Joden Finance Limited v Dorairaj

[2012] NZHC 1228

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV 2012-404-001985 [2012] NZHC 1228

IN THE MATTER OF     an appeal from the District Court at

Auckland

BETWEEN  JODEN FINANCE LIMITED Appellant

ANDSTEPHEN DORAIRAJ Respondent

Hearing:         28 May 2012

Appearances: A Palmer as McKenzie Friend for the Appellant

S E McCabe for the Respondent

Judgment:      5 June 2012

[COSTS] JUDGMENT OF WYLIE J

This judgment was delivered by Justice Wylie

On 5 June 2012 at 11.00 am

Pursuant to r 11.5 of the High Court Rules

Registrar/Deputy Registrar

Date:

Distribution:

Joden Finance Ltd: [email protected]

SE McCabe: [email protected]

JODEN FINANCE LIMITED V DORAIRAJ HC AK CIV 2012-404-001985 [5 June 2012]

[1]      On 16 April 2012, Joden Finance Limited filed a notice of appeal in respect of a costs decision given by Judge Mathers in the District Court at Auckland on

3 April 2012.[1]

[1] Joden Finance Ltd v Stephen Dorairaj DC Auckland CIV 2009-004-002364, 3 April 2012.

[2]      On 22  May 2012,  Joden  Finance  Limited  discontinued  the appeal.   The respondent,  Dr Dorairaj,  seeks  costs,  on  an  indemnity  basis,  consequent  on  the discontinuance.

Background

[3]      Dr Dorairaj   purchased   a   second-hand   Mercedes   motor   vehicle   from Joden Finance Limited in March 2009.  The cost of the vehicle was $79,995.  There were a number of problems with the vehicle, and Dr Dorairaj brought a claim against Joden Finance Limited in the Motor Vehicle Disputes Tribunal.   That claim was heard  over  two  days  in  September  2009.    Judgment  was  entered  in  favour  of Dr Dorairaj for $30,580.

[4]      Joden Finance Limited appealed the decision of the Motor Vehicle Disputes

Tribunal to the District Court.

[5]      The appeal was heard by Judge Cadenhead on 3 February 2010.   Judge Cadenhead dismissed the appeal in respect of liability, but allowed it in respect of quantum.  He remitted the matter back to the Motor Vehicle Disputes Tribunal.

[6]      The quantum issue was reconsidered by the Motor Vehicle Disputes Tribunal on 7 April 2010. The Tribunal confirmed the original quantum figure of $30,580 in a further decision released on 12 April 2010.

[7]      Joden Finance Limited then filed a second appeal against the new quantum decision  in  the  District Court  on  21  April  2010.     At  much  the  same  time, Joden Finance Limited filed an application for judicial review in this Court.   A hearing was scheduled in the District Court to hear Joden Finance Limited’s appeal.

Given  the  review  proceedings,  that  hearing  was  adjourned.    On  5 April  2011,

Whata J heard the judicial review proceedings.   Judgment was given in favour of Joden Finance Limited on 6 May 2011.[2]   Judge Cadenhead’s decision was set aside and the matter was referred back to the District Court.  No order for costs was made as between Joden Finance Limited and Dr Dorairaj.   The second appeal was then discontinued.

[2] Murphy and Joden Finance Ltd v The District Court at Auckland & Ors HC Auckland CIV

2010-404-002015, 6 May 2011.

[8]      The District Court then reheard the matter.   After three separate hearings, Judge   Mathers   delivered   a   decision   confirming   the   appellant’s   liability  on

22 December 2011.  She allowed the first appeal in part by reducing the quantum of the judgment against Joden Finance Limited.   Damages were reduced to $23,580. The  Judge  held  that  Dr Dorairaj  was  entitled  to  costs.    Submissions  were  then exchanged in respect of costs, and judgment issued on 3 April 2012 awarding costs of $30,000 to Dr Dorairaj.

[9]      Judgment had been given in favour of Dr Dorairaj.   Notwithstanding this, Joden Finance  Limited  tried  to  satisfy  the  judgment  by  tendering  a  cheque  for

$23,580  made  payable  to  an  entity known  as  Diacyn  Company  Limited.    This company is 51 percent owned by Dr Dorairaj and the purchase of the motor vehicle was apparently made on account of this company.  It is not, however, the judgment creditor.  Further, the cheque was tendered in full and final settlement of the overall proceedings.  It was not accepted by Dr Dorairaj.

[10]     Ms McCabe, appearing for Dr Dorairaj, advised that the principal sum owing to  Dr Dorairaj  is  $59,709.52,  comprising  the  judgment  debt  of  $23,580  and

$36,129.52 for costs, interest and disbursements.

[11]     Ms McCabe also advised that on 30 April 2012, the Motor Vehicle Disputes

Tribunal advised Dr Dorairaj that Joden Finance Limited had delivered to it a cheque for $23,580.

