Xing v Starlight Capital Limited

[2022] NZHC 3129

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2022-404-659

[2022] NZHC 3129

IN THE MATTER

of originating application that caveat no. 12197924.1 not lapse

BETWEEN

ZHONG XING

Applicant

AND

STARLIGHT CAPITAL LIMITED

First Respondent

LAND AND INFORMATION NEW ZEALAND

Second Respondent

Hearing:

On the papers

Appearances:

Applicant in person

R M Dillon for the First Respondent

Judgment:

28 November 2022

JUDGMENT OF GAULT J

(Costs)

This judgment was delivered by me on 28 November 2022 at 3:30 pm pursuant to r 11.5 of the High Court Rules 2016.

Registrar/Deputy Registrar

……………………………………

Parties / Solicitors:

The Applicant

Mr R M Dillon, Queen City Law, Auckland

XING v STARLIGHT CAPITAL LTD [2022] NZHC 3129 [28 November 2022]

[1]        The first respondent, Starlight, seeks increased costs in relation to this originating application for an order that a caveat not lapse.

Factual background

[2]        On 19 December 2017, Starlight’s interest as first mortgagee was registered on the title to a property at 52a Middleton Road, Remuera, Auckland.

[3]        On 30 October 2020, the applicant as purchaser entered into an agreement for sale and purchase of the property with the vendors Feng Gao and Huanhong Li     (as trustee of Gao and Li family trust). The same day, the parties entered into a residential tenancy agreement (lease).

[4]        Starlight has been involved in other Court proceedings with the vendors of the property.

[5]        On 26 July 2021, the applicant lodged a caveat. The caveat claims an interest in the property based on the agreement for sale and purchase and the lease.

[6]On 8 April 2022, Starlight applied to lapse the caveat.

This proceeding

[7]        On 28 April 2022, the applicant filed this originating application that the caveat over the property not lapse.

[8]        The applicant sought an interim order. Starlight sought to have the caveat removed urgently on the basis that it had an indefeasible interest unaffected by the applicant’s subsequent claim, it had sold the property exercising its power of sale as mortgagee, and the application was preventing registration of the transfer to a third party purchaser. One issue raised at the early mentions was the effect of Starlight’s temporary removal from the Company’s Register in October/November 2020 (at the time of the sale and purchase agreement).

[9]        On 17 May 2022, I made a conditional order under s 143(4)(c) of the Land Transfer Act 2017 adjourning the application to a hearing date. The order was

conditional on the applicant filing and serving an undertaking to pay damages for any loss caused by the caveat by 20 May 2022 at 5:00 pm. The effect of that conditional order was that, if the condition were satisfied and the adjournment took effect, it would have the same effect as an interim order provided the order was served on the Registrar-General of Land within the time prescribed in s 143(3)(b).

[10]      In the event, the condition was not satisfied, the adjournment did not take effect and the caveat lapsed. Starlight transferred the property to the third party purchaser.

Costs submissions

[11]Starlight seeks increased costs with a 50 per cent uplift on 2B scale costs.

[12]      Starlight did not quantify its 2B costs but identified  the  relevant  steps.  They total 3.6 days, and therefore 2B costs of $8,604. Starlight also seeks disbursements of $120.

[13]      Starlight seeks increased costs on the basis that the applicant intentionally failed to comply with the order of the Court and consequently the application failed. Reference is also made to the urgency of the situation from Starlight’s perspective.

[14]      The applicant agrees that 2B costs are payable but opposes increased costs, stating that he only received sufficient information in the proceeding. He also submits that Starlight’s sale and purchase agreement with the third party purchaser protected the applicant’s interests.

[15]      Starlight filed a reply memorandum submitting that the applicant’s reason cannot be credible but essentially repeating Starlight’s position.

Discussion

[16]      As the applicant effectively abandoned his application to sustain the caveat, Starlight is entitled to costs – as the applicant accepts.

[17]      In relation to increased costs, the onus is on Starlight to persuade the Court that an award of increased costs is justified. Although Starlight did not refer specifically

to r 14.6(3) of the High Court Rules 2016 which sets out the circumstances in which the Court may order increased costs, the relevant ground raised is failure to comply with a direction of the Court.1 However, the applicant’s failure to file and serve an undertaking to pay damages (such that the conditional order did not take effect) did not amount to a failure to comply with a direction or other order of  the Court.   There was no direction in the conditional order that an undertaking be provided. Rather, an undertaking was a condition of obtaining the equivalent of interim relief.

[18]      I accept the urgency of the situation from Starlight’s perspective. The merit of the applicant’s proceeding may also be doubted. Taking or pursuing a proceeding that lacks merit can warrant increased costs but, if a proceeding is resolved pre-judgment, only where the lack of merit is both obvious and incontrovertible.2 Here, Starlight has not made out (or even explicitly articulated) a claim for increased costs on the basis that the applicant acted unreasonably.

[19]I decline to award increased costs.

Result

[20]The applicant is to pay Starlight 2B costs and disbursements of $8,724.

Gault J

1      Rule 14.6(3)(b)(i).

2      T v T [2021] NZHC 3255 at [11].