SMITH & STOKES v PRAIN [2020] NZHC 1236

SMITH & STOKES v PRAIN [2020] NZHC 1236 [5 June 2020]IN THE HIGH COURT OF NEW ZEALANDCHRISTCHURCH REGISTRYI TE KŌTI MATUA O AOTEAROAŌTAUTAHI ROHECIV-2014-409-549[2020] NZHC 1236BETWEEN GREGORY ROBERT SMITH and COLINPETER STOKESPlaintiffsAND NOBLE INVESTMENTS LIMITEDRemoved First DefendantAND APPLE FIELDS LIMITEDRemoved Second DefendantAND JUSTIN WILLIAM PRAINThird DefendantAND CARDNO (NZ) LIMITEDFourth DefendantHearing: 19 May 2020Appearances: G D Stringer for Plaintiffs (via VMR, audio only)P B McMenamin for Third Defendant (in person)H J Dempsey and M R C Wolff for Fourth Defendant (via VMR)Judgment: 5 June 2020JUDGMENT OF ASSOCIATE JUDGE LESTERThis judgment was delivered by me on 5 June 2020 at 12.00 pmpursuant to Rule 11.5 of the High Court RulesRegistrar/Deputy Registrar5 June 2020[1] In broad terms there are three applications before the Court. Each of thedefendants seeks that this proceeding be struck out or permanently stayed whilethe plaintiffs seek that a stay entered by Associate Judge Matthews on 22 March 2019be lifted. The exact nature of the stay ordered on 22 March 2019 is one of the issuesbetween the parties.[2] The proceeding, which commenced in 2014, has its origins in a contractentered in 2002 (the 2002 contract). I will start with only a bare summary of thematters in issue and deal with the facts in more detail when dealing with the differentapplications.Context[3] The plaintiffs in this litigation, Gregory Robert Smith (Mr Smith) and ColinPeter Stokes (Mr Stokes), claimed against Noble Investments Limited (Noble) (nowstruck off the Companies Register), for breach of the 2002 contract relating to thepurchase by Mr Smith and Mr Stokes of land in a subdivision to be completed byNoble.[4] The original proceeding was against Noble and Apple Fields Limited (AppleFields) (now also struck off the Companies Register), which was the company usedby Noble to manage the development of this particular subdivision. That claim wasfor breach of contract and misrepresentation. Further, Mr Smith and Mr Stokes claimthat they are the victims of deceit perpetuated by a director of Apple Fields, the thirddefendant, Justin William Prain (Mr Prain), and the fourth defendant, Cardno(NZ) Limited (Cardno), which was a company engaged by Noble to acquire therequisite consents and assist in the planning of the subdivision in question.1[5] The plaintiffs, in the 2002 contract, purchased from Noble what is referred toin the 2002 contract and the statement of claim as "Lot 9". The plaintiffs alsopurchased Lot 19 and also a one-tenth share of Lot 22. Lot 22 is a strip of land thatserved as a right of way.1 Summary paraphrased from judgment of Gendall J in Smith v Noble Investments Ltd [2015]NZHC 3006.[6] The 2002 contract contained the following Further Terms (FT) of sale whichare central to the plaintiffs' claim:[FT] 14. Following completion of the initial subdivision the vendor will useit's [sic] best endeavours at it's [sic] costs to obtain L1A zoning for Lot 9 andfurther undertakes not to do anything or negotiate with the Council to useLot 9 to effect a more advantageous zoning that it might have achieved on thebalance of it's [sic] land, i.e, it shall not agree to a lesser zoning for Lot 9 thanfor any other lot where it is seeking L1A zoning or it's [sic] equivalent (unlesspreviously agreed in writing with the Purchaser).[FT] 15. In the event a further subdivision is approved and work undertakenfor residential subdivision by the Vendor on the adjoining development thenthe Vendor undertakes to provide full width roading to L1A zoning standardat it's [sic] cost, together with sewer, power, telephone, water and stormwaterconnection for this zone's standard to Lot 9. This work is to be completedwithin TWO YEARS of residential zoning being granted or whendevelopment of the Vendors adjoining land is undertaken, whichever comesfirst.[7] The plaintiffs also granted Noble an option to purchase Lot 19 under whichNoble could purchase it for $10. The plaintiffs plead the option was subject tocompliance with FT 14 and F T 15.[8] As will be expanded on below, the relationship between Noble and theplaintiffs became strained. The plaintiffs caveated Noble's titles resulting inproceedings commenced in 2010 in which the plaintiffs sought to protect their caveat.Noble's land became subject to its mortgagee's power of sale in 2014, albeit a sale didnot occur until some time later. In practical terms, the Noble's mortgagee stepping inended any chance of Noble complying with FT 15.[9] From the commencement of this litigation on 7 August 2014 until22 August 2016, the plaintiffs were represented by experienced counsel. From22 August 2016 the plaintiffs were self-represented. In February 2020 when theyagain engaged experienced counsel.[10] There are numerous references in minutes from the Court in the interim that,given the complexity of the plaintiffs' proceeding, they would be well served tore-engage counsel.The present applications[11] The applications of Mr Prain and Cardno are essentially in the same terms.Both bring the following applications:(i) an application to strike out for non-compliance with orders of theCourt; that application being made in reliance on r 7.48 of theHigh Court Rules 2016;(ii) an application for a permanent stay under r 15.1 of the High CourtRules; and(iii) an application that the plaintiffs' proceeding be dismissed or stayed forwant of prosecution in reliance on r 15.2 of the High Court Rules.[12] The application under r 15.1 is to make permanent the stay ordered byAssociate Judge Matthews on 22 March 2019.[13] The applications are opposed and countered with an application from Mr Smithand Mr Stokes that the 22 March 2019 stay be lifted.[14] The defendants' applications were brought in December 2019. As I have said,the plaintiffs engaged counsel in February 2020. On 24 April 2020, the Court receiveda proposed sixth amended statement of claim prepared by Mr Stringer, counsel for theplaintiffs. Because the plaintiffs' claim was stayed, the sixth amended statement ofclaim was not formally accepted for filing but treated as indicating the pleading theplaintiffs' intended to file if the stay was lifted. Accordingly, the defendants focusedtheir challenge on the proposed sixth amended statement of claim, which I will referto simply as the sixth amended statement of claim.[15] The sixth amended statement of claim was necessary because of thecircumstances leading to the stay ordered on 22 March 2019.[16] The fourth amended statement of claim was dated 29 July 2016 and at a timewhen the plaintiffs had counsel. That was followed by an amended statement of claimcalled the "fifth amended statement of claim" dated 4 May 2018 which was preparedby the plaintiffs. That claim came under criticism from Associate Judge Osborne(as he then was) in a judgment of 31 August 2018.2[17] On 19 November 2018, Associate Judge Matthews issued a minute in whichhe referred to the unsatisfactory state of the plaintiffs' pleadings and referred to earliercomments by the Court on 8 February 2017 and on 17 May 2018 in a similar vein. Heagain urged the plaintiffs to take legal advice and then said:3[7] I have decided that there will be one final opportunity for theplaintiffs, Mr Stokes and Mr Smith, to put their house in order. Because theCourt Christmas closure is just five weeks hence, I will allow more time thanwould ordinarily be the case for this to occur. I impose a deadline of31 January 2019 for the filing and service of the required amended statementof claim on all parties. I further direct that if this has not occurred by 5.00pmon that day, the claim is stayed without further order of the Court.