Busch v Zion Wildlife Gardens Limited (in rec and in liq) [2012] NZHC 17 (23 January 2012)

High Court of New Zealand

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Busch v Zion Wildlife Gardens Limited (in rec and in liq) [2012] NZHC 17 (23 January 2012)

Last Updated: 26 January 2012

IN THE HIGH COURT OF NEW ZEALAND WHANGAREI REGISTRY

CIV 2011-488-232 [2012] NZHC 17

UNDER the Animal Welfare Act 1999

BETWEEN CRAIG BUSCH First Plaintiff

AND CRAIG BUSCH AND ILS TRUSTEES LIMITED AS TRUSTEES OF THE BUSCH WILDLIFE FOUNDATION TRUST

Second Plaintiff

AND ZION WILDLIFE GARDENS LIMITED (IN RECEIVERSHIP AND IN LIQUIDATION)

First Defendant

AND COUNTRY DEVELOPMENTS LIMITED (IN RECEIVERSHIP)

Second Defendant

AND PATRICIA ELAINE BUSCH Third Defendant

Hearing: 23 January 2012

Appearances: E Orlov for Patricia Busch, Applicant

N King for Craig Busch, Respondent

Judgment: 23 January 2012

ORAL JUDGMENT OF ASSOCIATE JUDGE BELL Re: Application for security for costs

Solicitors:

Ulrich McNab Kilpatrick (T Savage), P O Box 633 Whangarei, for First Plaintiff

Email: [e-mail]

Bennet Castelino, P O Box 76234 Manukau 2241, for Third Defendant

_Email: [e-mail]

Copy for:

Noel King, P O Box 22006 Otahuhu, Auckland 1640

Email: [e-mail]

_{Evgeny Orlov, P O Box 8333 Auckland 1050}

CRAIG BUSCH V ZION WILDLIFE GARDENS LIMITED (IN RECEIVERSHIP AND IN LIQUIDATION) HC WHA CIV 2011-488-232 23 January 2012

_Email: [e-mail] / [e-mail]

[1] This is an application for security for costs under r 5.45. That rule says:

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.

[2] An application under r 5.45 follows these steps:

(a) Has the applicant satisfied the court of the threshold under r 5.45(1)? (b) How should the court exercise its discretion under r 5.45(2)?

(c) What amount should security for costs be fixed at? (d) Should a stay be ordered?

[3] Mr Orlov referred to the standard authorities under r 5.45 and former r 60 of the High Court Rules. The leading decisions are: A S McLauchlan Ltd v MEL Network Ltd,[1] Nikau Holdings v Bank of New Zealand,[2] Bell-Booth Group Ltd v

Attorney-General and BCNZ[3]and Aquaculture Corporation v McFarlane

Laboratories (1984) Ltd.[4] I follow them.

[4] The background is that this is further litigation between Craig Busch, his mother, and companies that were established for the operation of the wildlife park in Grays Road, Three Mile Bush, on the outskirts of Whangarei. Some years ago Mr Busch established the Zion Wildlife Park. He fell into financial difficulties and received financial assistance from his mother. There was a contract signed between the parties. Under the contractual arrangements his mother had a measure of control but there was a falling-out between them. Since then there has been litigation between them.

[5] In the present proceeding, Mr Busch has initiated the proceedings in the names of himself and also in the names of the trustees of the Busch Wildlife Foundation Trust. He and ILS Trustees Ltd are the trustees of that trust. Mr Busch says that he was the original owner of the wild life. He pleads that the Busch Wildlife Foundation Trust was established under a deed in March 2005 and that the animals were transferred to the trustees. Mr Orlov has made some play of the fact

_{that the establishment of the trust and the transfer of ownership are questionable.}

[6] For present purposes, I do not need to decide that question. Mr Busch’s case is that either he was the original owner of the animals and that they were transferred to the trust or, alternatively, he was the original owner of the animals and, if he has not transferred ownership to the trust, then he remains owner of the animals. The application for security for costs is directed against Mr Busch. Effectively, it requires him to put up security for costs, whether he is still the owner of the animals in his own right, or whether he is the owner of the animals in his capacity as one of the trustees of the Busch Wildlife Foundation Trust. For this application, I do not need to decide which alternate claim is correct. Any order for costs against him will still sound against him personally.

