Smartpay Limited v Kumar

[2024] NZHC 3578

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2023-404-001015

[2024] NZHC 3578

BETWEEN

SMARTPAY LIMITED

Judgment Creditor

AND

MANAS DHARMENDRA KUMAR

Judgment Debtor

Hearing:	On the papers
Counsel:	D Chisholm KC for the Judgment Creditor Judgment Debtor in Person
Judgment:	28 November 2024

COSTS JUDGMENT OF GARDINER J

This judgment was delivered by me on 28 November 2024 at 3.00 pm pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date.......................................

Solicitors:

Claymore Partners Ltd, Auckland D Chisholm KC, Auckland

SMARTPAY LTD v KUMAR [2024] NZHC 3578 [28 November 2024]

Introduction

[1]    In a judgment delivered on 30 July 2024, I dismissed an application by Smartpay Ltd (Smartpay) for an order adjudicating Mr Kumar bankrupt.1 I concluded that Smartpay had not properly served Mr Kumar with the bankruptcy notice, and therefore Mr Kumar had not committed an act of bankruptcy.  I ordered Smartpay   to pay Mr Kumar, who was self-represented, his reasonable disbursements.

[2]    Mr Kumar seeks an order that he is paid disbursements of $20,707.43 comprising:

(a)a filing fee of $65;

(b)printing costs of $342.86;

(c)the cost of having affidavits attested of $138.78;

(d)subscription fees for the LexisNexis database of $2,925.60;

(e)subscription fees for document collation and analysis software of

$1,112.22;

(f)subscription fees for a law research tool of $1,741.81;

(g)legal consultant fees of $12,244.90; and

(h)subscription     fees    for    an     online     legal     advice    chat    called “JustAnswer.com” of $2,136.26.

[3]    Smartpay opposes such an order, saying that almost none of the expenses claimed by Mr Kumar fall within the definition of a “disbursement” under the High Court Rules 2016, and furthermore, Mr Kumar has failed to provide any invoices to support the expenses claimed. Smartpay seeks that no order be made other than

1      Smartpay Ltd v Kumar [2024] NZHC 2088.

reimbursement of Mr Kumar’s filing fee of $65; and that such amount be set off against his judgment indebtedness to Smartpay.2

Legal principles

[4]    There is no dispute that litigants in person may receive an award of reasonable disbursements at the discretion of the Court,3 including any sums paid to a solicitor for helping them to prepare their case.4

[5]Relevantly, r 14.12 of the High Court Rules provides:

(1)In this rule,—

disbursement, in relation to a proceeding,—

(a)means an expense paid or incurred for the purposes of the proceeding that would ordinarily be charged for separately from legal professional services in a solicitor’s bill of costs; and

(b)includes—

(i)fees of court for the proceeding:

(ii)expenses of serving documents for the purposes of the proceeding:

(iii)expenses of photocopying documents required by these rules or by a direction of the court:

(iv)expenses of conducting a conference by telephone or video link; but

(c)does not include counsel’s fee.

(2)A disbursement must, if claimed and verified, be included in the costs awarded for a proceeding to the extent that it is—

(a)of a class that is either—

(i)approved by the court for the purposes of the proceeding; or

(ii)specified in paragraph (b) of subclause (1); and

2      Judgment debt of $850,427.43 (plus interest) owed to the liquidators of Optimizer Corp Ltd by way of compensation; and of $86,454.14 to Smartpay on account of costs.

3      Re Collier (a bankrupt) [1996] 2 NZLR 438 (CA); And Taylor v Attorney-General [2021] NZHC 2303 at [4].

4      Knight v Veterinary Council of New Zealand HC Wellington CIV-2007-485-1300, 31 July 2009 at [6].

(b)specific to the conduct of the proceeding; and

(c)reasonably necessary for the conduct of the proceeding; and

(d)reasonable in amount.

(3)Despite subclause (2), a disbursement may be disallowed or reduced if it is disproportionate in the circumstances of the proceeding.

[6]    Prior to 1 September 2024, litigants in person were not entitled to be awarded costs (as distinct from disbursements). From 1 September 2024, litigants in person may be awarded costs at a recovery rate of $500 per day.5 This change is prospective only, for steps undertaken after 1 September 2024;6 therefore, Mr Kumar is not eligible to be awarded costs for the steps he took in this proceeding prior to that date.

