SIEMER & ORS V FARDELL HC AK CIV-2003-404-5782

SIEMER & ORS V FARDELL HC AK CIV-2003-404-5782 2 October 2008IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY CIV-2003-404-5782BETWEEN VINCENT ROSS SIEMER AND JANE CHAPMAN SIEMER First Plaintiffs AND PARAGON SERVICES LTD Second Plaintiff AND KATE FARDELL EXECUTRIX FOR THE ESTATE OF ROBERT FARDELL Defendant Hearing: 2 October 2008 Appearances: No appearance for Plaintiffs M Harris for Defendant Judgment: 2 October 2008JUDGMENT OF JOHN HANSEN JSolicitors: Gilbert Walker, PO Box 1595 Shortland Street, Auckland VR & JC Siemer, 27 Clansman Terrace, Gulf Harbour, Auckland Copy: AA Lusk QC, PO Box 1379, Auckland[1] In these proceedings the plaintiffs, Mr and Mrs Siemer, seek to review the decision of Associate Judge Abbott relating to an order he made for security for costs. The defendant applied for security for costs and Judge Abbott heard that matter on 28 April 2008. [2] The plaintiffs did not appear although it is plain that they were aware of the hearing date, having been advised of that on 26 November 2007. It was apparent by the time of the hearing that Mr Siemer had chosen to leave New Zealand and was in the United States. In his decision the Associate Judge determined that security for costs of $100,000.00 should be provided either by payment into Court or by security to the satisfaction of the Registrar. The proceeding was stayed pending provision of the security. [3] The Siemers filed an application for review and they were clearly aware of this date of hearing. I have been provided with an exchange of emails between the firm of solicitors representing the defendant, and Mr Siemer. It is clear from that exchange of emails that he was aware of the hearing date and he was given copies of the Minute of Cooper J dated 19 June 2008 and the fixture notice dated 3 July 2008, both of which were attached to an email. [4] The Court has received submissions on behalf of the plaintiffs submitted by Mrs Siemer. Those submissions can be characterised by quoting in full paragraph 3. That reads:Despite 400 years of refined law to rely upon, Judges in this case against a 'favoured son of the New Zealand Court' have repeatedly relied upon their 'discretion' to help the defendant out. These 'discretion' rulings have little semblance to the laws of natural justice. Plain and simply, they have proved an abomination.There then follows material that also appears in other submissions and documents in other proceedings. This includes serious allegations against Judges of this Court and the Court of Appeal. The issue that I am faced with is simply whether or not the Associate Judge properly stated the law and correctly applied it to the facts of this case.[5] Although there was no appearance by the Siemers in front of Judge Abbott, they had filed submissions. The defendant filed extensive submissions and appeared and addressed the Court. The decision, which must be described as a considered one, runs for some 68 paragraphs. In circumstances such as this where there is a considered decision of an Associate Judge the approach of this Court is not to treat this as a hearing de novo, so it proceeds by way of an appeal as a rehearing. [6] The simple fact in this case is that the Associate Judge having set out the background, correctly set out the applicable principles contained in r 60, cited appropriately the leading authorities in New Zealand, and concluded at [21] the principles applicable in cases such as this. It is appropriate that I set this out:[21] The principles on which the Court acts in exercising the recognised discretion it has under r 60 are well settled by cases such as Bell-Booth Group Ltd v Attorney-General (1986) 1 PRNZ 457, Nikau Holdings Ltd v Bank of New Zealand (1992) 6 NZCLC 67, 939, and A S McLachlan Ltd v MEL Network Ltd (2002) 16 PRNZ 747 (CA). Authorities relied on by the plaintiffs (Ernst & Young v Benchmark Jewellery Co (NZ) Ltd (In Liquidation) (1993) 7 PRNZ 13 (CA) and Horn v Smith & Ors (HC CHCH CIV 2005-418-63, 1 March 2006, Christiansen AJ) are simply applications of the general principles: (a) The Court has to be satisfied as a threshold requirement that a plaintiff is resident out of New Zealand or there is reason to believe the plaintiff will be unable to meet an adverse order for costs; (b) The Court then has a discretion whether or not to order security, and as to the quantum of any security; (c) This discretion is to be exercised having regard to the circumstances of the case, with no predisposition one way or the other; (d) The Court has to assess what is just and reasonable having regard to the competing interests of plaintiff and defendant; (e) The amount of any security is to be what the Court thinks fit in all the circumstances.[7] In this case quite clearly there is reason to believe that the plaintiffs will be unable to meet an adverse order for costs. Firstly, as the defendant has pointed out in her submissions, in written submissions to the Supreme Court Mr Siemer has stated that he has moved assets with a view to re-establishing himself in the United States. The property in New Zealand is encumbered by a bank loan and there is a charging order placed on it. The assets in the United States are said to be entirely tied up inproperty and long-term security. The Siemers claim that there is adequate equity in their property at Clansman Terrace to meet any award of costs but no valuation has been placed before the Court, merely evidence of a real estate agent that was prepared and given at a time long before the significant collapse of the property market. The other reality is that the Siemers have not paid costs awarded against them at various stages of this proceeding or the proceeding involving Mr Stiassny and his firm Ferrier Hodgson, now known as Korda Mentha. It follows that the threshold requirement has been met. [8] The Court then has a discretion whether or not to order security and the sum of it. That discretion, as noted by the Judge, is to be exercised having regard to the circumstances with no predisposition either way. The Court has to assess what is just and reasonable having regard to the competing interests of plaintiff and defendant, and it is an amount that the Court thinks fit in all of the circumstances. One matter that is often considered is whether or not it is alleged that the actions of the defendant have contributed to the impecuniosity of the plaintiff. [9] In this case it is very much the Siemers' position that the actions of the defendant is responsible for their impecuniosity, both in relation to their dealings relating