Nadan v Sharma

[2022] NZHC 3516

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2021-404-002331

[2022] NZHC 3516

BETWEEN

PARAMSIWAN (SIWAN) NADAN

Plaintiff

AND

NILESHNI SHARMA

Defendant

Hearing:	(On the papers)
Counsel:	Callum McLean and Wendy Prior for the Plaintiff Defendant in person
Judgment:	19 December 2022

JUDGMENT OF MOORE J

[Costs]

This judgment was delivered by me on 19 December 2022 at 3:00 pm pursuant to Rule 11.5 of the High Court Rules.

Registrar / Deputy Registrar Date:

NADAN v SHARMA [2022] NZHC 3516 [19 December 2022]

Background

[1]    Paramsiwan Nadan and Nileshni Sharma were formerly husband and wife. Their marriage broke down after Mr Nadan had an affair. The continuing level of bitterness meant that the pair were unable to discharge their duties as trustees of the Shivam Family Trust (“the Trust”).

[2]    On 5 October 2022, I granted Mr Nadan’s application to remove himself and Ms Sharma as trustees of the Trust, appoint an independent corporate trustee as replacement, and divest and vest the Trust’s property.1

[3]    Mr Nadan now seeks costs on a 2B scale basis, uplifted by 25 per cent on steps taken after Ms Sharma refused an offer of settlement. The thrust of his position is that increased costs are justified because Mr Sharma’s conduct of the proceeding was unreasonable and put him to additional time and expense.

[4]    Ms Sharma’s position is that her intention was to obtain the best possible outcome for the beneficiaries, not to be frivolous. She argues that her contributions to the Trust’s property should be taken into account when considering costs.

Are Ms Sharma’s alleged contributions to the Trust’s property relevant to the assessment of costs?

[5]    The first issue is to deal with the relevance of Ms Sharma’s alleged contributions to the Trust’s property.

[6]    Ms Sharma submitted that these should be taken into account. Her costs memorandum attaches four spreadsheets of calculations and invoices relating to the property.

[7]    I do not consider this relevant to the assessment of costs. Whether Ms Sharma has made contributions to the property which are worthy of recognition is a separate substantive matter. As she points out in her costs memorandum, that is something the new corporate trustee could evaluate.

1      Nadan v Sharma [2022] NZHC 2553 at [51]–[52].

[8]    For present purposes, however, these alleged contributions do not bear on the assessment of costs. There is no real question that Mr Nadan succeeded in his application and is entitled to costs on a 2B basis.

[9]I therefore proceed on that footing.

Should increased costs be awarded?

[10]   The next issue is whether increased costs should be awarded. Mr McLean, for Mr Nadan, sought increased costs on two bases:

(a)that Ms Sharma’s position was unreasonable and the way she ran her defence added to the time and expense of the proceeding; and

(b)that she unreasonably failed to accept a Calderbank offer.

Taking or pursuing an unnecessary step or an argument that lacks merit

[11]   Increased costs may be ordered where the party opposing costs has contributed unnecessarily to the time or expense of the proceeding or step in it by:

(a)taking or pursuing an unnecessary step or an argument that lacks merit;2 or

(b)failing, without reasonable justification, to admit facts, evidence, documents, or accept a legal argument.3

[12]   I am satisfied that both of these alternatives are satisfied, for the reasons which follow.

[13]   First is that Ms Sharma maintained a position that lacked merit on the fundamental issues in these proceedings. It was common ground that the pair were irreconcilably opposed. Despite that plainly meeting the test for removal of a trustee, Ms Sharma nevertheless opposed Mr Nadan’s application. She further applied for her

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

3      Rule 14.6(3)(b)(iii).

to remain as a trustee notwithstanding her animus towards Mr Nadan, who is a beneficiary – a position that was clearly unsustainable. The circumstances were such that the obvious course was to have them both removed and replaced by an independent trustee. Failing to accept that was unreasonable.

