Stokes v Prain

[2020] NZCA 627

IN THE COURT OF APPEAL OF NEW ZEALAND

I TE KŌTI PĪRA O AOTEAROA

 CA467/2020
 [2020] NZCA 627

BETWEEN	COLIN PETER STOKES Appellant
AND	JUSTIN WILLIAM PRAIN First Respondent
AND	CARDNO (NZ) LIMITED Second Respondent
AND	GREGORY ROBERT SMITH Third Respondent

Counsel:	Appellant in person P B McMenamin for First Respondent M R C Wolff for Second Respondent Third Respondent in person
Judgment: (On the papers)	7 December 2020 at 2 pm

JUDGMENT OF GILBERT J

AThe application for review of the Deputy Registrar’s decision is declined.

BSecurity for costs in the sum of $14,120 is to be paid by 18 December 2020.

____________________________________________________________________

REASONS

1. This is an application for review of the Deputy Registrar’s decision declining to dispense with security for costs.

Background

1. In 2002, the appellant, Mr Stokes, and the third respondent, Mr Smith, entered into a contract relating to their purchase of land in a subdivision to be completed by Noble Investments Ltd (Noble), a company that has since been struck off the New Zealand Companies Register.  Noble engaged Apple Fields Ltd (Apple Fields) (also since struck off the Companies Register) to manage the development of the subdivision and the second respondent, Cardno (NZ) Ltd (Cardno), to obtain the requisite consents and assist in the planning of the subdivision.  The first respondent, Mr Prain, was a director of Apple Fields.

2. In August 2014, Messrs Smith and Stokes commenced proceedings in the High Court at Christchurch against Noble, Apple Fields, Cardno and Mr Prain advancing claims for breach of contract, misrepresentation and deceit.  A claim in negligence against Cardno was added in an amended statement of claim filed in October 2014. Messrs Smith and Stokes persistently failed to give proper particulars of their claims.  In May 2018, the Court described their fifth amended statement of claim as “manifestly unsatisfactory” and non-compliant with previous directions requiring particulars.[1]  A sixth amended statement of claim was then filed in January 2019.  Cardno and Mr Prain responded by applying to strike out the pleadings. 

   [1]Smith v Prain [2020] NZHC 1236 [Strike out judgment] at [26].

3. Following a hearing in May 2020, the claims were struck out by Associate Judge Lester for reasons given in a judgment delivered on 5 June 2020.[2]  The Associate Judge found that the sixth amended statement of claim did not plead a reasonably arguable cause of action in deceit against Mr Prain or Cardno and this could not be saved by amendment to the statement of claim given the failure to provide proper particulars, as required over the preceding five years.[3]  The claim in negligence against Cardno was untenable.[4]  The Associate Judge stated that he would have dismissed the proceeding for want of prosecution under r 15.2 of the High Court Rules 2016 had he not been persuaded that the pleadings should be struck out under r 15.1 as not disclosing a reasonably arguable cause of action.[5]

   [2]Strike out judgment, above n 1.

   [3]At [57]–[58].

   [4]At [59]–[75].

   [5]At [123].

4. Associate Judge Lester subsequently awarded costs of $87,665.20 plus disbursements of $2,320 in favour of Cardno.[6]  Costs of $86,661.40 were awarded to Mr Prain together with disbursements to be fixed by the Deputy Registrar.

   [6]Smith v Prain [2020] NZHC 1766 [Costs judgment].

5. Mr Stokes has filed a notice of appeal against the costs orders seeking to have those orders quashed.  He has not appealed against the substantive judgment striking out his claims.

6. Security for costs was set at $14,120.  Mr Stokes applied to have security for costs dispensed with on the following grounds:

   (a)Costs in the sum of $23,724 awarded by this Court to Mr Stokes against Noble remain unpaid.[7]

   (b)Mr Stokes has an interest in property sufficient to secure any costs he may be ordered to pay if his appeal does not succeed.

   (c)Mr Prain and Cardno have impeded Mr Stokes’ “ability to work, earn or save”.

   [7]Philpott v Noble Investments Ltd [2015] NZCA 342.

7. The Deputy Registrar declined Mr Stokes’ application to dispense with security for costs.  She noted that costs payable to Mr Stokes by Noble could not be offset against Mr Stokes’ prospective obligation to pay costs to Mr Prain or Cardno.  The Deputy Registrar did not consider that Mr Stokes’ interest in property was an adequate substitute for payment of security for costs as any order for costs would still require enforcement.  The Deputy Registrar noted that Mr Stokes did not contend he was impecunious and there was no evidence to support such a conclusion.  After weighing other relevant factors, the Deputy Registrar considered there was no justification for dispensing with the usual requirement for security for costs. 

8. Mr Stokes now applies for a review of the Deputy Registrar’s decision.  Mr Stokes contends that he is the victim of “deceit, lies, fraud and perjury” and it would be a “grave injustice” for him to be required to provide protection for costs for those who committed “such crime”.  He says his appeal is not vexatious, he merely seeks justice in a case which has elevated public interest because the public needs to be protected from “white collar developers and their agents” who “collude, deceive and lie”.

Assessment    

1. The application for review must be declined.  No error in the Deputy Registrar’s decision is demonstrated.  Mr Stokes does not claim to be impecunious.  There is no reason to think that the usual requirement for security for costs will prevent him from pursuing his appeal.  The appeal has limited prospect of succeeding.  The costs judgment necessarily assumes that the substantive judgment is correct.  There is no appeal from the substantive judgment.  A plaintiff who persistently fails to plead a tenable and properly particularised claim over a period of six years with the result that it is struck out will normally be expected to have to pay costs to the defendants.  An unpaid order for costs against Noble cannot be offset against Mr Stokes’ obligation to pay costs.  I agree with the Deputy Registrar that Mr Stokes’ interest in land is not an adequate substitute for the requirement to pay security for costs.  There is nothing in Mr Stokes’ application or submissions that could justify requiring the respondents to forego the normal protection provided by security for costs. 

Result

1. The application for review of the Deputy Registrar’s decision is declined.

2. Security for costs in the sum of $14,120 is to be paid by 18 December 2020.

Solicitors:
K J McMenamin & Sons, Christchurch for First Respondent
Morrison Kent, Wellington for Second Respondent