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Sanli Homes Limited v Jung [2019] NZHC 1861 (2 August 2019)

Last Updated: 8 August 2019

JUDGMENT OF ASSOCIATE JUDGE SMITH

This judgment was delivered by me on 2 August 2019 at 3.00pm, pursuant to r 11.5 of the High Court Rules

Registrar/Deputy Registrar

Solicitors / Counsel:

Shieff Angland, Auckland Queen City Law, Auckland Castle Brown, Auckland M Fisher, Auckland

K Ng, Auckland

SANLI HOMES LTD v JUNG [2019] NZHC 1861 [2 August 2019]

Introduction

[1] The applicants, Sanli Homes Limited and Sanli Group Limited (collectively, Sanli), seek an award of costs against the respondents, Jin Jung, Cheng Zhang and Pill So (the Jung interests) following a successful application by Sanli to sustain a caveat. The Jung interests in turn apply for an award of costs against a non-party, Northwest Developments Limited (Northwest).

Background

[2] On 6 May 2016 Sanli agreed to purchase a property at 77 Nobilo Road, Auckland (the Nobilo property) from the Jung interests. On 12 May 2016 Sanli lodged a caveat numbered 10427926.1 over the Nobilo property (the caveat) in order to protect their equitable interest in the Nobilo property until the date of settlement.

[3] The Nobilo property is situated in an area referred to as the Huapai Triangle. Unbeknown to Sanli, on or about 23 June 2015, the Jung interests had entered into an arrangement with neighbouring property owners to share in the costs of an application for a variation of the district plan to enable the Huapai Triangle land to be subdivided (the Five Party Agreement). The Five Party Agreement required each party to allow access across or use of its land if that was required to enable infrastructure to service another party's land, and each party agreed to grant and register easements to recognise such access rights. The parties further agreed that if the Council required any land or other infrastructure to be vested or dedicated in it as a condition of subdivision consent, or under the requirements of the plan change, the party whose land or infrastructure was required would do all things reasonably necessary to enable such vesting or dedication to occur.

[4] Northwest acquired land adjacent to the Nobilo property (the Northwest land) from parties who had been signatories to the Five Party Agreement, and it became entitled to enforce the Five Party Agreement against the original parties to the Five Party Agreement, including the Jung interests.

[5] Auckland Council approved the plan variation in November 2015, and in April 2016 the Jung interests consented to subdivisional and associated infrastructure works
on the Northwest land. The associated work included the establishment of an access road along the shared boundary between the Northwest land and the Nobilo property.

[6] In June 2016 Auckland Council approved the land use and subdivision for the Northwest land, including the roading proposals.

[7] In October 2016 the Jung interests executed a deed of authority in favour of Sanli authorising it to act on their behalf as if it were the owner of the land to advance discussions and reach agreement with any parties who might be affected by certain specified agreements, including the Five Party Agreement. The Jung parties covenanted in this deed not to act or agree anything with any of the parties or affected parties in relation to the Huapai Triangle, without obtaining Sanli's written approval to such action or agreement.

[8] Between May and September 2017 Northwest made a number of requests that the Jung interests sign certain documents novating Northwest as a party to the Five Party Agreement. The Jung interests responded that they could not sign the documents without Sanli's consent.

[9] The subdivision was substantially completed by Northwest, and all that remained was to deposit the survey plan, so that titles could be issued. This required the consent of both the Jung interests and Sanli as caveator. The Jung interests did not consent, and nor did they procure the consent of Sanli.

[10] Northwest then brought a proceeding against the Jung interests, claiming that the refusal of the Jung interests to give their consent, and to procure the consent of Sanli, breached the Five Party Agreement.

[11] In a judgment dated 13 July 2018 in that proceeding, Brewer J confirmed that Northwest was entitled to enforce the Five Party Agreement against the Jung interests.¹ The Jung interests were required to consent to the lodgement of the survey plan, and to procure any person who had lodged a caveat or other interest against the title to their

1. Northwest Developments Ltd v Zhang [2018] NZHC 1736 at [38]. This decision was upheld by the Court of appeal in Zhang v Northwest Developments Ltd [2019] NZCA 137.

land to consent to the survey plan. In the event that such consent was not immediately forthcoming, the Jung interests were ordered to take such steps as might reasonably be required to procure the withdrawal of any caveat or other interest, including by pursuing an application under s 145A of the Land Transfer Act 1952.

