Donaldson v Skyking Investments Ltd

[2018] NZHC 3299

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2017-404-597

[2018] NZHC 3299

BETWEEN

BRETT ROYCE DONALDSON

First Plaintiff

JONATHAN CHISWELL
Second Plaintiff

STEPHEN WILTON
Third Plaintiff

AND

SKYKING INVESTMENTS LTD

First Defendant

OCEAN PACIFIC RESORT HOLDINGS LTD
Second Defendant

KEVIN STOREY & BRENT GIBSON

Third Defendants

CASTLE BROWN

Fourth Defendant

Hearing:

13 December 2018

Counsel:

P L Rice for Plaintiffs

J Goodall for First, Second and Third Defendants R M Stewart for Fourth Defendant

Judgment:

13 December 2018

JUDGMENT OF BREWER J

This judgment was delivered by me on 13 December 2018 at 4:00 pm pursuant to Rule 11.5 High Court Rules.

Registrar/Deputy Registrar

DONALDSON v SKYKING INVESTMENTS LTD [2018] NZHC 3299 [13 December 2018]

Introduction

[1]                 This case is scheduled for trial commencing 25 February 2019. Eight days have been allowed. The first, second and third defendants (the defendants) now apply for the case to be stayed as against the first and second plaintiffs (the plaintiffs) and for the trial to be adjourned.

[2]                 The defendants’ application has its genesis in the security for costs judgment of Associate Judge Sargisson delivered on 12 September 2018.1 Her Honour ordered the plaintiffs to provide security for costs, jointly, in the sum of $26,000. Associate Judge Sargisson also ordered the plaintiffs to pay costs to the defendants on the application for security for costs on a 2B basis plus disbursements.

[3]                 The plaintiffs have satisfied the order for security for costs. $26,000 were paid into Court on 9 October 2018. However, the plaintiffs have not paid the defendants’ scale costs on the application, calculated as $8,172.

[4]                 The issue for me is whether, at this late stage, I should take the failure to pay the costs so seriously that I deny the plaintiffs the opportunity to take their claims to adjudication. I note the advice of Mr Rice that the position of the third plaintiff is tied to that of the plaintiffs in that, although the causes of action are separate for each plaintiff, the evidence of the plaintiffs would be relevant to the third plaintiff’s case. Mr Rice tells me that if I stay the plaintiffs’ case the third plaintiff would have to agree to the adjournment application because he could not realistically proceed alone.

[5]                 I have a discretion to order a stay and an adjournment as a response to a plaintiff not paying costs awarded in an interlocutory application. There are many cases where this, or something similar, has been done. But each case turns on its merits.

[6]                 In his notice of opposition, Mr Rice gives impecuniosity as the reason for the failure to pay costs by the plaintiffs.

[7]Mr Goodall for the defendants submits:

1      Donaldson v Skyking Investments Ltd [2018] NZHC 2398.

(a)Associate Judge Sargisson recorded the concession by the plaintiffs that they could not meet an adverse costs order. He submits that if the plaintiffs do not pay the $8,172 now, then they never will. However, the third plaintiff has funds and the defendants believe that if I grant their application, money will flow to the plaintiffs to enable them to pay the outstanding costs because the third plaintiff will want the case to proceed.

(b)There is no evidence the plaintiffs are actually impecunious as opposed to intransigent. There are no affidavits in support of the notice of opposition. In a joint memorandum dated 27 November 2018, Mr Rice advised the Court he had instructions that the costs would be paid by 11 December 2018. There is no explanation as to why those instructions were given but not carried through.

(c)The cases in this area emphasise the importance of parties complying with Court orders, including costs orders. Impecuniosity is not an answer to that concern.

[8]                 Mr Rice submits there would need to be egregious conduct by the plaintiffs to warrant a stay and an adjournment. He emphasises that the plaintiffs have paid security for costs and submits they are simply indebted to the defendants for the $8,172 ordered to be paid by the Court as scale costs.

[9]                 As to the plaintiffs’ impecuniosity, he refers me to the judgment of Associate Judge Sargisson. I have read the judgment. The following passages are relevant:

[19]  In submissions for the plaintiffs, it was conceded that neither would   be able to meet an adverse costs order should their claims fail. I do not need therefore to consider this step any further.

…

[40] Considering the delay of the defendants in bringing this application, after the defence had been filed and discovery and inspection had taken place, I do not consider it appropriate to factor those costs into the quantum for security. While deciding that some amount of security is necessary, I think it entirely appropriate to recognise prejudice to the plaintiffs due to the

defendants’ delay in making application for security a year after the proceeding was first begun. I intend therefore to exclude items (a)–(c).

Discussion

[10]I have decided to decline the application. My principal reasons are:

(a)The proximity of the trial.

(b)The relatively recent date of the costs award of Associate Judge Sargisson (12 September 2018), itself a response to a late application for security for costs.

(c)The plaintiffs have complied with the order to provide security for costs.

(d)The position of the third plaintiff who is an innocent bystander to the application. He is entitled to his day in Court and I accept his case would be compromised if the plaintiffs’ cases could not proceed with his own.

[11]              I do not, in the absence of evidence, place great weight on the claim the plaintiffs are impecunious. I take the concession recorded by Associate Judge Sargisson as pointing to impecuniosity, but the plaintiffs are not legally aided and they are represented by counsel. The defendants have other avenues available to them to seek to recover the $8,172. I see a relatively recent failure to pay costs as ordered, but I do not see egregious defiance. I place the emphasis on the matters set out in the foregoing paragraph.

Result

[12]The defendants’ application is dismissed.

[13]The plaintiffs are entitled to costs on a 2B basis, and I award them accordingly.

The fourth defendant

[14]              Mr Stewart appeared for the fourth defendant. He did so to raise concerns about the timetable. This is contained in a Minute of 12 March 2018 of Associate Judge Bell. The defendants are to serve their evidence no later than 24 December 2018. Apparently, the evidence will include the reports of experts. Paragraph 15 of the timetable says:

If both sides have called experts, there is to be a conference of experts following which they are to file and serve reports setting out the matters on which they agree and disagree and the reasons for their disagreement. This is to be done by 11 February 2019.

[15]              Mr Stewart is concerned that although the evidence of the plaintiffs does not include the evidence of experts, they might seek to brief experts following the receipt of the defendants’ experts’ evidence. He fears there might not be sufficient time if this is done and he is worried that Mr Rice has not given any indication as to whether it might be done.

[16]              I cannot give directions in a vacuum. Events will have to play out and if necessary applications will have to be made to vary the timetable or make other directions to ensure the just, speedy and efficient hearing of the disputes between the parties.

Brewer J

Solicitors:

Kelly Flavell (Auckland) for Plaintiffs

Morrison Mallett (Auckland) for First, Second and Third Defendants Fee Langstone (Auckland) for Fourth Defendant