Body Corporate 172108 v Cummins

[2023] NZHC 3387

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

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

CIV-2021-485-458

[2023] NZHC 3387

UNDER

the Insolvency Act 2006

IN THE MATTER

of the bankruptcy of Robert James Cummins

BETWEEN

BODY CORPORATE 172108

Judgment Creditor

AND

ROBERT JAMES CUMMINS

Judgment Debtor

Hearing:	On the papers
Appearances:	J B Orpin-Dowell for Judgment Creditor Judgment Debtor in person
Judgment:	27 November 2023

JUDGMENT OF ASSOCIATE JUDGE JOHNSTON

[Costs]

[1]    In my judgment of 21 June 2023, I dismissed the judgment debtor’s application for an order pursuant to s 38 of the Insolvency Act 2006 halting (in other words, staying) this proceeding.1

[2]    In the concluding paragraph I reserved costs in the expectation that counsel then engaged in the matter (Mr Orpin-Dowell for the Body Corporate and Mr Sullivan for Mr Cummins) would be able to resolve them.2

1      Body Corporate 172108 v Cummins [2023] NZHC 1535.

2 At [108].

BODY CORPORATE 172108 v CUMMINS [2023] NZHC 3387 [27 November 2023]

[3]    Since then, Mr Sullivan has withdrawn as counsel and Mr Cummins has assumed responsibility for the conduct of his own case.

[4]    The costs issue has not been  resolved,  and  Mr  Orpin-Dowell  for  the  Body Corporate and Mr Cummins have filed and served memoranda addressing costs.

[5]    Costs are dealt with in pt 14 of the High Court Rules 2016. The principles are straightforward and well known.

[6]    First, costs are quintessentially a matter for the Court’s discretion, though, like all discretions, this must be exercised on a principled basis.

[7]    Second, costs generally follow the event, that is to say that the successful party is usually entitled to a costs award.

[8]    Third, quantum is determined in accordance with the principles set out in the Rules by reference to the scales contained in sch 2. The scales proceed on the basis that the Court will categorise a case by reference to its complexity (1, 2 or 3), and the seniority of counsel which the Court assesses is required to deal with the matter (A, B or C). That categorisation gives rise to a daily rate which is applied to the various steps involved in the litigation as set out in sch 3. The object is predictability of costs so that parties are aware of the likely costs outcome in the event of being successful or unsuccessful and can factor this into their risk assessments.

[9]    Finally, the Rules allow for departure from scale costs. Such departure may involve a party being denied costs altogether, or, at the other extreme, allowed increased or solicitor and client (indemnity) costs. The cases are clear that such departures from scale costs are to meet extraordinary circumstances which usually involve a degree of impropriety on the part of one or more of the parties in the conduct of the litigation. Any other approach would undermine the policy objective of predictability.

[10]   In this case, the Body Corporate was successful. Mr Cummins’ application for an order halting the proceeding was dismissed. On behalf of the Body Corporate,

Mr Orpin-Dowell seeks a costs award. At a minimum the Body Corporate seeks scale costs calculated on a 2B basis, but Mr Orpin-Dowell invites the Court to consider awarding increased or indemnity or costs.

[11]   Mr Orpin-Dowell has calculated scale costs. His calculations (on a 2B basis as already said) appear to me to be correct. Mr Cummins does not suggest otherwise.

[12]   For his part, Mr Cummins’ contention is that the Court should decline to make any award of costs at this point pending his appeal from my judgment. Mr Cummins has already applied for leave to appeal (which he requires pursuant to s 56 of the Senior Courts Act 2016). I declined his application for leave in my judgment dated 10 November 2023.3 Therefore, Mr Cummins will require special leave from the Court of Appeal. In the alternative, Mr Cummins contends that only scale costs should be awarded.