[12] The Jung interests filed an appeal against the judgment of Brewer J, and also applied for an order staying execution of the judgment. No order appears to have been made on the stay application.

[13] Negotiations between the parties took place, primarily between Northwest and Sanli, from about 18 July 2018. Sanli considered that an agreement in principle was reached with Northwest on or about 24 July 2018, under which it would consent to the survey plan on the basis of certain covenants to be provided by Northwest. Sanli appears to have believed that its proposed covenants were acceptable to Northwest, and its solicitors submitted a draft deed to Northwest on 7 August 2018. The draft deed was unacceptable to Northwest, and it repeated requests earlier made to the Jung interests to apply under s 145A to have the caveat removed.

[14] On 9 August 2018, Northwest filed and served an application for ancillary and other orders intended to give effect to the order for specific performance made in the judgment of Brewer J. Among the orders sought were:

(i) an order directing the Jung interests to serve on Northwest copies of all documents filed by Sanli in support of any application by Sanli to sustain the caveat, and to effect service on Northwest immediately upon the Jung interests' being served with the application; and

(ii) an order granting leave to Northwest to file a notice of opposition and any affidavits in opposition to an application by Sanli to sustain the caveat.

[15] On receipt of the application for ancillary orders, the solicitors for the Jung interests wrote to Northwest's solicitor advising that they had heard from Sanli that no agreement had yet been reached between Sanli and Northwest. The solicitor for the
Jung interests indicated his understanding that Northwest's application for ancillary orders meant that no agreement could be reached between Northwest and Sanli. The solicitor went on to advise that the Jung interests had instructed him to make a s 145A request, "now that it is apparent that the application is reasonably required". On or about 9 August 2018 the Jung interests duly applied to the Land Registrar under s 145A of the Land Transfer Act 1952 to have the caveat removed.

[16] On 20 August 2018 Sanli and Northwest reached a settlement, under which Sanli agreed to provide its consent to the survey plan. From that point, Northwest no longer had any interest in the removal of the caveat, and it amended its application for ancillary orders accordingly. Sanli's interest in maintaining the caveat remained, however, and on 20 August 2018 it applied for an order sustaining the caveat (the caveat application).

[17] In a telephone conference on 29 October 2018, counsel advised that the caveat application had been resolved. Sanli had agreed with Northwest to provide the necessary survey plan consent, and the caveat would remain on the title. It appeared that the Jung interests were also prepared to pay 2B costs totalling $9,656.04 to Sanli, although later counsel advised that the Jung interests' willingness to pay that sum was limited to the quantum of a costs award if the Court considered Sanli was entitled to costs. As at 29 October 2018, the position appeared to be that, having abandoned their opposition to the caveat application, the Jung interests would have to pay costs to Sanli. The argument was whether Northwest should be ordered to pay both the costs payable by the Jung interests to Sanli on the caveat application and the Jung interests' own costs associated with the caveat application.

[18] I directed the Jung interests to file a formal application for costs against Northwest, and that application was filed on 2 November 2018. The issue for determination now, is what costs orders should be made as between the three parties.

Submissions

The Jung interests

[19] The Jung interests seek two orders for costs. First, that costs of $9,656.04 be awarded against Northwest on the caveat application in favour of Sanli. Secondly, that costs be awarded against Northwest in favour of the Jung interests; specifically,
$9,700.50 on the caveat application, and indemnity costs on the non-party costs application.

[20] The Jung interests seek these orders on the basis that Brewer J issued a judgment ordering the Jung interests to procure Sanli's consent to the survey plan, and to take such steps as may be reasonably required to achieve this, including applying for the lapse of the caveat.

[21] The Jung interests say they were reluctant to make the application to the District Land Registrar to remove the caveat, as they believed it would unnecessarily raise costs. But they were compelled to make the application when Sanli refused to consent to the survey plan and Northwest persistently demanded that the Jung interests make the application. On 10 August 2018, counsel for Northwest wrote to counsel for Sanli and the Jung interests stating that Sanli had refused to consent, and that the Jung interests needed to make the application. Northwest then maintained that "there was no prospect of an agreement being reached between Northwest and Sanli, in light of [a draft agreement] attached to Sanli's solicitors email at 2.46pm on Thursday 9 August 2018." The Jung interests then made the s 145A application that led to the filing of the caveat application.

