Bartercard Exchange Limited v De Vries

[2018] NZHC 2500

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE

CIV-2016-485-0428

[2018] NZHC 2500

UNDER

the Insolvency Act 2006

IN THE MATTER

of the bankruptcy of Anthony Harry de Vries

BETWEEN

BARTERCARD EXCHANGE LIMITED

Judgment Creditor

AND

ANTHONY HARRY DE VRIES

Judgment Debtor

Hearing:	On the papers
Appearances:	D G Dewar and M W Anderson for the Judgment Creditor Mr de Vries in person
Judgment:	24 September 2018

COSTS JUDGMENT OF ASSOCIATE JUDGE SMITH

This judgment was delivered by me on 24 September 2018 at 4.15pm, pursuant to r 11.5 of the High Court Rules

Registrar/Deputy Registrar

Solicitors / Counsel:

Thomas Dewar Sziranyi Letts, Wellington

Copy to:
A H de Vries

BARTERCARD EXCHANGE LTD v DE VRIES [2018] NZHC 2500 [24 September 2018]

[1]    On 30 April 2018 I made an order adjudicating Mr de Vries bankrupt. I directed that the judgment creditor (Bartercard) was entitled to costs. Those costs were to be on a 2B basis, together with disbursements, unless Bartercard filed a memorandum seeking increased costs within 15 working days. Mr de Vries was allowed 15 working days from the date of service of any costs memorandum filed by Bartercard, to file his own costs memorandum.

[2]    Bartercard duly filed a costs memorandum, in which it sought costs not only in this proceeding, but also a District Court proceeding and an appeal from the District Court proceeding. By minute dated 6 June 2018, Associate Judge Johnston directed that costs in the three proceedings would be dealt with separately, and that I would give judgment for costs in this proceeding.

The background to the adjudication proceeding

[3]    The background is fully set out in my judgment of 30 April 2018 adjudicating Mr de Vries bankrupt ("the adjudication judgment"),1 and in three other judgments I have given. First, I gave judgment in April 2016 dismissing Bartercard's first application for an adjudication order ("the April 2016 judgment").2 Secondly, in November 2016 I dismissed an application by Mr de Vries to set aside a second bankruptcy notice issued by Bartercard ("the November 2016 judgment").3 In December 2016 Bartercard filed a second application for adjudication. Mr de Vries applied for an order that I recuse myself in that proceeding, and that application was refused in a judgment given on 4 August 2017 ("the recusal judgment").4

Bartercard's submissions

[4]    Bartercard asks for costs on scale 2C for the particular steps in the proceeding identified in Schedule 3 to the High Court Rules, together with additional costs for multiple steps it was required to take that are not specifically referred to in Schedule 3.

1      Bartercard Exchange Ltd v de Vries [2018] NZHC 854.

2      Bartercard Exchange Ltd, ex parte de Vries [2016] NZHC 703.

3      de Vries v Bartercard Exchange Ltd [2016] NZHC 287.

4      Re de Vries, ex parte Bartercard Exchange Ltd [2017] NZHC 1851.

[5]    Mr Dewar and Mr Anderson submit that the Court has only to look at the file to see the proliferation of documents and filings that are prolix and irrelevant, and to note the extensive and unwarranted attacks on counsel. They submit that Mr de Vries habitually accused Mr Dewar of perjury, and made other unwarranted allegations, and regularly sent emails to every member of counsels' firm.

[6]    Mr Dewar and Mr Anderson note that, on a 2B basis, the scale at Schedule 3 to the High Court Rules allows for a total of only 1.2 days (0.2 days for filing and serving the bankruptcy notice, 0.6 days for filing the application for adjudication, and

0.4 days for appearing at the hearing).  On a 2B basis, costs at $2,230 per day5 would

be $2,676. If costs were awarded on a 2C basis, the time allowance would be 3.6 days. At the category 2 rate of $2,230 per day, costs on a 2C basis for the steps specifically identified in Schedule 3 for a bankruptcy proceeding would be $8,028.

