OCEANIC PALMS LIMITED V DANFORTH NOMINEES LIMITED CA CA179/05

OCEANIC PALMS LIMITED V DANFORTH NOMINEES LIMITED CA CA179/05 15 December 2005IN THE COURT OF APPEAL OF NEW ZEALAND CA179/05BETWEEN OCEANIC PALMS LIMITED Applicant AND DANFORTH NOMINEES LIMITED Respondent Hearing: 5 December 2005 Court: Anderson P, Glazebrook and Hammond JJ Counsel: B Hubbard and H Haynes (in person) for Applicant V E Fletcher for Respondent Judgment: 15 December 2005JUDGMENT OF THE COURT A The applications for leave to appeal are dismissed. B Costs of $1,500 plus usual disbursements are awarded to the Respondent.____________________________________________________________________REASONS(Given by Glazebrook J)Introduction[1] Oceanic has applied for leave to appeal against: (a) a judgment of Courtney J of 13 May 2005 with regard to costs, its appeal having been lodged out of time; and(b) a judgment of Venning J of 19 July 2005 dismissing an application for the review of a decision of Associate Judge Sargisson relating to security for costs.Background[2] The background to these applications is complicated. We are indebted to Venning J's summary in his 19 July judgment. [3] Oceanic is in the business of sourcing, growing and supplying plants, particularly palms. On 17 June 2001 Oceanic made an agreement with Danforth pursuant to which Oceanic was to deliver and plant six mature Kentia palms and six smaller Kentias. The purchase price was $48,000 including GST. Danforth took proceedings against Oceanic in the Disputes Tribunal. It alleged that it had paid the purchase price of $48,000 but Oceanic had refused to supply the six smaller Kentia palms. Danforth claimed $5,230 for the cost of replacement palms and associated costs. Oceanic also took proceedings in the Disputes Tribunal against Danforth. Oceanic's position was that Danforth had caused unreasonable delays in the performance of the contract which led to a disruption in Oceanic's business and a lengthy wait for payment. Oceanic sought compensation for the disruption to its business and other associated costs including storage costs. [4] The Disputes Tribunal heard the matter on 4 July 2003. It found in Danforth's favour. Oceanic was ordered to pay Danforth $4,050. On 31 July 2003 Oceanic sought a rehearing. On 4 November 2003 the Disputes Tribunal declined the application for rehearing. Oceanic then filed an application to the District Court for leave to appeal out of time. That application was dealt with by District Court Judge Hole on the papers on 10 February 2004. He dismissed it. Judge Hole noted in his decision that Oceanic had applied for a rehearing and that application had been declined. He declined to grant leave to appeal on the basis that Oceanic had failed to advance a good reason for applying out of time. He said it seemed clear that Oceanic was applying for leave to appeal because its application for rehearing was declined.[5] Oceanic then filed an application for judicial review in the High Court on 7 June 2004. Danforth sought security for costs. On 10 December 2004 Associate Judge Sargisson directed Oceanic to provide security for costs in the sum of $6,500, such security to be provided on or before 24 January 2005. The Associate Judge noted that, if security was not provided by 24 January 2005, the proceedings would be stayed until security was given. In addition, she fixed costs on the interlocutory application on a 2B basis together with disbursements as fixed by the Registrar. Costs were subsequently fixed in the sum of $3,790 on that hearing. [6] Oceanic did not pay the security but instead on 28 January 2005 issued separate proceedings in the High Court for judicial review seeking an order setting aside the Associate Judge's decision ordering security for costs. The application was clearly misconceived. After the matter had been before the duty Judge on a number of occasions Oceanic accepted that it was misconceived and filed a notice of discontinuance on 14 March. Danforth sought costs on the discontinuance. On 13 May Courtney J fixed costs against Oceanic in Danforth's favour in the sum of $3,790.Courtney J's decision[7] Courtney J said that in the normal course costs on a 2B basis would be awarded on the basis that Oceanic had chosen to follow an entirely inappropriate procedure and therefore put Danforth to unnecessary expense. The only question to be considered therefore was whether it should be allowed leeway because it was represented by its director in person. She concluded it was not. She said:[10] Danforth maintains that Oceanic was made aware of its error well before it chose to discontinue. Its solicitor, Ms Fletcher, has filed a memorandum advising that oral submissions were made at a mentions hearing on 10 February 2005 to the effect that the procedure adopted by Oceanic was incorrect. Those