Discussion

[7]I deal with each of the items claimed by Mr Kumar in turn.

Filing fee

[8]Mr Kumar is entitled to be reimbursed the filing fee of $65.

Printing costs

[9]    Photocopying expenses fall within the definition of a “disbursement” if the photocopying was required by the High Court Rules or a direction of the Court.7 Smartpay questions whether Mr Kumar incurred document printing costs because he provided electronic copies of his bundles and submissions. Mr Kumar must verify to the Registrar that he incurred these costs pursuant to a direction of the Court and provide a supporting invoice.

Attestation of affidavits

[10]   Smartpay submits that this is an expense that would not ordinarily be charged for separately from legal professional services in a solicitor’s bill of costs. That is true, but solicitors are not typically charged for this service by other solicitors. I can see no

5      High Court Rules 2016, r 14.2(1)(c) and sch 2 pt 2.

6      High Court Rules, sch 1AA pt 2.

7      Rule 14.12(1)(b)(iii).

principled reason why Mr Kumar should not recover this expense. However, he is required to verify the claim with an invoice.

LexisNexis database and research tool

[11]   Subscription fees for the LexisNexis database and law research tool do not meet the definition of a “disbursement” under the High Court Rules. They are not expenses that would ordinarily be charged for separately from legal professional services in a solicitor’s bill of costs.8

[12]   Additionally, the claim to 24 months’ subscription fees for LexisNexis and seven months of subscription fees for the other legal research tool is disproportionate,9 and neither cost is verified with a supporting invoice.

Document collation and analysis software

[13]   Mr Kumar says that he used software to search hundreds of legal documents, convert them into text, and analyse their contents.  The issue in the proceeding was   a relatively simple  issue  of  whether  Mr  Kumar  had  been  properly  served  with a bankruptcy notice. I find it difficult to understand why it was necessary for Mr Kumar to collate and analyse large numbers of documents. He has claimed for nine months of subscription fees and has not provided a supporting invoice to verify that the costs were in fact incurred. If they were, they are disproportionate in the circumstances of the proceeding.

Legal consultant services and online legal advice chat

[14]   The “legal consultant services” provided  by a  retired High Court  advocate in India and the JustAnswer.com subscription fees are not recoverable. This Court has awarded litigants in person reasonable disbursements for legal advice and assistance provided by a law firm, solicitor, or barrister.10 However, litigants in person may not recover the cost of obtaining advice or assistance with the conduct of the case from

8      Rule 14.12(1)(a).

9      Rule 14.12(3).

10 Hunter v Auckland Council [2018] NZHC 2975, [2020] NZRMA 401; Holt v Demetriades [2021] NZHC 2437; Sandilands v New Zealand Law Society [2017] NZHC 2640; and Harrison v Keogh [2015] NZHC 3320.

parties other than a solicitor or counsel.11 Additionally, the expenses, including sixteen months of subscription fees to JustAnswer.com, are disproportionate.12

Set-off

[15]   As noted, Smartpay submits that any costs it must pay Mr Kumar should be set off against his existing judgment indebtedness to Smartpay, based on a costs order.

[16]   Rule 14.17 of the High Court Rules deals with the situation where opposite parties are awarded costs against each other. Their respective costs must be set off and the lesser sum must be deducted from the greater, unless the court otherwise directs. However, this rule does not appear to be applicable here because the costs order against Mr Kumar has already been sealed.

[17]   I have not been referred to any rule that allows me to set off costs when one of the costs orders has already been sealed. Therefore, I decline to deal with set off  in this judgment. The Court’s expectation is that the parties will deal with the respective payments due in a common sense way.

Result

[18]Smartpay will pay Mr Kumar the following disbursements:

(a)filing fee of $65;

(b)document printing costs of $342.86 provided Mr Kumar verifies these costs, and that they were incurred pursuant to a direction of the Court; and

(c)affidavit attestation costs of $138.78 provided they are verified.

Gardiner J

11     Taylor v Attorney-General [2021] NZHC 2303 at [20]–[23].

12     High Court Rules, r 14.12(3).