Yu v Bradley
[2019] NZHC 1455
•26 June 2019
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2017-404-001125
[2019] NZHC 1455
BETWEEN JING JUN YU
First Plaintiff
ANDREW INVESTMENTS (2004) LIMITED
Second Plaintiff
AND
DALE GORDON BRADLEY and JILLIAN ANNE BRADLEY
Defendants
Hearing: (On the papers) Counsel:
J F Anderson QC and J C Adams for the Plaintiffs R S Reed QC and J K Grimmer for the Defendants
Judgment:
26 June 2019
[COSTS] JUDGMENT OF MOORE J
This judgment was delivered by me on 26 June 2019 at 10:00 am pursuant to Rule 11.5 of the High Court Rules.
Registrar/ Deputy Registrar Date:
YU & ANOR v BRADLEY & ANOR [2019] NZHC 1455 [26 June 2019]
Introduction
[1] The plaintiffs entered into a sale and purchase agreement on 13 November 2016 to purchase the property at 471 Whitford-Maraetai Road from the defendants (“the agreement”). Settlement was to occur on 15 February 2017. Issues arose and by mid-April 2017 both parties had purported to cancel the agreement. When the defendant vendors refused to return the deposit, the plaintiffs initiated this proceeding and sought summary judgment.
[2] On 16 November 2017, Associate Judge Doogue declined to grant summary judgment.1 The plaintiffs applied for leave to appeal to the Court of Appeal under s 56(3) of the Senior Courts Act 2016.
[3] On 4 September 2018, I dismissed the plaintiffs’ application for leave to appeal.2
[4]Unfortunately, the parties have been unable to agree as to costs.
Further background
[5] To a large degree, the determination of costs in this matter is influenced by the circumstances in which the plaintiffs brought the application for summary judgment and their knowledge at the time of doing so. It is therefore necessary to set out in some detail the substance of the application.
[6] The factual background to the proceeding was set out in my decision declining leave to appeal as follows:
[3] The agreement was based on the ninth edition of the standard Real Estate Institute of New Zealand Inc/Auckland District Law Society agreement for sale and purchase of real estate (“ADLS agreement”).
[4] Before the date of settlement, the plaintiffs raised various issues about the property; the condition of the waste water system, the removal of a fence, and boundary misrepresentation. They sought to begin a cl 8 procedure to resolve compensation for these breaches, and maintained a right to cancel in respect of the boundary misrepresentation. They also argue their ability to
1 Yu v Bradley [2017] NZHC 2816.
2 Yu v Bradley [2018] NZHC 2312.
begin a cl 8 process in respect of the boundary misrepresentation was obstructed by the defendants, who refused their valuer access onto the property. The plaintiffs eventually cancelled the agreement (or purported to) by letter of 10 March 2017, on the basis at settlement the defendants were not ready, willing and able to settle in accordance with cl 11(2).
[5] The defendants contest this version of events. They issued a settlement notice on 20 February 2017. By that time the plaintiffs had inspected the property. On the basis of the plaintiffs’ purported cancellation, they were of the view the plaintiffs had evinced an intention not to settle. On 13 April 2017 they took the plaintiffs’ cancellation as a repudiation and cancelled the agreement. In reliance on cl 11.4 of the agreement, the defendants retained the $230,000 deposit paid under the agreement.
[7] As I said, Associate Judge Dooge declined the plaintiffs’ application for summary judgment. In short, his findings were as follows:
(a)it was not reasonably arguable the defendants did not prevent the valuer obtaining access to the property. However, even without access an estimate of the likely financial loss was possible because the valuer had survey plans and diagrams and inspected the property from the neighbouring address;
(b)consequently, it was arguable the plaintiffs could not complain they were prevented from complying with the time limit at cl 8.1 for seeking compensation because of a breach of contract on the part of the defendants;
(c)it was thus arguable the plaintiffs’ justification for cancellation, i.e. non- compliance with cl 8, was insufficient and as a consequence was not covered by the Supreme Court’s decision in Property Ventures Investments Ltd v Regalwood Holdings Ltd;3 and
(d)it was arguable that even if the plaintiffs had an entitlement under the Fencing Act 1978 and a wastewater claim, that did not on its own justify non-compliance with the defendants’ settlement notice. There was thus
3 Property Ventures Investments Ltd v Regalwood Holdings Ltd [2010] NZSC 47, [2010] 3 NZLR 231.
no need to consider the other set-offs separately; they did not materially affect the plaintiffs’ entitlement to seek cancellation.
[8]The Associate Judge also said:4
… it is reasonably arguable for the defendants that responsibility for the plaintiffs' failure to comply with the requirements of cl 8 rested with them alone. Because they did not successfully invoke the provisions of cl 8 in the time allowed for that to happen, they were not entitled to insist on a deduction from the settlement amount required under the contract. The fact that they did so meant that they were evincing an intention not to settle in accordance with the contract. An entitlement thereby arose on the part of the defendants to cancel the contract, which they did. If it is arguable that the contract was correctly cancelled by the defendants, then it is not open to the plaintiffs to seek the return of the deposit. Stating matters conversely, it is arguable that the defendants have the right to retain the deposit.
