Blanchett v RBI Ltd

The High Court of New Zealand was asked to decide whether RBI Limited should be granted indemnity costs against the liquidators of The Stepping Stones Nursery Limited, David Murray Blanchett and Grant David McQuoid, after the liquidators were successful in their claim. The liquidators had sought to set aside 20 payments made by The Stepping Stones Nursery Limited to RBI, totaling $543,472, as insolvent transactions. The Court of Appeal had previously ruled that six of these payments were indeed insolvent transactions and ordered the repayment of $9,623.29 plus interest. RBI, in turn, sought indemnity or scaled costs against the liquidators, arguing that the final judgment mirrored their settlement offer of $10,000, made prior to the proceedings.

The court considered the legal principles surrounding Calderbank offers and their impact on costs in litigation. The court examined the reasonableness of the liquidators' decision not to accept RBI's offer and the relevance of the uncertainty surrounding the application of the 'peak indebtedness' rule in New Zealand at the time. The court also took into account the liquidators' partial success in the proceedings, as they were only able to establish that The Stepping Stones Nursery Limited was unable to pay its debts in respect of transactions in the second half of the specified period.

In its judgment, the court determined that although the final judgment was close to RBI's offer, the liquidators acted reasonably and responsibly in pursuing the proceedings. The court found that there was a proper basis for the claim and that the liquidators were not unreasonable in rejecting RBI's offer. Consequently, the court ruled that costs should lie where they fell, meaning each party would bear its own costs.