M & L Clayton Trustee Limited v Jackson - [2024] NZHC 1945

IN THE HIGH COURT OF NEW ZEALAND ROTORUA REGISTRY

I TE KŌTI MATUA O AOTEAROA

TE ROTORUA-NUI-A-KAHUMATAMOMOE ROHE

CIV-2023-463-88

[2024] NZHC 1945

UNDER Section 19, Receivership Act 1993 & Section 176, Property Law Act 2007 & s 301 of the Companies Act

BETWEEN

M & L CLAYTON TRUSTEE LIMITED as

trustee of the Mark Clayton Rotorua Trust First Plaintiff

M & L CLAYTON TRUSTEE LIMITED as

trustee of the Oasis Trust Second Plaintiff

M & L CLAYTON TRUSTEE LIMITED as

trustee of the Mark Clayton Katikati Trust Third Plaintiff

continued…/2

Hearing: 4 June 2024

Appearances:

D G Hayes for the Plaintiffs

S Hunter KC, L L Fraser and J Marcetic for the First Defendants D Broadmore and Z Sinclair for the Second Defendant

Judgment:

16 July 2024

JUDGMENT OF HARVEY J

[Security for costs]

This judgment is delivered by me on 16 July 2024 at 9.30 am pursuant to r 11.5 of the High Court Rules.

……………………………………………
Registrar / Deputy Registrar

M & L CLAYTON TRUSTEE LIMITED v JACKSON & ORS [2024] NZHC 1945 [16 July 2024]

ANDNEALE JACKSON, BRENDON JAMES GIBSON and GRANT GRAHAM
First Defendants
BANK OF NEW ZEALAND
Second Defendants

Introduction

[1] On 13 March 2024, judgment was issued declining the 21 December 2023 applications of Calibre Partners and the Bank of New Zealand Limited for firstly, security for costs against M & L Clayton Trustee Limited as trustee of the Mark Clayton Rotorua Trust. Secondly, for the transfer of the proceedings from Rotorua to Auckland.1 At a case management conference held before Associate Judge Taylor on 19 March 2024, the defendants indicated that they would apply for recission of the judgment.2 The Judge then issued directions that a half-day hearing be scheduled.

[2] On 20 March 2024, the defendants filed an interlocutory application seeking recession of that part of the judgment determining their applications for security and other orders. They ask that the plaintiff pay $120,000, or an amount the Court considers sufficient, as security regarding the claims against each of the defendants, so $240,000 in total. Finally, the defendants ask for a stay until security for costs are ordered and for costs on this application. The plaintiff opposes the application.3

[3] On 30 April 2024, I issued a minute directing the registrar to schedule the matter for hearing. That took place on 4 June 2024 via VMR.

[4] Both defendants filed an amended statement of defence on 5 April 2024. An affidavit from Lee-Anne Clayton (director of the plaintiff), dated 5 April 2024, has also been filed updating the Court on the plaintiff’s funding of the litigation following Associate Judge Taylor’s direction.4 A further affidavit from Neale Jackson was filed on 20 March 2024 in support of the recission and security applications. For convenience all evidence filed in respect of the initial application forms part of the evidence in this application. I also heard oral argument and received further submissions from the parties.

1 M & L Clayton Trustee Ltd v Jackson [2024] NZHC…

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: [2024] NZHC 1945
Decision Date: 16 July 2024

CaseChat Overview and Summary

M & L Clayton Trustee Limited, acting as trustee for various trusts, initiated proceedings against Neale Jackson, Brendon Gibson, Grant Graham (collectively referred to as Calibre Partners) and the Bank of New Zealand (BNZ), seeking security for costs and other relief. The defendants applied for security for costs, a stay of proceedings until security is paid, and costs of the application. The primary issue before the court was whether it was just in all the circumstances to order security for costs, and whether the earlier judgment declining security for costs should be rescinded. The court considered the financial position of the plaintiff, the merits of the claim, and the potential impact of an order for security on the plaintiff's ability to pursue its claim.

The court found that there were grounds to believe that the plaintiff would be unable to meet a costs award if unsuccessful, as it was relying on interest-free loans from the Clayton family to fund the litigation. The court also noted that it was too early in the proceeding to make a finding on the merits of the claim, and that the plaintiff had additional evidence that was not available in 2020. However, the court considered that an order for security for costs was appropriate, given the plaintiff's reliance on external funding and the potential for substantial costs if the defendants successfully defended the claim. The court ordered security for costs to be paid in three stages, and granted a stay of proceedings until security is paid. The court also rescinded the earlier judgment declining security for costs.

The court ordered that the plaintiff pay security for costs in three stages, with the first payment of $10,000 for each defendant due within two months from the release of the judgment. The second payment of $10,000 for each defendant is due at the close of pleadings, and the final payment of $31,200 for each defendant is due 20 working days before the trial commences. The court granted a stay of proceedings until security has been paid as ordered. Costs of the application were to lie where they fell.

Orders