IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV 2013-404-002118 [2013] NZHC 1248

BETWEEN	WHANGAPE ESTATE LIMITED Applicant

AND	LANDWORKS NZ LIMITED Respondent

Hearing:	On the papers

Appearances:	S Grant for the Applicant
F J Thorp for the Respondent

Judgment:	29 May 2013

JUDGMENT OF ASSOCIATE JUDGE CHRISTIANSEN

This judgment was delivered by me on
29.05.13 at 4:30pm, pursuant to
Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar
Date……………

WHANGAPE ESTATE LIMITED v LANDWORKS NZ LIMITED [2013] NZHC 1248 [29 May 2013]

[1]       On 24 April 2013 the applicant (Whangape) filed an application for an order that the caveat lodged against respondent’s (Landworks) property not lapse.

[2]      The application included a claim for solicitor/client costs in making the application to sustain the caveat.

[3]       On 2 May 2013 the documents were served on the respondent’s solicitors who on 2 May 2013 wrote and advised that Landworks would consent to an order that the caveat not lapse.

[4]       That letter also confirmed that Whangape’s claim for solicitor/client costs would be opposed.

[5]       This judgment deals briefly with the parties position regarding the claim for costs to be awarded on a solicitor/client basis or indeed on any basis at all.

[6]       Whangape justifies filing its originating application including its claim for costs on the basis that when Landworks acted to remove the caveat Whangape had been struck off the Companies Register with the consequence that its property had vested in the Crown.  Whangape had to take the steps it did (through its mortgagee) to restore itself to the Companies Register in order to act in support of its claim of a caveatable interest in the subject land.

[7]       Whangape’s  position  is  that  Landworks  wrongfully  applied  to  lapse  the caveat that Whangape had lodged to protect its interest as grantee of an access easement  agreed  in  a  deed  of  covenant  between  Whangape  and  Landworks. Therefore it claims Landworks’ application to lapse the caveat was without justification; and that Landworks was acting in breach of the deed of covenant that it entered into which contained terms to the effect that Whangape was entitled to lodge the caveat.

Conclusions

[8]       It  appears  Landworks   actions  in  applying  to  lapse  the  caveat   were reprehensible; and that there was no proper purpose for the application because

Landworks  had  acknowledged  by  its  deed  the  right  of  Whangape’s  caveatable

interest.

[9]       In this description of things Landworks conduct suggests wilful disregard of known facts.  In those circumstances an award of indemnity costs may be sometimes be justified.

[10]     Landworks arguably did not have any proper basis for applying to lapse the caveat.    Other  avenues  were  open  to  it  to  address  any  issues  of  concern  e.g. contacting Whangape’s solicitors whose address for service was on the caveat.  Also Landworks must have known what Whangape would have to do in order to prevent the lapsing of the caveat within the 28 days permitted by s 145 of the Land Transfer Act 1952.

[11]     In  that  process  Whangape’s  solicitors,  as  mortgagee  needed  to  apply  to reinstate Whangape and this had to be done before the application to sustain the caveat could be filed.

[12]     The application for payment of indemnity costs includes costs incurred on behalf of the mortgagee.

[13]     It may be that Rule 14.1 operates broadly enough to permit an award of costs to a non party but in this case it appears the mortgagee has taken this action of restoring Whangape to the Companies Register, not for its own purposes but for Whangape’s purposes.  There is no reason to suggest that the mortgagee’s security did not remain in place regardless of Whangape’s status as a company.

[14]     Overall it seems that poor judgment was exercised in the decision to apply for the caveat to lapse.  No credit is due therefore for the fact that Landworks consented to an order sustaining the caveat.

[15]     The Court accepts the position that the restoration procedure and therefore associated costs were not the responsibility of Landworks.

[16]     Insufficient explanation has been provided for the level of fees claimed in the circumstances.    A scale  uplift  is  a  more  appropriate  remedy  that  an  award  of solicitor/client costs.

Judgment

[17]     The Court orders Landworks to pay Whangape’s costs on a 2B basis with an uplift  of  50  per  cent  to  recognise  the  wasteful  nature  of  forcing Whangape  to undertake a process that Landworks was likely always going to consent to in any event.

[18]     Landworks is also to meet payment of Whangape’s disbursements.

[19]     No costs are awarded in respect of attendances to argue the issue of costs.

Associate Judge Christiansen