[22] The Jung interests say that they did not wish to defend the caveat application but that they were required to by the judgment of Brewer J, and subsequently by a threat of contempt proceedings by Northwest. In addition, the Jung interests state that it was Northwest who intended to defend the application. It required copies of all documents relating to the caveat application, and it made an application to the Court seeking certain ancillary orders, including an order permitting it to be heard on the caveat application. The Jung interests say they remained unaware of negotiations
between Sanli and Northwest, which ultimately resulted in Sanli consenting to the survey plan; rendering the caveat application unnecessary.

[23] On 20 August 2018, despite Northwest's earlier indication that there was no prospect of an agreement being reached with Sanli, Sanli provided its consent to the survey plan. On the same day, Sanli filed the caveat application.

[24] Ms Hwang stated the Jung interests' case in a memorandum dated 16 October 2018 as follows:

37. [The caveat application was] directly caused by the persistent and unreasonable request by Northwest to compel the [Jung interests] to make the unnecessary application [under s 145A] which would consequently result in [the filing of the caveat application]. The [caveat application] and consequent costs would not have resulted without Northwest's involvement.

38. ... Northwest were connected to these proceedings. It would be unjust to allow Northwest to compel the [Jung interests] to make the Application [under s 145A] against [their] will, resulting in these proceedings brought by [Sanli] ... when the [Jung interests] have always maintained that the Application [under s 145A] was unnecessary and unreasonable. Northwest, in compelling the [Jung interests] to make the Application [under s 145A] (resulting in the foreseeable outcome of these proceedings), should bear the costs [of the caveat application] as a consequence.

[25] An issue emerged at the hearing as to whether the Jung interests had in fact agreed to pay $9,656.04 to Sanli for costs on the caveat application. Ms Hwang told me that the agreement was only as to the quantum of the costs, leaving open the question of whether a costs order in the agreed sum should be made against the Jung interests, or whether Northwest should be ordered to pay Sanli's costs. That was not Ms Boparoy's understanding. She told me that there was agreement between Sanli and the Jung interests on both liability and the quantum of the costs order. Mr Fisher's understanding on the point was the same as Ms Boparoy's.

Northwest

[26] On 13 November 2018 Northwest filed a notice of opposition to the Jung interests' application for non-party costs. On 12 March 2019 it filed a further memorandum in regard to costs. For Northwest, Mr Fisher submitted that cost orders
should not be awarded against Northwest, as neither party can be said to have succeeded on the caveat application. The result of the caveat application was that the caveat was sustained by consent. That could not be considered a success for the Jung interests, who had applied to lapse the caveat.

[27] Mr Fisher submitted that Sanli cannot be viewed as the successful party (as both Sanli and the Jung interests had previously agreed), as the caveat application was only initiated due to Sanli's unreasonable behaviour. Sanli had no legitimate interest in not consenting to the survey plan, as the plan merely vested a portion of the Nobilo property road in Auckland City Council, which did not affect Sanli's legitimate interest in the Nobilo property. Mr Fisher submitted that Sanli withheld its consent to the survey plan unreasonably, in an attempt to extract collateral advantages from Northwest.

[28] At the time the Jung interests applied to the District Land Registrar to lapse the caveat, Sanli was arguing that it was justified in withholding its consent to the survey plan because it had a superior equitable interest in the portion of the Nobilo property in question. Mr Fisher submitted that view was incorrect and unreasonable, and that the caveat application should not have been necessary. On that basis, Mr Fisher submitted that Sanli cannot be considered to be the successful party on the caveat application and it should not be awarded costs that would effectively reward its wrongful behaviour.

[29] Mr Fisher submitted that the Jung interests were contractually obliged to provide their consent to the survey plan, and they could have done that at any time. If they had done that, it would probably have convinced Sanli to provide its consent.

[30] As neither party should be entitled to an award of costs under the High Court Rules 2016, no order ought to be made against Northwest. The Court's jurisdiction to award costs against a non-party should only be exercised in exceptional circumstances, and this is not an exceptional case. Northwest was not the real party interested in the outcome of the caveat application, and it has not engaged in conduct of the kind that would justify an award of costs against it.

Sanli

[31] Sanli asks for costs against the Jung interests only, not against Northwest. Sanli did not make submissions on the non-party costs issue.

