Corbans Viticulture Ltd v Waihopai Valley Management Ltd

[2012] NZHC 2799

IN THE HIGH COURT OF NEW ZEALAND BLENHEIM REGISTRY

CIV-2010-406-000046 [2012] NZHC 2799

BETWEEN  CORBANS VITICULTURE LIMITED Plaintiff

ANDWAIHOPAI VALLEY MANAGEMENT LIMITED

First Named First Defendant

ANDACHILLIES VENTURES LIMITED, ATREIDES HOLDINGS LIMITED, BLICKS ROAD INVESTMENTS LIMITED, FARRAH INVESTMENTS LIMITED AND ORS TRADING AS PATRIARCH JOINT VENTURE Second Named First Defendant

ANDANTHONY LEWIS MOORE Second Defendant

ANDDEAN ALFRED STEELE Third Defendant

ANDBEN DOUGLAS Fourth Defendant

ANDDENNIS LUNKEN Counterclaim Defendant

Hearing:         15 October 2012

Appearances: L Ponniah for Plaintiff and Counterclaim Defendant

G M Downing for the first-named First Defendant and Second
Defendant
D J C Russ for second-named First Defendant
T R J Jeffcott for the Third and Fourth Defendants

Judgment:      24 October 2012

RESERVED JUDGMENT OF ASSOCIATE JUDGE MATTHEWS

CORBANS VITICULTURE LIMITED V WAIHOPAI VALLEY MANAGEMENT LIMITED HC BLE CIV-

2010-406-000046 [24 October 2012]

[1]      This judgment determines the following interlocutory applications:

a)  By the second-named first defendant, the Patriarch Joint Venture, for security for costs against the plaintiff.

b) By the first-named first defendant, Waihopai Valley Management Limited, for security for costs against the plaintiff and the counterclaim defendant.

c)  By the third and fourth defendants, Mr Steele and Mr Douglas, for further security for costs against the plaintiff.

d) By the third and fourth defendants, Mr Steele and Mr Douglas, for leave to bring a summary judgment application against the plaintiff out of time.

e)  By Waihopai Valley Management Limited for further and better discovery by the plaintiff, and directing the plaintiff to answer interrogatories, and for costs on those applications.

[2]      There is a further application by the plaintiff for security for costs against the first-named first defendant in relation to its counterclaim.   The plaintiff maintains this should be the subject of direction to bring it to a hearing.     I understood at the fixture that counsel agreed it could be determined, but out of caution I defer consideration of it in this judgment.

[3]      As the last of these are largely resolved I will determine these first.   I will then deal with the applications for security for costs by the defendants, followed by the application for leave to bring summary judgment proceedings out of time.

Discovery and interrogatory issues

[4]      Answers to interrogatories which satisfy Waihopai’s request have now been provided.  One attachment is yet to be provided but is not expected to require further directions from the Court.  Costs are sought.

[5]      Waihopai still requires discovery and inspection of documents described in a letter from the plaintiff’s solicitor sent on 10 September, paragraph 1.8.   In that paragraph  the  documents  are  described  as  “all  correspondence  relating  to  the relevant period” but there is no further detail.  Mr Ponniah maintains that it is likely that once these documents are sorted it will be found that they have already been discovered.   Mr Downing says that whilst that may be the case, he is entitled to know whether it is or not, and to have discovery of any documents in this category which have not yet been discovered.

[6]      At the hearing I indicated to both counsel that I want clarity on this point and finality of discovery issues in very short order.   If any documents now held by Corbans Viticulture and/or its solicitors as described in that letter have not yet been discovered, they are to be listed in an affidavit of documents filed and served by

26 October.  Documents which have already been discovered are also to be identified by reference to their reference numbers in existing discovery.  For the sake of clarity this discovery order extends to all further discoverable documents held by Corbans Viticulture and/or Mr Lunken, the counterclaim defendant.

[7]      Mr Ponniah raised with me issues he has had with Waihopai concerning insurance.  His clients have sought discovery of documents relating to any insurance cover Waihopai may have had, in order to determine whether Waihopai has or has not in fact already been compensated for the losses in respect of which it has made its counterclaim.  Mr Ponniah maintains that he has requested this information before but that it has not been forthcoming.   Mr Downing says he does not recall any requests for discovery of this material and that as this was not the subject of a formal application he had not come to court prepared to answer it.

