Newman v Dey
[2025] NZHC 1981
•17 July 2025
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2024-404-000475
[2025] NZHC 1981
UNDER Property Law Act 2007 IN THE MATTER OF
An application under ss 316 and 317 of the Property Law Act 2007 to modify covenant
BETWEEN
CAMPBELL JAMES NEWMAN, HAZEL ANNE NEWMAN and EUGENE FRANCIS SPARROW
Applicants
AND
STEPHEN JOHN DEY and LIANE MARY DEY
Respondents
Hearing: On the papers Counsel:
D J Chisholm KC and J D Ryan for Applicants A C N Fuiava for Respondents
Judgment:
17 July 2025
JUDGMENT OF ANDREW J
[Costs]
This judgment was delivered by me on 17 July 2025 at 3 pm, pursuant to r 11.5 of the High Court Rules
Registrar/Deputy Registrar Date:
NEWMAN v DEY [2025] NZHC 1981 [17 July 2025]
Introduction
[1] In my substantive judgment of 17 April 2025,1 I granted the Newmans’ application for modification of an easement. I also ordered that the Newmans were to pay the Deys the sum of $100,000 in compensation pursuant to s 317(2) of the Property Law Act 2007 (PLA).2
[2]This judgment contains my decision on costs.
Submissions
[3]Both parties contend they are entitled to costs.
[4]The Newmans say they are entitled to 2B costs plus disbursements totalling
$30,000. Their submissions largely hinge on the recent judgment of Grau J in Kingsbeer v Okey, in which her Honour, endorsing the leading authorities of Synlait Milk Ltd v New Zealand Industrial Park Ltd3 and North Holdings Development Ltd v WGB Investments Ltd,4 held:5
Although the question here is different, being only whether costs should be awarded against the unsuccessful objector, I have some similar concerns about “immunising” an objector in the circumstances of the present case when there has never been any real attempt by the respondents to engage with the applicants’ concerns since 2017, and where the defence was largely based on what I considered was an unsupportable contention that it was not the respondent’s fault the parties could not get the road repaired.
[5] Mr Chisholm KC submits the respondents’ conduct has been unreasonable from the outset, noting that the Newmans made “genuine efforts” to resolve the matter amicably prior to commencing these proceedings. He says the Deys “unreasonably disregarded” the purpose of the easement and it was this misapprehension of the easement’s legal nature and purpose that ultimately made a cost-effective and practical resolution “impossible” and proceedings inevitable.
1 Newman v Dey [2025] NZHC 949.
2 At [79].
3 Synlait Milk Ltd v New Zealand Industrial Park Ltd [2020] NZSC 157, [2020] 1 NZLR 657.
4 North Holdings Development Ltd v WGB Investments Ltd [2014] NZHC 1175.
5 Kingsbeer v Okey [2024] NZHC 3582 at [21].
[6] The Newmans submit that the Deys’ “unreasonable conduct” was further compounded by:
(a)the respondents refusing to engage with an open pre-litigation settlement offer in January 2023;
(b)the respondents objecting based on their standing as the registered proprietors of 52 Wairoa Road and asserting detriment in relation to that title, rather than Driveway A;
(c)the respondents’ claiming loss of amenity to 52 Wairoa Road and making an unsubstantiated claim for compensation of $210,000;
(d)the applicants not seeking an indulgence (contrary to the respondents’ submission);
(e)the “gratuitous and irrelevant evidence of the respondents directed at attacking the integrity of the applicants”; and
(f)the respondents’ attempt in Calderbank offers to impose conditions that were not available as relief in the proceedings and seeking compensation that was significantly greater than directed by the Court.
[7] Mr Chisholm says this was a “clear-cut case” and that it was therefore unreasonable for the Deys to attempt to maintain the easement as a restriction on future development. As such, he submits that it is appropriate to depart from the usual approach of costs lying where they fall and instead follow Grau J’s approach in Kingsbeer and award costs to the applicants.
[8]The Deys say they are entitled to 2B costs and disbursements totalling
$42,750.85. They say they were entitled to oppose the modification and costs have been awarded in previous cases to parties in a similar position to them. They say they acted reasonably and that the applicants conducted the proceedings in a manner that caused a significant increase to the Deys’ costs, namely the late-stage reframing of the
application from being for the modification of a covenant to the modification of an easement.
