Brock v Beadle HC Tauranga CIV 2009-470-520

[2010] NZHC 1422

IN THE HIGH COURT OF NEW ZEALAND TAURANGA REGISTRY

CIV-2009-470-520

UNDER  the Insolvency Act 2004

IN THE MATTER OF     the bankruptcy of SHAYRON LEEE BEADLE

BETWEEN  STEVEN PETER BROCK Judgment Creditor

AND  SHAYRON LEE BEADLE Judgment Debtor

Hearing:         10 June 2010

Appearances: M B Dobbs for Judgment Creditor (on papers) L Wiessing for Judgment Debtor (on papers)

Judgment:      30 July 2010 at 12 noon

JUDGMENT OF ASSOCIATE JUDGE DOOGUE

This judgment was delivered by me on

30.07.10 at 12 noon, pursuant to

Rule 11.5  of the High Court Rules.

Registrar/Deputy Registrar

Date……………

Solicitors:

Michael Bevan Dodds, Barrister, Keri Keri – by email: - [email protected]

L Wiessing, Holland Beckett, Tauranga – by email: lizzy[email protected]

BROCK V  BEADLE HC TAU CIV-2009-470-520  30 July 2010

[1]      The creditor brought an application for an adjudication in December of 2009. The  creditor  had  earlier  issued  a  bankruptcy  notice  claiming  $4,219  being  the amount of the costs order made in the High Court.   That bankruptcy notice was expressly referred to in the application for adjudication order.   The application also referred to another sum of $16,242.03 which the creditor said it was owed pursuant to an order for costs made in the Tauranga Family Court on 23 September 2009.  The proceeding was adjourned for a defended hearing on 10 June 2010 after the debtor filed a notice of opposition.  The grounds of opposition advanced by the debtor were that the summons to debtor referred to two judgment debts but the debtor had only been served with bankruptcy notice relating to one of those debts.  There were other grounds advanced but that is the one that is relevant for the purposes of the present decision.   The debtor relied upon a decision of the High Court Re Carlyle, ex p McCardle Richardson (B394/96, HC Wellington) as authority for the view that a separate bankruptcy notice  should  have  been  issued  for  the  Family Court  costs before they could be made the subject of the application for order adjudicating the debtor bankrupt.

[2]      On the eve of the fixture the debtor paid the sum of $6,689.

[3]      It would appear that the creditor, therefore, accepted that he could not enforce the Family Court costs order in the present bankruptcy proceedings.  The parties now dispute the issue of costs.

[4]      In substance, what has happened here is that the creditor has discontinued the proceedings (even though they were actually terminated by an order which I made dismissing them on 10 June 2010 at which time I reserved costs).

[5]      The ways in which the High Court deals with costs at the point where proceedings are resolved very much depends upon the way in which they are determined.  They may be resolved by the Court conducting an opposed hearing and reaching conclusions on the merits of the claim.   In general, in such cases costs follow the event.   The proceedings can come to an end as well by means of a summary judgment application (either by the plaintiff or the defendant) or by a strike out application or by a discontinuance.

[6]      The   High   Court   rules   contain   provision   for   cases   where   a   party “discontinues” a proceeding, the   rules do not make express provision for cases where a proceeding is dismissed on the application of the party bringing it because that party has now received all or some of the relief sought and judges that there is no point in taking the proceedings further.

[7]      Where a party voluntarily ceases a proceeding (whether by what might be formally described as a “discontinuance” or by agreeing to have the proceedings struck out or dismissed) there are two possibilities.  One is that the decision by the applicant or plaintiff finally recognises that the merits not favour its claim.   The alternative reason is that the party has obtained all or some of the relief that it sought in the proceedings and there continued existence served no point.  In the former case, one can understand why the rules should provide that the presumption is that a discontinuing party should pay the costs.  Where however the reason for not going ahead with the proceedings is that the defendant or respondent at the last minute conceded entitlement to all or some of the relief, a different approach is likely to be taken.  That is the case here.  In such a situation the Court is entitled to ask whether the  proceedings  were  properly  issued  and,  given  that  the  opposing  party  has conceded entitlement to relief, the answer is likely to be that the proceedings were likely to be in the affirmative.   In such situations, where there is no agreement between the parties as to costs, it would seem to me that the plaintiff/applicant should be entitled to costs.  That is because the decision of that party to bring the proceedings in the first place has been vindicated.

[8]      In the present case, the debtor says that the creditor exaggerated the size of the debt which it was able to advance as the basis for a bankruptcy.  In my view the central  fact  is  that  there  was  an  expired  statutory demand  which  had  not  been satisfactorily complied with at the time when the creditor issued the proceedings. That remained the case right up until the eve of the hearing.   It is correct that references in the application for order included reference to other matters which were not the subject of the statutory demand.  But that does not detract from the fact that the debtor never had a satisfactory explanation for not complying with the debt that was included in the bankruptcy notice at any time right up until the eve of the hearing.

[9]      It seems to me that the debtor should therefore pay the costs of all steps taken up to the point where the proceeding was discontinued and that those costs should be on a 2B basis.   As well the creditor is entitled to disbursements as fixed by the

Registrar.

J.P. Doogue

Associate Judge