GIBSON V FISHER HC AK CIV 2005-404-006871

GIBSON V FISHER HC AK CIV 2005-404-006871 31 March 2006IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY CIV 2005-404-006871BETWEEN NEVILLE JAMES GIBSON Plaintiff AND ANTONIA CHRISTINA MARIA FISHER Defendant Hearing: 31 March 2006 Appearances: Plaintiff in Person Mr M Ring QC for Defendant Judgment: 31 March 2006ORAL JUDGMENT OF VENNING JSolicitors: McElroys, Auckland Copy to: Michael Ring QC, Auckland N J Gibson, AucklandIntroduction[1] This is an application for security for costs by the defendant against the plaintiff. The plaintiff is self represented. The application was allocated today's date as a fixture at a case management conference on 22 February 2006. At that conference the plaintiff was directed to file and serve his notice of opposition and affidavits in opposition by 16 March. The plaintiff has not filed a notice of opposition nor any affidavit in opposition.Application[2] The application is made under r 60 of the High Court Rules. That rule as relevant provides as follows:60 Power to make order (1) Where the Court is satisfied, on the application of a defendant,— (a) That a plaintiff— (i) Is resident out of New Zealand; or (b) That there is reason to believe that a plaintiff will be unable to pay the costs of the defendant if the plaintiff is unsuccessful in the plaintiff's proceeding,— the Court may, if it thinks fit in all the circumstances, order the giving of security for costs. (2) An order under subclause (1)— (a) Shall require the plaintiff or plaintiffs against whom the order is made to give security for costs in respect of such sum as the Court considers sufficient— (i) By paying that sum into Court; or (ii) By giving, to the satisfaction of the Registrar, security for that sum; and (b) May stay the proceeding until the sum is paid or the security given, as the case may be. Threshold[3] The first issue for the Court is whether, what is often referred to as the threshold requirement is made out, namely either that the plaintiff is resident out of New Zealand or is impecunious so that there is reason to believe the plaintiff will be unable to pay the costs of the defendant if the plaintiff was unsuccessful. In this case there is no real issue as to the threshold requirement. The claim filed by the plaintiff refers to him being of Sydney, Australia but also, significantly Mr Gibson accepted in the course of submissions that he is impecunious and would be unable to pay costs. There is also independent evidence of that in the materials referred to in the affidavit of Ms Catherine Rachel Goode filed on behalf of the defendant.General principles[4] Once the threshold requirement is established then the relatively recent Court of Appeal decision of A S McLachlan Ltd v MEL Network Ltd, (CA39/02, 29 August 2002) confirms that whether or not to order security under r 60 and, if so, the quantum of security are both discretionary decisions. At para [15] of that decision that Court noted:The rule itself contemplates an order for security where the plaintiff will be unable to meet an adverse award of costs. That must be taken as contemplating also that an order for substantial security may, in effect, prevent the plaintiff from pursuing the claim. An order having that effect should be made only after careful consideration and in a case in which the claim has little chance of success. Access to the courts for a genuine plaintiff is not lightly to be denied.And para [16]:Of course, the interests of defendants must also be weighed. They must be protected against being drawn into unjustified litigation, particularly where it is over-complicated and unnecessarily protracted.[5] In dealing with applications for costs the Court often refers to the following factors:• balancing the interests of the plaintiff's right to have his or her day in Court against the interests of a defendant not to be substantially out of pocket as a result of an impecunious plaintiff pursuing an unsuccessful proceeding;• delay;• merits of the proceeding. [6] In this case there is no issue as to delay. The application for security for costs was filed promptly after it had been flagged at the first case management conference. [7] The real issue is one of balancing the plaintiff's interests against the defendant's interests. That of itself leads to a consideration of the merits of the proceeding.Background[8] The defendant is a barrister sole. Until April 2003 she was a partner at Brookfields. She then left and commenced practice as a barrister. Mr Gibson was a dentist. He retained the defendant in relation to two disciplinary matters. The first involved a patient Ms Scholes. A disciplinary tribunal heard Ms Scholes' complaint and delivered its substantive decision on 23 July 2003. A penalty decision was delivered on 11 November 2002. Following the decision in November 2002 Mr Gibson instructed the defendant to appeal to the High Court against both the substantive and costs decisions. The appeal was struck out in July 2004 for want of prosecution. [9] The plaintiff says that the defendant was in breach of the duties owed by her to him arising from the strike out of the appeal. He raises five causes of action in the recent amended statement of claim. The five causes of action are:• breach of contract;• breach of fiduciary duty (two);• negligence; and• breach of the Fair Trading Act 1986. There are two breaches of fiduciary duty alleged. The most recent one is an allegation that the defendant allowed her own financial interests in her practice to conflict with her obligations to the plaintiff. [10] The other essential allegations are that the defendant:• failed to advise the defendant the appeal had not been set down for hearing and/or created the impression that it had been.