Meng v Zhang

[2021] NZHC 131

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2020-404-816

[2021] NZHC 131

UNDER

Section 143 of the Land Transfer Act 2017

IN THE MATTER

of an application that Caveat No. 117039.1 not lapse

BETWEEN

XING MENG and HUIMIN GUAN

Applicants

AND

JUNHUI ZHANG and WEI XU

Respondents

Hearing:	By memoranda
Appearances:	C Pendleton for Applicants J R Moss for Respondents
Judgment:	10 February 2021

JUDGMENT OF LANG J

[on costs]

This judgment was delivered by me on 10 February 2021 at 3.30 pm, pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar Date……………

Solicitors:

Turner Hopkins, Auckland Righteous Law, Auckland

XING MENG v ZHANG [2021] NZHC 131 [10 February 2021]

[1]                 In this proceeding the applicant sought an order sustaining a caveat they had lodged over a property owned by the respondents. The caveatable interest asserted by the applicants arose from an arrangement they had entered into with the respondents to purchase the property in question.

[2]                 Following a hearing on 2 September 2020 I made an order that the caveat was not to lapse until 2 December 2020. The purpose of the order was to give the applicants the opportunity to complete the sale and purchase of the property. Ultimately, however, they were unable to arrange finance to enable them to complete the purchase. The agreement accordingly came to an end and the caveat lapsed on 2 December 2020.

[3]                 The parties have been unable to resolve the issue of costs in relation to the present proceeding. Both the applicants and the respondents contend they were the successful parties and are entitled to an award of costs and disbursements in their favour. I am required to determine which of the two competing arguments is correct.

Background

[4]                 The applicants agreed to purchase the property from the respondents in July 2018 for the sum of $1.78 million. They paid a deposit of $200,000 on 15 October 2018. It is common ground that the agreement was conditional on the applicants being able to raise sufficient finance to enable them to complete the purchase of the property thereafter. They lodged the caveat to protect their interests as conditional purchasers after paying the deposit.

[5]                 The terms of the agreement were set out in text messages sent using the WeChat application on 11 July 2018. Unfortunately, however, the text messages did not specify the date by which the applicants were to obtain finance to enable them to complete the purchase of the property.

[6]In making the orders on 2 September 2020 I observed:

[4] In cases such as the present, where the parties have evinced a clear intention to enter into a binding but conditional agreement, the Court may imply a term into the contract setting a date by which it would be reasonable

for a purchaser to obtain finance.1 In the ordinary course of events this would require the Court to sustain the present caveat and direct the applicants to file a fresh proceeding to determine this issue. That would plainly not be in the interests of the parties here, all of whom want to see the contract proceed to completion with the minimum delay and expense.

[7]                 Counsel for the applicants contended I should sustain the caveat for a period of six months to enable their clients to obtain finance. Counsel for the respondents contended the applicants should have no more than one month to confirm finance. I noted that the applicants had had since July 2018 to obtain finance to enable them to complete the purchase of the property. I did not consider any reasonable vendor would accept a term giving purchasers in the position of the applicants six further months within which to obtain finance. I considered an appropriate outcome to balance the interests of both parties to be a period of three months. I therefore sustained the caveat until 2 December 2020.2

Relevant principles

[8]                 All issues as to costs are at the discretion of the Court.3 In exercising its discretion, however, the Court is required to take into account the principles set out in r 14.2 of the High Court Rules 2016. To the forefront of these is the principle that the party who fails with respect to an interlocutory proceeding should pay costs to the party who succeeds.4 These principles govern the determination of costs in the present case.

Who was the successful party?

[9]                 I do not consider there can be any argument about this issue. The applicants sought to sustain their caveat and were successful in doing so, albeit for a period of just three months. The fact that they were ultimately unsuccessful in obtaining finance to enable them to complete the purchase does not affect the success the applicants achieved in sustaining their caveat. I therefore regard the applicants as the successful party.

1      Connell Street Ltd v Purewal B.S. & J.K. Ltd HC Auckland CIV-2009-404-870, 17 December 2010 at [26].

2      At [8](i).

3      High Court Rules 2016, r 14.1.

4      Rule 14.2(1)(a).

Result

[10]             The applicants are therefore entitled to costs on a Category 2B basis together with disbursements as fixed by the Registrar.

Lang J