[8] For it to be allowed to proceed after that date, an application will beneeded supported by evidence on why this order has not been complied with.Mr Stokes and Mr Smith must be under no illusion that an order lifting thestay will readily be made.[18] On 31 January 2019, a further amended statement of claim (also called a "fifthamended statement of claim" {presumably in error}) was filed and was the subject ofdetailed memoranda from counsel for the defendants.[19] At the time, counsel for Cardno submitted that the fifth amended statement ofclaim did not comply with the directions that had been made by the Court previously,nor the High Court Rules. The defendants requested that the proceeding be stayed.[20] Associate Judge Matthews' minute recorded that the plaintiffs, whilemaintaining the adequacy of their proceedings, accepted that a stay might beappropriate to allow them to carry out further factual investigations. The plaintiffsenvisaged that the case would resume once it was known whether they would be ableto proceed with the subdivision originally envisaged in the 2002 contract.2 Smith v Noble Investments Ltd (in liq) [2018] NZHC 2294.3 Smith v Prain HC Christchurch CIV-2014-409-549, 19 November 2018 at [7]-[8].[21] The Court made orders in the following terms:4(a) The case by the plaintiffs against the third and fourth defendants isstayed until further order of the Court.(b) No later than 5.00pm on Friday, 28 June 2019 the plaintiffs mayapply by interlocutory application on notice for an order that the staybe lifted.(c) On or after 17 June 2019 either the third defendant or the fourthdefendant or both may apply by interlocutory application on noticefor such orders that they consider appropriate, which on the basis ofinformation presently provided to the Court appears to encompassorders for a permanent stay, strike out, or for further amendedpleadings.[22] I have previously observed in this proceeding that the 17 June 2019 datecontained in sub-paragraph (c) above, appears to be a typographical error. I took it asmeaning 17 July 2019, given the steps contemplated by sub-paragraph (c) wouldlogically follow from the steps in sub-paragraph (b).[23] As noted above, there is a dispute between the parties as to the effect of theseorders. The defendants characterise the order at [21] as an unless order, that is, unlessan application to lift the stay was made by 28 June 2019, the plaintiffs lost theopportunity to bring such an application. There would be a permanent stay by defaultas the plaintiffs would lose the opportunity to apply to have the stay lifted.[24] I do not accept that interpretation. The Judge in sub-paragraph (c) expresslycontemplated an application to make the stay permanent could be made. Further, inexplaining the reason for the orders, the Judge recorded that the stay was to give theplaintiffs a final opportunity to undertake such further investigations as they wishedaround the factual basis for their claim and to protect the plaintiffs' position in relationto the claim while that was done. The Judge also recorded that the stay was to preservethe right of the third and fourth defendants to seek after a reasonable period, suchorders as they considered necessary in relation to the plaintiffs' pleading.[25] While there is some force in the point made by Mr McMenamin, counsel forMr Prain, that the deadline given by the Judge for the making of an application to lift4 Smith v Noble Investments Ltd HC Christchurch CIV-2014-409-549, 22 March 2019 at [7].the stay must have been intended to have some effect, I do not view it as having theautomatic "drop dead" consequence contended for by the defendants.[26] In my opinion, the significance of the November 2018 and March 2019minutes of Associate Judge Matthews is they show the Court giving the plaintiffs ontwo occasions, a final opportunity to get their claim in order and make investigationsin that regard. In the minute of 19 November 2018, the plaintiffs were warned thatthey could not assume that the lifting of the foreshadowed stay would be a given.Ultimately, the minutes and what they provide for, are part of the context in which theapplications fall to be considered.Chronology1. On 7 August 2014 the plaintiffs commenced these proceedingsby way of a statement of claim in the Christchurch High Court.The plaintiffs pleaded a claim against Cardno for allegedlybreaching a contract.2. Between August and October 2014, the first, second and thirddefendants filed a statement of defence and counterclaim to thefirst statement of claim.3. On 9 October 2014 the plaintiffs filed and served an amendedstatement of claim called the first amended statement of claim.This claim added an alleged negligence cause of action againstCardno.4. Subsequently, Cardno filed and served a statement of defence tothe first amended statement of claim.5. On 11 March 2015 the plaintiffs were served with a noticerequiring further particulars of their claim by AFL and Mr Prain.6. On 13 April 2015, because no response was received from theplaintiffs to AFL and Mr Prain's request for further particulars,AFL and Mr Prain filed and served an interlocutory applicationfor an order requiring further particulars of the plaintiffs' claim.7. On 8 June 2015, the plaintiffs filed and served a further amendedstatement of claim called the third amended statement of claim.This pleading added an alleged deceit cause of action againstCardno.8. On 29 July 2015, Mr Prain served the plaintiffs with a secondnotice requiring further particulars of their claim.9. On 29 July 2016, the plaintiffs filed and served a furtheramended statement of claim called the fourth amendedstatement of claim.10. From 22 August 2016, the plaintiffs became self-represented.11. On 1 September 2016, Gendall J observed he already consideredthis proceeding a "longstanding and complex proceeding."12. On 26 October 2016, Associate Judge Osborne directed thepleadings did not adequately particularise the alleged damagesand ordered counsel file a memorandum addressing a timetablefor the proper particularisation of damages.13. On 1 February 2017, counsel filed and served a jointmemorandum suggesting a staged timetable "for the plaintiffsand first and second defendants to provide particulars ofdamages and make any necessary initial disclosure relevant tothat aspect."14. On 8 February 2017, Associate Judge Osborne found theplaintiffs still had not adequately particularised damages. Hedirected special damages such as wasted costs be tabulated andpleaded and general damages be given proper quantification.He directed the plaintiffs file and serve an amended statementof claim with these particulars within 25 working days.15. The plaintiffs did not file an amended statement of claim withinthe timeframe directed by Associate Judge Osborne, as theirnext statement of claim was not filed until 4 May 2018, almost15 months after the deadline set by Associate Judge Osborne.16. On 16 March 2017, Associate Judge Osborne ruled the joinderof Gold Band Finance Limited ("Gold Band") and Delta UtilityServices Limited ("Delta") to be effective.17. On 4 May 2017, Associate Judge Osborne considered numerousinterlocutory applications (including strike-out applicationsfrom Gold Band and Delta), observing as "no oppositionappears to have been filed to date, the Court is uncertain as tothe extent of opposition". His Honour directed the parties fileoppositions to the interlocutory applications within 5 workingdays, being 11 May 2017.18. On 11 May 2017, the plaintiffs by joint memorandum notifiedthe Court they opposed Gold Band's and Delta's strike outapplications. However, they did not file the