Tubbs as Liquidator of Empress Abalone Limited v McKenzie HC Christchurch CIV 2005-409-2588

[2010] NZHC 1090

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

CIV-2005-409-002588

BETWEEN  STEPHEN JOHN TUBBS AS LIQUIDATOR OF EMPRESS ABALONE LIMITED

Plaintiff

ANDELIZABETH JANET MCKENZIE First Defendant

ANDMICHAEL JOHN MCKENZIE Second Defendant

ANDCANTERBURY TRUSTEES LIMITED Third Defendant

Counsel:         D M Lester for Plaintiff

K W Clay for First Defendant

Judgment:      25 June 2010

FINAL JUDGMENT OF ASSOCIATE JUDGE DOHERTY Application by First Defendant for Security for Costs

[1]      I refer to my interim judgment of 11 June 2010.

[2]      In  accordance  with  my  direction  in  that  interim  judgment,  the  applicant (plaintiff) has filed an affidavit.  The plaintiff deposes that he is a partner in BDO Spicer,  Christchurch  which  is  an  independent  member  firm  of the  national  and international accounting practice BDO.  The plaintiff provides no evidence as to his personal finances, he confirms that BDO will underwrite costs should any award be

made against him.

TUBBS V MCKENZIE AND ORS HC CHCH CIV-2005-409-002588  25 June 2010

[3]      A further direction sought information from the plaintiff as to his failure or neglect to pay Court-ordered costs.   This in the context of a submission that the Court should draw an adverse inference as to his ability to pay costs in this proceeding from the fact he had not paid Court awarded costs to the applicant (defendant) in another proceeding.   The explanation given is that the plaintiff has elected not to pay the costs because there is a questionmark over the defendant’s financial position, and the plaintiff does not want to pay out funds, yet be unable to recover a greater amount from the defendant in what he sees as the inevitable judgment in his favour in this proceeding.

[4]      Whilst I find that a surprising attitude by a professional of the plaintiff’s standing and by a liquidator who was appointed to that position by this Court, his attitude does not weigh against my view he has the ability to pay the costs. Significantly, r 5.45(1)(b) directs my discretion to “reason to believe that a plaintiff will be unable to pay the costs of the defendant…” (emphasis mine), not that the plaintiff is unwilling to pay the costs.

[5]      That settles this application, as although there is no corroborative evidence, I accept the plaintiff’s assertion that the BDO indemnity means he is able to pay the costs of the defendant if he is unsuccessful.  Thus, the threshold of r 5.45 has not been crossed.

[6]      The application is dismissed.

[7]      That leaves the issue of costs in this application.  At the hearing both counsel were content that matters of cost be dealt with on a 2B basis to follow the event.  As it transpires, the hearing would have likely been unnecessary had the plaintiff filed the  affidavit  that  he  has  filed  in  accordance  with  the  direction  in  my  interim judgment.  Responsible counsel for the defendant would not have proceeded with the application in the face of it.   I believe defendant’s counsel would have taken that course.  Thus, proceeding on the hearing was an unnecessary step (r 14.6(3)(b)(iii)) caused by the plaintiff.   In fact, had the plaintiff been more forthcoming as to his position at the outset, the application is likely not to have been made at all.

[8]      Even although the defendant has been unsuccessful, in the circumstances I

award costs to her on this application on a schedule 2B basis, with an uplift of 50 per cent for the hearing step itself.

ASSOCIATE JUDGE DOHERTY

Solicitors:

Tomlinson Paull, Christchurch

(Counsel D Lester, Christchurch) KG Marshall, Christchurch

(Counsel KW Clay, Christchurch 8140)