Easton Agriculture Limited v Manawatu-Wanganui Regional Council [2012] NZHC 2055 (15 August 2012)

Last Updated: 24 August 2012

IN THE HIGH COURT OF NEW ZEALAND PALMERSTON NORTH REGISTRY

CIV 2008-454-31 [2012] NZHC 2055

BETWEEN EASTON AGRICULTURE LIMITED First Plaintiff

AND EVELEIGH FARMING COMPANY LIMITED (IN RECEIVERSHIP) Second Plaintiff

AND MANAWATU-WANGANUI REGIONAL COUNCIL

Defendant

Hearing: 7 August 2012

Counsel: J O Upton QC for Plaintiffs

S H Macky for Defendant

Judgment: 15 August 2012

_{JUDGMENT OF THE HON JUSTICE KÓS}

[1] On 7 September 2011 I dismissed the plaintiffs’ claim for negligence founded

upon the failure of a Manawatu River floodbank in February 2004. On 22 December

2011 I awarded the defendant Council costs of $93,000 and disbursements of

$123,683, in all $216,683. The plaintiffs have appealed both judgments. That appeal is due to be heard in the Court of Appeal on 12 November 2012.

[2] The plaintiffs now apply in this Court for a stay of execution of the costs judgment. The grounds in support of the application include that the appeal is properly arguable, has reasonable prospects of success, is brought on a bona fide basis and that the defendant as a substantial local authority would not be injuriously affected by a stay. The application was not brought on the basis that the appeal would be rendered nugatory by the plaintiffs being compelled now to pay the costs

_{they were ordered to pay in December.}

EASTON AGRICULTURE LIMITED v MANAWATU-WANGANUI REGIONAL COUNCIL HC PMN CIV

2008-454-31 [15 August 2012]

Jurisdiction and approach

[4] The stay application is brought under Rule 12(3) of the Court of Appeal (Civil) Rules 2005. As the Court of Appeal noted in Keung v GBR Investment Limited:[1]

In determining whether or not to grant a stay, the Court must weigh the factors “in the balance” between the successful litigants rights to the fruit of the judgment and “the need to preserve the position in case the appeal is successful”.

The decision listed seven conventional factors to be taken into account. Then it added an eighth that had emerged more recently.

[5] It is useful to now relist those factors in a new, logical order:

(a) Might the appeal be rendered nugatory by the lack of a stay? (b) What is the apparent strength of the appeal?

(c) Is the appellant prosecuting its appeal on a bona fide basis? (d) Will the respondent be injuriously affected by the stay?

(e) What will the effect on third parties be?

(f) Does the appeal raise questions of novelty and importance? (g) What is the public interest in the proceeding?

(h) Where does the overall balance of convenience lie?

In the fullness of time it may be that factors (f) and (g) coalesce.

Analysis

_{[6] I will now consider each of the eight factors in the context of this case.}

Submissions

[7] As noted at [2], the plaintiffs’ application for stay was not brought on the basis that the appeal would be rendered nugatory by the plaintiffs being required to meet their present obligation to pay the costs award. The position, however, has since changed. Mr Upton advised that he had received updated instructions the night previously. The second plaintiff is now being sold up by its receiver. The first plaintiff is in a “precarious position financially”. There is he says therefore a real risk of the appeal being rendered nugatory if the plaintiffs are required to pay costs now. Affidavit evidence would be available to confirm what has been said by counsel.

[8] Ms Macky however submits that is a point for her. That is, the depletion of the plaintiffs’ assets at a time of financial precariousness may injuriously affect the defendant. Nor is it clear how precarious the plaintiffs’ financial position is, what might need to be set aside to meet the costs of the appeal, and how much might be paid on account notwithstanding.

Discussion

[9] As the Court of Appeal has said in Dorbu v Barfoot and Thompson Limited[2] an appellant’s lack of means, while a material consideration, does not of itself entitle the appellant to a stay. And as the Court of Appeal also noted in that case, the effect on the respondent of granting a stay in such a situation may well be injurious, as it will have to wait yet longer to collect its debt, with all the intervening risk of that arising. Certainly, the fact that an appeal may be rendered nugatory by lack of a stay is not, in and of itself, determinative.[3] As Ms Macky observed, the exact position that the plaintiffs find themselves in, and the amount they would need in reserve

_{against funds needed to fight the appeal, were not in evidence. There has been}

ample time for the plaintiffs to put forward evidence on these matters, as their stay application was filed in February 2012.

[10] I therefore consider this factor neutral as to outcome.

What is the apparent strength of the appeal?

