Valmont v Chevin

[2023] NZHC 2292

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2022-404-2117

[2023] NZHC 2292

UNDER

the Insolvency Act 2006

IN THE MATTER OF

the bankruptcy (or proposal, as the case may be) of PETER LOUIS CHEVIN

BETWEEN

CLARK VINCENT VALMONT

Plaintiff

AND

PETER LOUIS CHEVIN

Defendant

Hearing:

17 August 2023

Appearances:

S M Lowery / J C Suyker for the Plaintiff

R B Hucker / A L McMillan for the Defendant

Judgment:

23 August 2023

COSTS JUDGMENT OF ASSOCIATE JUDGE C B TAYLOR

This judgment was delivered by me on     23 August 2023    at    3:00pm

pursuant to Rule 11.5 of the High Court Rules

…………………………. Registrar/Deputy Registrar

Solicitors:

Greenwood Roche (Steve Woodfield), Auckland, for the Plaintiff

Molloy Hucker Law(Robert B Hucker/Amy L McMillan), Auckland, for the Defendant

Copy for:
Samuel M Lowery, Bankside Chambers, Auckland, for the Plaintiff

VALMONT v CHEVIN [2023] NZHC 2292 [23 August 2023]

Introduction

[1]    This matter was called before the court at 10:00 am on 17 August 2023, being an application by Clark Vincent Valmont, the judgment creditor (Mr Valmont) to have the judgment debtor, Peter Louise Chevin (Mr Chevin) adjudicated bankrupt. Just prior to the hearing, Mr Chevin paid the judgment debt and the hearing solely related to the issue of costs. At the hearing, Mr Lowery, counsel for Mr Valmont, handed up a submission on costs dated 17 August 2023. Counsel for Mr Chevin, Mr Hucker, made submissions at the hearing as to costs.

[2]    At the hearing, the application for adjudication by Mr Valmont was dismissed and the matter of costs was reserved.

Submissions

[3]    Mr Lowery submitted that Mr Valmont should be awarded a mixture of indemnity and scale costs pursuant to r 14.6(4)(a) of the High Court Rules 2016 and is seeking a total award of $9,698.95.

[4]    Mr Lowery submits that r 14.6(4)(a) provides the Court may award indemnity costs if:

… The party has acted vexatiously, frivolously, improperly, or unnecessarily in commencing, continuing, or defending the proceeding or a step in the proceeding.

Mr Lowery submits that Mr Chevin paid the judgment debt shortly before the hearing, and his submissions disclose there was never a proper basis for him to oppose the adjudication.

[5]Mr Lowery made the following submissions in support of the costs sought:

(a)Mr Chevin had had a year to pay the most recent judgment, and two years to pay the oldest judgment sum and in that time had made no

effort to pay, or negotiate a payment plan with Mr Valmont. Instead, Mr Chevin employed the tactic of putting Mr Valmont to the cost of adjudication proceedings and waiting to the last moment to pay in the hope that Mr Valmont may give up or run out of funds or offer a deal to avoid legal fees;

(b)Mr Chevin is a serial bankrupt and has a history of ignoring Court orders, leaving debts unpaid, breaching management banning orders under s 382(1) of the Companies Act 1993, and breaching the terms of the earlier bankruptcies.

(c)Scale costs are an inadequate remedy for Mr Chevin’s cynical approach and indemnity costs are appropriate, given that Mr Chevin defended the proceedings when they were hopeless.

[6]    The award of costs sought by Mr Valmont of $9,698.15 is a mixture of indemnity cost and scale costs as follows:

(a)indemnity costs up to 16 August 2023 of $9,101.45 comprised of

$7,553.20 in legal fees and $1,548.25 in disbursements;

(b)scale costs for the hearing on 17 August 2023 of $397.50 (0.25 days at

$2,390).

[7]Mr Hucker made the following submissions in relation to costs:

(a)There is no basis for indemnity costs;

(b)Under the decision of the Court in Re Peacock,1 the Court has no jurisdiction to award costs. That decision is adequately summarised in the headnote as follows:

“When a petitioning creditor, before the date of the hearing of his petition, accepts the money tendered for the judgment debt, and such amount does not include the costs of the

1 `Re Peacock [1956] NZLR 365 (SC) at 367.

petition, the petition does not absolutely lapse, but the petitioning creditor by accepting the money engages that he will not proceed further upon it; and, after such acceptance, he cannot be heard on an application for costs.”

