Spackman v Martin
[2022] NZHC 554
•24 March 2022
IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY
I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE
CIV-2020-409-000142
[2022] NZHC 554
BETWEEN MURRAY SPACKMAN
First Plaintiff
AND
THOMAS MOORE
Second Plaintiff
AND
PATRICK MARTIN
First Defendant
AND
NICOLA MARTIN
Second Defendant
AND
ROBERT SNOEP
Third Defendant
AND
CREATEIP
Fourth Defendant
Hearing: 1 March 2022 Appearances:
G Slevin for First and Second Plaintiffs
M E Parker and T Bielby for Third and Fourth Defendants
Judgment:
24 March 2022
JUDGMENT OF ASSOCIATE JUDGE PAULSEN
This judgment was delivered by me on 24 March 2022 at 12.30 pm pursuant to Rule 11.5 of the High Court Rules
Registrar/Deputy Registrar Date:
SPACKMAN v MARTIN [2022] NZHC 554 [24 March 2022]
[1] This is an application by the third and fourth defendants for leave to issue a third party notice to Stephen Peter Hampson pursuant to r 4.4 (1) and (2) of the High Court Rules 2016.
[2]The application is opposed by the plaintiffs.
Background
[3] This litigation arises from a failed investment by the plaintiffs (Mr Spackman and Mr Moore respectively) in a company called Solar Bright Ltd (Solar Bright). Solar Bright is now in liquidation.
[4] The first and second defendants (Mr and Mrs Martin respectively) were founding directors and shareholders in Solar Bright.
[5] The third defendant (Mr Snoep) is a patent attorney who, along with his firm, the fourth defendant (CreateIP), provided professional services to both Solar Bright and Mr Martin in relation to inventions developed by Mr Martin whilst a director and shareholder of Solar Bright. I will refer to Mr Snoep and CreateIP together as “the applicants”.
[6] Mr Hampson was a director of Solar Bright between October 2013 and September 2017. He was also, at relevant times, a director of Powerhouse Ventures Ltd (PVL), the largest shareholder of Solar Bright.
[7] Solar Bright wished to raise capital and intended to do this through the issue of shares. In January 2017, Mr Spackman was invited to invest in the company and he introduced Mr Moore to the opportunity.
[8] At that time, Solar Bright held patents for a product called Pateye, and Mr Martin was developing a new product known as Dataeye. Pateye was a road stud that flashed a blue light when the temperature was sufficiently low to allow the formation of ice on the road. Dataeye monitored and reported on other matters, such as traffic volumes and weights of vehicles in motion, from sensors contained in Pateye road studs. The plaintiffs considered there was enormous potential in these inventions.
[9] The third amended statement of claim identifies meetings that occurred prior to the plaintiffs deciding to invest in Solar Bright where, the plaintiffs allege, representations were made concerning ownership of Pateye and Dataeye and steps that were being taken to protect the intellectual property in the inventions.
[10] The plaintiffs plead that on 19 January 2017, Mr Spackman met with Mr Hampson and was shown a shareholders and subscription agreement to which Solar Bright and Mr and Mrs Martin were parties. Under this agreement ownership of any intellectual property developed by Mr and Mrs Martin, while employed by Solar Bright, was reserved to the company.
[11] On 8 February 2017, Mr Spackman and Mr Moore attended a meeting with Mr and Mrs Martin and Mr Hampson at which they were introduced to the Dataeye product and told by Mrs Martin that the intellectual property in Dataeye was protected for Solar Bright by the terms of Mr and Mrs Martins’ employment agreements.
[12] The plaintiffs then plead that on 6 March 2017, Mr Spackman met with Mr Hampson and Anya Hornsey, an investment manager with PVL, where he expressed concern that Solar Bright did not have a patent in respect of Dataeye. The plaintiffs required information as to how it would be protected before investing in the company. Mr Hampson and Ms Hornsey arranged to meet with Mr Martin and Mr Snoep to obtain that information. Mr Martin and Mr Snoep were advised of the purpose of the meeting.
[13] That meeting was held at Mr Snoep’s office on 7 March 2017. However, prior to the meeting, Mr Snoep met with Mr Martin alone, where he accepted instructions from Mr Martin to apply for a patent in respect of Dataeye in the name of Mr Martin.
