Patel v Rajjo Nominees Limited
[2018] NZHC 2746
•23 October 2018
IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY
I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE
CIV-2018-485-654
[2018] NZHC 2746
BETWEEN NAGINBHAI NEIL GHELABHAI PATEL and RATILAL BHIKHUBHAI PATEL as
trustees of the Vishnu Trust Plaintiffs
AND
RAJJO NOMINEES LIMITED
First defendant
JOHN ANDREW DEAN
Second defendant
Hearing: 23 October 2018 Appearances:
First-named plaintiff in person
Mr John Dean for the first and second defendants
Judgment:
23 October 2018
JUDGMENT OF ASSOCIATE JUDGE JOHNSTON
[1] This matter, which was called in the Wellington Commercial List today, is not without its curiosities.
[2] The trustees of the Vishnu Trust, which owns a number of Wellington properties, engaged the second defendant, Mr John Dean, a Wellington solicitor, to act for them in a liquor licencing matter. Apparently, pursuant to the contract of retainer, set out in a letter of engagement which is not before the Court, the trustees agreed to permit the firm to take security in relation to any outstanding costs. A dispute arose concerning costs. The trustees say that Mr Dean overcharged them. Mr Dean denies this. Mr Dean assigned the right to recover this debt to the first defendant, Rajjo Nominees Ltd, a company closely associated with his practice. At some stage,
PATEL v RAJJO NOMINEES LIMITED [2018] NZHC 2746 [23 October 2018]
in purported exercise of the right to take security for outstanding costs, Rajjo registered caveats over 11 properties owned by the trustees. Then it commenced recovery proceedings in the District Court. The recovery proceedings were not defended. A judgment by default was obtained by formal proof evidence on 10 March 2017. The judgment amount – including interest and costs to that date – was $123,140.97. That judgment was then sealed in this Court for enforcement purposes. Charging orders over the same properties were then obtained and orders for sale followed. The trustees then paid the amount due, and it is common ground between the parties that the full amount of the judgment debt has been discharged.
[3] The trustees now ask the Court for orders removing the caveats and discharging the charging orders.
[4] The defendants oppose the former order. Insofar as the latter order is concerned, Mr Dean accepts that if the charging orders have not already expired by reason of the effluxion of time, they should be discharged.
[5] The objection to any order removing the caveats is, as I understand Mr Dean’s argument, two-fold.
[6] First, he says that the original judgment in the District Court was obtained not only against the trustees of the Vishnu Trust, but against Challenge Enterprises Ltd, and Mr Naginbhai Patel and Mr Nalini Patel in their personal capacities (as opposed to their capacities as trustees).
[7] Second, he tells me that the trustees have now applied to this Court for an order setting aside the District Court judgment obtained by default and that if that application were to be successful then Rajjo would be disadvantaged because of the prohibition contained in s 148 of the Land Transfer Act 1952 against the registration of a second caveat.
[8] I am unable to see how the fact that the original judgment was obtained against parties other than the trustees is relevant to anything I must decide. This, as I have said, is an application by the owners of property for the removal of caveats and the
discharge of charging orders over property owned by them. There are no caveats or charging orders affecting property owned by any other defendant in the original proceeding. Mr Dean’s first point is without substance.
[9] It is quite correct to say that if I make an order removing the caveats Rajjo will be unable, if the District Court judgment is set aside, to register any further caveats.
[10] However, that disadvantage to Rajjo has be set against the disadvantage to the trustees of the existence of the caveats in the meantime.
[11] In my judgement, the merits are overwhelmingly with the trustees. They have paid the amount of the judgment debt and are entitled to be relieved of the burden of caveats registered over their properties (as well as the charging orders if they still exist). In my view, in such circumstances, it would be a gross injustice for them to be deprived of the entitlement to deal as they wish with their own property.
[12]On those bases, I make orders:
(a)by consent, for the discharge of the charging orders over the 11 properties owned by the trustees and identified in the affidavit of Mr Naginbhai Neil Ghelabhai Patel dated 21 August 2018 (see the certificates of titled collectively referred to as Annexure 3 thereto); and
(b)for the removal of the caveats registered over those same titles.
[13] Mr Dean seeks an order for his removal as a defendant in this proceeding. In my view he is entitled to such an order. He should not have been cited as a defendant in the first place. I make an order striking out Mr Dean as the second defendant.
[14] I invited both Mr Patel and Mr Dean to make submissions on costs and I now turn to those. The plaintiffs would be entitled to costs on a 2B basis except that as far as I am aware they have not engaged solicitors and certainly did not engage counsel. That being so, they are entitled to an order for recovery of their disbursements but nothing more. I make that order against the first defendant only.
[15] Mr Dean sought costs in any event in relation to his application for his removal as a defendant. Having regard to the terms of the Court of Appeal’s decision in McGuire v The Secretary for Justice1, he faces the same difficulty. In short a solicitor acting for himself is not entitled to costs. I decline to make any costs order in relation to the aspect of this case.
Associate Judge Johnston
Solicitors:
John Dean Law Office, Wellington
1 McGuire v The Secretary for Justice [2018] NZCA 37.
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