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High Court of New Zealand Decisions |
Last Updated: 27 December 2018
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NOTE: PURSUANT TO S 35A OF THE PROPERTY (RELATIONSHIPS)
ACT 1976, ANY REPORT OF THIS PROCEEDING MUST COMPLY WITH SS 11B TO 11D OF
THE
FAMILY COURTS ACT 1980. FOR FURTHER INFORMATION, PLEASE SEE
HTTP://WWW.JUSTICE.GOVT.NZ/COURTS/FAMILY-
COURT/LEGISLATION/RESTRICTIONS-ON-PUBLICATIONS.
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IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
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CIV-2015-404-001535
[2016] NZHC 474 |
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BETWEEN
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LALIT PRASAD
Appellant
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AND
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SONYA PRASAD
Respondent
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Hearing:
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On the papers
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Counsel:
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A C M Fisher QC for appellant D Chambers QC for respondent
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Judgment:
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18 March 2016
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JUDGMENT OF KATZ J
This judgment was delivered by me on 18 March 2016 at 4:00pm Pursuant to Rule 11.5 High Court Rules
Registrar/Deputy Registrar
Solicitors: Sanjay Sharma, Waitakere
Turner Hopkins, Auckland
Counsel: Antonia Fisher QC, O’Connell Street Barristers, Auckland Deborah Chambers QC, Bankside Chambers, Auckland
PRASAD v PRASAD [2016] NZHC 474 [18 March 2016]
Introduction
[1] Mr and Mrs Prasad separated on 6 January 2014. They were unable to resolve their relationship property issues and proceedings were issued in the Family Court. On 8 June 2015, a judgment was granted in favour of Mrs Prasad. The Family Court ordered that two houses that were relationship property be sold at public auction, with the proceeds of sale to be equally divided.1
[2] Mr Prasad filed an appeal against the Family Court decision on 3 July 2015. He also filed an interlocutory application for a stay pending appeal, supported by an affidavit. Mrs Prasad filed a notice of opposition to that application, together with a supporting affidavit. Mr Prasad filed a reply affidavit, which Mrs Prasad then purported to further reply to.
[3] Mr Prasad discontinued his appeal shortly before it was due to be heard on 28 October 2015. He says that this was because he received a disappointing valuation for his business, which made it clear that the sale of the properties (which he had hoped to purchase) was necessary.
[4] Mrs Prasad now seeks an award of costs in respect of the abandoned appeal. She seeks increased costs on the basis of Mr Prasad’s alleged conduct in relation to the appeal. In the alternative, Mrs Prasad seeks costs on a scale basis.
[5] Mr Prasad opposes any award of costs and submits that costs should lie where they fall. If costs are to be awarded, he submits that there is no basis for increased costs and that they should be awarded on a scale basis. I will consider the following issues in turn:
(a) Is an award of costs appropriate? If so;
(b) What costs is Mrs Prasad entitled to on a scale basis?
(c) Should increased costs be awarded?
1 Prasad v Prasad [2015] NZFC 4649.
Is an award of costs appropriate?
[6] The first issue is whether costs should be awarded at all.
[7] Under r 15.23, a plaintiff who discontinues a proceeding must pay the defendant’s costs up to and including the date on which the proceeding was discontinued. However, this is subject to the court’s general discretion as to costs.2
[8] McGechan on Procedure summarises the key principles from the leading cases as follows:3
(a) The r 15.23 presumption obviates any requirement for the defendant to demonstrate that the plaintiff acted unreasonably in commencing and then discontinuing the proceeding. The defendant has the advantage of the presumption even where there has not been such unreasonableness.
(b) Although the r 15.23 presumption is designed to give a certain and predictable outcome upon discontinuance, it may be displaced if the court finds there are circumstances which make it just and equitable that it should not apply.
(c) Although the court is not limited in the factors it may take into account when considering whether the presumption is displaced, generally:
(i) The court will not consider the merits of the respective cases, unless they are so obvious that they should influence the costs outcome.
(ii) The court will consider the reasonableness of the stance of both parties up to the point of discontinuance: whether it was reasonable for the plaintiff to bring and continue the proceeding; and for the defendant to oppose the proceeding. The plaintiff will not be able to avoid the presumption by showing that at one point it had reasonable grounds for believing it would be successful in the proceeding.
(iii) Conduct prior to the commencement of the proceeding may be relevant (for example, if any conduct by a defendant precipitated the litigation), as may be the reason for discontinuing (for example, a change of circumstances rendering the proceeding unnecessary).
(d) The court’s general discretion in r 14.1 as to costs can also override the general principles relating to discontinuance.
