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Grant v Bhana

Grant v Bhana

Case [2018] NZHC 1527 25 June 2018

Civil Litigation & Procedure

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IN THE HIGH COURT OF NEW ZEALAND ROTORUA REGISTRY

I TE KŌTI MATUA O AOTEAROA TE ROTORUA-NUI-Ā-KAHU ROHE

CIV-2014-463-000169

[2018] NZHC 1527

BETWEEN
DAMIEN GRANT AND STEVEN KHOV

as liquidators of RANOLF COMPANY LTD (In liquidation)

Applicants

AND

STEPHEN BHANA

First Respondent

JASU MATI BHANA

Second Respondent

On the papers Counsel:
B J Norling and A Cherkashina for the Applicants First and Second Respondents in person

Judgment:

25 June 2018

JUDGMENT OF WOOLFORD J

[As to costs]

This judgment was delivered by me on Monday, 25 June 2018 at 11:30 am pursuant to r 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Solicitors:Waterstone Insolvency (Auckland) for Applicants (Copy to Respondents in person)

GRANT AND KHOV as liquidators of RANOLF COMPANY LTD (In liquidation) v BHANA [2018] NZHC 1527 [25 June 2018]

Introduction

[1] Mr and Ms Bhana, siblings, consistently acted to frustrate the liquidators of a company in their control. They failed to produce documents and provide information, even though I had ordered them to do so. Eventually, they were held in contempt of court. The liquidators were awarded indemnity costs in respect of the contempt application.

[2] Two questions now arise. First, whether the liquidators are entitled to costs given they were represented by in-house counsel? Second, if they are entitled to costs, what were their actual and reasonable costs?

Background

[3] The respondents are siblings. They were in a control of a company, Ranolf Company Limited. Mr Grant and Mr Khov, as liquidators, pursued the respondents for information about the company’s affairs.

[4] On 25 November 2014, I ordered the respondents to produce documents and provide information to the liquidators. They failed to do so. The liquidators applied, on 16 July 2015, for the respondents to be held in contempt of court.

[5] Brewer J held the respondents in contempt on 21 October 2015.1 The Judge said he was satisfied the respondents had deliberately frustrated the liquidation process. They persistently failed to produce books, records and documents relating to the company and an associated trust. Brewer J deferred the question of penalty, but said the liquidators were entitled to costs on an actual and reasonable basis.

[6] The respondents then claimed they were never served with the contempt application and maintained they were unaware of the 21 October 2015 hearing. But Brewer J confirmed his finding of contempt on 4 October 2016.2 The Judge was satisfied the respondents were served with notice of the 21 October 2015 hearing. They either overlooked the hearing or chose not to attend.

1 Grant v Bhana [2015] NZHC 2596.
2 Grant v Bhana [2016] NZHC 2352.

[7] On 17 November 2016, Brewer J fixed the respondents’ penalties for contempt.3 The Judge fined Mr Bhana $8,000 and Ms Bhana $5,000. Half was to be distributed to the liquidators and half to the Crown. Brewer J further awarded indemnity costs to the liquidators. He indicated he anticipated actual and reasonable costs would amount to around 2B costs with a 50 per cent…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Grant v Bhana

Details

AGLC: Grant v Bhana [2018] NZHC 1527
Case: [2018] NZHC 1527
Decision Date: 25 June 2018

CaseChat Overview and Summary

In the High Court of New Zealand Rotorua Registry, the applicants, Damien Grant and Steven Khov as liquidators of Ranolf Company Ltd (in liquidation), filed an application against the respondents, Mr and Ms Bhana, seeking costs after the respondents were found to be in contempt of court for failing to produce documents and provide information. The applicants argued that they were entitled to indemnity costs on an actual and reasonable basis, as well as disbursements. The respondents claimed that they were never served with the contempt application and therefore were unaware of the hearing. However, the court found that the respondents were served with notice of the hearing and chose not to attend.

The court considered two issues: first, whether parties represented by in-house counsel are entitled to costs; and second, if they are entitled to costs, what are their actual and reasonable costs? The court held that parties represented by in-house counsel are entitled to costs if the circumstances of their retainer fit within the terms of the relevant cases. The in-house counsel in this case billed their time to the company, which the liquidator was acting for. Therefore, the liquidators were entitled to costs.

As for the second issue, the court held that the amount claimed as indemnity costs was not reasonable. The court calculated the reasonable costs by considering the appropriate time taken, the significance and complexity of the work, and a reasonable median hourly rate. The court found that the liquidators' actual costs that were reasonably incurred amounted to $41,330.00. The court also found that the liquidators were entitled to $4,001.09 in disbursements.

Accordingly, the court made an order that Mr and Ms Bhana pay the liquidators $41,330.00 for their actual and reasonable costs and $4,001.09 for disbursements.

Orders