Mehta v Habitat Builders Limited
[2017] NZHC 2075
•29 August 2017
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV-2016-404-001284 [2017] NZHC 2075
BETWEEN DHARMENDRA MEHTA
Appellant
AND
HABITAT BUILDERS LIMITED First Respondent
Discontinued
EMENUWAL CHANDRA Second Respondent
Hearing: 22 August 2017 Appearances:
K Dillon for the Appellant
M T Taylor for the Second RespondentJudgment:
29 August 2017
JUDGMENT OF HINTON J
This judgment was delivered by me on 29 August 2017 at 10.30 am pursuant to Rule 11.5 of the High Court Rules
……………………………………………………………………
Registrar/Deputy Registrar
Counsel/Solicitors:
A Parlane, Parlane Law, Auckland
Kate Dillon, Barrister, AucklandMatt Taylor, Barrister, Auckland
MEHTA v HABITAT BUILDERS LIMITED [2017] NZHC 2075 [29 August 2017]
[1] On 10 May 2016, Judge Sharp struck out Mr Mehta’s proceeding on the basis of non-compliance with orders made on 6 May 2016, and awarded costs against Mr Mehta in the sum of $13,939.30. On 6 May 2016, Judge Sharp had also made a costs award against Mr Mehta in the sum of $1,000.
[2] Mr Mehta appeals against both the strike-out and the two costs awards.
[3] Habitat Builders Ltd, the first respondent, was removed as a party to the proceedings on 20 August 2016 after going into liquidation on 4 December 2013, and being removed from the companies register on 4 June 2015. Mr Chandra was the owner and sole director of Habitat.
Background
[4] In early 2011, Habitat brought proceedings in the Disputes Tribunal claiming the balance it said was due under a building contract with Mr Mehta. Mr Mehta refused to pay on the basis there were defects in the way the house was built.
[5] The matter was transferred to the District Court, where Mr Mehta became the plaintiff and the defendants counter-claimed.
[6] The proceedings had a chequered history between 2011 and early 2015. Inter alia, Habitat Builders was granted default judgment at one point; Mr Mehta was granted default judgment at one point (both these judgments being in 2011) and both default judgments were set aside. A judicial settlement conference was allocated, but then vacated. A settlement conference then took place, but did not lead to resolution. A three-day fixture was set in late September 2013 and did not proceed for reasons that are unclear.
[7] In short, in my view it is properly accepted by Mr Taylor, for the respondent, that no blame could be attributed to either side (or maybe blame should be attributed equally to both) at least down to early 2015.
[8] A back-up fixture was allocated for 10 November 2014, but did not become a firm fixture. A firm fixture was instead allocated for 14 January 2015. It seems that
directions were made for filing of briefs, but these were overlooked by both sides. Mr Taylor had written to Mr Mehta’s then solicitor, Mr Trivedi on 21 October 2014 asking for a brief of evidence for the back-up on 10 November. On 23 December
2014, Mr Taylor sent Mr Chandra’s brief to Mr Trivedi because Mr Taylor was about
to go on holiday. At that point Mr Taylor asked again where the plaintiff’s brief was.
[9] On the afternoon of 13 January 2015, Mr Trivedi delivered Mr Mehta’s brief
of evidence and other documents. The brief of evidence was substantial, spanning
24 pages, and the documents took up two ring binders. There were over 470 pages in total, including the brief of evidence. Judge Sinclair called an urgent telephone conference that day, and decided the 14 January hearing could not proceed because of the late filing of Mr Mehta’s evidence. The hearing set down for 14 January 2015 was vacated. While it can reasonably be said that the hearing was vacated as a result of default on the part of Mr Mehta, the tone of Judge Sinclair’s minute is not critical of Mr Mehta.
[10] Further telephone conferences were convened on 30 January 2015, 19 March
2015 and 31 March 2015. Mr Trivedi sought leave to withdraw after the 30 January telephone conference. This was granted. The 19 March 2015 telephone conference failed due to technical difficulties. The 31 March 2015 teleconference was attended by the defendant and was not attended by Mr Mehta.
[11] On 13 April 2015, Mr Andrew Barker (now QC) filed a notice of representation on behalf of Mr Mehta.
[12] Further conferences were held on or about 15 or 16 April 2015. Timetabling directions were made and further interlocutory matters arose during the course of
2015 regarding an application by Mr Mehta to file an amended statement of claim. A comprehensive statement of claim was filed on 21 August 2015, and the defendants filed a statement of defence on 14 September 2015.
