Radio Tarana (NZ) Limited v 5TUNZ Communications Limited [2014] NZHC 2580 (21 October 2014)

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BETWEEN	RADIO TARANA (NZ) LIMITED Plaintiff
AND	5TUNZ COMMUNICATIONS LIMITED First Defendant ROSHILA SINGH PRASAD Second Defendant SATYANDRA PRASAD Third Defendant _Contd.../...

Hearing:	4 August 2014
Appearances:	M B Wigley for the Plaintiff L Ponniah for H and J Lodhia and Nair & Chen Chartered Accountants Limited
_Judgment:	_{21 October 2014}

RADIO TARANA (NZ) LIMITED v 5TUNZ COMMUNICATIONS LIMITED & ORS [2014] NZHC 2580 [21

AND COMMUNITY FINANCIAL SERVICES LIMITED, ENTERPRISE MOTOR GROUP LIMITED, TEAM CFS HOLDINGS LIMITED, VEHICLE IMPORTS LIMITED, KEVIN ALGIE, HARISH LODHIA, JYOTI LODHIA, NAIR & CHEN CHARTERED ACCOUNTANTS LIMITED and KIM YONG

[2] The plaintiff was seeking further and better discovery against the first, second and third defendants, and discovery against a number of non parties. The applications were largely unsuccessful and I held that the defendants and the non parties were entitled to costs. I directed the defendants and the non parties to file memoranda in that regard.

[3] Agreement in relation to costs was reached between the plaintiff, the defendants and a number of the non parties who were also represented by the defendants’ solicitors. I recorded this in a minute issued on 3 November 2014, and fixed the agreed costs award.

[4] The issue of costs, however, remained outstanding in regard to those non parties who were not represented by the defendants’ solicitors – namely Mr and Mrs Lodhia and Nair & Chen Chartered Accountants Limited (the “remaining non parties”). They were represented by Mr Ponniah, and he has sought costs on their behalf.

[5] First, it is disappointing to see that Mr Ponniah, in his memorandum, has variously spelt my name as Riley J and then Wilie J. Not only is Mr Ponniah inconsistent, but nowhere in his memorandum does he record my name accurately. This is insulting. The Court is entitled to expect that the names of judges will be accurately recorded in memoranda. It reflects little credit on counsel that that has not occurred.

10 pages in length. Mr Wigley’s memorandum on behalf of the plaintiff is nine pages in length, but it is typed in a small font, with limited spacing. I gleaned the distinct impression that Mr Wigley had used a dense format to fit his submissions

within the 10 page limit. That is not appropriate, and it does not comply with the spirit of my direction.

[7] Mr Ponniah sought indemnity costs on behalf of the remaining non parties. He relied on a rule he referred to as r 302. He noted that his clients did offer to provide many of the documents requested by the plaintiff, and that they discovered those documents voluntarily. Nevertheless, the plaintiff considered this voluntary discovery was inadequate, and persisted in its application.

[8] Mr Ponniah observed that the application was scheduled for hearing on Monday, 4 August 2014. He asserted that the plaintiff did not finalise particulars of its request until Thursday, 31 July 2014, when he said he was served with a redacted synopsis of the plaintiff ’s submissions, and an affidavit from the principal behind the plaintiff – a Mr Khan. Mr Ponniah said that, given the timing, he did not have the opportunity to fully consult with his clients, and that had he had that opportunity, it is likely that a defended hearing of the application could have been avoided.

[9] Further, Mr Ponniah asserted that the plaintiff failed and/or refused to serve a bundle of the pleadings, including affidavits with exhibits, on his clients. He advised me that the plaintiff asserted that it had no obligation to do so. Mr Ponniah said that he was only sent the “hearing bundle” on Saturday, 2 August 2014, and that hard copies of the pleadings, together with copies of the unredacted submissions, were only served on him in Court on the morning of the hearing.

[10] It is also claimed by Mr Ponniah that the assertion by the plaintiff that the remaining non parties had failed to supply all relevant documents was not supported by any evidence. Rather, it is said that Mr Khan in his affidavit simply asserted that the voluntary discovery must have been inadequate, because of an alleged close relationship between Mr and Mrs Lodhia and Mr and Mrs Prasad (the second and third defendants), and because Mr Khan suspected that all are involved in concealing material from him. Mr Ponniah submitted that his clients were put to unnecessary and wasted expense in attending the hearing. He argued that the plaintiff ’s conduct

was unreasonable, and that his clients are therefore entitled to indemnity costs in the sum of $37,174.61.

[11] Mr Wigley, on behalf of the plaintiff, submitted that indemnity costs claims are limited to what is reasonable. He argued that the remaining non parties have not produced sufficient evidence as to their actual costs to meet the onus on them of establishing that the indemnity costs claimed are reasonable. He argued that scale costs are appropriate, plus one third.