[32] However, Sanli opposed Northwest's contention that it should not be regarded as the successful party on the caveat application because it wrongly and opportunistically withheld its consent to the survey plan. Sanli's position was that once the judgment of Brewer J was released, and as soon as it was possible, it had advised that it would consent to the survey plan.

[33] Sanli asks for an order for costs on the caveat application as agreed with the Jung interests. It is not concerned with whether those costs should be paid by the Jung interests or Northwest.

Discussion and conclusions

Costs against non-parties – legal principles

[34] In Erwood v Maxted the Court of Appeal noted that there is "ample authority" in New Zealand and elsewhere for the proposition that a broadly-based costs discretion may be exercised against non-parties to civil litigation.²

[35] In Carborundum Abrasives Ltd v Bank of New Zealand (No 2), Tompkins J observed that, as a general rule, costs will not be awarded against a person who is not a party to the proceeding.³ The Judge went on to state:⁴

For costs to be awarded against a non-party, that person must have some connection with, or involvement in, the proceedings. Such an order would be justified only where the circumstances demonstrated that the connection or involvement was such as to justify the making of what I accept should be regarded as an exceptional order.

² Erwood v Maxted [2010] NZCA 93, (2010) 20 PRNZ 466, at [18].

³ Carborundum Abrasives Ltd v Bank of New Zealand (No 2) [1992] 3 NZLR 757 (HC) at 764.

⁴ At 764.

[36] Tompkins J went on to say:⁵

Where proceedings are initiated by and controlled by a person who, although not a party to the proceedings, has a direct personal financial interest in the result ... it would rarely be just for such a person pursuing his own interests, to be able to do so with no risk to himself should the proceedings fail or be discontinued. That would be so whether or not the person is acting improperly or fraudulently.

[37] Non-party costs will only be awarded where it is just to do so and when "something more" about the non-party's conduct warrants an award.⁶ This may include, but is not limited to, where the non-party has engaged in impropriety.⁷ Of relevance to the determination is whether the non-party controls the litigation or benefits from it, as in such circumstances the non-party ought to be regarded as the "real party".⁸

The Jung interests' claim for non-party costs

[38] In one sense, it might be said that the caveat application was at least initiated by Northwest, through the pressure it applied to the Jung interests following the judgment of Brewer J. It does appear that Northwest intended, if it could, to run any proceedings relating to the caveat and defend any application by Sanli to sustain the caveat. To that extent, there is merit in the Jung interests' submissions relating to Northwest initiating and controlling the caveat application.

[39] I think it can also be said that Northwest had a clear interest in the outcome of the Jung interests' attempts to have the caveat removed, and that, if Sanli did not consent to the survey plan, it stood to benefit from a successful defence of any application Sanli might file to sustain the caveat. In my view the role played by Northwest must be assessed (for present purposes) not as it was at the time when the caveat application was filed, but on 9 August 2018, when the Jung interests applied to

⁵ At 765.

6. Kidd v Equity realty (1995) Ltd [2010] NZCA 452 at [16] See also Minister of Education v H Construction North Island Ltd (In Receivership and Liquidation) [2019] NZHC 1459 at [1] where Downs J said:

Non-party costs are exceptional. They are awarded only when it is just to do so, and when "something more" about the non-party's conduct warrants costs.

⁷ At [20].

8. Dymocks Franchise Systems (NSW) Pty Ltd v Todd (No 2) [2004] UKPC 39, [2005] 1 NZLR 145 at [25].

the District Land Registrar under s 145A. From that point I think all of the parties would have understood that it was a near-certainty that Sanli would file the caveat application: it had no choice but to do so, because it would lose the caveat by default if it did not. So I accept that:

(i) at the critical time Northwest had a clear interest in the outcome of the step which made the caveat application inevitable, and

(ii) that at that time it stood to benefit from the taking of that step.

[40] In those circumstances I think it can be said that Northwest was the "real party" to the caveat application, standing behind the Jung interests. The question is whether in that circumstance there is "something extra" about Northwest's conduct that, in the interests of justice, should make it responsible for the costs of Sanli and/or the Jung interests on the caveat application. I do not believe that there is.

