Daisley v Ark Contractors Limited
[2016] NZHC 2300
•27 September 2016
IN THE HIGH COURT OF NEW ZEALAND
AUCKLAND REGISTRY
CIV 2015-404-002799
[2016] NZHC 2300
BETWEEN M J DAISLEY
First Plaintiff
AND
SDD LIMITED
Second Plaintiff
AND
ARK CONTRACTORS LIMITED
First Defendant
AND
P G KELLER AND K E KELLER
Second Defendants
AND
THOMSON WILSON LAW
Third Defendant
Hearing: 27 September 2016 Appearances:
S Perese for the Plaintiffs
J Browne for the First and Second Defendants V Wethey and I Allan for the Third Defendant
Judgment:
27 September 2016
ORAL JUDGMENT OF ASSOCIATE JUDGE CHRISTIANSEN
M J DAISLEY and SDD LIMITED v ARK CONTRACTORS LIMITED, P G KELLER and K E KELLER and THOMSON LAW [2016] NZHC 2300 [28 SEPTEMBER 2016]
The applications
[1] The first defendant (Ark) and the second defendants (the Kellers) and the third defendant (Thomson Wilson) have brought applications against the plaintiff (Mr Daisley) for security for costs.
[2] Ark and the Kellers have applied to transfer this proceeding to Whangarei Registry and consolidate this proceeding with another in Whangarei (CIV 2016-488- 041), or at least have the two proceedings managed together and heard sequentially.
[3] In relation to the Whangarei proceeding (which Thompson Wilson is not a party to), Ark has applied to set aside a protest to jurisdiction that Mr Daisley has filed.
Judgment
[4] The Court dealt with the submissions and made rulings upon each application as each was considered.
Security for costs
[5] The Court considers there is clear evidence from which to infer Mr Daisley would be unable to pay costs if his proceeding did not succeed. On 2 December 2009 the parties signed an agreement the clear purpose was to recover properties owned by Mr Daisley and SDD (the second plaintiff being added by an amended statement of claim yet to be filed) from imminent mortgagee sale action. Presently he claims he is able to pay the costs of this proceeding if he is unsuccessful. The Court does not accept that position. Rather, the Court considers Mr Daisley has provided the barest of evidence regarding his present financial circumstances whilst maintaining it was not his obligation to provide anything more. However, there is recent evidence of a Court judgment against him which remains to be satisfied. There is no evidence of income being received. He does not own the home the he presently resides in. Despite claims he has a registered interest in three properties, a general register search identified one only and that property was owned by a trust.
[6] Mr Daisley’s claims of an ability to pay costs focuses on his claim to an entitlement to a shareholding in Ark – the company incorporated by the Kellers with the professional assistance of their lawyers, Thomson Wilson on 1 December 2009 in connection with attempts by the Kellers to assist the plaintiffs to prevent the mortgagee sale of the properties of Mr Daisley and SDD on 3 December 2009.
[7] The evidence is that Mr Daisley and SDD signed a joint venture agreement on 2 December 2009 by which ownership and control of those properties which were subject to mortgagee sale process were to be transferred to Ark. On 30 November 2009 Mr Badham of Thomson Wilson received an email from Mr Daisley’s solicitor Mr Jackson. Then on the morning of 2 December Mr Badham received an email from Mr Jackson noting he has spoken to Mr Daisley that morning and that an agreement had been reached whereby the second mortgage over the Daisley’s properties would be released - a mortgage requiring release before the Ark joint venture plan could proceed. Shortly after Mr Badham enquired whether Mr Jackson had any comments on the draft documents that had been provided to him, inter alia, as Mr Daisley’s lawyer. Mr Badham noted to Mr Jackson that he was working on a draft shareholders agreement relating to Mr Daisley’s “intended eventual shareholding in Ark contractors”.
[8] A draft shareholders agreement for Ark was completed and forwarded to Mr Jackson as 12:51pm on 2 December 2009 and at 1:50pm that afternoon Mr Jackson responded noting he had looked at that agreement and was “happy it reflects the current plan”.
[9] A copy of Mr Jackson’s response was printed and given to Mr Daisley at the meeting that afternoon.