[14]   I accept Mr McLean’s submission that Ms Sharma relied on arguments which were not supported by authority and raised matters relevant to the dispute at hand. Much of her case was directed at the merits of previous proceedings. Many of her criticisms levelled at Mr Nadan actually supported his argument that the pair could no longer discharge their duties as trustees. Responding to those arguments put Mr Nadan to additional time and expense. As did Ms Sharma’s conduct of the proceeding generally.

[15]For those reasons, I am satisfied that increased costs are appropriate.

Failing without reasonable justification to accept an offer of settlement

[16]   The next basis for increased costs is that Ms Sharma failed to accept an offer of settlement.

[17]   Unnecessarily contributing to the time or expense of the proceeding or step in it by failing without reasonable justification to accept an offer of settlement is another ground for increased costs.4

[18]   Mr Nadan sent an offer dated 26 July 2022 to Ms Sharma which read as follows:

“In the hopes of avoiding costs incurred for both yourself and our client, we are instructed that our client will not seek costs against you if you discontinue your defence. This means that costs would lie where they fall and you would formally resign as trustee, as would our client, and both of you would appoint the Public Trust to become sole trustee of the Shivam Family Trust.

Please be advised that if you reject our client’s offer, we will use this letter as evidence in Court for Calderbank purposes in our client’s costs submissions should he succeed in having you and him removed as trustees and both of you replaced by the Public Trust as trustee. He will be seeking indemnity costs or a 25% uplift in costs from today’s date.”

4      Rule 14.6(3)(b)(v).

[19]   Ms Sharma would have been in a better position had she accepted this offer. The outcome would be the same, except she would not be liable for Mr Nadan’s costs. Ms Sharma rejected the offer and maintained her unreasonable position. Doing so put Mr Nadan to additional time and expense.

[20]   I therefore consider that her failure to accept this offer also justifies increased costs.

Quantum of increased costs

[21]   Mr Nadan seeks an uplift of 25 per cent on steps taken from the date of the Calderbank offer. I accept that costs of that magnitude are justified. For the reasons given, that outcome may well be generous to Ms Sharma.

[22]An uplift of 25 per cent is applied to steps taken from 26 July 2022.

Should an allowance be given for second counsel?

[23]   One final matter is that Mr Nadan seeks an allowance for second counsel’s appearance at the hearing, if permitted by the Court. No submissions were directed at the appropriateness of such an allowance.

[24]   The default position is that provision is made for one counsel in a proceeding.5 Generally, a category 2 case must have some exceptional feature to justify a second counsel allowance.6 In Nomoi Holdings Ltd v Elders Pastoral Holdings Ltd,

Chambers J considered that:7

“The approach is always objective and is focused on the nature of the proceeding, not the actual counsel involved and how he or she or they choose to conduct the litigation. Elders may well have received considerable value from having Mr Crossland as second counsel. That is irrelevant, however, to the question I have to determine, namely whether the nature of this proceeding, given the way the trial was conducted, was such as to justify requiring the losing party to contribute to the winning party’s cost in having a junior counsel present.”

5      Prattley Enterprises Ltd v Vero Insurance New Zealand Ltd [2017] NZHC 1599 at [44].

6 At [44].

7      Nomoi Holdings Ltd v Elders Pastoral Holdings Ltd (2001) 15 PRNZ 155 (HC) at [21].

[25]   Here the proceeding was not particularly complex or lengthy. In my view there was no exceptional feature justifying an allowance for second counsel.

[26]No allowance for second counsel is given.

Result

[27]   I order that Ms Sharma pay to Mr Nadan costs of $16,013,8 together with reasonable disbursements.

Moore J

Solicitors:

McLean Law Limited, Auckland

Copy to:

The Defendant

8      This figure is calculated by deducting the allowance for second counsel. It also takes into account what appear to be calculation errors with the allowance claimed for filing the opposition to interlocutory application (step 23) and preparation of the bundle (step 41). Each step is allocated

0.6 days at the daily recovery rate of $2,390. By my calculation that amount uplifted by 25 per cent is equal to $1,792.50, not the $2,294.40 claimed.