Rangly Developments Limited v JCL Equities Limited
[2024] NZHC 3386
•13 November 2024
IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY
I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE
CIV-2024-409-163
[2024] NZHC 3386
UNDER District Court Act 2016, s 124 and High Court Rules, r 20.4 BETWEEN
Rangly Developments Limited Appellant
AND
JCL Equities Limited Respondent
Hearing: 23 October 2024 Appearances:
B Walker for Appellant
H C Matthews for Respondent
Judgment:
13 November 2024
JUDGMENT OF MANDER J
This judgment was delivered by me on 13 November 2024 at 4 pm pursuant to Rule 11.5 of the High Court Rules 2016
Registrar/Deputy Registrar Date: .
Rangly Developments Ltd v JCL Equities Ltd [2024] NZHC 3386 [13 November 2024]
[1] Rangly Developments Ltd (Rangly) and JCL Equities Ltd (JCL) entered into an agreement for the sale and purchase of a residential property (the agreement). A dispute arose between them regarding this contract which resulted in JCL suing Rangly in the Christchurch District Court to recover the deposit it had paid to Rangly. In response to that proceeding, Rangly sought summary judgment against JCL on the basis that none of the causes of action upon which JCL relies could succeed. That application was declined by Judge Kelly and Rangly now appeals that decision.1
Background
[2]The background to the dispute was set out in the District Court’s decision:2
[4] In July 2012 Rangly acquired a property at 46 Walford Street, Christchurch (the Property).
[5] Ten years later, on 8 August 2022 the parties entered into an agreement for the sale and purchase of the Property (ASP) which included the following due diligence condition:
21.0 Due Diligence
This agreement is conditional upon the purchaser being satisfied with the results of a due diligence investigation of the property and the purchaser’s intended development of it within 15 working days from the date of this Agreement.
If the purchaser is dissatisfied with any aspect of this investigation the purchaser may at the purchaser’s absolute discretion by notice in writing terminate this agreement and in such case any deposit paid must immediately be refunded in full. This clause is inserted for the sole benefit of the purchaser and the purchaser is under no obligation whatsoever to supply any reasons for the purchaser’s dissatisfaction with any aspect of the investigation.
The vendor undertakes and agrees to:
(b)provide to the purchaser any information held relating to the property relevant to the due diligence investigation.
[6] On 29 August 2022, the last day of the due diligence period, JCL confirmed the due diligence clause as having been satisfied, and on 5 September 2022 JCL paid a deposit of $141,739.10 to Rangly’s agent Harcourts.
[7] In December 2022 JCL’s director Mr Jack Lourie discovered through an Official Information Act (OIA) request made on EQC, of the existence of
1 JCL Equities Ltd v Rangly Developments Ltd [2024] NZDC 5211.
2 At [4]–[9].
an EQC file for the Property. JCL says that this file shows that three EQC claims were settled for cash including a claim for land damage, and that the scope of work is valued at $174,021.91. JCL also says that this report confirms damage to the perimeter foundation; that the house is not level; that there is cracking to the walls; and that there is a need for pile repairs.
[8] Following receipt of this file, in February 2023 JCL commissioned its own engineering report on the Property from Limestone Engineering Limited. This report raised further issues with the Property which JCL informally estimates it will cost in the order of $500,000.00 to repair.
[9] On 15 March 2023 JCL gave Rangly notice of its cancellation of the ASP. It now seeks return of its deposit.
JCL’s claim
[3] JCL alleged that the Earthquake Commission (EQC), at the request of Rangly, commenced a further assessment of the property in 2013 after a plumber brought to its attention that there was silt under the dwelling. JCL says the subsequent inspections of the property by EQC and its engagement of an engineer resulted in a scope of works that was used to cash settle EQC claims assigned to Rangly by the previous owner.
[4] JCL alleged Rangly was in contractual breach of the due diligence clause of the agreement by not providing it with information about earthquake damage the subject of these EQC claims. Further, that Rangly had engaged in deceptive and misleading conduct in breach of its obligations under the Fair Trading Act 1986 by failing to provide this information, and by its conduct made misrepresentations upon which the vendor relied and in respect of which it was entitled to relief.
[5] Essentially, JCL claims that Rangly failed in its obligation to disclose the earthquake damage that had been the subject of cash settled EQC claims. It is alleged this failure entitled JCL to cancel the contract and seek reimbursement of its deposit.