The Appeal and Subsequent Events

[12]     The appeal the subject of the present costs application was lodged in respect of Judge Mathers’ costs decision.  As noted, the notice of appeal was filed in this Court on 16 April 2012.  The matter was called before me at a civil appeals case management  conference  on  8 May  2012.    There  was  no  appearance  for  Joden Finance Limited, although it belatedly filed a memorandum.  Ms McCabe did appear on behalf of Dr Dorairaj.   She argued that the appeal should be struck out.   She referred to cl 16 in sch 1 of the Motor Vehicle Sales Act 2003.  She asserted that the decision of the District Court was a decision in respect of an appeal from a decision of the Motor Vehicle Disputes Tribunal, and that the District Court’s decision was final.

[13]     Given that there was no appearance by Joden Finance Limited, I declined to strike out the notice of appeal, but invited Ms McCabe to file an application if she considered that it was appropriate to do so.  I put in place a timetable order in that regard.

[14]     In the event, Ms McCabe did file an application to strike out dated 15 May

2012. On 22 May 2012, Joden Finance Limited discontinued the appeal.  The notice of discontinuance did not refer to the issue of costs, and I requested the Registrar to make enquiry from Ms McCabe to ascertain whether or not costs were sought.

[15]     In the event, Ms McCabe has filed a memorandum seeking costs on  an indemnity basis. The amount claimed is $6,671.20, together with $1,500 towards the cost of preparing the memorandum seeking costs, and an anticipated appearance at a further callover scheduled for 29 May 2012.

[16]     A  Mr  Palmer,  purporting  to  act  as  a  McKenzie  friend  on  behalf  of

Joden Finance Limited, filed a memorandum on 27 May 2012.

[17]     A telephone conference was convened  by me.   Neither Ms McCabe nor

Mr Palmer  wanted  to  appear  to  argue  the  costs  application.    Both  made  oral

submissions in relation to the costs claimed, and agreed that I should deal with the application on the papers.  I excused any appearance on 29 May 2012.

Analysis

[18]     Rule 15.23 of the High Court Rules provides as follows:

15.23   Costs

Unless the defendant otherwise agrees or the court otherwise orders, a plaintiff who discontinues a proceeding against a defendant must pay costs to the defendant of and incidental to the proceeding up to and including the discontinuance.

[19]     Here, Dr Dorairaj has not otherwise agreed.   Rather, he seeks costs on an indemnity basis.  Costs are sought on an indemnity basis because it is asserted that Joden Finance  Limited  has  acted  “in  bad  faith”.    Ms  McCabe  submitted  that Joden Finance Limited is determined to ensure that Dr Dorairaj should not benefit from  the  judgment  he  has  obtained.    Further,  she  argued  that  the  appeal  was vexatious because, pursuant to cl 16(5) in sch 1 of the Motor Vehicle Sales Act 2003, a decision of the District Court in respect of an appeal from a decision of the Motor Vehicle Disputes Tribunal is final.

[20]     Mr   Palmer   purported   to   appear   as   a   McKenzie   friend.     That   was inappropriate.   Joden Finance Limited is a company.   The general rule is that a company is not an actual person, and can only present a case in Court through legal representation.[3]     A  McKenzie  friend  generally  appears  only  for  an  individual;

[3] Re GJ Mannix Ltd [1984] 1 NZLR 309 at 310.

moreover, he or she is not normally permitted a right of audience before the Court.[4]

[4] Mihaka v Police [1981] 1 NZLR 54 at 58.

However, there is a residual discretion to allow a company lay representation, particularly in an emergency, or in matters where representation by counsel is clearly unnecessary, or unduly technical, burdensome, or costly.[5]   Given the circumstances, I was prepared to entertain the costs submissions advanced by Mr Palmer on behalf of

[5] Honda (NZ) Ltd v New Zealand Boilermakers Union [1991] 1 NZLR 392 at 397.

Joden Finance Limited.

[21]     Mr Palmer had filed a memorandum on Joden Finance Limited’s behalf.  It was, in many respects, tendentious and unhelpful.  It sought to canvas matters which have already been determined against Joden Finance Limited.   Relevantly, he did submit that the indemnity costs sought by Ms McCabe on Dr Dorairaj’s behalf were exorbitant, and that they bear no relationship to the time spent in dealing with the matter.  He submitted that costs should be assessed on a 2B basis.  He also made it clear that Joden Finance Limited is aggrieved by Judge Mathers’ decision as to costs and that it is contemplating filing proceedings for judicial review in relation to the same.

[22]     It is my clear view that Dr Dorairaj is entitled to costs on the discontinuance. Is he entitled to indemnity costs?

[23]     Pursuant to r 14.6, the Court can award indemnity costs in various defined circumstances.  Inter alia, the Court may order a party to pay indemnity costs if the party has acted vexatiously, frivolously, improperly or unnecessarily in commencing a proceeding or a step in a proceeding.[6]

[6] High Court Rules, r 14.6(4)(a).