[9] In declining leave to appeal, I found that no aspect of Associate Judge Doogue’s conclusion that the defendants had an arguable defence was capable of bona fide and serious argument on appeal.5
Relevant legal principles
[10] When an application for summary judgment by a plaintiff is unsuccessful the general rule is that costs will be reserved, for a decision to be made once the final outcome of the proceeding has been established at trial.6 Further the general approach to be adopted is that where an applicant for summary judgment is ultimately successful in the litigation but has earlier failed at the summary judgment claim the plaintiff should nonetheless be entitled to costs both on the summary judgment and the substantive proceeding.7
[11] As noted in Air Nelson Ltd v Airways Corporation of New Zealand Ltd, costs may be awarded in exceptional cases.8 Examples given by the Court are where the rules do not allow the summary judgment procedure to be invoked by a plaintiff or where a plaintiff proceeds in the certain knowledge that there is a bona fide question
4 At [82].
5 At [33].
6 NZI Bank Ltd v Philpott [1990] 2 NZLR 403 (CA).
7 Body Corporate 331094 v The Landings Parnell Ltd [2015] NZHC 979 at [3].
8 Air Nelson Ltd v Airways Corporation of New Zealand Ltd (1992) 6 PRNZ 1 (CA) at 3-4.
of fact or law which can be determined only after a trial. In such circumstances the Court may in its discretion award costs on the summary judgment application to the respondent to the application.
The parties’ positions as to costs
The defendants
[12] The defendants point out that the plaintiffs were unsuccessful in both their application for summary judgment and their subsequent application for leave to appeal. They seek the following:
(a)increased costs (scale costs with a 50 percent uplift) and disbursements in respect of the application for summary judgment; and
(b)scale costs and disbursements in respect of the application for leave to appeal.
[13] The crux of the defendants’ submissions is that the case was ill-suited for summary judgment and the plaintiffs ought to have known this. That is because it was clear that there was a genuine material dispute as to whether the first plaintiff had been misled as to the boundary. It was also disputed that the plaintiffs had properly invoked cl 8 and that the defendants had caused their delay in doing so. A further point of contest was whether the plaintiffs’ settlement notice was effective.
[14] The defendants say that there was various correspondence between the parties’ solicitors before the application for summary judgment was made that laid out these material conflicts of evidence. In these circumstances, it should have been readily apparent to the plaintiffs that their application for summary judgment would not succeed.
[15] In addition, the defendants point out that they tried to avert the need for the application to be determined once it was afoot. On 5 September 2017, after the defendants had filed their notice of opposition and affidavit evidence, they wrote to the plaintiffs outlining the disputes between the parties and advising that summary
judgment was unlikely to succeed. In this way, the defendants reasonably attempted to avoid the delay and expense of summary judgment and instead proceed to trial. Accordingly, the plaintiffs’ failure to heed their advice justifies an increased costs award.
[16] As for the application for leave to appeal, the defendants seek only scale costs. They say that increased costs on only one application is a sufficient sanction.
The plaintiffs
[17] Similarly, the plaintiffs accept that they are liable for scale costs in respect of their application for leave to appeal. But they oppose the defendants’ pursuit of increased costs for the summary judgment application. The plaintiffs say that costs on the summary judgment should be reserved until after the trial. That is because the “exceptional circumstances” that would justify the Court doing otherwise do not exist in this case.
[18] The plaintiffs deny that their application for summary judgment was premised on a point of fact. They say it was premised on a point of law: namely, what were the consequences of the defendants’ refusal to permit the plaintiff to inspect the property the day before settlement for the purpose of providing a genuine pre-estimate of the value of the plaintiffs’ claim for compensation in respect of the encroachment.
[19] Putting the matter more generally, the plaintiffs say that at the time they applied for summary judgment, they had reasonable grounds to believe that the defendants had no defence to their claim. Although the judgments of the Court highlights how the defendants had an arguable defence, they did not describe the plaintiffs’ case as meritless. Indeed, it is pointed out that I described it as “strong”.9 In the end the defendants showed elements of an arguable defence that that led the Court to refuse summary judgment. The plaintiffs say that this is no different from thousands of summary judgment cases and that the ordinary rule as to costs should prevail.
9 At [20].
Discussion
[20] I am inclined to agree with the plaintiffs and I therefore consider that the matter of costs on the application for summary judgment should be reserved until after the substantive proceeding has been determined. I do not consider that this is an exceptional case such to warrant a costs award in respect of the summary judgment application prior to the determination of the plaintiffs’ claims.
[21] While the plaintiffs’ application for summary judgment was declined, I do not consider it should have been clear to them that it was doomed from the outset. This was despite the defendants advising them of the issues that were in dispute between them. The plaintiffs were entitled to take on board these warnings with a degree of scepticism and to chance their arm by pursuing the application. Had they succeeded, the substantive proceeding would have been avoided. And I do not agree with the defendants’ assessment that the application was open and shut. The length of Associate Judge Doogue’s judgment, and the entailing depth of consideration he gave to the plaintiffs’ application, bear witness to that. Nor was it abundantly clear to me when deciding the question of leave to appeal that the plaintiffs should never have brought the application due to manifest disputes of fact that could only be determined in a substantive proceeding. I consider that the defendants’ assertion that this was no different from other applications for summary judgment that are so often brought before the Court is accurate. While it is easy, with retrospect and the aid of two judgments on the matter, to take the view that the plaintiffs should have considered their position more thoroughly before making the application, I do not accept that the reasons it was declined were so abundantly clear as to justify the making of a costs award against them.
[22] Having said that, I accept that the defendants should be entitled to scale costs on the application for leave to appeal. After receiving Associate Judge Doogue’s well- reasoned judgment, the reasons that their application for summary judgment was unsuccessful should have been clear to the plaintiffs. In this, they have made an appropriate concession, acknowledging that they should be liable to the defendants for scale costs. I order that those be paid accordingly.
Result
[23] I order that the matter of costs in respect of the plaintiffs’ application for summary judgment be reserved until the determination of the substantive proceeding.
[24] The defendants are entitled to costs from the plaintiffs on a 2B basis in respect of the application for leave to appeal.
Moore J
Solicitors:
Ms Anderson QC, Auckland Ms Adams, Auckland
Ms Reed QC, Auckland Mr Grimmer, Auckland
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