Niven v 8 Hereford Limited

[2021] NZHC 688

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2020-404-2382

[2021] NZHC 688

UNDER

Rule 19.2 of the High Court rules and s 142 of the Land Transfer Act 2017

IN THE MATTER

of an application to remove a caveat

BETWEEN

ALISTAIR GRANT NIVEN

Applicant

AND

8 HEREFORD LIMITED

Respondent

Hearing:	On the papers
Appearances:	I J Stephenson for the Applicant C A Murphy for the Respondent
Judgment:	31 March 2021

JUDGMENT OF GAULT J

(Costs)

This judgment was delivered by me on 31 March 2021 at 1:00 pm pursuant to r 11.5 of the High Court Rules 2016.

Registrar/Deputy Registrar

……………………………………

Solicitors / Counsel:

Mr I J Stephenson, lane Neave, Auckland Ms C A Murphy, Barrister, Auckland

Mr G Simon (respondent’s instructing solicitor), Gregory Simon Law, Auckland

NIVEN v 8 HEREFORD LTD [2021] NZHC 688 [31 March 2021]

[1]                This originating application to remove a caveat was resolved except in relation to costs. The applicant sought timetable directions for the filing of memoranda as to costs and for costs to be determined on the papers.

[2]                The applicant says that the respondent and/or its agent lodged the caveat without reasonable cause and therefore improperly. While the respondent later removed the caveat, the applicant was put to the unnecessary cost of the application to remove and seeks actual costs incurred or, in the alternative, 2B scale costs.

[3]                The respondent says that costs have already been decided between the parties pursuant to a settlement agreement and, alternatively, that costs should lie where they fall.

Discussion

[4]                Where a dispute arises between the parties as to whether costs have been agreed, it is appropriate to address first whether there is an agreement. In some circumstances that may require affidavit evidence and possibly a hearing. However, in this case, the issue of an agreement as to costs only arose in the respondent’s memorandum, which attached a settlement agreement, and the applicant elected not to file a reply. I can therefore also deal with this issue on the papers.

[5]                The settlement agreement was signed on the same day that the originating application was served. The issue is whether the settlement agreement relates to this proceeding. In the absence of any argument from the applicant, I accept the respondent’s submission that the signed settlement agreement precludes a claim for costs. Although the top of the document cites only the substantive District Court proceeding number, the agreement refers to the discharge of the caveat upon payment in clause 5 and I consider that the combination of clauses 4 and 6 mean that the parties agreed to settle the proceedings plural, that is both the District Court proceeding and this proceeding, with no issue as to costs.

[6]                Even if a claim  for costs were not  precluded by  the settlement  agreement,   I do not consider that indemnity costs should be awarded, for the following reasons.

[7]                As the Court of Appeal said in Bradbury v Westpac Banking Corporation, indemnity costs may be ordered where a party has behaved either very badly or very unreasonably.1 The Court elaborated, saying that indemnity costs, which depart from the predictability of the Rules Committee’s regime, are exceptional and require exceptionally bad behaviour. That is why to justify an order for such costs the misconduct must be flagrant.2

[8]                A party claiming indemnity costs carries the onus of persuading the Court that such an award is justified.

[9]                In support of its claim for indemnity costs, the applicant says the respondent did not have reasonable cause to lodge the caveat. The applicant’s criticism relates to the respondent’s conduct before the proceeding was commenced. Even if that criticism is correct, that is not a basis for awarding indemnity costs in the subsequent proceeding to remove the caveat. The Court is concerned with the costs of the proceeding. The respondent’s alleged misconduct is not conduct in commencing, continuing, or defending  a proceeding or a step in a proceeding within the terms of  r 14.6(4)(a) of the High Court Rules 2016. Generally, costs should reflect how parties have acted during litigation, not before it.3

[10]            Further, even if lodging the caveat were conduct in the proceeding, in a case that does not proceed to final determination, indemnity costs may only be awarded on the basis of lack of merit where the lack of merit is both obvious and incontrovertible.4 Here, the respondent does not make any concession in relation to its caveat. Consideration of whether the caveat lacked merit would require assessment of the evidence – it is not obvious and incontrovertible. A post-resolution inquiry into the reasonableness of the parties’ conduct is ordinarily contrary to the objectives of the costs rules.

1      Bradbury v Westpac Banking Corporation [2009] NZCA 234, [2009] 3 NZLR 400 at [27]-[28].

2 At [28].

3      Paper Reclaim Ltd v Aotearoa International Ltd [2006] 3 NZLR 188 (CA) at [160]; and Paper Reclaim Ltd v Aotearoa International Ltd [2007] NZSC 26, [2007] 3 NZLR 169 at [40]-[41].

4      N-Tech Ltd v Abooth Ltd [2012] NZHC 1167 at [108]; and Sealegs International Ltd v Zhang

[2020] NZHC 912 at [23].

Result

[11]There is no order as to costs.

Gault J