A.C.N. 092 138 442 Pty Limited (in liquidation) v Bristol Custodians Limited
[2014] NZHC 235
•20 February 2014
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV-2013-485-001048 [2014] NZHC 235
BETWEEN A.C.N. 092 138 442 PTY LIMITED (IN LIQUIDATION)
First Plaintiff/Applicant
OZEM KASSEM and BRUNO SECATORE
Second Plaintiffs/Applicant
ANDBRISTOL CUSTODIANS LIMITED First Defendant/Applicant
STEVEN JOHN FLAWS Second Defendant/Applicant
Hearing: 20 February 2014
Appearances: A A H Low for Defendants/Applicants
D J Friar and W D Hofer for Plaintiffs/Respondents
Judgment: 20 February 2014
ORAL JUDGMENT OF VENNING J RE SECURITY FOR COSTS
Solicitors: Bell Gully, Auckland
Alexandra Low & Associates, Auckland
A.C.N. 092 138 442 PTY LTD (IN LIQ) & ORS v BRISTOL CUSTODIANS LTD & ANOR [2014] NZHC 235 [20 February 2014]
[1] These proceedings have a fixture allocated for two days to commence on 3
March 2014.
[2] On 12 February the defendants applied for security for costs. The application for security for costs is opposed by the plaintiffs. The first point is that the application for security is made well after the close of pleadings date and leave is required. I treat the applicant/defendants’ submissions by Ms Low as an oral application for such leave and have heard the parties on that matter this morning.
Brief background
[3] I gratefully adopt the summary of Associate Judge Bell’s previous minute. The first plaintiff is an Australian company in liquidation. The second plaintiffs are the Australian liquidators of the company. The first defendant is a New Zealand company. It is said to be a former trustee of a LSW Group Property Trust. The second defendant is a liquidator of the first defendant. He lives between New Zealand and Australia. The director of the first defendant is a Mr Geoffrey Buckfield. He is Australian. The sole shareholder of the first defendant is his wife, Ms Jan Buckfield, who is also Australian. Mr Buckfield formerly controlled the plaintiff. It was the owner of four properties in Australia as well as a business that traded as the LSW Group. There are related proceedings before the Australian Courts.
[4] In the third amended statement of claim filed on 30 October 2013 the plaintiffs raise a number of causes of action. They seek the first defendant not be removed from the New Zealand Companies Register, the appointment of a new liquidator to that company; orders reversing the second defendant’s final report as liquidator; orders reversing other decisions of the liquidator; leave to continue proceedings in Australia, and also raise four causes of action seeking personal relief against the second defendant.
[5] In support of the application for security Ms Low submits that both plaintiffs are outside New Zealand. Also there is reason to believe the plaintiffs would be unable to pay costs if they are unsuccessful. She submits that, in weighing the discretionary factors, an order for security would not adversely impact the interests
of the plaintiffs. The increasing complexity of the issues in the case as evidenced by the amended pleading on 30 October and the significant evidence exchanged in support of the plaintiffs’ claim in December mean that an order for security is appropriate.
[6] The application is also supported by an affidavit from the second defendant. He makes the point that he is not aware of any creditors who may have funded or voted in favour of the proceedings and he is uncertain that any creditor would have the ability to meet the defendants’ costs. He notes the effect of the amended claim on him and in particular his greater exposure to costs.
[7] The application for security is, as noted, opposed. Mr Friar takes the preliminary point that leave is required for such an application and leave ought not to be granted in this case.
[8] Counsel have both referred to the case of Pegasus Group Ltd v QBE Insurance (International) Ltd & Anor.1 In that case Andrews J cited with approval the principles on which the Court may decide an application for leave to file interlocutory applications out of time as identified by Fisher J in Fordham v Xcentrix Communications Ltd.2 Those principles are:3
(a) The discretion to grant leave will be exercised in a way that will best achieve justice;
(b) There must be some basis or material on which the court could exercise its discretion;
(c) The court will weigh injustice to the defendant/plaintiff to see where the justice lies;
(d) The reasons for not making application before setting down will be considered;
(e) The court will consider whether irreparable damage will be suffered by the applicant if the order is not made.
