Flooks v Cooper Aitken Limited - [2024] NZHC 3600

IN THE HIGH COURT OF NEW ZEALAND HAMILTON REGISTRY

I TE KŌTI MATUA O AOTEAROA KIRIKIRIROA ROHE

CIV-2023-419-287

[2024] NZHC 3600

BETWEEN
TRACEY MAY FLOOKS

Plaintiff

AND

COOPER AITKEN LIMITED

Defendant

Hearing: 7 October 2024

Appearances:

B Gustafson for the Plaintiff

M Russell and J Ryan for the Defendant

Judgment:

29 November 2024

JUDGMENT OF ASSOCIATE JUDGE SUSSOCK

This judgment was delivered by me on 29 November 2024 at 4 pm pursuant to r 11.5 of the High Court Rules

Registrar/Deputy Registrar

Solicitors:
Speakman Law, Auckland

FLOOKS v COOPER AITKEN LTD [2024] NZHC 3600 [29 November 2024]

Introduction

[1] The defendant has applied for security for costs in the amount of $30,000 on the grounds that the plaintiff is not resident in New Zealand.

[2] A security for costs award is available where the party bringing the claim is either impecunious or is resident out of New Zealand. Once that threshold has been met, the court has a wide discretion including not to make an order if to do so would put an end to an otherwise meritorious claim. Staged orders for security are common.

[3] The plaintiff opposes any security for costs order on the basis that the case law establishes that if a person is resident outside of New Zealand but has realisable assets inside New Zealand to satisfy an adverse costs award, then security will not be ordered.

[4] The statement of claim records that the plaintiff lives in Cannes, France. However, she explains in her affidavit that she is currently living there to support her daughter’s tennis career, describing herself as born and bred in New Zealand. The plaintiff deposes that she owns an apartment in Parnell, Auckland in her personal name and annexes to her affidavit a current rates valuation recording the capital value as
$920,000. The plaintiff’s evidence is that there is a $190,000 loan secured by a mortgage over the property so there is sufficient equity to meet any costs award.

[5] I set out the background and the relevant legal principles below before considering whether a security for costs order ought to be made.

Background

[6] The plaintiff, Tracey Flooks (Tracey),1 her mother (Kay), her sister (Mandy), her brother (Trevor) and now retired accountant (Barrie Price) were all appointed executives of the estate of her father, the late Kevin Flooks. Kay, Mandy, Trevor, Tracey, and Debra (the sister of Tracey, Mandy and Trevor) are also beneficiaries of the estate.

1 I refer to the parties involved by their first names to avoid confusion but intend no disrespect in doing so.

[7] For some years prior to 2014, Barrie Price and Barrie Price & Associates (BPA) provided accountancy services to various members of the Flooks family and entities related to them.

[8] In 2014, the defendant, Cooper Aiken, purchased the client list but not the business of BPA. Since 2014, Cooper Aiken has provided tax and financial reporting services to various of the Flooks’ entities. Cooper Aiken submits that its first engagement for…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Flooks v Cooper Aitken Limited

Details

AGLC: Flooks v Cooper Aitken Limited [2024] NZHC 3600
Case: [2024] NZHC 3600
Decision Date: 29 November 2024

CaseChat Overview and Summary

The case of Flooks v Cooper Aitken Limited involves a dispute between Tracey Flooks, a plaintiff, and Cooper Aitken Limited, the defendant. Tracey, who resides in France, is bringing a claim against Cooper Aitken, an accounting firm, alleging improper administration of her father's estate and potential conflicts of interest. The defendant has applied for security for costs, seeking an order that Tracey provide security for the costs in the event she is unsuccessful in her claim. The court must decide whether Tracey's residence outside of New Zealand and her assets within New Zealand are sufficient to prevent the need for such an order.

The legal issues before the court include whether Tracey meets the threshold criteria for a security for costs order under rule 5.45 of the High Court Rules, and how the court should exercise its discretion in this matter. Tracey has significant assets in New Zealand, specifically an apartment in Parnell, Auckland, with a substantial equity value of approximately $700,000. The court considered whether these assets are sufficient to meet any potential costs award and whether Tracey's residence in France necessitates a security for costs order.

The court found that Tracey's residence in France satisfies the threshold requirement for a security for costs order. However, the court concluded that Tracey's significant assets within New Zealand, particularly the equity in her Parnell apartment, are sufficient to cover any costs award. The court referenced precedents such as Neely v Attorney-General and Clarke v Barber to support its decision that substantial assets within the jurisdiction should preclude a security for costs order. The court also directed Tracey to notify the defendant if she intends to dispose of or encumber her Parnell property, allowing the defendant to reapply for security of costs if necessary.

In light of the above, the court declined the defendant's application for security for costs. The court further directed Tracey to file and serve a memorandum if she intends to dispose of her Parnell property or encumber it to the extent that less than $100,000 equity remains. The defendant was granted leave to reapply for security of costs if Tracey files the required memorandum.

Orders