Combined Property Maintenance Limited v Singh - [2021] NZHC 621

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2020-404-1771

[2021] NZHC 621

UNDER section 143 of the Land Transfer Act 2017

IN THE MATTER

of an application that a caveat not lapse

BETWEEN

COMBINED PROPERTY MAINTENANCE LIMITED

Applicant

AND

VIKRAM SINGH and ANITA MISHERWAN

Respondents

Hearing: On the papers

Counsel:

G Bogiatto for the Applicant J P Wood for the Respondents

Judgment:

30 March 2021

JUDGMENT OF GAULT J

(Costs)

This judgment was delivered by me on 30 March 2021 at 4:00 pm pursuant to r 11.5 of the High Court Rules 2016.
Registrar/Deputy Registrar

……………………………………

Solicitors:
Mr G Bogiatto, Solicitor, Auckland
Mr J P Wood and Ms J Heatlie, Rainey Law, Auckland

COMBINED PROPERTY MAINTENANCE LTD v SINGH and MISHERWAN [2021] NZHC 621 [30 March 2021]

[1] This originating application for an order that caveats not lapse was withdrawn before hearing. Costs are disputed. The parties filed memoranda and I determine costs on the papers.

[2] The respondents seek indemnity costs, including costs on costs, on the basis that the originating application was doomed to fail and the respondents made reasonable offers to settle the application that were rejected.

[3] While not conceding that costs should be ordered, the applicant submits that the circumstances do not warrant making an order above scale costs.

Background

[4] The parties signed a fixed price construction contract in 2018 to build four townhouses. Following scope changes, a payment dispute arose. The applicant lodged caveats claiming an interest in the land based on the value added by its construction works.

Discussion

[5] The starting point is that 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 unless the defendant otherwise agrees or the Court otherwise orders.1 This presumption applies to an originating application. The presumption may be displaced if the Court considers it would be just and equitable in the circumstances not to apply it.2

Indemnity costs

[6]Rule 14.6(4)(a) of the High Court Rules 2016 (the Rules) provides:

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; …

1 High Court Rules 2016, r 15.23.
2 Kroma Colour Prints Ltd v Tridonicatco NZ Ltd [2008] NZCA 150, (2008) 18 PRNZ 973 at [12].

[7] As the Court of Appeal said in Bradbury v Westpac Banking Corporation, “unnecessarily” in this context takes its meaning from the adverbs which precede it: “vexatiously, frivolously, improperly”.3 Indemnity costs may be ordered where a party has behaved either very badly or very unreasonably.4 The Court elaborated, saying:5

Indemnity costs, which depart from the predictability of the Rules Committee’s regime, are exceptional and require exceptionally bad behaviour. That is why to justify an order for such costs the misconduct must be “flagrant”.

[8] While noting the…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2021] NZHC 621
Decision Date: 30 March 2021

CaseChat Overview and Summary

The High Court was asked to determine the costs of an originating application that was withdrawn by the applicant before hearing. The applicant, Combined Property Maintenance Limited, had lodged caveats against the property of the respondents, Vikram Singh and Anita Misherwan, seeking to prevent them from lapsing. The respondents sought indemnity costs, including costs on costs, arguing that the application was doomed to fail and that the applicant had unreasonably rejected their offers to settle. The applicant argued that the circumstances did not warrant an order for indemnity costs and that the parties should bear their own costs.

The court noted that the presumption is that a discontinuing party must pay the defendant’s costs up to and including the discontinuance. However, this presumption may be displaced if it would be just and equitable not to apply it. Indemnity costs may be ordered if the party has acted vexatiously, frivolously, improperly, or unnecessarily in commencing, continuing, or defending a proceeding or a step in a proceeding. Indemnity costs are exceptional and require exceptionally bad behaviour. The onus is on the applicant for indemnity costs to persuade the court that such an award is justified.

The court found that the lack of merit in the proceeding was not both obvious and incontrovertible such that it amounted to flagrant misconduct warranting indemnity costs. While the applicant should have accepted that scale costs were payable, it did not act unreasonably when it rejected the respondents’ offer of $8,000 (approximately $1,000 less than the respondents’ estimated indemnity costs at the time). The parties share responsibility for not resolving the costs issue. As the respondents have not made out their claim for indemnity costs, the court declined to order costs on costs.

The court ordered that the applicant is to pay the respondents 2B scale costs of $5,736 plus disbursements of $110, totalling $5,846. The court rejected the applicant’s submission that any award of costs should lie in Court until such time as the dispute between the parties which is currently the subject of District Court proceedings is resolved. The court noted that the originating application to sustain a caveat is a discrete proceeding in its own right and that costs should be fixed following the determination of the caveat proceeding notwithstanding ongoing substantive proceedings in the District Court.

Orders