2 See High Court Rules, r 14.1 and Oggi Advertising Ltd v McKenzie (1998) 12 PRNZ 535 (HC).
The principles at (i) – (iii) are derived from FM Custodians v Pati.4
[9] The key issue I must determine is whether the presumption in favour of costs has been displaced in all the circumstances of this case. In Ryde v Earthquake Commission Kós J noted a number of questions relevant to the consideration of this issue:5
(a) Was it reasonable to bring this proceeding?
(b) Was it reasonable for the defendant to defend this proceeding?
(c) Why were the proceedings discontinued?
(d) Were the merits so obvious that they should influence the costs outcome?
(e) Does the outcome represent vindication of the plaintiff's commencement of proceedings?
[10] Those questions provide a helpful framework for considering the issues in this case and I will therefore address each of them in turn.
Was it reasonable to bring the appeal?
[11] An appeal does not have to have been brought unreasonably to justify an award of costs. Nevertheless, the reasonableness of the appeal may be relevant to the issue of whether it is just and equitable to displace the presumption in favour of costs where an appeal has been abandoned.
[12] Mrs Prasad’s position is that the appeal was just part of a continuing campaign to delay the division of relationship property for Mr Prasad’s own benefit. Mr Prasad, on the other hand, submits that the appeal raises genuine issues arising out of a number of factual errors by the Judge, as well as errors in the exercise of his discretion.
4 FM Custodians Ltd v Pati [2012] NZHC 1902 at [11].
5 Ryde v Earthquake Commission [2014] NZHC 2763 at [23]—[30].
[13] I have carefully considered the Family Court Judgment, together with Mr Prasad’s notice of appeal. I note that Mr Prasad is represented by experienced senior counsel. In my view the notice of appeal raises tenable issues for consideration by an appellate Court. I am satisfied that there were reasonable and proper grounds of appeal.
Was it reasonable for Mrs Prasad to oppose the appeal?
[14] There is nothing to suggest that it was unreasonable for Mrs Prasad to oppose the appeal. On the contrary, she had the benefit of a Family Court decision in her favour and it was clearly appropriate for her to defend that decision on appeal. Mr Prasad does not argue otherwise.
Was the parties’ conduct during the proceeding reasonable?
[15] Mr Prasad submits that Mrs Prasad acted unreasonably by filing an affidavit on 4 August 2015 (in opposition to his stay application) making unwarranted attacks against him, which increased his costs. The relevant affidavit alleges, amongst other things, that Mr Prasad has been completely dishonest, has tried to fool or mislead the Court, has made veiled threats to run his business into the ground, has exercised undue influence in the preparation of valuations, grossly exaggerated costs, made outrageous claims that Mrs Prasad had cancer, engaged in a crusade to financially and emotionally ruin Mrs Prasad, and threatened to kill Mrs Prasad.
[16] These are serious allegations. Whether they are true or not, however, has not been determined, as the stay application was ultimately resolved by consent. Accordingly, for costs purposes, the focus must be on whether the allegations were relevant to the stay application, rather than whether they are true. In my view most of the allegations were relevant, given that Mrs Prasad’s opposition to the stay application was essentially that the appeal was a further “tactic” by Mr Prasad to delay final resolution of relationship property matters. As is (unfortunately) sometimes the case in appeals from the Family Court, given the intensity of emotions involved, both parties’ affidavits contained material which could be seen as inflammatory, or which could possibly have been expressed in more temperate language. Further, both parties appeared to take a “Rolls Royce” approach to their affidavit evidence, even though
much more concise evidence would likely have sufficed for the purposes of determining the stay application. I do not find, however, that the contents of either of Mrs Prasad’s two affidavits were such as to disentitle her to an award of costs on appeal.
[17] Mr Prasad also submits that Mrs Prasad unreasonably refused his efforts to settle the appeal. I am not in a position to determine the reasonableness or otherwise of Mr Prasad’s settlement offers. I reject his submission, however, as a matter of principle. These were not first instance proceedings in respect of which Mr Prasad had made a Calderbank offer, in circumstances where the parties’ legal rights and entitlements were uncertain. The disputes between the parties had been resolved by the Family Court. Mrs Prasad had received a judgment in her favour. There was no obligation on her to compromise her legal rights by accepting less than what she had been awarded in that judgment, or to enter into negotiations for that purpose. There was nothing unreasonable in her decision to elect to simply defend the Family Court decision on appeal.
Why was the appeal discontinued?
[18] The appeal was apparently discontinued because a valuation of Mr Prasad’s businesses indicated that he would be unlikely to be able to purchase the two relationship properties, as he had hoped. He therefore had to accept that the properties would need to be sold.
Were the merits of the appeal so obvious that they should influence the costs outcome?
[19] The appeal largely concerned questions of fact, most of which are disputed, which impacted upon the Judge’s decision. It is not possible to reach a clear view as to the merits of the appeal, although I suspect that Mr Prasad’s prospects of success on appeal were not strong.
