Body Corporate 172108 v Flat Bush Finance Limited
[2021] NZHC 1184
•27 May 2021
IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY
I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE
CIV-2020-485-549
[2021] NZHC 1184
BETWEEN BODY CORPORATE 172108
Plaintiff
AND
FLAT BUSH FINANCE LIMITED
Defendant
Hearing: On the papers Appearances:
T J G Allen for the plaintiff K Sullivan for the defendant
Judgment:
27 May 2021
JUDGMENT OF ASSOCIATE JUDGE JOHNSTON
Introduction
[1] In my judgment of 18 March 2021 I dismissed the defendant’s application for an order staying this proceeding and prohibiting advertising of the same.1
[2]There are now two matters before the Court for determination on the papers:
(a)an application by the plaintiff for costs in relation to that interlocutory application;
(b)an application by the defendant for leave to appeal from that judgment.
1 Body Corporate 172108 v Flat Bush Finance Ltd [2021] NZHC 555.
BODY CORPORATE 172108 v FLAT BUSH FINANCE LIMITED [2021] NZHC 1184 [27 May 2021]
Costs
[3] On behalf of the plaintiff, Mr Allen invites the Court to depart from the usual practice of awarding costs to the successful party in accordance with the scales contained in the High Court Rules 2016 and award the plaintiff indemnity costs.
[4] In doing so, Mr Allen submits that such an order would be “wholly appropriate”:
a.Pursuant to section 124 of the Unit Titles Act 2010 applying the “defence against attack” principle approved by the Court of Appeal in Black v ASB Bank and applied to bodies corporate in the same or similar context by two High Court judges; or alternatively on the basis that indemnity costs are appropriate since the proceeding is in the same realm as an abuse of process; or alternatively
b.The “stay” application falls exactly within the ambit of conduct justifying such an order under rule 14.6(4)(a), (b) and (f) of the High Court Rules.
[5] Mr Allen reminded me of the lengthy and complex background to this litigation, which need not be described here.
[6] Essentially, his argument was that, in one guise or another, Mr Robert Cummins and the companies that he has controlled, Manchester Securities Ltd and Flat Bush Finance Ltd, have run the same arguments time and again in this Court and the Court of Appeal, effectively to avoid, he would submit, meeting their obligations as owners or occupiers of Unit 12 in the Hobson Street flats.
[7] Mr Allen pointed to the trenchant criticism of this by this Court and the Court of Appeal.2 He submitted that Mr Cummins and the companies concerned have abused the Courts’ processes, and that an award of indemnity costs would be justified.
[8]There is considerable force in those submissions.
2 See for example Manchester Securities Ltd v Body Corporate 172108 [2019] NZCA 408 at [39] referring to Manchester Securities Ltd v Body Corporate 172108 [2017] NZCA 527, (2017) 19 NZCPR 65 at [44].
[9] However, as Mr Sullivan submits, the defendant in this case has not yet featured in this litigation, and is entitled to say that the primary argument advanced on its behalf was different from those advanced in any of the earlier litigation. Unlike its predecessors, the defendant is a charge holder in possession of the property and the primary issue in this case was whether, in that capacity, it was liable for levies.
[10] Mr Sullivan is quite right that the argument as to the defendant’s obligations as a charge holder in possession did not arise in any of the earlier litigation. How the focus of the argument changed is not difficult to discern. In a judgment dated 19 February 2020, recently upheld by the Court of Appeal,3 this Court made an order winding up the former owner of Unit 12, Manchester Securities Ltd.4 In order to give Manchester Securities Ltd a final opportunity to make good on its obligations and avoid liquidation, the Court ordered that the judgment would not come into force for a period of three weeks. Far from taking that opportunity, this apparently resulted in Mr Cummins furthering a scheme that was already partly implemented to rearrange things so as to leave Manchester Securities Ltd as a mere shell and transfer the ownership of Unit 12 to himself.
[11] However, indemnity costs are usually awarded in extreme cases against parties whose actions involve such things as breaches of confidence or flagrant misconduct.5 It is now possible to make such a criticism of the defendant here.
[12] In the end, the conclusion I have reached is that the plaintiff should have its costs on a 2B basis.
Leave to appeal
[13] As my judgment of 18 March was interlocutory in nature, leave to appeal is required.6
3 Cummins v Body Corporate 172108 [2021] NZCA 145.
4 Body Corporate 172108 v Manchester Securities Ltd [2020] NZHC 198.
5 Prebble v Awatere Huata (No 2) [2005] NZSC 18, [2005] 2 NZLR 467 at [6].
6 Senior Courts Act 2016, s 56.
[14]The principles that apply to such applications are well settled:7
(a)a high threshold exists;
(b)the applicant must identify an arguable error of law or fact;
(c)the alleged error should be of general or public importance warranting determination or otherwise of sufficient importance to the applicant to outweigh the lack of general or precedential value;
(d)the circumstances must warrant incurring further delay; and
(e)the ultimate question is whether the interests of justice are served by granting leave.
[15] The issue in respect of which the defendant wishes to appeal is a legal one, that is, whether in its capacity as a charge holder in possession of Unit 12 the defendant became liable for body corporate levies imposed after it went into possession of the Unit.
[16] Mr Sullivan submits, and I accept, that the Court of Appeal and Supreme Court decisions in the case to which counsel referred in argument, and which were referenced in my judgment — the litigation involving Body Corporate 162791, Mr John Gilbert and QSM Trustees Ltd — are not ultimately binding on this Court as to that question, because, there, what was said by the Court of Appeal and the Supreme Court on the point was not a necessary part of those courts’ judgments.8 It is unnecessary to embark on a fine analysis of counsel’s submissions of the sort that Mr Sullivan invites me to do to reach that conclusion. Nevertheless, I found the Court of Appeal judgment in particular was persuasive on the issue, and followed it. I accept too that this is an issue which may well have implications beyond this case.
7 Finewood Upholstery Ltd v Vaughan [2017] NZHC 1679 at [13], endorsed by the Court of Appeal in Greendrake v The District Court of New Zealand [2020] NZCA 122 at [6].
8 See Body Corporate 162791 v Gilbert [2014] NZHC 567; Body Corporate 162791 v Gilbert [2015] NZCA 185, [2015] 3 NZLR 601, (2015) 11 NZCLC 98–039; Gilbert v Body Corporate 162791 [2016] NZSC 61, [2018] 1 NZLR 1, (2016) 1 NZCLC 98–042, (2016) 17 NZCPR 584.
[17] On the other hand, my view is that the proposed grounds for appeal are not especially strong, and it also appears to me to be relevant to bring to account in balancing relevant considerations that the amounts involved in this case are modest, especially when set against the background of the wider dispute between Body Corporate 172108, Mr Cummins and the other entities connected with Unit 12.
[18] In the end, I am not satisfied that the circumstances warrant the further delay and cost of an appeal, or that the interests of justice would be served by granting leave in this case.
Conclusion
[19]For those reasons:
(a)I order that the defendant pay to the plaintiff scale costs on a 2B basis together with such disbursements as may be allowed by the Registrar;
(b)I decline leave to appeal; and
(c)Costs in relation to this application are reserved. I would expect counsel to be able to sort these out. If not, they may come back by memorandum in the usual way.
Associate Judge Johnston
Solicitors:
Grove Darlow & Partners, Auckland for plaintiff Core Legal Ltd, Masterton for defendant
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