[7]    Mr Dewar and Mr Anderson submit that further costs of $16,948 should be allowed for additional attendances, as detailed in this table:

1.	24 April    2017    –    preparation    and attendance for fixture (adjourned)	1.0 day
2.	1 June 2017 – teleconference	0.2 days
3.	26 July 2017 – appearances	0.2 days
4.	28 July 2017: Receive and review submissions put forward by Mr de Vries for recusal of Associate Judge Smith Receive Court request to response	0.5 days
5.	1 August 2017 – preparation of submissions on judicial recusal and filing	0.5 days
6.	Allowance for above steps including receiving and reviewing multiple memoranda and documents associated with them Preparation for adjourned hearings, etc	5.0 days
7.	10 August 2017 – hearing – adjourned	0.2 days
Total for Adjudication		7.6 days x $2,230.00	$16,948.00

5      The daily rate prescribed by Schedule 2 to the High Court Rules for a category 2 proceeding.

[8]    In total, Bartercard seeks costs on the adjudication proceeding of $24,976, comprised of $8,028 for costs on a 2C basis for filing and serving the bankruptcy notice, filing the application for adjudication, and appearing at the hearing of the adjudication application, together with $16,948 for additional attendances in accordance with the table set out at paragraph [7] above. Disbursements of $700.00 are sought, being $500.00 for the filing fee on the bankruptcy adjudication application and $200.00 on filing the bankruptcy notice.

Submissions by Mr de Vries

[9]    Mr de Vries filed a submission dated 28 May 2018, headed "Memorandum re Miscarriage of Justice and Costs Awards".  He also sent an email to the Court on    30 May 2018, in which he made some further submissions.

[10]   Mr de Vries submitted that "the whole case is a total miscarriage of justice". He set out his views on the various judgments and his views on the merits of many of the arguments. As far as I can see, the arguments on the merits have all been addressed in earlier judgments, and I do not see any basis to consider them again in dealing with costs on the adjudication proceeding.

[11]   Mr de Vries submitted that my invitation to Bartercard (in the adjudication judgment) to file a memorandum if it wished to apply for an award of costs in excess of costs calculated on a 2B basis, was "a further abuse and injustice". He submitted that counsel for Bartercard are now wrongly seeking additional costs "where in total we have spent less than an hour in Court without [counsel] having to prepare any major documents …". He referred to Bartercard's additional costs claim as a "scam".

[12]   Mr de Vries opposed any costs award, contending that there had been "a perversion of justice in Judges that support their friends to the exclusion of the Law and true Justice". He submitted that if I had ruled "according to proper law", and consistent with the April 2016 judgment, there would never have had to be so many appearances in Court "to combat injustice".

[13]   In his email to the Court dated 30 May 2018, Mr de Vries accused Mr Dewar of unethical behaviour traits and perjury. He said that the Law Society had chosen to

ignore his complaint. He described Bartercard's cost claims as exorbitant, and said that he was requesting the Law Society to investigate the "false charges". Mr de Vries noted that the  attendances  in  Court  (presumably  a  reference  to  the  hearings on 7 November 2017 and 7 February 2018) were for less than half a day.

Discussion and conclusions

[14]   The 'starting principle' on any costs application is that costs are at the discretion of the Court.6 Subject to that overriding principle, the following relevant principles are set out in r 14.2:

(i)the party who fails with respect to a proceeding should pay costs to the party who succeeds; and

(ii)the award of costs should reflect the complexity and significance of the proceeding;

(iii)costs should be assessed by applying the appropriate daily recovery rate to the time considered reasonable for each step reasonably required in relation to the proceeding;

(iv)what is an appropriate daily recovery rate and what is a reasonable time should not depend on the skill or experience of the solicitor or counsel involved or on the time actually spent by the solicitor or counsel involved or on the costs actually incurred by the party claiming costs;

(v)so far as possible the determination of costs should be predictable and expeditious.

