Crescent Construction Limited assignee of Luscious Living International Limited v Sachdeva

[2023] NZHC 3861

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV 2023-404-001595

[2023] NZHC 3861

BETWEEN

CRESCENT CONSTRUCTION LIMITED

assignee of LUSCIOUS LIVING INTERNATIONAL LIMITED

Appellant

AND

MANISH SACHDEVA

Respondent

On the papers

Appearances:

G Jindal for the Appellant

D G Collecutt and S Sharma for the Respondent

Judgment:

21 December 2023

JUDGMENT OF TAHANA J

(Costs)

This judgment was delivered by me on 21 December 2023 at 3.00pm Pursuant to Rule 11.5 of the High Court Rules

…………………………

Registrar/Deputy Registrar

Solicitors/Counsel:

Ormiston Legal, Auckland Patel Nand Legal, Auckland

CRESCENT CONSTRUCTION LIMITED assignee of LUSCIOUS LIVING INTERNATIONAL LIMITED v SACHDEVA (Costs) [2023] NZHC 3861 [21 December 2023]

Application for costs

[1]        In my judgment dated 1 December 2023, I allowed the appeal and indicated my preliminary view that the appellant is entitled to costs on a category 2B basis.1 I granted leave to file costs memoranda if costs could not be agreed. Costs memoranda have now been filed.

[2]        The appellant seeks increased costs of $32,982.00 (based on a 50 per cent uplift) plus disbursements of $835.00. The appellant says increased costs are justified because the respondent rejected a Calderbank offer and advanced unmeritorious arguments.

[3]        The respondent opposes increased costs and says costs should be awarded on a category 1A basis. The respondent says that only costs of $6,094.50 are payable and disbursements of $635.00. Alternatively, the respondent says costs should be stayed until the District Court determines the appeal from the Disputes Tribunal.

[4]I therefore need to determine the following issues:

(a)Should the proceedings be categorised as category 1A or category 2B?

(b)Is the appellant entitled to increased costs?

(c)Is the appellant entitled to costs for all the tasks claimed?

(d)Should costs be stayed?

Should the proceedings be categorised as category 1A or category 2B?

[5]        Rule 14.3 of the High Court Rules 2016 sets out the different categories, as follows:

Category     1 proceedings

Proceedings of a straightforward nature

able to be conducted by counsel considered junior in the High Court

1      Crescent Construction Limited v Sachdeva [2023] NZHC 3478 at [45].

Category     2 proceedings

Proceedings of average complexity requiring counsel of skill and experience considered average in the High Court

Category     3 proceedings

Proceedings that because of their complexity or significance require counsel to have special skill and experience in the

High Court

[6]        Both parties have previously agreed that the proceedings should be categorised as category 2B.2

[7]        The respondent’s submissions are confusing in that they refer to band A and then say “costs should be awarded on a 1B basis” suggesting they are seeking a category 1 categorisation. The table of costs included in the respondent’s submissions refers to a daily rate of $2,390 (which is the category 2 daily rate) and then to band A allocations of time.

[8]        Counsel for the respondent says the proceedings should be categorised as category 1A because the appeal concerned a procedural issue, did not involve extensive disputed factual issues nor consideration of conflicting authorities. Further, that the length of the judgment supports the proceedings being classified as category 1.

[9]        The appeal concerned whether the appellant should be joined to the District Court proceedings. That question turned on the application of the Companies Act 1993 to transactions entered into by a bankrupt director and/or bankrupt shareholder. That is not a procedural issue of limited complexity but an issue of statutory interpretation involving the application of caselaw. While the value of the dispute is small ($30,000), I do not accept that the issues were of a straightforward nature.

[10]I categorise the proceedings as category 2.

2      Memorandum of counsel for the respondent dated 25 August 2023 and memorandum of counsel for the appellant dated 25 August 2023.

[11]      In terms of the appropriate band, the bands relate to the time spent on each task so it is necessary to consider the relevant task and then whether the time required for that task falls within band A or band B. The respondent proposes band A time allocations for tasks. Rule 14.5(2) provides an explanation as to when band A, B or C is appropriate as follows:

A determination of what is a reasonable time for a step under subclause (1) must be made by reference—

(a)to band A, if a comparatively small amount of time is considered reasonable; or

(b)to band B, if a normal amount of time is considered reasonable; or

(c)to band C, if a comparatively large amount of time for the particular step is considered reasonable.

