Corbans Viticulture Limited v Waihopai Valley Management Limited [2012] NZHC 3574 (19 December 2012)

Last Updated: 7 January 2013

IN THE HIGH COURT OF NEW ZEALAND BLENHEIM REGISTRY

CIV-2010-406-000046 [2012] NZHC 3574

BETWEEN CORBANS VITICULTURE LIMITED Plaintiff

AND WAIHOPAI VALLEY MANAGEMENT LIMITED

First Named First Defendant

AND ACHILLIES VENTURES LIMITED, ATREIDES HOLDINGS LIMITED, BLICKS ROAD INVESTMENTS LIMITED, FARRAH INVESTMENTS LIMITED AND ORS TRADING AS PATRIARCH JOINT VENTURE Second Named First Defendant

AND ANTHONY LEWIS MOORE Second Defendant

AND DEAN ALFRED STEELE Third Defendant

AND BEN DOUGLAS Fourth Defendant

AND DENNIS LUNKEN Counterclaim Defendant

Hearing: 11 December 2012

Appearances: L Ponniah for Plaintiff and Counterclaim Defendant

G M Downing for the first-named First Defendant

Judgment: 19 December 2012

_{JUDGMENT OF ASSOCIATE JUDGE MATTHEWS}

Solicitors:

Corban Revell, PO Box 21-180, Waitakere City. [e-mail] / [e-mail]

McFadden McKeeken Phillips, PO Box 656, Nelson. [e-mail]

_{Fletcher Vautier Moore, PO Box 90, Nelson 7040. [e-mail]}

CORBANS VITICULTURE LIMITED V WAIHOPAI VALLEY MANAGEMENT LIMITED HC BLE CIV-

2010-406-000046 [19 December 2012]

Hamish Fletcher, PO Box 1672, Nelson 7040. [e-mail]

[1] This judgment determines:

(a) Issues arising from the first-named first defendant (Waihopai) having filed a notice of discontinuance of its counterclaim against the plaintiff (Corbans) and then withdrawn it.

(b) Mr Lunken’s application for security for costs against Waihopai and (if the counterclaim against it remains in effect) Corbans’ similar application.

Withdrawal of the notice of discontinuance

[2] On 16 November 2012 Waihopai filed a notice of discontinuance of its counterclaims against Corbans, noting however that it had also claimed set-offs in relation to the subject of those counterclaims, and the set-offs were still claimed.

[3] Rule 15.20 of the High Court Rules permits a plaintiff to file a notice of discontinuance, but where there is more than one defendant the plaintiff can only discontinue the proceeding against a particular defendant with the consent of every other defendant or with the leave of the Court. If the plaintiff files a notice of discontinuance, the consent of every other defendant must be in writing.

[4] The rule applies, inversely, to a counterclaim.

[5] Waihopai did not seek or obtain the leave of the Court, nor the written consent of Mr Lunken, who is also a defendant to the counterclaim.

[6] On 6 December Waihopai sought to withdraw its notice of discontinuance by filing a document titled “Notice of Withdrawal of Notice of Discontinuance (of Counterclaims by First-named First Defendant against Plaintiff)”.

[7] At the same time Mr Downing filed a memorandum noting that r 15.20 prevents any discontinuance where there is more than one defendant, without leave or the written consent of the other defendant.

[8] In the period between the filing of these two documents Mr Lunken, who is represented by Mr Ponniah, did not give written consent.

[9] Mr Downing argues that the notice of discontinuance was not valid as neither of the requirements of r 15.20(4) were met. Accordingly he argues that filing a notice withdrawing the notice of discontinuance had the effect of maintaining the status quo prior to the filing of the notice of discontinuance.

[10] Mr Ponniah says this is not the case. He says that Corbans had consented to discontinuance, and indeed relied on it, as it withdrew its application for security for costs. Following that Mr Lunken filed an application for security for costs which he had not done before, as Waihopai and Mr Lunken are represented by the same solicitors and counsel and only one order by way of security was needed. Mr Ponniah also says that briefs of evidence in chief have been exchanged, only reply briefs are to be completed, and these have been prepared in reliance on the notice of discontinuance.

[11] In relation to the latter point Mr Downing says that the existence of the counterclaim against Corbans does not make any difference to the briefs of evidence, as the claimed set-offs remained in place and the issues are the same, with the result that the briefs should be the same. He says he had initially withdrawn the counterclaim as it was going to simplify the proceedings, but in the end he had decided that it did not.

[12] I do not think Mr Downing’s explanation is satisfactory. Filing a notice of discontinuance should be a considered step. Whilst from time to time a step can be taken on a basis believed to be sound but which, on reconsideration, is thought to be erroneous, no basis which I find compelling was given to me.

[13] Nonetheless the purpose of r 15.20(4) is fundamental to the operation of the rule, as it protects the interest of other defendants who might otherwise be adversely affected by the withdrawal of a claim against one defendant. In my opinion it should be interpreted in accordance with that rationale. Although the rule does not

specifically provide that a notice of discontinuance filed without leave or the consent of other defendants is invalid, in my opinion that is the consequence.

[14] I find that the notice of discontinuance filed by Mr Downing on behalf of Waihopai was invalid. As a result the application for security for costs by Corbans is reinstated.