[15]   Rule 14.3 sets out three categories or proceedings for costs purposes, ranging from category 1 (proceedings of a straightforward nature able to be conducted by junior counsel) to category 3 (complex or significant proceedings that require counsel to have special skill and experience in the High Court). Nearly all proceedings in the

6      High Court Rules 2016, r 14.1(a).

bankruptcy Court are category 2 proceedings. Mr Dewar and Mr Anderson have not sought costs on a category 3 basis, and I see no reason to treat this case any differently.

[16]   The daily recovery rate for a category 2 proceeding is prescribed by Schedule 2 to the High Court Rules. It is $2,230.

[17]   How much time is considered reasonable for each step taken by the successful party in the proceeding is also a matter covered by the rules. If a normal amount of time is considered reasonable for a particular step in the litigation, the proceeding is said to be in "Band B". Nearly all cases in the bankruptcy Court are considered to be in this category. In this case, Bartercard is asking the Court to award costs in Band C (applicable where a comparatively large amount of time is considered reasonable for taking a particular step).

[18]   It will be seen that the scheme of the rules is not generally concerned with the actual time a lawyer might have spent taking a particular step in the proceeding: in order to facilitate the predictable and expeditious settling of costs claims, the rules themselves effectively prescribe what is reasonable, and how much the party paying the costs is required to pay for that time.7

[19]   Schedule 3 to the High Court Rules lists three relevant steps in a typical bankruptcy proceeding, for which "reasonable times" are allocated:

(i)filing and serving a bankruptcy notice;

(ii)filing an application for adjudication by a creditor; and

(iii)appearance at the hearing.

[20]   Under Schedule 3, 0.2 days is considered a reasonable time for filing and serving a bankruptcy notice in a "Band B" proceeding, and 0.6 days is considered reasonable for filing the application for adjudication. In this case I do not see anything

7      There is an exception where a successful party asks the Court to award full solicitor/client costs, on one or more of the grounds set out in r 14.6. However no such application has been made in this case.

in the taking of those two steps that should have taken more than a normal amount of time. On a Category 2, Band B basis, Bartercard is entitled to costs of $1,784 for these two steps (0.8 days at the Category 2 daily rate of $2,230).

[21]   This case was unusual in one respect, because there were numerous hearings. I reject Mr de Vries submission that these hearings were unnecessary. Many of the adjournments granted were specifically to allow Mr de Vries to take particular steps, such as pursuing his appeal to the Court of Appeal against the November 2016 judgment (which was eventually deemed to have been abandoned), and then pursuing his appeal to this Court against the decision of the District Court declining to set aside the original (2011) judgments which provided the foundation for the adjudication order. Mr de Vries also made unsuccessful interlocutory applications for strike-out and discovery, filed at the last minute by him, which contributed to further delay.

[22]Reviewing the file, I note that there were the following hearings:

(i)a list call on 21 February 2017;

(ii)a hearing on 24 April 2017 (which I adjourned to allow time to see if Mr de Vries would be permitted to pursue his appeal to the Court of Appeal);

(iii)a telephone conference on 19 May 2017;

(iv)a further telephone conference on 1 June 2017;

(v)a hearing on 10 August 2017 (adjourned because of my travel difficulties when a flight was cancelled);

(vi)defended hearings on 7 November 2017 and 7 February 2018.

[23]   Under r 14.5, if a step in a proceeding is not specifically provided for in Schedule 3, the time for that step is to be determined by analogy with other steps in the proceeding that are specifically mentioned in the Schedule. If there are no

analogous steps specified, the time is determined in accordance with what the Court considers as likely to have been required for the step.

