Reynolds v Finnigan - [2020] NZHC 3170

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2019-404-002717

[2020] NZHC 3170

BETWEEN
GRANT BRUCE REYNOLDS, as liquidator for THE LEARNING LADDER LIMITED (IN LIQUIDATION)

First Plaintiff

JOANNE LEE YOUNG
Second Plaintiff

THE LEARNING LADDER LIMITED (IN LIQUIDATION)

AND

PERI MICAELE FINNIGAN and BORIS VAN DELDEN

First Defendant

RED 9 LIMITED
Second Defendant

THE LEARNING LADDER (2018) LIMITED

Third Defendant

PEAT JOHNSON MURRAY LIMITED

Fourth Defendant

Hearing: 25 November 2020

Appearances:

A Ferguson and A McCabe for Third Plaintiffs M J Fisher and J T Yoon for Second Defendant

Judgment:

2 December 2020

JUDGMENT OF ASSOCIATE JUDGE P J ANDREW

REYNOLDS & ORS v FINNIGAN & ORS [2020] NZHC 3170 [2 December 2020]

Introduction

[1] In my judgment of 14 September 2020,1 I dismissed the application by the second defendant, Red 9 Limited (Red 9), for an order that the third plaintiff, The Learning Ladder Limited (TLLL), pay security for costs in the sum of $50,000. 2 As a matter of discretion, I made an order that the liquidator and first plaintiff, Mr Reynolds, and the second plaintiff, Mrs Young, were to file and serve a written undertaking accepting personal liability and on a joint and several basis for any costs awarded in favour of Red 9 against TLLL, up to a maximum of $35,000 (plus GST if any) and should TLLL fail to pay those costs.3

[2] Red 9 now seeks leave to appeal that judgment to the Court of Appeal pursuant to s 56(3) of the Senior Courts Act 2016.

[3] The critical issues I must determine are whether Red 9 has raised any arguable errors which have wider significance beyond the parameters of this case and whether any appeal will delay unnecessarily the determination of the substantive proceedings.

Relevant legal principles

[4] In Finewood Upholstery Ltd v Vaughan, Fitzgerald J held that the requirement for leave to appeal should serve as a “filtering mechanism”, to ensure that unmeritorious appeals of interlocutory orders, or appeals of interlocutory orders of no great significance to either the parties or more generally, do not unnecessarily delay the proceedings at which the orders were made.4

[5] In Finewood, her Honour endorsed the approach of Dobson J in A v Minister of Internal Affairs,5 where he held the following considerations are relevant to applications for leave to appeal:

1      Reynolds v Finnigan [2020] NZHC 2389, re-issued 12 October 2020.
2      Sought under r 5.45 of the High Court Rules 2016.
3 At [43]. The order required Mr Reynolds and Mrs Young to file and serve the undertaking within 14 days.
4      Finewood Upholstery Ltd v Vaughan [2017] NZHC 1679 at [13].
5      A v Minister of Internal Affairs [2017] NZHC 887.

(a)A high threshold exists for the granting of leave. An allegation of error of law or fact is generally insufficient. An applicant should raise an arguable error;

(b)Leave should only be granted where the circumstances warrant incurring…

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: [2020] NZHC 3170
Decision Date: 2 December 2020

CaseChat Overview and Summary

In Reynolds v Finnigan, the High Court of New Zealand was tasked with deciding whether to grant Red 9 Limited leave to appeal the court's earlier decision dismissing its application for an order that The Learning Ladder Limited (TLLL) pay security for costs. The critical legal issues were whether Red 9 had identified any arguable errors of law with broader implications and whether granting leave to appeal would unduly delay the substantive proceedings. The court found that Red 9 had raised arguable errors, particularly regarding the interpretation of the High Court Rules concerning the security for costs offered by the liquidator of TLLL. These issues had wider significance as they pertained to the acceptance of undertakings by liquidators in proceedings they brought. While there would be some delay in the proceedings if leave to appeal was granted, the court determined that the potential benefits of resolving these broader issues outweighed the delay.

The court granted leave to Red 9 to appeal the judgment to the Court of Appeal. Associate Judge P J Andrew further directed that the Notice of Appeal should be filed and served before Christmas 2020, and that Red 9 should take all reasonable steps to secure a prompt hearing of the appeal. In terms of costs, the court found that TLLL was the successful party in relation to the security for costs application, and thus Red 9 Ltd should pay costs to TLLL on a 2B basis plus disbursements. However, for the application for leave to appeal, Red 9 Ltd was the successful party and thus TLLL was to pay costs to Red 9 Ltd on a 2B basis plus disbursements. Both costs orders were to lie in court pending the determination of the appeal by the Court of Appeal.

Orders