submissions were recorded in a Minute by Cooper J 10 February 2005, who went on to note that Mr Hubbard was clearly not in a position to respond to the issue and directed that if the procedural issue was to be pursued Danforth should make an appropriate application on or before 23 February 2005 (which it did). [11] In these circumstances, it is not open to Oceanic to say that it discontinued the proceedings at the first opportunity. Plainly, the problem it faced was flagged on 10 February 2005. Oceanic could and should haverealised its difficulty and discontinued then, rather than putting Danforth to the expense of the application to strike out. [12] It is obvious that the reason Oceanic failed to recognise the problem it faced (and indeed the reason it made the error in the first place) is that it has chosen to be represented by its director personally, rather than engaging counsel. That is its decision entirely. However, the reality is that litigants in person must be taken to accept the dangers of managing the court process without legal assistance. I cannot see any reason to depart from the usual course I would follow in awarding costs. I therefore award Danforth costs of $3,790 on the basis set out at paragraph 3 of its memorandum 31 March 2005.Venning J's decision[8] Oceanic then applied (out of time) to review the decision of Judge Sargisson. This was dealt with by Venning J. Leave was granted but the application was refused. Venning J said that the issue related to the review of a discretion and held that the Associate Judge was entitled to come to the conclusion she did. He said:[24] In the course of her reserved decision the Associate Judge correctly directed herself to the appropriate jurisdiction for the application and the relevant authorities. She then considered the threshold test. She was satisfied there was reason to believe Oceanic would be unable to pay Danforth's costs and gave her reasons for that. Having found the threshold test satisfied and jurisdiction existed for the order she then considered the exercise of her discretion. In doing so she considered the strength (or weakness) of Oceanic's claim for judicial review noting in particular the difficulty facing an applicant for judicial review of a decision of a Disputes Tribunal: Evans v Disputes Tribunal at New Plymouth (2000) 14 PRNZ 183. The Associate Judge then considered the submission that Danforth was acting oppressively before balancing the respective interests of the plaintiff and defendant. After taking account of all of those factors she concluded that it was appropriate to exercise her discretion in favour of the applicant Danforth and order security for costs. She reduced the sum sought to $6,500. [25] On my review of the decision and the evidence before the Court the Associate Judge was quite entitled to come to the decision she did. With the benefit of hindsight one might be inclined to the view it would have been more cost efficient for the parties to have proceeded to the application for review rather than engaging in the interlocutory argument as to security for costs. However, Danforth was entitled to make the application for security for costs and the Court was then required to deal with it. [26] There was ample evidence before the Court for the Judge to conclude that the threshold requirement was satisfied. Mr Hubbard sought to challenge that decision before me in submission. He submitted that while Oceanic was not rich to suggest it was impecunious was a bit tough. When asked if Oceanic would be able to pay the $6,500 directed by the CourtMr Hubbard indicated that while Oceanic's financial position has improved it had not improved to the extent that it would be able to pay $6,500. Mr Hubbard attempted to resile from that in the memorandum filed after the hearing. However, on the information before the Associate Judge and frankly on the information before this Court on review there is sufficient evidence to support the Judge's finding that Oceanic would be unable to pay Danforth's costs if Oceanic was unsuccessful in the application for judicial review. [27] In terms of the exercise of the discretion again the Judge was right to take into account the factors that she took into account. The merits of the case are particularly relevant. In that regard it is significant that the case was an application for judicial review of the decision of the Disputes Tribunal. Oceanic wants to have another opportunity to put its case. I am quite satisfied, having seen Mr Hubbard in action, and having been addressed by him that he would have been well able to put Oceanic's case across to the Referee of the Disputes Tribunal. It is apparent from the material filed by Oceanic and Mr Hubbard's submissions that Oceanic simply does not accept the decision of the Disputes Tribunal. [28] It cannot