Langton v Raytheon Polar Services Ltd HC Auckland CIV 2009-409-2666
[2010] NZHC 1920
•27 October 2010
IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY
CIV-2009-409-002666
BETWEEN MICHAEL STEVEN LANGTON Plaintiff
ANDRAYTHEON POLAR SERVICES LTD Defendant
Hearing: 14 October 2010
Appearances: G D Wadsworth for Defendant/Applicant
R Chapman for Plaintiff/Respondent
Judgment: 27 October 2010
JUDGMENT OF ASSOCIATE JUDGE OSBORNE
as to security for costs
[1] The defendant applied for an order as to security for costs. The application for security, as filed, was supported by written submissions initially focused on security for the period through to completion of trial. Through the helpful position adopted by counsel it is possible for the Court to deal with the matter on a more focused, albeit interim basis. Mr Wadsworth for the defendant/applicant has not abandoned the breadth of the application but responsibly accepted in submissions that the intention which his client has to bring a strike-out application might appropriately lead the Court to deal with the matter of security in two stages.
The general nature of the proceeding
[2] The plaintiff is a heavy equipment mechanic. He suffered an injury while working for the defendant at the United States Antarctic Programmes Base at the
South Pole. For a period afterwards, while in New Zealand, he received financial
MICHAEL STEVEN LANGTON V RAYTHEON POLAR SERVICES LTD HC CHCH CIV-2009-409-002666
27 October 2010
assistance from the Accident Compensation Corporation. He subsequently moved to
Switzerland. The ACC assistance was subsequently terminated.
[3] He issued this proceeding for general damages in the sum of $375,000 and special damages in the sum of $125,000 alleging that the defendant had breached a duty of care owed to him and that the defendant had breached its contractual duties to him.
[4] The defence filed denies factual allegations which would be necessary to support a judgment against the defendant. The defendant goes on to plead an accord and satisfaction (which is denied by the plaintiff). It further pleads a statute bar based on the provisions of the Injury Prevention, Rehabilitation and Compensation Act 2001 (which statute bar is denied by the plaintiff).
[5] The defendant’s statement of defence carries the recital – “This defence is without prejudice to the Defendant’s right to apply to strike out these proceedings as statute barred under s 317(1) of the Injury Prevention, Rehabilitation and Compensation Act 2001”.
[6] Mr Wadsworth confirms that it is the defendant’s intention to pursue a strike out application on the basis pleaded.
Security for costs
[7] The defendant’s application for an order for security, based on r 5.45 High Court Rules, invokes the grounds that the plaintiff is resident out of New Zealand or that there is reason to believe that he will be unable to pay the defendant’s costs if the plaintiff is unsuccessful in his proceeding.
[8] On the evidence in this application both of these threshold requirements are made out. The plaintiff’s evidence establishes that he resides at Meltingen, Switzerland. It also establishes that he and his wife have no available substantial assets between them (having some entitlement in private pension funds but not
immediately accessible). Their living expenses mean that their combined income leaves them with little or no savings.
[9] The plaintiff through the English solicitors whom he had instructed in relation to the litigation (and who have in turn instructed his New Zealand solicitors) sought to meet the costs situation by obtaining After the Event (ATE) insurance cover. The evidence of the plaintiff’s solicitor establishes that the plaintiff from
24 September 2010 holds an ATE policy relating to the claim for damages which is the subject of this proceeding. The policy is expressly amended to include the New Zealand jurisdiction. The cover at this point is provided for the preliminary issue as to whether the claim is statute barred by virtue of what is referred to as the Accident Compensation Act 2001. Fifty percent of the premium is deferred and insured and fifty percent is deferred and uninsured. If the preliminary issue is successful fifty percent of the premium becomes due immediately and fifty percent is due at the conclusion of the main issue irrespective of income. If the preliminary issue is unsuccessful fifty percent of the premium is due immediately. The affidavit of the plaintiff’s English solicitor is helpful in attaching such evidence. In other points it is unhelpful or forgetful of the distinction between a deponent’s role and an advocate’s role. An example in the latter category is the following from the deponent –
... I state that such insurance protection makes an order for security for costs unnecessary.
That is of course a matter for the determination of this Court. I will return to my own assessment of the position.
Impact of the strike out application
[10] The strike out application which the defendant intends to bring has not yet been filed. It was Mr Chapman’s submission for the plaintiff that the determination of issues surrounding security for costs now would be premature for two reasons. First, the attendances through to the completion of an interlocutory application will in the context of this litigation not be substantial. Secondly, the merits and bona fides of the litigation will be clearer to the Court after the detail of strike out submissions than on this security application.
[11] As a fallback submission, Mr Chapman noted that it would be consistent with the Court’s approach to dealing with payment of security tranches to, on this occasion, deal with the first tranche only, namely through to the completion of the strike out application.
[12] Mr Wadsworth, as I have already indicated, was not in a position to consent to the second alternative but he realistically conceded that it was a proper approach open to the Court. Understandably he opposed the first alternative (not dealing with security at all at present).
Discussion
[13] The level of security sought by the plaintiff in this case is substantial in relation to a $500,000 claim. The solicitor who has undertaken the costs and disbursements calculation for the defendant places the total costs and disbursements likely to be incurred as being in the range $79,480 to $181,860. The largest part of that component lies in the uncertainty of the fees which will be payable to experts (in the form of a surgeon and a psychiatrist).
