Ty Investment Limited v YS Auto Trading Limited

[2020] NZHC 2323

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2019-404-002560

[2020] NZHC 2323

BETWEEN

TY INVESTMENT LIMITED

Applicant

AND

YS AUTO TRADING LIMITED

First Respondent

AND

VIPOOL AKHILENDRA SINGH

Second Respondent

Hearing:	(On the papers)
Appearances:	Helen McDermott for the Applicant Shiva Raju for the Respondents
Judgment:	8 September 2020

[COSTS] JUDGMENT OF MOORE J

This judgment was delivered by me on 8 September 2020 at 10:00 am pursuant to Rule 11.5 of the High Court Rules.

Registrar/ Deputy Registrar Date:

TY INVESTMENT LIMITED v YS AUTO TRADING LIMITED & ANOR [2020] NZHC 2323 [8 September 2020]

Introduction

[1]                 This judgment determines costs in relation to the freezing order dispute between TY Investment Ltd (“TY”) and YS Auto Trading Ltd and Mr Vipool Singh (“the respondents”).

Background

[2]                 The parties are involved in an ongoing dispute relating to a vehicle trading business.

[3]                 On 21 November 2019, Palmer J declined to grant TY a without notice freezing order restraining the respondents from removing assets in their bank accounts or vehicle stock in their possession from New Zealand.1 He noted that TY may wish to apply again on notice.

[4]                 TY pursued the application on notice, serving the proceedings on the respondents on 2 December 2019.

[5]                 On 18 December 2019, Katz J issued a Minute declining to make an order. Mr Singh had had difficulty finding a lawyer so no notice of opposition had been filed, and Katz J considered it was in the interests of justice to let Mr Singh oppose the order if he wished.

[6]                 On 30 January 2020, the respondents filed and served a notice of opposition, a brief affidavit supporting the notice of opposition and a statement of defence, having instructed counsel on 24 January 2020. On 10 February 2020, the parties agreed the timetable before Downs J. A half-day hearing was set down for 27 May 2020. The respondents filed evidence on 17 February 2020 and 2 March 2020.

[7]                 On 18 February 2020, TY filed an urgent memorandum seeking that the hearing be accorded urgency, and an affidavit from a friend of the director of TY claiming to have seen the car yard empty. Before Gordon J, it was acknowledged that the matter was not in fact urgent, and the hearing date of 27 May 2020 was maintained.

1      TY Investment Ltd v YS Auto Trading Ltd [2019] NZHC 3041.

[8]                 On 7 April 2020, the respondents made an offer (without prejudice except as to costs) that if TY withdrew the application, the respondents would reserve their position on costs incurred by the application, pending determination or resolution of the substantive claim. The offer also stated:

“Take notice that if your client pursues its application and it is ultimately dismissed, this correspondence may be tendered to the Court in support of an uplift in costs for all subsequent attendances (in respect of the application) and a direction that the same be paid forthwith.”

[9]The respondents required a response by 9 April 2020. TY did not respond.

[10]              On 14 April 2020, the parties filed a joint memorandum seeking a change to the timetable, in response to the difficulty the director of TY was having filing and serving a reply affidavit from China because of COVID-19. On 21 April 2020, TY served the respondents its unsworn affidavit, maintaining that there remained a real and clear risk of dissipation. On 13 May 2020, TY withdrew the application.

[11]              Before Lang J on 12 June 2020, TY asked that costs be reserved pending the substantive fixture. Lang J agreed with the respondents that costs should be determined at this point; to ensure that costs are predictable and expeditious.

