Palmerston North Cosmopolitan Club v Palmerston North Squash Club Inc [2012] NZHC 2658 (12 October 2012)

High Court of New Zealand

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Palmerston North Cosmopolitan Club v Palmerston North Squash Club Inc [2012] NZHC 2658 (12 October 2012)

Last Updated: 6 November 2012

IN THE HIGH COURT OF NEW ZEALAND PALMERSTON NORTH REGISTRY

CIV-2011-454-370 [2012] NZHC 2658

UNDER Rule 11.9 of the High Court Rules

BETWEEN PALMERSTON NORTH COSMOPOLITAN CLUB Plaintiff

AND PALMERSTON NORTH SQUASH CLUB INC

First Defendant

AND PALMERSTON NORTH BOWLS CLUB INC

Second Defendant

AND DAVID PETTERSON Third Defendant

AND LINDSAY PETTERSON Fourth Defendant

AND STEVE TOMS Fifth Defendant

AND GRANT SMITH Sixth Defendant

AND BRIAN LITTLE Seventh Defendant

AND FITZHERBERT ROWE Eighth Defendant

Judgment: 12 October 2012

_{JUDGMENT OF ASSOCIATE JUDGE D.I. GENDALL}

Under r 11.5 of the High Court Rules I direct the Registrar to deliver this judgment at 3.00 pm on 12 October 2012.

Solicitors: Cooper Rapley, Solicitors, PO Box 1945, Palmerston North

_{Kensington Swan, Solicitors, Private Bag 92101, Auckland 1142}

PALMERSTON NORTH COSMOPOLITAN CLUB V PALMERSTON NORTH SQUASH CLUB INC & ORS HC PMN CIV-2011-454-370 [12 October 2012]

Introduction

[1] On 27 June 2012 I gave judgment in this matter refusing an application by the first to seventh defendants (the applicant defendants) for an order for security for costs against the plaintiff.

[2] Subsequently, on 29 June 2012 the applicant defendants filed an application in this Court to recall that judgment together with supporting affidavits.

[3] That application was opposed by the plaintiff in a Notice of Opposition filed

6th day of July 2012.

[4] The opposed recall application together with supporting material has now been referred to me for decision. I apologise to counsel and the parties for the delay in giving this decision – I had been on leave for approximately eight weeks returning to the Court only on 1 October 2012 at which time all matters were referred to me.

[5] The grounds set out in the applicant defendants’ application for recall are

specified at para [2] of that application as follows:

(a) It is in the interests of justice that the judgment be recalled. In particular:

(i) There are two proceedings on foot, the substantive proceeding under CIV-2011-454-370 (‘Substantive Proceeding’) and proceeding CIV-2012-454-180 brought by the plaintiff under the Property Law Act 2007 (‘PLA Proceeding’).

(ii) The parties agreed prior to the hearing for security for costs that evidence from the PLA Proceeding, could be relied on at the hearing on 15 June 2012. The Court was advised of this prior to the hearing so that both matters could be called together.

(iii) At the hearing of 15 June 2012, counsel were advised that the files for the PLA Proceeding was with His Honour Justice Collins in Wellington. Consequently, the files for the PLA Proceeding were not before the Court.

(iv) His Honour undertook to read the files in the PLA Proceeding after the hearing.

(v) The Court directed counsel for the first to seventh defendants to only focus on the issue impecuniosity.

(vi) The Court file for the Substantive Proceeding was incomplete. In particular, the affidavit of David Ross Petterson (which contained evidence in relation to the plaintiff ’s impecuniosity) was not on the Court file.

(b) A memorandum was filed by counsel for the defendants on 18 June 2012 requesting that the Registry advise what material was missing so that counsel could forward the same. No response was received by counsel.

(c) On 21 June 2012, His Honour Justice Collins advised that the files for the Substantive Proceeding, was in Wellington. It is therefore unclear whether counsel’s memorandum of 18 June 2012 made it to the Court file.

(d) The judgment of 27 June 2012 does not address all the evidence filed by the defendants in relation to the plaintiff ’s impecuniosity. Namely, it does not address:

(i) the matters raised in David Ross Petterson’s affidavit sworn 3

August 2011; and

(ii) David Vance’s opinion dated 12 April 2012.

(e) In such circumstances, the reasonable inference to be drawn is that His

Honour has not considered all the evidence in relation to the matter.

Preliminary Points

[6] In considering the present application before the Court certain matters in my view need to be kept firmly in mind.

[7] The first of these is that the security for costs application which was the subject of my 27 June 2012 judgment sought an order for security of no more than

$20,000.00. In that judgment at various points I noted that essentially this provided what was really only a nominal and token amount by way of security, given the likely steps that would be required in this proceeding to reach trial, the number of parties involved and the probable length of a final hearing.

[8] In particular, at para [43] of that judgment I noted that the $20,000.00 sought by the defendants was “little more than a token gesture in this proceeding” and “would only go some way towards meeting the defendants’ costs given the complex nature of this proceeding and the range of parties involved.” As a result I expressed the view:

That said the motives of the defendants in bringing this application might possibly be questioned.

[9] The present application for recall by the defendants has initially spawned 7 pages of submissions from the applicant defendants on 2 August 2012, 19 pages of submissions from counsel for the plaintiff in reply on 22 August 2012 and a further 3 pages of submissions in response from counsel for the applicant defendants on 5

September 2012.

[10] It must be remembered that all this is directed to what is a recall application over a refusal to order a $20,000.00 amount by way of security for costs which has been generally accepted by all as little more than a “token” amount.

