Keemati Limited v QNZ Limited
[2020] NZHC 1034
•19 May 2020
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2019-404-002341
[2020] NZHC 1034
UNDER Sections 138 and 143 of the Land Transfer Act 2017 and Part 19 of the High Court Rules 2016 BETWEEN
KEEMATI LIMITED
Applicant
AND
QNZ LIMITED
Respondent
Hearing: Determined on the papers Counsel:
S R Carey for Applicant
W M Cheyne for Respondent
Judgment:
19 May 2020
COSTS JUDGMENT OF ASSOCIATE JUDGE PAULSEN
This judgment was delivered by me on 19 May 2020 at 11.00 am pursuant to Rule 11.5 of the High Court Rules
Registrar/Deputy Registrar Date:
KEEMATI LTD v QNZ LTD [2020] NZHC 1034 [19 May 2020]
[1] In a judgment of 27 February 2020, I granted the applicant’s (Keemati) application that pending further order of the court Keemati’s caveats lodged over two properties owned by QNZ Ltd (QNZ) shall not lapse.
[2] Counsel have not been able to agree on costs and have submitted memoranda pursuant to leave granted in my judgment.
[3] Keemati argues that it was successful in this proceeding and that it is entitled to costs on a 2B basis.1 It has submitted a schedule of costs and disbursements claiming costs of $15,774 and disbursements of $1,245.17 (exclusive of GST) totalling
$17,019.17.
[4] QNZ argues that costs should be reserved. The following grounds are put forward in support of this:
(a)The application to sustain the caveats is similar to a summary judgment application because the merits of the application are closely related to the merits of the substantive proceeding. I infer QNZ relies upon the principle that costs on unsuccessful summary judgment proceedings are commonly reserved.2
(b)If Keemati is ultimately successful in obtaining an order for specific performance for the transfer of the two properties it is required to pay QNZ $1,000,000. Keemati’s claimed costs are substantially less than
$1,000,000 so that, even if Keemati is successful in the substantive proceeding, the net result will be a payment from Keemati to QNZ.
(c)QNZ has filed a counterclaim and sought damages for the wrongful lodging of the caveats and the damages would include the costs of this proceeding. QNZ is concerned that ultimately Keemati will not be able to pay damages.
1 High Court Rules 2016, r 14.1.
2 NZI Bank Ltd v Philpott [1990] 2 NZLR 403, (1990) PRNZ 695 (CA).
[5] QNZ relies upon Navigator Finance Ltd (In Liquidation) v Petricevic where, Associate Judge Faire recognised that in the exercise of its discretion the court could reserve costs on an application to sustain a caveat pending the outcome of the substantive proceeding.3
[6]Mr Cheyne summarises QNZ’s position as follows:
In summary, the appropriateness of defending the application to sustain the caveats, and therefore the costs consequences of that decision, can only be determined once the outcome of the substantive proceeding is known. Even if Keemati is ultimately successful in its application to enforce its interests in the property it would have to pay QNZ a sum of money. Those circumstances justify reserving any costs decision until the conclusion of the substantive proceeding.
Discussion
[7] The court has a discretion as to costs, but its discretion must be exercised in a principled way and in accordance with the High Court Rules. So far as possible, the determination of costs should be both predictable and expeditious. As both parties recognise, the general rule is that the party who fails should pay the costs of the party who succeeds. Here, Keemati was successful and, prima facie, is entitled to costs.
[8] I do not accept the arguments QNZ advances in support of the submission that costs should be reserved. The normal practice in caveat cases is that an applicant who successfully sustains its caveat will be awarded costs. The analogy that QNZ seeks to draw with summary judgment proceedings is not valid. First, a summary judgment application is an interlocutory application in the course of a proceeding, albeit one that might ultimately determine the parties’ rights. An application to sustain a caveat is a proceeding in its own right and this proceeding has been determined. It is appropriate that costs are determined also. Second, typically costs are reserved in summary judgment cases where the plaintiff is unsuccessful but here Keemati was the successful applicant.
[9] It is not a relevant consideration that should Keemati be successful in the substantive proceeding it will be required to pay $1,000,000 for the properties, or that
3 Navigator Finance Ltd (In Liquidation) v Petricevic HC Auckland CIV-2010-404-003763 and CIV-2010-404-004794, 24 November 2010.
QNZ is pursuing a counterclaim. The fundamental error underlying QNZ’s submissions is the assumption that the result of the substantive proceeding will determine the appropriateness of it defending Keemati’s application to sustain the caveats. Keemati’s burden was to establish an arguable case to sustain the caveats. It satisfied the burden. The merits of this proceeding have been determined in its favour and costs consequences flow from that.
[10] The Navigator Finance case does not assist QNZ. There, Associate Judge Faire reserved costs because the unsuccessful respondents were trustees who were prevented by the caveat to have access to a major trust asset to pay a costs award, and the substantive hearing was set down in three months. No such special circumstances exist here.
[11] Keemati has sought costs on a 2B basis. This is clearly appropriate given the nature of the proceeding and, as Mr Carey points out, the enormous amount of paperwork that QNZ put before the court.
[12] The schedule of costs and disbursements submitted by Keemati appears reasonable and has not been disputed by QNZ.
Result
[13] QNZ is ordered to pay Keemati costs and disbursements totalling $17,019.17 in accordance with the schedule attached to Keemati’s counsel’s memorandum of 19 March 2020.
O G Paulsen Associate Judge
Solicitors:
Vinci Law, Auckland
Chapman Tripp, Auckland
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