Bignell v Nelson Sun Club Incorporated

[2020] NZHC 2733

IN THE HIGH COURT OF NEW ZEALAND NELSON REGISTRY

I TE KŌTI MATUA O AOTEAROA WHAKATŪ ROHE

CIV-2019-442-81

[2020] NZHC 2733

UNDER

the Insolvency Act 2006

BETWEEN

GARY ARTHUR BIGNELL

Applicant

AND

NELSON SUN CLUB INCORPORATED

Respondent

Hearing:	On the papers
Counsel:	F McDonald for the Applicant G J Praat for the Respondent
Judgment:	16 October 2020

JUDGMENT OF ASSOCIATE JUDGE LESTER

(Costs)

This judgment was delivered by me on 16 October 2020 at 3.00pm pursuant to Rule 11.5 of the High Court Rules

Registrar/Deputy Registrar 16 October 2020

BIGNELL v NELSON SUN CLUB INCORPORATED [2020] NZHC 2733 [16 October 2020]

[1]                  Following a hearing on 29 June 2020 the applicant, Mr Bignell, was successful in having vested in him, pursuant to s 119(2) of the Insolvency Act 2006, a cause of action disclaimed by the Official Assignee. The application was opposed by the respondent and determined following a half-day hearing.

[2]                  Counsel for the applicant now seeks costs in respect of the application. At its most basic, the submission for the applicant is that costs should follow the event. Counsel for the respondent realistically accepts that costs generally follow the event. The real issue here is not whether there should be an award of costs in support of the applicant, but whether there should be a departure from the scale.

[3]                  The applicant seeks costs on an indemnity basis as it is said the respondent made allegations of fraud or allegations that ought not to have been made. The applicant relies on Bradbury v Westpac Banking Corporation as identifying such allegations as grounds for indemnity costs.1

[4]                  Applicant’s counsel, in his memorandum dated 5 August 2020, identifies and is critical of a number of aspects of the way the respondent dealt with the application.

[5]The applicant’s indemnity costs are $22,420.99.

[6]Costs on a 2B basis (save one memorandum claimed on a 2A basis) are

$17,447.00.

[7]                  The scale claim includes an additional step not listed in the table of time allocations which the applicant says was caused by the respondent’s improper allegations.

[8]Disbursements are claimed and the respondent does not take issue with those.

[9]                  Overall, I am not satisfied this is a case that warrants departing from scale, albeit I am satisfied that the scale costs for the additional step claimed to deal with the allegations made by the respondent against the applicant is appropriate. In a ruling as

1      Bradbury v Westpac Banking Corporation [2009] NZCA 234, [2009] 3 NZLR 400 at [29].

to admissibility on 28 May 2020, I excluded evidence filed by the respondent which the applicant characterised as being allegations of unlawful conduct by him.2

[10]              That ruling also dealt with another issue raised in support of the application for increased costs, that is whether the respondent was taking some objection to the applicant’s wife pursuing a claim that she held in her own right. The respondent confirmed it was not raising any such objection and the issue fell away. I do not consider this issue significant in the scheme of things.

[11]              The respondent points to the applicant making a demand on the respondent in respect of the cause of action subject to the vesting application prior to the Official Assignee’s disclaimer. Accordingly, the respondent says the demand was made at a time when the applicant had no interest in the claim himself. The respondent also refers to the respondent’s position being upheld on a number of factual issues including the applicant stating that he had been granted a building consent when the document he annexed to his affidavit was not a consent. A matter that was of significance at the hearing was the applicant stating that he was not given notice of a meeting which was called for the purpose of determining his future membership. Counsel for the applicant subsequently and properly corrected that error.

[12]              The respondent goes so far as to say that the above factual issues warrant scale costs being reduced. I do not accept this. At a summary hearing, disputes of fact are not going to be resolved. The respondent suggests that in seeking and obtaining a vesting order, the applicant was obtaining an indulgence. I do not accept that the application is one where the applicant is seeking an indulgence. Rather, he was exercising a right contemplated by the Insolvency Act.

[13]              Much of the difference between counsel, when it comes to calculating scale costs (the respondent calculating costs at $7,648), is that the respondent adopts the steps apposite to an interlocutory application while the applicant applies the steps that apply to an originating application, which was how this proceeding was commenced.

2      Bignell v Nelson Sun Club Inc [2020] NZHC 1141.

[14]              One of the purposes of the costs regime is to make costs predictable. The respondent was confronted with an originating application and as such was able to predict in broad terms its exposure to costs should its opposition to the application fail.

[15]              I do not accept that there are grounds for treating the application other than what it was, that is, an originating application.

[16]              As I have said, I am not satisfied that this is a case for indemnity costs or indeed an uplift. Scale costs would return to the applicant approximately 75 per cent of his actual costs – the scale on a broad brush basis is designed to return to a successful party two-thirds of what is deemed to be a reasonable fee. I consider it appropriate to allow the claim for the letter included in the applicant’s scale costs schedule as an appropriate recognition of the further work the applicant was put to in respect of the matters that ultimately should not have been raised by the respondent.

[17]              Turning to  the  detail  of  the  schedule,  the  applicant  claims  0.4  days  for a memorandum filed with the Court on 6 March 2020. That was a joint memorandum of only three paragraphs. In my view, the appropriate allowance for this memorandum is 0.2 days. Save as to that factor, which reduces the scale costs to $16,969, that amount is approved together with the disbursements claimed of a $540 filing fee and

$211.83 service fee.

Associate Judge Lester

Solicitors:

Hamish Fletcher Lawyers, Nelson Knapps Lawyers, Nelson