[41] The critical point is that, whatever Northwest did following the delivery of the judgment of Brewer J on 13 July 2018, it did for the broad purpose of enforcing its rights under that judgment. Whether or not the caveat application was ever likely to provide a ruling on the priority of the respective equitable interests of Northwest and the Jung interests (a point on which I need express no opinion), the initiation of the s 145A process was effectively sanctioned by this Court in the judgment of Brewer J. Whatever Northwest might or might not have done following the judgment, once it was apparent that Sanli had not "immediately" consented to the survey plan the Jung interests were themselves bound to take such steps as might reasonably be required to procure the withdrawal of the caveat, including by making an application under s 145A.

[42] By 9 August 2019, when they initiated the s 145A procedure, the Jung interests knew that Sanli had not "immediately" consented to the survey plan, and they had for some time been under an obligation to take urgent steps to procure that consent. They cannot complain that Northwest insisted that they take those steps by one of the means identified by the Judge, namely, an application to the District Land Registrar under s 145A. And once that process had been commenced, it was always a possibility that
Sanli might consent to the survey plan, leaving Northwest with no continuing interest in Sanli's (inevitable) application to sustain its caveat. The ultimate outcome was, if not predictable, then at least one of a range of possible outcomes that might have ensued following the judgment of Brewer J.

[43] I am also of the view that the Jung interests have themselves caused or substantially contributed to the position in which they have found themselves. The Court of Appeal made it clear in the appeal from the judgment of Brewer J that it was not necessary for Northwest to prove that Sanli purchased the Nobilo property without knowledge of the Five Party Agreement, or that the Jung interests had not transferred their rights and obligations under the Five Party Agreement to Sanli. Absent a novation or a new agreement, the Jung interests remained liable under the Five Party Agreement whether or not they had assigned the benefits of that agreement to Sanli.⁹ The Court of Appeal noted that it was indisputable that the Jung interests were in breach of their obligations under the Five Party Agreement — they had not given their consent to the plan as they were obliged to do. Sanli may well have been a "sticking point" from the point of view of the Jung interests, because they had covenanted with Sanli "not to act or agree anything" under the Five Party Agreement without first obtaining Sanli's written approval, but that promise to Sanli did not absolve the Jung interests from their obligations under the Five Party Agreement.¹⁰ The position appears to be that the Jung interests effectively put it out of their power to ensure compliance with their obligations under the Five Party Agreement. They did so first by entering into the sale agreement to Sanli without procuring Sanli's covenant to comply with all relevant terms of the Five Party Agreement, and then later by ceding to Sanli all rights of negotiation with other parties, including in respect of matters arising under the Five Party Agreement.

[44] In all of the foregoing circumstances, I am not satisfied that the Jung interests have shown that there is "something extra" which requires that Northwest meet either Sanli's costs or the costs of the Jung interests themselves, on the caveat application. The Jung interests had an immediate and continuing obligation under the judgment of Brewer J to take immediate steps to ensure either that Sanli provided its consent to the

⁹ Zhang v Northwest Developments Ltd (2019] NZCA 137, above n 1, at [37].

¹⁰ At [39].

survey plan or that the caveat was removed. Consent to the survey plan had not been obtained by 9 August 2018, and it was the judgment, not the actions of Northwest, that required the Jung interests, as the primary obligors under the judgment, to make the s 145A application.

[45] For those reasons, the Jung interests' application for non-party costs against Northwest is dismissed.

[46] In the ordinary way, Northwest must be entitled to costs on the unsuccessful claim for costs against it. Those costs would normally be on a 2B basis, but the amounts involved here are modest, and as we will see later in this judgment, Northwest failed in its submission that Sanli was not entitled to any costs. That unsuccessful submission had the effect of requiring Sanli to involve itself in the costs argument to a greater extent than would otherwise have been necessary, and there is an issue, to which I return later in this judgment, as to whether Northwest should pay some costs to Sanli in respect of Northwest's unsuccessful contention that Sanli was not a "winner" in the caveat application, and should receive no costs.

[47] In the end, I think the justice of the case will be met if I award costs to Northwest on the non-party costs application against the Jung interests on a 2B basis, reduced by 20 per cent, plus any disbursements as fixed by the registrar. There will be an order accordingly.

Sanli's claim for costs

[48] Ordinarily, costs will follow the event and the loser will pay the winner's costs according to the scale set out in the High Court Rules 2016.¹¹ The primacy of this rule has been expressed by the Supreme Court in many different ways but perhaps most clearly and concisely as "the loser, and only the loser, pays".¹² This fundamental rule, although not absolute, ought only to be departed from for exceptional reasons.¹³

¹¹ Rules 14.2 – 14.5.

