Godfrey v Borley

[2017] NZHC 1380

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

CIV-2017-485-123 [2017] NZHC 1380

UNDER	the Insolvency Act 2006
IN THE MATTER	of the bankruptcy (or proposal, as the case may be) of Rachel Borley
BETWEEN	BARRY GODFREY Judgment creditor
AND	RACHEL BORLEY Judgment debtor

On the papers
Judgment:	26 June 2017

COSTS JUDGMENT OF ASSOCIATE JUDGE SMITH

Introduction

[1]      On 6 June 2017 I made an order, on Mr Godfrey’s application, adjudicating

Ms Borley bankrupt.

[2]      Mr Godfrey represented himself at the hearings, but he advised me at the hearing on 6 June 2017 that he had incurred legal costs obtaining advice on the court papers he had filed, and he asked me to make an order for costs.  Mr Godfrey seeks

$1,278.00 in costs, comprising $1,078.00 (including GST) in legal fees and the $200 fee for filing the bankruptcy notice.

[3]      I invited Mr Godfrey to file a memorandum in support of his costs claim, and a memorandum  has  now been  filed by Mr V Powell  of A J Pietras  & Co  Ltd,

GODFREY v BORLEY [2017] NZHC 1380 [26 June 2017]

confirming that his firm invoiced Mr Godfrey for $1,078 for legal advice in relation to the proceeding.

Discussion

[4]      The general practice of the courts in New Zealand is that lay litigants are not entitled to recover costs, although they will be awarded reasonable disbursements at the discretion of the Court.1   An unrepresented lay litigant may also claim a possible partial indemnity for any fees he pays for professional assistance.2

[5]      The Court of Appeal in J v E  has recently confirmed that the costs available under the costs regime set out in the High Court Rules are confined (aside from disbursements) to the legal costs billed by a lawyer retained by a litigant for legal services  provided  by the  lawyer  to  that  litigant.3   The  Court  observed  that  the function of an award of costs is a partial indemnity, not reward or (except in unusual circumstances) punishment.”4

[6]      The application of these principles where a lay litigant represents himself or herself  but  incurs  legal  costs  for  professional  assistance,  was  considered  by Associate Judge Osborne in Re Working Capital Solutions Holdings Ltd, ex parte Pezaro.  The Associate Judge concluded that “it may be appropriate to award a lay litigant a contribution to legal costs even where the litigant conducts the actual

litigation himself or herself”.5   The Associate Judge awarded the legal costs incurred

by the lay litigant, reduced under r 14.2(f) to confine the award of costs to those incurred by the litigant.6

Application of the principles to this case

[7]      Mr Godfrey paid fees to his solicitors in respect of the filing and service of the bankruptcy notice, and subsequent filing of the application for adjudication.  The

costs recoverable under the High Court Rules on a scale 2B approach for these steps

1      Re Collier (a bankrupt) [1996] 2 NZLR 438 (CA).

2      Lysnar v National Bank of New Zealand (No 2) [1935] NZLR 557 at 562.

3      J v E [2017] NZCA 249 at [43].

4 At [27].

5      Re Working Capital Solutions Holdings Ltd, ex parte Pezaro [2014] NZHC 2480 at [18].

6 At [24].

would have been $1,784.00 if all of the work had been done by the party’s solicitor. In the event, the solicitors charged Mr Godfrey considerably less than what he would have been entitled to recover for those steps on a “2B” basis.  That is particularly evident in respect of the filing of the application for adjudication, where Mr Godfrey was billed only $655.50 — the amount recoverable for that step on a “2B” basis under schedules 2 and 3 of the High Court Rules would have been $1,338.

[8]      It is not clear from Mr Powell’s memorandum whether Mr Godfrey may have prepared  the  bankruptcy  notice  and  the  adjudication  application  in  draft  form himself, and asked the solicitors to review the documents.   That would perhaps explain why the amounts charged are lower than might have been expected.  And of course the solicitors never assumed the responsibility to the court which they would have assumed if they had been on the record as solicitors for Mr Godfrey in the proceeding.

[9]      Given those uncertainties, I think the justice of the case will be sufficiently met  if  I  award  costs  to  Mr Godfrey  on  the  basis  of  a  partial  but  substantial contribution to the legal costs he has incurred; I accordingly award costs in his favour in the sum of $720 (being approximately two thirds of the amount claimed for fees), together with disbursements of $200 as claimed.

Associate Judge Smith

Solicitors:

A J Pietras & Co Ltd for the judgment creditor