M AND H - [2024] NZHC 3565

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2022-404-000862

[2024] NZHC 3565

UNDER the Insolvency Act 2006

IN THE MATTER

of an application for annulment of bankruptcy

BETWEEN

M

Plaintiff

AND

H

Defendant

Hearing: On the papers

Appearances:

E Telle for the Plaintiff

G Neil / R Hindriksen for the Official Assignee

Judgment:

27 November 2024

COSTS JUDGMENT OF GARDINER J

This judgment was delivered by me on 6 November 2024 at 4.00 p.m. pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar Date.......................................

Solicitors:

Koo Telle Lawyers, Auckland Meredith Connell, Auckland

M v H [2024] NZHC 3565 [27 November 2024]

Introduction

[1] On 24 November 2022, this Court dismissed an application by M to annul the bankruptcy of her former partner H and ordered M to pay scale costs on a 2B basis to the Official Assignee in bankruptcy of the property of H (Assignee), who participated in the proceedings to assist the Court and to ensure that H’s interests were represented.1

[2] On 19 June 2024, the Court of Appeal allowed an appeal against this Court’s judgment, annulled H’s bankruptcy, ordered H to pay M Band A standard appeal costs in the Court of Appeal, quashed the High Court costs order, and directed the High Court to reconsider costs in light of its decision.2 This judgment is that reconsideration.

[3] The Assignee submits that costs ought to lie where they fall. Alternatively, that if the Court is minded to award costs against H, the costs ought not to exceed 2B scale costs. This is because M’s conduct and approach to the High Court application substantially increased the costs involved and it is unjust in the wider circumstances of the case for H to bear M’s costs in the High Court.

[4] M seeks an order for indemnity costs, or increased costs, from H because of his “egregious and flagrant…abuse and misconduct”.

Legal principles

[5] The unsuccessful party is generally ordered to pay costs to the successful party, but this ultimately remains at the discretion of the Court.3

[6] As the High Court has found previously, there are no set guidelines on how costs should be assessed by the initial court where the initial court’s ruling has been

1 M v H [2022] NZHC 3060 [High Court decision].
2 M v H [2023] NZCA 243.
3 High Court Rules 2016, r 14.1 and 14.2(1)(a); Shirley v Wairarapa District Health Board [2006] NZSC 63, [2006] 3 NZLR 523 at [19].

overturned by an appellate court, but case law supports the general principle that costs are awarded to the party that is “successful” in the lower court due to an appeal.4

[7] Time spent on unsuccessful arguments run by a successful party or the taking of unnecessary steps or arguments that lacked merit can justify a refusal or reduction of costs.5

[8] Indemnity costs may be ordered where, relevantly, the party acted vexatiously, frivolously, improperly,…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading M AND H

Details

AGLC: M AND H [2024] NZHC 3565
Case: [2024] NZHC 3565
Decision Date: 27 November 2024

CaseChat Overview and Summary

In the High Court of New Zealand, M sought to annul the bankruptcy of her former partner H, which was initiated by H himself. The Court of Appeal had previously annulled H's bankruptcy and directed the High Court to reconsider the costs. The Assignee argued that the costs should lie where they fall or be limited to 2B scale costs, as M's conduct had substantially increased the costs involved. M sought indemnity costs from H, citing his alleged egregious conduct.

The court considered the principles governing costs orders, including that the unsuccessful party generally pays costs, and that indemnity costs may be awarded for vexatious, frivolous, or improper conduct. The court noted that while M's application for annulment was ultimately unsuccessful, the appeal raised important legal issues that had not been previously addressed by the New Zealand courts. The court also considered the Assignee's arguments that M's conduct had increased the costs and that it would be unjust for H to bear all of them.

The court decided that H should pay M's 2B costs, reduced by 50 per cent to reflect the unmeritorious arguments M had advanced in the High Court. The court found that while H did not participate in the proceedings, it was his initial action that necessitated M's application. The court balanced the considerations of justice, finding that it was not appropriate for M to bear all her own costs in the High Court.

The court orders that H pay M's scale 2B costs, reduced by 50 per cent, and disbursements to be fixed by the Registrar.

Orders