¹² Shirley v Wairarapa District Health Board [2006] NZSC 63, [2006] 3 NZLR 523 at [19].

¹³ At [19].

[49] I have dismissed the claim for non-party costs against Northwest, so I am primarily concerned here with the justice of the matter (for costs purposes) as between Sanli and the Jung interests. Nevertheless, Northwest did submit that Sanli should not be entitled to costs against the Jung interests, so I will address the merits of Sanli's costs claim.

[50] Northwest submitted that there is no identifiable winner here, as Sanli's caveat was sustained by consent, and because Sanli's objectionable behaviour is such that it should not be identified as the winner. I am not persuaded by this submission. Although the matter was resolved by consent, Sanli effectively had no option but to apply to sustain the caveat, and the caveat was sustained. In that sense, its application was clearly successful. I think the relevance of any objectionable conduct of Sanli is a matter to be considered in assessing the quantum of any costs to which Sanli might be entitled. Of particular relevance in that regard will be the question of whether Sanli unreasonably withheld its consent to the survey plan, knowing that its equitable interest in the Nobilo property was subordinate to Northwest's equitable interest in the Nobilo property created by the Five Party Agreement.

[51] When there are two competing equities, the ordinary rule is that, all things being equal, the first in time prevails. This priority may be reversed where the person with the earlier interest is responsible for an omission that has the effect of inducing a later claimant to act to their detriment. This may include an omission to promptly register a caveat.¹⁴ A failure to lodge a caveat may not always result in a reversal of priorities. But it is one of the circumstances to be considered.

[52] In an affidavit sworn in support of the caveat application, Mr Jilun Li, a manager employed by Sanli, deposed that, when he signed the agreement under which Sanli purchased the Nobilo property, he was not aware that the Jung interests had entered into any agreements with neighbouring property owners to share the costs of infrastructure works in the Huapai Triangle. He said that the Jung interests did not inform Sanli or him about that, and the agreement Sanli signed did not contain any provision for Sanli to take over any existing or current obligations of the Jung interests.

14. Australian Guarantee Corporation (NZ) Ltd v CFC Commercial Finance Ltd [1995] 1 NZLR 129 (CA) at 138.

[53] Mr Li said that the Jung interests became aware of the Five Party Agreement on 30 May 2016, over three weeks after Mr Li signed the purchase agreement. Mr Li then obtained a copy of the Five Party Agreement, and had it translated into Chinese. He said in his evidence that Sanli was surprised to hear that the Five Party Agreement would affect its interest in the Nobilo property. Sanli had entered into the agreement to buy the Nobilo property because it was unconditional, and Mr Li's authority to sign on behalf of Sanli did not go beyond signing a purchase agreement that was unconditional.

[54] Mr Li described certain correspondence passing between the solicitors after the judgment of Brewer J had been delivered. On 17 July 2018, Northwest wrote to Sanli enclosing the judgment of Brewer J and requiring Sanli's consent to the survey plan. Sanli's lawyers replied promptly, advising that they would need some time to translate all the Court documents for Sanli into Chinese. The translation work had been done by 24 July 2018, and Mr Li then instructed Sanli's solicitors to provide Sanli's in principle consent to the survey plan, so long as the consent did not affect proceedings Sanli presently had before the Court, or jeopardise Sanli's claims against the Jung interests. Mr Li said that, on or about 25 July 2018, Sanli's lawyers informed him that they had relayed Sanli's consent to the survey plan on certain terms and conditions, and that that had been accepted by Northwest. He said that Sanli's lawyers had invited Northwest to meet with them to discuss any other concerns Northwest might have with regard to the consent, but Northwest had refused. (It is apparent from a letter dated 25 July 2018 from Northwest's solicitors that Northwest considered that Sanli was stonewalling, by introducing collateral issues relating to Sanli's dispute with the Jung interests.)

[55] In an affidavit provided for the Jung interests, Mr Jin Kuk Jung said that, following the judgment of Brewer J, the Jung interests sought to delay the s 145A application, given that Northwest and Sanli were in discussions that appeared positive. The Jung interests also advised both Northwest and Sanli that the s 145A application may result in unnecessary costs for the parties, but Northwest repeatedly demanded that the Jung interests make the application immediately. That was despite the fact that the Jung interests had made an order for a stay of the orders made by Brewer J, and filed an appeal to the Court of Appeal against the judgment.
[56] Negotiations continued between the solicitors for Sanli and Northwest into August 2018. On 30 July 2018, counsel for Sanli advised that Sanli would require a deed recording the agreement between the parties as to the provision of Sanli's consent to the survey plan and the vesting of the road, the consent to be on the basis that Northwest would provide certain covenants Sanli had requested on 24 July 2018.

