R Kumar Holdings Limited v TDL Group Limited
[2025] NZHC 1617
•17 June 2025
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2024-404-002647
[2025] NZHC 1617
BETWEEN R KUMAR HOLDINGS LIMITED
Appellant
AND
TDL GROUP LIMITED
Respondent
Hearing: (On the papers) Counsel:
M Orange for Appellant
P Hall and A Christie for Respondent
Judgment:
17 June 2025
COSTS JUDGMENT OF VENNING J
This judgment was delivered by me on 17 June 2025 at 3.00 pm, pursuant to Rule 11.5 of the High Court Rules.
Registrar/Deputy Registrar
Date……………
Solicitors: Fortune Manning Lawyers, Auckland
Simpson Western, Auckland
R KUMAR HOLDINGS LTD v TDL GROUP LTD [2025] NZHC 1617 [17 June 2025]
[1] In a judgment delivered on 29 April 2025,1 the Court dismissed R Kumar Holdings Limited’s (Kumar’s) appeal against the decision of Judge K G Davenport KC,2 striking out the first and third causes of Kumar’s claim against TDL Group Limited (TDL).
[2] The Court reserved the issue of costs noting they were to be dealt with by an exchange of memoranda if counsel could not agree. The parties have been unable to agree. TDL seeks costs on an indemnity basis in the sum of $60,269.78 (including GST).3
[3]TDL also seeks costs on its memorandum seeking costs.
[4] Kumar accepts costs should follow the event but submits that costs should be limited to scale costs on the appeal, for one counsel, which total $8,365.
TDL’s cost submissions
[5] In support of the application for indemnity costs TDL submits that r 14.6(4)(a), High Court Rules 2016 is engaged. It says that Kumar acted vexatiously, frivolously, improperly and/or unnecessarily in a number of ways. First, by introducing a new point on appeal alleging TDL dishonestly or fraudulently concealed information material to Kumar’s claims (the fraud allegations). The allegations were first raised in the written submissions on appeal without any prior warning. The fraud allegations had not been pleaded in the District Court. Further, Kumar changed its position at the hearing. During submission counsel confirmed that Kumar abandoned its reliance on fraud under s 48 of the Limitation Act 2010 (LTA) but sought to rely on the fraud allegations on another basis, namely s 14(3) of the LTA.
[6] TDL noted that the Court had held that, even if it were open to Kumar to raise the fraud allegations as a new point on appeal, the evidence did not support even an arguable conclusion Kumar did not know the basis of the claim in its first and third causes of action. The Court categorised the fraud allegations as “entirely speculative”.
1 R Kumar Holdings Ltd v TDL Group Ltd [2025] NZHC 976.
2 R Kumar Holdings Ltd v TDL Group Ltd [204] NZDC 23357.
3 TDL ceased trading in March 2022. It is unable to claim GST on the invoices rendered.
[7] TDL says the fraud allegations were a baseless attack on TDL and Mr Herrick’s reputations in open court. It relies on the case of Bradbury v Westpac Banking Corporation).4
[8] Next, TDL says Kumar failed to accept legal arguments and advanced arguments that lacked merit. TDL notes the comments of the Court that the first cause of action proceeded on a speculative premise with no information to support its essential proposition. For that reason also, it says that Kumar acted vexatiously, frivolously and improperly.
[9] Next, TDL submits that r 14.6(f) applies. Kumar continued the appeal in wilful disregard of clearly established law (as was the case in Bradbury) so that indemnity costs were appropriate. TDL says the law in relation to pleading fraud is clear. Allegations of fraud must be direct, clear and detailed. Again, TDL notes that the fraud allegations were not pleaded in the original statement of claim, were not raised in the notice of opposition to the strike out in the District Court, were unsupported by affidavit evidence, were not raised at the hearing in the District Court, and were not raised in either the notice of appeal dated 24 October 2024 or the points on appeal in December 2024.