• failed to prosecute the appeal;• failed to advise the plaintiff about legal aid; and• allowed the appeal to be dismissed as a result of failing to prosecute it. The plaintiff seeks damages for injury to reputation of $550,000; general damages of $250,000 and exemplary damages of $75,000 together with a refund of fees and expenses. [11] The second matter the plaintiff complains of is in relation to complaints by three further complainants, Fryes, Blunt and Scott. The defendant acted for the plaintiff in relation to those complaints. She applied to the Dentists Disciplinary Tribunal to strike out the complaints on the basis of abuse of process, namely that the Complaints Assessment Committee was biased, had pre-determined the matter and had failed to observe the principles of natural justice. That challenge was dismissed in June 2003. The disciplinary tribunal considered it did not have jurisdiction to strike out the complaints on those grounds. The plaintiff instructed the defendant to lodge an appeal against the decision. Issues arose between the plaintiff and the defendant as to fees during October and November 2003. At thetime the plaintiff consulted another solicitor, Mr Jenkins, and instructed him in relation to the matter. [12] The plaintiff pleads that the independent advice obtained from Mr Jenkins was that the defendant was mistaken in the procedural step needed to be taken in having the decision of the disciplinary tribunal reviewed. He says that Mr Jenkins' advice was the correct procedure was to take judicial review rather than appeal proceedings (at paras 81 and 82 of the amended statement of claim). [13] As a consequence the appeal commenced by the defendant was abandoned. The judicial review proceedings promoted by Mr Jenkins came before the Court on 4 February 2004. In a decision delivered on 16 February 2004 the judicial review proceedings were themselves dismissed. The plaintiff pleads they were dismissed on the grounds that the power to strike out the complaint lay with the Dental Council rather than the disciplinary tribunal. [14] In relation to this second factual matter the plaintiff raises the same essential causes of action against the defendant. The plaintiff also seeks the same relief, although during the course of submissions Mr Gibson advised that the tribunal dismissed the complaint or at least did not find him guilty of fraud at the ultimate hearing.Defendant's submissions[15] Mr Ring QC submitted that at the relevant time the defendant did not owe the plaintiff a duty, that both claims were patently without merit and there had to be real concern that the defendant would be put to unreasonable cost if the claim proceeds. He submitted the defendant should not be in the position of facing such a claim without some security for her costs.Plaintiff's submissions[16] In opposition to the application Mr Gibson raised a number of matters. First, he noted that he would be making an application for legal aid if the matter was to go further. [17] Mr Gibson also submitted that his present impecuniosity and the fact he was without income was caused by the defendant's negligence. He submitted he could not practise or make an income at the moment and that was as a direct consequence of his not having had his appeal in relation to Scholes heard. He submitted that there was no change of solicitor recorded on the appeal documents and the defendant remained acting as counsel on the record for him at the time the appeal was dismissed. [18] Next he submitted that discovery need not be extensive in this case and the plaintiff's concerns as to costs were overstated. He referred to the fact he has compiled four eastlight folders which he considers would be the only discoverable documents he has. Although Mr Gibson then went on to note that he may require discovery of the defendant's financial position in light of the recent amendment to his pleading. [19] Mr Gibson submitted that the defendant was under a clear duty to him to have set the Scholes appeal down and he had, what he termed, a meritorious case against the defendant for failure to do so. [20] In relation to the second matter involving the Fryes, Blunt and Scott complaints, he accepted that the instructions to the defendant were terminated and that Mr Jenkins was instructed but submitted nevertheless that the defendant had been negligent in the advice she had given him during the course of that proceeding. [21] Finally he submitted the defendant was under an obligation to advise him of his rights in relation to legal aid.