[8]      At  the  hearing  I  ruled,  and  now  record,  that  I  decline  to  deal  with Mr Ponniah’s request as an informal application.   I pointed out that any relevant documents which are not discovered cannot be relied on at trial and that if an issue arises over whether Waihopai has already been compensated for its losses by an insurer, then plainly Waihopai would be in considerable difficulty at the trial.  I trust Corbans Viticulture and Waihopai through their respective counsel will now respond

appropriately to the legal requirements of discovery of relevant documents without the need for further Court intervention at this late stage in the interlocutory process.

[9]      Mr Downing seeks costs on both issues pointing out that his application should not have been necessary.   He says Corbans Viticulture has delayed in complying with its obligations in relation to interlocutory issues.  Mr Ponniah says that one item sought by Mr Downing, a video, was provided by a witness when being briefed and neither Corbans Viticulture nor Mr Lunken, nor he, were aware of its existence earlier.   It was discovered as soon as practicable after it came to Mr Ponniah’s attention.  On both discovery and interrogatories Mr Ponniah says that his clients have not delayed inordinately.

[10]     I have considered the respective positions of the parties, the progress with this litigation, and the respective submissions of counsel.   So far as discovery is concerned, I find that Mr Lunken as managing director of Corbans Viticulture has not complied as promptly as he should have in relation to discovery, noting that he was still providing correspondence relating to the relevant period to his solicitors in September of this year.   This case was commenced in 2010.   I am satisfied that Waihopai is entitled to costs on this application and I award costs on a 2B basis plus disbursements.

[11]     I  am  not  satisfied  that  there  has  been  an  inordinate,  or  in  any  event, inexplicable delay in responding to interrogatories.  On that application costs will lie where they fall.

Applications for security for costs

[12]     Rule 5.45 of the High Court Rules provides that if a Judge is satisfied that there is reason to believe that a plaintiff will be unable to pay the costs of the defendant if the plaintiff is unsuccessful in its proceeding, the Judge may order the giving of security for costs if he thinks it is just in all the circumstances.

[13]     Thus an applicant must first establish on evidence sufficient reason for the

Court to be satisfied that the plaintiff will be unable to pay an adverse costs award,

and secondly show that it is just in all the circumstances that an order should be made.[1]  The first of these is commonly referred to as the threshold test.

[1] Busch v Zion Wildlife Gardens Ltd (In Receivership and In Liquidation) [2012] NZHC 17.

[14]     It is plain that the discretion given  by this rule is not to be fettered by endeavouring to construct principles from the facts of previous cases.   What is required is a careful assessment of the circumstances of the case in question, thereby making a principled decision.[2]

[2] McLachlan Ltd v MEL Network Ltd (2002) 16 PRNZ 747.

[15]     Mr Russ presented submissions on behalf of the Patriarch Joint Venture, which Mr Downing and Mr Jeffcott adopted.

[16]     There  was  a  preliminary  argument  over  the  late  filing  of  a  notice  of opposition to the application.   The notice of opposition was undoubtedly late; I accept that Mr Russ had written to the solicitors for Corbans Viticulture seeking confirmation that the application was not opposed but did not receive a reply.  I also accept that the opposition when filed was in the same terms as the opposition filed in respect of the application by Waihopai of which Mr Russ had a copy.  In the end both counsel treated the application as opposed and Mr Russ accepted that the only real point to be made is that the late filing of the opposition may be relevant to costs.

The threshold test

[17]     Firstly, Mr Russ argues that as the plaintiff had consented to an order giving security for  costs  in  favour  of  Mr  Steele  and  Mr  Douglas  some  time  ago,  the threshold test was established.  He relies on Cargill NZ Ltd v Palmerston Wool Co Ltd.[3]  At p 4 Smellie J said:

[3] Cargill NZ Ltd v Palmerston Wool Co Ltd (1997) 11 PRNZ 52 (HC).

Rule 60 of the High Court Rules requires that the Court is to be satisfied of certain matters before security is ordered.  In a sense those grounds can be taken as having been established because of the consent order.