[24]     Here, it is alleged, in effect, that Joden Finance Limited acted vexatiously and improperly in filing the notice of appeal, when the relevant legislation provided that the decision of the District Court was final.

[25]     While I am not required to finally decide that point, I accept that there is force in Ms McCabe’s submission that there was no right of appeal to this Court.  It is trite law that, apart from statute, there is no right to appeal from one body to another.   Moreover,  if  a person desires to appeal, he or she can do  so only if Parliament has conferred that right, and only within the limits which the statute

giving the right lays down.[7]

[7] Attorney-General v Sillem (1864) 10 HLC 704 (HL) at 724; In Re Bowman, South Shields

(Thames Street) Clearance Order, 1931 [1932] 2 KB 621 at 633.

[26]     I doubt, however, that it can be said that Joden Finance Limited acted in bad faith  when  it  filed  the  appeal  as  submitted  by  Ms  McCabe.    Rather,  it  acted

erroneously.   Ms McCabe, in effect, invited me to conclude that Joden Finance

Limited’s conduct was vexatious, because of the way in which, she says, it has conducted itself in relation to other aspects of this matter.  I do not consider that this submission can properly be made.  First, there is no evidential foundation for it.  No affidavit has been filed in support.   Secondly, the challenged conduct must be in relation to the proceeding, and thus after it commenced, not earlier conduct.[8]   Here, the relevant proceeding in respect of which costs are sought is the discontinued appeal.  Thirdly, while Joden Finance Limited has contested matters vigorously, it cannot be expected to simply acquiesce in Dr Dorairaj’s claim.  Moreover, it has had

[8] Paper Reclaim Ltd v Aotearoa International Ltd [2006] 3 NZLR 188 (CA) at [160].

a measure of success in the proceedings to date.  Mr Palmer has made it clear that Joden Finance Limited feels aggrieved by Judge Mathers’ decision in relation to costs and that it is determined to challenge the same.  It may well have adopted the wrong process in doing so, but I do not see that its error in this regard justifies an award of indemnity costs.

[27]     Accordingly, I decline to award indemnity costs in the amount sought by

Dr Dorairaj.

[28]     In my view, costs should first be assessed on the normal basis.   It is then appropriate to consider whether the Court should make an order for increased costs.

[29]     Here, I am satisfied that the appropriate costs categorisation is on a 2B basis. They were proceedings of average complexity requiring a normal amount of time. The respondent was required to prepare a memorandum for, and appear at, the case management  conference  on  8  May  2012.    The  appropriate  allowance  for  the

memorandum is 0.4 of a day.[9]   The appropriate allowance for the appearance is 0.2

[9] High Court Rules, sch 3 cl 4.10.

of a day.[10]  Further, the respondent was required to prepare and file an interlocutory application seeking to strike out the notice of appeal.  The appropriate allowance is

[10] Schedule 3, cl 14.

0.6 of a day.[11]     The appellant also prepared a memorandum seeking costs.   By

[11] Schedule 3, cl 4.12.

analogy, as permitted by r 14.5(1)(b), the appropriate allowance is 0.4 of a day. There was also an appearance at a telephone conference convened to consider that

issue. Again, by analogy, I allow 0.2 of a day.

[30]     The  total  time  allocation  is  therefore  1.8  days.    The  appropriate  daily recovery rate under Schedule 2 is $1,880 per day, making for a total of $3,384 calculated on a 2B basis.  In addition, in my view, increased costs are appropriate. Given of cl 16(5) in the First Schedule to the Motor Vehicle Sales Act 2003, the filing of the notice of appeal by Joden Finance Limited lacked merit.  Joden Finance Limited was aware of the position, at least in general terms.  It had previously sought to  review  the  District Court’s  decision  in  this  matter.     Clause  16.6  in  the First Schedule to the Motor Vehicle Sales Act 2003 provides as follows:

16       Appeals from decision of Disputes Tribunal

…

(6)      To avoid doubt, nothing in this clause affects the right of any person to apply, in accordance with law, for judicial review.

This provision was expressly referred to by Whata J in his decision in this matter. Moreover, I am advised from the bar that Joden Finance Limited was reminded of the existence of cl 16(5) by Ms McCabe before it filed the appeal.  The filing of the notice of appeal was unreasonable in the circumstances.  Dr Dorairaj has been put to unnecessary costs as a direct consequence.  I consider that an uplift of 50 percent is appropriate in the circumstances.   It follows that the appropriate costs award is

$5,076.

[31]     Dr Dorairaj   is   also   entitled   to   his   reasonable   disbursements.      Here, disbursements are claimed in the sum of $403.70.  There has been no challenge to those disbursements. They seem reasonable to me, and the same are approved.

[32]     Accordingly,   I   award   costs   and   disbursements   consequent   on   the discontinuance  of  the  appeal  against  Joden  Finance  Limited  and  in  favour  of

Dr Dorairaj in the sum of $5,479.70.

Wylie J