Waitakere City Council v Mawhinney HC Auckland CIV 2006-404-4221

[2007] NZHC 1609

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2006-404-4221

UNDER  the Insolvency Act 1967

IN THE MATTER OF     the bankruptcy of Peter William

Mawhinney

BETWEEN  WAITAKERE CITY COUNCIL Judgment Creditor

AND  PETER WILLIAM MAWHINNEY Judgment Debtor

Hearing:         31 January 2007

Appearances: Mr Broad for Judgment Creditor

No appearance for Judgment Debtor

Judgment:      12 February 2007 at 5 p.m.

JUDGMENT OF ASSOCIATE JUDGE J P DOOGUE

This judgment was delivered by me on

12.02.2007 at 5.00 pm, pursuant to

Rule 540(4) of the High Court Rules.

Registrar/Deputy Registrar

Date……………

Solicitors:

Kensington Swan, Private Bag 92101, Auckland - (Mark Broad) Peter W Mawhinney, P O Box 95-157, Swanson

WAITAKERE CITY COUNCIL V  MAWHINNEY HC AK CIV-2006-404-4221  12 February 2007

[1]      Waitakere  City  Council  instructed  its  solicitors  to  prepare  and  serve  a bankruptcy notice on Mr Mawhinney.   The Waitakere City Council (“Waitakere”) through its solicitor says that it experienced considerable difficulty in serving Mr Mawhinney because Mr Mawhinney evaded service.  Waitakere has filed affidavits to this effect.  It now seeks an order that Mr Mawhinney pay indemnity costs as a result of the extra cost that Waitakere had to go to to serve him with the bankruptcy notice.  The proceedings have for all other purposes come to a conclusion because Mr Mawhinney paid the amount claimed in the bankruptcy notice but not costs.

[2]      Mr Mawhinney was advised that the application for costs would proceed on

31 January 2007 in the High Court at Auckland.  When the matter was called he did not appear.

[3]      I have reviewed the evidence filed by Waitakere in support of its application. That evidence is uncontested.  It shows that on 31 July 2006 Kensington Swan on behalf of Waitakere advised that it had, inter alia, a bankruptcy notice that it was to serve on Mr Mawhinney.  The letter from Mr Broad of Kensington Swan which he sent to Mr Mawhinney 31 July 2006 recorded that in the past difficulties had been experienced in serving him and invited him to  arrange a time to  meet  with Mr Burton-Brown the service agent to arrange service.   It said that Mr Burton-Brown would be telephoning to make arrangements or alternatively Mr Mawhinney could call him by phone to arrange a suitable time.  In the letter, Mr Broad provided Mr Mawhinney with Mr Burton-Brown’s telephone number.   The letter concluded by recording that Kensington Swan reserved the right to produce the letter in support of any application for increased/indemnity costs if they were required to go to the trouble of preparing an application for substituted service.

[4]      It would appear that Mr Mawhinney did not reply to the letter of 31 July

2006.

[5]      On  4  August  2006  Mr  Broad  of  Kensington  Swan  again  wrote  to  Mr Mawhinney recording that Mr Burton-Brown had left a telephone message on Mr Mawhinney’s telephone number but that Mr Mawhinney had not returned his call.  It recorded that Mr Burton-Brown visited Mr Mawhinney’s property 2 August 2006.

The letter said that Mr Burton-Brown observed a person who he believed was Mr Mawhinney return to the house but when he knocked on the door no one would answer.

[6]      Mr Burton-Brown filed an affidavit.  He said that on 2 August 2006 he left a voicemail on Mr Mawhinney’s telephone saying that he had documents to serve him and that he wish to call on him at 5 p.m. that day.  Mr Burton-Brown said he went to Mr Mawhinney’s property at 8 McKay Place, Bethells Beach.   He knocked on the door but there was no answer.  He was able to look into the house and saw that there were numerous folders with “Waitakere City Council” written on their spines.   He said he then left the property and waited some distance away.  From there he saw a man coming up to the house at 4.20 p.m.  This person fitted a description that he had been provided of Mr Mawhinney.  Mr Burton-Brown then went back to the property and saw a Mitsubishi car, which was not previously there, in the driveway.  As he walked up the driveway he saw the face of a person who  he  believed was Mr Mawhinney at the window.  That person disappeared and would not respond to any knocking on the door.   Mr Burton-Brown said he  later searched the registration number of the Mitsubishi motor vehicle and found that he was registered to Mr Mawhinney.     Mr  Burton-Brown  gave  evidence  of  previously  difficulties   in attempting to serve Mr Mawhinney with other proceedings.

