Colbart Limited v Eastpack Limited

[2013] NZHC 808

IN THE HIGH COURT OF NEW ZEALAND ROTORUA REGISTRY

CIV2011-463-000828 [2013] NZHC 808

BETWEEN  COLBART LIMITED Plaintiff

ANDEASTPACK LIMITED First Defendant

ANDEASTPACK KIWIFRUIT OPERATIONS LIMITED

Second Defendant

ANDRIVERLOCK ORCHARD PACK AND COOLSTORE LIMITED

Third Defendant

Hearing:         16 April 2013

Appearances: A A Hopkinson for the first and second applicants

J H Olphert for the third defendant applicant
D S Dowthwaite/W J Revell for the respondent

Judgment:      16 April 2013

ORAL JUDGMENT OF ASSOCIATE JUDGE CHRISTIANSEN

This judgment was delivered by me on

16.04.13 at 4:30pm, pursuant to

Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date……………

Solicitors/Counsel

W Revell, Dowthwaite Law, Rotorua – [email protected] / [email protected]

A Hopkinson, CooneyLeesMorgan, Tauranga - [email protected]

J Olphert, Olphert & Associates Ltd, Rotorua – [email protected]

COLBART LIMITED V EASTPACK LIMITED HC ROT CIV 2011-463-000828 [16 April 2013]

[1]      The  applicants  apply  for  further  orders  for  security  for  costs.     These applications are opposed.  Upon their applications previously the Court made orders for the payment of security into Court to cover the period up to and including the setting down of the proceeding for trial.

[2]      The proceeding has been allocated a trial of nine days commencing 4 June

2013.

[3]      Previously the Court made orders to pay security of costs (as to $20,000 for the first and second defendants and as to $20,000 for the third defendant) in face of claims that the defendant applicants have not sufficiently proved that the plaintiff was unable to meet any adverse order for costs. At that time the Court did not accept there was insufficient proof of the plaintiff’s inability to pay costs.

[4]      When original orders for security were made the Court reserved leave for the filing of these applications in anticipation of trial costs considerations.

[5]      Since the previous orders for security for costs were made the plaintiff has paid into Court the amounts fixed and in addition has paid the costs awarded against it on those original applications.  All payments were made on behalf of the plaintiff (presumably by its principal Mr Campbell) through the plaintiff’s solicitors trust account.

[6]      Latterly the plaintiff as filed an amended statement of claim in which losses are calculated at $329,000.  This is approximately half the level of costs claimed in its original statement of claim.

[7]      The first and second defendant applicants calculate that if the plaintiff ’s claim fails  then  they  would  be  entitled  to  a  costs  award  of  approximately  $61,000 calculated on a category 2B basis.  In addition they estimate their expert witness fees will be approximately $15,000.   In the round they calculate a total costs award of about $75,000.

[8]      The first and second defendants estimate their actual total legal fees will be approximately $100,000 plus GST and expert witness fees.  They complain that the

$20,000 awarded already by way of security would only cover approximately 27 per cent of their likely costs award if the plaintiff’s claim fails.

[9]      Argument on behalf of the third defendant offers similar calculations as to costs and disbursements.

[10]     All defendant applicants remain now as they have always have been of the view that the plaintiff is totally reliant on its Mr Campbell for funding.

[11]     These applications are opposed on the grounds that the quantum of security sought is excessive.  An offer to pay an additional $20,000 in total as security was rejected by the defendants.   In Mr Campbell’s affidavit in opposition he proposes that any further order for security be met by way of a charge over certain shareholdings of his.  He says he owns a company called Whistler Orchards Limited which   owns   shareholdings   in   the   first   defendant   which   have   a   value   of approximately $170,000.   Although information was provided in support of those share  value  estimates  nothing  at  all  has  been  provided  regarding  the  financial situation of Whistler Orchards Limited.  Strangely, there are still not details provided about the financial situation of the plaintiff.   It is no longer acceptable for the plaintiff to rely upon the proposition that the defendants must prove it is unable to meet any adverse costs award.   In this case the Court can reasonably assume that indeed the plaintiff is without doubt relying upon Mr Campbell’s funding for it to operate at all.

[12]     A significance focus of any trial will be upon the evidence of Mr Campbell and his recollections of those events which he says proves the plaintiff ’s claims against the defendants.

[13]     It is not appropriate at this time to provide a view on the merits of the parties’ respective  positions.    Therefore  the  Court  should  ensure  that  there  is  adequate security in the event the claims should fail.  The participants are commercial entities. The Court does not consider sufficient has been offered by way of security.  In his

submissions to the Court Mr Dowthwaite challenged counsels’ calculations of a final award of costs if the plaintiff’s proceeding failed.  It is sufficient to say there may be merit in reviewing cost claims for discovery and for the issue of interrogatories. Also there should be deducted from defendant counsels’ calculations of the amount of costs and disbursements previously paid and those which are to be paid upon the current applications for security.  As earlier noted those costs have been met by the plaintiff. Also it will be a condition of the further orders for security to be made that the costs on those are to be paid by 30 April 2013.

Decision

[14]     The Court orders that the plaintiff pay additional security in the sum of

$17,500 for the first and second defendants together, and in the sum of $17,500 for the third defendant.

[15]     Of the $35,000 in total the sum of $20,000 is to be paid into Court in cleared funds by 30 April 2013.  As to the balance of $15,000 this is to be paid into Court in cleared funds no later than 21 May 2013.

[16]     In  the event  the sum  of  $15,000  is  not  paid by 21  May  2013  then the proceeding will be stayed and the trial scheduled for 4 June 2013 will be vacated.

[17]     I fix the costs of the first and second defendants on the one hand and of the third defendant on the other upon the security for costs applications in the sum of

$2,500 together with disbursements and these are payable by the plaintiff by 30

April 2013.

[18]     Counsel remind the Court that the plaintiff’s evidence for trial is due to be delivered  by  23  April  2013.    I  direct  the  Registry  to  schedule  a  telephone conference with the Trial Judge on 24 April 2013 or within days thereafter as it suits the convenience of the Judge and counsel.

Other matters

[19]     Leave is reserved to the parties to apply on short notice for a telephone conference to be convened for any purpose at all.

Associate Judge Christiansen