Navaratnam v HG Metal Manufacturing Limited

[2023] NZCA 11

IN THE COURT OF APPEAL OF NEW ZEALAND

I TE KŌTI PĪRA O AOTEAROA

 CA692/2020
 [2023] NZCA 11

BETWEEN	VASHIHARAN NAVARATNAM First Appellant SHERINE NAVARATNAM Second Appellant
AND	HG METAL MANUFACTURING LIMITED Respondent

CA152/2022
BETWEEN	VASHIHARAN NAVARATNAM First Appellant SHERINE NAVARATNAM Second Appellant
AND	HIGH COURT AT AUCKLAND First Respondent HG METAL MANUFACTURING LIMITED Second Respondent

Hearing:	18 July 2022
Court:	Courtney, Thomas and Peters JJ
Counsel:	First Appellant in Person for CA692/2020 and CA152/2022 Second Appellant in Person in CA692/2020 and CA152/2022 T B Fitzgerald and B J Dominikovich for Respondent in CA692/2020 and Second Respondent in CA152/2022 No appearance for First Respondent in CA152/2022
Judgment:	14 February 2023 at 10 am

JUDGMENT OF THE COURT

HG Metal is entitled to indemnity costs of $128,686.70 against Mr and Mrs Navaratnam jointly and severally.

____________________________________________________________________

REASONS OF THE COURT

(Given by Courtney J)

1. On 8 September 2022 this Court struck out two appeals brought by Mr and Mrs Navaratnam.[1]  The appeals arose from an application by HG Metal Manufacturing Ltd (HG Metal) to enforce an arbitral award obtained against Mr and Mrs Navaratnam in Singapore in 2020.  Specifically, the appeals were against a decision of Woolford J entering judgment against Mrs Navaratnam by default[2] and a decision of Jagose J striking out judicial review proceedings brought to challenge a decision of Katz J in which she entered judgment against Mr Navaratnam.[3] 

   [1]Navaratnam v HG Metal Manufacturing Ltd [2022] NZCA 425 [Court of Appeal strike out decision].

   [2]HG Metal Manufacturing Ltd v Navaratnam HC Auckland CIV 2020-404-1955, 22 October 2020 [Minute of Woolford J].

   [3]HG Metal Manufacturing Ltd v Navaratnam [2021] NZHC 1920; and Navaratnam v High Court of Auckland [2022] NZHC 371.

2. The decision to strike out the appeals was made in the context of a strike out application by HG Metal.  The appeal against Woolford J’s decision was struck out as a result of Mr and Mrs Navaratnam’s numerous defaults in complying with this Court’s rules.[4]  The appeal against Jagose J’s decision was struck out as an abuse of process because it sought to relitigate an issue that had been finally determined by Katz J, namely whether HG Metal had satisfied the requirements of art 35(2) of the Arbitration Act 1996 by providing a properly authenticated copy of the award.[5]

   [4]Court of Appeal strike out decision, above n 1, at [48]. See Court of Appeal (Civil) Rules, r 44A(1)(a).

   [5]Court of Appeal strike out decision, above n 1, at [25]–[26].

3. HG Metal sought indemnity costs in the event of the appeals being struck out.  In our substantive judgment we directed the filing of memoranda to address this issue.  HG Metal filed a memorandum as to costs on 28 September 2022.  Mr and Mrs Navaratnam did not file a memorandum that expressly dealt with costs on the strike-out application but, rather, applied for recall of the decision striking out the appeals.  However, their submissions in relation to the recall included submissions which we treat as also relating to the costs on the strike-out application. 

4. It was appropriate to postpone dealing with costs on the strike-out application until after the recall application had been disposed of.  However, HG Metal also sought indemnity costs on the recall in the event that it was refused.  That meant that the issues raised in relation to costs on the strike-out application necessarily fell to be determined first in the recall application.  In a decision delivered on 14 February 2023 we declined the application for recall and made an order for indemnity costs against both Mr and Mrs Navartnam.[6]  We now determine HG Metal’s application for indemnity costs on the strike-out application.  In doing so we necessarily repeat the analysis relating to indemnity costs from the recall decision.

   [6]Navaratnam v HG Metal Manufacturing Ltd [2023] NZCA 10.

5. The claim for indemnity costs is based on Mr and Mrs Navaratnam’s liability under the guarantee they both signed on 24 September 2013, which gave rise to the arbitral award against them.  The guarantee contains the following cl 6:

   The Guarantor shall indemnify HG Metal against the full costs (including legal fees as between solicitor and client) of enforcing or attempting to enforce this Guarantee.

6. In her decision on costs Katz J reviewed the basis on which indemnity costs might be awarded pursuant to a contractual obligation and concluded that the costs HG Metal had incurred in applying to recognise and enforce the award in New Zealand were costs of “enforcing or attempting to enforce” the guarantee for the purposes of cl 6.[7]  As we indicated in our substantive judgment, Katz J’s finding as to Mr Navaratnam’s liability for indemnity costs arising from the guarantee means that Mr Navaratnam will be liable for indemnity costs in respect of the current appeal.[8]

   [7]HG Metal Manufacturing Ltd v Navaratnam [2021] NZHC 2498 at [21].

   [8]Court of Appeal strike out decision, above n 1, at [52].

7. There is no basis on which to differentiate Mrs Navaratnam’s position from that of her husband on this point.  She was a co-guarantor and subject to the same provisions, including cl 6. 

8. In their memorandum filed in support of the recall application, Mr and Mrs Navaratnam submitted that it was premature to consider the question of indemnity costs until their ground of challenge to HG Metal’s original application for recognition and enforcement based on its failure to satisfy art 35(2) of the Arbitration Act had been determined.  As we made clear in our substantive judgment, this argument has been finally determined and cannot be revisited.  It therefore does not provide any basis on which to refuse to award indemnity costs in accordance with the terms of the guarantee.

9. HG Metal has claimed a total of $128,686.70 (excluding GST).  This figure comprises:

   ·Solicitor/client costs  $122,578.74

   ·Service charge  $3,064.47

   ·Disbursements  $3,043.49

10. These costs relate to both appeals that were the subject of the strike out application.  HG Metal’s counsel advises that the appeals were invoiced together along with other related litigation such as the bankruptcy proceedings.  However, counsel has made an assessment of the steps and cost of work relating only to these two appeals.  Having reviewed counsel’s memorandum, we are satisfied that all the items claimed for relate to these appeals and were reasonably necessary.  We observe that the time taken to dispose of these appeals was unnecessarily increased by Mr and Mrs Navaratnam’s failure to comply with the Court’s directions and by the steps taken by them for the sole purpose of delaying the final determination of the matter.

11. We make an order that HG Metal is entitled to indemnity costs of $128,686.70 against Mr and Mrs Navaratnam jointly and severally.

Solicitors:
Bell Gully, Auckland for HG Metal Manufacturing Ltd