[10] Finally, TDL says that as the Court in Huljich v Huljich noted, a party may act vexatiously and unnecessarily in continuing the proceeding after an offer of settlement which will justify an award of indemnity costs.5 TDL notes that on several occasions during the District Court process offers were made to resolve the proceedings. Further, on 13 November 2024, after the appeal had been filed, there was a discussion between counsel which was followed by a letter from TDL’s solicitors of 21 November 2024 in which Kumar was invited to withdraw its appeal on the basis that if it did, TDL would not seek costs on the appeal but if it failed to, TDL would rely on the letter in support of a claim for indemnity costs on the appeal. Kumar did not accept the offer.
4 Bradbury v Westpac Banking Corporation [2009] 3 NZLR 400 (CA).
5 Huljich v Huljich [2019] NZHC 565 at [19]–[20].
[11] As noted, TDL also seeks costs for its costs memorandum and the costs associated with sealing the costs order. It seeks such costs together with a 50 per cent uplift.
Kumar’s response
[12] Kumar opposes the application. It submits costs on a 2B basis are appropriate and that the criteria for indemnity costs are not made out in the present case. Counsel refers to passages in Bradbury which noted that:6
Indemnity costs, which depart from the predictability of the Rules Committee's regime, are exceptional and require exceptionally bad behaviour. That is why to justify an order for such costs the misconduct must be “flagrant”: … .
[13] The same point was made in Supreme Court decision of Prebble v Awatere Huata (No 2) and by Fitzgerald J in AFI Management Pty Ltd v Lepionka and Co Investments Ltd.7
[14] For Kumar, counsel submits that its conduct cannot be described as flagrant misconduct. He argues that it did not pursue baseless allegations of fraud. The fraud relied on was fraudulent concealment of the nature discussed in Whangarei District Council v Daisley.8 It was based on an unconscionable failure to reveal. As noted, in that case, the Court of Appeal said:9
“The word ‘fraud’ is not used in the common law sense. It is used in the equitable sense to denote conduct by the defendant or his agent such that it would be ‘against conscience’ for him to avail himself of the lapse of time. … It may be that he has no dishonest motive: but that does not matter. He has kept the plaintiff out of the knowledge of his right of action: and that is enough: … .
[15] As to the submission that fraud was raised as a new point on appeal Kumar submits that the elements of fraudulent concealment (as defined above) had been pleaded and addressed in evidence. All that had changed on appeal was the legal
6 Bradbury v Westpac Banking Corporation, above n 4, at [28].
7 Prebble v Awatere Huata (No 2) [2005] NZSC 18, [2005] 2 NZLR 467 at [6]; and AFI Management Pty Ltd v Lepionka and Co Investments Ltd [2018] NZHC 1285 at [17].
8 Whangarei District Council v Daisley [2024] NZCA 161.
9 At [128].
characterisation of this conduct. The circumstances did not equate to misconduct by Kumar, as the argument was open to Kumar.
[16] As to the wilful disregard for the rules about pleading fraud, Kumar repeats that it only alleged fraudulent concealment in the Daisley sense.
[17] Kumar says that the mere fact that its arguments failed do not justify indemnity costs. It sought appellate oversight on whether the limitation defence was suitable for summary determination. The discovery issue went to the heart of the strike out application. Counsel for Kumar noted that the Court considered the argument and did not treat it as abusive, only finding the evidential threshold was not met.
[18] Finaly on the issue of failure to accept the offer to settle, Kumar made the point that in Easton Agriculture Ltd v Manawatu-Wanganui Regional Council Kós J had noted the Court was conventionally cautious in awarding increased costs where the successful party had made a walk-away or “drop hands” offer.10 Referring also to the case of Hira Bhana & Co Ltd v PGG Wrightson Ltd counsel noted that the offers TDL made effectively sought Kumar’s capitulation and only one of them, the letter of 13 November 2024, post-dated the filing of the appeal.11
Analysis
[19] Despite the submissions on behalf of TDL I do not consider that the conduct of Kumar or Kumar’s counsel during the course of the appeal, including the preparation for and conduct of the appeal, supports an award of indemnity costs. Ultimately Kumar’s appeal failed. However, I do not consider its conduct can be characterised as vexatious, frivolous, or improper. While it may have been frustrating to TDL, Kumar’s conduct of the appeal fell short of being characterised as egregious or flagrant misconduct.
