Speed v Educational Council of Aotearoa New Zealand

[2016] NZHC 1848

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

CIV 2015-485-884 [2016] NZHC 1848

IN THE MATTER

of claims in tort against the Defendants

and relief under the New Zealand Bill of
Rights Act 1990

BETWEEN

DOMINIC JAMES SPEED Plaintiff

AND

THE EDUCATION COUNCIL OF AOTEAROA NEW ZEALAND First Defendant

AND

THE WELLINGTON GIRLS COLLEGE BOARD OF TRUSTEES

Second Defendant

AND

THE POST PRIMARY TEACHERS ASSOCIATION INCORPORATED Third Defendant

Hearing:	1 August 2016
Counsel:	J L Bates for Plaintiff M F McClelland QC for First Defendant P A McBride for Second Defendant D M King for Third Defendant
Judgment:	9 August 2016

JUDGMENT OF BROWN J

SPEED v THE EDUCATION COUNCIL OF AOTEAROA NEW ZEALAND [2016] NZHC 1848 [9 August 2016]

Introduction

[1]      The plaintiff’s claim for damages in this proceeding has its antecedents in the judgment of Mallon J dated 19 November 2014 in S v The New Zealand Teachers Council.1   Mallon J there granted declaratory relief recognising that the plaintiff had succeeded in establishing that the Teachers Council did not comply with natural justice and did not act in accordance with the legislative scheme in the Education Act 1998 by its ongoing deferral of a decision on the plaintiff ’s renewal application while also declining to extend the period during which he was permitted to teach without a practising certificate.

[2]      As  the  plaintiff  pleads  in  the  first  amended  statement  of  claim  dated

2 March 2016:

84.On 15 December 2010 the Plaintiff, who came to New Zealand from the UK on 27 January 2007 and was granted a work permit, was served with a deportation liability notice under section 157 of the Immigration Act 2009 on the grounds that his work permit which had most recently been renewed on 15 May 2009 for the purpose of employment as a teacher at the Second Defendant no longer applied as his employment with the Second Defendant had been terminated.

85.As a result of the expiry and non-renewal of his teacher’s practising certificate  and  the  consequential  loss  of  his  employment  at  the Second Defendant on 27 July 2011 (after an unsuccessful challenge in the Wellington High Court), the Plaintiff was deported by the New Zealand Immigration Department to the UK.

[3]      All three defendants have applied for orders for security for costs.   One ground for their applications is that, consequent upon his deportation, the plaintiff is no longer resident in New Zealand.  They also rely on the second limb of r 5.45 of the High Court Rules which materially states:

5.45     Order for security for costs

(1)       Subclause (2) applies of a Judge is satisfied, on the application of a defendant,–

(a)      that a plaintiff–

(i)       is resident out of New Zealand; or

1      S v The New Zealand Teachers Council [2014] NZHC 2881.

(ii)      is a corporation incorporated outside New Zealand;

or

(iii)      is a subsidiary (within the meaning of section 5 of the Companies Act 1993) of a corporation incorporated outside New Zealand; or

(b)      that there is reason to believe that the plaintiff will be unable to pay the costs of the defendant if the plaintiff is unsuccessful in the plaintiff’s proceeding.

(2)      A Judge may, if the Judge thinks it is just in all the circumstances, order the giving of security for costs.

[4]      The plaintiff opposes the applications on the ground that it would be unjust for the defendants to obtain security because it is their alleged actions, the subject of his claim, which resulted in the plaintiff losing his job and thereby his New Zealand residency.

Relevant principles

[5]      In Reekie v Attorney-General the Supreme Court observed that applications for security for first instance proceedings call for careful consideration and that judges are slow to make an order for security which will stifle a claim,2  noting the review of the jurisdiction by the Court of Appeal in McLachlan v MEL Network Ltd.3

[6]      The Court of Appeal there stated that whether or not to order security, and if so the quantum, are discretionary matters for the Judge and that the discretion is not to be fettered by constructing “principles” from the facts of previous cases.   The Court said:

[14]      …  It  is  not  a  matter  of  going  through  a  checklist  of  so-called principles.  That creates a risk that a factor accorded weight in a particular case will be given disproportionate weight, or even treated as a requirement for the making or refusing of an order, in quite different circumstances.

