WESTPAC NEW ZEALAND LIMITED V LAW HC AK CIV-2012-404-991

WESTPAC NEW ZEALAND LIMITED V LAW HC AK CIV-2012-404-991 [21 August 2012]IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYCIV-2012-404-991[2012] NZHC 2135BETWEEN WESTPAC NEW ZEALAND LIMITEDApplicantAND SET KIEN LAWRespondentHearing: 21 August 2012Appearances: G M Sandelin and N Maday for ApplicantA E K Lau in personJudgment: 21 August 2012COSTS JUDGMENT OF ASSOCIATE JUDGE R M BELLSolicitors:MinterEllisonRuddWatts (G M Sandelin/N Maday) P O Box 3798 Auckland 1140 for ApplicantEmail: Nicholas.maday@minterellison.co.nzCopy for:Shean Singh, P O Box 10018 Dominion Road, Auckland 1446Email: shean@sheansingh.co.nzEe Kuoh Lau, P O Box 276-138 Manukau, AucklandEmail: Lau_augustine@yahoo.co.nz[1] This is the second decision in this case. On 10 May 2012 I grantedWestpac's application for removal of caveats lodged against the titles to threeproperties. These were properties over which Westpac had registered first mortgages and which it was trying to sell in the exercise of powers of sale under its mortgages.[2] The caveats had been lodged against the titles to the property by Set Kien Law, the respondent. The person responsible for arranging for the caveats to be lodged was Mr Lau. Mr Lau was also responsible for dealing with a solicitor, Mr Shean Singh, whose office was the address for service in the caveats, but in all other respects Mr Lau played the dominant part in trying to sustain the caveats and inresisting Westpac's application for the caveats to be removed. Westpac seeks costsagainst Mr Lau.[3] There is a wider context. This was the third case in which Set Kien Law was respondent to an application by Westpac for the removal of caveats. Other cases were Westpac New Zealand Ltd v Set Kien Law of 19 December 2011, Westpac New Zealand Ltd v Set Kien Law of May 2012.1 Associate Judge Christiansen heard both cases. Mr Lau had been permitted to appear on behalf of Set Kien Law. Associate Judge Christiansen gave Mr Lau an indulgence. Mr Lau is not a lawyer, he does not have New Zealand legal qualifications, but he was allowed to appear under a powerof attorney which he said he held for Set Kien Law. Mr Lau's qualifications are in fact as an engineer. Before the hearing on 10 May 2012 I gave a pre-trial direction that Mr Lau was not to appear because he did not have a right of audience on behalf of anyone else. I heard the case in his absence.[4] Notwithstanding that Mr Lau could not appear at the hearing, Westpac made it clear that it would seek an order for costs against Mr Lau as a non-party. I gave directions for that to be brought on notice. Substituted service was necessary. The matter was listed today and Mr Lau has appeared. He has opposed the application.1 Westpac New Zealand Ltd v Set Kien Law HC Auckland CIV-2011-404-7989, 19 December 2011and Westpac New Zealand Ltd v Set Kien Law [20112] NZHC 890.[5] The decision of the Privy Council in Dymock's Franchise Systems New SouthWales Pty Ltd v Todd (No.2),2 shows that applications against non-parties raise three questions:[a] Does the court have jurisdiction?[b] Is causation in issue, that is, whether, but for the non-party'sinvolvement, the respondent would have opposed?[c] Should the court in its discretion order the non-party to pay thesuccessful party's costs?[6] The question of jurisdiction is not in doubt. It is covered by r 14.1. The decision of the Privy Council recognises that the court has power to order costs against non-parties.[7] On causation, it is clear that Mr Lau played a dominant part in this proceeding. Ms Law, the respondent, is said to live in Malaysia. I have that information because Mr Lau has told me that in a previous court hearing and he has confirmed it today. Apart from that, I really have no information at all whether Ms Law actually exists. As best I can recall, I have never seen any documents signed by her. Whenever there have been any proceedings in her name, that is usually a clear signal that the person running matters is Mr Lau.[8] The Privy Council's decision makes it clear that a non-party cannot be liable for costs, if those costs would in any event have been incurred, even without the non-party's involvement in the proceeding. I accept Westpac's submission that in this case it is Mr Lau's involvement that has caused the additional costs to Westpac. AsI have said, Mr Lau played a dominant role in the proceeding. But for his involvement, Westpac would not have been required to prepare for a defended hearing for the removal of the caveats.2 Dymock's Franchise Systems New South Wales Pty Ltd v Todd (No.2) [2005] 1 NZLR 145.[9] On discretion, I take these matters into account. Mr Lau already knew that Westpac had good grounds for its application. He must have known, because of earlier decisions at hearings where Associate Judge Christiansen presided, that anyclaim for a caveatable interest must be tenuous in the light of Westpac's prior andsuperior interest as registered first mortgagee.[10] It is also quite clear that Mr Lau had been deeply involved in structuring the arrangements said to give rise to the caveatable interest. There is no sign that Ms Law herself took any part in those arrangements. The arrangements were unusual and do not make good commercial sense, except as being calculated to create some interest that would frustrate a mortgagee in trying to exercise its power of sale.[11] There was a rather unusual agreement for sale and purchase in each case, with strange provisions which were intended to convert a purchaser's interest inproperty into a lease. The purpose of creating a lease was to create a tenancy under the Residential Tenancies Act which could then be the subject of protection under s 58 of the Residential Tenancies Act. In my decision I made it clear that a tenancy had not in fact been created with the result that the rather strange arrangements did not operate in the way that they were intended to do so. I again emphasise that Mr Lau was behind this. These arrangements were put in place simply to frustrate the exercise of the power of sale by the mortgagees and to allow Mr Lau and Ms Law, or the current mortgagors, to somehow enjoy some income from the property before the mortgagee could complete sales of the property.[12] In my view this is a clear case for the discretion to be exercised against Mr Lau. In a very real sense, he is a party to the proceeding more so than Ms Law.He has dominated the proceeding on the respondent's side. He has made all the playon the respondent's side. He has made all the decisions. Westpac has not in effectbeen litigating against Ms Law but against Mr Lau.[13] As he has put himself in a position where he is in effect a party to the proceeding, it is appropriate that the normal consequences should follow and that he should pay the costs of that party to the proceeding. The order for costs madeagainst Ms Law was $5,893.45. I make a similar order for costs which Mr Lau is to pay Westpac on this proceeding.________________________R M BellAssociate Judge