10 Easton Agriculture Ltd v Manawatu-Wanganui Regional Council HC Palmerston North CIV- 2008-454-31, 22 December 2011 at [16].
11 Hira Bhana & Co Ltd v PGG Wrightson Ltd [2007] NZCA 342.
[20] I also accept that there is a difference between the concept of fraud as ultimately advanced by Kumar during the course of the appeal in response to a potential limitation defence and fraud as a cause of action.
[21] I am not satisfied that the criteria for an award of indemnity costs under the criteria set out at r 14.6(4) are made out in this case.
[22] However, I do consider that increased costs as provided for in r 14.6(3) are applicable on two grounds: r 14.6(3)(b)(v) and 14.6(d).
[23] I consider this is a case where the Calderbank letter is relevant. While it was made on a walk-away basis, the facts of this appeal are quite different to that considered by Kós J in Easton Agriculture Ltd v Manawatu-Wanganui Regional Council,12 and by the Court of Appeal in Hira Bhana & Co Ltd v PGG Wrightson Ltd.13 In Hira Bhana the credibility of witnesses was a crucial factor and it was not unreasonable for the unsuccessful party to proceed to trial to test that issue of credibility. Similarly, in the Easton Agriculture case Kós J accepted that the Council had actually wrongly denied negligence. The plaintiff had only failed on a causation argument. The Council’s litigation risk could not be said to be nil.
[24] In the present case, particularly before the written submissions were filed, the prospects of Kumar succeeding on the appeal were very low given the fully reasoned substantive decision of the District Court. The offer made on a walk-away basis was an appropriate offer and should have been accepted by Kumar.
[25] The fact that Kumar rejected the offer and then subsequently raised fresh issues on appeal simply aggravated the position.
[26] Further, the way that Kumar raised the allegation of fraud (even in its limited context) at a very late stage in the appeal process engages r 14.6(3)(b)(v). The way Kumar raised the concept of fraud initially in the written submissions and then altered the thrust of that allegation during argument added to the costs of TDL in responding.
12 Easton Agriculture Ltd v Manawatu-Wanganui Regional Council, above n 10.
13 Hira Bhana & Co Ltd v PGG Wrightson Ltd, above n 11.
[27] For those reasons I am satisfied that an increased award of costs is appropriate in this case. In such circumstances however, the Court has cautioned against increasing the award of scale costs above 50 per cent. I consider 50 per cent to be the appropriate increase in this case.
[28] I also allow for second counsel. While I acknowledge counsel for Kumar’s point that on an appeal to this Court which takes less than half a day one counsel is generally only allowed for, in this case, the way Kumar’s argument changed during the oral hearing supported the involvement of two counsel. Mr Hall and Ms Christie were required to confer on that matter during the hearing.
[29] In the circumstances and for the above reasons TDL Group is to have costs against Kumar in the sum of $15,594.75, as calculated in the attached schedule, together with disbursements as fixed by the Registrar. I have allowed for the two case management conference memoranda. Although prepared by Kumar’s solicitors, they required consideration and input by TDL’s solicitors.
[30] However, given the outcome against what was sought by TDL I am not prepared to award costs on the costs memoranda.
Venning J
SCHEDULE
Initial case management conference memorandum
0.4
Joint memorandum amending timetable
0.2
Preparation written submissions
3.0
Principal counsel
0.5
Second counsel
0.25
4.35
Costs 4.35 x $2,390 = $10,396.50 Uplifted by 50 per cent
=
$15,594.75
5
0