[8]    Mr Hucker submits that Peacock has been followed by the Courts and accordingly the Court should do so in this instance.

[9]    In response to this submission, Mr Lowery submits that the High Court has declined to follow Re Peacock and refers to the decision of Smith and Partners (a firm) v Laurenson.2 In dealing with Re Peacock, Associate Judge Bell in that decision made the following comments:3

[5] If Peacock were slavishly followed, its application would give rise to problems. Like the debtor in this case, many debtors served with a bankruptcy application are keen to avoid bankruptcy. One effective way of doing this is to attack the applicant’s status as a creditor by paying off the debt the subject of the application. Those debtors would be very puzzled if a creditor, who has gone to the trouble of issuing a bankruptcy application, were then to refuse payment, even if it does not meet all the relief sought in the application. Similarly, creditors who have been put to the trouble of applying for a bankruptcy adjudication would prefer not to be creditors. When a debtor offers to pay off the debt in a bankruptcy application, a creditor would find it odd to be told by his lawyer that if he wants to keep his claim for costs alive he should decline the payment and press on with his bankruptcy application.

…

[12] According to Peacock:

… by accepting the money, he engages that he will not proceed further upon a petition.

Thus “engages” is fictitious. A creditor does not actually undertake that he will no longer proceed with the application. Instead, under Re Peacock, that intention is imputed to the creditor. There is no good reason why the court should attribute to a creditor such a fictitious intention.

…

[16] In my judgment, the creditor is entitled to maintain its application for costs, even though it no longer seeks an order for adjudication. It is entitled to take that course, because it has not “engaged” that it  will  not seek  costs. I decline to follow Re Peacock.

2      Smith and Partners (a firm) v Laurenson [2014] NZHC 389.

3 Above n 2, at [12].

[10]   Mr Hucker also submits that Mr Chevin’s conduct outside the steps taken in this proceeding cannot be considered by the Court in fixing costs. He relies on the authority of Paper Reclaim Ltd v Aotearoa International Ltd.4 Mr Hucker submits that in relation to these proceedings Mr Chevin has not committed any default in the timetable, nor has he taken any unreasonable steps.

Analysis

[11]   In relation to the issue of jurisdiction to award costs, Associate Judge Bell decided in Smith and Partners that was  not appropriate to  follow the  decision in  Re Peacock. I agree with Associate Judge Bell’s reasoning as set out at [9] above, and I also decline to follow Re Peacock. Accordingly I am of the view that I have jurisdiction to award costs in favour of Mr Valmont notwithstanding payment of the judgment debt by Mr Chevin immediately prior to the hearing and the application for the adjudication order being dismissed.

[12]   As to the basis on which costs should be assessed, I accept Mr Hucker’s submission that Mr Chevin’s conduct outside of these proceedings should not be taken into account in fixing costs, and in doing so follow the authority in Paper Reclaim Ltd v Aotearoa International Ltd.5 Consequently I decline to take into account the submission by Mr Lowery set out at [5](b) in fixing costs.

[13]   In my view, if the conduct of Mr Chevin outside of these proceedings is disregarded, then Mr Hucker’s submission that there is no basis for indemnity costs as Mr Chevin has not, applying the test in Bradbury v Westpac Banking Corporation, behaved “either badly or very unreasonably” 6 to the degree which justifies indemnity costs.

[14]Accordingly, in my view costs calculated on a 2B basis should be awarded.

4      Paper Reclaim Ltd v Aotearoa International Ltd [2006] 3 NZLR 188 (CA) at 160.

5      Above, n 4.

6      Bradbury v Westpac Banking Corp [2009] NZCA 234; [2009] 3 NZLR 400; (2009) 19 PRNZ 385 at [27].

Order

[15]   Mr Chevin is ordered to pay Mr Valmont costs calculated on a 2B basis, together with disbursements, totalling $5,730.75.

…………………………….. Associate Judge Taylor