Dugh v Dugh

[2013] NZHC 1318

IN THE HIGH COURT OF NEW ZEALAND NAPIER REGISTRY

CIV 2007-441-562 [2013] NZHC 1318

BETWEEN  SATNAM SINGH DUGH Plaintiff

ANDJOGINDER RAM DUGH, PARDEEP KUMAR DUGH AND NARESH KUMAR DUGH

Defendants

On papers:

Counsel:                  E J Forster for Plaintiff

W J Wenley for Defendants

Judgment:                5 June 2013

JUDGMENT OF THE HON JUSTICE KÓS (Costs)

[1]      On 29 November 2012, the plaintiff Satnam Dugh applied for an order:

... granting a litigation lien over the proceeds of the judgment for the sum of

$50,337.94 [in favour of] David Porteous, Solicitors of Hastings.

[2]      Eighteen months earlier, the plaintiff’s counsel, Mr Forster, had written to

Mr Dugh’s principal creditor, Westpac, and the judgment debtors stating:

We claim a solicitor’s litigation lien from the proceeds of judgment for my costs, Mr Porteous’ costs (instructing solicitor) and Tax Link’s expert accountant’s costs.

[3]      In my judgment of 8 April 20131  I dismissed the plaintiff’s application for recognition of the lien.

1      Dugh v Dugh [2013] NZHC 685.

DUGH v DUGH & ORS [2013] NZHC 1318 [5 June 2013]

[4]      Subsequent to the argument before me on 1 February 2013, an advertisement notifying bankruptcy proceedings against Mr Dugh was published in the Hawkes Bay Times.   Less than a month after my decision on 8 April 2013 Mr Dugh was adjudicated bankrupt.

[5]      The defendants are entitled to costs.   The quantum has been agreed, but liability is not agreed. The agreed quantum is as follows:

23       Opposition to interlocutory application  .6

24       Preparation of submissions  1.5

26       Appearance    .5

2.6

Plus:

2.6 days $1,990.00                 $5,174.00

Sealing order  .2            390.00
Sealing fee        48.30

$5,612.30

[6]      The defendants seek that costs be paid by Souness Stone. That is on the basis that the lien sought was for their benefit, and the plaintiff is insolvent.

[7]      Mr Forster, expressly instructed in the matter by Souness Stone, then and now, has filed a memorandum contesting liability for costs by “counsel” (costs in fact are sought against the solicitors) on the basis that the application was properly brought to determine priorities, and that there had been no disclosure of the circumstances  to  be offset  in  favour of Westpac prior  to  the proceedings  being issued.

[8]      Whether or not that is so, plainly it was known to Mr Dugh, or at least his counsel and solicitors, before the hearing on 1 February 2013.  His likely insolvency, and inability to meet costs himself, must also have been apparent to those advising him.

[9]      Costs may be awarded against non-parties under rule 14.1.2    The principles on which that may be done are set out in Dimocks Franchise Systems (NSW) Pty Ltd v Todd (No 2)3  and by the decision of the Court of Appeal in S H Lock (NZ) Ltd v New Zealand Bloodstock Leasing Ltd.4   I record that costs orders against non-parties are exceptional, and are generally made only where a non-party has (1) substantial control over the proceeding or (2) significant influence over, and benefit from, it – so

that the non-party is in effect the real party to the litigation.

[10]     As my judgment makes clear, a litigation lien is an equitable charge in favour of the solicitor.  It is the solicitor that benefits from imposition of the charge.  It is not suggested that Mr Satnam Dugh would have benefited in any direct way from imposition of the charge.  The issue was, as Mr Forster says, a matter of priorities. The only question was whether the solicitors might gain preference beyond simply being unsecured creditors of the insolvent Mr Dugh.

[11]     In  these  circumstances  it  would  be  entirely  unjust  for  the  defendants, successful in opposing the litigation lien application, not to have costs paid by the interested beneficiary of the application, Souness Stone.  I am satisfied that condition (2) in [9] above applies here.

[12]     Costs as prescribed in [5] are to be paid by Souness Stone.

Stephen Kós J

Solicitors:

Souness Stone Law Partnership, Hastings for Plaintiff

Willis Toomey Robinson, Napier for Defendants

2      Erwood v Maxted [2010] NZCA 93.

3      Dimocks Franchise Systems (NSW) Pty Ltd v Todd (No 2) [2005] 1 NZLR 145 (JCPC) at [25].

4      S H Lock (NZ) Ltd v New Zealand Bloodstock Leasing Ltd [2011] NZCA 675 at [15] to [30].