[13]   The first issue, then, is whether the Court should, as Mr Cummins invites it to do, refrain from making any costs award pending the appeal. There is nothing in this. An appeal does not operate as a stay. It would be inappropriate for the Court to decline to deal with costs, now that the application for a stay has been disposed of, and the Court has also dealt with Mr Cummins’ application for leave to appeal. Indeed, there is every reason to deal with costs. Mr Cummins has recently filed and served a notice of appeal in which he is seeking special leave, and the Court of Appeal may be assisted if this Court deals with costs so that the outcome of the application is known.

[14]   Consistent with the principles that have already been outlined, and my assessment that Mr Orpin-Dowell’s calculation of scale costs is correct, the only remaining question is whether the Court should depart from scale costs as invited to do so by the Body Corporate.

[15]   On what grounds, then, is the Court invited to consider awarding increased costs?

3      Cummins v Body Corporate 172108 [2023] NZHC 3169.

[16]   As it happens, a 50 per  cent  uplift  in  scale  costs  (the  uplift  that  the  Body Corporate seeks) would result in an order that was almost exactly the same as its actual solicitor and client costs — both around $26,000. I can therefore deal with them together.

[17]   Mr Orpin-Dowell submits that the four arguments advanced by Mr Cummins in support of his application for a halt, which I rejected in my judgment of 21 June 2023, were without merit and that Mr Cummins must be regarded as having been aware of this, having regard to his involvement in earlier litigation involving Manchester Securities Ltd (a company which he controlled).

[18]   It is true that the principal arguments advanced by Mr Cummins in support of his application — or versions of them — had been aired and rejected in earlier litigation. His argument to the effect that he was entitled to stand in the shoes of Manchester Securities Ltd in advancing a cross claim and that the asserted cross claim was a basis for a halt of the proceeding against him was an argument that has been advanced more than once and rejected by this Court and the Court of Appeal. So too had his alternative argument to the effect that the Body Corporate was a secured creditor in respect of the amount of its claim. The third and fourth arguments advanced by Mr Cummins were of more recent vintage, though they too had been rejected in my judgment of 21 June 2023. In my assessment, it is not unfair for Mr Orpin-Dowell to contend, as he does, that Mr Cummins’ application for a halt was yet another example of the approach that he (and his company) have consistently adopted over the last decade of taking — and indeed retaking — every point that they perceive to be open to them in this long-standing dispute with the Body Corporate and the other unit title holders in the building. This has undeniably been done to avoid paying judgment debts that they have repeatedly been told — including by the Court of Appeal in the most direct terms — must be paid. It is not overstating the position, in my view, to describe the approach that Manchester Securities Ltd and Mr Cummins have taken as contemptuous.

[19]   Those  things  said,  it  is  also  the  case  that  Mr  Cummins  and   Manchester Securities Ltd are not the same  entity,  and,  in his  personal capacity, Mr Cummins has only featured in this litigation in more recent times. This particular

case results from his personal participation in the litigation at a time when Manchester Securities Ltd was the primary litigant and the resulting costs award made against him directly.

[20]   Even recognising that Manchester Securities Ltd and Mr Cummins are different entities, and that the Court must remain astute to ensure that it is not visiting on Mr Cummins the full consequences of the company’s historical action (even although Mr Cummins has obviously been the driving force behind the company), the view I have reached is that it would be appropriate to bring to account the points already made and the impact on the Body Corporate and the other unit title holders of Mr Cummins’ insistence on taking unmeritorious points and pursuing them to the nth degree. In my view, that can be recognised by an uplift on scale costs of 25 per cent.

[21]   Scale costs on a 2B basis come to $17,208.00. An uplift of 25 per cent therefore results in an award of $21,510.00. On top of that there are disbursements of

$110.00.

[22]   I make a costs award in favour of the Body Corporate against Mr Cummins in the sum of $21,620.00 inclusive of costs and disbursements.

Associate Judge Johnston

Solicitors:

Grove Darlow & Partners, Auckland for Judgment Creditor