Jo v Johnston - [2012] NZHC 2524

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

CIV 2009-409-000741 [2012] NZHC 2524

BETWEEN NAMGEUN JO AND SOON HEE KWON Plaintiffs

ANDBERNARD JOHNSTON First Defendant

ANDSOUTHERN HOSPITALITY LIMITED Second Defendant

Hearing: 27 September 2012 (By telephone) Counsel: S J Shamy for Plaintiffs
R Raymond for First Defendant
JDC Guest for Second Defendant

Judgment: 2 October 2012

JUDGMENT OF WHATA J ON SECURITY AS TO COSTS

[1] The plaintiffs claim that the first and second defendants negligently failed to take care when lodging applications for consents to develop the Stranges’ building on the corner of High and Lichfield Streets in Christchurch. It is claimed that the ducting requirements for the development were not properly assessed with the result that the design submitted for building consent was flawed and in fact could not be constructed. It is further claimed that the plaintiffs relied on the advice of the first defendant to proceed down a development route, that ultimately resulted in significant losses to them. The defendants deny these claims.

[2] The first defendant now seeks security for costs. It appears from the affidavit evidence of the plaintiffs that they have significant assets and income in Korea. However, there may be difficulty in accessing those funds, although Mr Shamy (for the plaintiffs) could not elaborate on the reasons why that is so. There is then an
offer to provide a yacht valued at $60,000 to $80,000 as security in lieu of a cash

JO AND KWON V JOHNSTON HC CHCH CIV 2009-409-000741 [2 October 2012]

sum. But the valuation is qualified and not a sound basis for making a decision around security.

[3] The further background to this application is that:

(a) The plaintiffs have successfully opposed two applications for summary disposal of the claim – so it cannot be said that the claim is completely without merit;

(b)Previous offers of security in the form of property have proved elusory – in one instance the property was sold without notice to the defendants and in another instance the property was subject to a caveat meaning that it did not in fact provide security.

Assessment

[4] The plaintiffs have not conducted themselves on the question of security in a manner that engenders confidence. Their offers of security have had a chimera like quality; revealed only after persistent enquiry by the first defendant. Balanced against this Mr Shamy makes the strong point that this Court has found that the plaintiffs have arguable causes of action of negligence. As Harrison J observed:

[22] However, I am satisfied that Mr Jo has an arguable basis for pursuing his other two allegations of negligence, presently described as failing to check the ducting properly before applying for a building consent and to take due care when lodging the application. In effect, the allegations are both sides of the same coin.

[5] Harrison J did, however, add:

... Mr Johnston’s liability, if any, would be restricted to wasted costs such as for engaging a new architect and the costs…

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 Jo v Johnston

Details

AGLC: Jo v Johnston [2012] NZHC 2524
Case: [2012] NZHC 2524
Decision Date: 2 October 2012

CaseChat Overview and Summary

The case of Jo and Kwon v Johnston and Southern Hospitality Limited involves a claim by the plaintiffs that the defendants negligently failed to take care when lodging applications for consents to develop the Stranges’ building on the corner of High and Lichfield Streets in Christchurch. The plaintiffs claim that the ducting requirements for the development were not properly assessed, leading to a flawed design that could not be constructed, and that they relied on the advice of the first defendant to proceed down a development route that resulted in significant losses. The defendants deny these claims. The first defendant seeks security for costs, as the plaintiffs have significant assets and income in Korea, although there may be difficulty in accessing those funds. The plaintiffs offered a yacht as security, but the valuation was not sound. The plaintiffs have successfully opposed two applications for summary disposal of the claim, and previous offers of security in the form of property have proved elusive.

The legal issue before the court was whether the plaintiffs should be required to provide security for costs. The court found that the plaintiffs had not conducted themselves on the question of security in a manner that engendered confidence. Their offers of security had a chimera-like quality, revealed only after persistent enquiry by the first defendant. However, the court found that the plaintiffs had arguable causes of action of negligence. The court was prepared to proceed on the basis that the claims have sufficient merit, that is, are arguable for the purpose of establishing liability. The court found that the plaintiffs were in funds but in the event the defendants were successful, the defendants will not have direct enforceable access to those funds. The court directed that the plaintiffs provide security in the sum of $40,000 or about two-thirds of the scale costs estimated by the first defendant. The proceedings are otherwise stayed pending the payment of security.

The court's reasoning and outcome in this case were based on the principle that access to the courts for a genuine plaintiff is not lightly to be denied. However, the court found that the plaintiffs had not conducted themselves on the question of security in a manner that engendered confidence. The court found that the plaintiffs were in funds but in the event the defendants were successful, the defendants will not have direct enforceable access to those funds. The court directed that the plaintiffs provide security in the sum of $40,000 or about two-thirds of the scale costs estimated by the first defendant. The proceedings are otherwise stayed pending the payment of security. The court found that the plaintiffs had arguable causes of action of negligence, and the court was prepared to proceed on the basis that the claims have sufficient merit, that is, are arguable for the purpose of establishing liability.

Orders