PATRICIA FRANCIS EMILY NICHOLSON Judgment Creditor AND JENNIFER ATKINSON Judgment Debtor

[2024] NZHC 2651

IN THE HIGH COURT OF NEW ZEALAND HAMILTON REGISTRY

I TE KŌTI MATUA O AOTEAROA KIRIKIRIROA ROHE

CIV-2023-419-208 [2024] NZHC 2651

BETWEEN

PATRICIA FRANCIS EMILY NICHOLSON

Judgment Creditor

AND

JENNIFER ATKINSON

Judgment Debtor

Hearing:

10 September 2024

Appearances:

CJ Keil for the Judgment Creditor

Ms Atkinson, Judgment Debtor in Person

Judgment:

13 September 2024

JUDGMENT OF ASSOCIATE JUDGE SUSSOCK

[Costs – Reasons]

This judgment was delivered by me on 13 September 2024 at 4 pm pursuant to r 11.5 of the High Court Rules

Registrar/Deputy Registrar

Solicitors:

Keil & Associates, Auckland

NICHOLSON v ATKINSON [2024] NZHC 2651 [13 September 2024]

Introduction

[1]    On 10 September 2024, I granted leave to the judgment creditor to discontinue these bankruptcy proceedings on the basis of an Admission of Claim form signed by the judgment debtor on 13 May 2024. The judgment creditor originally sought costs of  $7,648.00  plus  disbursements  of  $1,223.50  for  a   total   of  $8,871.50.   By  10 September 2024, the judgment creditor had reduced the costs claimed to $5,376 with the overall claim including disbursements totalling $6,950.50.

[2]    After considering the file and hearing from counsel and Ms Atkinson, I awarded costs for the filing and service of the bankruptcy notice and bankruptcy proceedings of $1,9121 plus disbursements of $1,223.50 for a total of $3,135.50. I now set out my reasons.

Background

[3]    The   application   for   adjudication   was   served   on   Ms   Atkinson    on 24 January 2024. Originally Ms Atkinson indicated that she wished to challenge the Disputes Tribunal decision from which the judgment debt arose. However, at the April 2024 call Ms Atkinson advised she would be willing to agree to pay $16,000 at a rate of $500 per month. The parties were directed to confer and file a joint memorandum by 6 May 2024 confirming whether an agreement had been reached with the matter next to be  called on 13 May 2024,  as confirmed by Minute  dated  15 April 2024.

[4]    At the call on 13 May, only counsel for the judgment creditor appeared and an adjournment was sought to allow completion of settlement documents. On the same day, but after the hearing, Ms Atkinson signed an “Admission of Claim” form in which she agreed to pay the full amount of the judgment sum of $18,200 at a minimum rate of $500 per month until cleared. The Admission of Claim form included reference to “Costs to be fixed by the Registrar” but did not include an amount. The form also included terms acknowledging that the debtor would be fully liable for all collection costs associated with collection/recollection of amounts outstanding (including

1      At the hearing I incorrectly calculated this as $1,812.00.

solicitor/client costs) plus default fees and that the debt would become due and owing in full if default was not rectified, with the matter to be referred back to Court if necessary.

[5]    In the email attaching the Admission of Claim form, John Campbell from Law Debt Collection, who was engaged for the judgment creditor, noted that after the signed Admission of Claim form was returned to him, they would prepare a “propertied of settlement” (presumably “proper deed of settlement”) to be executed by Ms Atkinson in the next couple of days.

[6]    At the next call on 17 June 2024, the judgment creditor again sought an adjournment to allow completion of settlement arrangements.

[7]    On 12 July 2024, the Friday before the call on Monday, 15 July 2024, and two months following the signing of the Admission of Claim form, Mr Campbell from Law Debt Collection sent a “Deed of Acknowledgement of Debt and Settlement” for signature by Ms Atkinson. The Deed appears to be intended to replace the Admission of Claim form. It records in cl 3 that the judgment debtor will pay the “Settlement Sum” to the judgment creditor by monthly instalments of $500 from 21 May 2024 until the Settlement Sum, interest and default fees are paid. The “Settlement Sum” is defined as:

The sum agreed to be paid by the judgment debtor to the judgment creditor of
$26,260.03 under the payment arrangement described in clause 3.