[57] Counsel for Sanli sent a draft deed to Northwest's solicitors on 7 August 2018. The draft deed required a number of covenants by Northwest, at least some of which Northwest found unacceptable. A revised draft deed was submitted by counsel for Sanli on 9 August 2018. Later that afternoon, Sanli's solicitors wrote to the solicitors for the Jung interests advising that an amended draft consent deed had been submitted to Northwest, with conditions which Northwest had previously found unacceptable removed.

[58] It appears that the revised form of deed was still unacceptable to Northwest. It proceeded to file its application for ancillary orders, and very shortly thereafter the Jung interests made their application under s 145A.

[59] It is true that Northwest was not entitled to lodge a caveat over the Nobilo property under the terms of the Five Party Agreement. But I am not sure that that could affect Sanli's position on the issue of the priority of the competing equitable interests, and the presence of the 'no caveat' clause did not in fact prevent Northwest from lodging a caveat over the Nobilo property (an action it later took).

[60] I do not see anything in the events that unfolded between 13 July 2018, when Brewer J gave his judgment, and 9 August 2018 (when the s 145A application was made) that would displace Sanli's ordinary entitlement to costs as the successful party in the caveat application. Sanli was not a party, and was not bound by the judgment of Brewer J, and nor was it bound by the Five Party Agreement. I am unable to say in the context of this costs judgment that Sanli clearly did not have an arguable case for priority of its equitable interest, given that Northwest had not lodged any caveat on the Nobilo property and Mr Li said that Sanli would not have bought the Nobilo property if the agreement had been subject to the conditions contained in the Five Party Agreement. Nor is it possible on the limited evidence available to conclude that
it was unreasonable for Sanli to attempt to negotiate additional terms (that is, additional to Sanli providing its consent to the survey plan) following the judgment of Brewer J. In my view, that was always a possibility, given the wide authority the Jung interests had conferred on Sanli to negotiate matters relating to the Five Party Agreement, and Sanli's understanding was that there was nothing in the draft deed it submitted to Northwest on 7 August 2018 that had not already been agreed in prior emails. The fact that Sanli took longer negotiating the terms of consent to the survey plan than the Jung interests would have liked, and longer than Northwest was prepared to accept, is in my view substantially a result of the Jung interests having handed control of a matter to Sanli over which the Jung interests should have maintained control themselves (namely, consent to the survey plan). If Sanli's consent could not be obtained promptly, there was always going to be an obligation on the Jung interests to make the s 145A application, and it was always a possibility that Sanli might consent to the survey plan but still have to file an application to preserve the caveat.

[61] In those circumstances, I do not think it can be said, as between Sanli and the Jung interests, that Sanli breached any duty to the Jung interests when it endeavoured to negotiate the best possible terms it could for the provision of its consent to the survey plan. No doubt the Jung interests found themselves 'between a rock and a hard place' following the judgment of Brewer J, when they could not effectively control the negotiations for Sanli's consent to the survey plan, but in my view that is a position the Jung interests brought upon themselves. I do not consider it should affect Sanli's claim for costs.

[62] I conclude that there is nothing to displace Sanli's ordinary entitlement to costs as the successful party. The amount of those costs has been agreed in the sum of
$9,656.04, and I make an order for payment of that sum by the Jung interests to Sanli.

[63] Sanli may be entitled to further costs for its attendances on the costs issue after 29 October 2018, but its involvement after that date was on a reduced basis, and the bulk of the argument was on the Jung interests' claim for non-party costs against Northwest. My impression is that if there were to be an award of further costs to Sanli it would be modest, reflecting that reduced involvement and the modest sums involved. However, I did not hear from counsel on the matter, so they may file
memoranda on the issue of further costs for Sanli, whether against the Jung interests or Northwest, if they cannot agree. Any memorandum on that issue by Sanli is to be filed and served within 15 working days. Any reply memorandum by the Jung interests or Northwest is to be filed and served within 10 working days of its receipt of Sanli's memorandum.

Associate Judge Smith