Body Corporate 378945 v Memelink

[2022] NZHC 1284

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

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

CIV-2020-485-721

[2022] NZHC 1284

BETWEEN

BODY CORPORATE 378945

Plaintiff

AND

HARRY MEMELINK

Defendant

Hearing:

On the papers

Appearances:

D Dewar for Plaintiff

D Livingston for Defendant
A O’Connor for Body Corporate 68792 (a supporting creditor)

Judgment:

1 June 2022

JUDGMENT OF ASSOCIATE JUDGE JOHNSTON

[Costs]

[1]                 In a judgment dated 29 April 2022, I dismissed the plaintiff’s application for an order adjudicating the defendant bankrupt. In the end, the application was dismissed on the basis that the plaintiff had not established that Mr Memelink owed it

$1,000 or more and could not therefore satisfy the requirements of s 13(a) of the Insolvency Act 2006. I also dismissed a further argument advanced on behalf of the plaintiff that the Court should, in assessing the amount owed, treat the plaintiff and a supporting creditor as joint parties to the application.

[2]                 I reserved costs in the expectation, though I did not say this, that counsel would resolve them. That has not happened. Both parties have filed memoranda seeking costs.

BODY CORPORATE 378945 v MEMELINK [2022] NZHC 1284 [1 June 2022]

[3]                 Costs are dealt with in pt 14 of the High Court Rules 2016 together with schedules 2 and 3. Part 14 and the schedules contain a comprehensive costs regime. Its overarching objective is to ensure that there is a degree of certainty in relation to costs, so that parties engaging in litigation can predict the likely outcome.

[4]                 The regime is not especially complex. Costs are fundamentally a matter of the Court’s discretion.1 However, the starting point is that costs follow the event, that is to say that the successful party is generally entitled to expect an award of costs.2 As to quantum, the Rules identify gradations of complexity for the litigation and the experience and skill level required of counsel. Overall, the regime entitles the Court to make an objective assessment of the proper costs award without analysing the details of each and every case. The New Zealand regime is half-way between the English approach where the successful party is generally entitled to its actual and reasonable costs (subject to taxation) and the North American approach which tends not to award costs except in unusual circumstances.

[5]                 None of the above is to say that there is not a degree of flexibility built into this regime. In exceptional circumstances the Court may — and occasionally does — depart from scale costs. However that is to accommodate exceptional circumstances. To give an example, if a plaintiff elects to allege fraud without any foundation for doing so it would not be surprising to find a successful defendant seeking an award of indemnity costs.3 Even if the plaintiff were to be successful on other grounds making an allegation of fraud without a proper foundation for the same might result in the plaintiff being deprived of costs.

[6]                 On its face, there is nothing exceptional about this case. The Body Corporate sought an order bankrupting Mr Memelink. Whilst the history of litigation involving this plaintiff (and many others) and Mr Memelink is legion, it would be wrong for the Court to reach a view about the costs that should apply in this case having regard to other litigation. The simple fact of the matter is that taken in isolation this was a stock standard application in which the plaintiff was unsuccessful because the evidence it

1      High Court Rules 2016, r 14.1.

2      Rule 14.2(1)(a).

3      See

put before the Court did not demonstrate that it had a claim of sufficient quantum so as to enable the Court to make the order it was seeking. The matter is no more complicated than that.

[7]                 In his submissions, Mr Dewar reminded me of the most contested factual issue in this proceeding — whether or not the bankruptcy notice that the Body Corporate served on Mr Memelink on 3 August 2021 contained the second page. Mr Memelink’s evidence was that it did not, and that he was ultimately mislead by this omission into not paying the costs amount of roughly $800 which was referred to on the second page. I did not accept Mr Memelink’s evidence. I concluded that he was served with a complete copy of the document. Secondly, I found that the only reason that the Body Corporate was unable to establish that Mr Memelink owed it a sufficient amount of money to enable the Court to make the order it was seeking was that Mr Memelink paid the bulk of the debt owed to the Body Corporate the day before the hearing. It is equally true that the Body Corporate on receipt of those monies had a decision to make as to whether to proceed with the hearing, and that it elected to do so.

[8]                 On balance, I have reached the conclusion that there is an exceptional aspect of this case, namely that the Body Corporate’s application for adjudication was justified and the only reason that it was unsuccessful was that Mr Memelink paid the bulk of what he owed at the very last opportunity. The Body Corporate’s evidence did not establish that the residual debt was sufficient to entitle the Court to make the order. By the same token it seems to me that the Body Corporate’s decision to proceed in those circumstances was wrong. Having regard to those considerations, the view I have reached is that it will do substantial justice in this case to decline to make any award of costs, leaving both parties to bear their own.

Associate Judge Johnston

Solicitors:

Thomas Dewar Sziranyi Lett, Lower Hutt for plaintiff Livingston & Livingston, Wellington for defendant