BANK OF NEW ZEALAND v RANI [2013] NZHC 2499

BANK OF NEW ZEALAND v RANI [2013] NZHC 2499 [24 September 2013]IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYCIV-2013-404-003511[2013] NZHC 2499BETWEEN BANK OF NEW ZEALANDPlaintiffAND SANTOSH RANIDefendantHearing: 23 September 2013Appearances: J Toebes for PlaintiffDefendant in personJudgment: 24 September 2013JUDGMENT OF KATZ J(Costs)This judgment was delivered by me on 24 September 2013 at 4:30 pmPursuant to Rule 11.5 High Court RulesRegistrar/Deputy RegistrarSolicitors: JT Law, WellingtonCopy to: S Rani, AucklandIntroduction[1] On 15 July 2013 the Bank of New Zealand ("Bank") filed an originatingapplication seeking the removal of caveats that Ms Santosh Rani had registered over the following two properties:(a) 531 Great South Road, Otahuhu, Auckland; and(b) 77A Hutton Street, Otahuhu, Auckland.[2] On 3 September 2013 Venning J granted the Bank's application in respect of the Great South Road property. On 23 September 2013 I granted the Bank'sapplication in respect of the Hutton Street property (by consent) and heard submissions on costs issues. My costs decision is set out below.Factual background[3] Prior to the issuing of proceedings, Mr Toebes of JT Law, on behalf of the Bank, wrote to successive lawyers acting for Ms Rani seeking her consent to removal of the caveat over the Great South Road property. The key letters were dated 4 April 2013 (to Wynyard Wood), 5 April 2013 (to Sharma Legal), 10 June 2013 (to Shankar Law) and 26 June 2013 (to Mr Peter Webb).[4] The 26 June 2013 letter from Mr Toebes to Mr Webb recorded that Mr Webb had sought a further two week period in order to confirm whether Ms Rani would agree to withdrawal of the caveat over the Great South Road property. Mr Toebes'response was that he had instructions from the Bank to proceed with an application to the High Court for an order for removal of the caveat, together with costs. MrToebes' 26 June 2013 letter concluded that:We look forward to your immediate confirmation that... the caveat has been removed from the title to the 531 Great South Road property; or if not, whether you are authorised to accept service of the application. The proceedings have been drafted and steps will be taken to continue with the filing and service of those proceedings until and unless we have written confirmation.[5] The caveat was not removed from the title to the Great South Road property. These proceedings were then filed on 17 July 2013. They sought removal of the caveats over both the Hutton Street and Great South Road properties.[6] On 5 August 2013 JT Law wrote again to Mr Webb, referring to prior correspondence and discussions between the parties. Mr Toebes noted that the Bank had now applied for an order removing the caveats. He also noted that Ms Rani had indicated she would consent to the orders for removal of the caveats on the basis that the Bank would provide her with a statement of account following the sale and would hold any surplus on trust. Mr Toebes confirmed an undertaking on such terms in the event that Mr Webb (on behalf of Ms Rani) signed and returned an attachedconsent memorandum "which we can then file with the Court to obtain the necessary orders".[7] The consent memorandum was not signed and returned. As a result it was necessary for the Bank to continue with the Court proceedings.[8] On 16 August 2013 Mr Webb wrote to JT Law. He noted that he had spoken to Ms Rani about the caveat proceedings and that she accepted that the Bank had an entitlement to sell the properties. He further advised that:In the course of that discussion [with] Ms Joshi [Rani] I canvassed your proposal that any funds in excess of those required to settle the debt due to BNZ above would be held on trust pending the outcome of a claim by her against those funds. My advice to her was that your proposal was a proper approach to the issue and that she should consent to that proposal and withdraw the caveat. It appeared to me that she accepted that advice.I'm not able to advance the matter further than that as I have not acceptedMs Joshi's instructions for the reasons set out above ...[9] Nothing further was heard from Ms Rani. The caveats were not removed. Nor was the consent memorandum signed and returned. The hearing date of 3 September 2013 was fast approaching. The afternoon prior to that hearing Ms Rani filed an affidavit in which she deposed that she had put caveats on the properties to protect her interests due to alleged fraudulent transactions and a conspiracy between her ex-husband and Deo Rajan to defeat her interests in the properties. Ms Ranistated that she intended to take legal action against both of them in relation to this and that there were also relevant pending actions in the Family Court.[10] Ms Rani indicated that she was willing to agree to the withdrawal of the caveat in relation to the Great South Road property "and no other properties". Inrelation to the Hutton Street property she stated that "I strongly oppose theapplication for order of removal of my caveat on that property because I certainlyhave a caveatable interest in that property".