be said the decision of the Disputes Tribunal was so obviously wrong that it must have been the subject of an unfair process. [32] Given the provisions of the Disputes Tribunals Act the application for judicial review had little, if any, chance of success. [33] The Associate Judge was quite entitled to make an order requiring Oceanic to provide security for costs in the exercise of her discretion. It may be that another Judge may have made the order for security in a lesser figure but the sum of $6,500 was within the reasonable discretion available to the Associate Judge. As noted by Fisher J in Wilson v Neva Holdings Limited([1994] 1 NZLR 481) it is not for this Court on review to substitute its own discretion. That is not the purpose of an application for judicial review. [34] In summary then, having considered the application for review of Associate Judge Sargisson's decision on the merits, I decline to review the decision. The decision stands. The Associate Judge was also quite entitled to make the order for costs in favour of the successful applicant, Danforth.Judgment of Lang J of 6 September 2005[9] Oceanic then sought leave to appeal against Venning J's decision. This was heard by Lang J on 5 September 2005 and the application was refused on 6 September 2005. As to the jurisdiction to make an order for security, Lang J had this to say:[16] The judgment of Venning J records (at para [26]) that he asked Mr Hubbard during the hearing whether Oceanic was then in a position to provide the security ordered by Asociate Judge Sargisson. Mr Hubbard eventually indicated that, whilst Oceanic's financial position had improvedsince the hearing of the original application, it had not improved to the extent that it would be able to provide security in the sum of $6,500. Not surprisingly, Venning J concluded that there was sufficient evidence available to support Associate Judge Sargisson's finding that there was reason to believe that Oceanic would be unable to pay an adverse award of costs. [17] It is difficult to fault the reasoning of both judges in relation to this issue. During the hearing before me it also emerged that Oceanic has now applied to the Court of Appeal for a waiver of the security for costs it is required to provide in relation to another appeal it is pursuing against Danforth. It has also failed to date to pay outstanding costs to Danforth amounting to approximately $10,700. Even now, therefore, there is reason to believe that Oceanic will have difficulty in meeting any adverse award of costs. [18] For these reasons I consider that Oceanic has no real prospect of persuading the Court of Appeal that jurisdiction did not exist to require security be provided, or that the approach taken by Associate Judge Sargisson and Venning J in relation to that issue was erroneous in any way.[10] Lang J then said that the authorities make it clear that, once jurisdiction is established, there is a wide discretion whether or not to require security to be given. He could find no error in the decision of Judge Sargisson that would have entitled Venning J to come to a different conclusion. [11] He was of the view that neither Judge Sargisson nor Venning J underrated Oceanic's chance of success in the judicial review as it was unlikely to be an easy task to persuade the Court that the Tribunal had made an error of principle in denying its application for a re-hearing. He noted that Venning J took the view that, in reality, Oceanic's complaint related to the outcome of the proceeding before the Disputes Tribunal rather than the process by which it was reached and this would not be a matter with which judicial review was concerned. [12] As to the level of security, Lang J said that, although other Judges may have set it higher or lower, the level was within the range available to the Judge. Lang J also said that the matter was not one of public importance. It was a routine interlocutory decision in the course of an unexceptional civil proceeding. He also took into account that the result of the appeal would not finally determine the rights of the parties. He therefore refused leave to appeal.Oceanic's submissions[13] With regard to Courtney J's judgment, Mr Hubbard submitted that costs should have been reserved until the judicial review had been concluded. In addition, he submitted that proper account should have been taken of the fact that they were lay litigants. [14] With regard to Venning J's judgment, Mr Hubbard challenged the jurisdiction to make an order for security for costs. In his submission, although Oceanic would have difficulty in paying the security (as it would lose the use of the money), it has sufficient assets to pay any eventual costs award. He also submitted that Oceanic's case on the judicial review was very strong as there had never been a fair