Sharma v Craft Construction Limited (in liquidation) - [2023] NZHC 1294

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2022-404-118

[2023] NZHC 1294

BETWEEN
SUJENDRA SHARMA

Plaintiff

AND

CRAFT CONSTRUCTION LIMITED (IN LIQUIDATION)

First Defendant

AND

BEN HOLDICH

Second Defendant

Hearing: On the papers

Counsel:

F B Q Collins for Plaintiff K K Kommu for Defendants

Judgment:

29 May 2023

JUDGMENT OF PAUL DAVISON J

[Re: Costs]

This judgment was delivered by me on 29 May 2023 at 3.30 pm pursuant to r 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Solicitors:
Gibson Sheat, Wellington Glaister Ennor, Auckland

SHARMA v CRAFT CONSTRUCTION LIMITED (IN LIQUIDATION) [2023] NZHC 1294 [29 May 2023]

Introduction

[1] Craft Construction Ltd (CCL) was placed into liquidation on 19 July 2021. By application dated 8 February 2022, Sujendra Sharma (the plaintiff) applied pursuant to s 248(1)(c) of the Companies Act 1993 for leave to commence proceedings against CCL. In his statement of claim filed with the application, the plaintiff seeks relief by way of: an inquiry into the value of the construction work and services provided by CCL pursuant to a construction contract; a declaration as to the value of CCL’s construction work and services; just and equitable relief pursuant to s 43 of the Fair Trading Act 1986; an award of damages for the cost of rectification of the work performed by CCL, together with consultants’ fees; interest and an award of legal costs and disbursements. CCL opposed the application for leave.

[2] By judgment dated 22 December 2022, I granted the plaintiff’s application and made an order granting him leave to commence the proceeding.1 I observed that as the successful party the plaintiff is entitled to an award of costs, and I directed the parties to file and exchange costs memoranda, and said that upon receipt of their memoranda I would determine costs on the papers. 2

[3] The plaintiff seeks 2B scale costs uplifted by 50 per cent totalling $13,623.00, and disbursements totalling $2,018.60. The plaintiff seeks an award costs against both CCL and against the liquidators of CCL in their personal capacity.

[4] CCL says that costs should lie where they fall. In the alternative, CCL says that only 2B scale costs should be awarded against CCL, and not against the liquidators personally.

Background

[5] The plaintiff is the owner of a residential property in Auckland. In December 2019 he obtained building consent for the construction of a significant extension to the house comprising a three bay car garage, dining room, prayer room, two bathrooms and a sleep-out (the extension project).

1 Sharma v Craft Construction Ltd (in liq) [2022] NZHC 3600 at [57].
2 At [58].

[6] In early 2020 the plaintiff engaged Dynamic Renovations Ltd (Dynamic) to build the planned extension. After commencing the work Dynamic soon quit the site at the point where the foundations were incomplete. The plaintiff then entered into negotiations with CCL to take over and complete the project. Negotiations on behalf of CCL were undertaken by…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2023] NZHC 1294
Decision Date: 29 May 2023

CaseChat Overview and Summary

The plaintiff, Sujendra Sharma, sought leave to commence proceedings against Craft Construction Limited (CCL), a company in liquidation, and its liquidators, seeking an inquiry into the value of construction work, a declaration as to its value, damages, and costs. The defendants opposed the application, arguing that the plaintiff should submit his claim to the liquidators. The court granted the plaintiff's application for leave, finding that the adjudications did not provide a reliable basis for finally determining the merits of the plaintiff's claims. The plaintiff now seeks an award of 2B scale costs uplifted by 50 percent and disbursements. The defendants opposed the application for costs, arguing that costs should lie where they fall and that only standard scale costs should be awarded against CCL, and not against the liquidators personally.

The court considered the general principles of awarding costs and the exceptional circumstances required for a costs order against liquidators personally. The court found that the defendants' opposition to the plaintiff's application for leave was without reasonable justification, and that the plaintiff's claim was not suited to determination by liquidators under the statutory process. The court also found that it was reasonable for the plaintiff to engage his Wellington-based counsel and to claim for the necessary travel expenses. Accordingly, the court ordered the defendants to pay the plaintiff 2B scale costs uplifted by 50 percent and disbursements as set out in the plaintiff's costs memorandum.

In summary, the court found that the defendants' opposition to the plaintiff's application for leave was without reasonable justification and awarded the plaintiff increased costs. The court found that there were no exceptional circumstances to warrant an award of costs against the liquidators personally. The court also found that it was reasonable for the plaintiff to engage his Wellington-based counsel and to claim for the necessary travel expenses. The defendants were ordered to pay the plaintiff's costs as set out in the judgment.

Orders