HIGHLEY LIMITED AND ANOR V VODAFONE NEW ZEALAND LIMITED AND ANOR HC AK CIV 2006 404 2870 [2008] NZHC 1442 (15 September 2008)

IN THE HIGH COURT OF NEW ZEALAND
AUCKLAND REGISTRY
                                                                CIV 2006 404 2870



               BETWEEN                     HIGHLEY LIMITED
                                           First Plaintiff

      
        AND                         EFTWIRE LIMITED
                                           Second Plaintiff

               AND
                        VODAFONE NEW ZEALAND LIMITED
                                           First Defendant

               AND
                        BANK OF NEW ZEALAND
                                           Second Defendant


Hearing:       15 September
2008

Appearances: L Herzog for Plaintiffs
             J Browne for First Defendant
             J H Stevens for Second Defendant

Judgment:      15 September 2008


                          REASONS FOR
            JUDGMENT OF ASSOCIATE JUDGE CHRISTIANSEN




[1]    At the conclusion of counsels' submissions I made the following orders upon
the applications for security for costs.



              (a) Additional security in the sum of $10,000.00 to each defendant is
                   to be provided by the plaintiffs.




HIGHLEY LIMITED AND ANOR V VODAFONE NEW ZEALAND LIMITED AND ANOR HC AK CIV
2006 404 2870 15 September 2008

               (b)
Security is to be provided by the deposit of $20,000.00 with the
                   plaintiffs' solicitors. There to be held by them
as stake holder
                   pending further order of the Court.


               (c) Until security has been paid, the proceeding
shall be stayed.


Background


[2]    The defendants apply again for further security.          In October 2006 the
plaintiffs provided
$15,000.00 by way of security to each defendant. Earlier, on 18
September 2006, Associate Judge Faire reserved leave to each of the
defendants to
apply for orders for further security should the extent of interlocutory applications
justify such a step being taken.


[3]    The first defendant applies for further security of $22,000.00, and the second
defendant applies for $15,000.00.


[4] 
  Together they claim:


               (a) The initial security provided was inadequate.


               (b) Discovery and inspection
will be significant tasks involving
                   significant expense.


               (c) There is reason to believe the plaintiffs
will be unable to pay the
                   defendants' costs if the plaintiffs are ultimately unsuccessful.


               (d)
The plaintiffs' claim is without merit.


[5]    As to the last mentioned, the Court has no present ability to make any
assessment
regarding the merits of the plaintiffs' claim. The claim concerns an
alleged breached of confidentiality.        The plaintiffs claim
their confidential
information was disclosed to the defendants and was used by them in breach of
confidence when the defendants developed
their own system which enabled mobile

phone customers to undertake mobile phone pre-paid transactions remotely using
their mobile
phone.


[6]    In overview, this proceeding has advanced very little since it was originally
filed. The plaintiffs have filed a
number of amended statements of claim in face of
claims by the defendants for further particularisation of pleadings. A decision
by
Associate Judge Faire on an application for further particulars was reviewed.
Subsequently there was an appeal.


[7]    Since
then, interrogatories have been delivered.         In that outcome the
defendants claim there are now inconsistencies between the
pleaded case and the
plaintiffs' answers to interrogatories.


Considerations


[8]    I am satisfied that there is insufficient
cover provided by the original order
for security to deal with the prospective discovery and inspection obligations.


[9]    I do
not propose to deal with issues relating to the merits of the plaintiffs'
claim, or the means of the plaintiffs to meet an adverse
award of costs.


[10]   Because of the nature of the claim, the merits of it cannot usefully be
assessed until the discovery process is completed.


[11]  
In the absence of any challenge by the plaintiffs to claims of impecuniosity,
the Court can accept, on this ground alone, that an
application for security has
properly been brought. Also, there is no question that the requirement for security
will prevent the
case going ahead.


[12]   The approach of the defendants in this application is to seek an order for
security in a sufficient sum
to meet the defendants' ongoing costs, but also to
provide a top up to cover legal expenses to date.

[13]    I interpolate from
the approach adopted by Associate Judge Faire, that he had
in mind the parties agreeing upon a sum which, in the ordinary course
ought to have
been sufficient to deal with the interlocutory processes to the stage of trial.


[14]    I     am   certain     that
   if   he   had     any    forewarning       of   the
pleading/particularisation/sworn answers to interrogatory issues, he may have
adopted a different approach.


[15]    In fact, what has occurred was beyond the anticipation of the parties. Yet, I
am satisfied
the defendants challenges to the pleadings have been pursued properly.
It does not appear to me, at least to this stage, that the
defendants are engaging in
"deep pocketing" tactics. Nor do I agree with plaintiffs' counsels claim that the
causes of delay lie
with the defendants ­ rather, on balance, I think they are with the
plaintiffs.


[16]    Further security ought to be ordered to
see the discovery process through. I
accept the assessment of counsel for the defendants that discovery will be extensive,
and expensive,
and may require the engagement of professionals for assistance.


[17]    They claim a 2C costs award might in time be justifiable.
I am satisfied the
cover provided by a 2B category calculation might be insufficient.


[18]    Security is seldom awarded in a sum
equal to a defendant's own calculation
of an award of costs in the outcome. For various reasons, courts are inclined to
discount
such a calculation.


[19]    For these and other above stated reasons, I accept the sum should be fixed in
an amount in excess of
the scale 2B category of costs.


Costs


[20]    Costs upon these applications is to be fixed on a Category 2B basis, to be
paid
by the plaintiffs in the cause.

Other matters


[21]   In the course of submissions the defendants have identified discrepancies
between what has most recently been delivered by the plaintiffs by way of an
amended statement of claim, and what has been provided
on oath in answers to
interrogatories. I need not detail these. Those matters in issue are well known to
both sides. The Court expresses
the hope that the plaintiffs will address these
matters in a further amended statement of claim to be filed. In the event one is
filed,
the defendants shall within one month thereof file their statements of defence.


[22]   As indicated in this brief judgment,
the process of discovery and inspection
will likely be complex. For those reasons, I require the defendants' verified lists of
documents
to be filed and served within three months of the date the additional
security for costs has been posted. Thereafter, inspection
is to be completed within a
further two months. After that, and upon a suitable early date, the Court is to
schedule a case management
conference by telephone in order to schedule a fixture.


[23]   Because of the length of the processes prescribed, hereafter general
leave is
reserved to apply on short notice for a telephone conference to be convened.




Solicitors
Nigel Faigan, Auckland for Plaintiffs
Wilson & Harle, Auckland for First Defendant
Bell Gully, Wellington for Second Defendant