Chandler Farms Limited v Petterson
[2023] NZHC 1798
•11 July 2023
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2022-404-1584
[2023] NZHC 1798
BETWEEN CHANDLER FARMS LIMITED
Applicant
AND
RACHEL ANNE LOUISE PETTERSON, LEIGH ANNE TAYLOR, and PAUL
STEVEN TAYLOR
First RespondentBRIDGET JUDY LEM, DANIEL LORNE
LEM and SANDRA LEE LEM as trustees of THE CALDERA TRUSTSecond Respondents
Hearing: On the papers Counsel:
P Chisnall for Applicant
M D Branch and K F Shaw for First Respondents
No appearance for Second Respondents (no steps taken)Judgment
11 July 2023
JUDGMENT OF LANG J
[Costs]
This judgment was delivered by Justice Lang On 11 July 2023 at 11.00 am
Pursuant to r 11.5 of the High Court Rules Registrar/Deputy Registrar
Date:…………………………
Solicitors/counsel:
Duncan Cotterill, P Chisnall, Wellington Harkness Henry, Auckland
CHANDLER FARMS LTD v PETTERSON [2023] NZHC 1798 [11 July 2023]
[1] On 8 May 2023, I delivered a judgment granting an application by the applicant, Chandler Farms Ltd, seeking orders extinguishing two restrictive covenants that had erroneously been registered against titles to land that it owned.1 The two respondents own parcels of land adjoining that owned by Chandler Farms. The first respondents, the trustees of the Taylor Family Trust (the Taylor Trustees), had opposed the application whilst the second respondents, the trustees of the Caldera Family Trust (the Caldera trustees), took no steps in the proceeding.
[2] Chandler Farms and the Taylor Trustees have been unable to reach agreement regarding costs. This judgment deals with that issue.
The arguments
[3] The Taylor trustees contend that no order for costs should be made or, alternatively, that any such order should be nominal given the fact that the underlying problem was caused by a drafting error when the restrictive covenants were first registered. This was made by the solicitors then acting for Chandler Farms.
[4] Alternatively, the Taylor trustees argue that costs should be awarded on a category 2B basis together with disbursements as fixed by the Registrar. They take issue with one aspect of the calculations made by Chandler Farms in relation to the steps for which costs should be awarded.
[5] Chandler Farms seeks increased costs to reflect a settlement offer that it made to the Taylor Trustees after the hearing was adjourned on 2 March 2023. By that stage I had provided the parties with my tentative factual conclusions and invited them to endeavour to reach agreement regarding the orders that should be made.
Should costs be awarded?
[6] I acknowledge that the application was rendered necessary by the fact that the solicitors acting for Chandler Farms erroneously drafted the restrictive covenants so as to make the land owned by Chandler Farms subject to them. Had the Taylor trustees
1 Chandler Farms Ltd v Petterson [2023] NZHC 1070. Judgment was reissued on 30 May 2023 to correct some minor typographical errors.
consented to the application when it was filed they may have been entitled to an award of costs. This may have been appropriate to recognise the fact that the application had been rendered necessary by the error made by Chandler Farms’ solicitors. On the other hand, the Taylor trustees had earlier rejected attempts by Chandler Farms to resolve the dispute prior to the proceeding being filed. This means it may have been appropriate to make an order of costs against the Taylor trustees even if they consented to the application after it was filed.
[7] However, the Taylor trustees did not consent to the application. They chose to contest it and to argue that the restrictive covenants were not registered in error. They claimed that they understood that the land owned by Chandler Farms was to be subject to the covenants even though that issue had never been the subject of any discussion between the parties. Given the stance that they took, and the fact that it was rejected in my judgment, I am satisfied that conventional costs principles apply. This means the Taylor trustees as the unsuccessful party should be required to contribute to Chandler Farms’ costs. I therefore do not accept the argument for the Taylor trustees that no order for costs should be made or that any order for costs should be nominal.
Should Chandler Farms receive increased costs?
[8] The Court has the power to require a party to pay increased costs where that party fails without reasonable justification to accept an offer of settlement.2 The Court also has the power to order increased costs where a party unnecessarily increases the time and cost of a proceeding by taking a step or pursuing an argument that lacks merit.3
[9] Chandler Farms seeks an order that costs be increased by 50 per cent for steps taken after 20 February 2023 on the basis that the Taylor trustees failed without reasonable justification to accept an offer of settlement that it made to them on that date. It also contends that the Taylor trustees thereafter took a step or pursued an argument that lacked merit.
2 High Court Rules 2016, r 14.6(3)(b)(v).
3 Rule 14.6(3)(b)(ii).
[10] The Taylor Trustees object to Chandler Farms disclosing the correspondence that contains the settlement offer. Although the correspondent was marked “without prejudice save as to costs”, Chandler Farms points out that the proposal contained within the letter required the consent of the Caldera Trustees, and their position was unknown. The Taylor Trustees contend that the Court should not take into account the offer when it was contingent on consent being obtained from a third party and there was no guarantee that this would be forthcoming.
[11] I consider that in considering an application for increased costs the Court is entitled to take into account the offer of settlement made by Chandler Farms notwithstanding the matters raised by the Taylor trustees. The offer required the Taylor Trustees to consent to the orders Chandler Farms sought on the basis that Chandler Farms would consent to the restrictive covenant being modified so as not to preclude further subdivision of the properties owned by the Taylor Trustees and the Caldera trustees.
[12] It can obviously be argued that the Taylor Trustees are now in a worse position than they would have been if they had accepted the offer of settlement. It can also be argued that the Taylor Trustees were unlikely to successfully oppose the application given the tentative factual conclusions I had reached at the end of the evidence. However, I consider the Taylor trustees were entitled to have the Court rule on the issues before it. They were not bound to accept the tentative factual conclusions that I provided at the end of the evidence given that I had not yet heard submissions from their counsel. The Taylor trustees were entitled to have their counsel endeavour to persuade me to alter those conclusions. They therefore had reasonable justification for declining the offer and maintaining their argument that the application should be dismissed.
[13] In those circumstances, I do not consider it would be appropriate to require the Taylor trustees to pay increased costs. Costs will therefore be payable on a category 2B basis together with disbursements as fixed by the Registrar.
Calculation of costs
[14] An issue has arisen as to whether Chandler Farms is entitled to claim for two days preparation for hearing under Item 32 in the Second Schedule to the High Court Rules 2016.
[15] The present proceeding was commenced by originating application. This means that costs are governed by Steps 37 to 43 of the Second Schedule. Item 40 makes an allowance of 1.5 days for the preparation of written submissions in addition to costs payable under item 37 for the filing of the application and supporting affidavits. Item 32, which applies to general proceedings, does not apply. It follows that the amount claimed by Chandler Farms is reduced by the sum of $4,780.00.
Lang J
0