Parklane Infrastruct Limited v Lu Trustee Limited

[2020] NZHC 2102

IN THE HIGH COURT OF NEW ZEALAND HAMILTON REGISTRY

I TE KŌTI MATUA O AOTEAROA KIRIKIRIROA ROHE

CIV-2020-419-000042

[2020] NZHC 2102

BETWEEN

PARKLANE INFRASTRUCT LIMITED

Applicant

AND

LU TRUSTEE LIMITED and HO NO. 2 TRUSTEES LIMITED

Respondents

Hearing:

(On the papers)

Counsel:

Matthew Casey QC for the Applicant

Kate Cornegé and John Muggeridge for the Respondents

Judgment:

20 August 2020

[COSTS] JUDGMENT OF MOORE J

This judgment was delivered me on 20 August 2020 at 9:00 am pursuant to Rule 11.5 of the High Court Rules.

Registrar/ Deputy Registrar Date:

PARKLANE INFRASTRUCT LIMITED v LU TRUSTEE LIMITED & ANOR [2020] NZHC 2102 [20 August 2020]

Introduction

[1]                  This judgment determines costs applications following my judgment ordering that the applicant’s caveat lodged against the respondent’s property not lapse.1 The parties have made submissions as to costs. Essentially, they disagree whether an offer made by the applicant to the respondent on 29 April 2020 entitles the applicant to increased costs.

Background

[2]                  The respondents sought that the caveat lapse, or if one was made, sought that the applicant undertake as to damages and that the caveat be limited to Lot 3 of the property.

[3]                  On 29 April 2020, the applicant made an offer to the respondents to settle the caveat proceeding. It proposed the rights of both parties if the applicant’s interest in the property, conferred by the 14 February letter, was finally upheld in Court. The relevant aspects of that offer were that:

(a)the applicant would have access rights over the strip of Lot 201 connecting the respondents’ land to Bourke Drive;

(b)the respondents would support the applicant’s proposal for the Kiwibuild project;

(c)(subject to consents) the applicant could complete the roading and services through Lots 3 and the Bourke Drive extension area;

(d)if the respondents wished to develop Lot 3 before the applicant gained consents for its development, the costs of roading and services would be covered by the respondents in accordance with a plan to be agreed between the parties. These costs would be reimbursed if the respondents gained the consents; and

1      Parklane Infrastruct Limited v Lu Trustee Limited & Anor [2020] NZHC 1182.

(e)the applicant would consent to the respondents’ subdivision and partially withdraw the caveat on Lot 1 and Lot 2.

Submissions

[4]                  The applicant seeks on a 2B basis,2 with a 50 per cent uplift for steps taken after 29 April 2020. That amounts to costs of $19,359, plus disbursements of $734.63, calculated as follows:

Step	Allocated days
Filing originating application and affidavits	2
Memorandum for first conference	0.4
Appearance at first conference	0.3
Sealing order	0.2
Memorandum for second conference	0.4
Appearance at second conference	0.3
Sealing order	0.2
Preparing written submissions	1.53
Preparing bundle	0.6
Hearing	0.5
Sealing judgment	0.2
6.6
Total costs 2B basis	$15,774.00
+ 50 per cent for last six steps	$3943.50
Total increased costs	$19,717.50

2      High Court Rules 2017, schs 2 and 3.

3      In the applicant’s submissions, this was marked as 1.4 days in error. As a result, both parties’ calculations of quantum are slightly off.

[5]                  The respondents submit that the applicant is only entitled to costs on a 2B basis, amounting to $15,535, plus disbursements.

Principles

[6]                  The Court may make an order for increased costs where the unsuccessful party failed without reasonable justification, to accept an offer of settlement.4 The onus is on the party claiming increased costs to demonstrate that the increase is justified.5 The reasonableness of a party's rejection of an offer must be assessed at the time the offer was made. It will depend on the size and timing of the offer, the reasonable expectations of the party refusing the offer and on the parties’ ability, at the time of the offer, to assess the merits of the case.6

Does the respondent’s failure to accept the offer justifies increased costs?

[7]                  Mr Casey submits that the offer was reasonable. He states that had the respondents accepted the offer, they would now be in a better position and the applicant would have saved the costs of making the application.

[8]                  Ms Cornegé for the respondents submits that no increase is justified, because the respondents did not act unreasonably in rejecting the offer. She states that the offer was relied on at the hearing in support of the respondents’ submission that restricting the caveat would not prejudice the applicant’s legitimate interests. She states the prescribed rights set out in the offer were extensive.

[9]                  The judgment only determined the issue of whether the caveat should lapse. The contents of the applicant’s offer extend beyond that issue. It set out how the parties would be responsible for obtaining the consents and carrying out the work necessary for the access way. As noted by Ms Cornegé, one clause would have required the parties to agree to a plan for roading and services if the respondents wished to develop Lot 3 before the applicant gained consents. The applicant would only have to reimburse those costs if the applicant gained consent for the Kiwibuild

4      High Court Rules 2016, r 14.6(3)(b)(v).

5      Strachan v Denbigh Property Ltd HC Palmerston North CIV-2010-454-232, 3 June 2011 at [27].

6      Samson v Mourant [2016] NZHC 1119 at [44].

project. Ms Cornegé states this would have given the applicant significant power and control where its development might not ever come to fruition. I am inclined to agree. Further, the offer would have required the respondents to support the applicant’s plan for the Kiwibuild project and not go after it themselves.

[10]              The offer was more than an attempt to avoid costs in the caveat proceeding. On that basis, I will not grant the applicant increased costs because the respondents failed to accept the offer.

[11]              In addition to the submissions made above, Mr Casey stated it was also relevant that the respondent challenged the caveat by sending the applicant a letter demanding it be withdrawn, and then commencing the process in s 143 of the Land Transfer Act 2017 of applying to lapse the caveat. He submits that the respondents could have invited the applicant to commence substantive proceedings before they took such steps, but instead the applicant was required to file and obtain orders urgently.

[12]              I do not consider that the respondents making the application under the process in s 143 to be an unreasonable action warranting an increase in costs.7

[13]              Mr Casey also made a brief submission that the costs as claimed made no allowance for the filing of the reply affidavit of Trent Cary, so if increased costs are not granted that step should be allocated its own costs. However, the applicant has claimed for two days’ worth of costs for ‘Filing originating application and affidavits’. That is sufficient. The actual time spent and costs incurred are irrelevant.8

Orders

[14]The applicant is entitled to costs of $15,774, plus disbursements of 734.63.

7      Samson v Mourant [2016] NZHC 1119 at [39]-[41].

8      Woolf v Kaye [2018] NZHC 3426 at [12]-[17].

[15]Orders accordingly.

Moore J

Solicitors:

Mr Casey QC, Auckland Tomkins Wake, Hamilton