Phillips v Ngati Tama Custodian Trustee Limited

[2020] NZHC 2433

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2020-404-1044

[2020] NZHC 2433

UNDER

of Part 24 of the High Court Rules 2016 and the Insolvency Act 2006

IN THE MATTER

of the Bankruptcy of David William Phillips

BETWEEN

DAVID WILLIAM PHILLIPS

Judgment Debtor/ Applicant

AND

NGATI TAMA CUSTODIAN TRUSTEE LIMITED

Judgment Creditor/ Respondent

Hearing:	3 September 2020
Appearances:	R A Idoine for Judgment Creditor Judgment Debtor in person
Further submissions completed:	18 September 2020
Judgment:	18 September 2020

JUDGMENT OF POWELL J

This judgment was delivered by me on 18 September 2020 at 3 pm pursuant to R 11.5 of the High Court Rules

Registrar/Deputy Registrar Date:

PHILLIPS v NGATI TAMA CUSTODIAN TRUSTEE LIMITED [2020] NZHC 2433 [18 September 2020]

[1]    This matter was originally listed in order to determine an application to set aside a bankruptcy notice issued by the judgment creditor, Ngati Tama Custodian Trustee Limited (“Ngati Tama”), against the judgment debtor, David William Phillips (also known as :david-william: house of phillips). The judgment debtor had challenged the bankruptcy notice issued to enforce costs of $2,500 awarded against the judgment debtor in the Supreme Court.1

[2]    By the date of the hearing the position had changed substantially. In the interim the judgment debtor had paid the full amount of the costs awarded. As the judgment debtor’s application to set aside the bankruptcy notice and challenge to the costs claimed therein had been filed within the ten working days specified in s 17 of the Insolvency Act 2006, there was therefore no present act of bankruptcy and with the subsequent withdrawal of the judgment debtor’s application to set aside the bankruptcy notice (confirmed at the hearing), the sole issue remaining was whether Ngati Tama should be entitled to costs and disbursements as follows:

(a)On the issue of the bankruptcy notice itself for which it had claimed

$828; and

(b)For opposing the judgment debtor’s application to set aside the bankruptcy notice in the sum of $6,921.50.

[3]    The judgment debtor opposes any award of costs. The judgment debtor submits in particular that as a result of an exchange of emails with counsel for    Ngati Tama, the judgment debtor’s payment of $2,500 amounted to a full and final settlement of all amounts outstanding. In the alternative, the judgment debtor argues Ngati Tama had proceeded with indecent haste in issuing the bankruptcy notice against him when it should have looked at other avenues. More broadly the judgment debtor submitted that the costs sought were excessive given the substantive debt was only

$2,500.00, were impossible for him to meet, and suggested that his impecuniosity was previously taken into account by the Court of Appeal when it reversed its previous cost order against him.2

1      Phillips v Ngati Tama Custodian Trustee Ltd [2020] NZSC 46.

2      Ngati Tama Custodian Trustee Ltd v Phillips [2020] NZCA 252.

Discussion

[4]    The present application is the latest instalment in a long history of litigation between the parties over ownership of intellectual property rights. Although the substantive dispute was ostensibly settled in 2013, in 2016 the judgment debtor (and related companies)  attempted  to  pursue  further  claims  against  Ngati  Tama. Ngati Tama applied for summary judgment to stop these fresh claims and while unsuccessful in the High Court in 2018,3 succeeded in the Court of Appeal.4 The judgment debtor’s application for leave to appeal to the Supreme Court was subsequently dismissed,5 with the costs of $2,500 awarded by the Supreme Court forming the basis of the current bankruptcy notice.6 I note for completeness that costs are still to be calculated in respect of the original High Court claim.

[5]    The Supreme Court issued its decision declining leave to appeal on 12 May 2020. Judgment was sealed on 11 June 2020 and on 22 June a copy of the sealed judgment was emailed to the judgment debtor together with a demand for payment. No response was provided by the judgment debtor to the demand and the bankruptcy notice, issued on 13 July 2020, was served on 21 July 2020.

