Donovan Trust Company Limited v Hailes

[2017] NZHC 1572

IN THE HIGH COURT OF NEW ZEALAND TAURANGA REGISTRY

CIV 2015-470-191 [2017] NZHC 1572

IN THE MATTER OF

a civil proceeding asserting breaches of

restrictive land covenants in Transfer
B329860

BETWEEN

DONOVAN TRUST COMPANY LIMITED

First Plaintiff

PATRICK DARCY CURTIS and DHL TRUSTEES NO 1 LIMITED

Second Plaintiff

AND

LAUREEN CLAIRE HAILES AND TIMOTHY JAMES STEPHENS Defendants

Hearing:	On the papers
Counsel:	G J Judd QC for First and Second Plaintiffs N D Smith for Defendants
Judgment:	7 July 2017

COSTS JUDGMENT OF PETERS J

This judgment was delivered by Justice Peters on 7 July 2017 at 2 pm pursuant to r 11.5 of the High Court Rules

Registrar/Deputy Registrar

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

Solicitors:           Johnston Prichard Fee, Auckland

Ussher Lawyers, Whangamata

Counsel:            G J Judd QC, Auckland

N D Smith, Tauranga

DONOVAN TRUST COMPANY LTD v HAILES [2017] NZHC 1572 [7 July 2017]

[1]      This judgment determines applications by the parties for awards of increased costs, following their settlement of the proceeding.   For reasons set out below, I decline to make any order as to costs.

[2]      The   first   and   second   plaintiffs   are   the   registered   proprietors   and/or beneficially interested in two properties in Hahei, both of which adjoin a property of which the defendants are the registered proprietors.   As I understand it, the defendants’ property is subject to, and the plaintiffs have standing to enforce, the land covenants in memorandum of transfer B329860 (“covenants”).

[3]      On  or  about  17  December  2015,  the  plaintiffs  commenced  proceedings against the defendants.  The plaintiffs alleged that the defendants were in breach of one or more of the covenants in the transfer, the alleged breach being the defendants lodging an application for resource consent to permit the operation of a restaurant or bar on their site.

[4]      The plaintiffs contended that the making of the application put the defendants in breach of one or more of the covenants and they commenced proceedings seeking an injunction to restrain the defendants until 2025 from taking any further steps to pursue that application or indeed the carrying on of any activity on the site that might follow any grant of consent.

[5]      The plaintiffs also sought an award of damages, interest and costs.   The plaintiffs subsequently reduced the amount claimed by way of damages and then abandoned that claim altogether, by way of correspondence if not on the pleadings.

[6]      By  their  statement  of  defence,  the  defendants  denied  any  breach  of  the provisions  of  the  transfer.    They  also  maintained  in  correspondence  with  the plaintiffs that the lodging of the application for resource consent was not a breach of the covenants.

[7]      By joint memorandum dated 23 January 2017, the parties advised that they had resolved the proceedings on terms which would preclude the defendants from

using their site for any purpose other than as a residence, although the latter might include operating a bed and breakfast.

[8]      It was a term of the settlement that the parties would invite the Court to determine the issue of costs.

[9]      Since then I have received the defendants’ memorandum of 27 January 2017 seeking costs on a 2B basis, plus an award of increased costs; the plaintiffs’ memorandum of 9 February 2017 themselves seeking costs, plus indemnity, alternatively increased costs; the defendants’ reply of 10 February 2017 and the plaintiffs’ reply on a particular point dated 6 March 2017.

[10]     As counsel for the plaintiffs submitted, High Court Rules, r 14.2 lists the principles which generally apply to the determination of costs.   The first of those general principles is that the party who fails should pay costs to the party who succeeds.  Counsel for the plaintiffs contends that the defendants failed.  Counsel for the defendants disputes that, his submission being that the plaintiffs abandoned much of their claim and that the terms of the order agreed were vastly narrower than that sought in the proceedings.

[11]     My initial view – without the benefit of argument – is that the plaintiffs would have faced considerable difficulty in persuading the Court to grant relief.

[12]     First, I do not consider that an application for resource consent could in itself constitute  a  breach  of  the  covenants.     Secondly,  even  if  the  plaintiffs  were anticipating steps the defendants might take if consent were granted, it would be necessary for them to persuade the Court that it should restrain a possible course of action by the defendants, and then that the covenants controlled the use of the site rather than the nature of any building to be constructed thereon.   Both of these matters would require argument.  There may also have been an issue as to whether damages would be an adequate remedy.

[13]     Regardless, the fact remains that the defendants agreed to an injunction that constrains their use of the site until 2025.  It is a matter for them why they did so.

Their assessment of the plaintiffs’ prospects of success may have been different from mine or they may have considered that their best interests lay in agreeing to the order rather than continuing to litigate.   Whatever their reasons, I am not now able to determine that one party succeeded or failed and each party must bear their own

costs.

Peters J