[15] I find, however, that Corbans is entitled to costs. I assess this at one-quarter of a day under scale 2B for both preparation and presentation of argument (not each of those steps).

Application for security for costs by Corbans and Mr Lunken against Waihopai

[16] In the reserved judgment I issued on 24 October I determined applications for security for costs by the defendants against Corbans (paragraphs [12] to [56]). I noted, and then discussed the evidence in relation to, the need for an applicant to satisfy one or other of the threshold tests set out in r 5.45.

[17] On the present application Waihopai concedes that the first threshold test is met, and thus that I may be satisfied that there is reason to believe that Waihopai will be unable to pay the costs of the plaintiff and the counterclaim defendant if it is unsuccessful in its claims against them.

[18] I therefore turn to consider whether, even though this threshold test has been met, security for costs should be ordered.

[19] Mr Ponniah says that the counterclaim is substantial and has required the preparation of a great deal of evidence and will therefore take a significant portion of the trial time. Conversely, Corbans’ claim against Waihopai is a simple claim based on purchase orders which have not been paid. He says the set off is fundamentally the same, but Mr Lunken, on the other hand, is required to defend only the counterclaim. He sought $50,000 by way of security, based on an assessment of likely trial costs. I note that this was the sum I awarded, inversely, in the judgment of 24 October 2012.

[20] Mr Downing says that the counterclaim is really a defence and will make no difference to the evidence overall. He drew my attention to paragraph [52] of the earlier judgment where I said:

[52] First, I do not consider that in the circumstances of this case, the existence of the counterclaim by Waihopai should defeat the application for security for costs, as decided in the Kimber Timber Products case. I accept the submission of Mr Downing that the evidence in support of the counterclaim is the same evidence relied on in defence of the claim, apart from evidence of quantum, so the counterclaim will not significantly increase the time required to try the plaintiff’s claim. There should in my judgment be a reduction, however, in the amount of security ordered in favour of Waihopai, for this reason.

[21] As a consequence of that decision I reduced the amount of security to be given by Corbans by $10,000, out of a total of $50,000. Mr Downing says this reduction of $10,000 is effectively the security for costs for the counterclaim, so far as Corbans is concerned.

[22] Mr Downing then says that as Mr Lunken is represented by the same solicitors and counsel as Corbans, this sum of $10,000 is in effect security for costs for both counterclaim defendants. I note that Mr Ponniah expressly says that only one award of security for costs is sought.

[23] In reply Mr Ponniah says that Mr Lunken has not had the benefit of the discount on security given by Corbans, and cannot, because he is only a counterclaim defendant not a plaintiff, and consequently there is no set-off applying to him. He says that the main reliance is on the Fair Trading Act causes of action in the counterclaim which are primarily directed at Mr Lunken who is said to have made the representations relied on.

[24] Mr Ponniah does not accept that the $10,000 set-off was a sum directly related to security for costs in respect of the counterclaim, noting that it was made in the context of a claim by the defendants for security for costs. He says it only related to presenting the defence. However, he accepted that the $10,000 sum was to be taken into account if security were to be ordered.

Discussion and amount to be awarded

[25] I am satisfied that the sum of $10,000 deducted from the amount directed to be secured in relation to Corbans’ claim was to take into account the counterclaim, because this is expressly provided for in the earlier judgment. The sole remaining issue to be determined is whether that sum should be increased, given the further submissions of counsel. Mr Ponniah’s submission that there should be an order that security be given in the sum of $50,000 less, perhaps, the sum of $10,000 already discounted from the inverse award, does not in my opinion reflect the reality of the case. However, the application for security now brought by Mr Lunken relies on the additional cost to which he will be put as an additional party. At the very least, this includes the preparation of his own evidence, and argument in respect of his own position, as well as cross-examination (preparation and delivery) directed at his case specifically. Although he has, and will have, the same solicitors and counsel as Corbans, I think it realistic to assess further involvement on their part, and thus additional fees.

[26] Having considered all factors, in my judgment Waihopai must give security for costs to Corbans and to Mr Lunken in the following terms:

(a) The total is $20,000.

(b) From this is to be deducted $10,000, representing the deduction in the amount of security for costs given by Corbans.

(c) The security is given in favour of Mr Lunken and Corbans jointly and severally, which for the sake of clarity means that if both succeed at trial the sum secured is applied to them both, but that if only one succeeds, the entire sum is also available to that party.

(d) Security will be given by the sum of $10,000 being held in the trust account of McFadden McKeekan Phillips from 26 February 2013.

[27] Corbans and Mr Lunken have succeeded on this application. They are entitled to costs on a 2B basis for:

(a) All steps involving preparation and filing of the application by

Corbans.

(b) All steps involving preparation and filing of the application by

Mr Lunken.

(c) Preparation on behalf of both, not each.

(d) A hearing for one-quarter of a day for both, not each.

[28] Disbursements, if any, are to be fixed by the Registrar. In this respect I note that Mr Ponniah travelled to Nelson for argument on 11 December. However, at least half of the time occupied that day related to a strike-out application by the third and fourth defendants in respect of which a separate judgment will be issued. On this application Mr Ponniah is entitled to one-quarter of travel expenses, to be fixed

_{by the Registrar.}

J G Matthews

Associate Judge