[6]    Given the history of the litigation I do not consider that there was anything untoward with regard to the timing of the issue of the bankruptcy notice, particularly given the judgment debtor had not responded to the letter of demand.

[7]    There is also nothing in the judgment debtor’s submission that anything in the email correspondence between the parties precludes Ngati Tama from seeking costs on either the bankruptcy notice itself or its opposition to the judgment debtor’s application to set aside the bankruptcy notice. On the contrary the email correspondence reveals that when on 20 August 2020 the judgment debtor requested a “without prejudice counter-offer to settle this matter”, Mr Idoine for Ngati Tama sent the following email to the judgment debtor:

Dear Mr Phillips

3      Ngati Tama Custodian Trustee Ltd v Phillips [2018] NZHC 304.

4      Ngati Tama Custodian Trustee Ltd v Phillips [2019] NZCA 647.

5      Phillips v Ngati Tama Custodian Trustee Ltd [2020] NZSC 46.

6      Ngati Tama Custodian Trustee Ltd v Phillips [2020] NZCA 252 at [26].

Our instructions are that payment of the sum is required in full as specified in the Supreme Court’s orders.

We remind you that our client’s right to recover its costs under clause 4.1 of the settlement deed, in addition to those under r 14.2 and 14.6 of the High Court Rules 2016, are expressly reserved.

Kind regards

[8]    This email makes it clear that not only was the full amount of the Supreme Court costs award required to be paid by the judgment debtor, but that Ngati Tama’s rights to recover its costs were “expressly reserved”. Nothing in subsequent email correspondence altered that position, albeit that Mr Idoine subsequently confirmed the costs sought by Ngati Tama were according to scale rather than in terms of the 2013 settlement deed.

[9]    I therefore conclude that the sum of $878.00 being the standard costs and disbursements for the issue of a bankruptcy notice as noted in the notice itself, are properly payable by the judgment debtor to Ngati Tama.

[10]   Likewise, as the judgment debtor did not initially seek to settle the amount owing, but rather apply to set aside the bankruptcy notice, Ngati Tama were entirely justified in opposing the judgment debtor’s application and as the judgment debtor has now withdrawn the application, are entitled to costs for the steps taken.

[11]   Although, as the judgment debtor notes, the total amount of the scale costs now sought by Ngati Tama is larger than the judgment debt itself, as I explained to the judgment debtor at the hearing, the measure is in fact not the amount of the judgment debt but what was a reasonable response in the circumstances. In this case the judgment debtor raised a number of issues, backed up by a lengthy affidavit, and, given the previous history of this matter, the notice of opposition, affidavit and memoranda filed by Ngati Tama were an entirely reasonable response for which they are entitled to scale costs and disbursements in the sum claimed, noting also that the judgment sum was not paid until after those documents had been filed and the application to set aside the bankruptcy notice not withdrawn until the hearing before me.

[12]   The fact that the judgment debtor may not be able to pay as he asserts is not relevant in terms of the calculation of costs, and I note for completeness that the Court of Appeal’s decision not to award costs against the judgment debtor was because he had been legally aided in the Court of Appeal hearing and as exceptional circumstances for the purposes of s 45 of the Legal Services Act 2011 were not present no costs order could be made.7 Clearly, that issue does not arise in the present proceedings.

Decision

[13]   The judgment debtor is to pay costs and disbursements to Ngati Tama Custodian Trustee in the total sum of $7,749.50 made up as follows:

(a)Costs on the issue of the bankruptcy notice in the sum of $478.00 and disbursements of $350.00, a total of $828.00; and

(b)Costs on the application to set aside the bankruptcy notice in the sum of $6,811.50 and disbursements of $110.00 a total of $6,921.50.

Powell J

7      Ngati Tama Custodian Trustee Ltd v Phillips [2020] NZCA 252 at [21]-[22].