Submissions

Respondents

[12]              The respondents submit that the application was unnecessary from the outset and that TY had ample time to consider the respondents’ evidence and discontinue the application, particularly following the 7 April 2020 offer. They seek costs on a 2B basis, uplifted by 10 per cent because the offer was declined without reasonable justification and TY’s belated acceptance of the respondents’ evidence unnecessarily contributed to the time and expense of advancing the application. That amounts to costs of $11,567.60 plus disbursements of $110, calculated as follows:

Step	Allocated days
23	Filing opposition to interlocutory application	0.6
11	Filing memorandum (7 February 2020)	0.4

Step	Allocated days
12	Appearance at callover (10 February 2020)	0.2
11	Filing memorandum (19 February 2020)	0.4
12	Appearance at callover (20 February 2020)	0.2
11	Filing (joint) memorandum (14 April 2020)	0.4
30	Preparation of affidavits	1
11	Filing memorandum (5 June 2020)	0.4
11	Filing memorandum (11 June 2020)	0.4
11	Filing memorandum (26 June 2020)	0.4
4.4
Total costs 2B basis	$10,516
+ 10 per cent uplift	$11,567.60
Disbursements	$110

TY

[13]              TY seeks that costs be reserved, pursuant to the offer on 7 April 2020, noting that it was exceedingly difficult for counsel to obtain instructions during COVID-19 as his client was overseas.

[14]              If costs are not reserved, TY submits that costs should not be increased for the offer and should in fact be reduced by 25 per cent because of unnecessary delays, pursuant to r 14.7(f) of the High Court Rules 2016.

Discussion

Should costs be reserved?

[15]              In accordance with Lang J’s Minute of 12 June 2020, I will not reserve costs. I agree with the respondents that it would not be appropriate to let TY take the benefit of the offer by reserving costs. Although the COVID-19 lockdown has obviously created delays and difficulties in legal proceedings, without any specific explanation it is difficult to see how counsel’s communication with his client in China would have been obstructed as claimed.

Should costs be reduced for unnecessary delays?

[16]              Costs may be reduced according to r 14.7 of the High Court Rules 2016, including if:

“(f)     the party claiming costs has contributed unnecessarily to the time or expense of the proceeding or step in it by—

(i)            failing to comply with these rules or a direction of the court; or

(ii)           taking or pursuing an unnecessary step or an argument that lacks merit; or

(iii)    failing, without reasonable justification, to admit facts, evidence, or documents, or accept a legal argument; or

(iv)          failing, without reasonable justification, to comply with an order for discovery, a notice for further particulars, a notice for interrogatories, or other similar requirement under these rules; or

(v)      failing, without reasonable justification, to accept an offer of settlement whether in the form of an offer under rule 14.10 or some other offer to settle or dispose of the proceeding

…”

[17]              I do not accept that the respondents unnecessarily delayed the proceedings. It is not unusual that they had difficulty appointing a lawyer over the summer holiday period. They complied with the timetabling orders agreed between the parties. Further, they sought to deal with the matter expeditiously by tendering the 7 April 2020 offer.

[18]Accordingly, costs on a 2B basis will not be reduced.

Should costs be increased for the 7 April offer?

[19]              The Court may make an order for increased costs where the unsuccessful party failed without reasonable justification, to accept an offer of settlement.2 The onus is on the party claiming increased costs to demonstrate that the increase is justified.3 The reasonableness of a party's rejection of an offer will depend on the size and timing of

2      High Court Rules 2016, r 14.6(3)(b)(v).

3      Strachan v Denbigh Property Ltd HC Palmerston North CIV-2010-454-232, 3 June 2011 at [27].

the offer, the reasonable expectations of the party refusing the offer and on the parties’ ability, at the time of the offer, to assess the merits of the case.4

[20]              A party seeking increased costs where the other side rejected an offer and then discontinued will need to establish clearly that the failure was unreasonable:5

“… more evidence than normal is required because the Court does not have a definitive judgment against which to contrast the settlement offer.”

[21]              Despite this caution, I am satisfied there should be an order for increased costs. TY had all evidence from the respondents and could assess the strength of the application. It does not seem that there were risks to the assets that would justify a freezing order. In my view, TY’s actions contributed unnecessarily to the time and expense of the proceeding. Accordingly, I will increase costs for those steps taken after 7 April 2020 by 20 per cent.

Result

[22]TY is to pay the respondents cost of $11,578 and disbursements of $110.

Moore J

Solicitors:

Righteous Law, Auckland Mr Raju, Auckland

4      Samson v Mourant [2016] NZHC 1119 at [44].

5      Holdfast NZ Ltd v Selleys Pty Ltd (2005) 17 PRNZ 897 (CA) at [29].