The interlocutory applications
[6] In response to JCL’s claims, which Rangly denied, it filed an application seeking summary judgment and also applied for an order for security for costs. Rangly maintained JCL had “no prospect of succeeding in relation” to the pleaded causes of action. The applications were accompanied by an affidavit sworn by Rangly’s owner, Lance Ryan, in support of the relief sought. Mr Ryan disputed the factual allegations
upon which Rangly’s claim was based. He maintained the valuation of the scope of works valued in the sum of $174,021.91 was based on a desktop analysis completed by EQC that related to land damage and was never received by Rangly.
[7] Mr Ryan deposed that Rangly’s EQC claims had been settled for an approximate sum of $7,500 and related only to cosmetic damage to the property. He denied Rangly was under any obligation to provide information to JCL in the absence of any request for such material and that, in any event, JCL had taken no steps to inspect the property either prior to entering into the agreement or pursuant to the due diligence clause of the agreement. This was consistent with Rangly’s reason for buying the property, which was to develop the site.
District Court decision
[8] After reviewing the competing contentions of the parties and the principles governing summary judgment applications, the Judge concluded:3
[47] In the present case, I agree with JCL that the pleaded facts and causes of action are tenable.
[48] Moreover, where a defence raises questions of fact upon which the outcome of the case may turn, summary judgment is generally not to be entered. In this case, Rangly acknowledges in its application for summary judgment that there are disputed facts namely relating to:
(a)the 2013 further EQC assessment (including what prompted that assessment, the circumstances around the [engineer’s] report dated 6 November 2015, and the extent to which Rangly received EQC payments); and
(b)whether Harcourts listed the property for sale and what discussions may have been had between JCL and Harcourts.
[49] Importantly too, JCL’s causes of action, particularly the second [for breach of contract], turn in large part on the question of whether the due diligence clause created a positive obligation on Rangly to provide information about the Property to JCL, to a greater or lesser extent, before it was asked by JCL to do so.
[50] Given this last issue I [sic] particular, I am not satisfied that summary judgment should be entered in favour of the defendant.
3 JCL Equities Ltd v Rangly Developments Ltd, above n 1.
The appeal
[9] JCL brings its appeal against the refusal to grant summary judgment on the following grounds. It is alleged:
(a)The Judge erred by approaching the application for summary judgment on the basis of the same principles that apply to a strikeout application.
(b)The Judge erred by finding the “mere identification of factual disputes” was a sufficient reason to decline the application. The corollary to this being:
(i)the Judge failed to assess the evidence and the significance of the factual matters in dispute; and
(ii)the Judge failed to make any findings in relation to the meaning of the due diligence clause in the agreement and to assess whether there was any real prospect of JCL’s interpretation being accepted at trial.
[10] Rangly maintains the property was assessed by EQC as having suffered only minimal damage and there was nothing misleading about it being sold on this basis. It says JCL’s claim is based on incorrect factual allegations, which are described as having been resolved by the particulars contained in the statement of defence and initial disclosure, and in the evidence provided by Mr Ryan. Rangly submits no misrepresentations were made either expressly or by omission, and that JCL freely confirmed the contract without taking the opportunity to undertake any due diligence as provided for in the agreement. Rangly’s position is that these facts do not need to be tested at trial and they should have been “robustly assessed” by the Judge on the summary judgment application.
[11] In opposition to the appeal, JCL supports the District Court decision dismissing the application for summary judgment. It maintains its claim requires an assessment of disputed factual circumstances relating to the agreement and that the evidence upon which Rangly relies in opposition to its claim is untested. In its submission, there
remains outstanding relevant documentation relating to the EQC claims and their cash settlement and that, because of the extant factual disputes between the parties which include issues of credibility, the issues between the parties can only be determined at trial. The Judge was therefore correct to dismiss the summary judgment application.
Did the Judge err in his identification of the principles governing an application for summary judgment by a defendant?
