Prima Technologies Ltd (in liq) v KMQ Inc HC Auckland CIV 2010-404-1116

[2010] NZHC 2152

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2010-404-001116

BETWEEN  PRIMA TECHNOLOGIES LTD (IN LIQUIDATION)

First Plaintiff

AND  D NAIR

Second Plaintiff

AND  KMQ INC

Second Defendant

AND  K QUINN

Third Defendant

Hearing:         29 November 2010

Appearances: D Smyth for Plaintiffs

S McAnally for Defendants

Judgment:      30 November 2010 at 11:30 am

JUDGMENT OF ASSOCIATE JUDGE BELL

Thisjudgment was delivered by me on 30 November 2010 at 11:30 am pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date: ………………….

Solicitors/Counsel:

McDonald Law, PO Box 28624, Auckland
Keegan Alexander, PO Box 999, Auckland

D E Smyth, PO Box 105270, Auckland

PRIMA TECHNOLOGIES LTD (IN LIQUIDATION) AND ANOR V KMQ INC AND ANOR HC AK CIV-

2010-404-001116  30 November 2010

[1]      On 7 October 2010, I heard the defendants’ application for security for costs and strike-out.  I dismissed the application for security for costs on condition that the liquidator accept personal liability for costs on the first plaintiff’s cause of action.  I said that if the liquidator is unwilling to accept the condition, then the defendants were at liberty to bring this matter on for hearing again and I would reconsider the matter.

[2]      A conference was called on Monday, 29 November 2010.  The liquidator had not given the undertaking as to personal liability.   Mr Smyth explained that the liquidator was unwilling to do so.  Both parties agreed that I should reconsider the question for security for costs.

[3]      The liquidator is already personally liable for costs on the second cause of action as that cause of action is brought in his name.  It is the more important claim in this proceeding and is for a far larger sum.  The first cause of action is in the name of the company.  The amount claimed is $NZ365,000 approximately.  The liquidator has formulated that claim based on examination of the plaintiff’s accounting records. While  not  conceding  a  claim,  the  defendants  have  not  shown  any  significant obstacles to that claim.

[4]      In my earlier judgment, I recorded the defendants’ proposal that security for costs be fixed at $40,000, with $20,000 to be put up now and $20,000 at a later stage.  At the time I thought that proposal was reasonable.  I have reconsidered that. Security  for  costs  is  required  only for  the  defendants’  success  against  the  first plaintiff.  Security for costs is not required for the liquidators’ claim in the second cause of action.  I had regarded the sum of $40,000 as appropriate security for costs for both causes of action.

[5]      A discount is required because security is required for only the first cause of action.

[6]      I accept  that  this  is  one case where it  is  appropriate that  a company in liquidation put up security for costs. I accept the defendants’ argument that this litigation is being run solely for the benefit of one creditor who appears to be funding

the  litigation.    It  is  appropriate  that  that  funder,  through  the  liquidator,  put  up security.

[7]      I fix security at $30,000, of which $15,000 is to be paid into Court now and the balance is to be paid in on the case being set down for hearing.   In default of payment, the first cause of action is stayed.

[8]      The first plaintiff is to pay costs on the security for costs application on a 2B

basis, plus disbursements as fixed by the Registrar.  If the parties are unable to agree on costs, they may file memoranda.

R M Bell

Associate Judge