[11] This must raise serious issues over questions of proportionality here. The time and trouble, and the legal and other fees incurred in the original security application, the recall application, its formal opposition and the lengthy submissions advanced to the Court on both are significant and in a sensible world would be weighed against a possible maximum amount of security at issue of $20,000.00. All this should really go without saying. And, some pragmatism should surely prevail here.

[12] But, for obvious reasons, I must leave these matters on one side here. Because, notwithstanding these comments which I have felt obliged to make, the present recall application is before the Court and must be dealt with. I now give my decision on that application but necessarily in a somewhat hasty and truncated form. Given the amounts truly at issue in my security for costs judgment, in my view, nothing more is warranted here.

Present Application

[13] An application to recall a judgment is brought under r 11.9 High Court Rules and the leading statement on recall remains that of Wild CJ in Horowhenua County v Nash (No 2) [1968] NZLR 632 at 633:

Generally speaking, a judgment once delivered must stand for better or worse subject, of course, to appeal. Were it otherwise there would be great inconvenience and uncertainty. There are, I think, three categories of cases in which a judgment not perfected may be recalled — first, where since the hearing there has been an amendment to a relevant statute or regulation or a new judicial decision of relevance and high authority; secondly, where counsel have failed to direct the Court’s attention to a legislative provision or authoritative decision of plain relevance; and thirdly, where for some other very special reason justice requires that the judgment be recalled.

[14] As McGechan on Procedure at para HR11.9.01 notes, this statement in Horowhenua County has been applied by the Supreme Court in Saxmere Co Ltd v Wool Board Disestablishment Co Ltd [2009] NZSC 122 and by the Court of Appeal in a number of other cases.

[15] In Erwood v Maxted [2010] NZCA 93 at 23 the Court of Appeal set out guidelines to deal with the proliferation of what were seen as unjustified applications to recall judgments in that Court. The guidelines distinguish between correction of accidental slips and omissions and applications for recall indicating that in respect of the latter the criteria set out in Horowhenua County will be strictly applied.

[16] The underlying policy in all this is clearly to reconcile the broad ends of justice in relation to the particular case and the desirability of finality in litigation at first instance – Ashe v Tauranga Marina Society (1991) 4 PRNZ 89.

[17] The application before me as I understand it essentially contends that my judgment dated 27 June 2012 is flawed for two reasons. First, it is suggested that despite my agreement at the hearing to do so, I may have failed to take into account and properly consider affidavits and material on the related file CIV-2012-454-180 (the PLA file) between the plaintiff and the first and second defendants concerning a related Property Law Act 2007 proceeding between them.

[18] That contention is quickly disposed of. Before issuing my 27 June 2012 judgment I did have an opportunity to consider the material on the PLA file CIV-

2012-454-180. This included all affidavit material and in particular affidavits on that file of Mr David Ross Peterson (who incidentally is the third defendant in the substantive proceeding) sworn 3 April 2012 and 6 June 2012 which included a copy of his earlier affidavit as sworn in the substantive proceeding on 29 August 2011. In addition, the unsworn “opinion” of Mr David Vance dated 12 April 2012 was actually handed up to me at the hearing and despite the plaintiff ’s objections considered then and subsequently.

[19] As noted at para [24] of my decision, all this material was taken into account when considering the issue of the plaintiff’s suggested impecuniosity and my findings on that aspect. This para [24] referred specifically to this material when the words “substantial reports from other accountants commenting on the plaintiff ’s accounts and its financial position” were used. In addition, para [25] and following in my judgment went on to hold that “notwithstanding this” only a small amount was sought by way of security, and ...“there seems little doubt that the plaintiff has a

significant cashflow from its operations and would be able to meet an award of costs to this level” (para [26]) and “... the threshold requirement that the plaintiff is impecunious has not been satisfied” (para [27]).

[20] The second reason from counsel for the defendants and Mr Peterson himself suggesting that my judgment is flawed is their claim that at the hearing I prevented any submissions being put by defence counsel concerning the merits of the plaintiff’s claim. This is not correct. My recollection is that, given the acknowledged difficulty of determining merits in any security for costs application at a relatively early stage, I had interrupted submissions from counsel for the defendant to ask that his primary focus be addressed to impecuniosity questions which after all would comprise the threshold inquiry.

[21] My further recollection is that at no time did I prevent or forbid counsel from making particular submissions of any kind. This would appear to be essentially confirmed at para [6] of the 22 August 2012 submissions advanced by counsel for the plaintiff on the present application.

[22] And, in any event, it will have been clear from my 27 June 2012 judgment that, without commenting in any real way on the final merits of the plaintiff’s claim, I found that there was a reasonable argument open here that indeed, even if the plaintiff was impecunious to such an extent that a $20,000.00 security amount should be required, there was a reasonable argument that this impecuniosity may have been caused or contributed to by the actions of the applicant defendants.

Conclusion

[23] For all these reasons it follows that the present application by the applicant defendants to recall my 27 June 2012 judgment must fail. Essentially, their complaints relate to matters which if at all should be the subject of appeal. They are not appropriate matters to justify any recall of that judgment.

[24] The broad ends of justice in this particular case clearly in my view require

that my judgment of 27 June 2012 must stand. There are no “very special reasons”

here, as specified in Horowhenua County at [633], why justice requires that the judgment be recalled.

[25] The defendants’ recall application accordingly is dismissed.

[26] Costs with respect to the present application are reserved. If, as I understand the position, costs are sought by the plaintiff then that is a matter which can be addressed following the Judicial Settlement Conference in this proceeding which is to take place shortly.

‘Associate Judge D.I. Gendall’