[18]     Mr Russ accepts that this is not an inviolable rule and circumstances may change, but submits that it would be incumbent upon a plaintiff to demonstrate a

change of circumstances since the time the consent order was made.  It would have to be sufficiently cogent to justify an assertion by the plaintiff that it can now meet costs, when it had accepted, earlier, that it could not.   No such evidence has been presented.

[19]     Secondly, Mr Russ says that in any event the evidence is sufficient to satisfy the threshold test.  Mr Russ submits that the failure of Corbans Viticulture to disclose its financial circumstances should give rise to an adverse inference on its ability to meet costs.[4]

[4] Arklow Investments Ltd v MacLean (1994) 8 PRNZ 188 at 191 (HC).

[20]     The first evidence relied on by Mr Russ is in an affidavit of Mr M A Gillam sworn on 2 November 2011.  He is a licensed private investigator.  He says that in September 2011 he went to Corbans Viticulture’s premises.  There was little or no noise around the property, which looked “somewhat closed up”.  He could not see any activity.  There was one vehicle parked in an 8-space parking area.  There were no people coming or going in the half hour period that he was present.

[21]     He  went  to  see  a  neighbour  who  informed  him  that  Corbans  had  one caretaker looking after the property and equipment but the viticulture process carried out on the property had shut down.  This person told Mr Gillam that Corbans had no staff, but that the man to contact was “Dennis”.

[22]     Mr Gillam said that he had telephoned the company shortly before, and tried to speak to someone about purchasing root stock.   He was told that Mr Dennis Lunken was the only person to speak to but he was away.

[23]     Mr Gillam then made an appointment to meet Mr Lunken early in October, at the property.  He noted the same vehicle was parked in the car park and during the

20 minutes he was there he did not see or hear any other person there.  There was no

receptionist.  All offices apart from Mr Lunken’s were empty and appeared to be

unoccupied.

[24]     Mr Gillam made an inquiry from Mr Lunken about purchase of some root stock and Mr Lunken advised he could not assist, nor could he say whether he would have sufficient root stock to meet the inquiry in the New Year.   Mr Lunken gave Mr Gillam a list of root stock currently available, amounting to some 11,000 items. The price quoted was $4.00 each, including freight packaging and insurance.

[25]     A week after that meeting Mr Gillam attempted to phone a Ms Maitland described on the company’s website as the production manager.  The number given for  her  resulted  in  an  automated  message  advising  the  number  was  no  longer allocated to a customer.  However, the website contained a Vine List dated 15 August

2011  showing  the  quantities  of  vines  available  by  variety.    The  list  showed

20 varieties  with  just  under  18,000  vines  available  and  a  further  five  varieties labelled as sold out.

[26]     Two weeks later Mr Gillam again accessed Corbans Viticulture’s website and

printed off a Vine List showing 15 varieties with a total of 11,100 vines in stock, and

10 varieties sold out.  No new stocks had been added and there were no increases in available numbers for any variety.

[27]     Further evidence was given by Mr D A Steele, a chartered accountant.   He also viewed the Corbans Viticulture website in October 2011 and noted the stated availability of varieties and quantities of root stock.  Based on the price of $4.00 per item quoted to Mr Gillam, and the stated 11,100 vines available, Mr Steele noted a return  of  $44,000  prior  to  operational  overheads  and  deductions  for  freight packaging and insurance.   By way of comparison  he referred to the website of Riversun Nursery Limited which showed 79,000 vines in stock, from 118 varieties. He proffered the opinion that from the information he had it appeared that the stock levels for Corbans Viticulture showed that it is not trading at a viable level to sustain even minimal overheads.

[28]     Mr Steele then referred to a quality certification programme called Tellarc SAI Management System which provides a certification standard for businesses, giving  national  recognition.    He  referred  to  a  report  by  that  company  dated

30 September 2009 from Tellarc’s lead auditor which he obtained from the plaintiff’s

discovery.  He quoted the following paragraph:

This drastic reduction in staff numbers is due to the reduction of sales from the previous 800,000-900,000 vines to the projected 100,000 vines to be sold in the current season.  The company will have up to 300,000 vines available to sell so any unrealised demand could be met.   A minimum of staff is required to manage the 100,000 vine throughput and the one paddock used to grow the vines.  The Board is currently funding the cashflow shortfall and the company is constantly going through a cost cutting programme.  Leased land is being relinquished and overhead costs reduced.

