McLellan v Springvale Central Water Co Ltd

IN THE HIGH COURT OF NEW ZEALAND DUNEDIN REGISTRY

CIV-2013-412-000468 [2014] NZHC 1677

BETWEEN

SHAUN McLELLAN

Plaintiff

AND

SPRINGVALE CENTRAL WATER CO LTD

Defendant

Hearing:	2 July 2014
Appearances:	J E Bayley for Applicant/Defendant D J More for Respondent/Plaintiff
Judgment:	17 July 2014

JUDGMENT OF ASSOCIATE JUDGE OSBORNE

as to security for costs

Introduction

[1]      The defendant (Springvale) seeks security for costs.

[2]      The security sought is payment of an additional sum of $52,810.  When this application was first filed, at a time when there was a summary judgment application before the Court, the plaintiff (Mr McLellan) provided by agreement a first tranche of security of $5,284. This application was then adjourned.

[3]      Mr McLellan’s summary judgment application was subsequently abandoned with the result that timetable directions have now been made through to trial.  Hence Springvale’s renewed application for a second tranche of security.

[4]      Mr McLellan accepts that he will be unable to pay Springvale’s costs if he is

unsuccessful in his proceeding.   The threshold requirement under r 5.45(1)(b) is therefore established.

McLELLAN v SPRINGVALE CENTRAL WATER CO LTD [2014] NZHC 1677 [17 July 2014]

[5]      Mr More, for Mr McLellan, did not challenge the reasonableness of the

Springvale  assessment  of likely 2B  costs  and  expert  witness  fees  ($37,810  and

$15,000 respectively).   It would remain for the Court, if the Court finds it just to award some additional security, to determine whether the full $52,810 or only some part of it should be awarded.

[6]      Mr McLellan’s opposition to the awarding of any further security is upon the basis that the Court should conclude under r 5.45(2) that it is not just in all the circumstances to award any security. That is for three reasons, namely:

(a)       Mr McLellan has a good cause of action against Springvale; and

(b)      Mr McLellan’s impecuniosity has been caused by the Springvale’s

conduct in relation to the contract; and

(c)      It would be contrary to the interests of justice for Mr McLellan to be required to provide further security for costs and for the proceeding to be stayed until security was provided.

The Court’s general approach to consideration of security

[7]      In A S McLachlan Ltd v MEL Network Ltd,1 the Court of Appeal emphasised the discretionary nature of this jurisdiction and observed that it is not to be fettered by constructing “principles” from the facts of previous cases.  There is no check-list of so-called principles.

[8]      It  is  appropriate in  this  case,  given  the two  central  issues  raised  by Mr

McLellan, to focus first on the merits of his claim and secondly on the cause of his impecuniosity.

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

Mr McLellan’s claim

The nature of the claim

[9]      Mr McLellan brings his claim as assignee of the cause of action.  The cause of action was assigned by Highland Springs No 2 Ltd (Highland) of which Mr McLellan is the sole shareholder and director.

[10]     Mr McLellan sues Springvale…