Sainsbury Logan & Williams v Bell - [2014] NZHC 221

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

CIV-2009-091-197 [2014] NZHC 221

BETWEEN SAINSBURY LOGAN & WILLIAMS Plaintiff

ANDROBERT ARTHUR BELL Defendant

Hearing: 18 February 2014

Counsel: I J Law for Plaintiff
R A Bell (in person) Judgment: 19 February 2014

JUDGMENT OF WILLIAMS J

[1] The plaintiff law firm sues the defendant to recover unpaid legal fees in a sum somewhat less than $3,900. The defendant counterclaims pursuing 14 causes of action in contract and negligence. The overall value of those counterclaims is of the order of $1.3 million.

[2] The plaintiff now seeks an order for security for costs as provided by r 5.45 of the High Court Rules. The plaintiff points to bankruptcy proceedings issued by a judgment creditor, BDO Manawatu Limited. This, the plaintiff says, means that it appears the counterclaimant will be unable to pay the plaintiff ’s costs in the event that the counterclaims fail. That threshold test in the rule being met, the plaintiff argued that it is ‘just’ to impose security for costs.

[3] For two reasons, I do not consider that such an order can be justified. The first is factual. At the end of the hearing before me, Mr Bell produced an affidavit in relation to his “claimed impecuniosity”. The affidavit attached evidence from five
bank accounts currently containing funds in New Zealand, Australian and US

SAINSBURY LOGAN & WILLIAMS v BELL [2014] NZHC 221 [19 February 2014]

dollars. The cumulative total of these funds (in New Zealand dollars) is $815,658. The annexed account documents suggested that these liquid funds had been on deposit in these accounts since last year. The funds all seemed to be held in Mr Bell’s personal name.

[4] It must follow that the threshold requirement in r 5.45 is not met.

[5] Even if that were not so, I would not have been minded to make the order sought. In Oceania Furniture Limited v Debonaire Products Limited,1 Clifford J took the view as a general proposition, that “whereas security for costs may be ordered on what is in substance an independent counterclaim, they will not be ordered where the counterclaim is in effect a defence to the plaintiff’s claim.”2

[6] A number of the heads of counterclaim are loss of chance actions in contract and tort. These are too remote from the original claim by Sainsbury Logan to be treated as, in substance, a defence to it. The first and eighth causes of action are different however. They claim $188,000 in wasted litigation expenditure because, Mr Bell argues, Sainsbury Logan failed to advise him until the day of trial that an aspect of the claim upon which he relied, lacked merit. Those heads of claim are indeed defences in substance. They essentially say that Mr Bell is not liable to pay the $3,900 in outstanding fees because, in breach of legal duty, Sainsbury Logan failed to prosecute the litigation competently.

[7] Mr Law for the plaintiff, invited me to make an order for…

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.

Keep reading for free

Create a free CaseChat account to read Sainsbury Logan & Williams v Bell and more:

Read every judgment in full
Ask AI and get answers linked to paragraphs
See how each paragraph was cited in later cases
Download judgments as PDF or Word

Continue with Google

One click creates your free account or signs you in.

By continuing you agree to the Terms and Privacy Policy.

Details

Case: [2014] NZHC 221
Decision Date: 19 February 2014

CaseChat Overview and Summary

Sainsbury Logan & Williams, a law firm, initiated proceedings against Robert Arthur Bell in the High Court of New Zealand, Wellington Registry, seeking to recover unpaid legal fees amounting to less than $3,900. Bell, the defendant, counterclaimed with 14 causes of action in contract and negligence, with the total value of these claims being approximately $1.3 million. The plaintiff sought an order for security for costs under rule 5.45 of the High Court Rules, citing Bell's bankruptcy proceedings as evidence of his potential inability to pay the plaintiff's costs if the counterclaims were unsuccessful.

The court had to determine whether the threshold test for an order for security for costs was met and, if so, whether such an order was just. The court noted that Bell produced an affidavit at the end of the hearing, which included evidence from five bank accounts showing a total of $815,658 in liquid funds. This evidence demonstrated that Bell had sufficient funds to cover the plaintiff's costs, thereby not meeting the threshold requirement for the order. Furthermore, the court considered that some of Bell's counterclaims, particularly those related to wasted litigation expenditure, were substantively defences to the plaintiff's claim, while others were more remote. The court concluded that even if Bell were impecunious, the marginal advantage of imposing security for costs would not be sufficient to make such an order just.

Accordingly, the application for security for costs was dismissed. The court then addressed timetabling matters, noting that the parties agreed to use the scheduled four-day fixture for a settlement conference before an Associate Judge. The court ordered that the parties exchange statements covering primary fact evidence, with specific deadlines for providing these statements. Costs were reserved.

Orders