Walker v Forbes

[2017] NZHC 2350

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE

CIV-2012-409-2486 [2017] NZHC 2350

UNDER

the Companies Act 1993

IN THE MATTER

of the liquidation of Property Ventures Limited (in receivership and in liquidation)

BETWEEN

ROBERT BRUCE WALKER AND JOHN MARSHALL SCUTTER

First Plaintiffs

PROPERTY VENTURES LIMITED (in liquidation)

FIVE MILE HOLDINGS LIMITED (in receivership and in liquidation) Third Plaintiff

CASHEL VENTURES LIMITED Fourth Plaintiff

TAY VENTURES LIMITED

(in receivership and in liquidation) Fifth Plaintiff

LIVINGSPACE PROPERTIES LIMITED (in receivership and in liquidation)

Sixth Plaintiff

BEECHNEST VENTURES LIMITED (in liquidation)

TUAM VENTURES LIMITED

(in receivership and in liquidation) Eighth Plaintiff

CASTLE STREET VENTURES LIMITED

(in receivership and in liquidation) Ninth Plaintiff

WALKER v FORBES.4 [2017] NZHC 2350 [26 September 2017]

LICHFIELD VENTURES LIMITED

(in receivership and in liquidation) Tenth Plaintiff

92 LICHFIELD LIMITED
(in receivership and in liquidation)

ST ASAPH VENTURES LIMITED (in liquidation)

MONTECRISTO CONSTRUCTION COMPANY LIMITED

(in liquidation)

AND

AUSTIN JOHN FORBES First Defendant

ALISTER SPEDDING JOHNSTON Second Defendant

GORDON LEWIS HANSEN Third Defendant

DAVID IAN HENDERSON (a bankrupt) Fourth Defendant

ADOLF de ROOS Fifth Defendant

DANIEL JAMES GODDEN Sixth Defendant

PwC (sued as a firm) Seventh Defendant

VERO LIABILITY INSURANCE Third Party

Hearing:

26 September 2017

Appearances:

J B M Smith QC and N R Williams for Plaintiffs
A C Hughes-Johnson QC and W J Palmer for First Defendant
J Moss for Second and Sixth Defendants

A L Sherriff for Third Defendant D M Lester for Fourth Defendant M J Wallace for Fifth Defendant P M Fee for Seventh Defendant

K Harkness for Third Party

Judgment:

26 September 2017

JUDGMENT OF LANG J

[on application for orders varying existing orders for security for costs]

This judgment was delivered by me on 26 September 2017 at 3.30 pm, pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date……………

[1]      On 6 June 2017, I delivered a judgment in which I required the plaintiffs to provide security in a total sum of $2.780 million for the costs and disbursements of the defendants.1

[2]      The plaintiffs have now settled their claims against the seventh defendant, PricewaterhouseCoopers (PWC), and seek a variation of the existing orders to reflect the fact that PWC will no longer be a party to the proceeding.  The plaintiffs say this will result in the trial being concluded more quickly than would otherwise have been the case, and that the orders should be varied in any event to exclude the component that comprised security for PWC’s costs.

[3]      The remaining defendants contend it is premature at this stage for me to make the order the plaintiffs seek.  They say the existing orders should not be varied until they have had an opportunity to consider whether, and to what extent, the duration and shape of the trial is likely to be affected by the fact that PWC will no longer be a party to it.

[4]      I  am  not  prepared  to  defer  determination  of  this  issue  in  the  way  the defendants suggest.   It is necessary to deal with it now because the plaintiffs are required to provide a second tranche of security on 15 October 2017 and they need to know where they stand.

The terms of the judgment

[5]      As I made clear in the judgment, the order for security was in a global sum in respect  of  the  defendants  other  than  Mr  Henderson.2      I ordered  security to  be provided in the total sum of $2.63 million in respect of those defendants.   This included an allowance in the sum of $450,000 for the nine expert witnesses who were then expected to be called for the defendants.  At that stage PWC anticipated calling five expert witnesses.  In addition, I directed the plaintiffs to provide security

in the sum of $150,000 in respect of their claims against Mr Henderson.3

1      Walker v Forbes [2017] NZHC 1212.

2 At [94].

[6]      I gave the following explanation for the quantum of security that I directed the plaintiffs to provide:

[94]      Making a modest allowance for the likely merits I have identified, I consider a global order of costs in the sum of $2.180 million to be appropriate. Although I do not apportion that sum between the defendants, I record that I have calculated it by allowing the sum of $460,000 for the first, third and seventh defendants.  All of those defendants will be represented by senior counsel at the trial.  I have allowed the sums of $250,000 each for the second and sixth defendants and $300,000 for the fifth defendant.  These are based on the cost estimates provided by their counsel at the hearing as adjusted to reflect my impression of the merits and the other factors I have identified in relation to the second and sixth defendants.

[7]      I directed that the plaintiffs were to provide the security in two tranches.4

The plaintiffs were to provide security in the sum of $1.5 million to the satisfaction of the Registrar no later than 31 July 2017, and the balance of $1.28 million no later than 15 October 2017.

Decision

[8]      The plaintiffs’ request that they receive a refund of security needs to be viewed in light of the following observation from my judgment:

[95]      Given that this is a global order and there is obvious uncertainty about the length of the trial and the actual costs that may be awarded, the plaintiffs should not expect that settlement or discontinuance against one or more defendants will necessarily result in any reduction or refund of the security that has been ordered.

[9]      Having considered the memoranda filed in anticipation of the conference earlier today, I remain of the view that the trial is likely to take at least twelve weeks notwithstanding the fact that the claims against PWC will no longer form part of the trial.   Furthermore, I have a concern that the trial may still go some considerable period beyond the time allocated to it.  For that reason I approach the present issue on the basis that a trial of twelve weeks duration will still be required.

[10]     I accept, however, that the level of security needs to be adjusted to reflect the fact that the plaintiffs should not now be required to provide security for PWC’s costs.  In this context I do not consider it appropriate to direct a refund of security

already provided, or to endeavour to spread any reduction across the two tranches on a pro rata basis.  Rather, I consider the simplest approach is to reduce the amount of security that the plaintiffs will be required to provide on 15 October 2017.  I did not take Mr Smith to take issue with this approach at the conference this morning.

[11]     In calculating the global amount of security the plaintiffs were required to provide I took a notional sum of $710,000 in respect of PWC’s likely future costs and disbursements.   In addition, the plaintiffs had earlier provided security in the agreed sum of $150,000 in respect of steps taken by PWC up to and including discovery and inspection.  This means the plaintiffs were required to provide security in respect of PWC in the total sum of $860,000.

[12]     As always in deciding issues relating to security, the decision rests on matters of impression rather than hard evidence.   I consider the concerns to which I have referred  can be met  by  reducing the  second  tranche of security by the sum  of

$560,000.  Retention of security in the sum of $300,000 from the security formerly to be provided in respect of PWC provides some comfort in the event that the length of the trial exceeds the twelve weeks currently allocated.

[13]     I therefore vary the existing orders by reducing the amount of security to be provided on 15 October 2017 from $1.280 million to $720,000.

Lang J