[12] On behalf of Rangly, Mr Walker submitted the District Court Judge erred when he accepted JCL’s submission that applications for summary judgment by a defendant are in the nature of a strikeout and can only succeed where it can be shown the claimant cannot succeed in respect of any pleaded cause of action. It was argued the Judge misdirected himself by simply accepting the presence of disputed facts rendered summary judgment inappropriate. Mr Walker submitted that the Court has some leeway to make findings where there is inconsistent evidence, particularly where there are indisputable contemporary documents or other statements that support a deponent. Had the Court undertaken an analysis of the affidavit evidence and taken a less rigid approach to the assessment of the factual differences between the parties, it was submitted the Court could have properly concluded that none of JCL’s causes of action had “any reasonable prospect of success”.
[13] The principles to be applied to an application for summary judgment under the District Court Rules 2014 are the same as those that govern the identical rule in the High Court Rules 2016.4 The Court may give judgment against a plaintiff if the defendant satisfies the Court that none of the causes of action pleaded by the plaintiff can succeed.5 A defendant must be able to knock out a plaintiff’s entire claim in order to be able to obtain summary judgment.
[14] A party may file affidavit evidence in support of such an application and obtain summary judgment on the basis of material other than that contained in the pleadings. However, that latitude does not change the fundamental rule that if there are material disputes of fact between the parties which cannot be resolved on a reading of the
4 High Court Rules 2016, r 12.2.
5 District Court Rules 2014, r 12.2.
affidavits, summary judgment will be declined.6 The procedure can only be used where a defendant has a clear answer to the plaintiff’s allegations which is not capable of being contradicted.7 Only where a defendant has an irrefutable case on the evidence which provides a complete defence to the plaintiff’s claim will a defendant be able to obtain summary judgment.8
[15] In approaching his task to the present application, the District Court Judge drew upon principles articulated by the Court of Appeal, in Attorney-General v Prince, that apply to a strikeout application.9 These include that strikeout applications proceed on the assumption that pleaded facts are true and that only where causes of action are so clearly untenable that they cannot possibly succeed will it be appropriate to summarily strikeout a claim. It is a jurisdiction that is to be exercised sparingly in a clear case where the court is satisfied it has the requisite material upon which to do so.10 Mr Walker argued the Judge was wrong to take the same approach to Rangly’s application for summary judgment. However, when regard is had to the relevant principles that govern a summary judgment application brought by a defendant, I am unable to discern any material difference. I do not consider the guidance the Judge derived from the approach to a strikeout application led him into error.
[16] The Court of Appeal has accepted that even on a striking out application a Court is entitled to receive affidavit evidence and may do so in a proper case, as it may on an application for summary judgment.11 However, for the purposes of either application, the Court will not attempt to resolve genuinely disputed factual issues. Evidence that can legitimately be taken into account will usually be undisputed and the Court will not normally consider evidence that is inconsistent with a respondent’s
6 Ferrymead Tavern Ltd v The Christchurch Press Co Ltd (1999) 13 PRNZ 616; and Jones v Attorney-General [2003] UKPC 48, [2004] 1 NZLR 433.
7 Westpac Banking Corp v M M Kembla NZ Ltd [2001] 2 NZLR 298, (2000) 14 PRNZ 631 (CA); and Jones v Attorney-General, above n 6.
8 Body Corporate No 207624 v North Shore City Council [2012] NZSC 83, [2013] 2 NZLR 297 at
[4].
9 Attorney-General v Prince [1998] 1 NZLR 262 at 267.
10 At 267.
11 Attorney-General v McVeagh [1995] 1 NZLR 588 (CA).
pleading.12 Exceptions may apply where evidence inherently lacks credibility or is inherently improbable.13
[17] This approach to factual disputes, that also applies to applications for summary judgment, was recognised by the District Court Judge when he observed that where a defence raises questions of fact upon which the outcome of the case may turn, summary judgment will generally not be appropriate.14 This rightly was the Judge’s focus when assessing whether JCL’s application could succeed. Whether the Judge was strictly correct to wholly equate JCL’s application for summary judgment with a strikeout application does not discernibly advance Rangly’s appeal in the absence of it being able to demonstrate his approach led him into error about the correct way to assess the summary judgment application. It follows that I do not consider the Judge erred in his approach to the legal framework that he was required to apply to the merits of JCL’s application.
Did the Judge’s identification of disputed factual issues lead him to erroneously decline summary judgment?
[18] JCL claims the Judge erred by declining summary judgment only because of the identified presence of factual disputes between the parties. Further, that the Judge failed to assess the evidence and that, had he done so, it would have resulted in summary judgment being entered in favour of Rangly.