necessaryopposition and requested an additional 5 working days tocompile "full evidence" to serve their notice of opposition.19. On 26 May 2017, counsel filed a joint memorandum recountingan email conversation between the parties discussing, amongstother things, a timeframe extension for the plaintiffs' notice ofopposition.20. On 6 June 2017, Associate Judge Osborne directed the plaintiffsprepare their notice of opposition within 20 working days fromtheir date of request on 26 May 2017, being 23 June 2017.21. At this time, in opposition to the interlocutory applications theplaintiffs wished to call and/or subpoena witnesses. However,the Court considered they had not applied under High CourtRule 7.28, which sets out the special circumstances forcross-examination in interlocutory applications. In doing so, theCourt granted the plaintiffs an indulgence, and directed them tomake that application by 20 June 2017.22. On 20 June 2017, the plaintiffs filed and served an applicationto call and/or subpoena witnesses.23. On 26 June 2017, Associate Judge Matthews held the plaintiffs'application was "inadequate in its present form". He directedthe plaintiffs had a further 10 working days to redraft theapplication, and 20 working days to prepare the necessaryaffidavits. His Honour recognised these proceedings had"become procedurally complicated" and noted the plaintiffswere self-represented.24. On 11 July 2017 the plaintiffs by way of joint memorandumwithdrew their application for leave to call witnesses.25. On 23 November 2017, the fifth defendant, Gold Band, andsixth defendant, Delta, were successful in their application forsummary judgment dismissing the claim against them.26. On 22 March 2018, Associate Judge Matthews issued a minutedirecting the plaintiffs file an amended statement of claim by4 May 2018.27. On 4 May 2018, the plaintiffs filed and served a further amendedstatement of claim called the fifth statement of claim. Thispleading added a cause of action in fraud against Cardno andattempted to join more defendants to the proceeding.28. On 17 May 2018, the Court described the fifth amendedstatement of claim as "manifestly unsatisfactory" as it did notcomply with previous directions as to the particularisation ofdamages. The Court directed the plaintiffs had "one furtheropportunity to plead their case in accordance with theHigh Court Rules.29. On 27 June 2018, Associate Judge Matthews once againrecommended the plaintiffs take legal advice as to thisproceeding, particularly regarding whether a legal duty wasowed, whether such a duty had been breached, the consequencesof such a breach, and whether such claims were sustainableconsidering limitation periods.30. On 31 August 2018, Associate Judge Osborne directed, amongstother things, the plaintiffs serve amended pleadings on allexisting defendants incorporating the additional or amendedcauses of action against the defendants the plaintiffs wished tojoin at the time within 20 working days.31. On 25 October 2018, counsel for Cardno filed a memorandumrecording the plaintiffs had not complied with the direction tofile and serve an amended statement of claim within 20 workingdays and seeking a revised timetable for the plaintiffs to complywith this direction.32. On 29 October 2018, the Court emailed the plaintiffs enquiringwhether they consented to Cardno's timetabling proposal.33. On 9 November 2018, the plaintiffs filed a memorandumrejecting Cardno's proposed timeframe.34. On 14 November 2018, counsel for Mr Prain replied to the firstplaintiff's memorandum summarising the plaintiffs' delays andfailures to comply with Court directions to that date, and soughtan order from the Court disallowing any extension "withouta formal application and evidence as to why the plaintiffs havebeen unable to comply with the order of the Court and why anextension would be justified."35. On 19 November 2018, Associate Judge Matthews issueda minute directing the plaintiffs file a final amended statementof claim by 31 January 2019, or the claim would be stayedwithout further order.36. On 31 January 2019, the plaintiffs filed a further amendedstatement of claim called the fifth amended statement of claim,adding causes of action against Cardno for alleged misleadingand deceptive conduct under the Fair Trading Act 1986 and landtransfer fraud.37. On 12 March 2019, counsel for Cardno filed a memorandumseeking directions in relation to the fifth amended statement ofclaim, recording Cardno's views the pleadings remaineddefective.38. On 22 March 2019, Associate Judge Matthews issued a minutestaying these proceedings until further order of the Court,subject to the plaintiffs making an interlocutory applicationon notice for an order the stay be lifted on or before 5:00pm onFriday 28 June 2019. His Honour directed the defendants couldapply to the Court on or after 17 July 2019 for an order topermanently stay or strike-out these proceedings.39. On 28 June 2019, the plaintiffs filed a memorandum advisingthey would not apply to lift the stay, as they wished to focus ontheir "ongoing" factual investigations.40. On 5 July 2019, Associate Judge Lester issued a minuteconfirming the stay was to remain in place.41. On 4 December 2019, in accordance with AssociateJudge Matthews' direction, counsel for Cardno filed and servedan interlocutory application on notice for orders the plaintiffs'fifth amended statement of claim is permanently stayed and/orstruck out.42. On or about 18 December 2019, counsel for Mr Prain filed andserved an interlocutory application for orders that the plaintiffs'fifth amended statement of claim be permanently stayed orstruck out.43. On 18 February 2020, counsel for Cardno filed and serveda memorandum of counsel proposing a timetable forprogressing this proceeding. At this stage, the plaintiffs had notfiled a notice of opposition to Cardno's strike out application,which was due on 24 December 2019.44. On 18 February 2020, the plaintiffs filed a notice of oppositionto Cardno and Mr Prain's applications for orders that theplaintiffs' fifth amended statement of claim be permanentlystayed or struck out.45. On 4 March 2020, the plaintiffs filed and served an affidavit insupport of their notice of opposition to Cardno and Mr Prain'sstrike out applications and the plaintiffs' interlocutoryapplication to lift the stay of proceedings.[27] The pleadings in this case have been subject to criticism by the Court ona number of occasions. The chronology set out at [26] above, which is adopted fromthe chronology presented by Mr Wolff, counsel for Cardno, details the history of thepleadings and criticisms by the Court of the pleadings in respect of particulars andquantum. The accuracy of Mr Wolff's chronology was not challenged by counsel forthe plaintiffs, albeit he submitted that responsibility for delay could not be laid entirelyat the feet of the plaintiffs, and I will return to that when discussing delay.Strike out for non-compliance with Court orders[28] This application is brought in reliance on r 7.48 of the High Court Rules whichprovides if a party fails to comply with an interlocutory order a Judge may make anyorder that the Judge thinks fit, including striking out a party's pleading in whole or inpart.[29] The strike out claim is brought under r 15.1 of the High Court Rules.Rule 15.1 provides:(1) That the court may strike out all or part of a pleading if it –(a) discloses no reasonably arguable cause of action, defence, or caseappropriate to the nature of the pleading; or(b) is likely to cause prejudice or delay; or(c) is frivolous or vexatious; or(d) is otherwise an abuse of process of the court.