[11] At the hearing before Venning J on 3 September 2013 Ms Rani accepted that she did not have a direct caveatable interest in the Great South Road property. Venning J accordingly granted the orders as sought by the Bank in relation to thatproperty. In relation to the Hutton Street property, Ms Rani opposed the Bank'sapplication for removal of the caveat. Venning J concluded that Ms Rani should have the opportunity to put her case before the Court in relation to that property. Hetherefore adjourned the Bank's application in relation to the Hutton Street caveat, for hearing on 23 September 2013.[12] The Bank's submissions in relation to the Hutton Street property were filed on 12 September 2013. Ms Rani's submissions were filed on 17 September 2013.Ms Rani indicated that she was willing to consent to the removal of the Hutton Street caveat on the same terms and conditions as the Great South Road caveat, namely that any funds in excess of those required to settle the debt due to the Bank as mortgagee would be held on trust until further notice. Obviously, this differed from the position she had taken before Venning J on 3 September 2013. If she had taken this position at the 3 September hearing a further hearing would not have been necessary.[13] JT Law wrote to Ms Rani the day after receiving her submissions (18 September 2013). Mr Toebes noted her indication that she would be willing to sign a withdrawal of the caveat. He then stated that:If you want to follow through on your statement that you will execute the withdrawal, you need to instruct your conveyancing lawyer urgently; and let me have that withdrawal form by say early afternoon on Friday, 20 September 2013.[14] JT Law further noted that the Bank continued to seek costs from Ms Rani on the basis that the application to the Court was required and became necessary because the previous four solicitors she had instructed either did not respond or did not provide confirmation of withdrawal of the caveat that Ms Rani now consented to. Ms Rani was urged to take "proper legal advice about these matters".[15] Ms Rani did not, however, provide an executed withdrawal of caveat. On the afternoon of Friday 20 September 2013 (the working day prior to the hearing) she responded by email to JT Law advising that she did not have a conveyancing lawyer and could not afford one in any event. She suggested that JT Law send her the necessary forms to fill in.The Bank's submissions[16] Against this background, the Bank seeks costs in relation to these proceedings on a category 2B basis, with an uplift of $1990 (1 day). The basis for the uplift sought by the Bank is that Schedule 3 to the High Court Rules does not allow for time for preparation for a hearing that does not involve written submissions. Written submissions were not prepared for the 3 September 2013hearing, apparently due to the late service of Ms Rani's affidavit. Further, even though her affidavit provided for a consent to withdrawal of the caveat over the property at 531 Great South Road, that was on terms which were unable to be accepted by the Bank and had previously been rejected.[17] Mr Toebes submitted that, as the Bank had already put in place the appropriate undertaking to protect the equity in the property after completion of any mortgagee sale, there was no basis for any opposition. Nevertheless, due to the stance taken by Ms Rani, it was necessary to prepare for the hearing. This resulted in time and expense being incurred. Mr Toebes noted that item 40 of Schedule 3 allocates a time of 1.5 days for preparation of written submissions. In the circumstances he submitted that an additional allocation of one day's preparation time for the 3 September hearing would be appropriate.Ms Rani's submissions[18] Ms Rani said that the first time that she was informed that the Bank wanted her caveat on the property at 531 Great South Road removed she immediately agreed to do so, on the terms and conditions sought by the Bank. She said that this was prior to the issuing of proceedings. She noted that there was no reference to the caveat over the Hutton Street property in correspondence at the time. Ms Rani submitted that it was unnecessary for the Bank to commence these proceedings and unnecessary costs have been incurred as a result.[19] Ms Rani said that the first time she became aware that there was an issue regarding the removal of the caveat on the Hutton Street property was when she wasserved with the Bank's originating application. If she had been given enough time and notice of the application she would have agreed to removal of the Hutton Street caveat on the same terms and conditions as the subsequent removal of the caveat on the Great South Road property.[20] In essence Ms Rani's position was that it should have been possible to sortout the caveat issues without the necessity for legal action. The legal proceedings were unnecessary. As a result she submitted that the Bank should be meeting her reasonable costs rather than the reverse.