[19] Essentially, Rangly’s argument rests on the proposition that JCL’s allegation that the company must have been aware of EQC’s involvement with the property in 2013 and thereafter is decisively met by Mr Ryan’s response in his reply affidavit that at no time was he or Rangly aware of any further assessed damage to the property or of any cash settled claims, whether based on EQC’s scope of works or otherwise. Mr Ryan maintains that Rangly only received some $7,500 for cosmetic damage to the property and that the company received no correspondence from EQC in respect of other claims.
12 Attorney-General v Prince, above n 9; and Attorney-General v McVeagh, above n 11.
13 That where material facts are genuinely in dispute where the remedy sought is summary judgment or strikeout the matter must be left for trial.
14 JCL Equities Ltd v Rangly Developments Ltd, above n 1, at [48], citing Pemberton v Chappell
[1987] 1 NZLR 1, (1986) 1 PRNZ 183 (CA).
[20] It is argued the material JCL has obtained from EQC, pursuant to its Official Information Act (OIA) request, represents EQC’s complete file and that further discovery is not necessary because it would not result in the identification of any other relevant documents. Mr Walker submitted that on the material before the District Court the only conclusion the Judge could have drawn was that Rangly received limited compensation for cosmetic damage and that the property was sold by Rangly on the basis of that bona fide understanding.
[21] JCL clearly does not accept Rangly’s position. It has brought its claim in the District Court on the basis of the allegations set out in its statement of claim. These alleged facts are disputed by Rangly, which relies upon Mr Ryan’s affidavit evidence as providing the correct narrative or version of events. Given this is the current position between the parties, it is not clear to me how a Court could be expected to resolve those disputed facts or be able to accept Mr Ryan’s evidence as a complete answer to the allegations made by JCL, without the matter proceeding to trial. Lest it be thought JCL is asserting a narrative bereft of any supporting foundation, it is able to point to documents that it has so far obtained from EQC’s file (which JCL maintains is incomplete) that provide at least some basis for its allegations.
[22] Illustrative of such material is a document obtained from EQC that is headed “Inspection Summary”, which was completed by an agent or employee of EQC in May 2013. It records the inspector’s observation of the presence of silt and debris adjacent to the dwelling and damage to the land. This inspection appears to have occurred in the presence of a person described as the “customer”, who is named as Nathan Lang, Mr Ryan’s son-in-law, who is a person involved in the business of Rangly. The document refers to the assessed damage ($25,500) being referred for settlement. Mr Matthews, who appeared on behalf of JCL, highlighted an email some seven years later sent by Mr Ryan to Mr Lang about providing access to property for the purposes of facilitating the sale process. Counsel submitted this indicated the ongoing involvement of Mr Lang in Rangly, who appears to have previously been involved with EQC on behalf of the company regarding claims relating to the property.
[23] Mr Matthews submitted the EQC file is incomplete because it contains no correspondence between EQC and the owner of the property, which at the time was
Rangly, despite the cash settled claims listed in EQC’s covering letter to which the file is said to relate. Mr Matthews also referred to correspondence between EQC and Mr Ryan, annexed to his affidavit, which he submits contradicts Mr Ryan’s evidence that he had no further correspondence with EQC after March 2014 and his proffered explanation for there being no such correspondence on the EQC file as being simply because there was none.
[24] JCL maintains the reason the information provided by the EQC file, in response to its OIA request, is incomplete is plain from EQC’s covering letter which refers to information having been withheld to protect the privacy of “respective owners”. The covering letter refers to five claims relating to the property that had been cash settled, including for land damage. Mr Matthews submitted that, while the covering letter from EQC listed these cash settled claims, no information about these settlements was included in the disclosed EQC file, likely, in Mr Matthews submission, because of privacy and confidentiality considerations. He further emphasised that other pieces of correspondence with EQC exhibited in Mr Ryan’s affidavit had not been disclosed in the material provided by EQC, and that this was a further indication the material obtained from EQC was incomplete.