[14] The meeting between Mr Hampson, Ms Hornsey, Mr Martin and Mr Snoep immediately followed. The plaintiffs plead that, during that meeting, Mr Martin and Mr Snoep outlined the way in which Dataeye would be protected for Solar Bright. Ms Hornsey took notes and prepared a document summarising the protection strategy (the IP Strategy document).
[15] Later that day, Mr Hampson sent an email to the plaintiffs attaching the IP Strategy document, noting Dataeye leveraged the Pateye technology and without it Dataeye did not work. For that reason, part of the protection strategy was to file continuations of the patents held in respect of Pateye. His covering email referred to “Solar Bright’s strategy regarding the IP protection” and noted that “we feel the IP strategy is in a good position”. He also advised a provisional patent application in respect of Dataeye would be made within two weeks.
[16] On 12 March 2017, Mr Spackman advised Mr Hampson that both he and Mr Moore were satisfied with the information provided and would each invest in Solar Bright subject to Mr Spackman being appointed as an independent director of the company.
[17] On 21 March 2017, the applicants filed a provisional patent application for Dataeye in the name of Mr Martin (not Solar Bright).
[18] Mr Spackman was made aware the provisional patent application had been filed at a directors’ meeting on 6 April 2017, but it was not disclosed that the application had been made on behalf of Mr Martin personally.
[19] The plaintiffs acquired shares in Solar Bright between April and July 2017. Mr Spackman paid $172,500 for 230 shares while Mr Moore paid $127,500 for 170 shares.
[20] The plaintiffs plead it was not until 21 September 2017 that Mr Spackman was made aware by Mr Martin that the Dataeye application had been made in his name.
[21] Mr Spackman resigned as a director of Solar Bright on 27 November 2017. In January 2018, Mr and Mrs Martin, with the assistance of the applicants, assigned the Pateye patents and related intellectual property from Solar Bright to Mr Martin.
[22] In February 2018, Mr Spackman was reappointed as a director of Solar Bright. Proceedings were issued by PVL and Solar Bright against Mr and Mrs Martin, and an
order was obtained on 15 March 2019, whereby Mr Martin was to transfer the Pateye patents and related intellectual property back to Solar Bright, but this never occurred.1
[23] Solar Bright was put into liquidation on the application of the Commissioner of Inland Revenue on 4 April 2019.
[24] There were also proceedings between Solar Bright and Mr and Mrs Martin before the Employment Relations Authority, in the course of which the Authority made a declaration that the Pateye and Dataeye inventions belonged to Solar Bright.2
[25] This proceeding was commenced in March 2020. It is set down for trial in March 2023. The close of pleadings date was 1 November 2021. The plaintiffs filed their third amended statement of claim on 6 September 2021. Relative to the applicants, the amended pleading substituted a cause of action in deceit for one of negligent misstatement. The applicants filed their amended statement of defence on 27 September 2021 and this application to join Mr Hampson as a third party on 1 November 2021.
The plaintiffs’ claims against the third and fourth defendants
[26] The plaintiffs’ claim against the applicants, as it is presently formulated in the third amended statement of claim, alleges deceit and breach of the Fair Trading Act 1986.
[27] As far as the cause of action in deceit is concerned, the plaintiffs plead that Mr Snoep knowingly and dishonestly made false representations that the Dataeye intellectual property belonged to Solar Bright, and that the applicants intended to file an application to protect the intellectual property in Dataeye for the benefit of Solar Bright. They also plead it was implicit in representations made by Mr Snoep that Mr Martin had no competing claim to ownership of Dataeye. The plaintiffs consider that in the context of the meeting of 7 March 2017, Mr Snoep’s failure to disclose that he had accepted instructions to apply for a patent for Dataeye on behalf of Mr Martin
1 Solar Bright Ltd v Martin [2019] NZHC 447.
2 Martin v Solar Bright Ltd (in liq) [2019] NZERA 463.
was dishonest and caused the plaintiffs to make their investment in Solar Bright, which they would not otherwise have made.
[28] Mr Snoep says the issue of ownership of the patent applications in respect of Pateye and Dataeye was not discussed at the 7 March meeting and the information provided at the meeting was entirely accurate.