[14] The expert fee components will not arise in the event of a successful strike out application. They also do not fall into the reckoning if there is to be security for costs in the interim.
[15] On my calculation the solicitor’s estimate of costs, based on a 2B award, amounts to $21,280 through to the ceiling of an interlocutory order, together with
$1,380 disbursements.
[16] 2B would be an appropriate calculation for the likely nature of attendances through that period.
[17] Counsel both accept that the Court must have regard to the merits and bona fides of a plaintiff’s case. Where a case has merit, the Court must take into account the issues of access to justice which are involved: Ambrose v Pickard.[1] In this case I
consider it premature to reach even a tentative view as to the superior strength of the case of one party or the other. The plaintiff’s case is based first on events which did occur and which caused him injury. To that extent there is clearly strength in that part of his case. But the case then turns to relatively technical and jurisdictional issues under the relevant legislation. Unsurprisingly at the hearing before me both experienced counsel were able to formulate competing submissions as to the suggested hopelessness of the other’s jurisdictional position. As those matters will be at the heart of the strike out application, and will provide the Court with a more appropriate opportunity for assessment, I consider that in the discretion relating to security for costs the Court should take the view that the better time for assessment of merit will be on the occasion of the strike out application. That has the added benefit of ensuring that the assessment of security for costs in relation to the much greater portion of security sought will be in a more informed setting. For now I consider the case should be viewed as one in which the plaintiff has an understandable basis for his claim and that the Court should take into account the access to justice issue.
[1] Ambrose v Pickard [2009] NZCA 502 at [40].
[18] The apparent availability of ATE insurance is in my judgment a matter to be given some recognition. Mr Wadsworth suggested that it should be given very little weight in the present context. Its confirmed availability was announced only through an affidavit sworn on 30 September 2010 and filed approximately a week before this hearing. Mr Wadsworth pointed out (correctly) that there are terms and conditions attaching to the coverage which are outside the control of the Court and the defendant. There may even be an issue as to whether the relevant premium will be paid, although the position for the plaintiff, from the bar, was that the practice in England is that the English solicitors involved would then attend to payment of the premium as a disbursement. The Court is not left with a clear picture in that regard. In the event the plaintiff is unsuccessful at the strike out stage, the plaintiff’s solicitors would be unable to later recover any premium they pay as a disbursement from the other party because their client’s litigation will have failed. Mr Wadsworth also raised as a consideration the fact that the insurance company in question is Gibraltar-based, with potential difficulties and significant costs for the defendant should it have to enforce rights under the insurance policy.
[19] Weighing all these matters, including the fact that the plaintiff seeks
$500,000 damages, I consider it appropriate that the plaintiff provide in New Zealand a measure of security for costs but not at the level which I would have awarded but for the existence of the ATE policy. I consider that an appropriate balanced figure would be one representing approximately 40 percent of a 2B award up to the completion of the strike out application. Such a figure would be NZ$9,000.
Appropriate conditions
[20] By r 5.45(3)(b) the Court may stay a proceeding until security is given. Mr Wadsworth submitted that such an order was appropriate in the usual way.
[21] The present case is somewhat unusual in that the next step in the proceeding will be the defendant’s strike out application. The defendant clearly wants to have that strike out application heard. The true nature of the condition attaching to the security order which Mr Wadsworth seeks, to be effective, would be in the nature of an unless order, leading to the striking out of the plaintiff’s claim if he does not provide the security so as to enable the defendant’s strike out application to proceed. I do not consider on the facts of this case as they are understood at present that it is appropriate to make an order of that kind, assuming the jurisdiction to exist.
[22] It is nevertheless an appropriate case in which to order a stay in the usual way, but with leave to the defendant to file a strike-out application. If the plaintiff wishes to continue with this proceeding it is clearly in his interests to provide the security and to co-operate in having the stay application heard and determined.
Orders
[23] I order:
1)The plaintiff shall provide security for costs in the sum of NZ$9,000 to the satisfaction of the Registrar, to be provided in a single tranche on or before 18 November 2010.
2)The proceeding is stayed until the security is provided, except to the extent that the defendant if it chooses to do so may before the provision
of security file and serve an application for an order striking out the proceeding. In the event the plaintiff does not provide security as directed, the costs of any adjournment of the stay application occasioned by the failure to provide security are likely to fall on the plaintiff.
3) The proceeding is adjourned to a telephone conference at 9.00 am
23 November 2010. The Court anticipates that by that date the ordered security will have been provided and that counsel will be able to indicate to the Court the appropriate timetable directions for the continuation of the proceeding. Counsel are to confer and to file, three working days before the conference, preferably a joint memorandum dealing with their proposals for directions.
[24] The above orders are made in partial adjudication of the issues raised by the defendant’s interlocutory application. All other aspects of the application are adjourned. Counsel’s memorandum to be filed in November should indicate whether counsel have any agreement as to whether the remaining issues in the security application should be the subject of argument at the hearing of the strike out application so that the Court can in a single judgment, in the event the strike out application is unsuccessful, deal with the remaining security issues.
[25] The costs of the security application to date are reserved, to be dealt with when the security application is finally determined.
Associate Judge Osborne
Solicitors:
Kennedys, PO Box 3158, Auckland for Defendant/Applicant
Johnston Lawrence, PO Box 1213, Wellington for Plaintiff/Respondent
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