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 by the judgment debtor was repetitive and included material that was irrelevant and/or abusive. He submits counsel was required to review the material and prepare an affidavit in response by the judgment creditors and, as there is no step in Schedule 3 covering those specific activities. He submits under r 14.5, if any step is not provided for in Schedule 3 of the Rules, that step is determined by analogy with the Schedule, or the time assessed as likely to be required if no analogy can be made. On this basis, the judgment creditors have claimed half of the allowance for step 37 by analogy.

Judgment debtor’s position

[7]    The judgment debtor, Mr Knight, at paragraphs [1] to [3] of his memorandum, advises that the payment he made to the judgment creditors was only evidence of his solvency and was not intended to pay the debt. The remainder of the memorandum repeats the various defences and other issues which were raised by Mr Bartley at the hearing on 25 November 2024.

[8]    It is clear that Mr Knight’s wife made the payment to the judgment creditors’ lawyers in satisfaction of the debt, and it was not paid on the account of the debt owed by Mr Knight to be held on trust as “evidence of solvency”. Accordingly the debt has now been paid.

[9]    As a result of the underlying debt having been repaid and following the authority of Re Jindal, ex parte Jarden Securities Ltd, the judgment creditors are entitled to costs in respect of the application for an adjudication order.

Orders

[10]   I order that the judgment debtor, Mr Knight, is to pay the judgment creditors the sum of $9,861.25 plus disbursements of $1,962.06, totalling $11,823.31.

…………………………….. Associate Judge Taylor