[9] Ms Fuiava first submits that costs should not be awarded against the respondents, based on the general principles provided in Synlait6 and North Holdings.7 She says the arguments put forward in opposition were reasonable and, in circumstances where the issue of standing was only raised in the amended application filed just prior to the hearing, the respondents acted as reasonably as they could. As such, she submits no costs award should be made against the Deys.
[10] The respondents submit that costs should be awarded in their favour against the applicants as the result was “mixed”, given the Deys’ success in obtaining compensation. In making this submission, Ms Fuiava relies on three cases she says involved the award of costs to respondents in similar circumstances: MacRae v Walsh,8 J T Jamieson & Co Ltd v Inland Road Ltd,9 and Queen Elizabeth II National Trust v Green Growth No 2 Ltd.10 She says those cases provide that, where the applicant is granted an indulgence by the Court, costs should be awarded against the party seeking the indulgence.
[11] In relation to offers for settlement, Ms Fuiava set out a series of offers and counter-offers made prior to and following the commencement of proceedings and submits that, on an assessment of Calderbank principles, the correspondence supports an award of costs being made in favour of the Deys.
[12] The respondents also submit that the award of compensation made in the substantive judgment “specifically excludes the legal costs incurred by the respondents from the award of compensation” and that, if an award of costs is not made in favour of the respondents, this would significantly negate the award of compensation.
6 Above n 3.
7 Above n 4.
8 MacRae v Walshe [2013] NZCA 664, (2013) 15 NZCPR 254.
9 J T Jamieson & Co Ltd v Inland Road Ltd [2014] NZHC 1170.
10 Queen Elizabeth II National Trust v Green Growth No 2 Ltd [2015] NZHC 343.
[13] Finally, Ms Fuiava seeks clarification as to which party will bear the cost of executing the orders made in my substantive judgment and submits that those costs should be borne by the applicants.
Relevant legal principles
[14] It is reasonably settled, following the Supreme Court’s decision in Synlait Milk Ltd v New Zealand Industrial Park Ltd, that where an application is brought to extinguish or modify an easement or covenant under the PLA, the respondent holding the existing rights (in this case, the Deys) is entitled to defend its rights and will not be subject to an adverse costs award if it fails at first instance.11 As Katz J explained in North Holdings Development Ltd v WGB Investments Ltd:12
[11] The nature of the proceedings must be kept in mind when considering costs issues. Unlike in ordinary civil litigation, a party who opposes extinguishment or modification of a covenant starts from the position of being “in the right”. In opposing the application they are seeking to protect their existing legal rights. For that reason the normal rule that costs follow the event does not apply. A respondent who unsuccessfully opposes an application to extinguish or modify a covenant should generally not have to pay the applicant’s costs, unless he or she has acted unreasonably.
[15] Referring to the Australian approach of awarding costs to an unsuccessful objector, the Court in Synlait noted:13
On balance, we consider awarding costs to an unsuccessful objector would not be appropriate. It is one thing to protect the objector from an adverse costs award against it, assuming it acts reasonably. But if the objector is also immunised from any cost of defending its covenant, there is no real incentive for it to engage with a proposal to address the applicant’s concerns without the need for a court application. We do not think that is desirable.
[16] As such, the presumption is that costs will not be awarded against a respondent who unsuccessfully, but reasonably, opposes the extinguishment or modification of an easement. Rather, in all but exceptional cases, such as Kingsbeer v Okey, as cited by the applicants, costs should lie where they fall.14
11 Synlait Milk Ltd v New Zealand Industrial Park Ltd, above n 3, at [201]–[205].
12 North Holdings Development Ltd v WGB Investments Ltd, above n 4.
13 Synlait Milk Ltd v New Zealand Industrial Park Ltd, above n 3, at [204].
14 See for example: Sidwell Developments Ltd Partnership v Top Dream Development Ltd [2024] NZHC 1928; and Tisot v Selak [2024] NZHC 3162.
Analysis and decision
[17] The critical issue is whether the Deys’ opposition to the modification of the easement was reasonable. The parties have opposing views on this issue.
