McNaughton v Miller - [2021] NZHC 2688

IN THE HIGH COURT OF NEW ZEALAND MASTERTON REGISTRY

I TE KŌTI MATUA O AOTEAROA WHAKAORIORI ROHE

CIV-2021-435-01

[2021] NZHC 2688

BETWEEN
RICHARD MCNAUGHTON

Plaintiff

AND

RODNEY MILLER

First Defendant

AARON SLIGHT
Second Defendant (Discontinued)

RIGG ZSCHOKKE LIMITED
Third Defendant (Discontinued)

GARY KAYE
Fourth Defendant

TAVERNER KEYS & CO

Fifth Defendant

Hearing: 15 September 2021

Appearances:

Plaintiff in person

D Bleier for first defendant

V Wethey for fourth defendant J Forrest for fifth defendant

Judgment:

8 October 2021

JUDGMENT OF ASSOCIATE JUDGE JOHNSTON

Introduction

[1] In this proceeding the plaintiff, Mr Richard McNaughton, is suing the first, fourth and fifth defendants, Mr Rodney Miller, Mr Gary Kaye and Taverner Keys &

MCNAUGHTON v MILLER [2021] NZHC 2688 [8 October 2021]

Co, in connection with a transaction that took place in mid-2017 whereby he or his interests acquired from Mr Miller or his interests a Masterton plumbing and drain laying business. Originally, Mr McNaughton was suing two other parties, cited as the second and third defendants, but he has since discontinued his claims against them.

[2] Mr McNaughton’s statement of claim which, although headed “First Amended Statement of Claim” is, I am informed, the third iteration of that document, is not especially easy to follow. It is irregular in a number of respects, an example being that the pleaded causes of action are not each followed by a prayer for relief. Rather, there is one omnibus prayer for relief. As a result, it is difficult to discern what relief is being claimed against which defendants on what grounds.

[3] In any event, Mr McNaughton pleads at least five causes of action that include allegations of breach of contract, breach of the Fair Trading Act 1986, negligent misstatement, fraud, conspiracy and promissory estoppel. He is seeking substantial damages of an amount over $5,984,000.

[4] At the heart of his claim is an allegation that certain forward orders included in the material provided to him prior to entering into the agreement for sale and purchase of the business, which were presented as demonstrating the health of the business and on which he relied, turned out to be under quoted; he alleges that as a consequence the company he incorporated to acquire the business did not make the projected profit and that this lead to its demise. On that basis, he claims the profit that he says the company should have made on these projects and consequential losses including profits the company would have made in the future had it not failed.

The current application

[5] The three continuing defendant applicants have all applied for orders for security for costs.

[6] By the time their applications were heard these had been refined so that each of them sought $75,000 by way of security and proposed that in each case security is staggered, with

(a)$25,000 ($75,000 in total) to be paid within five working days of any order;

(b)$20,000 ($60,000 in total) to be paid after the first case management conference; and

(c)$30,000 ($90,000 in…

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 McNaughton v Miller

Details

AGLC: McNaughton v Miller [2021] NZHC 2688
Case: [2021] NZHC 2688
Decision Date: 8 October 2021

CaseChat Overview and Summary

In the case of McNaughton v Miller, Richard McNaughton, the plaintiff, filed a lawsuit against Rodney Miller, Gary Kaye, and Taverner Keys & Co, the defendants, over a business transaction that took place in mid-2017. The plaintiff's claims against two other parties have been discontinued. McNaughton's statement of claim includes at least five causes of action, such as breach of contract, breach of the Fair Trading Act 1986, negligent misstatement, fraud, conspiracy, and promissory estoppel, seeking substantial damages of over $5,984,000. The defendants have applied for orders for security for costs, with each seeking $75,000 in staggered payments.

The court had to determine whether the defendants met the threshold test for security for costs and if it was just to make an order considering all the circumstances. The court found that the defendants met the threshold test and were prima facie entitled to an order for security for costs. The court considered factors such as the apparent strengths and weaknesses of the case, the plaintiff's financial position, and any delay on the part of the defendants. The court accepted that the plaintiff could not resist the contention that the threshold test was met and that the defendants were prima facie entitled to orders for security for costs.

The court decided to grant the defendants' request for security for costs, with each defendant seeking $75,000 in total. The court found that the amount was reasonable and would strike the right balance between the interests of the parties. The court proposed to order the plaintiff to provide security in the form of a second registered mortgage security over the property registered in the plaintiff's parents' names. The court also decided to stay the proceeding pending the provision of the security and the required undertakings.

In conclusion, the court ordered the plaintiff to provide security for costs to the first, fourth, and fifth defendants in the form of a second registered mortgage security over the specified property. The proceeding was stayed pending the provision of the security and undertakings. Costs of this application were reserved.

Orders