[29] There are clearly disputed issues concerning the content of the 7 March meeting, the extent to which statements made by Mr Snoep concerned the ownership of Dataeye and how the invention would be protected for Solar Bright, and the extent to which those representations were accurately conveyed to the plaintiffs by Mr Hampson.
[30] As far as the cause of action for breach of the Fair Trading Act is concerned, the plaintiffs allege the applicants’ representations at the 7 March meeting were made in trade and were misleading or deceptive causing them to invest in Solar Bright. The same issues I identify in [29] above arise in relation to this cause of action.
This application
[31] In support of their application to join Mr Hampson as a third party, the applicants have filed a draft third party notice in which they plead three causes of action.
[32] The first cause of action alleges that Mr Hampson, as a director of both Solar Bright and PVL, owed the plaintiffs a duty of care to provide them with “accurate and up to date information in relation to the intellectual property owned by [Solar Bright] and/or Mr Martin in Pateye and Dataeye”. It is said Mr Hampson breached this duty by providing inaccurate information to the plaintiffs when eliciting their investment in Solar Bright. In the event that the applicants are held liable to the plaintiffs, they claim a contribution and/or indemnity from Mr Hampson as a joint and/or concurrent tortfeasor pursuant to s 17(1)(c) of the Law Reform Act 1936.
[33] The second cause of action is also in negligence. The applicants allege Mr Hampson owed them a duty of care and was negligent in:
(a)failing to inform them of what was said at the 8 February 2017 meeting and/or what his and the plaintiffs’ understanding was following the meeting, concerning the status of the intellectual property in the Dataeye invention;
(b)failing to take reasonable steps to ensure the accuracy of the IP Strategy document by not providing it to the applicants for review and confirmation as to its accuracy, before providing it to the plaintiffs;
(c)failing to advise the plaintiffs that Mr and Mrs Martin had been paying directly for Solar Bright expenses, including for the applicants’ services.
[34] The third cause of action pleads breach of s 9 of the Fair Trading Act and alleges that the conduct of Mr Hampson relied upon in respect of the two previous causes of action was misleading and deceptive conduct in trade and, as a consequence, the applicants have suffered loss in respect of the amount of any judgment against them in favour of the plaintiffs. They seek either judgment directly against Mr Hampson or a contribution to any such judgment in an amount the Court considers just and equitable.
Relevant principles
[35] The application is based on r 4.4 of the High Court Rules which I set out in full below:
4.4Third Parties
(1)A defendant may issue a third party notice if the defendant claims any or all of the following:
(a) that the defendant is entitled to a contribution or an indemnity from a person who is not a party to the proceeding (a third party):
(b) that the defendant is entitled to relief or a remedy relating to, or connected with, the subject matter of the proceeding from a third party and the relief or remedy is substantially the same as that claimed by the plaintiff against the defendant:
(c) that a question or issue in the proceeding ought to be determined not only between the plaintiff and the defendant but also between—
(i)the plaintiff , the defendant, and the third party; or
(ii)the defendant and the third party; or
(iii)the plaintiff and the third party;
(d) that there is a question or an issue between the defendant and the third party relating to, or connected with, the subject matter of the proceeding that is substantially the same as a question or an issue arising between the plaintiff and the defendant.
A third party notice must be issued within—
(a) 10 working days after the expiry of the time for filing the defendant’s statement of defence; or
(b) a longer time given by leave of the court.
(3)A third party notice may be issued only with the leave of the court if an application for judgment is pending under rule 12.2 or 12.3.
Relevant for present purposes is r 4.8 which provides:
4.8Court’s power and discretion
(1)On an application seeking leave to issue a third, fourth or subsequent party notice, the court must have regard to all relevant circumstances, including delay to the plaintiff.
(2)On the making of an application of that kind, the court may grant or refuse leave or grant leave on just terms.