[30] Mr Stringer emphasised the direction in Couch v Attorney-General, whereElias CJ and Anderson J observed "[i] it is inappropriate to strike out a claimsummarily unless the court can be certain that it cannot succeed."5[31] Mr Stringer also emphasised if a claim can be saved by amendment thenit should not be struck out. He relied on Wylie J's statement of the principles inSmith v Fonterra Co-operative Group Ltd, which I adopt as an accurate summary ofthe principles:6[23] The established criteria for striking out were summarised by the Courtof Appeal in Attorney General v Prince. They are as follows:(a) pleaded facts, whether or not admitted, are assumed to be true. Thisdoes not however extend to pleaded allegations which are entirelyspeculative and without foundation;(b) the cause(s) of action must be clearly untenable. The Court must becertain that it (they) cannot succeed;(c) the jurisdiction is to be exercised sparingly and only in clear cases;5 Couch v Attorney-General [2008] NZSC 45, [2008] 3 NZLR 725 at [33].6 Smith v Fonterra Group Co-operative Group Ltd [2020] NZHC 419 at [23]-[26].(d) the jurisdiction is not excluded by the need to decide difficultquestions of law, requiring extensive argument; and(e) the Courts should be slow to strike out a claim in any developing areaof the law, particularly where a duty of care is alleged in a newsituation.[24] The threshold for a strike out is high, and the Court should considernot only the basis on which the claim is pleaded but also any other basis onwhich the claim might be pleaded.[25] The Court is entitled to receive affidavit evidence on strike outapplications, and will do so in proper cases. It will not however attempt toresolve [genuinely undisputed] issues of fact, and it will generally limitevidence to that which is undisputed. Normally it will not consider evidenceinconsistent with the pleadings, because, as noted, a strike out application isdealt with on the footing that the pleaded facts can be proved.[32] In respect of dismissal for want of prosecution under r 15.2, again counsel werein agreement as to the applicable legal principles. McGechan on Procedure recordsthat the principles are well settled7 and refers to Lovie v Medical Assurance SocietyNew Zealand Limited, where Eichelbaum CJ said:8[T]he applicant must show that the plaintiff has been guilty of inordinate delay,that such delay is inexcusable, and that it had seriously prejudiced thedefendant. Although these considerations are not necessarily exclusive, andat the end of the day one must always stand back and have regard to theinterests of justice, in this country, ever since New Zealand IndustrialGases v Andersons Ltd [1970] NZLR 58 it has been accepted that if theapplication is to be successful, the applicant must commence by proving thethree factors listed.[33] McGechan also records that the need to "stand back" involves consideringwhether the overall interests of justice would allow the case to proceed.9The applications to strike out the deceit causes of action[34] Counsel were agreed as to the principles that apply to a cause of action indeceit.[35] To establish the causes of action against the defendants in deceit, the plaintiffsmust show that the defendants made representations that were false and that they made7 Andrew Beck (ed) McGechan on Procedure (online looseleaf ed, Thomson Reuters)at [HC15.2.01].8 Lovie v Medical Assurance Soc NZ Ltd [1992] 2 NZLR 244 (HC) at 248.9 McGechan on Procedure, above n 7, at [HR15.2.01(1)].those representations fraudulently. The plaintiffs must show that the defendants knewthat the representation was untrue, or had no belief that it was true, or was reckless asto its truth.10[36] In addition, the defendants must have intended that the plaintiffs should relyon the representation.[37] Allegations of fraud must be distinctly alleged and as distinctly proved.11It is well established that fraud or dishonesty (and the same must go for thepresent tort) must be distinctly alleged and as distinctly proved; that it mustbe sufficiently particularised; and that it not sufficiently particularised if thefacts pleaded are consistent with innocence This means that a plaintiff whoalleges dishonesty must plead the facts, matters and circumstances relied onto show that the defendant was dishonest and not merely negligent, and thatfacts, matters and circumstances which are consistent with negligence do notdo so.(citations omitted)[38] It follows the plaintiffs must allege that the defendants knew therepresentations were untrue, or had no belief in the representations truth, or werereckless in that regard and that the defendants intended the plaintiffs should rely onthe representations. That means that under r 5.17(2) of the High Court Rules, as theplaintiffs are alleging the defendants' state of mind, they must give particulars of thefacts relied on in alleging that state of mind. That requirement reconciles with thepassage above from Three Rivers District Council that a plaintiff must plead the facts,matters and circumstances relied on to show that the defendant was dishonest.[39] In respect of Mr Prain's state of mind the pleading is "Mr Prain knew hisrepresentations were false or were reckless as to whether they were true."[40] The generality of this pleading is compounded by the extreme generality ofsome of the pleadings against Mr Prain. For example, paragraph 46 of the sixthstatement of claim pleads:10 Amaltal Corporation Ltd v Maruha Corporation [2007] 1 NZLR 608 (CA).11 Three Rivers District Council v Bank of England (No 3) [2001] UKHL 16, [2003] 2 AC 1 at [184].Cited in NG v Harkness Law Ltd [2014] NZHC 850 at [43].46. From on or around 2007 until 2016 Mr Prain represented to thePlaintiffs that the infrastructure that Delta was installing includedthe capacity and provision for their Lot 9 subdivision and Lot 22roading.[41] Delta was the contractor carrying out the roading and stormwater works. It ishard to think of a less particularised pleading. Again, these are representations (it isnot clear how many instances of representation are claimed) that the plaintiffs say arefraudulent.[42] I accept Mr McMenamin's submission on behalf of Mr Prain that the pleadingthat "Mr Prain knew his representations were false or was reckless as to whether theywere true" is no more than a bare assertion of dishonesty. There is no pleading of fact,matter, or circumstances that shows Mr Prain knew that the representations relied onwere untrue. "Fraud cannot be left to be inferred from the facts."12 Generalallegations, however strong, are insufficient to amount to a proper allegation of fraud.[43] I put this issue directly to Mr Stringer. He submitted that fraud could not beruled out at the moment. He emphasised he had only been involved in the proceedingfor a short time and had not had an opportunity to come to grips fully with discoveryand that something might come out of a full review discovery. He said it could not beassumed by the Court that nothing would be found and therefore the plaintiffs shouldbe allowed to carry on. He submitted there was more to the present circumstancesthan met the eye. He also submitted ultimately the question of fraud would be a matterfor cross-examination. In substance, he requested that the plaintiffs be alloweda further unspecified time to prepare another amended statement of claim where theseissues would be addressed but was unable to give any basis for saying Mr Prain hadbeen dishonest. He emphasised that where a pleading can be saved by amendment, itshould not be struck out.