to Paragon Services Ltd and in relation to Mr Fardell's dealings with Mr Stiassny. In his considered decision the Associate Judge considered those matters at some length, in what essentially amounted to what is often a difficult exercise of determining the strength of the plaintiff's case. [10] In relation to the dealings over Paragon Services Ltd the plaintiffs face a significant hurdle, attacking the s 174 proceeding recommended, adopted and progressed by Mr Fardell. That is because the Judge hearing the matter noted that there was clearly oppression and that the relief sought by the plaintiffs was appropriate and indeed the only effective relief which was available to them. Given what they would have to prove to establish negligence on the part of a barrister, that would amount to a significant hurdle for them to overcome. [11] There is also a point, although not so strong, that the defendants if the matter ever went to trial, would adduce evidence that the intellectual property and theproduct consequent upon it was not as valuable as the plaintiffs thought and is readily available today on the internet. That is a matter that this Court could not determine at this stage, but if that is the case it would highlight what may be the reality here, that Mr and Mrs Siemer unfortunately made an unwise investment. [12] In relation to the other complaint of the Siemers relating to the agreement with Mr Stiassny and Ferrier Hodgson, there are again significant difficulties in that that agreement contained confidentiality provisions that the Siemers chose to breach. The substantial costs of litigation faced by Mr Siemer in those proceedings have arisen from that breach. It is, in the circumstances, somewhat difficult to understand how that can be sheeted home to Mr Fardell's estate. [13] The Associate Judge concluded, as he was entitled to do on the evidence before him, that the plaintiffs' claim faced significant evidential hurdles. He then went on to consider the question of the appropriate amount of security, noting that there was no evidence from the Siemers that the effect of an order for substantial security would prevent this proceeding continuing. He noted further, Mr Siemer's comments in his submissions to the Supreme Court suggesting he has the assets but preferred to put them out of reach of the defendant. Again quite properly the Associate Judge took into account the conduct of these proceedings by the plaintiffs, noting that it had been running for five years without having come to trial. He noted that three trial dates had had to be abandoned and continued tellingly at [53]:[53] Mr Siemer clearly has a fixed view on the merits of the claim, and has great difficulty accepting the outcome of decisions against the plaintiffs. His submissions are often intemperate and highly rhetorical, focused only on his view of the case rather than seeking to distil the real issue for decision and concentrate on the arguments for and against that issue. Recent submissions to the Supreme Court on an application for leave to appeal exemplify the point. His failure to pay costs awards, and to prefer other affairs over this hearing, demonstrate an uncooperative approach to the proceeding generally. The defendant claims that the net effect of this is that she is being drawn into unjustified and unnecessarily protracted litigation. She says that the defendant should not have to continue defending a claim being advanced on that basis, without the costs of doing so being secured. There is certainly justification for that view in the material before me on this application.[14] In all of those circumstances, he concluded correctly in my view, that this was an appropriate case for the grant of security.[15] As to quantum, he noted that the defendants produced a schedule of costs according to scale based on a 15 day trial, which everything indicates is a realistic assessment of time, those scale fees totalling more than $200,000.00. He also noted that Mr Siemer in his memorandum to the Court submitted that such an amount could not be justified where there was only the trial left, and their failure to provide detail to support their assertions that the defendant has contributed to the protracted nature of the proceedings. [16] He noted at [59] that the schedule of costs produced was for steps not otherwise dealt with by awards already made, and found that they could be expected to be treated as costs in the cause to be awarded to the party ultimately successful. He concluded that an award of $200,000.00 if the defendant was successful may not necessarily be able to be established but, having considered that, was satisfied that an award of costs and disbursements would exceed the $100,000.00 sought. He therefore concluded that when balancing the competing interests of the defendant and plaintiffs, looking at the protracted history of his matter and the strength of the case, that a substantial order for security was appropriate so that the defendant was not unfairly exposed to costs. Those costs he accepted were significantly driven up by the way Mr Siemer, in particular, had chosen to conduct the litigation. [17] The Associate Judge, as I have noted, correctly identified the applicable legal principles. He has considered the facts of this case. He has found inevitably that the threshold has been met, carried out the necessary balancing exercise and, in my view, correctly concluded that security in the sum of $100,000.00 either by payment into Court or by a security to the satisfaction of the Registrar was appropriate. [18] It follows that I will dismiss this application for review. [19] Mr Harris on behalf of the defendant seeks costs on a 2B basis but with an additional 50 percent allowance for a significant reason. That is essentially that this is a meritless application for review, which does not in any way address the relevant principles applicable to applications for security for costs, but rather the submissions are simply yet again another rehash of scandalous and abusive allegations that Mr Siemer in particular, and now obviously Mrs Siemer, have made on manyoccasions before. Notwithstanding invitations from the Court on a number of occasions to confine themselves to the facts and the law, the submissions continue to make the unsubstantiated allegations that are all too familiar in these proceedings. Accordingly I am satisfied that an additional allowance should be made in this case. [20] There will be costs to the defendant on a 2B basis with an uplift of 40 percent, together with disbursements as fixed by the Registrar.. John Hansen J