GJ NEW ZEALAND HOLDINGS LIMITED v CHASE [2020] NZHC 446

GJ NEW ZEALAND HOLDINGS LIMITED v CHASE [2020] NZHC 446

Although the third parties met the threshold showing reason to believe the defendant may not be able to pay costs, the judge exercised discretion against ordering security because delay in bringing the application, the disruptive effect of ordering security at late stage after close of pleadings and fixture allocation, the proportionality of relief, and the fact the defendant's impecuniosity may be causally linked to the alleged conduct of the third parties outweighed the need for security. Limited tailored discovery was ordered only as to communications between Ewing and Banks about the sale (from marketing date to one month after settlement) under the adverse documents test; other...

Citation
[2020] NZHC 446
Parties
Plaintiff (discontinued): GJ New Zealand Holdings Limited; Defendant: Eric Stephen Chase; First Third Party: Paul Robert Ewing; Second Third Party: John Archibald Banks
Court
High Court
Jurisdiction
New Zealand
Judgment Date
19 February 2020
Procedural Posture
Civil (misrepresentation, Negligent Misstatement, Fair Trading Act) / Interlocutory Applications: Security for Costs and Discovery; Pre Trial (hearing Fixture Allocated)
Outcome
Security for costs application dismissed; defendant's discovery application granted in part and refused in part; plaintiff's claim discontinued by liquidators and counterclaim stayed as to the company.
Legal Topics
Security for Costs, Discovery, Misrepresentation, Negligent Misstatement, Accessory Liability, Receivership, Liquidation, Without Prejudice Communications
Civil Procedure Commercial Law Tort Company Insolvency Security for Costs Discovery Misrepresentation Negligent Misstatement +4 more

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Parties

GJ New Zealand Holdings Limited

Plaintiff (discontinued)

Eric Stephen Chase

Defendant

Paul Robert Ewing

First Third Party

John Archibald Banks

Second Third Party

Procedural Posture

Civil (misrepresentation, Negligent Misstatement, Fair Trading Act) / Interlocutory Applications: Security for Costs and Discovery; Pre Trial (hearing Fixture Allocated)

Legal Issues

  1. 1 Whether there is reason to believe defendant will be unable to pay costs such that security for costs should be ordered
  2. 2 Whether defendant is entitled to tailored discovery from the third parties (r 8.19) and scope of any such discovery
  3. 3 Admissibility of without-prejudice settlement communications

Ratio Decidendi

Although the third parties met the threshold showing reason to believe the defendant may not be able to pay costs, the judge exercised discretion against ordering security because delay in bringing the application, the disruptive effect of ordering security at late stage after close of pleadings and fixture allocation, the proportionality of relief, and the fact the defendant's impecuniosity may be causally linked to the alleged conduct of the third parties outweighed the need for security. Limited tailored discovery was ordered only as to communications between Ewing and Banks about the sale (from marketing date to one month after settlement) under the adverse documents test; other...

Court Disposition

Security for costs application dismissed; defendant's discovery application granted in part and refused in part; plaintiff's claim discontinued by liquidators and counterclaim stayed as to the company.

Orders

  • Security for costs application by first and second third parties dismissed
  • Order for limited disclosure: third parties to disclose communications between Paul R Ewing and John A Banks relating to the marketing, promotion and sale of the master franchise (whether held by Jireh or GJ New Zealand Holdings Ltd) from the date the business was first put on the market until one month after...