[44] I do not consider this a case of saving a pleading by amendment. Essentialelements of the deceit cause of action are not pleaded at all, namely the details of fraudand the intention that the representations be relied on in each case with the necessaryparticulars. While I appreciate Mr Stringer has only been involved recently in the12 See McGechan on Procedure, above n 7, at [HR5.26.08(1)], referring to, inter alia,Schmidt v Pepper New Zealand (Custodians) Ltd [2012] NZCA 565 at [15].proceeding, I note that the first four statements of claim were pleaded by experiencedcounsel between commencement on 7 August 2014 and the fourth amended statementof claim on 29 July 2016. Had a fact, matter or circumstance which showed that thedefendants were acting dishonestly been available, it would have been discovered bynow.[45] This issue was to the fore of Cardno's submissions challenging the deceit causeof action. After Cardno's submissions were filed on 5 May 2020, the plaintiffs filedfurther affidavits from experts addressing stormwater and resource management issuesbut did not explain the basis of why they said the defendants were dishonest.[46] I suspect that is in part because of the way in which the representations set outin the statement of claim are framed. The pleadings are so broad and lacking inparticulars that there are no instances of conduct identified to which facts, matters orcircumstances can be linked to support a claim of dishonesty. This relates to a separatearea of criticism by the defendants of the plaintiffs' pleading. For example,paragraph 41.1 of the sixth amended statement of claim pleads:44.1 From 25 May 2009 onwards, Cardno and Mr Prain continued torepresent that option A would also accommodate lot 9, when thePlaintiffs interests were not being accommodated.[47] "Option A" is reference to the stormwater requirements for the plaintiffs' landbeing accommodated in stormwater basins on the Noble subdivision. The breadth ofthe pleading is self-evident and as noted by Mr McMenamin, this pleading is of whatthe plaintiffs understood the defendants to say, rather than what the defendants actuallysaid.[48] A further example is para 41.7:41.7 There were numerous meetings between Cardno, Mr Prain and theplaintiffs, where the plaintiffs were assured option A was proceeding,and would include Lot 9.What the above is intended to add to 41.1 is not clear. The pleading at [46] above, isof a similar character.[49] Mr Stringer, to support the submissions that there was evidence of dishonesty,referred to an email from Cardno to Mr Stokes of 2 July 2008. That email wasaccompanied by a coloured plan showing the Noble subdivision and a stormwaterbasin/run-off pond. It did not show a subdivision on the adjacent Lot 9. The coveringemail said:Attached is a revised copy of the scheme plan for the Noble Villagedevelopment showing the two right of ways giving access to Lot 9 as youdiscussed with Tom Kain. Can you please confirm that this is satisfactory soI can submit the plan to Council. Do you require any assistance withamending your current application to allow for a higher density?[50] There is no reference to stormwater or the provision of other services in theemail. From Mr Stringer's submissions it seemed that the plaintiffs assumed thatbecause the stormwater basin was shown on the plan that Cardno was impliedlyassuring the plaintiffs would have access to it.[51] Given the wording of FT 15 of the 2002 contract between the plaintiffs andNoble, set out at [6] above, then subject to putting a document in its full context, it ispossible the plaintiffs may have been reasonable in making that assumption, but thatdoes not mean that the email was a representation by the defendants that the plaintiffswould have access to the stormwater system when it was built (the diagram being anindication of what would happen in the future). It is a further leap again to say thatthe email was in effect sent with the dishonest intent of lulling the plaintiffs into a falsesense of security so that they would not take issue with what they say were Noble'schange of plans.[52] The plaintiffs suspect the defendants of what amounts to conniving with Nobleto trick them into believing everything was in hand in respect of the plaintiffs'subdivision. However, starting from suspicion is not an adequate basis for meetingthe stringent requirements for the pleading of fraud. The plaintiffs' case amounts tothem saying that the defendants told them over an extended period that theirsubdivision could connect to services on the Noble subdivision. It eventuated that itwas not possible for that to occur. Therefore, the plaintiffs' case assumes thedefendants must have been lying or reckless to the truth when they madethe representations. This without much more is well short of deceit.[53] In summary, the plaintiffs' assertion is that they were assured all theinfrastructure and services were in place, or under way, to allow the plaintiffs tocomplete their subdivision. They say that assurance was given dishonestly. However,their inability to give specifics in relation to the alleged representations is the otherside of the coin from their inability to plead facts, matter or circumstances as to whythe representations were made dishonestly.[54] Mr McMenamin pointed out that the allegations against Mr Prain in the sixthamended statement of claim are effectively a repeat of allegations made againstMr Prain in the third amended statement of claim.[55] Mr McMenamin, by a notice dated 28 July 2015, sought particulars of therepresentations alleged. Those particulars were not given. A fourth amendedstatement of claim was filed on 29 July 2016 by counsel then instructed for theplaintiffs.[56] There is force in Mr McMenamin's submission that some five years after hisnotice for particulars went unanswered, Mr Prain is now facing in substance the samepleading he did in 2015. This is an issue I will pick up when discussing delay.[57] I find the proposed sixth amended statement of claim does not pleada reasonably arguable cause of action against Mr Prain and the statement of claimagainst him is struck out under r 15.1(a). For reasons I have given, I do not considerthe cause of action against Mr Prain capable of being saved by amendment. That wasthe function of the proposed sixth amended statement of claim. No further proposedpleading was put up after the plaintiffs received the defendants' submissions.Mr Stringer was not able to point to any material or otherwise explain howthe pleading gaps could be rectified in an amended pleading. At the risk of labouringthe point, the plaintiffs have had a number of indulgences from the Court to get theirpleading in order. If that could not be done at the outset of these proceedings whenthe plaintiffs had experienced counsel, as they do now, I see no prospect of thesituation changing.[58] In respect of the deceit claim against Cardno, the same position applies andaccordingly, the deceit claim against Cardno is struck out.Application to strike out the negligence cause of action against Cardno[59] The pleading in the sixth amended statement of claim against Cardno is asfollows:67. Cardno owed the Plaintiffs a duty of care it would act to benefit thePlaintiffs by ensuring that Lot 9's Further Subdivision, services androading were provided for in its subdivision design, RMAApplications to the Council, and in the engineering design.[60] There is a further pleading in the sixth amended statement of claim as follows:68. Cardno assumed responsibility to provide information and advice tothe plaintiffs, and that it had the overall carriage of obtaining theconsents to enable the plaintiffs subdivision of Lot 9 to proceed.[61] I accept Mr Wolff's submission, on behalf of Cardno, that the first duty pleadeddoes not plead a recognised duty of care. There is also a failure to provide particularsto demonstrate how Cardno was allegedly negligent in carrying out its work. It isstruck out as not disclosing a reasonably arguable cause of action.