Dorn v Environment Waikato HC Auckland CP 182-Sd99

[2001] NZHC 508

IN THE HIGH COURT OF NEW ZEALAND
AUCKLAND REGISTRY CP 182-SD99

BETWEEN J.P. DORN
Plaintiff

AND ENVIRONMENT WAIKATO
Second Defendant

AND R.H. KILVINGTON
Third Defendant

Hearing: 22 May 2001

Counsel: P.T.R. Heaslip for Plaintiff
S.J. Chatwin for Second Defendant
J.N. Burton for Third Defendant

Judgment: 22 May 2001

JUDGMENT OF FISHER J

Solicitors:
P.T.R. Heaslip, P.O. Box 4108, Auckland, for Plaintiff
Tompkins Wake, P.O. Box 258, Hamilton, for Second Defendant
Izard Weston, P.O. Box 5348, Wellington, for Third Defendant

Introduction

[1] Before me for resolution today are an application by the plaintiff for an order discharging an earlier order requiring security for costs and applications by the second and third defendants to strike out the proceedings.

[2] The background is set out in more detail in my judgment of 11 February 2000. At that time most of the plaintiff’s claims and causes of action were struck out but I declined to strike out a potential claim concerned with damage to chattels given the possibility that the statutory protection to the defendants under s 110(3) of the Maritime Transport Act 1994 did not extend to the destruction of chattels. That left the plaintiff in a position whereby it could continue with an action against the second and third defendants confined to destruction of chattels.

[3] On 19 April 2000 1 granted the defendants’ application for security for costs against the plaintiff in the sum of $12,000 for each of the two remaining defendants and directed that the proceedings against each of those defendants would be stayed until they were paid by the plaintiff.

[4] Before me today is an application to have those orders for security discharged on the ground that the plaintiff has now been granted legal aid. In support Mr Heaslip rightly submits that in accordance with the authorities security for costs is often refused in circumstances where a person is legally aided (as to which see Amev Life Assurance Co Ltd v Dixon-McIver [1993] 1 NZLR 733; (1992) 5 PRNZ 503 and O’Malley v Garden City Helicopters Ltd (1994) 8 PRNZ 182) although the grant of legal aid is of itself not a bar to security (see Young v News Media (Auckland) Ltd (1992) 6 PRNZ 183 and Glass v James (1992) 6 PRNZ 476).

[5] As I understand it, under normal circumstances a grant of legal aid is likely to be an important consideration mitigating against requiring security from the legally aided party for three reasons. One is the degree of protection which legal aid affords to a successful party seeking costs recovery from the legally aided party. Secondly there is the legislative intention that the legally aided party should be placed in a special category when it comes to liability to pay the opposition’s costs. Those concepts are to be found in s 40 and 41 of the Legal Services Act 2000. Thirdly legal aid can be an indirect indication to the Court that the legally aided person’s claim or defence was investigated to at least some vestigial level by the legal aid agency as a prerequisite to the grant of aid. That in turn could suggest to the Court that the case for the legally aided party is not a fanciful one. Whether there appears to be an arguable case can have a bearing upon whether security should be required (see on that aspect Young v News Media, supra, at 189 per Holland J).

[6] Turning to the present case, the legal aid granted is not the usual grant to cover a plaintiff’s case as a whole. It has been limited in the following terms: “the grant has been extended by $5,000 for the express purpose of (a) attending to the issue of security of (sic) costs, and (b) to obtain release of the video in order for the valuer to make an informed valuation”. This very limited grant is in no way analogous to those cases in which the grant of aid has been relied upon as a reason for not requiring security for costs. In no sense does it give the defendants any basis for seeking costs under s 41 of the Legal Services Act for any steps beyond those for which aid has been granted. Logically the legal aid so far granted would be a reason for discharging the stay of proceedings and the order for security only to the extent that the legal aid will cover the particular step in respect of which the defendants may be successful and gain a costs order in their favour. The aid granted to “attend to the issue of security of costs” is essentially circular. The way in which security for costs should be dealt with is dependent upon other legal aid for the future.

[7] Legal aid limited to the question of examining whether there will be legal aid for the future really does not advance this matter at all. The legal steps involved in obtaining a release of the video in order for the valuer to make an informed valuation have already been taken so far as handing over the video by the second defendant is concerned. No further costs will be incurred by the defendants if further steps within the plaintiff’s camp over the viewing of the video by the valuer are necessary.

[8] The upshot is that in my view Mr Heaslip’s reliance upon legal aid in this particular case as a reason for discharging the order for security for costs and the stay of proceedings is misconceived. Of course the position would change if legal aid were to be granted not simply for this interlocutory step but for the proceedings as a whole.

[9] The other rationale I referred to for regarding legal aid as a reason for a different approach to security is the indirect reflection upon the merits of the legally aided party’s case. In that respect the plaintiff has produced a legal opinion obtained by Legal Services on 11 October 2000. The legal opinion traverses the question of the potential for a chattels exception to the statutory protection of s 110(3) of the Maritime Transport Act reflecting the comment I made on that aspect in my judgment of 11 February 2001. 1 do not think that this legal opinion, or my judgment, is necessarily the end of that aspect. There is room for legal argument as to the extent to which the fact that chattels were destroyed necessarily falls outside the statutory protection and the application of that legal principle to the circumstances of this case. However on the present state of the Court file, that is a question which might properly go forward to the trial itself.

[10] There are, however, two further questions which the legal aid agency and counsel advising them do not yet appear to have had the opportunity to examine. These questions could affect their approach to the merits of the plaintiff’s case, and in turn the question whether legal aid should extend beyond the very limited form in which it has so far been granted.

