Safari Vervaardiging CC v Safari BBQ Products Limited

[2024] NZHC 155

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2022-404-2309

[2024] NZHC 155

BETWEEN

SAFARI VERVAARDIGING CC

Plaintiff

AND

SAFARI BBQ PRODUCTS LIMITED

Defendant

Hearing:	On the papers
Appearances:	Janko Marcetic and Y S Yang for the Plaintiff Hein Erasmus for the Defendant
Judgment:	13 February 2024

COSTS JUDGMENT OF ASSOCIATE JUDGE C B TAYLOR

This judgment was delivered by me on the 13th day of February 2024 at 3:00pm

pursuant to Rule 11.5 of the High Court Rules

…………………………. Registrar/Deputy Registrar

Solicitors:

Chapman Tripp (Janko Marcetic/Samuel Yang), Auckland, for the Plaintiff
Copy for:

Hein Erasmus, Auckland, for the Defendant

SAFARI VERVAARDIGING CC v SAFARI BBQ PRODUCTS LIMITED [2024] NZHC 155 [13 February 2024]

Introduction

[1]                 On 17 November 2023 this Court made orders placing the defendant into liquidation. At the same callover, the Court gave the plaintiff leave to file a memorandum seeking costs against Mr Erasmus  after  the  Court  had  struck  out Mr Erasmus’s purported statement of defence.

[2]The plaintiff seeks an order that Mr Erasmus pay the plaintiff costs totalling

$8,245.50, being scale costs on a 2B basis relating to the statement of defence, with a 50 per cent uplift applied.

Plaintiff’s submissions

[3]                 The plaintiff refers to Her Honour Associate Judge Gardiner’s judgment issued on 23 August 2023 declining Mr Erasmus’s application for a stay of the proceeding. At [55](c) of the judgment, Associate Judge Gardiner records that Mr Erasmus “will be personally liable for costs” if he files an appearance as a shareholder or creditor, and files a statement of defence.

[4]                 Mr Erasmus duly filed a statement of defence in that capacity, and he is therefore personally liable for costs.

[5]                 The plaintiff submits that the fact that Mr Erasmus is a lay litigant does not preclude an award of costs against him, and lay litigants are not exempt from normal provisions relating to costs, citing decisions in Tao v Strata Title Administration Limited1 and Carter v Capital and Coast District Health Board.2

[6]                 The plaintiff has quantified costs relating to the strike-out of the statement of defence on a 2B basis at $5,497 as set out in the schedule to counsel for the plaintiff’s memorandum.

1      Tao v Strata Title Administration Ltd [2016] NZHC 1821.

2      Carter v Capital and Coast District Health Board [2022] NZHC 3507 at [10].

[7]                 As to the 50% uplift sought by the plaintiff, the plaintiff submits that the Court ought to exercise its discretion under r 14.6 of the High Court Rules 2016 to order a 50% uplift in the costs, on the basis that Mr Erasmus took or pursued an argument that lacked merit (r 14.6(3)(ii)).

[8]The plaintiff refers to the Court’s minute of 7 November 2023 that found that:

The statement of defence does not disclose any tenable defence to the liquidation application by the plaintiff. The issues raised in the statement of defence and the submissions have already been dealt with in both judgments. Accordingly, the statement of defence should be struck out.

[9]                 The plaintiff submits that having not appealed the stay judgment, or the judgment of Associate Judge Lester upholding the statutory demand underpinning the liquidation application, it was inappropriate for Mr Erasmus to try to relitigate the same issues via his ‘statement of defence’. The plaintiff submits those arguments could not succeed by being raised again in the purported statement of defence, and therefore Mr Erasmus pursued a ‘hopeless’ argument. Counsel refers to TheCircle.co.nz Ltd v Trends Publishing International Ltd (in liquidation and in receivership).3

[10]              As to any overlap of costs awarded by the Court against the defendant as part of the liquidation orders, and costs sought against Mr Erasmus personally, the plaintiff does not seek double recovery but submits that it is not presently apparent whether the plaintiff will receive costs from the liquidation. Accordingly, the plaintiff seeks orders that:

(a)Mr Erasmus being jointly and severally liable with the defendant for the 2B costs totalling $5,497; and

(b)Mr Erasmus being severally liable for the remaining $2,748.50 claimed.

3      TheCircle.co.nz Ltd v Trends Publishing International Ltd (in liquidation and in receivership)

[2021] NZCA 235 at [34] and [57].

Mr Erasmus’s submissions

[11]              Mr Erasmus makes the following points in opposition to the plaintiff seeking costs from him personally and opposing the 50 per cent uplift of costs sought by the plaintiff:

(a)Prior to the liquidation of the defendant, Associate Judge Lester in his original decision made it clear that the defendant did have an arguable case for a counterclaim, and also said unfortunately the defendant had to ‘pay now and argue later’;

(b)Associate Judge Taylor at the last hearing did not make a decision against the defendant, but allowed time to consider the merits of the counterclaim filed against the defendant, and if the counterclaim was indeed hopeless (as the plaintiff claimed in point 11 of its submissions) then the Associate Judge would have made a decision on that day;

(c)Under point 5 of the plaintiff’s submissions they point out that Mr Erasmus will be personally liable for costs if he filed an appearance as a shareholder or a creditor. While he did file an appearance as a shareholder, the defendant filed a statement of defence.

(d)Time and costs must be shared, and the majority of the hearing and preparation was to deal with the statement of defence and not the application to appear.

(e)The claim for a 50 per cent uplift in costs is inappropriate, as the merits were not ‘hopeless’ as demonstrated by the fact that three Associate Judges did not make a decision on the day of the relevant hearing, and/or took time to reflect and reserve decisions.

Result

[12]              I am of the view that the plaintiff is entitled to the costs order sought. As is apparent from the Court’s minute of 7 November 2023, the statement of defence filed

did not disclose any tenable defence to the liquidation application by the plaintiff, and the issues raised in the statement of defence and submissions had already been dealt with in AJ Gardiner’s and AJ Lester’s judgments. Accordingly, in my view the statement of defence and submissions were ‘hopeless’ and caused the plaintiff to incur unnecessary costs. Therefore in accordance with r 14.6(3)(ii), and the relevant authorities it is appropriate to grant the 50 per cent uplift to the plaintiff on 2B costs.

Orders

[13]I make the following orders:

(a)Mr Erasmus be jointly and severally liable with the defendant for the 2B costs relating to the statement of defence, totalling $5,497; and

(b)be severally liable for the remaining costs of $2,748.50.

…………………………….. Associate Judge Taylor