hearing before the Disputes Tribunal and the District Court had also given it only cursory consideration. The decision of the Tribunal was also, in his submission, clearly wrong and that should be the paramount consideration.Danforth's submissions[15] Ms Fletcher, for Danforth, submitted that the overall interests of justice require leave to be refused in both cases. In her submission, the matters are trivial and both relate to the exercise of a discretion (in Venning J's case to the review of the exercise of a discretion). No errors of principle have been identified and the decisions were clearly available in the circumstances. Any appeal therefore has no prospect of success.Discussion[16] Mr Hubbard had two problems in terms of being granted an audience before the Court. He was purporting to represent Oceanic as an unqualified advocate, contrary to Re G J Mannix Ltd [1984] 1 NZLR 309. Secondly, he had sworn affidavits in support of these applications. Nevertheless we informally allowed Mr Hubbard (and also Mr Haynes) to elaborate on the written material they had placed before the Court on Ocenic's behalf. We also heard from Ms Fletcher. Thatwe allowed Mr Hubbard and Mr Haynes to address us in this case is not to be taken as an indicator of future leniency in this regard. [17] We accept Ms Fletcher's submission that the appeals in this case have no prospect of success. Courtney J's decision on costs was fully reasoned, there have been no errors of principle identified and she has not been shown to be wrong. The principle of the current High Court costs rules is that costs are fixed at each step and that they are awarded in favour of the successful party at each step, whether or not that party is ultimately successful in the litigation or not. Therefore, costs would only be reserved in exceptional circumstances. Oceanic has pointed to no such exceptional circumstances, apart from the fact that it was represented by a layperson. [18] There is no principle that distinguishes between classes of litigants. Although some indulgence may be accorded to lay litigants, in principle they should be subject to the same costs awards as any other party. In addition, Oceanic had been warned it was using an inappropriate procedure and continued regardless, a factor that rightly weighed heavily with Courtney J. [19] We turn to Venning J's decision. Once he was satisfied that Judge Sargisson was not in error when she held that there was jurisdiction to make an order for security, Venning J was concerned with the review of a discretion. This means that Oceanic would have to have shown that Judge Sargisson made an error of principle or that the decision was not one that could have been reached by a reasonable decision maker. [20] As to jurisdiction, for the reasons given by Lang J, above at [9], it is clear that there was jurisdiction. While we accept that there may be a difference between being able to pay security because of cashflow issues and being able ultimately to pay a costs order, this would not usually be enough to remove jurisdiction. As to the decision to award security and the level, it was not enough simply to show that another judge may have come to a different conclusion. No errors of principle were identified in Judge Sargisson's decision and it was one open to her. Venning J was thus undoubtedly correct to refuse Oceanic's application.[21] Mr Hubbard and Mr Haynes submitted strongly that Judge Sargisson and Venning J had underestimated the strength of Oceanic's case on the judicial review. We have not been convinced that the assessment of the merits of the judicial review application by any of the three High Court judicial officers was wrong. [22] From the extensive affidavit material filed in this court, we agree with Venning J that Oceanic's concern appears mainly to be with the merits of the Disputes Tribunal decision and the manner in which it interpreted the contract. That is not a matter that would be at issue in any judicial review. Mr Hubbard and Mr Haynes complained that the High Court appeared to be showing a reluctance to deal with Oceanic's complaints about the Disputes Tribunal. Any reluctance there may be is because of the nature of the Disputes Tribunal. The whole point of the Disputes Tribunal regime is to give very limited appeal rights so that dispute resolution is cost effective. [23] We also note that it is likely in any event that some security for costs would have been granted even if the judges had rated Oceanic's prospects of success more highly.Result and costs[24] The proposed appeals having no prospect of success, it is not in the interests of justice that leave be granted. The applications for leave to appeal are dismissed. [25] Costs of $1,500 plus usual disbursements are awarded to Danforth.Solicitors: Grove Darlow, Auckland for Respondent