[21] Finally, Ms Rani challenged the standard (Category 2B) time allocations provided for various steps in the High Court Rules. She suggested that the times set out in the Schedule 3 exceeded the times actually required for each step in this particular case.Discussion[22] Ms Rani is correct in her submission that these proceedings should not have been necessary. However, the fact that they were must be laid squarely at Ms Rani's door, not the Bank's. A number of unsuccessful attempts were made by the Bank to secure a withdrawal of the Great South Road caveat prior to the issue of proceedings.[23] Unfortunately, however, Ms Rani did not engage constructively with theBank's efforts to resolve the Great South Road caveat issues amicably. She also ignored the Bank's "final warning shot" of 26 June 2013, requiring her to remove the Great South Road caveat or face legal proceedings.[24] Despite indications in the correspondence that Ms Rani may have been willing to withdraw the caveats (including in particular in Mr Webb's letter of 16August 2013) Ms Rani took no steps to actually do this. Nor did she sign a Memorandum on the terms proposed by the Bank or arrange for her solicitors to do so on her behalf. Ultimately it was in Ms Rani's sole power to take the necessarysteps to either remove the caveats or enter into an agreement for them to be removed at an appropriate time. She failed to do so, leaving the Bank with no option but to continue the proceedings. As a result, the first defended hearing, on 3 September 2013, was necessary.[25] It appears, however, that Ms Rani largely abandoned any opposition to withdrawal of the Great South Road caveat at the 3 September hearing (or immediately prior to it). She maintained her opposition to withdrawal of the caveat over the Hutton Street property.[26] I have not overlooked Ms Rani's submission that the pre-litigation correspondence did not refer to the Hutton Street property. She said that if it had, she would have consented to the withdrawal of the caveat on that property. This would have avoided the need for legal proceedings. Such a submission is, however, inconsistent with the position Ms Rani took before Venning J. Even after the proceedings had been filed, Ms Rani did not consent to removal of the Hutton Street caveat. As I have noted above, her 2 September affidavit stated that "I stronglyoppose the application for order of removal of my caveat on that [Hutton Street] property because I certainly have a caveatable interest in that property".[27] As a result a second hearing, to resolve the issues in relation to the caveat on the Hutton Street property, had to be scheduled. This required the filing of further evidence and the preparation of written submissions. Again, it was only at the eleventh hour that Ms Rani effectively withdrew her opposition. By this stage theBank had already prepared and filed its submissions in support of its application for removal of the Hutton Street caveat.[28] On a category 2B basis (with no uplift) the applicable costs would be as follows:General civil proceedings costs Allocated days Amountor part days1. Item 37 - Filing originating application 2 $3,980.00and supporting affidavits2. Item 12 - Appearance at callover 0.2 $ 398.00on 8 August3. Item 42 - Appearance at hearing .25 $ 497.50- 3 September4. Item 40 - Preparation of written 1.5 $2,985.00submissions5. Item 42 - Appearance at hearing - .25 $ 497.5023 September6. Item 29 - Sealing order or judgment 0.2 $ 398.00TOTAL $8,756.00[29] I do not accept Ms Rani's submission that the allocations provided for in the High Court Rules are excessive in this particular case. These proceedings are appropriately categorised as category 2B proceedings. There is, in my view, no basis to depart from the standard time allocations set out in Schedule 3 for such proceedings. Accordingly, at the very least, the Bank is entitled to $8,756.00 costs plus disbursements of $590 (court filing fee and the costs of sealing Venning J'sorder).[30] The more difficult issue is whether I should accede to the Bank's request touplift the category 2B costs to allow for a day's preparation time for the 3 Septemberhearing. After careful reflection I have concluded that it would not be appropriate to do so. The Bank has been allocated 1.5 days for preparation of written submissions for the second hearing. The relevant submissions are extremely concise (two pages in length in relation to the substantive issues). While I make no criticism of theirbrevity, 1.5 days for preparing such submissions is probably on the generous side. However, 1.5 days hearing preparation time is reasonable when allocated across both the 3 September and 23 September hearings. I therefore do not propose to make any adjustments to the scale costs, set out at [28] above.Result[31] Costs are awarded in favour of the plaintiff in the sum of $8,756.00, plus disbursements of $590.00.____________________________Katz J