Pasupathy v Zahim

[2024] NZHC 17

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2023-404-000576

[2024] NZHC 17

BETWEEN

AKILAKUMAR PASUPATHY

Applicant

AND

MOHAMMED ZAHIM

Respondent

Hearing:

On the papers

Appearances:

A Pasupathy in Person

J T Burley for the Respondent

Judgment:

18 January 2024

COSTS JUDGMENT OF ASSOCIATE JUDGE GARDINER

This judgment was delivered by me on 18 January 2024 at 10.30 a.m. pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

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

Solicitors:

McVeagh Fleming, Auckland

PASUPATHY v ZAHIM [2024] NZHC 17 [18 January 2024]

Introduction

[1]    In a judgment delivered on 29 November 2023, I dismissed Mr Pasupathy’s application that his caveat not lapse.1 I ordered Mr Pasupathy to pay Mr Zahim’s costs and reasonable disbursements. As counsel for Mr Zahim indicated an intention to apply for indemnity costs, I invited submissions.

[2]    Under r 14.6(4)(a) of the High Court Rules 2006, the Court may order a party to pay indemnity costs if the party has acted vexatiously, frivolously, improperly, or unnecessarily in commencing, continuing, or defending a proceeding (or step in a proceeding).

[3]    The making of allegations which ought never to have been made, or unduly prolonging a case by the raising of meritless claims — essentially, the “hopeless case” situation – is one of the circumstances recognised by the Court of Appeal in Bradbury v Westpac Banking Corp2 in which indemnity costs may be ordered. “Hopeless” in this context is equated to “totally without merit” and “bound to fail”.3

[4]    Mr Zahim submits that Mr Pasupathy’s application was bound to fail, and was totally without merit, because:

(a)The second deed relied on by Mr Pasupathy did not confer on him at the time the caveat was lodged an interest capable of supporting the caveat. The judgment found that there was no enforceable agreement to mortgage.4

(b)Even if Mr Pasupathy did have a caveatable interest, his right to bring a claim against Mr Zahim under the second deed for the alleged unpaid debt, and the contended related remedy as mortgagee was barred by the Limitation Act 1950 and/or the Limitation Act 2010.5

1      Pasupathy v Zahim [2023] NZHC 3415.

2      Bradbury v Westpac Banking Corp [2009] 3 NZLR 400, (2009) 19 PRNZ 385 (CA) at [29].

3      TheCircle.co.nz Ltd v Trends Publishing International Ltd (in liq and in rec) [2021] NZCA 235 at [34].

4      At [28] - [34].

5 At [44].

[5]    Mr Zahim says that he has incurred $45,338.27 (including GST) in total in legal fees and disbursements since commencing the proceeding. This compares to scale costs on a Category 2B basis of $21,032, plus disbursements of $5,361.50 (including GST).

[6]    Mr Zahim submits that the fact that Mr Pasupathy was self-represented for most of the underlying application, up to and including the hearing on 30 October 2023, contributed to Mr Zahim’s costs as he had to compensate for Mr Pasupathy’s lack of representation.

[7]    Mr Pasupathy denies that he brought the application vexatiously, frivolously, or improperly. He has sworn an affidavit in which he explains that he engaged legal counsel, Vijendra Naidu of Newton Law, to represent him when he became aware that Mr Zahim intended to sell the property. Mr Naidu filed the originating application that the caveat not lapse on Mr Pasupathy’s behalf. He states that Mr Naidu did not advise him that his application was vexatious, frivolous, or improper. He states that Mr Naidu advised him to engage a barrister for the hearing, but he was unable to afford the estimated cost of $20,000 to $25,000.

[8]    Mr Pasupathy’s evidence is that he sought assistance from Community Law in South Auckland to obtain a civil lawyer, possibly with legal aid. Those attempts were unsuccessful. He has provided a letter from Mr Soane Foliaki of Community Law, who confirms that Mr Pasupathy tried, with his assistance, to secure a civil lawyer through legal aid, and that these attempts were unsuccessful.

[9]    Mr Pasupathy also provides evidence of his ill health over the months leading up to the hearing.

[10]   I do not consider that an award for indemnity costs against Mr Pasupathy is appropriate in the circumstances. While Mr Zahim succeeded on the merits, I do not agree that Mr Pasupathy’s application can be categorised as frivolous, vexatious, or improper. The legal basis for his application was wrong, but that would not necessarily have been apparent to Mr Pasupathy. The argument over whether the second deed conferred an equitable interest capable of supporting the caveat involved some legal

complexity, as did the argument around the Limitation Act 1950 and/or the Limitation Act 2010. Arguably, it should have been apparent to a competent lawyer that Mr Pasupathy’s grounds for sustaining the caveat would not prevail, but I do not consider that Mr Pasupathy should be penalised for not appreciating that himself. It seems that Mr Pasupathy made genuine attempts to obtain legal representation but was unable to do so.

[11]   In these circumstances I consider that an award of costs on a standard 2B basis is suitable.

Result

[12]   I order Mr Pasupathy to pay Mr Zahim costs of $21,032, plus disbursements of $5,361.50.

Associate Judge Gardiner