LHL Leasing Solutions Ltd v Pinto Ltd - [2014] NZHC 2397

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2013-404-005240 [2014] NZHC 2397

BETWEEN
LHL LEASING SOLUTIONS LIMITED

Plaintiff

AND

PINTO LIMITED Defendant

Hearing: 30 September 2014

Appearances:

D P Robinson for Defendant/Applicant
G P Denholm for Plaintiff/Respondent

Judgment:

30 September 2014

JUDGMENT OF ASSOCIATE JUDGE OSBORNE
as to security for costs

Introduction – an application for security for costs

[1] The defendant (Pinto) seeks security for costs in this proceeding against the plaintiff (LHL).

[2] LHL sues for rental payments under an equipment lease and for return of the leased equipment which Pinto had for the main part placed with Pinto’s customers. The term of the lease was five years from November 2005. The money claimed is approximately $280,000.00 together with interest. The equipment is said to be worth
$70,000.00.

[3] Pinto denies breaches of the lease. It asserts defences based on the limitation period and on estoppel. It counterclaims for what it asserts were failures of LHL to meet its lease obligations, particularly in relation to LHL’s obligation to maintain the
equipment.

LHL LEASING SOLUTIONS LIMITED v PINTO LIMITED [2014] NZHC 2397 [30 September 2014]

[4] LHL does not put in dispute that it is likely, if unsuccessful in its claims, to be unable to pay Pinto’s costs.

What is in issue

[5] LHL’s opposition asserts that security should not be ordered because of Pinto’s denial of LHL’s right to the return of its equipment and to payment of rental. LHL says that those are the cause of LHL’s impecuniosity and inability to provide security. To justify that conclusion Mr Denholm advances the following propositions by reference to LHL’s evidence:

(a) LHL has genuine claims based on the lease contract;

(b)the appropriate forum for any conclusion as to key facts is at a trial on the full hearing of evidence;

(c) LHL’s financial circumstances flow from a shortfall in Pinto’s rental

payments and Pinto’s non-return of the equipment.

[6] Mr Denholm accepted that in relation to an impecunious plaintiff security is “the norm” and should be dispensed with only in exceptional circumstances. He pointed nevertheless to the highly discretionary nature of security. I refer to A S McLachlan v MEL Network Ltd.1 Mr Denholm submitted that the following considerations were particularly relevant in this case:

(a) LHL’s genuineness.

(b) LHL’s belief that its impecuniosity has been caused by Pinto’s

breaches.

(c) The inappropriateness of the Court drawing anything other than an impression of merits at this point.

1 A S McLachlan v MEL Network Ltd (2002) 16 PRNZ 747 (CA).

(d)The Court’s reluctance to deny a plaintiff access to justice through the order of a substantial sum of security if that prevents presentation of a claim.

The security jurisdiction

The High Court Rules

[7] Rule 5.45 empowers me to order the giving of security for costs where there is reason to believe that a plaintiff will be unable to pay the defendant’s costs if the plaintiff does not succeed in the proceeding.2

The principles

[8] The general…

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.

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Details

Case: [2014] NZHC 2397
Decision Date: 30 September 2014

CaseChat Overview and Summary

In the High Court of New Zealand, LHL Leasing Solutions Limited (LHL) sued Pinto Limited for rental payments under an equipment lease and for the return of the leased equipment, which Pinto had placed with its customers. The lease term was five years, from November 2005. LHL claimed approximately $280,000.00 together with interest, and the equipment was valued at $70,000.00. Pinto denied breaches of the lease and raised defences based on the limitation period and estoppel. It also counterclaimed for what it asserted were failures of LHL to meet its lease obligations, particularly in relation to LHL’s obligation to maintain the equipment.

The court had to decide whether to order security for costs in this proceeding against LHL. LHL did not dispute that it was likely, if unsuccessful in its claims, to be unable to pay Pinto’s costs. LHL’s opposition asserted that security should not be ordered because of Pinto’s denial of LHL’s right to the return of its equipment and to payment of rental. LHL argued that those were the cause of LHL’s impecuniosity and inability to provide security.

The court considered the genuineness of LHL’s claims, the impecuniosity resulting from a defendant’s actions, and the access to justice. The court found that LHL’s prospects of success in the proceeding as a whole were extremely modest. The court ordered LHL to provide security for the defendant’s costs, to be paid in two tranches. The court also stayed the proceeding until security was paid and ordered that the defendant’s counterclaim would be simultaneously stayed if the plaintiff’s claim was stayed. The plaintiff was to pay the defendant’s costs of this application and this order on a 2B basis, together with disbursements to be fixed by the Registrar, the Court certifying for the reasonable costs of travel and accommodation of counsel.

Orders