[37] Underlying applications to join third parties is the principle that all persons potentially responsible for a loss should be parties and present in the same action and at the same trial. This principle is supported by two main considerations: practicality and justice. The latter is the overarching consideration. In Turpin v Direct Transport Ltd, Cooke J observed, “[u]ltimately the determining considerations seems [sic] to be
to me the requirements of justice to all parties and a reasonably speedy and convenient resolution of all issues.”3
[38] There was no dispute as to the relevant principles that apply which were set out by Associate Judge Osborne in Walter Peak Corporate Trustee Ltd v Anderson Lloyd as follows:4
(a)The defendant’s claim against the third party must be covered by one of the four grounds set out in r 4.4(1). A defendant may join the third party as of right within the time limit set down in r 4.4(2)(a). An application outside this time limit requires leave of the Court (r 4.4(2)(b)).
(b)Where leave is sought, the Court must consider firstly whether one of the grounds in r 4.4(1) exists and secondly whether to exercise its discretion to join the third-party: ANZ Banking Group (NZ) Ltd v Dairy Containers Ltd CA156/92, 17 December 1992.
(c)In exercising its discretion, the Court must have regard to all relevant circumstances, including delay to the plaintiff (r 4.8).
(d)The interest of justice between all parties, however, is paramount. While any delay to the plaintiff is regrettable, the attainment of justice by the most efficient means is an overriding consideration: KPMG Peat Marwick v Cory-Wright & Salmon Ltd (in rec and liq) CA77/94, 20 May 1994.
(e)Where the defendant has not been guilty of unreasonable delay, a factor in favour of exercising the discretion will be whether the defendant could have joined the third party as of right if it had applied within the time limit: ANZ Banking Group (NZ) Ltd v Dairy Containers Ltd CA156/92, 17 December 1992.
(f)Equally, unexplained or unacceptable delay by the defendant may result in leave being refused: Meroiti v National Australasia Finance Ltd CA128/90, 6 December 1990.
(g)In cases of serious delay that risk prejudicing the plaintiff, the court may be prepared to make an order for joinder on conditions designed to preserve the hearing date for the plaintiffs claim against the defendant: Total Air Supply Company Ltd v Total Air Supply Company (2007) Ltd HC Auckland CIV-2008-404-7627, 10 January 2011.
(h)Avoiding duplicity of proceedings and preventing the same question being tried with different results militate in favour of allowing the application. The overriding purpose of the third party rules is to enable all the issues to be dealt with in one action: Turpin v Direct Transport Ltd [1975] 2 NZLR 172.
3 Turpin v Direct Transport Ltd [1975] 2 NZLR 172 (SC) at 176.
4 Walter Peak Corporate Trustee Ltd v Anderson Lloyd HC Dunedin CIV-2009-412-389, 9 December 2011 at [8].
(i)There is, however, a need to strike a balance between all the parties’ interests. The extent to which the plaintiff is necessarily involved in the issues between the defendant and the third party is a consideration. Equally, it can be oppressive and unjust to involve a third party in a proceeding where much of the proceeding will not involve that third- party.
(j)The Court may have regard to the relevant strengths and weaknesses of the parties’ cases, including the case against the proposed third party and the likelihood of recovery: Dairy Containers Ltd v NZI Bank Ltd (1993) 1 NZLR 160 at 167.
The grounds for seeking joinder
[39] The applicants rely on each of the grounds set out in r 4.4(1) of the High Court Rules, that is:
(a)they have a right to contribution from Mr Hampson;
(b)they are entitled to relief or a remedy connected with the subject matter of the proceeding, which is substantially the same as that claimed by the plaintiffs against them;
(c)there are questions or issues in the proceeding concerning the content of the meeting of 7 March 2017 and the extent to which any representations of Mr Snoep were accurately recorded and conveyed to the plaintiffs by Mr Hampson, which ought to be determined not only as between the plaintiffs and the applicants, but also between the plaintiffs, the applicants and Mr Hampson; and
(d)there are questions or issues between the applicants and Mr Hampson, as to the content of the meeting of 7 March and the extent to which any representations of Mr Snoep were accurately recorded and conveyed to the plaintiffs by Mr Hampson, that are substantially the same as questions or issues arising between the plaintiffs and the applicants.
The issues
[40] The applicants require the leave of the Court to issue their third party notice. The issues that arise are as follows:
(a)whether the claims advanced by the applicants engage any one of the four grounds set out in r 4.4(1); and
(b)if so, whether the Court should exercise its discretion to grant leave to issue the third party notice.
Basis for joinder
[41]I am satisfied that at least r 4.4(1)(a), and (c) are engaged.
