Ministry of Justice v McGuire

[2017] NZHC 1369

IN THE HIGH COURT OF NEW ZEALAND PALMERSTON NORTH REGISTRY

CIV-2016-454-118 [2017] NZHC 1369

UNDER	the Insolvency Act 2006
IN THE MATTER	of the bankruptcy of Jeremy James McGuire
BETWEEN	THE MINISTRY OF JUSTICE Judgment creditor
AND	JEREMY JAMES MCGUIRE Judgment debtor

Hearing:	6 April 2017
Appearances:	S M Kinsler and S K Shaw for the judgment creditor J J McGuire in person
Judgment:	21 June 2017

COSTS JUDGMENT OF ASSOCIATE JUDGE SMITH

[1]      On 13 April 2017 I gave judgment dismissing an application by Mr McGuire to set aside a bankruptcy notice issued against him on 13 December 2016.   The bankruptcy notice was issued for the sum of $31,281.86.1

[2]      I held in the judgment that the Ministry was entitled to costs in the ordinary way.  However as I had not heard submissions on costs at the hearing, I allowed the parties time to file memoranda.  Those memoranda have been filed, and I now give judgment on the Ministry’s application for costs.

[3]      The Ministry seeks costs on a Category 2, Band B, basis, together with a

25 per cent uplift.  Costs on 2B basis would be $6,690.  With the 25 per cent uplift, the amount sought for costs is $8,362.50.  In addition, the Ministry seeks an order for

disbursements totalling $413.50.

1      Ministry of Justice v McGuire [2017] NZHC 742.

THE MINISTRY OF JUSTICE v MCGUIRE [2017] NZHC 1369 [21 June 2017]

[4]      Mr McGuire says there should be no order for costs, or if any costs are to be awarded, they should be awarded under Category 1 in the High Court Rules.

Discussion and conclusions

[5]      I think the starting point for a case like this is that costs would ordinarily be awarded on a 2B basis.

[6]      In his costs submissions, Mr McGuire submits that the judgment indicates that his case was not without merit.  He refers to the history leading up to the issue of the bankruptcy notice, as set out in my judgment of 13 April 2017, and a number of matters which he submits show that he has been treated unfairly.  For example, he submits that there was an “enormous conflict of interest” when two of the three members of the selection committee who declined to recommend a legal aid contract for him in 2013 were also members of the Manawatu Standards Committee whose actions  resulted  in  Mr  McGuire  being  given  an  apology  by  the  New  Zealand Law Society.

[7]      Mr McGuire says that he could not understand the decision of Dobson J that dismissed his application for judicial review.  He did not get the chance to test the reasoning in it because of the way things happened with his appeal against the judgment.2

[8]      I do not think the various issues of fairness raised by Mr McGuire, whether or not they may be justified (something I am not required to decide), can or should affect the issue of costs on his unsuccessful application to set aside the bankruptcy notice.  If there was unfairness in any of those other courts or tribunals, any regress Mr McGuire might be entitled to should be pursued (or should have been pursued) in those courts or tribunals.

[9]      Nor do I consider this is a case where costs should be awarded only on a

Category 1 basis.  As Mr McGuire has pointed out, he raised a number of issues on

2      Mr McGuire says that he was a day late in applying for an extension of time to file his case on appeal, which effectively meant the appeal was abandoned.   He then had to appeal to the Supreme Court, but his attempt to do so was dismissed in that court.

which the Ministry was obliged to engage, and which resulted in a judgment which in the end ran to 99 paragraphs.

[10]     I conclude that the Ministry is entitled to costs (at least) on a 2B basis. [11]   I now turn to consider the Ministry’s application for a costs uplift.

[12]     The  Ministry  relies  on  Rule  14.6(3)  of  the  High  Court  Rules,  which relevantly provides:

14.6     Increased costs and indemnity costs

…

(3)      The court may order a party to pay increased costs if—

…

(b)       the party opposing costs has contributed unnecessarily to the time or expense of the proceeding or step in it by—

(i)        failing to comply with these rules or with a direction of the court; or

(ii)      taking  or  pursuing  an  unnecessary  step  or  an argument that lacks merit; or

(iii)      failing,  without  reasonable  justification,  to  admit facts, evidence, documents, or accept a legal argument; or

…

(d)       some other reason exists which justifies the court making an order for increased costs despite the principle that the determination  of  costs  should  be  predictable  and expeditious.

…

[13]     It is for the party claiming increased costs to persuade the court that an increase above scale is justified.3    Increased costs may be awarded where there has

been a failure by the paying party to act reasonably.4

3      Strachan v Denbigh Property Ltd HC Palmerston North CIV-2010-454-232, 3 June 2011 at [27].

4      Bradbury v Westpac Banking Corp [2009] NZCA 234, [2009] 3 NZLR 400 at [27].

[14]     The Ministry submits that Mr McGuire did not act reasonably in applying to set  aside  the  bankruptcy  notice.    It  submits  that  the  communications  between Mr McGuire and his counsel and the solicitors at Crown Law provided no basis on which Mr McGuire could reasonably have understood that an agreement had been reached with the Ministry, and that that position was communicated to Mr McGuire clearly on a number of occasions.

[15]     The Ministry submits that Mr McGuire’s other arguments in support of the application to set aside unnecessarily complicated the proceeding.  Mr McGuire did not adequately consider the effect of the Limitation Act 2010, and his attempt to invoke the equitable doctrines of laches and acquiescence lacked merit.

[16]     I do not consider this is a case justifying an uplift on scale costs.   While Mr McGuire’s  argument  over  the  date  of  the  costs  judgment  referred  to  in  the bankruptcy notice may have been technical, the argument was not entirely without merit and a correction order under s 418 of the Insolvency Act 2006 was necessary before the bankruptcy notice could be upheld.

[17]     I also consider that there were some unusual features of the case, including the relatively long period of time which elapsed between the date of the judgment of Dobson J and the issue of the bankruptcy notice.  While Mr McGuire has failed with his opposition based on equitable grounds, I do not consider that his arguments were so obviously lacking in merit that a costs uplift would be justified.

[18]     Weighing the considerations, I am satisfied that it is appropriate to award costs to the Ministry on a 2B basis, together with disbursements.  Mr McGuire has not challenged the detail of the Ministry’s claim based on a 2B basis, and it appears to me to be in order.  I accordingly award costs to the Ministry in the sum of $6,690 plus disbursements of $413.50.

Associate Judge Smith

Solicitors:

Meredith Connell, Wellington for the judgment creditor