Williams v Kamal
[2019] NZHC 2930
•8 November 2019
IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY
I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE
CIV-2019-485-518
[2019] NZHC 2930
BETWEEN JACOB JAKE WILLIAMS
Applicant
AND
IMRAN MOHAMMED KAMAL
Respondent
Hearing: 8 November 2019 Appearances:
Applicant in person
J Mahuta-Coyle and K Hagan for respondent
Judgment:
8 November 2019
EX TEMPORE JUDGMENT OF ASSOCIATE JUDGE JOHNSTON
[1] On 16 December 2018 the shareholder of Zone Media Ltd resolved by special resolution to wind the company up and appointed the respondent, Mr Imran Kamal, as the liquidator. The applicant, Mr Jacob Williams, was the shareholder and director of the company.
[2] On 29 August 2019 Mr Williams filed a document entitled “Interlocutory Application Without Notice” together with an affidavit sworn by him. As I read Mr Williams’ application it amounts to an application — which must be pursuant to s 284 of the Companies Act 1993 — for an order removing Mr Kamal as liquidator. The originating documentation was irregular in a number of respects. Most obviously, any application for such an order under s 284 of the Companies Act by a director of a company in liquidation requires leave and no application for leave was or has been made. Further, the application was in the form of an ex-parte interlocutory application when what was required was an inter-partes originating application. Nevertheless, the
WILLIAMS v KAMAL [2019] NZHC 2930 [8 November 2019]
Registry accepted this material for filing. The file was directed to me in the first instance and I issued a minute in which I said:
[1]I have considered the plaintiff’s application dated 21 August 2019 and his affidavit in support sworn on the dame date.
[2]Although this originating documentation is irregular in certain respects, I am prepared to treat it as an application under s 284(1) of the Companies Act 1993 for leave to apply for an order for the removal of the defendant as the liquidator of Zone Media Ltd (in liq).
[3]However, such an application cannot be dealt with on an ex-parte (without notice) basis.
[4]Accordingly, I direct the plaintiff to serve the defendant with a copy of his application, his affidavit and the minute.
[5]No more documentation is to be filed in the Court until such time as the plaintiff has filed and served an affidavit of service on the defendant, or the defendant has entered an appearance of one sort or another.
[3] On 6 September 2019 Mr Williams informally emailed the Registry saying that he had effected service of the originating documentation.
[4] Notwithstanding paragraph [5] of my minute, Mr Williams then proceeded to file another ex-parte interlocutory application on 9 September 2019 seeking further orders.
[5]I issued a direction on 10 September 2019 in which I said:
In my minute dated 29 August I directed that no more documentation was to be accepted for filing in this proceeding until such time as the originating documentation was served on the defendant and either the defendant entered an appearance or the plaintiff proved service. I repeat that direction.
[6] On 23 September 2019 the respondent’s solicitors filed and served a notice of opposition and an affidavit sworn by Mr Kamal in support of his opposition.
[7] The matter was listed for a case management teleconference on 24 September 2019.
[8] My minute of the teleconference, which was attended by Mr Williams and counsel instructed for Mr Kamal, Mr Mahuta-Coyle, was in these terms.
[1]Although this proceeding was commenced by way of an interlocutory application, it is an originating application by the applicant pursuant to s 284 of the Companies Act 1993 for the removal of the respondent as the liquidator of Zone Media Ltd (in liq).
[2]Mr Williams informs the Court that he wishes to proceed with his application, as of course he is entitled to do.
[3]On behalf of the respondent, Mr Mahuta-Coule raises a question as to whether s 284 of the Companies Act is the correct provision pursuant to which the Court will make an order for the removal of a liquidator. In the context of a case management conference, it would be inappropriate to make any ruling in relation to that, though I observe that there are cases in which the Court has made such an order pursuant to s 284.
[4]Mr Mahuta-Coyle also makes the point that a party seeking to apply pursuant to s 284 requires leave. Mr Williams has not specifically sought leave, but accepts that he will have to obtain leave as part of his substantive application.
[5]If, having reflected on those matters, the applicant elects to file an amended originating application then he is to do so by 15 October 2019.
[6]The respondent proposes to make an application for an order for security for costs.