Reasonable opposition
[18] While this case was complicated by the unusual composition of the easement instrument, it was reasonably clear cut. Any merit in the respondents’ opposition to the application was significantly undermined by their misinterpretation of standing from the outset. As I noted in my substantive judgment, much of the opposition by the Deys was based on their rights and interests as the registered proprietors of 52 Wairoa Road, rather than as owners of Driveway A. It was thus entirely irrelevant to my consideration of the application.
[19] Further, the Deys placed significant emphasis on the purpose of the easement being compromised by the proposed modification. However, they misconstrued the purpose of the easement; their opposition was flawed from the outset. Had the purpose of the easement been obscure or more uncertain, I would have been more inclined to find the opposition reasonable. However, as I held, the purpose clearly related to access to 50 Wairoa Road and Driveway A, not the restriction of development at 50 and 52 Wairoa Road.
[20] While reasonableness generally relates to a respondent’s actions in the course of proceedings, I find relevant the Deys’ lack of engagement with the Newmans’ attempt to reach a mutually beneficial arrangement more than two years before the substantive hearing. Had the Deys engaged with the Newmans to reach agreement on or around the terms the Newmans proposed in January 2023, they would likely have been left in the same position as they now find themselves, but with one and a half times the compensation and without the significant cost associated with the court proceedings.
[21] Consequently, I consider the respondents’ opposition to the modification was unreasonable.
[22] While the case of Kingsbeer, provided by the applicants as authority for the award of costs against the respondents, is quite different to the present, in that the dispute in that case was much more prolonged and the opposition was even less reasonable than in the present case, I accept it provides an adequate basis to depart from the orthodox approach taken in Synlait, Sidwell and Tisot. The opposition advanced in those cases had, at a minimum, some arguable basis.
[23] For example, in Sidwell, Brewer J found that “the respondents’ arguments were real ones and tested the boundaries of the law … [t]here was a degree of uncertainty.”15 In this case, most of the arguments advanced by the respondents were flawed and much of the complexity and uncertainty arose from the respondents’ misinterpretation of the situation. Once the question of standing was resolved, the substantive application was reasonably straightforward and did not involve much, if any, legal complexity.
[24] For the avoidance of doubt, the modification was not, as the respondents suggest, an indulgence that would preclude the award of costs in favour of the applicants. It is certainly the case that, where an indulgence is granted, that will be at the expense of the party obtaining it.16 However, as Grau J noted in Kingsbeer, the granting of an application for modification of an easement is not an indulgence. Her Honour noted that “it is difficult to view the applicants as seeking any indulgence when Parliament has expressly codified the ability to modify or extinguish an easement (or covenant) where the requirements in s 317 are met”.17 As in Kingsbeer “that is exactly what has occurred in this case”.
[25] For all these reasons, I find it appropriate to depart from the orthodox approach of ordering that costs are to lie where they fall. As I consider it appropriate to award costs against the respondents, it follows that there is no basis for costs to be awarded in their favour. However, for completeness, I address the key submissions made by the respondents in seeking costs.
15 Sidwell Developments Ltd Partnership v Top Dream Development Ltd, above n 14, at [23].
16 Queen Elizabeth II National Trust v Green Growth No 2 Ltd, above n 10, at [9].
17 Kingsbeer v Okey, above n 5, at [26].
Late amendment of application
[26] The respondents take issue with the late-stage amendment of the Newmans’ application for modification, noting that it was initially brought to modify a covenant rather than an easement, and saying that this “necessitated a substantial revision of the respondents’ position and led to additional costs”. In my view, while the late amendment to the application was unfortunate (i.e. it would have been preferable for the amendment to have been made much earlier), it was entirely justified and necessary. Had no such amendment been made, the hearing would have proceeded on an incorrect basis and would have entirely overlooked the fundamental issue of standing that formed a significant portion of my decision.
[27] I acknowledge that the respondents raised their concerns with the amended application at the time and at the hearing. I appreciate that it would have been challenging to modify submissions to reflect this change at such short notice. I also note that there may have been a procedural issue in the manner in which the amended application came before the Court, as it appears to have been made filed without leave and after the close of pleadings date.18 However, the respondents did not expressly take issue with the amendment on this basis.
