Mangaroa 26N2 Trust v Huata

[2022] NZHC 50

IN THE HIGH COURT OF NEW ZEALAND NAPIER REGISTRY

I TE KŌTI MATUA O AOTEAROA AHURIRI ROHE

CIV-2019-441-000018

[2022] NZHC 50

BETWEEN

MANGAROA 26N2 TRUST

Plaintiff

AND

WI HUATA AND DONNA HUATA

Defendants

AND

P C RAIKES LIMITED

Interested Party

Hearing:

On the papers

Appearances:

L A Foley for Plaintiff

F C Monteiro and K T van der Plas for Defendants and Interested Party

Judgment:

1 February 2023

JUDGMENT OF GRICE J

(Costs)

[1]    The defendants seek costs on an application for stay of enforcement of a judgment pending appeal. The stay was the subject of a consent order following a joint memorandum filed by the parties dated 3 August 2022.

[2]    The order for stay, in terms of the joint memorandum reserved the question of costs. A direction was made for the filing of an application for costs by 16 September 2022. Subsequently the parties agreed to extend the date to 30 November 2022. An application was filed on that date. The application for costs is opposed by the successful judgment plaintiff who in turn seeks costs on the application for costs by the defendants.

MANGAROA 26N2 TRUST v HUATA [2022] NZHC 50 [1 February 2023]

[3]    The substantive judgment dated 8 February 2022 granted orders in favour of the plaintiff landlord as follows:1

(a)  Declaring that the lease expired on 30 September 2019 and the tenant was holding over without consent; and

(b) For the plaintiff’s possession of the land comprised and described in Certificate of Title HBV4/1351, being 17.6999 hectares more or less,

Lot 2 Deposited Plan 1996

[4]    The defendants lodged an appeal to the Court of Appeal and an application for security for costs. The notice of appeal is dated 7 March 2022. The judgment plaintiff sought an increased security for costs. That application has not yet been determined by the Court of Appeal.

[5]    The plaintiff issued a notice to the defendants to vacate the property on 4 April 2022, expiring on 6 May 2022. No approach to the plaintiff was made by the defendants before they filed the application for stay of execution of the judgment on 26 April 2022.

[6]    The plaintiff opposes the application for costs on the stay application on the following main grounds:

(a)The stay was granted by consent on conditions. The defendants did not approach the plaintiff with a view to agreement before applying for the stay;

(b)In support of the stay by the defendants, Mr Huata in his affidavit dated 26 April 2022, indicated there was insufficient time given to move the personal chattels, equipment and machinery trees and livestock within the period given to vacate the property which was from the date of the issue of the notice of 4 April 2022, to 6 May 2022. No mention was

1 Mangaroa 26NN2 Trust v Huata [2022] NZHC 113 (substantive judgment)

made in that of removal of buildings which the defendants now say is required.

(c)an application for stay of the costs order had been made. There were no grounds for that application to be made.

[7]    The defendants responded to those points in opposition by saying that there was no time to approach the plaintiff to negotiate a stay before it filed the application. They also say that the fact they now say there are buildings to be removed is not significant. It is usual to deal with such matters by negotiation between the parties following the termination of a lease particularly where possession of property expended for a period of over 35 years. In addition the application for stay of the costs order is not pursued and in any event is not a significant matter which would entitle the plaintiff to a reduction in costs to be awarded on a stay application.

Analysis

[8]    The defendants rely on the usual principle that costs should follow the event. The proceedings had been allocated category/band 2B basis for costs based on the level of complexity and time likely taken for steps. The defendants seek an award on a 2B basis for the steps taken in relation to the application for stay with the steps for preparation and the filing of the affidavit on a category/band 2C allocation.

[9]    The court did not hear the application for stay. The question of costs was reserved by consent. The arguments between the parties in relation to costs largely relate to the positions taken during the negotiations for the stay. In this case the court was not privy to the discussions and negotiations between the parties leading to agreement on the application for a stay. I am not in a position to determine the reasonableness or otherwise of those positions on the basis of the letters and emails between counsel attached to the submissions. Nevertheless it is apparent from those that while the landlord had initially taken the position that it would not agree to a stay the reasons for that largely appear to do with the concerns it had about the ongoing payment of rental and the compliance with the terms of the lease. On being told about the intention to remove the buildings the plaintiff indicated it would likely take a different view. The defendant did not make that clear at the outset.

[10]   . In a situation such as the present case the court may have been sympathetic to the application for stay given that the defendants possessions accumulated over some 35 years needed to be removed. However it is not clear who was actually living on the property at the time of the issue of the notice to vacate. Based on the evidence at the hearing Mr and Mrs Huata were not living on the property at the hearing stage. The issue of occupation is not mentioned in Mr Huata’s affidavit therefore it seems likely that the defendants are not living on the property. The property was also the subject of a licence or sublease by the Huatas which was entered into without the knowledge or consent of the landlord/plaintiff. It seems the licensee remains in possession at least of some of the property.