[13] On 6 January 2016, the matter was set down for trial for three days, to commence on 10 May 2016. A case management conference was allocated for
23 February 2016.
[14] On 22 February 2016, Mr Bates, who by then was representing Mr Mehta, made an interlocutory application to withdraw. Judge Sharp allowed the application and vacated the conference set for the following day. She made orders that a further conference would be held on 10 March 2016, and made an unless order that Mr Mehta was to attend the next conference, otherwise his claim would be struck out for want of prosecution. She gave no reason why the unless order was being made. It seems to have been because of the further change of lawyer and the consequent need to allocate another conference date.
[15] At the conference on 10 March 2016, which was before Judge Hinton, Mr Mehta attended the Court and advised that he was seeking legal representation. A further conference was set down for 22 March 2016, again before Judge Hinton, to give Mr Mehta time to instruct another lawyer.
[16] On 22 March 2016, Mr Mehta again attended the conference and advised that he had decided to proceed on a self-represented basis. Judge Hinton made the following timetabling directions:
(a) … Mr Mehta must now disclose by 8 April 2016 to Mr Taylor all documents
which are relevant and which he proposes to rely on at trial …
(b) Mr Taylor will, within the next seven days [ie 29 March 2016] and likely this week, supply Mr Mehta with relevant documents from the second defendant’s perspective …
(c) So far as briefs of evidence are concerned, Mr Mehta’s amended brief (he had already filed a brief in the simplified trial proceeding) and the briefs of other witnesses, in particular an expert witness in relation to building issues which Mr Mehta advises of this morning (Mr Taylor had no knowledge of this), must be supplied by 8 April.
(d) The second defendant’s briefs must be supplied by 29 April.
(e) In addition, Mr Mehta will prepare and file with the Court a synopsis of submissions by 3 May and Mr Taylor will do likewise by 7 May 2016.
[17] Judge Hinton also directed on 22 March 2016 that there be a telephone conference on 5 May 2016 to confirm readiness for trial.
[18] Mr Mehta says that he was waiting on the Court Minute from the 22 March
2016 conference, but it went to his lawyer (which seems to be accepted), so he did not receive the Minute until 8 April 2017, being the first compliance date for him.
[19] In the meantime, the documents which the defendants were to provide to Mr Mehta had been made available to him on 24 March 2016, on the basis that he collect them from the office of Mr Taylor. Mr Mehta requested that the documents be couriered to him, and he confirmed receipt of the documents by 14 April 2016.
[20] On 18 April 2016, Mr Taylor emailed Mr Mehta, pointing out that his evidence was due on Friday 8 April, and that Mr Taylor had received nothing to date. (Mr Mehta did not have the documents though from Mr Taylor until about 14 April.) On 26 April, when he still had not received Mr Mehta’s evidence, Mr Taylor emailed Mr Mehta asking what evidence would be relied on by him, as the defendants’ evidence was due on 29 April 2016. Mr Taylor sent a follow-up email to Mr Mehta on 28 April 2016.
[21] On 4 May 2016, Mr Taylor filed a memorandum requesting that the case be disposed of on the basis that the plaintiff had not provided any evidence or replied to Mr Taylor’s email in relation to the same, and therefore, at that time, there was no case for the defendants to answer.
[22] On 6 May 2016, a further pre-trial conference was convened. This was before Judge Sharp. A Minute was issued, dated 6 May 2016, which recorded her directions as follows:
(a) Documents are to be served by Mr Mehta on Mr Taylor, for the second defendant no later than 5.00 pm on 6 May 2016.
(b) Mr Mehta’s briefs of evidence are to be served by 9.00 am on 9 May
2016.
(c) The second defendant’s briefs of evidence are to be served by 9.00 am
on 10 May 2016.
(d) Mr Mehta’s synopsis of submissions is to be filed and served by
9.00 am on 9 May 2016
(e) The defendant’s submissions are to be filed and served by 9.00 am on
10 May 2016.
(f) Mr Mehta is to pay costs of $1,000 to the second defendant by
5.00 pm on Monday, 9 May 2016 for his defaults. Any failure to do so will result in my striking out his claim.
The 10 May 2016 hearing and strike-out
[23] On 10 May 2016, Mr Mehta appeared in Court, not having complied with any of the orders made most recently by Judge Sharp. He said he had been unable to do so because of his own ill-health and the ill-health of his mother-in-law, who had been admitted to hospital on 8 May 2016. He provided a letter from his GP, dated 9 May
2016, and a letter from Waitakere Hospital, dated 8 May 2016.
[24] Judge Sharp ordered that Mr Mehta’s claim be struck out. Judge Sharp did not accept that the ill-health of Mr Mehta’s mother-in-law or Mr Mehta’s own ill-health were adequate excuses for not complying with the timetable directions. Her Honour stated that since Mr Mehta wished to proceed that day by attending, he could not rely on the medical certificate attesting to his own ill-health. Judge Sharp did not consider that his mother-in-law’s ill-health was relevant to the matters before her.