[7] Mr Busch launched the proceeding before Zion Wildlife Gardens and Country Developments Limited were put into receivership. Once they went into receivership he amended the claim.

[8] His first cause of action is directed towards establishing ownership of the animals and preventing other defendants from exercising any powers of possession, property or control of those animals and disposing of the animals except to the plaintiffs.

[9] The second cause of action is directed at rights of management of the animals. The management right is relevant because Mrs Busch has statutory licences under the Animal Welfare Act or under the Biosecurity Act under which she has been given statutory rights to control the animals. It needs to be borne in mind that the statutory is likely to confer permission to have the care of the animals, when the statute otherwise does not allow it. There is a separate question whether any grant of a statutory licence gives her rights to control animals to the exclusion of others. I have not been presented with full submissions on that question. Anything I say is not intended to determine that question. It is Mrs Busch’s assertions that her statutory licence gives her some measure of exclusive control of the animals which is challenged by Mr Busch in this proceeding.

[10] I understand that the first and second defendants through the receivers do not generally contest the rights asserted by Mr Busch. The receivers apparently take the

view that whatever rights the secured creditor obtained under the securities they did not extend to ownership of the animals, and the receivers do not apparently claim that the secured creditors’ rights give them any right to dispose of the animals. It therefore appears that there may not be live issues between the plaintiffs on the one hand and the first and second defendants on the other. I have not heard from the lawyers for the receivers. I express only a provisional view not intended to bind either the receivers or the creditors. For all intents and purposes, the contest I am concerned with is between the plaintiffs on the one hand and Mrs Busch on the other.

Has Mrs Busch satisfied the threshold under r 5.45(1)?

[11] There is an alternate test here – either that the plaintiff is resident out of New Zealand or that there is reason to believe that the plaintiff will be unable to pay the costs of the defendant if the plaintiff is unsuccessful in the plaintiff’s proceeding.

[12] Mr Busch has, for some time, been living in South Africa. His first affidavit in opposition to the present application was sworn in South Africa. His whereabouts in South Africa have never been conveyed to the court. So long as he lived in South Africa there would be serious concerns whether any costs order of this court could be effectively enforced against him in South Africa. It is a large country with a large population where it would be difficult to trace Mr Busch. However, Mr Busch swore his second affidavit on 20 January 2012 in Tauranga. He now asserts that he lives in New Zealand and he claims now to be a resident of New Zealand. His affidavit is relatively sketchy. I am unable to draw from it an assurance that he will in fact remain living in New Zealand on a permanent basis. He describes himself in his affidavit as a ―global wildlife expert‖. I infer from that, that he may lead a peripatetic lifestyle, that is, that he may be prone to move about the world. While he has sworn his second affidavit in Tauranga, he has not given an address in Tauranga where he lives and he has not shown that he has taken steps to establish any kind of base in New Zealand, such as purchasing a home. I am uncertain as to how fixed his intention is to stay in New Zealand. His statement, ―I intend to remain in New Zealand for the foreseeable future,‖ is not very reassuring. At this stage I have concerns that if matters in the short term do not turn out to his advantage, he may yet again leave New Zealand for some other part of the world. In that event I have no

assurance that he would be easily traceable to enforce an order for costs against him. For present purposes, I find that he has a fleeting residence in New Zealand, but not that he has established a permanent base here for the future.

[13] There is a firmer foundation for the threshold under the alternate basis, that is, that there is reason to believe that Mr Busch would be unable to pay the costs of his mother if he is unsuccessful in his proceeding. I have had prior cause to require Mr Busch to provide security for costs. That was in connection with proceedings he took last year to be substituted as a creditor in a proceeding to have his mother bankrupted. That was at a stage when he was outside the jurisdiction and still living in South Africa. He did not provide security as required and did not continue with his application. That suggests to me that he would have difficulty coming up with the funds to pay.

[14] I also take into account the background to the differences between himself and his mother - the financial difficulties he got into in being able to run the park in the beginning. He has not provided any information as to his financial position. There is nothing from him to suggest that he does have the means to pay an order for costs. In my judgment, Mrs Busch has established that there is reason to believe that Mr Busch will be unable to meet any order for costs if he is unsuccessful in the proceeding.