[29]     From this Mr Steele expressed the view that it was clear confirmation that the company was experiencing difficulty with trading from as early as 2009 and was receiving funding from its Board to continue trading.

[30]     Mr Steele went on to note that given the current stock available, the company was trading well below the 2009 level of 300,000 stock units.  He expressed the view that the company’s ability to continue trading is tenuous, given the stock level, the physical observations of the company’s property by Mr Gillam, and Mr Lunken’s indication that he did not know what stock he would have available in the New Year, but was going to have to wait and see.

[31]     The third affidavit relied on in support of the application is that of Mr J P Bischkopf, another private investigator.  He sees that on 5 October 2012 at around

1.30 pm he went to the property.  He drove around the perimeter.  The driveway gate was locked, as was the gate to the paddocks.  He noted the windows in the office blocks appeared to be closed with all blinds closed, the grass in the paddock was overgrown, there was no sign of any activity and there were a number of old crates stacked around the property, appearing to be empty.  There were no vehicles in the carparking area and no sounds coming from the premises, nor people coming and going.

[32]     Mr Bischkopf then spoke to two employees of an adjacent property, and another person at another nearby address.   The view of those people was that the business appeared to be closed and did not seem to be operating much.

[33]     Mr Bischkopf returned the next day and observed that the position seemed to be the same.  However, two days later he noticed that the front gate leading to the office was open.

[34]     There was one person present, identified as Mr Lunken.  Mr Bischkopf told Mr Lunken that he was looking to purchase pinot noir root stock for his father’s farm “up north near Maungatapere”.  Mr Lunken told him he did not have any pinot noir but  he  could  try  another  person  whose  phone  number  and  name  he  gave  to Mr Bischkopf.  Mr Lunken told him that he was the only person there looking after the place, and Mr Bischkopf did not see any other person there.   He made other observations about the premises broadly similar to those of Mr Gillam a year earlier.

[35]     Mr Russ says that based on this evidence Corbans Viticulture has wound down its operations.  From output of 800,000 to 900,000 vines, it has progressively dropped to 300,000 then 100,000 and now just 11,100 vines available to sell, at

$4.00 each.

[36]     Evidence  in  opposition  to  the  application  was  given  for  the  plaintiff  by Mr Lunken.  In an affidavit dated 8 October Mr Lunken said that it is well-known that in recent years the viticulture industry and the wine industry, both in New Zealand and worldwide, have been slow as a result of the downturn in the world economy and  a surplus of supply in  certain  varieties of wine in  New Zealand. Corbans therefore decided it was prudent business practice to implement a cost reduction programme to meet current market activity and wait for the economy and the viticulture industry as a whole to improve.  It undertook an orderly restructuring. He remains the CEO.  The core functions of the business are still being maintained and “from time to time” Corbans gets inquiries from various customers “which we try to satisfy”.

[37]     Mr  Lunken  said  that  all  root  stock  blocks  have  undergone  pruning  and nursery maintenance so that graftable root stock varieties are available for an anticipated upturn when it occurs.

[38]     In his affidavit of 12 October Mr Lunken said that he did not accept that Mr Bischkopf’s inquiry for pinot noir grapes was genuine because this variety will not grow in the area given, a fact which would be known to anyone who was genuinely looking  to  purchase  that  variety  or  develop  a  vineyard.    Mr  Lunken  said  that although Mr Bischkopf did not see or hear any other person on the premises Ms Maitland, the production manager, was at work, grafting in the production shed.  He said there was no need for a receptionist as most business comes from vineyards around the country and there are few walk-in customers, that he and Ms Maitland can and do receive telephone calls, and that the business is not closed, nor has it ceased trading.  He continues as the chief executive officer, managing it.

[39]    Finally, Mr Russ points to answers given to interrogatories which gives information about staff members, also referred to in the Tellarc report.  From a total of 51 employees, 49 employees had had their employment terminated by 31 May

2009 (18 permanent staff, and 31 seasonal staff) leaving just two permanent staff now employed.

