Energy Securities LP v Vector Limited
[2018] NZHC 2271
•30 August 2018
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2017-404-166
[2018] NZHC 2271
BETWEEN ENERGY SECURITIES LP
Applicant
AND
VECTOR LIMITED
Respondent
Hearing: 21 August 2018 Appearances:
T J Herbert for Applicant
J K Goodall for Respondent
Judgment:
30 August 2018
JUDGMENT OF PALMER J
This judgment is delivered by me on 30 August 2018 at 2.30 pm pursuant to r 11.5 of the High Court Rules.
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Registrar / Deputy Registrar
Counsel/Solicitors:
Timothy Herbert, Barrister, Auckland Jason Goodall, Barrister, Auckland
Copy to:
Currie Lawyers Limited, Christchurch
ENERGY SECURITIES LP v VECTOR LTD [2018] NZHC 2271 [30 August 2018]
The proceeding
[1] Energy Securities Ltd (ESL) has brought proceedings against Vector Ltd (Vector) for breach of a duty of care in tort for around $70,000 –$80,000.
[2] Vector applied for security for costs on 1 June 2017. The application was resolved by consent, with ESL agreeing to an order for security for costs on 14 November 2017. It was agreed security would be paid in three tranches, the first of which (amounting to $5,000) had already been paid. The order was made by Wylie J on 16 November 2017 and varied by consent by Associate Judge Sargisson on 30 November 2017. ESL also agreed to pay scale costs on the application within three working days. Payment of the scale costs was made seven months late.
[3] The second tranche of security, amounting to $10,000, was payable 10 days after the affidavit of documents was filed. The deadline for filing the affidavits was originally 2 March 2018 but extended to 9 March 2018 by informal agreement. When ESL did not comply with this deadline, despite two requests, Vector applied on 23 April 2018 for strike-out and costs on that application. The plaintiff’s affidavit was eventually served on 9 May 2018, so Vector’s application was rendered nugatory. Associate Judge Smith granted costs on a 2B basis on the 23 April 2018 application in a minute of 18 May 2018. I understand those costs were paid on 5 July 2018
[4] Following filing of the discovery affidavits, the second tranche of security was due on 23 May 2018. It has not yet been paid despite three requests. On 28 June 2018 Vector sought leave to apply for summary judgment or to strike out ESL’s statement of claim or orders that ESL’s claim be struck out unless, within three working days, ESL pays the second tranche of security for costs. ESL consents to leave to apply for summary judgment but not summary judgment itself. ESL consents to a stay of the proceeding, terminable on payment of the outstanding tranche of security. I heard the application on 21 August 2018.
Law of unless orders for failing to pay security for costs
[5] An unless order carrying the risk of strike-out is not available only if a stay has been imposed first. Under r 7.48 of the High Court Rules 2016 (the Rules), I may
make any order I think just, including strike-out in whole or part and including staying the proceeding in whole or part, where a party fails to comply with an interlocutory order. But doing so is a serious step. It should only be taken when necessary to do justice to the other interests at stake.1 As Courtney J stated in Jaques v Main, the strike-out jurisdiction highlights the tension between timely and efficient disposition of proceedings and the seriousness of depriving the litigant from having the merits of the claim substantively determined.2 In Smith v Antons Trawling Company Ltd, which also concerned failure to pay security for costs as ordered, Fisher J stated cases should not lightly be dismissed on technical or procedural grounds.3 He suggested the following aspects of the default would “usually be critical”:4
(a)Its duration.
(b)Its impact upon the progress of the proceedings as a whole.
(c)Whether there appears to be any excuse or explanation.
(d)Whether it continued after reasonable opportunities and reminders, particularly where the Court has already made a fresh order, or given a warning, due to earlier non-compliance.
(e)Whether it has substantially prejudiced the innocent party, whether procedurally or due to some wider impact upon the innocent party's interests and affairs.
(f)Whether there is any realistic expectation that it will be rectified following further opportunity for compliance.
Submissions
[6] Mr Goodall, for Vector, submits a stay would give ESL an open-ended extension to its deadline for paying security with the ability for ESL to reactivate its proceeding at its leisure in relation to events eight years ago. He submits that would be grossly unfair to Vector. He submits: there is a history of court orders being breached; Vector has had to make three interlocutory applications; there is no notice of opposition to Vector’s application; and there is a strong public interest in ensuring expeditious resolution of legal proceedings.5
1 Parlane v Hayes [2015] NZCA 341 at [31].
2 Jaques v Main [2017] NZHC 857 at [25].
3 Smith v Antons Trawling Company Ltd HC Auckland CL40/98, 24 March 2000 at [3].
4 At [5].
5 Mawhinney v Commissioner of Inland Revenue [2017] NZHC 2195 at [19].
[7] ESL has filed no evidence to explain the delay or to say when the security will be paid. Instead Mr Herbert submits the case law suggests unless orders should only be granted if there is first a stay and then nothing happens for some years. He submits: a stay should be ordered instead; strike-out is a draconian remedy; Vector’s actions deprived ESL of funds to pursue its claim; and he understands the funding for the security payment should be available within the next month.
Decision
[8] Here, there is a history of delays and breaches of deadlines by ESL. No evidence of an excuse is given. It appears it is difficult for ESL to find the money. The payment of security is only three months late in terms of the formal deadline, though it is five months past the deadline that would have applied had ESL complied with the agreed discovery timetable. There have been several reminders to ESL. I was advised, from the bar, ESL should pay security within a month of 21 August 2018.
[9] Vector and the Court is entitled to have the proceeding pursued according to the deadlines set by consent and by the Court. But I am prepared to give ESL further time to find the money it has agreed to pay as security. Ideally, the proceeding should be decided on its merits rather than on a procedural step.
[10]I make the following orders:
(a)I stay the proceeding for the one month counsel for ESL thought was required for payment to be made, until Friday 21 September 2018.
(b)If the second tranche of security for costs of $10,000 has not been paid by then:
(i)it will be struck out at 5.00 pm on Friday 28 September 2018;
and
(ii)unless ESL elects not to pursue the matter, the proceeding will be called in the civil list in the week of 24 September 2018 so the parties can make submissions about whether that strike-out
order should be varied, or not. In that case, the parties should file memoranda by noon Monday 24 September 2018.
(c)I award costs of this application to Vector on a 2B basis.
Palmer J
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