[7]The respondent is to file and serve its interlocutory application for an order for security for costs and any affidavit evidence by 1 October 2019.
[8]The respondent is to file any notice of opposition and affidavit evidence by 15 October 2019.
[9]The Registrar is requested to set down the respondent’s application for an order for security for costs as soon as possible after 1 November 2019. One and a half hours are to be allowed. Rule 5.39 is to apply in the usual way.
[9] I record that the applicant has not filed and served an amended originating application or sought leave to apply under s 284(1) of the Companies Act. During the course of the hearing Mr Williams informed me that he had filed and served further material. It turns out that what he attempted to file was an amended substantive application and a further affidavit. These were apparently rejected for filing by the Registry so were not before me. Nevertheless I allowed Mr Williams to refer to their contents as necessary during the course of the hearing.
[10] On 1 October 2019, Mr Kamal’s solicitors filed and served an interlocutory application for an order for security for costs together with a further affidavit sworn by Mr Kamal in support of that application.
[11] Mr Williams has not filed a notice of opposition to that application, or any affidavit evidence in opposition but that is not fatal to his opposition.
[12] Mr Kamal’s application for an order for security for costs was set down for hearing before me today.
[13] Rule 5.45 of the High Court Rules 2016 deals with security for costs and provides:
5.45 Order for security of costs
(1)Subclause (2) applies if a Judge is satisfied, on the application of a defendant,—
(a)that a plaintiff—
(i)is resident out of New Zealand; or
(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 a 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.
(3)An order under subclause (2)—
(a)requires the plaintiff or plaintiffs against whom the order is made to give security for costs as directed for a sum that the Judge considers sufficient—
(i)by paying that sum into court; or
(ii)by giving, to the satisfaction of the Judge or the Registrar, security for that sum; and
(b)may stay the proceeding until the sum is paid or the security given.
(4)A Judge may treat a plaintiff as being resident out of New Zealand even though the plaintiff is temporarily resident in New Zealand.
(5)A Judge may make an order under subclause (2) even if the defendant has taken a step in the proceeding before applying for security.
(6)References in this rule to a plaintiff and defendant are references to the person (however described on the record) who, because of a document filed in the proceeding (for example, a counterclaim), is in the position of plaintiff or defendant.
[14] As Mr Mahuta-Coyle submits the principles are well settled. His summary of them appears to me to be fair:
3.1Has the applicant satisfied the Court of the threshold test under r 5.45(1)?
3.2Should the Court exercise its discretion under r 5.45(2)?
3.3What amount should security for costs be fixed at?
3.4Should a stay be ordered?
[15] Mr Kamal relies on r 5.45(1)(b) — that is to say that there are reasons to believe that the plaintiff will be unable to pay any costs order if he is unsuccessful in his proceeding.
[16] As Mr Mahuta-Coyle submits there is evidence in Mr Williams’ affidavit evidence before the Court of his impecuniosity.
[17]In his original affidavit filed at the outset Mr Williams deposed:
This [application as to change of venue] is made on the ground of myself being the plaintiff and living in Christchurch filing this without legal council [sic] means having the hearing in Christchurch makes filing documents and attending a hearing if need be is easier for myself as I am on Work and Income payments and can’t afford any costs like travelling as I am applying for fee waiver for the application being filed.
[18]Prior to the liquidation Mr Williams agreed to pay Mr Kamal a retainer of
$4,000 plus GST if Mr Kamal would accept appointment as liquidator and Mr Kamal’s evidence is that this has never been paid.
[19] There is evidence establishing that the Tenancy Tribunal has made an order in favour of the proprietor of a backpacker hostel against Mr Williams for a not insubstantial amount, and this has not been paid.
[20] Moreover, Mr Williams has elected not to file any evidence in opposition to Mr Kamal’s application in order to demonstrate that he would be in position to pay any order for costs.
[21] I am satisfied that Mr Kamal is able to establish that there is a real risk that if the plaintiff were to be unsuccessful at trial and the Court were to make a costs order against him he would not be in a position to meet this.
[22] As Mr Mahuta-Coyle submits, that being so, the matter of whether or not an order for security for costs should be made becomes essentially a matter for the Court’s discretion.