[62] In essence, the pleading at [59] is a claim that Cardno was negligent in failingto discharge its contractual duty to Noble is to ensure that Noble met its obligation tothe plaintiffs. That duty is akin to placing Cardno in the position of guarantor ofNoble's contractual obligations.[63] I accept Mr Wolff's submission that this cause of action relies on Noble'sobligations to the plaintiffs under the 2002 contract. Cardno was not a party to thatcontract. I agree the duty the plaintiffs seek to impose is inherently contractual innature – it is a duty to ensure something occurred.[64] The Court of Appeal in Rolls-Royce New Zealand Ltd v Carter HoltHarvey Ltd, held a duty to take reasonable care to perform a contract does not existin tort as that duty would essentially be contractual in nature and therefore could notbe owed by someone who is not a party to that contract.13[65] There was further merit in Mr Wolff's submission that even if a duty of carewas owed, the plaintiffs have failed to identify the standard of care to which Cardnoought to have performed, nor how Cardno's actions had fallen below the allegedstandard of care.[66] Paragraph 72 of the sixth amended statement of claim sets out what theplaintiffs say Cardno negligently failed to do:72. Cardo negligently failed to:72.1 Provide accurate advice and information to the Plaintiffsabout the RMA applications and engineering designapplications it was submitting to the Council, and that it wasproject managing the construction of; and72.2 Ensure that the Further Subdivision Application andEngineering applications to the Council met the obligationspleaded above.72.3 Use reasonable skill and care to ensure the correctness of theinformation and advice provided to the plaintiffs.72.4 Try to ensure the consent was obtained so the plaintiffs couldcomplete the subdivision of Lot 9 as had been promised.[67] Paragraph 72.1 is a pleading Cardno failed to provide accurate advice andinformation to the plaintiffs about the RMA applications and engineering designapplications submitted to the Council. No other details are provided.[68] The pleading does not attempt to differentiate between the provision ofinformation that was misleading versus an omission to supply information. As I willtouch on below, I agree this has the flavour of a negligent misstatement pleading.[69] Paragraph 72.2 is an allegation Cardno negligently failed to ensure that theapplications to the Council met Noble's obligations to the plaintiffs. That is simply13 Rolls-Royce New Zealand Ltd v Carter Holt Harvey Ltd [2005] 1 NZLR 324 (CA).a recasting of what amounts to a contractual duty and I do not consider it takes theplaintiffs' claim further.[70] Paragraph 72.3 is a pleading Cardno negligently failed to use reasonable skilland care to ensure the correctness of the information and advice provided to theplaintiffs. I do not see this as adding materially to para 72.1 and, again, it has nofurther particulars.[71] Paragraph 72.4 of the claim is a pleading Cardno negligently failed to "[t]ry toensure the consent was obtained so the plaintiffs could complete the subdivision ofLot 9 as had been promised." Again, I do not see this general assertion of negligenceas altering the view I have already expressed in respect of this cause of action.[72] As to the duty of care, Mr Wolff in reply submissions said the plaintiffs' caseas presented had the flavour of allegations of negligent misstatement. Such issuggested by the second duty, but such has never been pleaded before and would nowbe statute barred. In respect of Cardno, the damage said to have been suffered inrespect of the negligence cause of action is the transfer of Lot 19 to Noble – thatoccurred in December 2008 and so in respect of that damage, time began to run then.[73] The plaintiffs plead, but for the claimed assurances that everything was inorder, they held off taking enforcement action against Noble until October 2013.[74] The effect of any negligence misstatement by Cardno would have come to anend at that point. Again, Mr Smith says it was 2012 that the plaintiffs learnt Noble wasnot providing the promised services. Any negligent misstatement claim would not bestatute bound.[75] I conclude that the second duty at paragraph 68 of the sixth statement of claimis statute barred and is also struck out. It cannot be saved by amendment. It has notbeen raised before and any variation of a negligent misstatement claim will be barredby limitation.Application to strike out for non-compliance with Court orders[76] To the extent this application relies on the plaintiffs not applying to lift the stayuntil well after the date set by Associate Judge Matthews, just as I considered thefailure to do so was not intended to have a "drop dead" effect, I do not consider thedelay in making the application to lift the stay should, without more, be fatal – suchwould be to convert it to an unless order.[77] In the minutes set out in the Chronology at [26] above at items 12, 14, 28, 29,30, 35 and 38, there is reference to the need for the plaintiffs to properly plead theirloss or otherwise meet the requirements of the High Court Rules. Directions weremade in that regard on the following dates; 8 February 2017 (item 14), 17 May 2018(item 28), 31 August 2018 (item 30) and in the minutes of Associate Judge Matthewsalready referred to (items 35 and 38). The defendants say the plaintiffs have over anextended period failed to properly plead loss as required by the Court's direction.[78] As discussed, in relation to the deceit cause of action, at its most basic theplaintiffs allege the defendants' dishonestly led them to believe that the subdivisionplans the defendants were preparing on behalf of Noble would permit the plaintiffs tosubdivide their land by joining onto roading, stormwater and other services in theNoble subdivision.[79] The Court of Appeal, in Amaltal Corporation Limited v Maruhu Corporation,held in respect of deceit the correct measure of loss is the tort measure:14The correct measure of damages in tort is an award which serves to put theclaimant in the position he or she would have been in if the representation hadnot been made. That is subject to the usual rules of remoteness, mitigationand the like.[80] It is clear that damages are not to be calculated on a contract basis. Damagesin respect of prospective gains to which the person contracting was entitled by virtueof his contract to expect to come in, are not recoverable.1514 Amaltal Corporation Limited v Maruhu Corporation, above n 10, at [56].15 At [57].[81] However, the sixth amended statement of claim pleads that the plaintiffs havesuffered loss on a contractual basis. Paragraph 42 of the sixth amended statement ofclaim pleads:42. The loss is the difference between the property ($1,600,000) and thesubdivided property value of ($5,100,000), being a loss of circa$3,500,000, plus or minus further development costs and profits.[82] The sixth amended statement of claim also goes on to claim legal and expertcosts and interests.[83] The plaintiffs' approach to loss starts with the prospective gains they expectedto receive if their contract was completed by Noble. Such is not the correct approach.[84] In respect of the pleading against Mr Prain, the pleading of damage is asfollows:49. Because of the representations the Plaintiffs did not enforce theirrights under the [Agreement for Sale and Purchase] ASAP or FurtherAgreement until after October 2013.50. The Plaintiffs have suffered a loss because of Mr Prain's deceit.