[7]      The evidence of problems in serving Mr Mawhinney was relied upon by Waitakere when it  made an application for substituted service of the bankruptcy notice.   The bankruptcy notice was, in due course, served on Mr Mawhinney following orders for substituted service being made in this Court on 7 September

2006.  The bankruptcy notice was served in accordance with that order by sending it to Mr Mawhinney’s facsimile number, posting to his P O Box Number and affixing a copy of the bankruptcy notice to the door of the property at 8 McKay Place, Bethells Beach.

[8]      Waitakere by its counsel submits that an order for increased or indemnity costs pursuant to Rule 48C is justified.  The Rule provides that the Court may make orders for increased or indemnity costs in a number of situations.  Included amongst

these are subparagraph 3(d) of the Rule which says that an order for increased costs can be made where:

d.         Some other reason exists which justifies the Court making an order for increased costs despite the principle that the determination of costs should be predictable and expeditious.

[9]      By subparagraph 4 of the Rule it is provided that:

(4)      The Court may order a party to pay indemnity costs if –

(a)       The   party   has   acted   vexatiously,   frivolously, improperly, or unnecessarily in commencing, continuing, or defending a proceeding or a step in a proceeding; or

(b)       The  party  has  ignored  or  disobeyed  an  order  or direction of the Court or breached an undertaking given to the Court or another party to the proceeding; or

(c)       Costs are payable from a fund, the party claiming costs is a necessary party to the proceeding affecting the fund, and the party claiming costs has acted reasonably in the proceeding; or

(d)       The person in whose favour the order of costs  is made was not a party to the proceeding and has acted reasonably in relation to the proceeding; or

(e)       The party  claiming costs  is  entitled  to  indemnity costs under a contract or deed; or

(f)       Some other reason exists which justifies the Court making an order for indemnity costs despite the principle that  the determination of costs  should be predictable and expeditious.

[10]     Paragraphs (4)(a) – (e) do not expressly apply to the case where a defendant avoids service.   But the fact that (4)(a) refers to a party acting “vexatiously, frivolously, improperly, or unnecessarily” provides the flavour of the Rule.   I take the view that such conduct may well provide a reason that comes within the grounds set out in paragraph (4)(f) which says that there maybe some other reason which justifies the Court making an order for indemnity costs despite the principle that the determination of costs should be predictable and expeditious.

[11]     In my view, the evidence makes it reasonably clear that Mr Mawhinney was avoiding service.  He was uncooperative and unnecessarily so.  He is not required to

co-operate, but if he takes it upon himself to obstruct Court processes (which include the service of documents) he, like others, may well expose themselves to additional orders for costs.  Whether he considers that it is fair or reasonable for Waitakere City to have proceeded by way of a bankruptcy is beside the point.  That issue is one for the Court to determine and it can only do so after service has been effected.   By avoiding service Mr Mawhinney and those who behave similarly to him, prevent the Court from carrying out its duty to expeditiously consider cases presented to it for its consideration.  As well as impeding the work of the Courts, such conduct obviously increases the costs which the other party to the litigation will incur.   Those two reasons are sufficient in my view for the Court to exercise its discretion to make an order for indemnity costs.

[12]     I am satisfied that the judgment creditor has incurred costs of $2,598.50 in preparing the application for substituted service.  I believe those costs are reasonable.

[13]     There  will  therefore  be  an  order  that  the  judgment  debtor  pay  costs  of

$2,598.50  in  respect  of  the  application  for  substituted  service  filed  in  this proceeding.    As well, the judgment debtor is to pay disbursements incurred with relation to the substituted service application which are to fixed by the registrar.

J.P. Doogue

Associate Judge