[23] A key consideration is the Court’s impression — and of course, at this stage, it can be no more than that — of the merits of the case, and therefore the likelihood or otherwise of a costs award being made against the plaintiff at the conclusion of a trial.
[24] For a number of reasons, the clear impression I have, based largely on material put before the Court by Mr Williams himself, is that his prospects of success at trial are poor:
(a)First, although I have tried in dealing with this matter to signal to the plaintiff the steps he needs to take in order properly to advance his case, such as applying for leave, he is apparently uninterested in doing so.
(b)Second, it is, I think, relevant that, as the sole shareholder of the company, it was Mr Williams who was initially responsible for Mr Kamal’s appointment.
(c)Third, there is evidence that Mr Williams has been less than cooperative in his dealings with Mr Kamal in relation to Mr Kamal’s attempt to investigate the affairs of the company. During the course of the hearing
Mr Williams suggested that it was Mr Kamal that was failing to cooperate with him, and he instanced Mr Kamal’s refusal to correspond with him or talk to him. In relation to this the evidence is that the Police have charged Mr Williams with harassing Mr Kamal and there is an extant order preventing Mr Williams form initiating contact with Mr Kamal.
(d)Fourth, there is some evidence, as Mr Mahuta-Coyle points out, of Mr Williams acting vexatiously in making a series of complaints against Mr Kamal.
(e)Finally, and most importantly, Mr Williams, in the affidavit material he has put before the Court thus far, has failed to demonstrate that Mr Kamal has acted inappropriately or improperly in any way that might provide a foundation for an application for his removal. The most relevant serious criticism that can be made of him on the evidence is that he has not filed reports on time. And that has now been rectified. Mr Williams certainly levels various complaints against Mr Kamal. Examples are that Mr Kamal has defamed him and breached his privacy. These, as I said to Mr Williams, may provide him with a basis for complaints elsewhere, but they have next to nothing to do with the process of winding Zoom Media Ltd up.
[25] Another important factor which is often influential in applications for security for costs is whether an order is likely to prevent a plaintiff from being able to prosecute his claim. Unfortunately, here, because Mr Williams has effectively failed to participate in this application, the Court has no evidence as to whether that is likely to be so. From the financial evidence referred to earlier, I am prepared to infer that an order for security for costs — even a nominal one — is likely to present a significant impediment to the plaintiff prosecuting his claim. However, in my view, in the circumstances of this case, that should not prevent an order being made. As Mr Mahuta-Coyle submitted, this is essentially an access to justice issue. It needs to be borne in mind that this case concerns the winding up of a company which, by all accounts, has no assets. The short point is that Mr Williams would not, in such
circumstances, be prevented from pursuing a claim for recovery of damages. In my view, there would be no unfairness involved.
[26] A final factor to which reference should be made is whether there is evidence indicating that any impecuniosity on the plaintiff’s part has been bought about by the actions of the defendant. Again, the position here is that because Mr Williams has chosen not to put any evidence in or actively oppose this application, the Court is placed in a difficult position in terms of making an assessment of this factor. However, given the lack of any evidence of Mr Kamal acting inappropriately, I am doubtful that Mr Williams will be able to establish that Mr Kamal was responsible in any way for his financial position.
[27] In the end, I am satisfied that this is a case in which it would be appropriate to make a modest order for security for costs in favour of the defendant. The defendant, through Mr Mahuta-Coyle, proposes an order for security at $10,000. That appears to me to be appropriate. If this matter were to proceed to trial then my expectation is that the costs would be considerably greater than that.
[28]For those reasons, I make the following orders:
(a)Pursuant to r 5.45 of the High Court Rules I order that the plaintiff pay security for costs in the sum of $10,000 to be held by the Registrar;
(b)I make an order staying this proceeding pending the payment of security for costs;
(c)I expressly direct that the defendant need take no steps by way of response to any documentation filed and served to date while the stay remains in place;
(d)I grant leave to the plaintiff to apply for a review of my orders should circumstances change;
(e)The defendant having been successful in this application is entitled to scale costs on a 2B basis together with such disbursements as may be allowed by the Registrar.
Associate Judge Johnston
Solicitors:
John Langford Law, Wellington for respondent
0
0
0