Court of Appeal awards indemnity costs to vendor finance company facing moot appeal

DLL issued bankruptcy notices on the appellants in May 2025. The appellants applied to set aside the notices. An associate judge refused to do so. 

Appeal filed

Vasanthans appealed against the judgment. The Court of Appeal confirmed a 24 June 2026 hearing date. 

To secure the judgment debt. DLL obtained an October 2025 charging order over the appellants’ Auckland property. After the property sale, DLL received full repayment of the judgment debt. 

In emails sent to the appellants’ solicitor from 11 May 2026 to 16 June 2026, DLL’s solicitors asked about whether the appellants would abandon their appeal, which had become moot upon the discharge of the charging order on around 7 May 2026. 

Strike-out application

Given the lack of responses received or submissions filed, DLL applied to strike out the appeal on 5 June 2026. DLL alleged that the appellants failed to prosecute their appeal, which was moot and abusive of process, with due diligence. 

The appellants filed a notice of abandonment of the appeal dated 17 June 2026. Thus, the Court of Appeal addressed the unresolved issue of costs. 

Indemnity costs

The Court of Appeal of New Zealand considered it appropriate to award DLL indemnity costs and security for costs for the following reasons. 

First, the appeal court saw no merit in the appeal and no arguable error advanced in the decision under appeal. The appeal court noted that prior decisions described: 

• the first District Court application to set aside the default judgment as “little more than a further delaying tactic” 
• VCL’s application to set aside the statutory demand as substantially “a collateral attack” on the District Court decision, demonstrating “a failure to understand the true nature of DLL’s claim” 

Second, the appeal court determined that the appellants, motivated by delay and a lack of comprehension of DLL’s case, failed to: 

• Take steps to withdraw the moot appeal 
• Reply to correspondence from DLL’s counsel, which prompted DLL’s strike-out application 
• Explain their failure to respond 

The appeal court said the appellants should have promptly abandoned the appeal upon the discharge of the judgment debt. The appeal court rejected the excuse that the appellants’ relocation to Australia led to delays in providing instructions. 

Third, the appeal court held that DLL incurred unnecessary costs due to the appellants’ conduct during the proceedings. Specifically, DLL incurred costs to: 

• Oppose an application to dispense with security for costs 
• Prepare for an appeal 
• Draft submissions 
• File an interlocutory application 

Enjoy this story? Read the latest litigation and dispute resolution news on the main page!