[22] On the issue of quantum of security, if the Court got to that stage, Mr Gibson submitted that the substantive case ought to be dealt with within two to four days and costs would likely be on a 2B basis. [23] Mr Gibson also referred during the course of submissions to the fact that he had not filed an affidavit. He suggested that further time might be given to him to file an affidavit. I declined that request. Mr Gibson was present at the case management conference when the directions were made for the hearing of this application including the timetable for the filing of affidavits. Mr Gibson has had ample opportunity to respond to the defendant's application and affidavit. He has been granted an indulgence by being heard in the absence of a notice of opposition.Discussion[24] On the basis that the threshold is established it is for the Court, in the exercise of its discretion, to determine whether to order security or not. In this case, as both counsel and Mr Gibson have identified, the focus is on the merits of the plaintiff's proceeding. [25] In relation to the first matter the appeal was struck out by the Court in July 2004. It is the defendant's point that well prior to then she had ceased acting for Mr Gibson. The defendant has sworn an affidavit in support of the application for security in which she deposes that she took no further steps from September 2003 on the appeal file following advice to the plaintiff and his instructing solicitor of her intention to withdraw and that on 6 December the plaintiff collected his files from her. [26] In support of that the defendant annexed copies of two letters she wrote. The first to Mr Gibson, copied to Mr Pat Kennelly is dated 12 September 2003. The letter says inter alia:Regrettably I will now have little option other than to file notices withdrawing from representing you on the 3 matters that are currently before the courts. They are: (a) the Appeal in the High Court at Auckland re Scholes,(b) the Appeal against the Dentist's Disciplinary Tribunal in Wellington, and (c) the substantive complaints against you before the DDT.[27] Perhaps more significantly however on 6 December 2003 the defendant wrote a further letter which appears to have been handed to the plaintiff confirming receipt of $12,000 as full and final satisfaction of all monies owed and:I attach with this letter all files held on your behalf, together with my files. As you know the correspondence file has a lot missing, and those documents are with Brookfields. I will check on this and have the remaining documents forwarded to you in due course. You will see I wrote to Hayden Wilson on Tuesday 2 December advising him that the submissions would be filed by Friday at the latest. I will need to write to him on Monday advising that I no longer have instructions from you and that you have uplifted your files. The address for service will still be Pat Kennelly.[28] Against that evidence all briefs that the defendant had for the plaintiff had ceased at the latest by the date of the handover of the files on 6 December 2003. In those circumstances it is very difficult to see how the fact that the appeal was struck out in 2004 for non prosecution some seven months later could be laid at the feet of the defendant. There was a further letter on the file which shows that when there was a communication from the Court to the defendant in June she wrote and advised the Court on 29 June that she had no instructions from the plaintiff. She copied that letter to Mr Jenkins who was acting then for the plaintiff on the other matter and also to Mr Kennelly. [29] I note that Mr Kennelly's involvement as solicitor is confirmed by the plaintiff's own pleading. He records at para 14 of the amended statement of claim that on the Memorandum of Counsel filed by the Defendant on 27 May 2003 the solicitor is recorded as Hunt Edward Kennelly Solicitors of Orewa. [30] In relation to the second matter, on the plaintiff's own case the plaintiff had terminated his instructions to the defendant and Mr Jenkins had charge of the matter from late 2003 and certainly again by 6 December 2003. Further, it is extremely difficult to see how the plaintiff can pursue the defendant in negligence on the basis of the unsuccessful outcome of review proceedings taken by his new counsel whenthat was a different and separate set of proceedings to that initially undertaken by the defendant and when, ultimately, on the plaintiff's advice to the Court, he was found not guilty of fraud in the substantive disciplinary proceedings. [31] There is another point in relation to the second set of proceedings. When the decision was issued by the disciplinary tribunal reference was made to the possibility of appeal which was the procedure followed by the defendant. In the circumstances that also would suggest some difficulty for the plaintiff in maintaining a claim for negligence against the defendant, quite apart from the difficult issue of damages. [32] I accept the submission for the defendant that in the circumstances it cannot seriously be argued that at the relevant times the defendant owed let alone breached the duties that are pleaded against her. As the Court of Appeal observed in Price Waterhouse v Kwan (CA80/99, 16 December 1999):Plaintiffs in this field must show that the defendant's act or omission constituted a material and substantial cause of their loss. It is not enough that such act or omission simply provided the opportunity for the occurrence of the loss. The concept of materiality denotes that the act or omission must have had a real influence on the occurrence of the loss.