Queen Elizabeth Ii National Trust v Green Growth no.2 Limited

[2015] NZHC 343

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2012-404-004592 [2015] NZHC 343

BETWEEN

QUEEN ELIZABETH II NATIONAL

TRUST Plaintiff

AND

GREEN GROWTH NO. 2 LIMITED Defendant

Hearing:	On the papers
Appearances:	F B Collins and H E Eglinton for the Plaintiff W A McCartney for the Defendant
Judgement:	4 March 2015

JUDGMENT OF WYLIE J [RE COSTS]

[1]      I refer to my reserved judgment dated 17 December 2014.  In that judgment, I indicated that it was my preliminary view that costs should lie where they fell.1    I gave the parties the right to file memoranda if they disagreed with that view.

[2]      I have received a memorandum from the plaintiff.   It said that the general rules should apply and that as the successful litigant, it should be entitled to scale costs.  It also asserted that significant hearing time was taken in considering issues raised in a counterclaim filed by the defendant.  It pointed out that the counterclaim was wholly unsuccessful.  It argued that following the summary judgment decision, when   Associate   Judge   Doogue   held   that   the   covenant   was   protected   by indefeasibility, there was no, or at best limited, merit in opposing its claim for

rectification.

1 Queen Elizabeth the Second National Trust v Green Growth No 2 Ltd [2014] NZHC 3275 at [166].

QUEEN ELIZABETH II NATIONAL TRUST v GREEN GROWTH NO. 2 LIMITED [2015] NZHC 343 [4 March 2015]

[3]      The defendant for its part said that my preliminary view as to costs was appropriate, and that the problems with the covenant were of the trust’s own making. It noted that the trust was unsuccessful in one of the claims made by it – namely a claim for a declaration as to the meaning of the covenant, and that the fact that the counterclaims were unsuccessful did not mean they were without merit.  It argued that the counterclaims had a factual and legal basis.   It submitted that the primary battleground between the parties related to whether or not the covenant was indefeasible, and that that was purely a question of law, legitimately open to argument.

Analysis

[4]      Costs are of course at the discretion of the Court – r 14.1 of the High Court Rules.  That discretion is not, however, unfettered.  It is qualified by the cost rules set out in rr 14.2 to 14.10. The cost regime established by those rules is regulatory in character, and there is accordingly a strong implication from the rules that the Court should apply the regime in the absence of some good reason to the contrary.  Any departure must be a considered and particularised exercise of the discretion.2

[5]      Rule 14.2(a) states the following general principle – “the party who fails with respect to a proceeding or an interlocutory application should pay costs to the party who succeeds.”

[6]      In the present case, the plaintiff did succeed in large part in the proceeding.  It obtained rectification of covenant B429136.1.  The defendant failed in its application to amend its counterclaim to allege fraud.   Further, its other counterclaims failed, largely because I concluded that they were precluded by s 62 of the Land Transfer Act 1952.

[7]      Nevertheless, notwithstanding the general principle set out in r 14.2(a), I do not consider it appropriate to award costs to the plaintiff in this case.  There are a

number of reasons for that decision.

2 Manukau Golf Club Inc v Shoye Venture Ltd [2012] NZSC 109, [2013] 1 NZLR 305 at [7] and [16];

Glaister v Amalgamated Dairies Ltd [2004] 2 NZLR 606 (CA) at [22];
Mansfield Drycleaners Ltd v Quinny’s Drycleaning (Dentice Drycleaning Upper Hutt Ltd) (2002)
16 PRNZ 662 (CA) at [27].

[8]      The  plaintiff  was  seeking  an  indulgence.    It  was  seeking  to  rectify  the covenant.

[9]      It has traditionally been the case that where an indulgence is granted, it is at the  expense  of  a  costs  award  against  the  party  obtaining  the  indulgence.3

Alternatively,  a successful plaintiff seeking an  indulgence may be refused costs where the object of the proceedings is to correct a mistake made by the plaintiff.4

These principles extend to a successful party seeking rectification.5

[10]     There is no general rule universally applicable in such circumstances.  Rather what is required is a principled application of the costs rules, and an analysis of the facts to see what has given rise to the litigation, taking into account the conduct of the parties, and whether one of them has contributed to its costs or engaged in other

conduct that should influence the costs decision.6

[11]     It  cannot  be  disputed  that  the  problems  with  the  covenant  were  of  the plaintiff’s own making.  It drafted the covenant and it registered it.  The deficiencies in the signed document necessitated the proceedings.  Further, various aspects of the plaintiff’s actions in dealing with the covenant were not particularly satisfactory, and were subject to criticism by me in my reserved judgment.

[12]     In the present case the primary matters in dispute between the parties related to  indefeasibility,   and   the   consequences   of   holding  that   the  covenant   was indefeasible.

[13]     The plaintiff is correct that Associate Judge Doogue did find that covenant attracted indefeasibility under s 62 of the Land Transfer Act when the matter was before the Court on the plaintiff’s application for summary judgment.   There had,

however, been no previous authority on the point, and in my view the defendant, as

3   Holdgate  v  Holdgate  HC Auckland  CP303/96, 24  September  1996  at  [3];  Macrae v  Walshe [2013] NZCA 664, (2013) 15 NZCPR 254; Roses are Red Board Ltd v Board of Administration of the Methodist Church of New Zealand [2009] NZCA 237, (2009) 19 PRNZ 369.

4  Matthew Casey and others New Zealand Procedure Manual: High Court (2nd  ed, Lexis Nexis, Wellington, 2013) at (14.7.5(b);

5 Gemmell v Gemmell [1924] NZLR (SC) at 249.

6 Cunningham v Butterfield [2014] NZCA 213 at [52] to [57]; and see G E Dal Pont Law of Costs (3rd

ed, Lexis Nexis, Australia, 2013) at [14.34].

the current owner of the property, cannot be criticised for seeking to argue the point in the substantive proceedings.

[14]    The related issue, whether or not rectification was available against the defendant as a successor in title, was more difficult.  It was not decided by Associate Judge Doogue.   There was little recent case law on the point and, again, I do not consider that the defendant can be criticised for arguing the matter fully.

[15]     Indeed, had the defendant not argued the points, I would have appointed an amicus to assist, given the comparative dearth of recent authority.

[16]     The plaintiff is also correct when it says that the defendant failed in its counterclaims.   However, the majority of the counterclaims fell away once I had decided the indefeasibility issue in favour of the plaintiff.   Consideration of the remaining counterclaims did not prolong the hearing to any significant extent.

[17]     In my view, the defendant only became involved in the proceeding because of the plaintiff’s  error  in  drafting the covenant.    It  was  entitled  to  take all  points reasonably open to it once it became involved.  While it might be argued that the issue of unconscionability,  which was raised by the defendant, was not a point reasonably open to it, that assertion did not prolong the hearing to any significant extent at all.

[18]     This is not a case where the answer was obvious from the outset.   The litigation became necessary because the covenant was inadequate and that was solely the responsibility of the trust.   The defendant, as the registered proprietor of the property, had a legitimate interest, and I cannot see that this is a case where the trust should nevertheless be entitled to an award of costs.

[19]     The application for costs is declined.

Wylie J