The Ministry of Justice withdrew bankruptcy proceedings against Jeremy McGuire on the basis no one would get court costs. He subsequently applied for court costs.
A lawyer who was subject to bankruptcy proceedings by the Ministry of Justice over $35,000 in legal bills tried to get the ministry to pay his legal costs after it abandoned its court action.
But the High Court has given the application short shrift.
The saga that is the legal battle between Palmerston North lawyer Jeremy McGuire and the ministry is long, winding and occasionally convoluted.
It has its genesis in McGuire wanting to be an approved legal aid provider, something that was blocked by Law Society complaints in 2013.
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His challenge against the situation resulted in a precedent-setting Supreme Court decision, with the country’s highest court saying lawyers can claim for costs when they represent themselves.
His initial legal aid appeal was stopped by the Supreme Court in 2018, and his second challenge met the same fate.
Meanwhile, the ministry initiated bankruptcy proceedings against McGuire to recover $35,182.86 in costs and interest he owed it.
According to an October High Court decision from Associate Judge Kenneth Johnston, the ministry offered to settle on the basis neither party would pursue costs.
McGuire ended up paying back all but $103.12 of the bill, which the ministry wrote off as de minimis – to small to be meaningful – when withdrawing its bankruptcy proceeding.
Despite the ministry’s offer to settle with no party pursuing costs, McGuire applied for costs.
Johnston did not outline the full background in his decision, noting McGuire’s written analysis was “eloquent testament” to both McGuire’s knowledge “and perhaps also to the extent to which a disproportionate amount of time and attention can very easily be expended on litigation”.
The High Court Rules generally allowed people on the receiving end of discontinued legal action were entitled to costs, but a general rule was not an absolute one, Johnston said.
If McGuire was entitled to costs because the ministry wrote off the $103.12, the ministry would be incentivised to chase down that small amount to avoid costs.
“That of course would be an inefficient use of the parties’ resources,” Johnston said.
Neither party was entitled to costs.