How should the court exercise its discretion under r 5.45(2)?

[15] It is necessary to balance the interests of Mrs Busch in not being drawn into unjustified litigation against Mr Busch’s interests in having access to the courts. Generally on security for costs applications courts cannot make detailed findings and any views as to merits are very much matters of impression.

[16] Mr Busch or the Busch Wildlife Foundation Trust has established some degree of ownership. In particular, I am influenced by the fact that the receivers do not appear to be challenging Mr Busch’s claims to ownership. Having established some degree of ownership there may follow from that a right to possession and control. Against that, Mrs Busch appears to rely solely on her statutory licence and

general arguments whether it is possible to own wildlife in captivity. Mr Busch may be able to obtain statutory permission himself or some other person acting on his behalf may be able to obtain statutory permission. In that event he would be entitled to take possession of the animals and the rights that Mrs Busch is asserting might not stand in the way of his taking control of the animals. To that extent there may be a claim on his part. I say no more than that. Those comments are not meant to stand in the way of the parties presenting their defences at the hearing of this proceeding.

[17] On the other hand, Mrs Busch is entitled to be protected against unjustified litigation. I cannot say at this stage that she has no defence to the proceeding. She has good ground to fear that she is being drawn into more litigation with her son. I bear in mind in particular that proceedings he has initiated in 2008 have still not been resolved and, if anything, seem to have ended in a stalemate. She has good reason to fear that her son will litigate against her without giving her the assurance that if she were to succeed she will be protected for costs.

[18] On this balancing exercise under r 5.5(2) I find that there is a proper basis for an order for costs to be made even though Mr Busch, or his trust, may have some merit in their claim. Accordingly, I propose to make an order for security for costs.

What amount should security for costs be fixed at?

[19] Mrs Busch set out a calculation of costs if she were to succeed. Her calculation of costs is made on the 2B basis. It assumes that a hearing of two days will be required. The calculation shows a total of $22,240. That includes a claim for

1.6 days for preparation of the counterclaim. I have earlier given a case management direction that the counterclaim should be excluded from the hearing which is about to take place. For security for costs purposes that item should also be excluded. Costs that would be ordered are likely to be in the order of $20,000. But I also take into account that Mrs Busch may also be entitled to recover disbursements, filing fees and related expenses. I have not been given a calculation of likely disbursements. Without any precise figures tendered to me I will assume an extra

$2,000. In effect this approach takes me back to the original estimate of some

$22,000.

[20] When courts fix security for costs they do not fix security for the full amount of a likely award of costs but usually allow some element of discount. That element of discount is applicable in this case, given that there is some merit in Mr Busch’s claim. I propose to allow a discount in this case. In my judgment the amount of security that should be fixed is $16,000.

Should a stay be ordered?

[21] I direct that Mr Busch is to provide security for $16,000 by Wednesday 1

February 2012. This order applies against him not only as first plaintiff but also as a trustee of the Busch Wildlife Foundation. If he does not pay the sum of $16,000 into court by Wednesday 1 February 2012, this proceeding will be stayed. If he does not pay the security for costs into court by that stage, Mrs Busch will be entitled to make other applications arising out of non-compliance with that order.

Costs

[22] Mrs Busch has succeeded in her application for security for costs. She is entitled to have costs on that application awarded to her and fixed now. Costs can be fixed on a 2B basis. I invite counsel to confer on that and prepare a calculation and submit a memorandum. Failing that, they may file separate memoranda but I expect that there should not be any basis for disagreement on a 2B basis on an interlocutory application. The time for the hearing is half a day. The order will be enforceable from the date it is sealed.

........................................
Associate Judge Bell

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[1] _{A S McLachlan Ltd v MEL Network Ltd (2002) 16 PRNZ 646 (CA) at [13]-[14].}

[2] _{Nikau Holdings v BNZ (1992) 5 PRNZ 430.}

[3] _{Bell Booth Group Ltd v Attorney-General & BCNA (19896) 1 PRNZ 457.}

[4] Aquaculture Corporate v McFarlane Laboratories (1984) Ltd (1987) 1 PRNZ 467 (HC) at [7].