  set  out  in  McGechan  on  Procedure  at  para  HR15.23.01  as follows:

HR15.23.01      Principles

The following emerge from Kroma Colour Prints Ltd v Tridonicatco NZ Ltd [2008] NZCA 150, (2008) 18 PRNZ 973 and FM Custodians Ltd v Pati & Ors [2012] NZHC 1902 at [10]-[12]:

(a)       Although  the  r  15.23  presumption  is  designed  to  give  a  certain  and predictable outcome upon discontinuance, it may be displaced if the Court finds there are circumstances which make it just and equitable that it should not apply.

(b)        Although the Court is not limited in the factors it may take into account when considering whether the presumption is displaced, generally:

(i)        The Court  will not  consider the  merits of the  respective cases, unless they are so  obvious that they should influence the costs outcome.

(ii)       The Court will consider the reasonableness of the stance of both parties: whether it was reasonable for the plaintiff to bring and continue the proceeding, and for the defendant to oppose the proceeding up to the point of discontinuance.

(iii)      Conduct prior to the commencement of the proceeding may be relevant (for example, if any conduct by a defendant precipitated the litigation), as may be the reason for discontinuing (for example, a change of circumstances rendering the proceeding unnecessary).

(c)        The Court’s general discretion in r 14.1 as to costs can also override the general principles relating to discontinuance.

[13]     In the present case the material filed by Ms Birch, including her memoranda as to costs, do not in my view provide any substantive reasons to support a view that the BNZ should not be entitled to a costs award on the caveat applications, applications which were eventually discontinued by Ms Birch.

[14]     Instead, it seems Ms Birch has outlined in her submissions various matters which in my view are quite irrelevant to the BNZ’s claim for costs.   On this, Ms Birch has alleged that the BNZ “fraudulently removed the caveats in question” and by doing so showed disrespect to “the authority of the Court”.  This is quite wrong. It was not the BNZ who removed the caveats in question but it was the Registrar General of Land who removed them after they lapsed by operation of s 145A Land Transfer Act 1952.  The BNZ simply requested that the Registrar General of Land provide notice for the caveats to lapse which occurred as Ms Birch had not met the time limits required to have the caveats sustained.  In addition, it was after the lapse of the caveats that the Registrar General of Land simply registered the transfer from the BNZ in exercise of its power of sale under the defaulting mortgages.

[15]     I am satisfied also that, under the circumstances prevailing in this case, the complex web of purported agreements and caveats in which Ms Birch (with the help of Ms Lambert) has been involved, were designed simply as an abortive attempt to thwart the BNZ’s proper mortgagee sale processes with regard to the College Street properties following substantial default under its mortgages.

[16]     On these aspects, it is perhaps not insignificant that in the caveat application before me, Ms Birch referred the Court she said in support of her application to the decision Waterhouse v Westpac New Zealand Limited HC, Whangarei, 4 July 2012, CIV-2012-488-382 [2012] NZHC 1578, Associate Judge Bell. In that case, in rather similar circumstances to the present the Westpac Bank had made an application to lapse a caveat lodged also it seems involving the same Ms Lambert. Her earlier caveat had also lapsed in that case. Then, Mr Waterhouse had purported to register another caveat following the lapse of Ms Lambert’s caveat, as I understand the position, she having been adjudicated bankrupt in the meantime.

[17]     In the Waterhouse case, Associate Judge Bell, at para [31](b) found:

(b)       It is clear that Mr Waterhouse’s caveat was lodged not to protect his interests as a residential tenant, but simply to delay or impede Westpac in the exercise of its powers to sell the house under the mortgage. That is apparent from the participation of Ms Lambert in the scheme and the lack of commercial reality in the arrangements made.

[18]     In that case, Associate Judge Bell dismissed Mr Waterhouse’s application that his caveat not lapse, and ordered him to pay Westpac’s costs on the application.

[19]     In my view the situation which faces the Court in the present case is perhaps not surprisingly rather similar to that which prevailed in the Waterhouse case.  The bona fides of Ms Birch in registering the caveat and bringing her present application must be seriously questioned.  I am satisfied that all this was purely an unsuccessful attempt on her part to impede the BNZ’s proper mortgagee sale of the property, following acknowledged default under its mortgage.

[20]     Given all these matters, it is my view that, under the circumstances in this case, the presumption in r 15.23 that a discontinuing party is to pay the other party costs has not been displaced and should apply.   It is as I see it entirely just and equitable that the presumption continues to apply here.

[21]     The BNZ is accordingly entitled to costs on this application as sought.  Costs are therefore awarded to the BNZ against Ms Birch on this application on a category

2B basis together with disbursements as approved by the Registrar.

‘Associate Judge D.I. Gendall’