[25] This brief review of the contested allegations and related discovery issues, which will need to be addressed to resolve the factual disputes between the parties, serves to illustrate how the proceeding cannot be dealt with by way of summary judgment. As noted, the factual issues in dispute between the parties give rise to related questions of discovery that will need to be explored. The Court may well have to make credibility or, at least, reliability findings when assessing the evidence of witnesses for the purpose of resolving factual disputes that cannot otherwise be resolved by what presently may be an incomplete documentary record. The Court will also likely be required to assess competing arguments as to the reasonable inferences that can be safely drawn from the competing narratives.
[26] I consider it plain that the parties’ respective cases give rise to contested questions of fact which will need to be resolved in order for the proceeding to be conclusively determined. Rangly denies having involvement or knowledge of any subsequent EQC assessments of damage to the property that are claimed to have
resulted in further cash settlements. JCL maintains Rangly’s denial is not tenable in the known circumstances, in particular as the owner of the property at the requisite time and that any such denial should be rejected. The presence of that dispute alone is sufficient to conclude that an application for summary judgment is inappropriate and must be dismissed.
[27] Mr Walker referred to a number of other contentious factual issues. These include the way in which the property came to be listed for sale by Rangly with a particular real estate firm; JCL’s stated intentions to develop the property and how this may or may not have been communicated to Rangly; certain matters that JCL is alleged to have been aware of at the time of the sale; and JCL’s failure to carry out any due diligence investigation of its own. Rangly sought to address these matters by reference to the available evidence, despite their contentious nature.
[28] Because of the conclusion I have reached regarding the centrality of the disputed issues regarding further EQC assessments of damage to the property and Rangly’s knowledge of any such assessments and related cash settlements, it is not necessary to review these other factual disputes. It is sufficient to note these other issues are also not capable of resolution by way of summary judgment, based as they presently are on the competing contentions of the parties. However, there is one aspect of the issue concerning due diligence that gives rise to different considerations which I will discuss presently when addressing the final ground of appeal.
[29] To summarise, each of the causes of action pleaded by JCL engage the factual issues to which I have referred, in particular the allegation that Rangly was aware of further earthquake damage alleged to have been assessed by EQC and the subject of cash settled claims that were not disclosed to JCL as part of the sale and purchase process. Rangly has argued the factual issues to which each of those causes of action give rise are “answered by credible evidence” that provides a complete answer to JCL’s allegations, and that neither further discovery nor a trial is necessary. It was submitted the evidence provided by Mr Lourie, the owner of JCL, lacks credibility and is inconsistent with the available documentation. This is said to be in contrast to Mr Ryan’s evidence which is described as being clear, consistent and supported by relevant contemporary documents, and therefore wholly credible.
[30] As I have concluded and will, in my view, be apparent on the face of Rangly’s own submission, those contentions cannot be resolved on the affidavit evidence alone and require to be tested at trial. The very nature of the issues which the competing cases give rise renders summary judgment a wholly inappropriate remedy. Until these fundamental issues are resolved by the Court’s assessment of the strength of the evidence called in support of the parties’ respective positions, not all the causes of action are capable of being conclusively determined. That is the statutory test that must be met for a defendant to successfully obtain summary judgment.
Failure to address meaning of due diligence clause
[31] Mr Walker submitted the District Court Judge erred when concluding that whether the due diligence clause of the agreement created a positive obligation on Rangly to provide information about the property without any request for information by JCL was not able to be determined on the application for summary judgment. It is not strictly necessary to address this ground of the appeal because JCL’s reliance on the due diligence clause primarily relates to its claim for breach of contract and is not, of itself, determinative of alleged breaches of the Fair Trading Act or the allegation of misrepresentation which are based on Rangly’s alleged conduct or omission. However, I accept that, as a standalone issue, Rangly’s contended for construction of the due diligence clause—that an express request by JCL was required to trigger an obligation to furnish information about the property—was capable of being determined on the summary judgment application.
[32] JCL’s position is that the obligation on Rangly was plain on the face of the due diligence clause which states that the vendor “undertakes and agrees to provide” the purchaser with “any information held relating to the property relevant to the due diligence investigation”. Rangly, on the other hand, maintains that in the absence of any express request for such information it was under no contractual obligation to provide material held by it in the terms described. Both parties accept that JCL did not explicitly make a discrete request of Rangly to provide information it held about the property. Therefore, there is no factual dispute that is required to be resolved regarding the basis or premise upon which Rangly’s interpretation of the due diligence clause is advanced.
