JAG Media Ltd v Magna Systems & Engineering (NZ) Ltd

[2015] NZHC 2292

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV 2012-404-1965 [2015] NZHC 2292

BETWEEN

JAG MEDIA LTD

First Plaintiff

BCITV LTD (formerly known as

BROADCAST INC LTD) Second Plaintiff

AND

MAGNA SYSTEMS & ENGINEERING (NZ) LTD

First Defendant

COUNTRY TV LTD (formerly known as

COUNTRY 99 TV LTD) Second Defendant

BROADCAST TRAFFIC SYSTEMS LTD Third Defendant

DAVID HUGHES Fourth Defendant

THE LIVING CHANNEL NEW ZEALAND LTD

Fifth Defendant

EYEWORKS NEW ZEALAND LTD Sixth Defendant

Hearing:

22 September 2015

Counsel:

D B Hickson for Plaintiffs

G Blanchard and K D Puddle for First and Second Defendants K M Burkhart and K M Kenealy for Third and Fourth Defendants

A L Ringwood for Fifth and Sixth Defendants

Judgment:

22 September 2015

(ORAL) JUDGMENT OF HEATH J

JAG MEDIA LTD v MAGNA SYSTEMS & ENGINEERING (NZ) LTD [2015] NZHC 2292 [22 September

2015]

The application

[1]      This proceeding has been set down for hearing over six weeks, to begin on 12

October 2015.  Recently information came to the attention of the defendants about the financial position of the plaintiffs. As a result, they sought leave to file and serve a late application for security for costs.   Both the application for leave and the substantive application are opposed.   They were set down for hearing before me today so that the issue could be addressed as soon as possible before trial.1

[2]      At this morning’s hearing Mr Hickson, for the plaintiffs, advised me that he intended  to  seek  leave  to  file  and  serve  a  Fifth Amended  Statement  of  Claim. Information has become available to the plaintiffs to suggest that on one occasion, the server on which a particular system was located had been entered by the third defendant contrary to the position that the third defendant had previously advised. The third defendant’s position had been that a backup may have been taken for software support services but later it retracted an apparent admission that it made a backup on 26 April 2011.  Mr Hickson wishes to file and serve an amended pleading to allege wrongful conduct on the part of the third defendant.   It may also have consequential effects on allegations made against other defendants, some of which will be beneficial to them.

[3]      Although a draft Fifth Amended Statement of claim has been made available to  counsel,  I have  not  yet  seen  it.    It  would  be  impracticable  to  deal  with  an application for leave today.  Counsel for the defendants have indicated that not only will the nature of the amendments need to be considered to identify issues for trial, but there may need to be significant changes to the briefed evidence.  An example is the point made by Ms Burkhart, for the third defendant, that an expert will need to analyse the reason for the entry into the system at the time now alleged.  This will require in-depth analysis of the extracted server logs for the relevant period.

[4]      I indicated to Mr Hickson that if he wished to pursue the current application, it  would  inevitably  lead  to  loss  of  the  October  2015  trial.    Mr  Hickson  took

1      High Court Rules, r 7.7.

instructions and advised me that he wished to proceed nevertheless. Accordingly, the trial set down to commence on 12 October 2015 is vacated and appearances are excused.

[5]      The next issue concerns the question of security for costs to be argued today. Circumstances have changed because the defendants will no longer be committed to a trial over six weeks in the near future.  Nevertheless, as I indicated to Mr Hickson it seems to me that some earnest should be provided by the plaintiffs to protect the defendants  for  costs  in  the  event  that  they  are  successful  in  defending  the proceeding. Although Mr Hickson has sought to persuade me in written submissions that the claim is virtually unanswerable, counsel for the defendants, have also attempted to persuade me that the claim is hopeless.  Plainly it is impossible to make any assessment of that type.   I have proceeded on the basis that there are genuine claims that have a prospect of success at trial and in respect of which a not insignificant award of damages might be made.

[6]      On that basis, I consider that an order for security for costs should be made. If the companies are not in a position to post that amount, it should be done by those who stand to benefit from the proceeding.  I order that a sum of $50,000 be posted as security  for  costs  in  respect  of  each  of  the  groupings  of  defendants  who  are separately represented.  That will mean a total of $150,000 will need to be found, with  $50,000  being  held  as  security for  costs  for  each  of  the  first  and  second defendants, the third and fourth defendants and the fifth and sixth defendants respectively.  Those sums shall be posted to the satisfaction of the Registrar of this Court on or before 30 November 2015.   I have indicated to Mr Hickson that that could be done through payment of cash, a provision of a mortgage security or a bank bond or something of that type.  If the amount is intended to be posted other than in cash it would be helpful for counsel for the plaintiffs to liaise with other counsel to ensure there is no debate about that.

[7]      If security were not posted by 30 November 2015, the proceeding will be stayed pending further order of the Court.   Leave to apply to vary the amount of security is also reserved.  That will enable the defendants to seek higher security if that were justified and will also permit the plaintiffs to seek review of the order

should, for example, they take the view that a lesser sum or no security should be paid in respect of particular defendants.

[8]      Assuming the proceeding is not stayed, an application for leave to file and serve a Fifth Amended Statement of Claim together with any affidavits in support, shall be filed and served on or before 4 December 2015.  The Registrar is directed to allocate a case management conference of one hour before a Judge, on the first available  date  after  11  December  2015,  and  preferably  before  the  Christmas vacation.   For that conference, counsel shall file memoranda no later than three working days before the allocated date.  The memoranda shall set out the respective counsel’s  views  on  the  further  steps  that  may  need  to  be  taken  to  deal  with outstanding interlocutory applications and ready the trial for hearing.  A new fixture date will not be allocated until case management has reached the point at which a Judge is satisfied that can properly be done.

Costs

[9]      So far as the costs in relation to today’s hearing are concerned, they are reserved.    Any  memoranda  for  the  case  management  conference  counsel  shall indicate whether any application for costs in respect of today’s hearing is to be pursued.

Case management directions made on 16 September 2015

[10]     At a case management conference on 16 September 2015, Gilbert J made a direction that the plaintiffs file a reply to the affirmative defences pleaded by the defendants by 5.00pm on 23 September 2015.   The course taken as a result of today’s hearing renders that direction otiose.  It is set aside.  Any other orders made

by the Judge which are inconsistent with that I have made today are also set aside.

P R Heath J

Solicitors:

Castle Brown, Auckland Bell Gully, Auckland Kennedys, Auckland Lowndes, Auckland Counsel:

D B Hickson, Auckland
G P Blanchard, Auckland