[28] Despite their frustration with the amendment, I note that, in their substantive submissions, the respondents said of the Memorandum: “It was never a covenant, as pleaded in the original application”. Further, s 317 applications differ between easements and covenants in very limited circumstances — none of which were raised by the applicants in either their original or amended application. As such, I reject the respondents’ submission that the late amendment to the application provides any basis for a costs award in their favour.
Effect of Calderbank offers
[29] Four Calderbank offers were exchanged prior to the hearing, two of which (those made by the Deys) are said to be relevant.19
18 High Court Rules 2016, r 7.6–7.7.
19 See High Court Rules, rr 14.10–14.11.
[30] Subject to the Court’s overriding discretion, a Calderbank offer creates a “presumptive entitlement” to costs on the steps in the proceeding after the offer is made if the offering party offers a sum of money to the other party that exceeds the amount of a judgment obtained against the offering party or if the offering party makes an offer that would have been more beneficial to the other party than the judgment obtained against the offering party.20 An offer may also be taken into account if it was close to the value or benefit of the judgment obtained by the successful party.
[31] The Deys’ first Calderbank offer was made on 26 June 2024 and proposed the replacement of the easement with a condition preventing the use of Driveway A by any new dwelling built on the Newmans’ property and $150,000 in compensation from the Newmans. The second Calderbank offer was made on 24 February 2025 and involved the same replacement of the easement as in the June offer, but included a series of additional conditions which would severely limit the Newmans’ ability to develop their property.
[32] Judgment was obtained against the Deys. As such, the Deys would only be entitled to costs under r 14.11 of the High Court Rules 2016 if the benefit in the offers they made exceeded or was close to the benefit the Newmans obtained through my judgment. In my view, their offers would not have provided greater benefit to the Newmans than my judgment has. The first offer would have required the Newmans to pay one and a half times the compensation I ordered. The latter offer, made one week before the hearing, would have been detrimental to the Newmans, both financially and in terms of their legal interest in Driveway A. In light of the offers made by the Deys and rejected by the Newmans, I do not consider the making of Calderbank offers in any way entitles the Deys to a costs award in their favour.
20 Aldrie Holdings Ltd v Clover Bay Park Ltd (No 2) [2016] NZHC 1482 at [23].
Quantum
[33]The applicants seek the following costs:
Cost item Allocation Amount 37. Filing application and supporting affidavits 2 $4,780 39. Case management (as for ordinary proceeding) 0.4 $956 40. Preparation of written submissions 1.5 $3,585 41. Preparation by applicants of bundle for hearing 0.6 $1,434 42. Appearance by principal counsel 1.5 $3,585 43. Second and subsequent counsel if allowed by court 0.75 $1,792.50 Total $16,132.50
[34] I decline to certify for second counsel. It is for the party seeking certification for second counsel to demonstrate why the presence of second counsel was warranted in the circumstances and the applicants have provided no submissions to discharge their onus.21
[35] Otherwise, the costs sought are reasonable and I will award costs of $14,340 against the respondents.
[36]As to disbursements, the applicants seek a total of $21,175.50. Of this
$17,307.50 is attributed to “Expert – Seagars”. No further information has been provided and there does not appear to be anything on file to verify this disbursement.22 If the applicants wish to pursue the claim for these disbursements, itemised invoices will need to be filed for the Court’s approval.
[37] The applicants have responsibly acknowledged that a portion of their expert’s costs related to the valuation at 52 Wairoa Road and, as such, seek a reduced award of
$30,000. I deduct from this the amount sought for second counsel, namely $1,792.50.
21 Specialised Structures New Zealand Ltd v Findlater Construction Ltd [2016] NZHC 1752 at [8]. Also see Body Corporate S73368 v Otway (No 2) [2018] NZHC 1761 at [4]; and Nomoi Holdings Ltd v Elders Pastoral Holdings Ltd (2001) 15 PRNZ 155 (HC) at [21].
22 As required by r 14.12(2) of the High Court Rules.
Result
[38] I order that the respondents are to pay the applicants’ costs and disbursements in the sum of $28,207.50 — but subject to receipt of invoices and Court approval in relation to the disbursements.
[39] Regarding the clarification sought at [13] above, I consider it is reasonable for the cost associated with the execution of the orders made in my substantive judgment to be borne by the applicants as they are the only party to benefit from the execution of those orders.
Andrew J
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