Goldstone v Minister of Finance
[2019] NZHC 1865
•2 August 2019
IN THE HIGH COURT OF NEW ZEALAND TAURANGA REGISTRY
I TE KŌTI MATUA O AOTEAROA TAURANGA MOANA ROHE
CIV-2018-470-152
[2019] NZHC 1865
UNDER the Insolvency Act 2006 IN THE MATTER
of an application for vesting orders
BETWEEN
ANDREA JEANETTE MARY GOLDSTONE
Applicant
AND
REECE CLIVE GOLDSTONE
Respondent
AND IN THE MATTER of an application under s 119(2) Insolvency Act 2006 to vest property BETWEEN
REECE CLIVE GOLDSTONE
Applicant
AND
THE MINISTER OF FINANCE ON BEHALF OF THE CROWN
Respondent
AND
ANDREA JENETTE MARY GOLDSTONE
Second Respondent
On the papers Appearances:
T Bartlett for A J M Goldstone M King for R C Goldstone
Judgment:
2 August 2019
COSTS JUDGMENT OF TOOGOOD J
This judgment was delivered by me on 2 August 2019 at 3.00 pm Pursuant to Rule 11.5 High Court Rules
Registrar/Deputy Registrar
GOLDSTONE v GOLDSTONE [2019] NZHC 1865 [2 August 2019]
Introduction
[1] On 16 July 2019, I issued a judgment dealing with competing applications under s 119(2) of the Insolvency Act 2006 for vesting orders in relation to a property that was the former family home of the applicants (the Mountain Road property), both of whom are former bankrupts who were married but are now divorced.1 This judgment addresses issues of costs that follow the result.
[2] When a person is adjudicated bankrupt, all property belonging to or vested in them is vested in the Official Assignee and any rights in the property belonging to the bankrupt are extinguished.2 The property of a bankrupt that is unsaleable, or not readily saleable, or that may give rise to a liability to pay money or perform an onerous act may be determined by the Assignee to be “onerous property”.3
[3] The Assignee may disclaim onerous property.4 The effect of a disclaimer is that ownership of and all rights in the onerous property is vested in the Crown as bona vacantia.5 The bankrupt or a person alleging loss or damage as a result of disclaimer may apply to the High Court under s 119 of the Insolvency Act for an order that the disclaimed property be vested in him or her. Section 119(3) of the Insolvency Act provides that the Court may make a vesting order “if it is satisfied that it is fair that the property should be delivered to, or vested in, the applicant”.
[4] After discussing the scheme of the legislation, the evidence and the submissions of the parties, I determined that the fairest way for the Court to exercise its discretion under s 119(3) in respect of the cross-applications was to vest the Mountain Road property in Mr Goldstone solely.
[5] I reserved the question of costs and Mr Goldstone now applies for an order in his favour. Counsel have filed helpful submissions which I have considered.
1 Goldstone v Goldstone [2019] NZHC 1649.
2 Insolvency Act 2006, s 101(1).
3 Section 117(4)(a)(ii).
4 Section 117(1).
5 Fish Man Ltd (in liq) v Hadfield [2017] NZCA 589, [2018] 2 NZLR 428 at [34], approving Rural Banking and Finance Corporation of New Zealand Ltd v Official Assignee [1991] 2 NZLR 351 (HC) at 360.
Costs affected by both parties being recipients of legal aid
[6] Since both Mrs Goldstone and Mr Goldstone have been granted legal aid, the costs application falls to be determined under s 45 of the Legal Services Act 2011 (the Act), the relevant provisions of which are as follows:
45 Liability of aided person for costs
(1)If an aided person receives legal aid for civil proceedings, that person’s liability under an order for costs made against him or her with respect to the proceedings must not exceed an amount (if any) that is reasonable for the aided person to pay having regard to all the circumstances, including the means of all the parties and their conduct in connection with the dispute.
(2)No order for costs may be made against an aided person in a civil proceeding unless the court is satisfied that there are exceptional circumstances.
(3)In determining whether there are exceptional circumstances under subsection (2), the court may take account of, but is not limited to, the following conduct by the aided person:
(a)any conduct that causes the other party to incur unnecessary cost:
(b)any failure to comply with the procedural rules and orders of the court:
(c)any misleading or deceitful conduct:
(d)any unreasonable pursuit of 1 or more issues on which the aided person fails:
(e)any unreasonable refusal to negotiate a settlement or participate in alternative dispute resolution:
(f)any other conduct that abuses the processes of the court.
(4)Any order for costs made against the aided person must specify the amount that the person would have been ordered to pay if this section had not affected that person’s liability.
(5)If, because of this section, no order for costs is made against the aided person, an order may be made specifying what order for costs would have been made against that person with respect to the proceedings if this section had not affected that person’s liability.
….
[7] The legislative scheme recognises that a person whose limited means qualifies them for legal aid would ordinarily not be able to satisfy an order for costs. For the purposes of this costs application, s 45 requires the Court to determine these questions:
(a)Has Mr Goldstone satisfied the Court that there are exceptional circumstances, taking account, without limitation, of the following conduct by Mrs Goldstone –
(i)any conduct that caused Mr Goldstone to incur unnecessary cost;
(ii)any failure to comply with the procedural rules and orders of the Court;
(iii)any misleading or deceitful conduct;
(iv)any unreasonable pursuit of one or more issues on which Mrs Goldstone failed;
(v)any unreasonable refusal to negotiate a settlement or participate in alternative dispute resolution;
(vi)any other conduct that abused the processes of the Court; and
(vii)any other relevant circumstances.