[12]      The above indicates that band A is for proceedings where only a “small amount of time” is considered reasonable whereas band B is for a normal amount of time.

[13]      I am not satisfied that the nature of the appeal and each of the tasks required less than a normal amount of time. Band B is therefore appropriate for each of the tasks.

Is the appellant entitled to increased costs?

[14]      The Court may order a party to pay increased costs if the party opposing costs has contributed unnecessarily to the time and expense of the proceeding or a step in it by:

(a)taking or pursuing an unnecessary step or an argument that lacks merit;3 or

(b)without reasonable justification, rejecting an offer of settlement.4

[15]      While I rejected the respondent’s position in response to the application to enlarge time, the respondent was entitled to challenge the application. Further, limited

3      High Court Rules 2016, r 14.6(3)(b)(ii).

4      High Court Rules 2016, r 14.6(3)(b)(v).

time was spent on this issue on appeal. I do not consider that it justifies an increase in costs despite the Court rejecting the respondent’s arguments.

[16]Turning to the Calderbank offer, the offer required the respondent to pay

$30,000.00. That issue was unrelated to the appeal, which was only concerned with whether the appellant should be joined as a party to the District Court proceedings. The respondent therefore had a reasonable justification for rejecting the offer. The Calderbank offer does not therefore justify awarding increased costs.

Is the appellant entitled to costs for all the tasks claimed?

[17]      The respondent says the appellant is not entitled to claim for the costs of the application for enlargement. Had the respondent not taken issue with the one day delay, it would have been unnecessary for the appellant to file an application on 1 September 2023 to enlarge time. The issue could have been dealt with by consent at the mention hearing before Powell J. Submissions and hearing time on this issue would not have been necessary. The appellant has therefore incurred unnecessary costs because of the respondent’s position. Further, the appellant’s application was successful and it is therefore entitled to costs.

[18]      The application to enlarge time was heard at the same time as the appeal so there were costs savings in the time required for submissions and preparation. I therefore consider that the costs of submissions should be limited to the band B allocation of 3 days for an appeal and not 4.5 days as claimed by the appellant. I decline the appellant’s claim for preparing two bundles for the hearing. The appellant can only claim once. The hearing took just over one hour. The appellant is therefore only entitled to claim 0.25 days in accordance with step 57. The appellant cannot claim twice for hearing time.

[19]      The appellant is also not entitled to claim costs of $956.00 for filing the memorandum dated 22 September 2023 seeking an indulgence from the Court to start the hearing early. Those costs arose because of the availability of the appellant’s counsel.

[20]      I also decline the appellant’s claim for costs of $717.00 for submissions dated 11 December 2023 regarding costs. I decline to award costs on costs especially in circumstances where I have declined a large part of the appellant’s costs’ claim.

[21]I therefore award costs as follows:

STEP	DESCRIPTION	TIME	AMOUNT
INTERLOCUTORY APPLICATION (A)
22	Filing of interlocutory application	0.60	1,434.00
SUBSTANTIVE APPEAL (B)
52	Commencement of appeal	1.00	2,390.00
11	Filing memorandum dated 08.08.2023	0.40	956.00
11	Filing memorandum dated 25.08.2023	0.40	956.00
11	Case management conference 29.08.2023	0.30	717.00
56	Preparation of written submissions	3.00	7,170.00
57	Appearance at hearing on 03 Oct 2023	0.25	597.50
29	Sealing of judgment	0.20	478.00
Appeal costs			13,264.50
TOTAL COSTS (A + B)			$14,698.50
DISBURSEMENTS
Filing fee (appeal)		540.00
Filing fee (interlocutory)		200.00
Printing and binding of common bundle		45.00
Sealing of judgment		50.00
TOTAL DISBURSEMENTS		$835.00

Should costs be stayed?

[22]      The respondent has not filed an application to stay execution and there is no appeal. I therefore decline the respondent’s request to stay execution of this costs judgment.

Result

[23]      The respondent is to pay the appellant costs of $14,698.50 and disbursements of $835.00.

[24]The security for costs of $1,195 is to be released to the appellant.

Tahana J