[15]      The rule itself contemplates an order for security where the plaintiff will be unable to meet an adverse awards of costs.  That must be taken as contemplating  also  that  an  order  for  substantial  security  may,  in  effect, prevent the plaintiff from pursing the claim.   An order having that effect should be made only after careful consideration and in a case in which the claim has little chance of success.   Access to the Courts  for a  genuine plaintiff is not lightly to be denied.

2      Reekie v Attorney-General [2014] NZSC 63, [2014] 1 NZLR 737.

3      McLachlan v MEL Network Ltd (2002) 16 PRNZ 747 (CA).

[16]     Of course, the interests of defendants must also be weighed.  They must be protected against being drawn into unjustified litigation, particularly where it is over-complicated and unnecessarily protracted.

So far as the significance of the merits of a claim is concerned, the Court stated that at best in a complex matter assessment at the interlocutory stage can be no more than an impression and cannot be a definite indicator of the ultimate outcome after trial.

[7]      The general approach to an application for security for costs involves four steps:

(a)       Has the applicant satisfied the Court of the threshold under r 5.45(1)? (b)     How should the Court exercise its discretion under r 5.45(2)?

(c)       What amount should security for costs be fixed at? (d)           Should a stay be ordered?

Is the r 5.45(1) threshold satisfied?

[8]      The defendants make the point that as the plaintiff has not filed an affidavit in opposition to the claim it is not known where he is residing.  However it is common ground that the plaintiff is not resident in New Zealand.

[9]      Mr Bates fairly acknowledged at the commencement of the argument that it was not denied that the plaintiff was overseas.  Nor was it denied that he was not able to meet an award of costs.  The latter position was later refined to allow for the possibility that by the time the proceeding is determined the plaintiff could be in a position to pay costs if he is unsuccessful.

[10]     Hence both the threshold requirements relied on are satisfied.

How should the Court exercise the r 5.45(2) discretion?

[11]     For the first defendant Mr McClelland QC contended that there is little merit

in the plaintiff’s claim.  He was deported from New Zealand following his arrest for

shoplifting on 21 July 2011 at a time when he was facing other charges.  His urgent application for interim orders was dismissed by the High Court on 14 July 2011.4  As Williams J noted the plaintiff did not take any steps for nearly three months after being warned of the April 2011 change of stance by Immigration New Zealand but made the application to the Court only after he was arrested on a further charge.

[12]     Mr McClelland also noted that the majority of funding received by the first defendant is from teacher registration fees although it does receive some funding from the Crown.  He anticipated that the trial of the plaintiff’s claim would take at least five days but more probably seven or eight days.   An order for security for

$40,000 was sought.

[13]     Mr McBride made the point that the claim against the second defendant is quite different from that against the first defendant.  The first cause of action against the second defendant alleges negligent misstatement but is said to arise in respect of a mandatory reporting obligation.  Like Mr McClelland, he emphasised the lack of apparent merit in the plaintiff’s claims against the second defendant and noted that the plaintiff had been unsuccessful in his claim before the Employment Relations Authority and had not advanced his challenge to that decision in the Employment Court.

[14]     The  affidavit  of  Ms J A Cassie  recorded  that  the  Employment  Relations

Authority ordered the plaintiff to pay to the second defendant costs in the sum of

$10,000 but no payment had been made.   Ms Cassie further noted that the second defendant is publicly funded and relies on supplementary donations and fundraising to provide its services.  It also seeks an order for security in the sum of $40,000.