The first limb – r 4.4(1)(a)
[42] The first limb requires a defendant to show it is entitled to a contribution or indemnity from the proposed third party. I did not understand it to be argued that the applicants claim an indemnity from Mr Hampson. The issue is whether they have a right to a contribution from him.
[43]Section 17(1)(c) of the Law Reform Act 1936 provides as follows:
17 Proceedings against, and contribution between, joint and several tortfeasors
(1)Where damage is suffered by any person as a result of a tort (whether a crime or not)—
(a)…
(b)…
(c)any tortfeasor liable in respect of that damage may recover contribution from any other tortfeasor who is, or would if sued in time have been, liable in respect of the same damage, whether as a joint tortfeasor or otherwise, so, however, that no person shall be entitled to recover contribution under this section from any person entitled to be indemnified by him in respect of the liability in respect of which the contribution is sought.
[44] The relevant principles were set out by Associate Judge Osborne in Walter Peak Corporate Trustee Ltd v Anderson Lloyd as follows: 5
(a)The essence of the right to a contribution lies in the liability to a common demand.
(b)The elements necessary for a defendant to succeed in joining a third party pursuant to s 17(1)(c) of the Law Reform Act are:
(i)The plaintiff has suffered damage as a result of a tort;
(ii)The defendant is a tortfeasor liable in respect of that damage; and
(iii)The third party is also a tortfeasor liable in respect of that same damage.
(c)Damage does not mean ‘damages’; it means the harm suffered by another person.
(d)The damage must be the same. In other words, the harm caused by the proposed third party must be the same as that caused to the plaintiff by the defendant.
(e)The phrase ‘joint tortfeasors or otherwise’ in s 17(1)(c) includes concurrent tortfeasors as well as joint tortfeasors. While the damage must be the same, the causes of action (the specific torts) may be different.
[45] Applied to this case, the plaintiffs’ primary claim against the applicants is in the tort of deceit. They say representations made by the applicants relating to the ownership of the intellectual property in Pateye and Dataeye and steps that would be taken to protect it on behalf of Solar Bright, were intended to, and did, deceive them.
5 Walter Peak Corporate Trustee Ltd v Anderson Lloyd, above n 4, at [11] and applied in Westwood Group Holdings Ltd v Rilean Construction (South Island) Limited [2013] NZHC 1739 at [18].
The damage they suffered is said to be the loss of their investments in Solar Bright (and consequential losses). In their first proposed cause of action against Mr Hampson, the applicants allege he is jointly and/or concurrently liable in tort for the same damage on the basis that in breach of a duty of care owed to the plaintiffs, he failed to provide accurate information to them concerning ownership of the intellectual property in Pateye and Dataeye when eliciting their investments in the company. It follows, in my view, that r 4.4(1)(a) is engaged.
The third limb – r 4.4(1)(c)
[46] The third limb requires there be a question in issue in the proceeding which ought to be determined, not only between the plaintiff and the defendant, but also as between either:
(a)the plaintiff, the defendant and the third party, or
(b)the defendant and the third-party; or
(c)the plaintiff and the third-party.
[47] As noted, the focus of the plaintiffs’ claim against the applicants is representations said to have been made by Mr Snoep at the 7 March meeting which were then recorded in the IP Strategy document and passed on to the plaintiffs by Mr Hampson that same day. The plaintiffs were not present at the 7 March meeting and neither is in a position to comment on what was or was not discussed, or upon the extent to which Mr Hampson’s email and the IP Strategy document reflect what was said at that meeting. Mr Snoep says he was not aware of the IP Strategy document and nothing in it was a representation by the applicants. While Mr Spackman downplays Mr Hampson’s role in misleading the plaintiffs, it appears Mr Moore gave evidence before the Employment Tribunal that he invested in Solar Bright as he was led to believe by Ms Martin and Mr Hampson that Solar Bright owned the Pateye and Dataeye inventions.
[48] I accept the submission for the applicants that the questions/issues of the content of the 7 March meeting and the extent to which this was accurately conveyed to the plaintiffs by Mr Hampson, are fundamental to both the case the plaintiffs bring against them and also to the extent to which Mr Hampson may be required to contribute to the plaintiffs’ loss on the basis that he breached a duty of care, owed to the plaintiffs, to provide them with accurate and up to date information in relation to the ownership of Pateye and Dataeye and steps taken to protect it for Solar Bright. These are matters that should be determined as between the plaintiffs, the applicants and Mr Hampson.