[10] The claim against Thomson Wilson alleges a breach of duty of care owed to the plaintiffs. Thomson Wilson’s position is that the plaintiffs were at all material times represented by their own solicitors.
[11] In the Court’s view the plaintiffs have a significant hurdle ahead with their proceeding against Thomson Wilson. It is a matter the Court takes into account when assessing security for costs ought to be posted.
[12] There is no doubt that Mr Daisley has an entitlement to a shareholding in Ark. This has never been denied. But, from the defendants point of view the value of that shareholding when determined will be far from clear and will provide no certainty to the defendants that such equity would provide adequate security to pay costs in the outcome of this proceeding. Incidentally, the main thrust of the proceeding concerns Mr Daisley’s claim for losses he says he has incurred due to the loss of his properties when those were transferred to Ark together with any improvement of the value of those properties since including profits derived from the use of the land since.
[13] The Court’s clear view is that there was no certainty in the outcome that would provide funds from which the plaintiffs could draw a sufficient amount to promptly pay costs if the claims were unsuccessful.
[14] In conclusion the Court held security ought to be paid and that this could be done by instalments.
[15] The Court directs Mr Daisley to pay security in the sum of $20,000 on account of the claims against the first and second defendants and in the sum of $20,000 in respect of the claim against Thomson Wilson. Further instalments of $25,000 will be required prior to the close of pleadings date.
[16] Those sums are to be paid into Court and until they are the proceedings are stayed. That stay will take effect from the time of the issue of this judgment.
Transfer of proceeding
[17] The proceeding was filed in the Auckland High Court. All parties reside in or about Whangarei. Most if not all witnesses will come from within the Whangarei High Court Registry area. The sole reason given on behalf of Mr Daisley is that the
Auckland Registry was chosen because the registered office of Ark is at an accountant’s address situated within the Auckland region.
[18] The proceeding was filed on 26 November 2015, just a few days short of six years since those events identified in support of the plaintiffs’ claim. Statements of defence on behalf of Ark and the Kellers were filed on 21 January 2016 and on behalf of the third defendant on 22 January 2016.
[19] In opposition to the application for transfer Mr Perese submitted, adopting the judgment of Associate Judge Osbourne in Inder v Commissioner of Crown Lands1 that HCR 1.5 prevents any step being taken to transfer proceedings to another registry after a statement of defence was filed.
[20] It is this Court’s view that claims of waiver do not prevent access to Rule 5.1(5). That Rule provides:
If it appears to a Judge, on application made, that a different registry of the court would be more convenience to the parties, he or she may direct that the statement of claim or all documents be transferred to that registry and that registry becomes the proper registry.
[21] Rule 5.1 provides that the proper registry shall be that nearest to the residence or principal place of business of the first defendant. Mr Daisley argues that Auckland is the proper registry as that is where Ark’s registered office is. However, that is not the test for the purposes of HCR 5.1. The unchallenged evidence is that Ark is controlled and managed from Whangarei. It follows that the proceeding ought to have been filed in the Whangarei Registry.
[22] Matters of “convenience to the parties” do not entail obtaining the consent of all parties involved. Rather it is about the Court’s perception of convenience overall. There is no suggestion that management of the proceeding through Whangarei will take any longer than it would through Auckland. Indeed the reverse may well be the case.
1 (HC) Christchurch CIV 2009-409-1219, 27 November 2009.
[23] Accordingly the Court directs this proceeding be transferred to the Whangarei Registry for management thereafter.
Consolidation of this proceeding with CIV 2016-488-041
[24] In the outcome of the Court’s decisions to grant security and the application for transfer, Mr Perese on behalf of the plaintiffs indicated the protest to jurisdiction filed on behalf of Mr Daisley in the Whangarei proceeding would be withdrawn.
[25] After discussion with counsel it was agreed this proceeding, upon transfer, would be case managed together with CIV 2016-488-041 with the intention that the latter proceeding would be heard sequentially.
Costs
[26]There are reserved and shall be fixed upon application.
Other
[27] It is not presently intended to issue a judgment detailing a factual background, a review of principles or a review of counsels’ submissions. That will be provided however if it shall be required for the purpose of any appeal against these rulings. Then further judgment reasons will follow in writing.
Associate Judge Christiansen
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