[25] Specifically, Judge Sharp stated that:1
… What the file does reveal is a singular lack of progress in this matter since the default judgments were set aside. It indicates a plaintiff who has, for whatever reason, fallen out with or discontinued the service of four to five lawyers, who fails to comply with timetable orders and who seemingly either intentionally or negligently does not progress this claim. In other words, he does not and has not prosecuted it.
The trial cannot proceed today with the lack of documentation and evidence that there is. It would be unfair to the defendant and it would be to make a mockery of the timetable orders. To adjourn the proceeding again would not be just. I consider that Mr Chandra has been caught up in a proceeding which has not been prosecuted by the plaintiff for quite long enough.
[26] Judge Sharp then struck out the claim on the basis that Mr Mehta had failed to prosecute his claim.
1 Mehta v Habitat Builders Ltd [2016] NZDC 12971 at [16]-[17].
[27] After this appeal was filed, the District Court released two oral judgments of Judge Sharp, one relating to the pre-trial conference on 6 May 2016 and the other relating to the orders made on 10 May 2016. The 6 May oral judgment seems to be a verbatim transcript of what took place that day. I note that it differs from the minute of 6 May in that it refers to all of the orders being made on an “unless” basis. While I accept that must have been an accurate record of what the Judge said in Court, I cannot treat the orders as all having been made on an unless basis, given that the minute refers only to the costs order in that regard, and the “oral judgment” was not available to Mr Mehta until well after the strike-out.
Law
[28] I now turn to consider the law relevant to Mr Mehta’s appeal against the
decision of Judge Sharp.
[29] Section 72 of the District Courts Act 1947 provides that a party may appeal to the High Court against the whole or any part of any decision. Under s 75, such an appeal is by way of rehearing.
[30] Section 76 of the District Courts Act provides that the High Court has a range of powers on appeal, including making “any decision or decisions it thinks should have been made”.
[31] Under r 15.2 of the District Courts Rules:
Any opposite party may apply to have all or part of a proceeding or counterclaim dismissed or stayed, and the court may make such order as it thinks just, if—
(a) the plaintiff fails to prosecute all or part of the plaintiff’s proceeding to
trial and judgment; or
(b) the defendant fails to prosecute all or part of the defendant’s
counterclaim to trial and judgment.
[32] The principles under r 15.2 are well settled. An applicant must show that:2
2 See Lovie v Medical Assurance Society New Zealand Ltd [1992] 2 NZLR 244 (HC) at 248;
NZ Industrial Gases Ltd v Andersons Ltd [1970] NZLR 58 (CA); Fitzgerald v Beattie [1976]
1 NZLR 265 (CA); Mead v Day [1985] 1 NZLR 100 (CA).
(a) The other party has been guilty of an inordinate delay; (b) Such delay is inexcusable; and
(c) It has seriously prejudiced the applicant.
[33] Also relevant is the somewhat different law as to unless orders. If a proceeding is struck out as the result of an unless order to that effect, that happens automatically and no further application or order is necessary.3 In that event, the defaulting party has to apply to be relieved of the sanction imposed.
[34] However, the strike-out was not recorded to be on the basis of an unless order which would suggest the Judge did not intend the unless order to have such significant effect. The unless order has to be treated as being limited to the $1,000 costs award. I therefore treat this matter as the Judge and the parties have, as a dismissal for want of prosecution.
[35] There seem to be differing views as to whether an appeal against a decision under r 15.2, or similar provisions, is a general appeal or an exercise of the Judge’s discretion. I consider the better and prevailing view is that this is a general appeal and I should adopt the de novo approach.4 In the present case it makes no difference.
Decision
[36] It is understandable that Judge Sharp took the view that Mr Mehta had failed to progress his claim over some five years. That is the first blush impression, and Mr Mehta would not have been able to articulate otherwise in May 2016. However, I have decided after hearing from Ms Dillon and after being taken through the relevant documents that is not correct. There is no good evidence that Mr Mehta had been responsible for the lack of progress on the file since the default judgments were
set aside (being the basis on which the Judge proceeded). Mr Taylor accepted that.
3 SM v LFDB [2014] 3 NZLR 494 (CA) at [29].
4 Lovie v Medical Assurance Society New Zealand Ltd, above n 2.
[37] The defaults on Mr Mehta’s part began on 13 January 2015 with the late delivery of his brief of evidence and documents. Mr Trivedi was apparently a very inexperienced lawyer. This no doubt was why shortly afterwards he sought leave to withdraw. The January 2015 trial presumably could still have gone ahead. I have already noted that Judge Sinclair does not seem to have been critical of the plaintiff.