[33] The authorities are clear that where a proceeding gives rise to “clear-cut” questions of contractual interpretation or law, however difficult they may be to determine, there is no reason the Court should not address such issues on the hearing of a summary judgment application.15 In the present case, the Judge identified the question of whether the due diligence clause created a positive obligation on Rangly to provide information to JCL about the property as being an issue which caused him not to be satisfied that summary judgment should be entered. However, as already observed, Rangly’s argument that an express request was a prerequisite to the imposition of any obligation to provide information was an issue that could be addressed on the basis of the uncontroversial fact that JCL had not requested Rangly to provide it with information about the property.
[34] My finding that the Judge erred in this aspect of his reasoning does not materially advance Rangly’s position on the appeal. Rangly is required to satisfy the Court that none of the causes of action pleaded by JCL can succeed. The plaintiff in this case still has available to it the alternative allegations of misleading and deceptive conduct and misrepresentation by omission for not disclosing EQC’s further involvement in respect of other damage to the property, which it claims Rangly was aware. Unlike the interpretation of the due diligence clause upon which Rangly relies in defence of the contractual claim, the alternative causes of action are not capable of being definitively determined without the Court making findings of fact in respect of JCL’s disputed allegations.
Conclusion
[35] For the reasons traversed, I do not consider the District Court erred in its refusal to enter summary judgment. The appeal from that decision is therefore dismissed.
Security for costs application
[36] In the event its application for summary judgment failed, Rangly applied for security for costs against JCL. The proposed security was calculated in accordance
15 Attorney-General v Prince, above n 9, at 267; Pemberton v Chappell, above n 14, at 4,185; and International Ore & Fertiliser Corp v East Coast Fertilizer Co Ltd [1987] 1 NZLR 9, (1986) 1 PRNZ 69 (CA) at 16,76.
with scale costs, in the amount of $15,280.16 That application was declined. The Judge held that JCL’s claim was not without merit or, at least, was not untenable, and that, while he was satisfied the application for security for costs was not made by Rangly for any apparent tactical reasons, he was not satisfied on the limited evidence it had proffered that such an order was justified.17 The application was therefore dismissed.
[37] Rangly argued the Judge erred in two major respects. First, it was submitted that JCL appears to be a shelf company with no assets and that it could be wound up with no consequences should it fail in its action against Rangly. It was emphasised that no set of accounts had been provided by JCL to allay these concerns that it could not meet an adverse costs order. Rangly submitted the Judge had erred by not placing proper weight on JCL’s failure to produce financial statements. Second, it was submitted the Judge failed to have adequate regard to the strength of JCL’s case which, even if not amenable to summary judgment, it was argued, lacked merit. It was submitted the Judge had paid too greater regard to Mr Lourie’s unsupported evidence of the company being solvent and having carried on business activities since 2017.
[38] In reply, Mr Matthews submitted there was an onus on Rangly to demonstrate there was a reason to believe the plaintiff would be unable to pay costs in the event it was unsuccessful.18 All that had been put forward in support of the application for security were details of Mr Lourie being the sole director and shareholder of JCL, as he is of eight other companies, and that Rangly was unaware of any assets that JCL owned. Beyond Mr Ryan expressing a concern that Mr Lourie could pass a resolution to liquidate JCL in the event of a costs award against his company, no stated reason nor justification was expressed for his concerns. These were said to be held notwithstanding Mr Ryan’s knowledge that Mr Lourie was a well-known Christchurch property developer who, through various corporate entities, has purchased several earthquake damaged properties for developmental purposes.
16 District Court Rules, r 5.48(2).
17 JCL Equities Ltd v Rangly Developments Ltd, above n 1, at [61]-[63].
18 Concord Enterprises Ltd v Anthony Motors (Hutt) Ltd (2) [1977] 1 NZLR 516 at 519.
[39] The Court has a discretion to order security for costs if satisfied there is reason to believe a plaintiff will be unable to pay the costs of the defendant if the plaintiff is unsuccessful.19 The making of an order for security requires there to be “reason” for a belief that the plaintiff will not be able to pay. Mere assertion is insufficient and an application has to provide some credible evidential basis from which it may reasonably be inferred the party will be unable to pay the costs.20 In the event the threshold test is met, the Court’s decision whether it would be “just in all the circumstances to order the giving of security for costs” is highly discretionary.21
[40] The only circumstances upon which Rangly seeks to have an adverse inference drawn as to JCL’s ability to pay costs is its corporate identity, the absence of it being aware it has any assets, and the unavailability of any set of accounts or solvency certificate. Against that, Mr Lourie deposes that JCL has been in business since 2017 and has always met its obligations in the course of its business dealings. He says JCL is solvent and there is no reason to believe it would not continue with its business activities, as it has done for some years.