[15]     Ms King  drew  attention  to  the  fact  that  the  sole  claim  against  the  third defendant alleges a breach of an alleged duty of care owed by the third defendant in allegedly providing the plaintiff with incorrect advice relating to appeal rights regarding practising certificates.  She described the claim against the third defendant

as tenuous.

4      Speed v Chief Executive of the Department of Labour HC WN CIV-2011-485-1369.

[16]     She emphasised that the third defendant is a trade union which is funded by its membership fees and has limited resources.  She submitted that there would be difficulty in seeking to enforce overseas any award of costs which might be obtained against the plaintiff. The third defendant sought security in the sum of $10,000.

[17]     Mr Bates’  very  thorough  submissions  reviewed  several  of  the  leading authorities on the law of negligence including Couch v Attorney-General,5 Gorringe v Calderdale  Metropolitan  Borough  Council6   and  several  decisions  of  the High Court of Australia.  He submitted that there was a duty on the first defendant to take reasonable care to protect the plaintiff from the consequences of losing his right to practise without due process which went “hand in hand” with the statutory scheme.

It was his contention that the plaintiff had a significant “tail wind” as a consequence of the judgment of Mallon J.

[18]     In his submission the overriding consideration on the applications involved the  balancing  of  the  interests  of  the  plaintiff  and  the  defendants.    He  placed significant reliance on the observation of Kόs J in Highgate on Broadway Ltd v Devine:7

Access to justice is an essential human right.   The cost of exercising that right is the payment of costs in the event of failure.  The right of a successful defendant to costs in that event is arguably subordinate to the plaintiff’s right to be heard.  Strong social policy considerations favour the use of Courts as an accessible forum for the resolution of disputes and grievances of almost all kinds.  Only where a clear impression can be formed that the plaintiff’s claim is altogether without merit – so that in the alternative it would be amenable to being struck out – would it be right for security to be ordered where to do so would bring the plaintiff’s claim to dead halt.

[19]     It was Mr Bates’ submission that:

3.9Here, however, the First Defendant’s actions were causative of the Plaintiff’s loss of his employment, and his residency.  Unusually, the Plaintiff has already proven that the First Defendant’s actions were illegal.  The First Defendant is seeking to stifle the Plaintiff’s action for damages because the Plaintiff is no longer in the country, and lost his New Zealand-based employment.  The First Defendant ought not to be permitted to take advantage of its own proven wrongdoing.

5      Couch v Attorney-General [2008] NZSC 45, [2008] 3 NZLR 725.

6      Gorringe v Calderdale Metropolitan Borough Council [2004] 1 WLR 1057 (HL).

7      Highgate on Broadway Ltd v Devine [2012] NZHC 2288.

[20]     I recognise that it is not appropriate for the Court to predetermine the merits of claims or to form more than “an impression”.  However in balancing the interests of the plaintiff and the first defendant I have formed the view that there is some merit to the plaintiff’s contention that it would be unjust to require him to provide security having regard to the events described and the relief granted in the judgment of Mallon J.

[21]     However I am far from satisfied that the same proposition holds good in relation to the second and third defendants.  Particularly having regard to the nature of those organisations and the manner of their funding, I do not consider that it would be proper to decline to award security.

[22]     Consequently the applications by the second and third defendants are granted and I make an order for security for costs in the sum of $40,000 and $10,000 respectively. Again emphasising that I have not formed any view on the substance of the plaintiff’s claim, nevertheless I decline in my discretion to make an order for security in favour of the first defendant.

Should a stay be ordered?

[23]     I consider that it is appropriate to direct a stay of the proceeding so far as it concerns the second and third defendants.  However I am not prepared, at least at this juncture, to make the “unless” order which Mr McBride advocated.

[24]     Pending the provision of security for costs in respect of the second and third defendant, the plaintiff is not precluded from continuing his claim vis-á-vis the first defendant.

[25]     Costs on all three applications are reserved to be resolved as part of costs in the cause.

Brown J