Wila Developments (Ormiston) LP v Lu

[2021] NZHC 3350

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2021-404-981

[2021] NZHC 3350

IN THE MATTER

of an application to sustain caveats 12064040.1 and 12076153.1

BETWEEN

HAO YUAN LU

Applicant

AND

WILA DEVELOPMENTS (ORMISTON) LP

Defendant

CIV-2021-404-2069

AND IN THE MATTER

of an application to remove caveat 12280558.1

BETWEEN

WILA DEVELOPMENTS (ORMISTON) LP

Applicant

AND

HAO YUAN LU

Defendant

Hearing:	(on the papers)
Judgment:	8 December 2021

COSTS JUDGMENT OF VENNING J

This judgment was delivered by me on 8 December 2021 at 3.45 pm, pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date……………

Solicitors:           Le Salmon Long, Auckland

Zhang Law Limited, Auckland

Counsel:            S Wroe, Auckland

LU v WILA DEVELOPMENTS (ORMISTON) LP [2021] NZHC 3350 [8 December 2021]

[1]                 This costs decision relates to two caveat proceedings between Mr Lu and Wila Developments (Ormiston) LP (Wila). In the first proceeding CIV-2021-404-981 Associate Judge Bell dismissed an application by Mr Lu to sustain two caveats he had lodged in March 2021 over five properties owned by Wila.1 The Judge indicated that he considered costs should be calculated on a category 2 band B basis for most steps.

[2]                 In the second proceeding, CIV-2021-404-2069, on 12 November 2021, this Court granted an urgent without notice (Pickwick) application by Wila to remove a third caveat Mr Lu had lodged over the same five properties on the same day Associate Judge Bell’s judgment was delivered and without prior warning to Wila.2

[3]                 In relation to the first proceeding Wila considers indemnity costs should have been available but seeks increased costs. In the second proceeding Wila seeks indemnity costs.

[4]                 Ms Wroe has filed submissions on behalf of Mr Lu in response. She submits that on the first proceeding an order for costs on a category 2 basis is appropriate, with most steps falling within band B, but band A should apply to preparation for the first case management conference and preparation of the bundle for the hearing. In relation to the second proceeding Ms Wroe submits there were no exceptional grounds supporting indemnity costs. She submits that category 2 is appropriate but band A should apply for more of the steps in the proceeding since Wila was not coming fresh to the issues in relation to the caveats.

[5]                 The background to the proceeding is set out in the judgments issued in the first and second proceedings. It is unnecessary to repeat it in this costs judgment.

[6]                 I do not consider that Mr Lu’s subsequent actions after the issue of Associate Judge Bell’s decision which led to the second proceeding should impact on the costs award in that first proceeding. The Court is guided by Associate Judge Bell’s assessment in relation to costs on that proceeding.

1      Lu v Wila Development (Ormiston) LP [2021] NZHC 2772.

2      Wila Developments (Ormiston) LP v Lu [2021] NZHC 3068.

[7]                 Wila is to have costs on a category 2, time band B basis and disbursements in relation to all steps in relation to that first proceeding. I note Ms Wroe’s submission that some steps in the proceeding should be calculated at band A but, having regard to the number of properties and the fact there were two caveats involved I consider that time band B is appropriate to all steps despite Associate Judge Bell’s reference to “most”. There will be an order for costs in Wila’s favour against Mr Lu on the first proceedings in the sum of $11,950 together with disbursements.

Result/costs order in CIV-2021-404-981

[8]                 Mr Lu is to pay costs to Wila in the sum of $11,950, together with disbursements of $130.44.

[9]                 The position is different in relation to the second proceeding. As noted, Mr Lu lodged the third caveat against the same five titles on the day that the decision adverse to him was delivered. Immediately Wila learned of Mr Lu’s third caveat it emailed Mr Lu asking him to withdraw the application. Mr Lu ignored that email. He had also ignored an earlier email in relation to costs.

[10]              As Wila had entered agreements for sale and purchase in relation to the land, it then applied urgently on a Pickwick basis for orders the third caveat be removed and for indemnity costs. The application was accompanied by a detailed affidavit from Mr Li, its director. Mr Lu’s explanation for lodging the third caveat was that Wila had retained his deposit for lot 11. That was at variance to the interest he claimed in the caveat and it could not have supported the caveat over the other properties.

[11]              Wila submits that Mr Lu’s actions in lodging the third caveat leading to the second proceeding  justified an award of indemnity  or uplifted costs  referring  to     r 14.6(4) and r 14.6(3)(b)(ii) and (iii) and (d). Counsel also referred to the decisions of French v French, ASB Bank v Lambert and O’Malley v Sting Enterprises Ltd.3 Wila says that Mr Lu’s claim to an interest pursuant to a constructive trust was hopeless and baseless. Any claim he had was comprehensively dismissed in the first judgment.

3      French v French HC Auckland CIV-2010-419-661, 17 August 2010; ASB Bank v Lambert [2013] NZHC 947; and O’Malley v Sting Enterprises Ltd HC Christchurch CIV-2010-409-1656, 15 September 2010.

Further, Mr Lu had failed to advise Wila of the caveat and had then failed to respond to its request to have it removed.

[12]              Ms Wroe submitted that Mr Lu’s behaviour in relation to the second proceeding was not sufficiently flagrant or bad enough to support indemnity costs. She submitted the cases of French v French and ASB Bank v Lambert could be distinguished. The actions of the caveator in the French proceeding were vexatious in nature because they were taken against the background of a longstanding and deep rooted family dispute. In ASB Bank v Lambert the Court was able to point to seven other decisions in which Ms Lambert had been the main protagonist or involved in supporting others to lodge caveats. Ms Wroe submitted that category 2, band A would be appropriate on the second proceeding as Wila was “not coming fresh to the issues” in relation to caveats.

[13]              I take a different view to Mr Lu’s behaviour in relation to the lodging of the third caveat and the need for Wila to take steps to have it removed as a matter of urgency to Ms Wroe. Mr Lu’s actions were deliberate and frustrated Wila’s attempts to deal with its property. He allowed the caveat to remain over the properties despite the fully reasoned judgment of Associate Judge Bell which confirmed there was no basis for him to caveat the properties. Mr Lu failed to respond to the request for the caveat to be removed. I do not accept Mr Lu’s suggestion that the email went to his junk box given that an email to exactly the same address from the Registrar of the Court was received by Mr Lu and responded to immediately.

[14]              Mr Lu’s behaviour in lodging the second caveat put Wila to the cost of taking urgent steps to remove the caveat (which should have been unnecessary). His legal argument that the caveat was there to support the deposit lacked merit given the previous judgment of the Court and the fact the caveat claimed a constructive trust.

[15]              The caveat was unnecessary in any event, particularly when Wila had previously confirmed the deposit moneys were held by its conveyancing solicitor. An uplift in costs is required. However, I do not consider Mr Lu’s actions can be said to justify indemnity costs. His actions more appropriately can be regarded as analogous to taking unnecessary steps and pursuing an argument that lacked merit.4

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

[16]              In the circumstances I consider scale costs uplifted by 50 per cent to be appropriate. I see no reason to reduce the time allowance for the steps taken given the urgency. That calculates to $13,416.75 together with disbursements.

Result/costs order in CIV-2021-404-2065

[17]Mr Lu is to pay Wila costs of $13,416.75, together with disbursements of

$513.04.

Venning J