[8] If I decide that there are no exceptional circumstances, I may not make an order for costs against Mrs Goldstone,6 but I may make an order specifying what order for costs would have been made against her with respect to the proceeding if s 45 had not affected her liability.7
[9] If I decide that that are exceptional circumstances, any order for costs made against Mrs Goldstone with respect to the proceeding must not exceed an amount (if
6 Section 45(2).
7 Section 45(5).
any) that is reasonable for Mrs Goldstone to pay having regard to all the circumstances, including the means of the parties and their conduct in connection with the dispute.8
Mr Goldstone’s arguments
[10] Mr Goldstone submits that a finding of exceptional circumstances may be made because Mrs Goldstone’s approach to the proceeding involved:
(a)conduct that caused Mr Goldstone to incur unnecessary costs;9
(b)the unreasonable pursuit of one or more issues on which her case failed;10 and
(c)conduct that amounted to an abuse of the processes of the Court.11
[11] In support of that submission, it is argued that Mrs Goldstone “essentially treated the application akin to an application for division of relationship property” by:
(a)pursuing unnecessary arguments relating to the Property (Relationships) Act 1976 (the PRA), which resulted in wasted time and expense considering those arguments and addressing those in submissions;
(b)pursuing unnecessary arguments relating to the PRA, which resulted in wasted time and expense considering those arguments and addressing those in submissions;
(c)adducing evidence in relation to the circumstances of her relationship with Mr Goldstone, including but not limited to making false allegations regarding the circumstances in which they met, which Mr Goldstone felt obliged to respond to, and which in any
8 Section 45(1).
9 Section 45(3)(a).
10 Section 45(3)(d).
11 Section 45(3)(f).
event, had no bearing on the central issue of fairness under s 119(3) of the Insolvency Act;
(d)raising the issue of having obtained an ex parte protection order against Mr Goldstone when that had no relevance to the case;
(e)raising allegations of past and continuing domestic violence in her submissions against Mr Goldstone, without any evidential foundation;
(f)referring to a failed application for an occupation order for the Mountain Road property, which was a wasted application because neither of them owned the property at the time the application was made; and
(g)disputes over the upbringing of their children.
Mrs Goldstone’s response
[12]In response, Mrs Goldstone submits essentially that, because:
(a)the Court’s discretion under s 119(3) is so broad and unfettered;
(b)the statute provides no guidance to the Court or parties on what factors the Court should take into account in deciding what is “fair” under the section; and
(c)there were no previous court decisions shedding any light on the relevant factors,
it was necessary for her to place before the Court circumstances broadly related to the nature and circumstances of the relationship and its termination; the acquisition and management of the property and contributions to the property by each of the parties to the relationship; and the parties’ financial circumstances.
[13] It is evident also that Ms Bartlett, in presenting the case for Mrs Goldstone, was influenced by significant references, in other cases under s 119, to the jurisdiction of the Family Court to make orders under the PRA affecting relevant property.
[14] In the substantive proceeding, Mrs Goldstone provided evidence which satisfied me that, because of her responsibilities as principal carer for the three children of the marriage, she has very limited resources from which she could meet a costs order.
Discussion
[15]I am able to dispose of the issues succinctly.
[16] I agree with Ms Bartlett that, in the absence of assistance from the legislature on the fairness criteria to be applied to the exercise of the Court’s discretion under s 119(3) and the absence of any relevant court decision providing guidance, it was prudent of Mrs Goldstone to present a broadly-based claim. Although I held in the judgment that some aspects of the evidence led by both parties about circumstances and events occurring before, during and after the relationship were not relevant to the exercise of the discretion to determine what was “fair”,12 I cannot fault counsel for providing the Court with that evidence.
[17] After considering the legislation, relevant authorities and the parties’ submissions, I came to the view that the relevant circumstances must be those that related to the disclaimed property, rather than to general matters which might be relevant to a division of relationship property by the Family Court.13 I took a narrow view, in the particular circumstances of this case, on a “first principles” basis, by reference to the statutory scheme but I recognise that, although I rejected them, it is possible to identify tenable arguments in favour of a more expansive view. Having regard particularly to Moore J’s description of the discretion under s 119(3) as being “broad and largely unfettered”,14 no criticism can be levelled at either party for taking a broad brush to the evidential landscape they wished me to contemplate.
12 At [69]-[71].
13 At [66].
14 Robinson v IAG New Zealand Limited [2016] NZHC 3149 at [50].
Findings
[18] Accordingly, I do not accept the proposition that Mrs Goldstone caused Mr Goldstone to incur unnecessary cost, or unreasonably pursued any issues, or abused the Court’s process in her approach.
[19] I find under s 45(2) of the Act that there are no exceptional circumstances and it follows that I may not make an order for costs against Mrs Goldstone in the proceeding.
[20] Section 45(5) provides that, having reached that conclusion, I may make an order specifying what order for costs would have been made against Mrs Goldstone with respect to the proceeding if s 45(2) had not affected her liability. It is appropriate in this case that I should make such an order.
[21] Applying the costs regime under the High Court Rules 2016, Mr Goldstone calculates that his entitlement on a Category 2B basis would be to a costs order totalling $12,153.50. Respecting the principle, however, that an award of costs must not exceed the costs actually incurred,15 Mr Goldstone’s claim is properly limited to a claim for $10,109.65. He also seeks payment of disbursements of $2,365.96. In both respects, I find the claim to be reasonable.
Order
[22] I declare, therefore, that the amount of costs that I would have ordered Mrs Goldstone to pay if I had decided she should be liable to costs would be costs of
$10,109.65 and disbursements of $2,365.96, a total of $12,475.61.
................................................
Toogood J
15 High Court Rules 2016, r 14.2(1)(f).
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