1 Pegasus Group Ltd v QBE Insurance (International) Ltd & Anor HC Auckland CIV-2006-404-
006941, 6 March 2009.
2 Fordham v Xcentrix Communications Ltd (1996) 9 PRNZ 682.
3 At 685.
[9] The principal issues in the present case seem to me to be where the justice of the matter lies, which requires the Court to consider the merits of the application for security itself, the reasons for the late application and whether irreparable damage would be suffered if the order is not made.
[10] In the present case I note Ms Low’s point that given both plaintiffs reside overseas the initial threshold requirement is met. That supports the substantive application for security. However, against that, and accepting that the first plaintiff is a company in liquidation, the second plaintiffs in the present case are liquidators. There is no suggestion that they will not be able to meet any order of costs that may be made against them. The issue is that they are Australian residents. Apart from the general submission made by Ms Low that Australian courts may be reluctant to award costs or enforce costs against liquidators personally, (which is made without any material or evidence before the Court to support it), there is nothing before the Court to suggest that if the plaintiffs are ultimately successful and an order for costs is made against the plaintiffs, including the second plaintiffs, that the defendants would not be able to enforce the order against the second plaintiffs personally.
[11] Any order for costs in those circumstances would be an order of the High Court of New Zealand. Under the relevant legislation such an order is registrable as a judgment in Australia and enforceable accordingly.
[12] I turn to the delay in making the application. Ms Low submitted that although the close of pleadings date was set as at 18 November, that date should have been adjusted because there were developments made after that date was fixed, including the substantive amended claim by the plaintiffs. However, in the absence of any application to the Court by the parties or of the matter having been raised, the close of pleadings date remains as it was fixed. Indeed the pleadings were closed by that date, because the amended claim that the defendants rely on to support the late application for security for costs was filed and served on or about 30 October 2013.
[13] The defendants have been on notice since that date at least of the case they would face and, particularly in the case of the second defendant, that the plaintiffs were seeking relief against him personally.
[14] Ms Low made the point that it was only when the substantive volumes of evidence from the plaintiff were served on 19 December that the defendants, and particularly Mr Flaws, fully appreciated the case they had to meet and the expense they would be put to to meet that case.
[15] However, even giving that submission as much weight as I can, I note that the application for security was not filed until 12 February, notwithstanding that Mr Flaws’ affidavit in support of it was completed on 28 January in Queensland. The application being filed on 12 February was filed within less than three weeks of the start of the fixture. It has to be said that the application for security for costs has in this case been made at the eleventh hour. It comes very late. I note Mr Friar’s point that the application has been a distraction to the plaintiffs being filed at this late stage as it has required an urgent response, but I do not overstate that. The relevant principles on an application such as this are well known to both counsel and, if I might say, both counsel have said everything that can be said on such an application at short notice this morning.
[16] In short, I am not satisfied that the reasons for the late application for the security are fully explained. The applicant cannot satisfy the Court as to why the application was made at this very late stage.
[17] Finally I am not satisfied that irreparable damage, let alone any particular damage, will be suffered by the applicant for security if leave is not granted and the order for security is not made. As noted, if the plaintiffs are unsuccessful they will face an order for costs. I am not satisfied that such an order would be unenforceable. It may be that additional costs will be incurred by the defendant in executing the order but I do not consider that to be the type of irreparable damage contemplated by
Fisher J and discussed in the Fordham case.4
[18] For those reasons I am satisfied in this case that it is not appropriate to grant leave. The merits of the application for security do not support leave being granted. The delay is extensive and has not been fully explained by the defendant. I am not
satisfied that the interests of justice require leave to be granted.
4 Fordham v Xcentrix Communications Ltd, above n 2.
[19] The application to bring the application for security and the application for security for costs itself are accordingly dismissed.
Costs
[20] Costs to the plaintiffs on a 2B basis together with any relevant disbursements.
Venning J
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