[41] In declining the application to order security for costs, the Judge noted that he had dismissed the summary judgment application and that it therefore followed he was of the view JCL’s claim is not without merit or is, at least, not untenable. Having regard to the factual issues that exist between the parties, I have essentially come to the same conclusion, although without expressing any opinion as to the merits of the competing cases which, because of the state of the present evidence, it would be premature to venture a view. As noted by the Judge, this is not a case where the plaintiff company is in liquidation or receivership. That is not a prerequisite to a successful application for security in respect of a corporate plaintiff but nor is there any indication that JCL will not continue to trade, as Mr Lourie has deposed it has done for a number of years.
19 District Court Rules, r 5.48(1)(d).
20 Concord Enterprises Ltd v Anthony Motors (Hut) Ltd (No 2), above n 8, at 519; 100 Investments Ltd v Walker [2023] NZHC 2584, (2023) 26 PRNZ 304 at [17], citing Red 9 Ltd v Learning Ladder
Ltd (in liq) [2021] NZCA 284, (2021) 25 PRNZ 780 at [28]; and New Zealand Kiwifruit Marketing
Board v Maheatataka Coolpack Ltd (1993) 7 PRNZ 209 (HC) at 212.
21 McLachlan v MEL Network Ltd (2002) 16 PRNZ 747 (CA).
[42] On balance, I am unable to conclude on the state of the available information that the Judge erred in finding the threshold for the Court to exercise its discretionary jurisdiction had not been met. It follows that this aspect of the appeal must also be dismissed. Such a finding at this stage of the proceeding does not preclude a further application for security in the event Rangly becomes aware of any new evidence that bears on the question of whether JCL will be able to pay Rangly’s costs in the event the plaintiff is unsuccessful.
Costs
[43] In the event the appeal was dismissed, JCL sought costs. Mr Matthews submitted that, in the circumstances of this particular interlocutory appeal, costs should be awarded. Rangly resisted that application. Mr Walker submitted the issue of costs, including on the appeal, should be reserved pending the determination of the merits of the substantive proceeding.
[44] Often the issue of costs is reserved on summary judgment applications pending final determination of the plaintiff’s claim. However, relying on dicta of this Court, Mr Matthews submitted that where a defendant seeks summary judgment founded on principles that pertain to strikeout applications which fail, it will be appropriate to award costs to the successful plaintiff.22 It was stressed that a defendant will only be successful on an application for summary judgment where there is a clear legal impediment to liability or where there is a complete and incontrovertible answer on the facts.
[45] It was submitted that this was clearly not such a case. Rangly’s application appears to have been made in the knowledge there existed extant factual issues between the parties. It took the view that Rangly’s “credible evidence” in respect of those factual disputes was sufficient to be preferred on the papers and that a trial was not needed. This optimistic view of its summary judgment application was accompanied by a related submission that Mr Lourie’s evidence lacked credibility and was inconsistent with documents, despite JCL’s position that much material remained undisclosed.
22 Suharnan v Brookfields [2013] NZHC 586, (2013) 22 PRNZ 790.
[46] It is an unavoidable conclusion that Rangly’s application intrinsically gives rise to core factual issues the Court can only be expected to resolve by evidence tested at trial. It was also apparent there were grounds to seek further discovery. I consider this was not a case that lent itself to determination by way of summary judgment. In those circumstances, therefore, I consider an award of scale costs on the appeal in favour of the respondent is appropriate. It is anticipated these costs will be able to be agreed between the parties but, in the event they are unable to do so, memoranda (no more than three pages) can be exchanged and filed.
Result
[47] The appeal against the dismissal of Rangly’s application for summary judgment is dismissed.
[48] The appeal against the dismissal of Rangly’s application for security for costs is dismissed.
[49]JCL is entitled to scale costs on the appeal.
Solicitors:
Trollope & Co, Christchurch White Fox & Jones, Christchurch
0
3
0