[24]   In this case, there were four scheduled defended hearings (on 24 April 2017, 10 August 2017, 7 November 2017 and 7 February 2018). In addition, Bartercard was obliged to address Mr de Vries' application that I recuse myself from hearing the matter, and voluminous and often repetitive documents filed by Mr de Vries (including a 50 page document filed for the April hearing and a 100 page document filed in advance of the November 2017 hearing). Preparation was required for each of the four scheduled defended hearings, and those additional attendances, including preparation time and the filing of submissions, clearly require the award of additional costs beyond the total of $2,676 plus disbursements to which Bartercard would have been entitled if an adjudication order had been made on 21 February 2017.

[25]   By my reckoning, the total hearing time spread over the four dates on which defended hearings were either scheduled (10 August 2017) or took place (24 April 2017, 7 November 2017 and 7 February 2018) did not exceed 0.75 days. Costs on a 2B basis for 0.75 days of hearing time is $1,672.50.

[26]   In addition to actual hearing time, Schedule 3 provides for various "case management" attendances, such as preparing for and participation in telephone conferences and filing memoranda. For the hearing of a defended originating application, which I think is the closest analogy in Schedule 3 to the defended bankruptcy adjudication proceeding with which I am now concerned, the Schedule also allows for "preparation of written submissions".

[27]   I accept Bartercard's submission that 0.2 days is an appropriate allowance for time spent on the two telephone conferences on 19 May and 1 June 2017. On a 2B basis, Bartercard would be entitled to total costs of $892.00 for those two conferences. In addition, Bartercard filed memoranda for the Court on 20 February 2017, 3 May 2017 and 19 May 2015. Again, I think a reasonable (averaged) time for those memoranda would be 0.2 days each; on a 2B basis, Bartercard would be entitled to additional costs of $1,338 for the memoranda.

[28]   The large time commitment for Bartercard lay not in attending the hearings, or even in drafting its own submissions for the hearings: it lay in reading and reviewing Mr de Vries' frequent and often voluminous filings, many of which contained repetitive material and repeated personal attacks on Mr Dewar. All of this had to be read, and I accept that it must have contributed greatly to counsel's time spent on the matter. That includes responding to Mr de Vries' filings in support of his recusal application, on which Bartercard was entitled to be  heard  (particularly as  one  of Mr de Vries  recusal  grounds  related  to  my  decision  to  allow  Mr Dewar  and  Mr Anderson to appear as counsel). Written submissions were filed for Bartercard for the April and August hearings, with chronologies, and an updating affidavit was provided for the November hearing by Mr Chetty. I am satisfied that a reasonable time allocation for preparing for all of the scheduled defended hearings, and reviewing and making written submissions on the recusal application, is three days. I reach that number by applying the '2B' time allocation for preparing written submissions on an originating application (1.5 days) to two sets of written submissions, then reducing the resulting three days to allow for a measure of repetition in the second set of submissions, but adding back the reduced  time  to  cover  Bartercard's  review  of Mr de Vries' documents filed in support of the recusal application, its submissions filed in opposition, and its preparation for the (cancelled) hearing on 10 August 2017 and the hearing on 7 February 2018.

[29]   Three days on a 2B basis is $6,690, and Bartercard is entitled to judgment for that sum in addition to the $2,676 it is entitled to for the three steps specifically prescribed in Schedule 3, the $892.00 it is entitled to for the telephone conferences, the $1,338 it is entitled to for the memoranda, and the $1,672.50 it is entitled to for the hearings on 24 April, 10 August and 7 November 2017, and 7 February 2018. The total of those sums is $13,268.50, and there will be judgment for Bartercard for costs for that sum, together with the sum of $700.00 for disbursements as claimed.

[30]   It will be apparent from the foregoing that I do not consider Band C is appropriate for any of the attendances for which costs have been claimed. I take into account that the issues in the case were not particularly complex, and that the requirement to review Mr de Vries' numerous and voluminous filings was mitigated

to a fair extent by the fact that substantial parts of them tended to be repetitive and did not call for any additional response.

Associate Judge Smith