[49] Mr Slevin referred to Centre for Advanced Medicine Ltd v Sprott where Associate Judge Lang said:6
It is always a serious matter to join a third party to a proceeding. Such an order exposes the newly joined party to the expense and inconvenience of litigation commenced by others. The Court should therefore not make an order for joinder unless it is satisfied that the common question or issue is one of reasonable significance, and not merely of peripheral importance to the proceeding as a whole.
[50] Here, the common issues that arise are not peripheral but go to the heart of both the plaintiffs’ claims against the applicants and the applicants’ entitlement to contribution from Mr Hampson. It follows, unless there are other matters relevant to the exercise of discretion to join third parties, the applicants should be granted leave to issue a third party notice to Mr Hampson.
The discretion
[51] The plaintiffs raise several matters they say go to the exercise of the discretion. I identify them as follows:
(a)the proposed third party notice does not disclose reasonable causes of action;
(b)the potential for delay to the plaintiffs if Mr Hampson is joined;
6 Centre for Advanced Medicine Ltd v Sprott HC Auckland CIV-2004-404-1245, 20 August 2004 at [64].
(c)the delay in applying for leave;
(d)oppression.
No reasonable cause of action
[52] Mr Slevin argued that the causes of action relied upon by the applicants either do not exist or are so weak, and the chances of the applicants obtaining any relief so small, that I should exercise my discretion to refuse leave to join Mr Hampson as a third party.
[53] While, as noted above, the Court can and does take into account the strength and weakness of the parties’ respective cases, it is also generally the position that if a prima facie case is made out for bringing a proposed third party claim within r 4.4(1), the Court will not investigate disputed questions of fact and the factual allegations alleged in the third party notice will be presumed to be capable of proof.7
[54] As far as the first cause of action is concerned (that Mr Hampson breached a duty of care owed to the plaintiffs to provide them with accurate information concerning the Pateye and Dataeye inventions), I consider the proposed pleading could be significantly improved. However, I accept the cause of action is viable and to the extent the central allegation is that Mr Hampson failed to make proper enquiries and pass on accurate information to the plaintiffs, there are plainly disputed facts which I am presently in no position to resolve. For instance, Mr Slevin argues Mr Hampson could not have known the patent application in respect of Dataeye was made in Mr Martin’s name as he “reasonably relied upon information provided by the applicants”. However, that puts in issue a range of matters, such as what was actually said by Mr Snoep, the extent to which the IP Strategy document and Mr Hampson’s 7 March email reflect Mr Snoep’s advice, and the extent to which Mr Hampson should have obtained confirmation that the patent application was filed in the name of Solar Bright.
7Andrew Beck and others McGechan on Procedure (looseleaf ed, Brookers) at [HR 4.8.03] citing Kupe Group Ltd v Ariadne Australasia Ltd (No 2) HC Auckland CL 151/88, 20 April 1990 and Just Sounds Ltd v Watt HC Auckland CP506/97, 12 November 1998.
[55] As far as the second cause of action is concerned (that Mr Hampson, as a director of Solar Bright, owed an independent duty of care to the applicants) I agree with Mr Slevin that this cause of action is untenable as a matter of law. Mr Parker was unable to provide me with any authority for the existence of such a duty. Even allowing for the Court’s reluctance to dismiss pleadings of the existence of a duty of care in novel circumstances, I would not have considered it appropriate, in the exercise of my discretion, to grant leave to join Mr Hampson if this was the only cause of action advanced.
[56] As far as the third cause of action is concerned (that Mr Hampson engaged in misleading or deceptive conduct) Mr Slevin accepts that if liability under s 9 of the Fair Trading Act is established against both the applicants and Mr Hampson, the Court may apportion responsibility for the loss between them. I agree with his assessment.8
[57] The plaintiffs’ challenge to this cause of action was largely based on the argument that Mr Hampson could have no liability under the Fair Trading Act as he was a mere conduit for information provided by the applicants.9 In my view, this is a trial issue and it is arguable Mr Hampson was not acting as a conduit because it was not plain that he was simply passing on information received from the applicants. He was a director of Solar Bright and could be expected to know whether the information he conveyed was correct. Further, it could be argued that his email of 7 March was giving the information conveyed his own imprimatur.10
[58] I therefore find that notwithstanding my view concerning the proposed second cause of action, at least two of the applicants’ proposed causes of action are arguable.