[8]The judgment debt was $18,200 so the costs sought amounted to $8,040.03.

[9]    The Deed contained a number of terms not included in the Admission of Claim form as follows:

(a)increased default fees for instalment payments missed for more than three days;

(b)interest after default of more than three days of 10 per cent per annum on the remaining principal owing (compounding monthly) until the judgment debtor has repaid the principal sum in full; and

(c)acceleration of payment after default of more than three days so that all amounts including default fees and interest accrued will immediately become due and payable notwithstanding the due date has not arisen.

[10]   Ms Atkinson was not prepared to sign the Deed and appeared at the call on 15 July 2024 questioning the more than $8,000 costs claimed. At that call Ms Atkinson advised that she had tried a number of times to contact counsel for the judgment creditor and Mr Campbell directly but without success. Although I accept there have been difficulties serving Ms Atkinson as she does not have an email address for service, the late provision of documents to Ms Atkinson and the fact that Counsel who appeared at this call in July was not aware that an Admission of Claim form had been signed by Ms Atkinson in May or that Ms Atkinson had not appeared at the May or June calls when an agent had been instructed supports there being communication issues. The matter was therefore adjourned again to allow counsel for the judgment creditor to clarify the position and to reconsider the costs claimed.

[11]   At the call in August, counsel for the judgment creditor then sought to proceed with the bankruptcy application on the basis Ms Atkinson would not sign the proposed Deed and sought costs and disbursements of $8,871.50. Counsel for the judgment creditor accepted Ms Atkinson has been paying $500 per month since May 2024.

[12]   After further discussion, I adjourned the matter again and directed the judgment creditor to reconsider its position including the Admission of Claim form signed and the costs claimed.

[13]   Prior to the 10 September call, a memorandum was then filed on behalf of the judgment creditor seeking leave to discontinue on the basis of the Admission of Claim form signed on 13 May 2024 and reducing the costs and disbursements sought to

$6,959.50. The costs claimed were for the filing of the bankruptcy notice and the application for adjudication plus appearances at four rather than eight calls. Total disbursements of $1,223.50 were also claimed including service fees of $832.20.

What is the appropriate costs award?

[14]   Costs are at the discretion of the Court.2 The principles on which they are to be determined are set out in r 14.2 of the High Court Rules 2016 with the appropriate daily rates and time allocations provided for in rr 14.3 to 14.5. Costs in bankruptcy proceedings are ordinarily set on a 2B basis.

[15]   Rule 14.7 of the High Court Rules provides that despite rr 14.2 to 14.5, the Court may reduce the costs otherwise payable in a number of circumstances, including where:

(a)the party claiming costs has contributed unnecessarily to the time or expense of the proceeding by taking an unnecessary step or an argument that lacks merit;3 or

(b)some other reason exists which justifies the Court refusing costs or reducing costs despite the principle that the determination of costs should be predictable and expeditious.4

[16]   Once the Admission of Claim form had been signed, the judgment creditor ought to have sought leave to withdraw at the following call with costs to be determined by the Court. Instead, it sought to improve its position by varying the terms to those agreed in the Admission of Claim form.

[17]   To then apply to proceed with the bankruptcy application when the  Admission of Claim form had been signed and payments were being made clearly brings the circumstances within those set out in r 14.7 of the High Court Rules 2016.

[18]   It is only because Ms Atkinson is acting for herself that an award of costs is not made against the judgment creditor for the calls since May 2024 after Ms Atkinson signed the Admission of Claim form.

2      High Court Rules 2016, r 14.1.

3      Rule 14.7(f)(ii).

4      Rule 14.7(g).

[19]   Furthermore, if settlement discussions are continuing, as they were here, ordinarily counsel would file a memorandum seeking an adjournment and asking for appearances to be excused. There is then no need for an appearance and no ability to claim costs for each appearance.

[20]   I accept the judgment creditor’s submission that the bankruptcy proceedings appear to have been necessary to enforce the Disputes Tribunal decision but, in the circumstances, only allow costs for the filing and service of the bankruptcy notice and the filing of the application for adjudication for a total of $1,912 plus disbursements of $1,223.50.

Result

[21]Costs are fixed at $1,912 plus disbursements of $1,223.50 for a total of

$3,135.50 making the total amount payable by instalment under the Admission of Claim form $21,335.

Associate Judge Sussock