[33] Before leaving the matter I make the following further observations. Insofar as Mr Gibson submits that the defendant's actions were causative of his impecuniousity it is apparent from the affidavit of Ms Goode referred to above that Mr Gibson has a liability for approximately $560,000 in costs in the Minter Ellison proceedings. I accept Mr Gibson's advice those proceedings are subject to a stay and an appeal but nevertheless, and even without that obligation, there is evidence of other creditors of in excess of $500,000. On any view of it, any possible claim that Mr Gibson might have against the defendant would be quantified at significantly less than that. [34] It cannot be said that Mr Gibson's impecuniosity has been caused by the actions of the defendant. Further, to the extent that his impecuniosity flows from his inability to practise that follows from the findings of the disciplinary tribunal rather than any actions or omissions of the defendant.[35] Insofar as Mr Gibson suggests his claim is based on an obligation to advise him concerning legal aid it is again apparent from the annexures to Ms Goode's application that Mr Gibson knew about the existence of legal aid for civil proceedings by November 2001. Given his experience with the Court system it is inevitable that if that was an issue he would have been alive to it when dealing with the defendant during 2003. [36] Insofar as Mr Gibson has said that he will be applying for legal aid the present position is that he is currently not in receipt of legal aid. Whether he is granted legal aid will be a matter for the Legal Services Agency. But it is not a matter that affects the determination of this application at this time. [37] In summary, while this is not a strike out application, I have to observe that having reviewed the pleadings and on the basis of the material currently before the Court at this time this is a claim with no or little apparent merit. If the plaintiff wishes to exercise his right of access to the Court process to pursue such a claim that right comes with attendant responsibilities. The right of access to the Court is not a right of a free run with no cost consequences. The defendant in this case is entitled to an order for security for costs.Quantum[38] The next issue for the Court is how much security and how that security should be fixed. In the Court of Appeal decision of A S McLachlan Ltd v MEL Network Ltd (referred to above) the Court approved a staged approach. That is also the approach suggested on behalf of the defendant in this case. I agree it is an appropriate process to adopt in this case. Security should be fixed and provided for through to the completion of discovery. [39] While the nature of the proceedings are not themselves particularly difficult it is apparent from the amended statement of claim (which runs to some 40 pages and 115 paragraphs) that to answer the statement of claim (which may include requests for further particulars) will require a considerable time input from the defendant. If discovery is to be as broad as the plaintiff may wish on the basis of the plaintiff'sallegations then discovery itself will be a substantial exercise. While the proceeding is properly classed as category 2 in terms of difficulty, in terms of the time scale it may well be that aspects of the case would warrant timeband C as opposed to timeband B. That will necessarily increase the costs of the proceeding. [40] At this stage it is unnecessary for me to consider in detail how long the substantive hearing will be if one is to be held. On my assessment, allowing a notional 2C basis for filing a defence to the claim as pleaded with discovery perhaps taking more than might normally be the case, and otherwise 2B costs, costs to scale to discovery are somewhere between $10,000 and $20,000. The defendant suggests security for costs in the sum of $17,500. I fix the security at $15,000.Result[41] The orders of the Court are: a) The plaintiff is to pay $15,000 into the Court as security for costs up to the completion of discovery and inspection. b) Leave is reserved to the defendant to revisit the issue and to seek a top-up of security during the course of the proceeding. c) Given the nature of these proceedings they are to be stayed until the security of $15,000 is provided. d) The defendant is to have costs on this application on a 2B basis together with disbursements as fixed by the Registrar. __________________________ Venning J