[40]     Mr Russ submits that the claim against Patriarch is not strong; the evidence will be that it has paid Waihopai for the vines which Waihopai bought from Corbans Viticulture and that it did not have a contract with Corbans Viticulture itself. Discovered documents refute any suggestion that Waihopai was acting as agent for Patriarch Joint Venture.

[41]     Mr Russ submits that there is no force in the suggestion that this application has been brought too late, or as a tactical move.  It was filed three months before the setting-down date and after a period during which settlement had been attempted. When this was not achieved the position was reviewed and the financial ability of the plaintiff to meet an adverse award of costs was reassessed.

[42]     Mr Russ says that an assessment of a likely adverse costs award for the trial alone, expected to extend over 10 days, is just under $60,000 in addition to which there would be expert costs to be met.   He estimates an award of costs and disbursements of some $70,000 to $75,000 in all, and asks for security for costs in the sum of $50,000.

[43]     Mr Ponniah says first that the applications by the defendants rely on evidence from Mr Gillam and Mr Steele which is a year old.  He invites me to infer from the fact that the plaintiff is still running the case, and has paid $30,000 by way of security for costs already, that the plaintiff can afford to pay an adverse costs award. He points out that Mr Lunken remains as CEO, and the company still uses contract workers when needed, for pruning.  It is still producing.  It has been slowed down for prudent reasons and is ready to take advantage of an upturn in the market in due course.   Mr Ponniah says there is no evidence the company has failed to pay any debts or failed to comply with any financial obligations.

[44]     Mr  Ponniah  says  the  claim  against  the  defendants  is  strong  and  refutes Mr Russ’s submissions in relation to whether the Patriarch Joint Venture has in fact paid Waihopai.

[45]     Mr  Ponniah  then  relies  on  Kimber  Timber  Products  (1996)  Ltd  (In

Receivership) and Ors v Kimber Timber Products Ltd[5] where, at p 8, the Judge said:

... there is no justification for requiring the plaintiffs to provide security for costs in respect of their proceeding when they can raise exactly the same arguments and claim substantially the same relief in their defence to the first defendant’s counterclaims.

[5] Kimber Timber Products (1996) Ltd (In Receivership) and Ors v Kimber Timber Products Ltd

HC Rotorua CP25/96 26 June 1997, Master Kennedy-Grant.

[46]     Mr Ponniah says that the counterclaim is far more complex than the claim and would have been brought against the plaintiff anyway, so the Kimber Timber decision is applicable.  He says that Corbans Viticulture has strong defences to the counterclaim by way of contractual exclusion clauses, and evidence that the vines which Corbans Viticulture supplied to Waihopai were planted late, resulting in the failure of which Waihopai complains.

[47]     Mr Ponniah also submits that the application has been brought too late.  The case is at the point where evidence is about to be exchanged, the setting-down date is

rapidly approaching, and the trial is set for March.

[48]     In reply, Mr Russ submits that although the evidence of Mr Gillam and Mr Steele is a year old, it remains current until it is shown to be no longer an accurate  representation  of  the  present  situation,  that  to  an  extent  Mr  Gillam’s evidence  is  brought  up  to  date  with  that  of  Mr  Bischkopf,  and  that  Corbans Viticulture has elected not to respond to that evidence by producing any evidence that the situation is other than is described by those witnesses.

Discussion on whether the threshold test is met

[49]     For the following reasons I am satisfied that there are sufficient reasons to believe that Corbans Viticulture will be unable to pay the costs of the defendants if unsuccessful in this claim.  First, the business has plainly been wound down.  This is established by the evidence about the drop in staff numbers, the drop in root stock numbers and the physical state of the premises.   Whilst this might be a prudent response to market conditions, that is a different and irrelevant issue.   I have put aside the hearsay evidence of conversations with third parties about the company’s activities.

[50]   Secondly, although the evidence of Mr Gillam and Mr Steele is about circumstances a year ago, Corbans Viticulture has known. since their affidavits were filed in support of an earlier application, that they were to be relied upon for the purposes  of  a  security  application,  and  has  had  ample  opportunity  to  produce financial statements or accounts, or other hard evidence of the financial position of the company, for me to take into account.  Whilst I must be cautious in drawing an adverse inference from the lack of this material, the evidence of the wind-down is so compelling and the apparent turnover of the company so low that in my opinion this is a case where I must properly infer that the evidence presented for the defendants accurately  portrays  the  present  financial  position.     It  is  no  answer  that  the shareholders support the company, because an adverse costs award would be made against the company not the shareholders.

