Memelink v Official Assignee

[2021] NZHC 2641

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

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

CIV-2018-485-363

[2021] NZHC 2641

UNDER

the Insolvency Act 2006

IN THE MATTER

of the bankruptcy of Harry Memelink

BETWEEN

HARRY MEMELINK

Applicant

AND

THE OFFICIAL ASSIGNEE

Respondent

Hearing:

On the papers

Appearances:

D Livingston for applicant

P Chisnall and C Vinnell for respondent No appearance by or for Bruce Mead

C Tennet in person

A O’Connor of Gambitsis Crombie Ltd G Dewar for Body Corporate 68792

G Neil for Lynx Trustees Ltd (in liquidation)

Judgment:

5 October 2021

JUDGMENT OF ASSOCIATE JUDGE JOHNSTON

[Costs]

[1]    On 28 August 2018 this  Court  made an order  adjudicating the applicant,  Mr Harry Memelink, bankrupt. Subsequently, Mr Memelink applied for orders setting aside various determinations of the respondent, the Official Assignee, in which the Assignee accepted claims by unsecured creditors in his bankruptcy.

[2]    That application — and a cross application by one of the unsecured creditors, Body Corporate BC 68792 — was heard on 16 September 2020. In my judgment of 15 October 2020, I dealt with these applications. I reserved costs.

MEMELINK v THE OFFICIAL ASSIGNEE [2021] NZHC 2641 [5 October 2021]

[3]    Before the Court now are costs applications on behalf of Gambitsis Crombie and the Body Corporate. These are opposed, at least as to quantum, by Mr Memelink.

[4]    The other parties involved in the 16 September 2020 hearing have either taken no part or expressly elected not to seek costs.

[5]    This being a costs application, it invites a brief judgment dealing with the key points.

[6]    As already explained, this was a challenge initiated by Mr Memelink to determinations of the Official Assignee. There can be no serious doubt that Gambitsis Crombie and the Body Corporate were required to engage in the proceeding in order to defend their positions. They both did so successfully. Mr Memelink’s challenge to liability and quantum in relation to Gambitsis Crombie’s claim was unsuccessful. The Body Corporate successfully defended the challenge to the determination in its favour by the Official Assignee, and was successful in its cross application, increasing the quantum of its unsecured debt by some margin.

[7]    The principles upon which costs are dealt with by this Court are well settled and widely understood. The starting point is that costs are a matter for the Court’s discretion. Generally, they follow the event, that is to say that the successful litigant is entitled to a costs award. Quantum is determined on the basis of the scales provided for in the High Court Rules 2016 other than in exceptional circumstances. In such circumstances, there is scope for reduced or increased costs should the Court regard such an order as appropriate.

[8]    I have considered the submissions advanced on behalf of Gambitsis Crombie, the Body Corporate and Mr Memelink. I am quite unable to see anything that takes this case out of the ordinary sweep of cases.

[9]    I do not doubt that Mr Memelink genuinely believed that he had grievances in relation to liability and quantum in connection with the unsecured debts accepted by the Official Assignee, and he was entitled to challenge those. Equally, Gambitsis

Crombie and the Body Corporate were entitled to oppose Mr Memelink’s application (and, in the case of the Body Corporate, make its own application).

[10]   In the end, the Court concluded the two disputes against Mr Memelink, so that Gambitsis Crombie and the Body Corporate were the successful parties. They are entitled to costs orders. There is nothing that suggests to me that there is scope for reducing or increasing those costs. I see this as a standard case in all respects for the application of the general rules as I have described them.

[11]   This brings me to the specific costs applications made by Gambitsis Crombie and the Body Corporate, and Mr Memelink’s opposition to aspects of these.

[12]   It seems to be common ground the Court should assess costs on a 2B basis, and that certainly seems appropriate to me.

[13]   There is a difference of view as to whether, for costs purposes, the proceeding should be viewed as an originating proceeding or an interlocutory one. Mr Livingston submits on behalf of Mr Memelink that the proceeding is interlocutory in its nature. That is correct, from a technical perspective. However, for all intents and purposes, this was a stand-alone application which was heard and disposed of in precisely the way that an originating application would be. It involved considerable amounts of money, and the Court’s determination was dispositive. I see considerable force in the contention that it ought to be treated as akin to an originating application for costs purposes.

[14]   Gambitsis Crombie’s application proceeds on the basis that there should be an allowance for a one-day hearing.

[15]   That is opposed by Mr Memelink. Mr Livingston on his behalf submits that there should be some apportionment because the Gambitsis Crombie component of the case occupied only a portion of the day. I do not accept that submission. Gambitsis Crombie had to prepare, file and serve its notice of opposition and affidavit evidence in support of its application, prepare for the hearing and participate in the same.

[16]   The Body Corporate applies for a costs order that is substantially greater than that made by Gambitsis Crombie primarily because it includes specific items allowing for the preparation of affidavit evidence and written submissions. In relation to this I accept the submission advanced on behalf of Mr Memelink that there is a degree of double counting in this.

[17]   As I see it Gambitsis Crombie is entitled to costs for the filing and service of their opposition and affidavit evidence in support, preparation for the hearing and the hearing itself. The Body Corporate for its part is entitled to costs for the same items and for the filing and service of its own application and affidavit evidence in support. I am satisfied that a costs order reflecting those items (which are intended to include the preparation of affidavit evidence and submissions) will do substantial justice in this case.

[18]   For transparency purposes, here are my calculations based on a one day hearing and a (2B) daily recovery rate of $2,390:

Claim item	Gambitsis Crombie		Body Corporate
Filing and service of application	3 days =	$7,170
Filing and service of opposition	2 days =	$4,780	2 days =	$4,780
Preparation for hearing	2 days =	$4,780	2 days =	$4,780
Hearing	1 day =	$2,390	1 day =	$2,390
TOTAL	$11,950	$19,120

[19]   Gambitsis Crombie will have a costs order in the amount of its (GST exclusive) solicitor and client costs or $11,950, whichever is the lesser, together with such disbursements as may be allowed by the Registrar.

[20]   The Body Corporate will have a cost order in the amount of its (GST exclusive) solicitor and client costs or $19,120, whichever is the lesser, together with such disbursements as may be allowed by the Registrar.

Associate Judge Johnston

Solicitors:

Livingston & Livingston Ltd, Wellington for applicant Anthony Harper, Christchurch for respondent