[11]   The Court has a discretion as to costs, however that discretion must be exercised on a principled basis and follow the rules as to costs set out in the High Court Rules and the relevant schedules.2 The usual position is that costs will follow the event, although there are a number of other factors to consider.

[12]   Also relevant to the stay application would have been the likely success of the appeal. This is difficult to determine at this stage. The grounds for appeal are relatively general as set out in the notice of appeal of 3 March 2022. They do not mention the particular ground which Mr Huata emphasises in his affidavit. The particular grounds to which he refers relate to the failure of the Court to allow him to pursue his claim for rights to the land based on tikanga and mana whenua. This was a matter raised by Mr Huata in his cross examination as the last witness giving evidence before the close of the hearing. It was not a claim which was pleaded nor was it foreshadowed earlier.3

[13]   Any stay certainly would not have been granted without conditions. The parties ultimately agreed to a number of conditions which were set out in the schedule to the consent memorandum as follows:

Schedule 1

Conditions of the stay of execution

2 Mangaroa 26N2 Trust v Huata [2022] NZHC 553 (the costs judgment).

3 Substantive judgment at {186] and [187].

1.  The defendants are to pay and remain rent six months in advance at the rate of $23,900.00 per annum plus GST. The first rental payment is due 20 August 2022 and covers the period of 1 August 2022 to 31 January 2023. Rent will then be invoiced monthly on the first of the month and payable by the end of the month.

2.  In the event they are unsuccessful, the defendants are to vacate the property within six months of determination of the Court of Appeal proceeding.

3.   The defendants are to comply with all tenancy obligations, subject to any specific arrangements agreed between the parties (either to date or in future).

4.  Leave is reserved for either party to apply to the Court to vary the conditions of the stay of execution if there is a change in circumstances.

[14]   The court is likely to have made orders for payment of rental in advance and other conditions at a minimum along the lines of those agreed to by the parties in the joint memorandum. The history of the defendants’ (or their interests’) occupation of the land included periods of time when the rental had not been paid on time. In addition there was evidence of the defendants’ disregard for the landlord’s rights, including by failure to seek its consent to sublease the property and for the erection of buildings.

[15]   At an earlier time in the history of the Huatas’ occupation of the property they had made much of the fact that they would not agree to sublet the property without the consent of the landlord. Yet it is common ground that they did sublet or licence it without the knowledge or consent of the landlord/plaintiff who found out about the arrangement only as a result of the issue of the proceedings for recovery which ultimately resulted in the substantive judgment.

[16]   Mr Huata in his affidavit said he had been meeting the rental payments for the property over the last two years and was paying rental at the time of the application for stay. The plaintiff said this was inaccurate. The defendants subsequently sought to explain Mr Huata’s evidence as to the payment. I am not in a position to determine the position with the payment of rental. However, the history of the matter is that the timely payment of the rental and compliance with the terms of occupation were wanting at times during the defendants’ occupation.

[17]   This is not a simple case where it is likely that a stay would be granted as a matter of course and therefore the defendant as the winner would be entitled to costs.

The plaintiff was justified in seeking conditions as to payment of rental and compliance with the holding over terms given the defendants’ poor compliance and payment history. Conditions would have been imposed on any order for a stay. As the stay was settled out of Court, I do not consider that the defendants can be regarded as the successful party in terms of the High Court Rules. Had there been early engagement between the parties it may be that an application for stay could have been dealt with by consent at the outset saving the taking of all the steps for which costs are now sought. There was ample opportunity for the defendants to seek agreement as to the stay at the outset.

[18]   As is apparent I am of the view that the defendants are not entitled to costs on the application for the stay.

[19]   In relation to the application by the plaintiff for costs on the failed application for costs on the stay, the defendants says that the plaintiff would not negotiate on its costs application. I have found that the defendant was not entitled to costs on its stay application. In those circumstances the plaintiff is entitled to costs on its application for costs against the defendant. The defendants in their costs application relied on the general rule that costs are awarded to the successful party. The plaintiff succeeded in its opposition. It is entitled to costs on a 2B basis for opposing the application costs on the stay.

Conclusion

[20]   The defendant’s application for costs on the stay application which had been granted by consent on conditions is dismissed.

[21]   The plaintiff’s application for costs on its opposition to the defendants’ application for costs on the stay is granted on a 2B basis together with reasonable disbursements.

Grice J

Solicitors:

Le Pine & Co, Taupō Wilson Harle, Auckland