Bartley v Knight - [2025] NZHC 333

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2024-404-953

[2025] NZHC 333

UNDER the Insolvency Act 2006

IN THE MATTER OF

an application for costs in the bankruptcy of TIMOTHY JOHN KNIGHT

BETWEEN

JACQUILINE LEE BARTLEY

First Judgment Creditor

JOSEPH HERMAN BARTLEY
Second Judgment Creditor

AND

TIMOTHY JOHN KNIGHT

Defendant

Hearing: 25 November 2024

Appearances:

Kenton Starr/Tenille Homes for the Judgment Creditors Judgment Debtors are self-represented

Judgment:

28 February 2025

COSTS JUDGMENT OF ASSOCIATE JUDGE C B TAYLOR

This judgment was delivered by me on 28 February 2025 at 3:00pm
pursuant to Rule 11.5 of the High Court Rules

………………………….
Registrar/Deputy Registrar

Solicitors:
Vallant Hooker & Partners (Kenton Starr/Tenille Homes), Ponsonby, Auckland, for the Judgment Creditors

Copy for:
Timothy John Knight, Auckland, Judgment Debtor

BARTLEY v KNIGHT [2025] NZHC 333 [28 February 2025]

Introduction

[1] This matter was the subject of a hearing at the High Court at Auckland on 25 November 2024. On 28 November 2024, counsel for the judgment creditors filed a memorandum advising the Court that the debt underpinning the bankruptcy notice and on which the creditors’ application for an adjudication order was based, had been paid. Accordingly, no judgment was issued in respect of the proceeding.

[2] By memorandum dated 12 December 2024, counsel for the judgment creditors is seeking costs against the judgment debtor on the basis that as the underlying debt was paid, the judgment creditors are the successful parties. Costs are sought on a 2B basis (adjusted as actual costs were less than scale costs), of $9,861.25 plus disbursements of $1,962.06.

[3] In response to counsel for the judgment creditors memorandum of 12 December 2024, the judgment debtor filed a memorandum on 6 January 2025.

Judgment creditors’ position

[4] Mr Starr, for the judgment creditors, submits that a party who satisfies an amount owed to a judgment creditor will generally be liable for all costs reasonably incurred in the bankruptcy proceedings, referring to the authority of Re Jindal, ex parte Jarden Securities Limited.1 He also submits that costs in bankruptcy matters are usually fixed on a 2B basis, citing Re Bartercard Exchange Ltd, ex parte de Vries.2

[5] Mr Starr submits that by satisfying the debt owed to the judgment creditors in this proceeding the judgment debtor vindicated the judgment creditors’ application for adjudication and that payment came at a very late stage after the defended hearing held on 25 November 2024. He submits the judgment debtor put the judgment creditors to the cost of commencing the proceeding and prosecuting their application on a defended basis.

1 Re Jindal, ex parte Jarden Securities Limited [2021] NZHC 2215 at [40].
2 Re Bartercard Exchange Ltd, ex parte de Vries [2018] NZHC 2500 at [15]-[17].

[6] As to the calculation of costs, Mr Starr points out that costs are mostly fixed on a 2B basis, and step 11 is claimed on a 2A basis. He submits that much of the material filed…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2025] NZHC 333
Decision Date: 28 February 2025

CaseChat Overview and Summary

This case was heard in the High Court of New Zealand at Auckland. The parties involved were Jacquiline Lee Bartley and Joseph Herman Bartley, as judgment creditors, and Timothy John Knight, the judgment debtor. The dispute centered on an application for costs in the bankruptcy of Timothy John Knight. The creditors sought costs from the debtor on the basis that they were successful in their application for an adjudication order, which was vindicated when the debtor paid the underlying debt. The debtor argued that the payment was not intended to settle the debt but was instead evidence of his solvency. The court was required to determine whether the judgment creditors were entitled to costs under the circumstances, and if so, the appropriate amount of those costs.

The primary legal issue before the court was whether the judgment creditors were entitled to costs in the bankruptcy proceedings, given that the underlying debt had been paid by the debtor. The creditors argued that under the Insolvency Act 2006, a party who satisfies a debt owed to a judgment creditor generally becomes liable for the costs reasonably incurred in the bankruptcy proceedings. They cited the authority of Re Jindal, ex parte Jarden Securities Limited, which supports the principle that costs are typically awarded to the successful party in such proceedings. The judgment debtor, on the other hand, contended that the payment made was not an admission of liability but rather evidence of solvency, and thus, he should not be liable for the creditors' costs.

The court considered the arguments from both parties and examined the relevant legal principles. It noted that the creditors were successful in their application for an adjudication order, and the debtor had vindicated this by paying the underlying debt, albeit at a very late stage. The court also highlighted that costs in bankruptcy matters are usually fixed on a 2B basis, with specific steps claimed based on the actual work undertaken. The creditors had claimed costs on a 2B basis, adjusted to reflect the actual costs incurred. The court found that the creditors were entitled to costs under the circumstances and ordered the debtor to pay the sum of $9,861.25 plus disbursements of $1,962.06, totaling $11,823.31.

In summary, the court held that the judgment creditors were entitled to costs in the bankruptcy proceedings as they were successful in their application for an adjudication order. The debtor's payment of the underlying debt, though made late, validated the creditors' position. The court awarded costs on a 2B basis, adjusted for actual costs, and ordered the debtor to pay the creditors $11,823.31 in total. This decision reinforces the principle that successful parties in bankruptcy proceedings are generally entitled to costs, provided the underlying debt has been satisfied.

Orders