DT UNITED KINGDOM LIMITED V THE COMMISSIONER OF INLAND REVENUE HC AK CIV-2009-404-5580

DT UNITED KINGDOM LIMITED V THE COMMISSIONER OF INLAND REVENUE HC AK CIV-2009- 404-5580 30 March 2011IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYCIV-2009-404-5580IN THE MATTER OF of the Tax Administration Act 1994BETWEEN DT UNITED KINGDOM LIMITEDPlaintiffAND THE COMMISSIONER OF INLANDREVENUEDefendantHearing: 30 March 2011Judgment: 30 March 2011 at 3:00 PMINTERIM JUDGMENT OF ASSOCIATE JUDGE SARGISSONThis judgment was delivered by me on 30 March 2011 at 3 pm pursuant toRule 11.5 of the High Court RulesRegistrar/Deputy RegistrarDate ..........................Solicitors:Christopher Taylor, PO Box 37772, Parnell 1151Crown Law Office, PO Box 2558, Wellington 6140[1] In response to my minute of 15 March 2011 counsel for the defendant advises that the defendant does not intend to file any submissions in reply and would prefer that the application for an "unless" order and order for dismissal be determined on the papers according to the prior indication of both counsel. Counsel for the plaintiff would like the application argued.[2] Since receiving that advice, I have reviewed the principles to be applied in anapplication to strike out plaintiff's proceeding on the grounds of non-compliance with an order for security for costs. The principles were set out by Thorp J inJagwar Holdings Ltd v Fullers Corporation Ltd (1991) 4 PRNZ 577 at 578, and discussed at some length recently by Associate Judge Bell in Giuseppina Prager- Macholl v Susan Michell and Anor HC Auckland CIV2010-404-000917, 1 March 2011, Judge Bell also discussed what are called the Hytec principles. He stated at [17]:In cases where a plaintiff has failed to pay security for costs, the effect of the Hytecprinciples and the approach taken by Thorp J in the Jagwar Holdings case are combined in these principles set out in McGechan at HR5.45.11(4):a) The plaintiff is entitled to a reasonable opportunity to comply; generally theCourt fixes the time;b) If the plaintiff fails to provide security within the time allowed, or within areasonable time, the Court may strike out the proceeding, and an "unless"order may be made;c) If the defendant cannot establish the more general ground of failure to prosecute under r 15.2, a proceeding should only be dismissed if the non-compliance is "intentional and contumelious"; andd) Generally, the proceeding will only be dismissed if its continuation wouldinvolve substantial prejudice to the defendant.[3] Applying these principles, I find that the defendant has not established that an"unless" order that would likely result in striking out of the plaintiff's proceedingshould be made at this stage. No submission identifies evidence of any unavoidable or substantial prejudice that would arise if a stay were to continue for the period Mr Gould proposes and I am also not satisfied that other unavoidable prejudice has been identified. I do not therefore find it necessary to hear further argument.[4] Though I accept that a stay cannot continue indefinitely and that thedefendant should not have to suffer inordinate delay I do not think that point hasbeen reached. I therefore issue this minute as an interim decision. I order that thedefendant can seek the order by way of a memorandum on 2 days notice if, by 30November 2011, the plaintiff has not paid or otherwise provided to the Registrar'ssatisfaction the first tranche of security.[5] I also grant leave for the defendant to file and serve a memorandum, supported by affidavit, on two days notice to seek further orders in the event that substantial prejudice is said to arise.[6] Costs are reserved.___________________________Associate Judge Sargisson