Does the outcome represent a vindication of Mr Prasad’s decision to bring the appeal?
[20] The outcome certainly does not vindicate Mr Prasad’s decision to bring the appeal. On the contrary, Mr Prasad has now agreed that a sale will go ahead, in
accordance with the orders of the Family Court. If anything, the outcome represents a vindication of Mrs Prasad’s decision to oppose the appeal and to defend the Family Court’s decision. The properties will now be sold on the terms preferred by Mrs Prasad, as prescribed by Judge Burns.
Has Mr Prasad displaced the r 15.23 presumption?
[21] Taking all of these matters into account Mr Prasad has not displaced the r 15.23 presumption. The appeal was a fairly routine appeal. Mrs Prasad’s conduct in opposing the appeal, and the associated stay application, was reasonable. Nothing has occurred that has vindicated Mr Prasad’s position. Rather, Mr Prasad claims to have discontinued the appeal as a result of realising, in effect, that he could not afford to retain the properties. That conclusion is a vindication of the Family Court decision (and Mrs Prasad’s position) rather than that of Mr Prasad. Further, his conclusion on that issue appears to have been reached rather belatedly, with the appeal only being discontinued a day prior to the appeal hearing.
[22] It is irrelevant that Mr Prasad may have advised Mrs Prasad some time prior to that of his intention to abandon the appeal. Unless and until a notice of abandonment of appeal was filed, counsel for Mrs Prasad clearly had to continue to prepare for the hearing of the appeal.
[23] Mrs Prasad is accordingly entitled to costs on the abandonment of the appeal, in accordance with the r 15.23 presumption.
What costs is Mrs Prasad entitled to on a scale basis?
[24] In terms of scale costs, Mrs Prasad seeks 2B costs generally, but 2C costs (five days) in relation to the preparation of affidavits, on the basis that a comparatively large amount of time was reasonably required for that step.
[25] Reasonable time is determined under r 14.5:
14.5 Determination of reasonable time
(1) For the purposes of rule 14.2(c), a reasonable time for a step is—
- (a) the time specified for it in Schedule 3; or
(b) a time determined by analogy with that schedule, if Schedule 3 does not apply; or
(c) the time assessed as likely to be required for the particular step, if no analogy can usefully be made.
(2) A determination of what is a reasonable time for a step under subclause (1) must be made by reference—
(a) to band A, if a comparatively small amount of time is considered reasonable; or
(b) to band B, if a normal amount of time is considered reasonable; or
(c) to band C, if a comparatively large amount of time for the particular step is considered reasonable.
[26] Different time bands may be applied to different steps in the proceeding.6 A party contending for a band other than band B must demonstrate why a normal amount of time does not apply.7 The party must explain why the step required a comparatively large amount of time.8
[27] Mrs Prasad’s claim to recover the costs of preparation of her affidavits is advanced on the basis that the affidavits fall within item 30 of Schedule 3. That step is listed under the heading “Trial preparation and appearance” and is described as “Plaintiff’s or defendant’s preparation of briefs or affidavits”. One and a half days preparation is allowed for Band A, two and a half days for Band B and five days for Band C.
[28] In my view, however, Mrs Prasad’s claim to any entitlement to claim costs under this head is misconceived. The relevant affidavits were filed in support of, or in opposition to, Mr Prasad’s interlocutory application to stay enforcement of the Family Court judgment pending appeal. They were not affidavits prepared for a substantive trial. Item 30 is inapplicable. Rather, the relevant substantive evidence
6 McLachlan v Mercury Geotherm Ltd (in rec) CA 117/05, 4 December 2006 at [62]–[63].
for the purposes of the appeal would have been the evidence that was heard in the Family Court, as comprised in any affidavits or briefs of evidence filed in that Court, together with any notes of evidence taken at the hearing. The practical reality is that evidence prepared for a substantive trial will almost always be significantly more extensive than evidence prepared for an interlocutory application, and this is reflected in the reasonable time allocations set out in Schedule 3.
[29] I have not overlooked that on 18 September 2015 Mr Prasad filed an application seeking that the evidence that he had adduced in support of the stay application be admitted as fresh evidence at the hearing of the appeal. Mrs Prasad was prepared to consent to that application, provided that the two affidavits she had filed in relation to the stay application were also admitted. The application to admit further evidence on appeal was ultimately not determined, however, as it was superseded by the abandonment of the appeal. Accordingly no leave was ever granted to file fresh evidence on appeal.
[30] Further, even if leave had been granted to allow the parties to refer to the stay affidavits at the appeal hearing, this would not have somehow converted those affidavits into affidavits that were prepared for “trial” in terms of Schedule 3, item 30. On the contrary, the affidavits were prepared for purposes of the stay application, whatever use may (or may not) subsequently have been made of them.
