Patel v Macleod - [2017] NZHC 990

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2016-404-1516 [2017] NZHC 990

BETWEEN
MANU PATEL, PAMELA PATEL AND

VINESH PATEL T/A GREENER CORNER

Applicants

AND

GRANT MACLEOD AND JACQUELINE MACLEOD AS TRUSTEES OF THE MACLEOD TRUST Respondents

Hearing: 12 April 2017

Counsel:

CC Mansell for applicants
KM McMullen for respondents

Judgment:

16 May 2017

JUDGMENT OF FITZGERALD J [Application for indemnity costs]

This judgment was delivered by me on 16 May 2017 at 11 am, pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date……………

Solicitors: Martelli McKegg, Auckland (AW Johnson) Cavell Leitch, Christchurch

Patel v Macleod [2017] NZHC 990 [16 May 2017]

Introduction

[1] The respondents (“the Macleods”) seek $10,500, plus GST and disbursements, in solicitor/client costs (on an indemnity basis) from the applicants (“the Patels”). The Macleods say they incurred these costs in opposing the Patels’ ultimately discontinued application for relief against forfeiture of a commercial lease. The Macleods say that they are entitled to these costs on the basis of a contractual clause to that effect in the underlying lease between the parties.

[2] The Patels, however, say that costs should not be awarded to the Macleods. This is on the basis that the proceedings were discontinued following a settlement, and that the default position in such circumstances is that costs lie where they fall. Alternatively, the Patels say that it was unreasonable for the Macleods to have incurred the costs that are now claimed, given the parties had entered into a prior settlement which resolved the matters in issue. Finally, the Patels say that if costs are to be awarded to the Macleods, they should be calculated on a scale (2B) basis, as the contractual costs clause does not apply in the current circumstances.

[3] There have been significant delays (not of the parties’ making) in costs being determined. It seems that for a number of months in the latter part of 2016, the respondents were unaware of Duffy J’s minute dated 13 September 2016, in which Her Honour ordered that a hearing be allocated to determine the Macleods’ application for indemnity costs. Those delays are unfortunate and regrettable,
particularly given the principle that costs ought to be determined expeditiously.1

Background

[4] At all material times, the Patels had operated a café/grocery store in Takapuna. From August 2015, they leased their premises from the Macleods, who act as trustees of the Macleod Trust. The lease agreement was a standard-form
ADLS deed.

1 High Court Rules 2016, r 14.2(g).

[5] On 10 May 2016, the Macleods served the Patels with a notice of intention to cancel the lease. This was on the grounds that the Patels had rent and outgoings in arrears (being the rent and outgoings for May 2016, due on 1 May 2016).2

[6] During the subsequent 14-day notice period, the Patels managed to partially pay these arrears. But they did not fully pay the arrears before the notice expired on
25 May 2016. So on 26 May 2016, the Macleods re-entered…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Patel v Macleod

Details

AGLC: Patel v Macleod [2017] NZHC 990
Case: [2017] NZHC 990
Decision Date: 16 May 2017

CaseChat Overview and Summary

The Macleods sought indemnity costs from the Patels in the amount of $10,500, plus GST and disbursements, following the Patels’ discontinuation of their application for relief against forfeiture of a commercial lease. The Macleods claimed that they were entitled to these costs pursuant to a contractual clause in the underlying lease agreement. The Patels argued that the costs should not be awarded because the proceedings were discontinued following a settlement and that the default position in such circumstances is that costs lie where they fall. Alternatively, the Patels argued that it was unreasonable for the Macleods to have incurred the costs that are now claimed, given the parties had entered into a prior settlement which resolved the matters in issue. The Patels further argued that if costs are to be awarded to the Macleods, they should be calculated on a scale (2B) basis, as the contractual costs clause does not apply in the current circumstances.

The court found that the presumption under r 15.23 of the High Court Rules 2016, which provides that a party who discontinues a proceeding should pay costs to the other party, was engaged. The court further found that the Macleods were entitled to a costs award in this case, and that it was reasonable for them to file their notice of opposition when they did. The court also found that clause 6.1 of the lease agreement applied to Macleods’ opposition to an application for relief against forfeiture, and therefore gave the Macleods a prima facie entitlement to indemnity costs. However, the court considered that the actual time and costs involved appeared somewhat high and reduced the costs claimed by the Macleods by a further $1000, to reflect what it considered to be a reasonable level of costs incurred in opposing the application.

The Macleods were entitled to solicitor/client costs of $9,500, plus disbursements (GST exclusive) of $757.27.

Orders