Eliahu v Eliahu

[2022] NZHC 2259

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2021-404-2088

[2022] NZHC 2259

BETWEEN

YARON ELIAHU

First Plaintiff

LIA ELIZABETH ELIAHU, LEO DANIEL ELIAHU and LILLY RON ELIAHU
Second Plaintiffs

AND

DANIEL ELIAHU

First Defendant

PITA BREAD LTD
Second Defendant

PITA HOLDINGS LTD
Third Defendant

DANIEL ELIAHU and DMG TRUSTEES

(ELIAHU) LTD sued as trustees of the PITA PROPERTY TRUST

Fourth Defendants

Judgment:

(On the papers)

6 September 2022

JUDGMENT OF BREWER J

(Costs)

This judgment was delivered by me on 6 September 2022 at 3.30 pm pursuant to Rule 11.5 High Court Rules.

Registrar/Deputy Registrar

Solicitors:

McVeagh Fleming (Auckland) for Plaintiffs DMG Solicitors (Auckland) for First Defendant

ELIAHU v ELIAHU [2022] NZHC 2259 [6 September 2022]

Introduction

[1]    On 29 October 2021, the first plaintiff (Yaron Eliahu) filed two on notice interlocutory applications seeking an interim injunction against the first defendant (Daniel Eliahu or “Danny”) and leave to bring a derivative action on behalf of the second and third defendants.

[2]    The interim injunction sought to restrain Danny from continuing to make unauthorised payments out of the second and third defendants’ bank accounts to himself or other persons, and continuing to accrue unauthorised and unwarranted expenses for those companies. The derivative action for which leave was sought was against Danny for breach of fiduciary duties and breach of statutory duties, and against the fourth defendants for knowing receipt.

[3]    Before those applications were heard and determined, Yaron filed an urgent interlocutory application for an interim injunction restraining Danny on the basis that, between service on Danny of the statement of claim and the above applications, he continued to make substantial unauthorised withdrawals of company funds. Justice Gault made interim orders by consent on 15 March 2022 pending determination of the applications dated 29 October 2021. He reserved the question of costs.

[4]    On 30 May 2022, I granted both of Yaron’s 29 October 2021 applications.1 I found that Yaron is entitled to costs.2 If costs could not be agreed, I directed Yaron to file a costs memorandum by 1 July 2022 and Danny to file his reply by 1 August 2022.3

[5]    Costs could not be (entirely) agreed. Yaron accordingly filed a memorandum on 1 July 2022. Danny has not filed a memorandum in reply. But attached to Yaron’s memorandum is a letter from Mr Gould, counsel for Danny, outlining the areas of disagreement.

[6]It now falls to me to decide the appropriate costs award.

1      Eliahu v Eliahu [2022] NZHC 1226

2 At [55].

3 At [56].

Discussion

[7]    The letter from Mr Gould dated 30 June 2022 confirms that Danny agrees to Yaron’s proposed schedule of costs and disbursements with the exception of five specified matters discussed below.

Filing interlocutory application for interim injunction

[8]    Yaron claims $1,434 for filing the urgent interlocutory application for an interim injunction pending determination of the applications dated 29 October 2021.4 Mr Gould suggests that this application “was unnecessary and has not been adjudicated upon”. I agree with Ms Staines, counsel for Yaron, that it was entirely reasonable for him to seek urgent interim relief in circumstances where Danny continued to make what appeared to be substantial unauthorised withdrawals from the second and third defendants’ accounts despite the 29 October 2021 applications.

[9]    On 15 March 2022, Gault J made the interim order by consent on the terms sought by Yaron. He reserved costs. Yaron was then subsequently successful in obtaining the interim injunction against Danny following my judgment on 30 May 2022.

[10]The general rule that costs follow the event applies.5

[11]   I am satisfied that Yaron is entitled to costs for filing the urgent interlocutory application.

Preparation by applicant of bundle for hearing

[12]   Yaron claims $1,434 for preparation of a bundle for the hearing.6 Ms Staines states that a casebook was prepared for the hearing of Yaron’s 29 October 2021 applications and was referenced extensively in the footnotes of the plaintiffs’ submissions. Mr Gould states that he “was not served with a bundle, nor was it referred to at the hearing”. But a copy of the casebook was served on Mr Gould, and

4      High Court Rules 2016, sch 3 item 22.

5      Rule 14.2(1)(a).

6      Schedule 3 item 25.

filed with the Court, by email on 29 March 2022. Ms Staines has attached emails from Mr Gould acknowledging receipt of the casebook. Hard copies of the casebook were also couriered to the Court and to Mr Gould’s offices on 29 March 2022.

[13]I am satisfied that Yaron is entitled to costs for preparation of the bundle.

Second and subsequent counsel

[14]   Yaron initially claimed costs for second and subsequent counsel. Mr Gould responded that “[g]iven the nature of the proceeding, second counsel are clearly unnecessary.” Ms Staines conceded this claim and removed it from the schedule of costs sought.

Filing memorandum for first or subsequent case management conference (14 April 2022)

[15]Yaron claims $956 for the filing of a memorandum dated 14 April 2022.7

[16]   At the hearing on 12 April 2022, I directed counsel to file memoranda addressing whether the Court has jurisdiction to make an order that Danny should be permitted to receive a monthly payment of $20,000 from the second or third defendants, without prejudice to Yaron’s claims in the substantive proceeding. The memorandum on 14 April 2022 addressed this issue. It concluded there would be no legal basis for making such an order.

[17]   Mr Gould states that the memorandum was “a half page and does not squarely fit within Item 11 of the High Court Rules”. He suggests that costs of $100 would be more appropriate. Ms Staines submits that even though the memorandum was only one page in length, counsel for Yaron had to undertake research in order to confirm to the Court the conclusion that there is no legal basis on which it can allow Danny to receive the monthly payment. She submits that Yaron should be entitled to claim the cost of this exercise.

7      Schedule 3 item 11.

[18]   I am satisfied that Yaron is entitled to recover the costs of preparing this memorandum. It was prepared following specific directions I made at the hearing on 12 April 2022. I see no issue with costs being sought by reference to item 11. As to the memorandum being only one page in length, that would not be indicative of the amount of time taken to research and prepare an answer to the relevant question. But even so, I consider that a comparatively small amount of time (band A) would have been required.8

[19]I allow 0.2 days or $478 for this step of the proceeding.

Filing fee

[20] Yaron claims the filing fee ($200) for the urgent interlocutory application for an interim injunction. Mr Gould described this as “a wasteful expense”. For reasons already canvased at [8] above, I do not agree. Yaron is entitled to recover this disbursement.

Result

[21]   I award costs on a 2B basis in favour of Yaron totalling $18,505.50 (allowing only 0.2 days in respect of the memorandum dated 14 April 2022), plus disbursements.

Brewer J

8      Rule 14.5(2)(a).