[1l] One is the question whether the plaintiff consented to the destruction of the chattels. The present state of the affidavits is that the defence witness Mr Bunting deposes in an affidavit of 15 March 2000 (paragraph 5) as follows:

“Mr Henry and I showed the plaintiff the material that had been stored (as listed in paragraph 5) and asked him what he wanted. The plaintiff sorted through the material and selected some items. I asked the plaintiff twice if he wanted the remaining items that were left in the boat shed. I said that anything that he did not take would be destroyed or recycled. The plaintiff told me that he did not want the remaining items and we could arrange for the remaining items to be destroyed. After collecting the items which he wanted the plaintiff left at about 6.00pm.”

[12] I do not think it can be doubted that if the plaintiff had, as deposed, consented to the destruction of those items which he did not select, that must be a complete answer to any claim which he might now have. Among other things the property would no longer be his since it would be abandoned property. I would have thought that consent would be a complete answer to any claim, whether based on trespass or conversion. Despite the fact that Mr Dorn has filed an affidavit in preparation for the hearing today (sworn 10 May 2001) and that the defendants’ applications expressly stated that they would be relying upon the affidavit of Mr Bunting, Mr Dorn does not in his recent affidavit comment upon, still less contradict, the evidence of Mr Bunting on that point.

[13] A second matter which could have a bearing upon the merits is the prospect that an equitable set-off or counter-claim in respect of the defendants’ costs could exceed any claim advanced by the plaintiff. The costs exceed $200,000. It is conceivable (but of course it is certainly not for me to say) that legal aid would not be granted unless it were clear that Mr Dorn’s claim would significantly exceed any such set-off or counter-claim. On that subject the only evidence before me (and again the plaintiff has had ample time in which to respond) is a valuer’s letter of 3 December 2000 which speculates that on the information then available to the valuer “The materials in question would have a market value in excess of $30,000”. The valuer goes on to state that a full valuation would require viewing the videos available and interviews with Mr Dorn etc. The video in question was sent to the plaintiff’s counsel on 26 April 2001, approximately four weeks ago. Apparently the valuer has still not seen it. I must say I find this surprising given that unless some evidence can be put before the Court to show a value significantly in excess of the $200,000 one would have thought that the plaintiff would face insuperable difficulties in these proceedings. One imagines that the Legal Services Agency would wish to consider this aspect when it decides whether to grant aid for the future conduct of these proceedings.

[14] Because of those difficulties peculiar to this case I am satisfied that the mere fact that legal aid has been granted to the plaintiff is not a reason for either discharging the order for security for costs or for lifting the stay in respect of further steps by the plaintiff in these proceedings. I am prepared to reserve leave, however, to the plaintiff to file a further application to have the orders for security and stay discharged in the light of any further developments there may be in the availability of legal aid and subject in any event to the matters which follow.

Third defendant’s application for dismissal

[15] In some careful submissions Mr Burton has satisfied me that the plaintiff’s claim against the third defendant could not succeed in any event and quite independently of the difficulties to which I have referred. It is, I think, implicit in the amended statement of claim now filed by the plaintiff that these proceedings rest on trespass and/or conversion. Trespass would require direct physical interference with goods which were in the possession of the plaintiff without lawful justification. In the present case the uncontested affidavits establish that the third defendant, the Director of Maritime Safety, had no role in the actions taken with respect to the chattels removed from the vessel. Pursuant to s 99 of the Maritime Transport Act 1994 the third defendant appointed the second defendant to be a receiver of wreck.

[16] The only step taken by the third defendant (pursuant to s 110(1)) was that having formed the opinion that the vessel was, or was likely to become, an obstruction to navigation he directed the second defendant to cause the vessel to be removed. From that point on the third defendant had no role in the matter. All steps taken with respect to the vessel and its contents were carried out by the second defendant in accordance with the powers conferred upon it as receiver pursuant to s 110(3). I accept Mr Burton’s submission that there is not only no evidence that the third defendant had any direct or indirect role in steps taken with respect to the chattels but that there is no relationship of agency involved here between the third and second defendants. Each had a separate and independent statutory function. The powers under s 110(3) were not powers of the third defendant as Director. They were powers of the second defendant receiver. Accordingly there was no delegation of statutory powers and no room for vicarious liability. In those circumstances there is no point in allowing the plaintiff to keep the third defendant in these proceedings even on the hypothetical assumption that he could overcome the obstacles to which I have previously referred.

Conclusions

[17] The claim against the third defendant is struck out. In view of the plaintiff’s status as a legally aided party, at least at today’s hearing, it seems appropriate that in lieu of a direct order for costs I stipulate that in terms of s 40(4) of the Legal Services Act an order would have been made for the plaintiff to pay the third defendant’s costs on a 2B basis (the details to be determined by the Registrar) but for the plaintiff’s legally aided status.

[18] As to the second defendant, I accept that on the state of the affidavits as they presently stand the second defendant is arguably entitled to judgment for the two reasons I mentioned, namely the uncontested allegation that the plaintiff consented to the destruction and secondly the lack of evidence that his claim exceeds a prima facie defence and equitable set-off for an amount exceeding $200,000. I am, however, conscious that the plaintiff’s case today has not been presented in the way it ought to have been. I am reluctant to see it expire on the basis that Mr Dorn could have included appropriate matters in his affidavit today and neglected to do so for whatever reason. In those circumstances I will allow the proceedings to continue against the second defendant in the meantime but on the basis that the existing orders for security in the sum of $12,000, and a stay of all steps by the plaintiff pending payment, will continue except that I reserve leave to the plaintiff to apply to set aside the security and stay if and when legal aid for the proceedings as a whole is granted.

[19] The second defendant’s application to have the proceedings dismissed will be adjourned to a date to be fixed by the Registrar approximately six months from today.