[38] The progress, or lack of progress, through 2015 cannot be blamed on Mr Mehta, or there is nothing to suggest it should be. I consider the unless order made by Judge Sharp on 22 February 2016 was unjustified.
[39] The real problem arises with Mr Mehta’s non-compliance, when representing himself, with the directions made on 22 March 2016. Mr Mehta points to the non-receipt until 8 April 2016 of the minute from the Court, but the fact of the matter is he was present in Court on 22 March. Also, even as at 8 April, he still had time to gather together what he needed for a hearing on 10 May. As noted, he had already filed a very comprehensive brief back in January 2015. Although no doubt that did need amending following the amended statement of claim, it must be questionable how much amendment was required bearing in mind the brief was already 24 pages in length. He had also filed a very substantial number of documents in January 2015. What was really missing was expert evidence as to defective workmanship and as to costs of rectification.
[40] Mr Mehta then also failed to comply with the timetabling directions made by Judge Sharp on Friday 6 May 2016, although by that stage he probably was in a hopeless position. The die was cast as a result of his non-compliance with the
22 March 2016 orders.
[41] The GP’s letter and the letter from Waitakere Hospital regarding admission of his mother-in-law, coupled with the inevitability of his being unable to comply once the matter reached 6 May 2016, do excuse Mr Mehta’s default in terms of the 6 May directions.
[42] The real focus is on the very material default in not complying with
Judge Hinton’s 22 March 2016 directions. That default may also be to some extent
explained by the GP’s letter and the letter from Waitakere Hospital. Reading those documents, it seems clear that Mr Mehta had suffered from depression for quite some time, and that the problems with his mother-in-law were very serious and had also been ongoing. I can understand these problems may have got on top of him, coupled with the fact that Mr Mehta was representing himself in notoriously tricky proceedings, and was living in the house which he says suffers from all of these defects.
[43] These matters alone do not excuse the significant breach of the 22 March
2016 orders, and the significant inconvenience caused to Mr Chandra and to the
Court.
[44] However, I am influenced by the fact which I have recorded above, that a great deal of work had actually been put in by Mr Mehta and his previous counsel over the period since 2011.
[45] Viewed overall, Mr Mehta had not been guilty of an inordinate delay and he had not failed to prosecute his case. I refer for example to his filing of the substantial brief of evidence and files of documents back in January 2015. Also, a large amount of work had been put into filing the amended statement of claim in
2015. (I note further that a very significant amount of work had been put into
preparation for this hearing by Mr Mehta’s new counsel, Ms Dillon.)
[46] All of these matters weighed together have led me to determine that the proceedings should not have been struck out for want of prosecution. A costs order and conditions imposed on an adjournment would have been appropriate.
[47] On 10 May 2016, Judge Sharp awarded costs on a 2B basis for the full proceedings down to the date of strike-out. On the basis that the strike-out is overturned, costs should only have been awarded for the further inconvenience to the defendant, which I have decided to fix at $1,000, being in addition to the
$1,000 costs order that had already been made on 6 May 2016, which I do not disturb.
[48] I have also decided in all of the circumstances to make my order reinstating
the proceedings conditional on Mr Mehta’s paying into the District Court by Friday
22 September 2017, the sum of $5,000 to be held as security for costs, that being a step which the District Court Judge could have taken. If there is a further default by Mr Mehta, that amount will be available to the defendant on account of costs. If not, and if Mr Mehta is ultimately successful or the proceedings settle, that amount can be paid back out to him.
[49] Finally, I comment that both counsel impressed me at this hearing. Mr Mehta should take particular notice of that in terms of his ongoing representation. Furthermore, I hope he has taken on board my comments about the substantive proceeding. It seems that the total payments he was liable to make to the defendants under the building contract were something less than $40,000, yet his claim against Mr Chandra now amounts to something in the order of $150,000. While that is conceivable, a claim of that magnitude as against the original contract price seems unlikely. Mr Mehta also needs to give due regard to the fact that the company with whom he entered into the contract has gone into liquidation. There are cases where a sole director/shareholder has been found liable in negligence or otherwise, and this may well be one, but Mr Mehta needs to take a very practical approach towards this matter. Mr Chandra also needs to take a very pragmatic approach towards resolution. This may be one of those cases where both parties end up losing because of the money they have spent on legal fees.
Result
[50] The appeal is allowed and the proceeding is reinstated on the condition that Mr Mehta pays into the District Court by 22 September 2017 the sum of $5,000 to be held as security for costs.
[51] The costs award made on 10 May 2016 is set aside and replaced with a costs order of $1,000.
[52] The costs order made on 6 May 2016 remains in place.
[53] Mr Mehta is entitled to costs on the appeal on a 2B basis.
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Hinton J
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