[51]     For these reasons I find that the threshold test in r 5.45 has been met.

Exercise of discretion

[52]     First, I do not consider that in the circumstances of this case, the existence of the counterclaim by Waihopai should defeat the application for security for costs, as decided  in  the  Kimber  Timber  Products  case.     I  accept  the  submission  of Mr Downing that the evidence in support of the counterclaim is the same evidence relied  on  in  defence  of  the  claim,  apart  from  evidence  of  quantum,  so  the counterclaim will not significantly increase the time required to try the plaintiff’s claim.   There should in my judgment be a reduction, however, in the amount of security ordered in favour of Waihopai, for this reason.

[53]     Secondly, the application has not been brought unduly late in the proceeding. It is not uncommon for applications for security for costs to be brought as the reality of trial costs become evident, or as a change in a plaintiff’s financial circumstances becomes  evident.    The  applications  were  brought  shortly  after  the  failure  of settlement attempts, and well before the setting-down date.

[54]     Thirdly, awarding security for costs will not prevent the case proceeding: Mr Ponniah responsibly informed me that if security is required the court order will be met.  Given evidence that the shareholders are supporting the company, it may be that it will be the shareholders who meet the orders.  In the circumstances established by the evidence, that would be a satisfactory position, because as already noted an adverse costs award would be against Corbans Viticulture not the shareholders, yet it is the shareholders who are funding the litigation while at the same time winding the activities of the company down.

Amount to be awarded

[55]     Taking into account the projected trial costs for each defendant, it is my view that Corbans Viticulture should give security for costs in the sum of $50,000 for the Patriarch Joint Venture partners, $50,000 for Mr Steele and Mr Douglas (less the sum of $30,000 already secured) and $40,000 for Waihopai representing a discount of

$10,000 against the sum I would otherwise have awarded, for the reasons noted.

[56]     I think it appropriate to stage payment.   In relation to Waihopai and the

Patriarch Joint Venture partners, one half of each award of costs is to be paid within

the next 15 working days; the remaining part of each award is to be paid by 26

February 2013.  In relation to Mr Steele and Mr Douglas, the sum of $20,000 is to be paid by 26 February 2013.

Application for leave to issue summary judgment application

[57]     Rule 12.2(2) provides that the Court may give judgment against the plaintiff if the defendant satisfies the Court that none of the causes of action in the plaintiff’s statement of claim can succeed.

[58]     Rule 12.4(3) provides that an application by a defendant may be made either at the time the statement of defence is served on the plaintiff, or later with the leave of the Court.

[59]     This rule does not set out any criteria which the Court must take into account in exercising its discretion to grant leave.

[60]     Each application must, in my opinion, be considered in light of the objective of the High Court Rules, to secure the just, speedy and inexpensive determination of any proceeding,[6]  and the Court must take into account the interests of the party applying, the party against whom the application has been made, and in a case where there are other parties who are not parties to the application, their interests, to the extent that they are relevant.   It may also be appropriate, in my view, to make a preliminary assessment of the merits of the proposed application, to the extent that this can fairly be done on the evidence available, but this will only be one factor to

take into account in an overall assessment.

[6] Rule 1.2

[61]     The first point advanced by Mr Jeffcott is that it was not until his clients had the benefit of discovery of documents that he was in a position to put together a tenable summary judgment application.  Having obtained discovery, he has formed the view that the plaintiff’s claim cannot succeed.  Further, there was a hiatus, as he

put it, in his client’s legal representation between late November 2011 and early May

2012, when he was instructed.   At that point his clients exhausted all settlement options before filing applications for summary judgment.

[62]     Mr Jeffcott then set out the legal basis, and the factual basis, on which he maintains the claims against Mr Steele and Mr Douglas cannot succeed.

[63]     Because I have formed a clear view on this application it is not necessary to set out in detail the submissions made by Mr Ponniah in opposition.  It is sufficient to record that he maintains that contrary to Mr Jeffcott’s submission there is a strong legal basis for the claim, and that the success or otherwise of the causes of action will depend upon findings of fact which could not be determined by way of an application for summary judgment, even if leave were granted.