[31] I also note that although the affidavits may have had some relevance to the substantive appeal, they were primarily relevant to issues such as Mr Prasad’s motives in bringing the appeal, which was an issue that fell for consideration in the context of the stay application, rather than on the substantive appeal.
[32] Steps 22 to 29 in Schedule 3 relate to interlocutory applications. Step 23 allows
0.6 days for “Filing opposition to interlocutory application”. This step covers both preparation of the notice of opposition and supporting affidavit(s). If a comparatively large amount of time is reasonably required for this step then a Band C allocation would be appropriate (2 days). I am not satisfied, however, that Band C is appropriate in this case. A “normal” amount of time was appropriate for the filing of documents in opposition to the stay application. There was nothing particularly unusual or
complex about the stay application. Indeed it was resolved by consent, on the basis of undertakings given by Mrs Prasad in her notice of opposition not to enforce the Family Court decision pending hearing of the appeal. Given those undertakings it is not entirely clear why the three affidavits (two from Mrs Prasad and one from Mr Prasad) filed together with or following the notice of opposition were strictly necessary at all.
[33] The appropriate award of costs in favour of Mrs Prasad, on a 2B scale basis, is
$10,035.00.9 This does not include any separate provision for the preparation of affidavits, for the reasons I have outlined above. Preparation of affidavits is including in step 23, “Filing opposition to interlocutory application”.
Should increased costs be awarded?
[34] Rule 14.6(b) provides for an award of increased costs where a party opposing costs has contributed unnecessarily to the time or expense of the proceeding or step in it, in one of the ways identified in that rule.
[35] Mrs Prasad submits that Mr Prasad has contributed unnecessarily to the appeal by “pursuing an unnecessary step or an argument that lacks merit” (r 14.6(b)(ii)). Indeed Mrs Prasad’s position is that the entire appeal was unnecessary and lacked merit. In her view the appeal was simply part of a “continuing campaign” to delay the division of relationship property. In essence, Mrs Prasad submits that Mr Prasad commenced the appeal for an improper purpose, namely to delay the inevitable sale of the properties and to provide himself with continuing financial advantages, while at the same time exhausting Mrs Prasad’s financial base.
[36] The party claiming increased costs carries the onus of persuading the court that their award is justified.10 I have found at [13] above that it was reasonable to bring the appeal, in that the notice of appeal raises arguable and tenable grounds of appeal. Nevertheless, if Mrs Prasad can establish that the appeal was not brought genuinely, but simply to delay matters, with the intention of it being abandoned “at the courtroom door” that would likely justify an increased award of costs.
10 Strachan v Denbigh Property Ltd HC Palmerston North CIV-2010-454-232, 3 June 2011 at [27].
[37] The information before me on this issue primarily comprises the stay affidavits, which traverse the issue of Mr Prasad’s motives in bringing the appeal. Mrs Prasad’s view is that Mr Prasad’s motives were improper. Mr Prasad denies that. The affidavits have not been tested through cross-examination and it is not possible or appropriate to attempt to resolve the disputed factual issues “on the papers”. Serious allegations have been made, which would need to be tested through cross-examination before any definitive factual findings could be made.
[38] Mrs Prasad also referred extensively to Mr Prasad’s conduct in the Family Court proceedings, including his alleged delays in filing affidavits of assets and liabilities, and in filing annual accounts and tax returns. There are also suggestions that he delayed in filing several other documents, put forward numerous unmeritorious discovery requests, and misled the Family Court in relation to whether there was a tenancy in the property. I do not think such matters are particularly relevant to the issue of whether increased costs are justified on this appeal. Rather, they are matters that are primarily relevant to costs issues in the Family Court. They do not compel the conclusion that Mr Prasad’s motivation behind his appeal was solely (or primarily) delaying the disposition of the relationship property.
[39] I note the observations of the Court of appeal in Thames-Coromandel District Council v Coromandel Heritage Protection Society Incorporated that “costs are intended to reflect how parties have acted during litigation, not before it”.11 And further, the proper role of costs is to compensate the winning party for its legal costs “in respect of that proceeding or that step in the proceeding. Costs are not to be used for ‘punishing’ a party for its conduct outside the proceeding”.12 Conduct before the filing of the appeal in this case is, therefore, only relevant to the extent that it may cast some light on the reasonableness of Mr Prasad’s conduct in relation to this appeal. Ultimately, however, given the extent to which the evidence is disputed, it is not possible or appropriate for me to attempt to make factual findings as to Mr Prasad’s motives in bringing the appeal. There is no conduct on the part of Mr Prasad during the appeal proceeding itself which justifies an increased costs order.
[40] For the reasons I have outlined, Mrs Prasad has not discharged the onus on her of establishing that an award of increased costs is justified.
Result
[41] Costs are awarded to Mrs Prasad on a 2B scale basis, in the sum of $10,035.00.
Katz J
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