[85] The prayer for relief then refers to damages as pleaded in paragraph 42 of thepleading, and an enquiry into further damages.[86] I will return to what appears to be a loss of opportunity pleading below.However, the manner in which loss has been pleaded in relation to the cause of actionin deceit is incorrect. I am driven to the conclusion that the plaintiffs have failed tocomply with the directions made that they properly particularise their loss. Thedirection that they do so is not met by pleading loss founded on a wholly incorrectbasis.[87] As to the pleading of a loss of opportunity to take enforcement action againstNoble, there are difficulties with that claim. Mr Smith, in his affidavit filed in relationto the present applications, said:8. The plaintiffs have sought to resolve the issues of our subdivision formany years. It has become apparent to us since 2012 that thestormwater solution we have been promised by the developer,supported by representations made to the plaintiffs by Mr Prain &Cardno, was not being implemented as promised and as continuing tobe assured.(Emphasis added)[88] On this evidence, it was some time in 2012 that the plaintiffs say they learntthat they were not getting the stormwater solution they allege they were promised.[89] It is clear the relationship between Noble and the plaintiffs became at leaststrained in 2010. The plaintiffs had lodged caveats over Noble's land to protect theirrights under the 2002 contract and following opposed hearings, those caveats weremaintained. Those caveats were registered in December 2008 and October 2009.Concerns about Noble's compliance with its obligations to provide services to theplaintiffs' subdivision appear to have been present from around 2010.16[90] Ultimately the land Noble was subdividing and which the plaintiffs believedthey had a right to access for services and critically, stormwater, was sold bya mortgagee.[91] In a later judgment of Associate Judge Osborne involving a caveat by themortgagee, his Honour recorded that the mortgagee's power of sale of Noble'sproperty became exercisable in July 2014 following the service of notices under theProperty Law Act 2007.17 Quantifying a loss of opportunity to bring enforcementaction against Noble, where there are indicators that Noble was financially strained,would not have been straightforward in 2012 (the date given by Mr Smith for when itbecame apparent that the plaintiffs were not getting the services promised), let aloneafter the passage of eight years.[92] Had the defendants' applications been based on this ground alone, I would havebeen hesitant to strike out the plaintiffs' claim, but the inability of the plaintiffs, overan extended period of time, to comply with the directions of the Court to properly16 Philpott v Noble Investments Ltd [2012] NZHC 1431.17 Gold Band Finance Ltd v Philpott [2016] NZHC 1674.plead their claim made in respect of their pleadings, reinforces the view I have reachedin striking out the plaintiffs' claim under r 15.1.Quantum – Cardno[93] A different approach to loss is taken in relation to Cardno. The plaintiffs plead:59. In reliance on Cardno's deceit the Plaintiffs entered into the FurtherAgreement with AFL/NIL and transferred Lot 19 to NIL in August2018.[94] The plaintiffs plead they have suffered loss because of the alleged deceit intransferring Lot 19 and in refraining from trying to enforce the ASAP against Nobleuntil after 22 October 2013. The prayer for relief again refers to the damages aspleaded in paragraph 42 and, so, the same criticisms apply.[95] The issue with Lot 19 is not straightforward. Had the subdivision proceededas originally envisaged, then the plaintiffs would not have retained Lot 19 as Noblewould have exercised its rights under the option agreement to acquire it for $10. Thecircumstances in which the further agreement was entered into would have to beconsidered. If that agreement was entered into because the plaintiffs reluctantly sawthe need to assist Noble to advance the subdivision, then that of itself might suggestthat Noble's financial difficulties existed earlier than I have indicated. I appreciatethis is entering the realm of speculation and is probably more relevant to the effect ofdelay.[96] However, as it stands, the pleading of loss to the extent it is linked back to thecontractual measure is incorrect and the pleading of an enquiry into damages does notmeet the orders to properly particularise loss.Inordinate delay[97] On behalf of Mr Prain, Mr McMenamin submitted, in effect, that inordinatedelay was self-evident given the proceedings were commenced on 7 August 2014 andas at April 2020 the plaintiffs have still not settled their pleadings.[98] Mr McMenamin identified the following instances of unexplained and he says,inordinate and inexcusable delay.25. Within this period there are discrete instances where the plaintiffshave culpably failed to take the necessary steps to advance their claim.For example;23.1 the period of 10 months between the initial filing ofproceedings in August 2014 and the filing third amendedstatement of claim on 8 June 2015 which first raised the causeof action in deceit which is the current claim against the thirddefendant,23.2 the period of 14 months following the order of AssociateJudge Osborne on 8 February 2017, to file and serve anamended statement of claim within 25 working days,23.3 the period of 5 months following the order of Associate JudgeOsborne on 31 August 2018 to file and serve an amendedstatement of claim within 20 working days,23.4 the period of 11 months following the order of AssociateJudge Matthews on 22 March 2019 permitting the plaintiffsto file, no later than 28 June 2020, an interlocutory applicationto lift the stay order which he imposed at that time.[99] Mr McMenamin submits each one of these instances of delay in itself wouldconstitute inordinate delay and that the cumulative effect is decisive. I accept hissubmission.[100] Mr Stringer's submissions, on behalf of the plaintiffs, did not directly engagewith the delay identified by Mr McMenamin. Mr Stringer submitted that the delaysafter March 2018 were explicable and cannot be laid solely at the feet of the plaintiffs.[101] I do not accept Mr Stringer's submission. Earlier in this judgment I discussedthe circumstances leading to the stay and the final opportunities given by AssociateJudge Matthews to the plaintiffs to get their claim in order. There is force in thedefendants' point that it was only with them bringing their applications inDecember 2019 that the proposed sixth amended statement of claim was providedin April 2020.[102] As recorded in the minute of Associate Judge Matthews of 22 March 2019, theplaintiffs wanted to use the time to investigate whether they could achieve thesubdivision. This suggests to me they put their energies into assessing loss and bystarting with the value of the subdivided land and trying to mitigate their lossby completing the subdivision if possible.[103] While commercially understandable, starting with the value of their land uponit being sub-divisible, is not the basis upon which loss is assessed. At the risk ofrepetition, the test is the position the plaintiffs would have been in, in the absenceof the alleged deceit. The plaintiffs have themselves identified that on their case theywould have taken enforcement action earlier against Noble. The value of that loss ofopportunity does not equate to the value of the subdivision, assuming it could becompleted.[104] I make this point, as it appears to me, that the plaintiffs have delayed their claimon an incorrect basis, that is, they have gone down a false path when it comes toquantifying their loss.