Official Assignee v Black Bag Limited - [2015] NZHC 1642

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2014-470-19 [2015] NZHC 1642

UNDER Part 18 of the High Court Rules

BETWEEN

OFFICIAL ASSIGNEE in bankruptcy of the property of EDWARD JOHN HARMAN

Plaintiff

AND

BLACK BAG LIMITED First Defendant

LLOYD FERGUSSON Second Defendant

Date ofhearing: 12 June 2015

Appearances:

Mr Neil for Plaintiff
Ms Hui for Defendants

Judgment:

14 July 2015

JUDGMENT OF ASSOCIATE JUDGE J P DOOGUE

This judgment was delivered by me on
14.07.15 at 4 p.m., pursuant to
Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date……………

OFFICIAL ASSIGNEE in bankruptcy of the property of HARMAN v BLACK BAG LIMITED [2015] NZHC
1642 [14 July 2015]

Introduction

[1] This proceeding was commenced on 2 February 2014 when the Official Assignee (“plaintiff”) as administrator of the bankrupt estate of Edward John Harmon brought a claim against Black Bag Ltd and Mr Fergusson (“defendants”) alleging that the bankrupt had made insolvent gifts. Various relief was sought including monetary judgment and orders including the cancellation of guarantees and security interests. The current reason why the matter is before the Court is that an interlocutory application for further and better discovery was filed by the first defendant dated 30 January 2015. That application was opposed. The application was amended on 11 April 2015. On 23 April 2015, the parties took part in a telephone conference with Lang J. The Judge made timetabling orders in relation to the application. He recorded at paragraph 5 of the Minute that he issued following the conference that:

I record that at the listing of the matter on 6 May 2015 counsel expect to be in a position to advise the Court whether or not fixture on 12
June will be required.

[2] The fixture which the Judge mentioned was scheduled for 12 June 2015. On

2 June 2015, counsel for the first defendant advised the Registry that the fixture date of 12 June was no longer needed and, later that day, the plaintiff was served with a memorandum from the defendant’s counsel formally withdrawing the amended application.

[3] On 12 June, I heard from counsel concerning costs. The parties have been unable to agree as to which party should bear the costs of the application and amended application. Unfortunately, while the parties had avoided the need for a half-day fixture on the application for further and better discovery, the way matters developed, it turned out that they then committed themselves to a half-day fixture on costs at which they outlined the submissions which they would have concerning discovery. Amongst other things, a bundle of documents of nearly 200 pages was

filed and, as well, additional documentary exhibits were produced during the course of the hearing before me.

[4] The course that the proceeding has taken raises the question of whether the outcome of the application of the costs rules in this case has resulted in a predictable and expeditious outcome. The application reflects what is becoming a not unusual situation where, following…

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.

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Details

Case: [2015] NZHC 1642
Decision Date: 14 July 2015

CaseChat Overview and Summary

The case of Official Assignee v Black Bag Limited involved the Official Assignee, acting as the administrator of the bankrupt estate of Edward John Harmon, bringing a claim against Black Bag Limited and Mr. Lloyd Fergusson. The claim alleged that the bankrupt had made insolvent gifts, and the Official Assignee sought various forms of relief, including monetary judgment and orders to cancel guarantees and security interests. The matter before the court was an interlocutory application for further and better discovery, which was filed by the first defendant and subsequently opposed by the plaintiff. The defendants later withdrew the amended application, and the case proceeded to a hearing on costs.

The primary legal issues before the court were whether the defendants were justified in bringing and continuing the application for further and better discovery and, if not, whether they should be liable for the plaintiff's costs. The court considered whether the defendants' actions justified the invocation of exceptions to the general rule that a party discontinuing an application should bear its own costs.

The court found that the defendants were not justified in bringing and continuing the application for further and better discovery. The Official Assignee had cooperated with the defendants and provided necessary documents, including a replacement data medium when an issue arose. The court emphasised that a party initiating an interlocutory application bears the responsibility for determining whether there are sufficient prospects of success, and it is not the duty of the opposing party to warn of potential weaknesses. The court concluded that the defendants were liable to pay the costs of the plaintiff and that the appropriate basis for the costs order was on a 2B basis, without an uplift.

Additionally, the court addressed the issue of whether costs could be awarded for the preparation of the costs hearing itself. The court found that there was authority to grant such costs orders and that making such orders may assist in resolving costs disputes more readily. The court granted the plaintiff's application for costs in relation to the preparation for and attendance at the costs hearing, subject to the parties reaching an agreement on the amount or referring the matter to the court for determination.

This case highlights the importance of parties cooperating in discovery processes and the consequences of bringing and pursuing interlocutory applications without sufficient justification. The court's decision reinforces the general rule that a party discontinuing an application should bear its own costs, absent exceptional circumstances.

Orders