Norris Ward McKinnon v Kaye - [2013] NZHC 554

IN THE HIGH COURT OF NEW ZEALAND HAMILTON REGISTRY

CIV2009-019-001473 [2013] NZHC 554

BETWEEN NORRIS WARD MCKINNON Plaintiff

ANDANTHONY PRATT KAYE AND MORVA KAYE
Defendants

Hearing: 19 March 2013

Appearances: R J Latton for the plaintiff
A P Kaye in person

Judgment: 20 March 2013

JUDGMENT OF GILBERT J

This judgment was delivered by me on 20 March 2013 at 3.00 pm pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date: ………………….

Solicitors: Kennedys, P O Box 3158, Auckland 1140

Copy to: Mr & Mrs Kaye, 5/204 Nixon Street, Hamilton 3216

NORRIS WARD MCKINNON V KAYE HC HAM CIV 2009-019-001473 [20 March 2013]

Introduction

[1] Mr and Mrs Kaye apply to lift the stay of this proceeding ordered by Faire AJ

on 28 November 2012. Norris Ward McKinnon does not oppose this application.

[2] Norris Ward applies for security for costs against Mr and Mrs Kaye in relation to their counterclaim. This is the only live claim because Norris Ward has now dropped its claim against Mr and Mrs Kaye for outstanding fees.

Background

[3] In mid-2005, Mr and Mrs Kaye agreed to purchase a garden centre business in Cambridge pursuant to three interrelated agreements for sale and purchase, one for each of the two lots being acquired, and one for the business. The Kayes retained Tanner Fitzgerald to act for them on this purchase.

[4] The Kayes encountered difficulties on settlement. Tanner Fitzgerald paid the amount required to settle the purchase of one of the lots without obtaining title. The mortgagee was concerned about its position and recommended that the Kayes obtain independent advice. This is what led them to engage Norris Ward in August 2006.

[5] In September 2006, shortly after it was instructed, Norris Ward advised the Kayes that they had a good claim against Tanner Fitzgerald for negligence. The Kayes accepted this advice and instructed Norris Ward to pursue such a claim.

[6] In November 2006, with Norris Ward’s assistance, the Kayes obtained title to the lot they had paid for. Final settlement of the balance of the purchase was completed on 16 March 2007.

[7] In May 2007, the litigation lawyer dealing with the matter at Norris Ward advised the Kayes that Tanner Fitzgerald had no defence to their claim and that they would achieve a substantial recovery, in the hundreds of thousands of dollars. This advice was confirmed by letter dated 27 July 2007:

At this early stage, I consider that you have a strong case for negligence and reasonable prospects for securing, at least, the majority of the monies you are seeking in damages [$673,027].

[8] In a letter dated 23 August 2007, Norris Ward advised the Kayes that there was a good prospect of the claim settling within six to eight months. The letter also confirmed the likely recoverability of substantial damages:

Having considered your alleged damages I consider that you have reasonable prospects of recovering a substantial amount of these damages being in the hundreds of thousands of…

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: [2013] NZHC 554
Decision Date: 20 March 2013

CaseChat Overview and Summary

The plaintiff, Norris Ward McKinnon, sought an order for security for costs against the defendants, Anthony Pratt Kaye and Morva Kaye, in relation to their counterclaim. The Kayes had engaged Norris Ward to pursue a claim against Tanner Fitzgerald for negligence. However, the Kayes alleged that Norris Ward's advice was negligent and caused them to suffer substantial losses. The key legal issue was whether the court should grant an order for security for costs to protect Norris Ward from the Kayes' inability to pay costs if their claim failed.

The court held that the threshold test for making an order for security for costs was met, as there was a reason to believe the Kayes would be unable to pay costs if their claim failed. However, the court declined to make an order for security for costs in the exercise of its discretion. The court considered that the Kayes had a good arguable case and that it would be unjust to deny them access to the court to pursue their legitimate claim. The court also noted that Norris Ward had offered to settle the Kayes' claim for $140,000 and had written off all outstanding fees.

The court lifted the stay of the proceeding by consent. The plaintiff's application for security for costs was declined. The proceeding was adjourned to a telephone conference to enable directions to be made for the future conduct of the proceeding, including the allocation of a new trial date.

Orders