[11] It is common ground that the appeal on merits seeks to set aside findings of fact made at trial. Mr Upton is correct in noting that he does not seek to set aside findings of credibility. Rather the issue is one of expert evaluation as to causation. I held that the Council had failed to maintain the stopbank in accordance with its duty of care to the plaintiffs. There is no cross-appeal against that finding. The difficulty for the plaintiffs in terms of causation was their focus on a want of maintenance or about the interface between the road bridge and the stopbank, and the existence of a gap (which I found as a matter of fact to exist) between the top of the stopbank and the bottom of the bridge. (Mr Upton says that the appeal argument is that there was more to it than a “gap”. The argument is that there was a more substantial weakness, albeit under the bridge, and that that was connected to the adjacent upstream and downstream failures of the stopbank. With respect that seems to me to be something of a distinction without a difference. “Gap” was the plaintiffs’ shorthand for permeability in the top of the stopbank below the bridge.) Ultimately the difficulty for the plaintiffs on the facts was that the stopbank failed not just under the bridge, but also downstream and upstream of it. The latter in particular is significant. It appears to have been the first significant failure, and to have emerged in the early hours of the morning well before significant failure either under the bridge or downstream of the bridge. But the only failure of duty that I found on the facts on the part of the defendant Council was in relation to its maintenance under the bridge. That failure could not account for failure of the floodbank upstream of the bridge, in what was an over-design flood in any event.

[12] The plaintiffs’ appeal is not hopeless. But it is not strong.

[13] Ms Macky accepts that the appeal is pursued on a bona fide basis. I agree.

Will the respondent be injuriously affected by the stay?

[14] As noted earlier, Ms Macky is concerned that the financial precariousness of the plaintiffs means that they may use the time prior to appeal to manage their affairs so that any costs order ultimately would be depleted.

[15] Mr Upton submits that the financial position here can be likened to the position in relation to applications for security for costs. I accept that such an analogy may be made, but it cannot be taken too far. Want of means does not excuse a plaintiff from supplying security for costs, or an appellant for paying costs of trial prior to conduct of the appeal, except perhaps in a situation where it can be shown that the other party is responsible for that party’s lack of means. That is not the case here.

[16] I find that there is a real risk that non-payment now will result injurious disadvantage to the defendant.

What will the effect on third parties be?

[17] This consideration does not arise.

Does the appeal raise questions of novelty and importance?

[18] The appeal does not raise issues of novelty and importance.

What is the public interest in the proceeding?

[19] The appeal does not raise issues of public interest.

[20] Mr Upton emphasises for the plaintiffs that a significant measure of cost was incurred in responding to issues on which the defendant Council failed at trial (negligence). It is, therefore, unfair to require the plaintiffs to pay that part of costs. Secondly, he points to the relative sizes of the parties, his clients being David to the Council’s Goliath.

[21] The first consideration I have addressed already in my costs decision. At [23] to [30] of my decision of 22 December 2011 I concluded that this was not an appropriate case to reduce costs from scale on this ground. The Council did not act unreasonably in contesting liability for breach of duty of care in this case.

[22] As to the second consideration, relative size, I do not see that to be a material consideration. The facts are that one party is financially secure and one is not. The financial security associated with the defendant Council means that (as Mr Upton accepts) any payment of costs to it need not be secured pending the outcome of the appeal. Plainly the Council is good for costs in the event it is ordered by the Court of Appeal to repay what it has received.

[23] I am not satisfied that this is a proper case in which to alter the ordinary course of events. That is that the unsuccessful plaintiffs must pay costs in accordance with the Court’s order of 22 December 2012. Inasmuch as the respondent Council is good for repayment of costs, there is no need to order conditions.

[24] Apart only from the question of whether the appeal would be rendered nugatory because of the plaintiffs’ financial precariousness, this would not be a proper case to grant a stay. The prospect that plaintiffs now are in a state of financial precariousness has two consequences. The first is that for that ground to be considered, affidavit evidence would need to have been filed. It has not been. Secondly, it lends weight to the submission for the defendant Council that it would be injuriously affected by the grant of a stay, which may see the sum to which it is entitled for costs depleted in the ensuing months before appeal.

_{[25] The application for stay is dismissed.}

_{Stephen Kós J}

Solicitors:

Wadham Goodman, Palmerston North for Plaintiffs

Heaney & Co, Auckland for Defendant

---

[1] Keung v GBR Investment Limited [2010] NZCA 396 at [11], quoting Duncan v Osborne

Buildings Ltd (1992) 6 PRNZ 85 (CA) at 87.

[2] _{Dorbu v Barfoot and Thompson Limited [2010] NZCA 216 at [20]}

[3] Cousins v Heslop [2007] NZCA 377 at [10], Philip Morris (NZ) Limited v Liggett & Myers

Tobacco Co (NZ) Limited [1977] 2 NZLR 31.