Rabobank New Zealand Limited v Phillips

[2023] NZHC 118

IN THE HIGH COURT OF NEW ZEALAND HAMILTON REGISTRY

I TE KŌTI MATUA O AOTEAROA KIRIKIRIROA ROHE

CIV-2022-419-000247

[2023] NZHC 118

UNDER

Companies Act 1993

IN THE MATTER OF

An application to set aside a statutory demand

BETWEEN

RABOBANK NEW ZEALAND LIMITED

Applicant

AND

WARREN KENNETH PHILLIPS

Respondent

Hearing:	On the papers
Counsel:	R Georgiou for Applicant Respondent self-represented
Judgment:	27 January 2023

JUDGMENT OF ANDREW J

[Costs]

This judgment was delivered by Justice Andrew on 7 February 2023 at 4.00 pm

pursuant to r 11.5 of the High Court Rules 2016 Registrar / Deputy Registrar

Date ………………………………

RABOBANK NEW ZEALAND LTD v PHIILLIPS [2023] NZHC 118 [27 January 2023]

Introduction

[1]                 In my judgment of 14 December 2022,1 I set aside a statutory demand issued by Mr Phillips against the applicant, Rabobank New Zealand Ltd.2

[2]                 This judgment contains my decision on costs following receipt of further submissions from the parties.

[3]Rabobank seeks indemnity costs or 2B costs with a 50 per cent uplift.

Relevant legal principles

[4]                 Rule 14.2 of the High Court Rules 2016 contains the principles to be applied in determining costs. Rule 14.2(1)(a) encapsulates the primary principle that “costs follow the event”.3

[5]                 Rule 14.2(1)(g) provides that so far as possible the determination of costs should be predictable and expeditious.

[6]                 Increased costs, that is beyond scale, may be ordered where there is a failure by the party paying to act reasonably.4

[7]                 The party claiming increased or indemnity costs carries the onus of persuading the Court that their award is justified.5

Discussion

[8]                 In applying the principles in r 14.2 it is clear, in my view, that Mr Phillips should pay costs to Rabobank. Rabobank was clearly the successful party; it succeeded both in opposing the application for leave to file an opposition out of time and in setting aside the statutory demand.

1      Rabobank New Zealand Ltd v Phillips [2022] NZHC 3390.

2      Rabobank.

3      Shirley v Wairarapa District Health Board [2006] NZSC 63, [2006] 3 NZLR 523 at [19].

4      Bradbury v Westpac Banking Corp [2009] 3 NZLR 400 (CA) at [27].

5      Robert Osborne (ed) McGechan on Procedure (online looseleaf ed, Thomson Reuters) at [HR14.6.01].

[9]                 I do not accept that the high threshold for an award of indemnity costs has been made out. However, there has been a failure by Mr Phillips to act reasonably and an award of costs above the 2B scale is, in the circumstances, justified. Mr Phillips’ defence of the proceedings was always without merit and he filed a large number of memoranda containing numerous irrelevant allegations and issues. They have undoubtedly contributed to extra costs being incurred by Rabobank.

[10]             I find that Mr Phillips should pay costs to Rabobank on a 2B basis with a 25 per cent increase on the basis of a failure by Mr Phillips to act reasonably.

[11]             I record Rabobank’s position6 that Rabobank’s legal fees incurred by Gibson Sheat solicitors, in relation to the P & M Family Trust, have been deducted from the Trust’s bank account, as provided for under the terms and conditions of the lending to the trustees. That encompasses fees on other issues.

[12]             Rabobank advises that in the event that costs are granted to it, they will be offset against the amounts already recovered from the trustees, and a refund provided to the trustees if necessary.

Result

[13]             I order that Mr Phillips, the respondent, is to pay costs and disbursements to Rabobank on a 2B basis with a 25 per cent increase beyond that 2B scale.

[14]             I direct that Rabobank is to send a copy of this costs judgment to the trustees of the P & M Family Trust.

Andrew J

6      See memorandum of counsel for applicant dated 30 November 2022 at [3] and [4].