[12] Mr Wigley took issue with Mr Ponniah’s assertion that the plaintiff was late in filing and serving documentation. Rather, he said that the remaining non parties filed their notice of opposition late. He also asserted that the plaintiff offered to provide detail of its concerns about the voluntary discovery undertaken by the remaining non parties. He said that this offer was not taken up and that it was the plaintiff that was put to unnecessary expense as a result. He submitted that the remaining non parties should not be entitled to any costs arising out of the defended hearing, and the preparation of written submissions.

(a) Mr Wigley first argued that the starting point in fixing costs should be the sum of $12,982, being scale costs plus one third, together with the actual accounting costs incurred. He then went on to submit that the scale costs should be reduced by $7,440 to $5,542, and that that sum was the appropriate costs order. I observe that the former figure does not seem to be scale costs plus one third and that the latter figure does not allow for the one-third increase which Mr Wigley initially suggested was appropriate.

(b) Later in his submissions, Mr Wigley argued that the proceedings should be classified as category 2A, and that the total costs order should be $4,378, plus one third, which he said equates to $7,071.64. I observe that it does not do so. Rather, it equates to $6,315.75.

(d) Mr Wigley then went on to argue that any costs award should be reduced, given his assertion that the delays were caused by the remaining non parties. He went so far as to suggest that the plaintiff should be entitled to a credit for costs incurred by it in preparing for, and attending, the hearing.

[14] I had some difficulty in following Mr Wigley’s submissions as to what the

[15] Mr Wigley accepted that costs of $1,753.75 (inclusive of GST), should be recoverable by Nair & Chen Chartered Accountants Limited. He consented to an order to that extent.

[18] In the High Court Rules 1985, r 302 dealt with orders for particular discovery against non parties. This rule is no longer in place. The operative rules are now the High Court Rules 2008. The costs of the unsuccessful application fall to be dealt with under Part 14 of the Rules. The costs of the voluntary discovery undertaken are not covered by r 8.22. It applies only to the costs of discovery where an order is made by the Court pursuant to subpart 1 of Part 8 of the Rules. There was no order made against Mr and Mrs Lodhia, or Nair & Chen Chartered Accountants Limited.

[20] First, increased costs and indemnity costs are governed by r 14.6. A court can order a party to pay indemnity costs for any one or more of the reasons set out in

r 14.6(4). Mr Ponniah does not refer to r 14.6 at all, let alone identify which sub paragraph of r 14.6(4) he relies on.

[21] Secondly, Mr Ponniah’s submissions proceed on the premise that it is the plaintiff who has breached timetable orders. I am not persuaded that that is the case. The parties to the proceedings claimed confidentiality in respect of various matters raised in affidavits filed. When the plaintiff filed its application seeking non-party discovery on 8 May 2014, Mr Ponniah protested that without access to the unredacted copies of the affidavits, he could not properly advise his clients. In a minute issued on 28 May 2014, I put in place a timetable, which, inter alia, gave Mr Ponniah the opportunity to agree on the terms of an undertaking which would enable him to consider the confidential material. I directed Mr Ponniah and other counsel to advise me whether or not they had reached agreement allowing Mr Ponniah access to redacted affidavits on or before 11 June 2014. No joint memorandum was filed. In anticipation that agreement might not be reached, I also directed that Mr Ponniah could file an application seeking access to the redacted material on or before 20 June 2014. That also did not occur. Rather, the parties seem to have gone off on a course of their own. Mr Ponniah did not get access to the unredacted affidavits. The result was that Mr Ponniah’s clients did not file a notice of opposition to the application for non-party discovery until 25 July 2014. Until such time as the notice of opposition was filed, the plaintiff was not obliged to serve anything further on Mr Ponniah’s clients. Once the notice of opposition was filed, the plaintiff did delay, and I accept that Mr Ponniah was only given copies of documents at a very late stage. That, however, appears to be because counsel never reached agreement allowing Mr Ponniah access to the confidential material. Responsibility for the resulting delays cannot be laid at the door of the plaintiff alone.

[22] Thirdly, indemnity costs are generally determined by reference to actual costs, but can be less than actual costs if the court considers that actual costs were not reasonably incurred.¹Here, there are real difficulties with the indemnity costs

¹Bradbury v Westpac Banking Corporation [2008] NZHC 751; (2008) 18 PRNZ 859 (HC) at [204]–[206].

No details are given of the time taken on each step, nor of the hourly rate charged.

It also seeks reimbursement of travel costs, and GST. There is no explanation offered as to how or why GST should be recoverable by way of a costs order. On the face of it, such a claim flies in the face of reality. The remaining non parties will already have sought or claimed for a refund from the IRD.

