Smartpay Limited v Kumar

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2020-404-001775

[2023] NZHC 314

IN THE MATTER OF the liquidation of 4468440 Limited (previously known as Optimizer Corporation Limited)

BETWEEN

SMARTPAY LIMITED
Plaintiff

AND

MANAS DHARMENDRA KUMAR

Defendant

Hearing: On the papers

Judgment:

28 February 2023

JUDGMENT OF DOWNS J

(Costs)

This judgment was delivered by me on Tuesday, 28 February 2023 at 11 am pursuant to r 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Solicitors/Counsel:
Claymore Partners Ltd, Auckland. Haigh Lyon, Auckland.
DJ Chisholm KC, Auckland. M Taylor-Cyphers, Auckland.

SMARTPAY LTD v KUMAR [2023] NZHC 314 [28 February 2023]

[1] Smartpay Ltd, or Smartpay, was successful in its action against Manas Kumar that he breached his obligations as a company director.1 Smartpay seeks 2B costs2 and quantification of interest under the Interest on Money Claims Act 2016.

[2] Mr Kumar contends Smartpay should not have costs; rather, these should be awarded to the company whose obligations Mr Kumar breached. I disagree for the simple reason Smartpay incurred the costs in bringing the action against Mr Kumar.

[3] Smartpay’s calculation of costs includes $5,975 for second counsel. I am not persuaded second counsel justifies certification (though I accept second counsel would have been helpful to the plaintiff). So, costs and disbursements come to $86,452.14, not $92,427.14.

[4] Quantification of interest under the Interest on Money Claims Act produces a figure of $173,086.22. Mr Kumar requests interest not be quantified now. He says it would be better to wait until all creditors have filed claims. It is not clear this would affect the position, as the interest figure is based on the amount of compensation payable to the company, and this is already known ($850,427.43).

Result

[5]Mr Kumar is liable for 2B costs and disbursements totalling $86,452.14.

[6]Applicable interest is $173,086.22.

……………………………..

Downs J

1 Smartpay Ltd v Kumar [2022] NZHC 997 and Smartpay Ltd v Kumar [2022] NZHC 2685.
2 And disbursements.

CaseChat Overview and Summary

The case of Smartpay Limited v Kumar involved the plaintiff, Smartpay Limited, pursuing a claim against the defendant, Manas Kumar, for breach of his obligations as a company director. The dispute was heard in the High Court of New Zealand, Auckland Registry, where Smartpay sought 2B costs and quantification of interest under the Interest on Money Claims Act 2016. The central legal issues in the case were whether Smartpay was entitled to the costs incurred in bringing the action against Kumar and whether interest should be quantified immediately or deferred until all creditor claims had been filed.

The court found that Smartpay was entitled to its costs as it had incurred them in pursuing its action against Kumar. While Kumar argued that the costs should be awarded to the company he had breached obligations to, the court disagreed, noting that Smartpay was the party that had directly incurred the costs. The court also considered the quantum of costs, reducing the amount claimed by Smartpay for second counsel, resulting in total costs and disbursements of $86,452.14 rather than the $92,427.14 Smartpay had sought. Regarding interest, the court quantified it under the Interest on Money Claims Act, resulting in a figure of $173,086.22. Kumar had suggested deferring interest quantification until all creditor claims had been filed, but the court held that this was unnecessary as the interest figure was based on the known compensation amount payable to the company.

The final orders of the court were that Kumar was liable for Smartpay's 2B costs and disbursements, totalling $86,452.14, and applicable interest of $173,086.22.

CaseChat Overview and Summary

Orders of the court

Background to the litigation

Evidence Before The Court

Reasons for decision

Legal Principle Established