[105] It also seems to me there was some delay prior to the issue of theseproceedings. In the passage from Mr Smith's affidavit referred to at [87] above, herefers to discovering that Noble was not following through on its contractualobligation in 2012. These proceedings were not issued until August 2014, so at least18 months later. While delay prior to the issue of proceedings cannot constituteinordinate and excusable delay, if such delay has occurred, further delay after issue ofthe proceedings will be looked at more critically.18[106] Accordingly, I consider there has been inordinate delay. The plaintiffs'submissions did not seek to justify the delay to any real extent.[107] I also consider the delay to be inexcusable.[108] Mr Stringer referred to the fact there was an interlocutory hearing inNovember 2017 which included strike out applications between counterclaimdefendants and defendants. Mr Stringer submitted this meant the defendants bore18 Lovie v Medical Assurance Society New Zealand Limited, above n 8, at 248.some responsibility for the delay caused by that interlocutory. However, thatsubmission does not take the plaintiffs very far because in the same application, twoadditional defendants sought, and were granted, orders for strike out/summaryjudgment in respect of the plaintiffs' claim against them.[109] In short, there would have been an interlocutory hearing as a result of theplaintiffs' joinder of the two defendants who successfully applied to be removed fromthe proceeding without the applications between defendants.[110] Mr Stringer submitted that it was disingenuous of the defendants to suggestthere had been delay when in the minute of Associate Judge Matthews of22 March 2018, there was reference to a trial date being allocated after1 February 2019.[111] However, as Mr McMenamin recorded in his reply submissions, as at22 March 2018, the plaintiffs had not complied with the direction of the Court mademore than 13 months earlier on 8 February 2017 to file and serve an amendedstatement of claim within 25 working days. The reason why the proceeding was notready to be set down earlier rests with the plaintiffs' delay. The direction of settingdown was vacated in the minute of 19 November 2018 because of the plaintiffs' failureto comply with the order of Associate Judge Osborne of 31 August 2018. At that time,the plaintiffs applied for an order adding four additional parties as defendants.Directions were made for the filing of an amended statement of claim to include thenewly joined parties. Ultimately, having received leave to join additional defendants,the plaintiffs took no steps to file the necessary statement of claim against those partiesand so the process of seeking that leave simply added to the delay.Serious injustice[112] McGechan on Procedure notes serious prejudice as perhaps the most importantconsideration.1919 McGechan on Procedure, above n 7, at [HR15.2.04(1)(a)].[113] The extent of the prejudice faced by both defendants is related to thedeficiencies in the pleadings. Had the statement of claim set out full and specificdetails of exactly what each of the defendants were alleged to have said, and when,with proper particulars, then the defendants could, from the outset, have been betterplaced to recall what happened. However, as I have noted, the actual wording of anyparticular alleged representation is not pleaded. There are practically no particulars ofdates, times and place of the alleged representations.[114] For example, the pleading referred to at [40] covering the period 2007 to 2016is frankly, hopeless, and gave Mr Prain no starting point to try and reconstruct what heis alleged to have done.[115] I accept that because of the failure to provide details, the defendants have neverbeen in a position where they could direct their minds to any specific allegations whiletheir recollections were still fresh.[116] The commentary in McGechan on Procedure notes that:20In most, if not all, cases some prejudice results from the mere passage of time,dimming of memories, physical changes etc. Situations can exist which areso badly affected by such factors that an order can be made on that basis alone,but "in most cases" Courts look for some "special prejudice": NZ IndustrialGases Ltd v Andersons Ltd, at 63. But note Eichelbaum CJ's comments inLovie at 254,672 that: "[O]ne needs to guard oneself against the danger ofdiscounting the arguments based on the dimming of memories simply becausethey cannot be adequately demonstrated."[117] In respect of Mr Prain, I consider this to be a case where the prejudice to himthrough delay and the impact of the passage of time on him being able to sensiblyrecall, as yet, unspecified oral representations that go back more than a dozen years,is sufficient prejudice.[118] Had the statement of claim been more particularised from the start thenI consider this point would not have been decisive. However, I agree withMr McMenamin that there is simply nowhere for Mr Prain to start in assemblingevidence to deal with the broadest of allegations against him.20 At [HR15.2.04(1)(b)].[119] In respect to Cardno, additional factors are relied on to support seriousprejudice. Cardno says several of its employees have since left and it is now difficultfor Cardno to contact those former employees who had knowledge of the issue in theproceeding. For those Cardno employees, the passage of time also impacts on theirability to recall events and Cardno also relies on the fact that some of its records werelost in the Christchurch earthquakes. While the plaintiffs are of course not responsiblefor the loss of those documents, that is part of the context in which the issue of theeffect of the delay is to be considered.[120] It is telling that the sixth amended statement of claim in respect of Mr Prainand Cardno largely reproduces elements of the third and/or fourth statements of claim,which, as I have said, has been the subject of criticism on by the Court. Nothing saidby Mr Stringer gives me confidence that the plaintiffs will be able to rectify thesituation. The plaintiffs have had numerous indulgences in respect of their pleadings,yet in substance have gone back to earlier versions of their claim.Prejudice[121] The rigour required of a party pleading fraud, the fact that by the sixth amendedstatement of claim the plaintiffs cannot properly plead the elements of deceit, and theabsence of any indication that the plaintiffs will be able to plead deceit, means thedefendants have been, and will, continue to be prejudiced through the proceedingremaining on foot. The effect of delay is compounded by the inadequacy of thepleadings.[122] The plaintiffs have had more than enough indulgences from the Court. As longago as 30 November 2015, Justice Gendall said the issues in the proceeding needed tobe brought to a head.21 Now, nearly five years later, the plaintiffs are nowhere nearachieving that end.[123] Accordingly, I would have concluded that the plaintiffs case against eachdefendant should dismissed under r 15.2 of the High Court Rules had I not made ordersunder r 15.1(a).21 Smith v Noble Investments Limited HC Christchurch CIV-2014-409-549, 1 September 2016.Costs[124] Counsel are to file memoranda on costs of not more than five pages, if costsare sought, within 10 working days and any reply within 10 working days thereafter(also to be no more than five pages).Cross application to lift stay[125] It follows that the plaintiffs' cross application to lift the stay, is dismissed.________________________________________Associate Judge LesterSolicitors:Inder Lynch, Papakura (for the Plaintiffs)K J McMenamin & Son, Christchurch (for Third Defendant)Morrison Kent, Wellington (for Fourth Defendant)