(c) There are items included in the invoices which do not relate to the application made by the plaintiff. The application was dated 8 May

2014. One of the invoices starts from 9 April 2014, and includes such matters as “reviewing the Whale Oil article and communication with you in relation to the same”, and “preparing letter of demand to the Prasads and communication with the Prasads’ solicitor, Chris Darlow”. Another of the invoices is dated 28 February 2014.

(d) There are two invoices from Ellis Gould. They were sent to Jyoti Import & Export Limited. There is no explanation offered as to the identity of that company or its relationship with the remaining non parties. One invoice is dated 30 November 2013, and the other

23 December 2013. There is no explanation provided as to how those invoices are relevant. Prima facie, it would seem that they must be irrelevant. They predate the application by many months.

(e) The invoices from Nair & Chen Chartered Accountants Limited are to an entity known as Sona Sansaar Limited. There is no explanation as to who that entity is, or how it is related to the remaining non parties.

(f) There are three invoices from Nair & Chen Chartered Accountants Limited dated 23 January 2014, 30 May 2014 and 11 July 2014. It is not clear that the first invoice has anything to do with the non-party

discovery sought. The second invoice does not relate to discovery. At best, it is only the third invoice for $1,525 (exclusive of GST) which may have some relationship to the unsuccessful application made by the plaintiff, although even that is not clear.

[23] The appropriate way to approach costs is to, first, categorise the proceeding under r 14.3.

[24] In my judgment, the proceedings are appropriately categorised as category 2 proceedings. They were of average complexity, requiring counsel of skill and experience considered average in the High Court.

[25] Next, I turn to consider what was a reasonable time for each step in the proceeding under r 14.5. Notwithstanding Mr Wigley’s submissions to the contrary, in my view, costs in the proceedings should be determined by reference to band 2 – that is, a normal amount of time for each step was reasonable in the circumstances.

Item in Sch 3	Activity	Band B
11	Filing memo for case management conference	0.4
12	Appearance at case management conference on 28 May 2014	0.2
23	Filing notice of opposition	0.6
24	Preparing written submissions	1.5
26	Appearance at hearing	1
	Sealing costs order	0.2
Total		3.9 days x $1,990 (= $7,761)

[27] I now go on to consider whether or not an award of increased costs under r 14.3 is appropriate.

[28] In my view, an award of increased costs is appropriate, because the argument advanced by the plaintiff seeking non-party discovery against the remaining non parties lacked merit, particularly after Mr and Mrs Lodhia and Nair & Chen Chartered Accountants Limited discovered voluntarily. There was no proper basis for the plaintiff to continue its application, and the application was far too wide and intrusive from the outset. In my view, it is appropriate to increase the costs payable by the application of scale by 25 percent, to recognise these matters.

[30] It is not appropriate to discount that figure for the reasons which Mr Wigley has sought to advance in his submissions. I have already directed that costs should be paid by the plaintiff. If the plaintiff is aggrieved by that direction, its remedy is to appeal.

[31] I go on to consider whether or not I ought to make an order for the voluntary discovery which was attended to. There are difficulties in this regard:

(a) First, as I have noted, r 8.22 does not apply for the simple reason that no order was made by the Court. Discovery was attended to voluntarily. The remaining non parties should have agreed on costs in the context of that voluntary discovery, or alternatively, formally reserved the position so that the Court could rule on it. Insofar as I am aware, they did not do so.

(b) Secondly, and in any event, there is no proper basis on which I can fix costs. As I have noted, there is one invoice for Nair & Chen Chartered Accountants Limited which may relate to steps taken by them to comply with the request for non-party discovery. That, however, is not clear. Nair & Chen Chartered Accountants Limited

only discovered five documents, one of which was said to be privileged. While I accept that that firm will have incurred costs in searching out the relevant documents, there is no proper quantification of the costs claimed on which I can rely for the purposes of making a costs order in relation to the limited discovery which was undertaken. The same applies to Mr and Mrs Lodhia.

Accordingly, I decline to order costs in respect of the voluntary discovery undertaken either by Mr and Mrs Lodhia, or by Nair & Chen Chartered Accountants Limited.

[32] Costs are fixed against the plaintiff and in favour of the remaining non parties in the sum of $9,701.25.

[33] The remaining non parties are also entitled to their reasonable disbursements. I have been given no information about the disbursements incurred. Disbursements such as filing fees and other out of pockets actually incurred are recoverable. I will leave it to the parties to deal with this issue. If there is any dispute, the same is to be

High Court of New Zealand Decisions

Radio Tarana (NZ) Limited v 5TUNZ Communications Limited [2014] NZHC 2580 (21 October 2014)