[64]     I decline leave to file summary judgment applications, for the following reasons.   First, the case has already been allocated a fixture at the beginning of March next year, for two weeks.   The setting-down date is just six weeks away. There was a timetable in place for exchange of evidence, which would be underway now had it not been suspended because of the interlocutory applications determined in this judgment.  It is to be reinstated with amended dates.  Although it might be possible to require exchange of evidence in accordance with the timetable, while at the same time moving towards a fixture on a summary judgment application, and then determining it, this would lead to a parallel process which would in my view be unfair on Corbans Viticulture, being both cumbersome and costly.   Corbans Viticulture is entitled to prepare for trial unencumbered by such a process.  It is also preferable in the interests of not only Mr Jeffcott’s clients but the other defendants that the trial preparation process occupies the full attention of all parties and counsel.

[65]     Secondly,  I  am  quite  satisfied  that  even  if  an  application  for  summary judgment were brought, it would inevitably result in argument over disputed issues of fact.   There is no evident ground showing that any of the causes of action, let alone all of them as required by r 12.2(2), cannot succeed, apart from Mr Jeffcott’s submission that there are no discovered documents supporting the causes of action, and they will not succeed on the evidence.  Given that the evidence has not yet been exchanged, this submission comes close to saying that the causes of action will not

succeed because his clients deny them.   Ultimately they may be right, but in reviewing a leave application I would be more persuaded if I had before me a clear pathway on every cause of action to at least a prospect of a summary judgment application having a firm grounding on some basis other than facts which are inevitably in dispute.

Outcome

[66]     I make the following orders:

a)  The  plaintiff  is  to  file  and  serve  an  affidavit  giving  discovery  of  all documents  referred  to  in  paragraph  1.8  of  a  letter  from  the  plaintiff’s solicitors   to   the   solicitors   for   the   first-named   first   defendant   dated

10 September 2012, being correspondence generated during the period under review in this proceeding, such discovery to be given by 26 October 2012.

b) To the extent that discovery of these documents has already been given, they are nonetheless to be listed, and a cross reference to the former discovery reference is to be given.

c)  Discovery  is  also  to  be  given  at  the  same  of  any  other  discoverable documents held by the plaintiff or the counterclaim defendant.

d) I order costs in favour of the first-named first defendant on its application for further and better discovery, on a 2B basis plus disbursements fixed by the Registrar.

e)  Costs  on  the  first-named  first  defendant’s  application  for  answers  to

interrogatories will lie where they fall.

f)   Security for costs will be given by the plaintiff in the sum of $50,000 in favour of the first-named first defendant, $40,000 for the second-named first defendant, and a further $20,000 in addition to the security already given, for Mr Steele and Mr Douglas jointly.  Payment is to be made as to one half of the award of costs  in  relation  to  the first-named  first  defendant  and  the

second-named first defendant, within 15 working days and the remaining one half of each of these awards by 26 February 2013.  In relation to Mr Steele and Mr Douglas the sum of $20,000 is to be paid by 26 February 2013.

g)  Each defendant is entitled to costs on the applications for security for costs.

For the second-named first defendants, costs will be on a 2B basis plus disbursements fixed by the Registrar.  For the first-named first defendant, and Mr Steele and Mr Douglas, costs will be on a 2B basis plus disbursements fixed by the Registrar, but without any allocation of costs in relation to the hearing, to avoid duplication of costs – taking into account that all defendants relied on the submissions presented by Mr Russ.

h)  The application for leave to issue summary judgment, by Mr Steele and

Mr Douglas is dismissed.

i)I  award  costs  against  Mr  Steele  and  Mr  Douglas  on  a  2B  basis  plus disbursements fixed by the Registrar, on this application.

J G Matthews

Associate Judge

Solicitors:

Corban Revell, PO Box 21-180, Waitakere City. [email protected] / [email protected]

McFadden McKeeken Phillips, PO Box 656, Nelson. [email protected] Fletcher Vautier Moore, PO Box 90, Nelson 7040. [email protected] Hamish Fletcher, PO Box 1672, Nelson 7040. [email protected]