Delay to the plaintiffs
[59] The plaintiffs submit that given the present scarcity of judicial resources due to Covid-19 and other factors, as well as the range of interlocutory steps that may result, there may be a risk of the trial being delayed if leave is granted to issue the third
8 Crowhurst v Lawton CA 92/00, 8 August 2000 at [6], [10]; Hotchin v New Zealand Guardian Trust Company Ltd [2016] 1 NZLR 906.
9 Red Eagle Corporation Ltd v Ellis [2010] 2 NZLR 492; (2010) NZSC 20.
10 At [38].
party notice. They also submit Mr Hampson may have run-off insurance in which case he may wish to add further parties, adding to the risk of delay. Mr Slevin acknowledges the Court will be better placed to evaluate the risks he identifies. The short answer to these submissions is that there is no reason to believe that the workload of the Court is such that all matters cannot be dealt with promptly so as to avoid any risk of delay to the trial. There is, afterall, a full year until the scheduled trial. With proper case management and the cooperation of the parties, I cannot see the trial would not be ready to proceed as planned.
General delay
[60] The plaintiffs argue the applicants have not provided an adequate explanation for the delay of over 18 months in making their application. Mr Slevin submits this calls into question the genuineness of the claims against Mr Hampson. Mr Parker appeared to suggest the change in the plaintiffs’ pleading (substituting a cause of action in deceit) explains the delay, but I do not accept that. It appears to me that the application to join Mr Hampson could and should have been made earlier. Had I considered this might have put the trial dates in jeopardy, it would have been a strong factor against granting leave to join Mr Hampson. In the event, I consider it will not have that effect.
Oppression
[61] Mr Hampson lives overseas. The plaintiffs intend to call him as a witness and Mr Slevin argues that, as his evidence would not occupy more than one day and might be given by AVL link, joining him as a third party will have serious consequences for him and is oppressive. It is said that as a party, Mr Hampson will have to be represented by counsel and travel to New Zealand for the entire hearing. It is submitted the inevitable imposition of costs and inconvenience upon him should be weighed alongside the probability that the applicants will not recover anything from him or have any award against him reduced significantly by an apportionment of responsibility.
[62] I accept that given the consequences of joining persons to litigation in terms of time, cost and anxiety, such an order should not be made lightly. However, Mr Hampson will be a witness in any event and it is likely, in my view, that even if he was not joined as a party, he would be expected to travel to give his evidence. As a party, and if successful, Mr Hampson will likely be entitled to costs and his reasonable disbursements. Further, this is not a case where the issues between the applicants and Mr Hampson will occupy only a small portion of the trial. I do not agree with Mr Slevin’s submission that Mr Hampson played only a limited role in the events that have resulted in this litigation.
[63] Standing back and assessing all that is before me, I am satisfied that the applicants have shown an arguable case engaging r 4.4(1)(a) and (c). While I do not accept they have provided a reasonable explanation for the delay in making this application, I do not consider that the making of an order for joinder will put the trial at risk. Overall, the attainment of justice is the overriding consideration and I consider that is best achieved by having all issues between these parties determined in the one proceeding.
Result
[64] The applicants are granted leave to join Mr Hampson as a third party and must file their third party documents within 10 working days. Service upon Mr Hampson must be effected without delay.11
[65] The case should be set down for a case management conference in the first week of May 2022 to consider what variations are required to the existing timetable. Counsel shall file any memoranda addressing this issue at least two working days prior to the teleconference.
11 I note service upon Mr Hampson overseas may be made without leave under r 6.27.
[66]Costs shall be reserved and may be addressed at the next teleconference.
O G Paulsen Associate Judge
Solicitors:
Maciaszek Brown Law (Mark Brown), Christchurch Kevin Smith Law Limited, Wellington
Parker Cowan, Queenstown
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