RIGHT POINT INVESTMENTS LIMITED (IN LIQUIDATION) AND ANOR V ROYDEN RUSSELL MOTTRAM HC AK CIV 2005-404-4224

RIGHT POINT INVESTMENTS LIMITED (IN LIQUIDATION) AND ANOR V ROYDEN RUSSELL MOTTRAM HC AK CIV 2005-404-4224 22 March 2006IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY CIV 2005-404-4224BETWEEN RIGHT POINT INVESTMENTS LIMITED (IN LIQUIDATION) First Plaintiff AND VIVIAN JUDITH FATUPAITO AND RICHARD DALE AGNEW Second Plaintiffs AND ROYDEN RUSSELL MOTTRAM DefendantCIV 2003-004-1408AND BETWEEN RIGHT POINT INVESTMENTS LIMITED Second Plaintiffs AND ROYDEN RUSSELL MOTTRAM Defendant Hearing: 6 March 2006 Counsel: D Salmon and J Cundy for applicant/defendants D Vizor for respondent/plaintiff Judgment: 22 March 2006 at 15:30JUDGMENT OF ASSOCIATE JUDGE FAIRE [on applications for security for costs, strike out and particulars]Solicitors: LeeSalmonLong, PO Box 2026, Auckland for applicant/defendants Bell Gully, PO Box 4199, Auckland for respondent/plaintiffThe application[1] The defendant applies for orders: a) That the plaintiffs give security for costs in respect of the proceedings on files Civ 2005-404-4224 and Civ 2003-004-1408; b) Striking out those of the alleged liabilities in Schedule C to the statement of claim in Civ 2005-404-4224 which were incurred before 1 August 1999 with a consequential amendment to paragraph 6(c) of the statement of claim and the prayer for relief in that proceeding; c) Striking out particulars 6(a) and 6(b) and Schedules A and B of the plaintiffs' statement of claim in Civ 2005-404-4224; and d) That the plaintiffs file and serve an amended statement of claim in Civ 2005-404-4224 giving particulars as follows:In relation to each of the alleged liabilities to third parties which the defendant allegedly authorised Right Point to incur between March 1999 and October 1999, and contained in Annexure C to the statement of claim: 1. the exact date on which the defendant is alleged to have given authority to Right Point to incur that alleged liability. 2. The basis for the plaintiffs' allegation that authority to incur that alleged liability was given to Right Point by the defendant on that particular date. 3. The exact date of any invoice rendered to the defendant in respect of that alleged liability. 4. What the alleged liability is for, including any goods, services or other benefit that was received by Right Point, or was expected to be received by Right Point, in exchange for Right Point incurring that alleged liability.Background[2] I will refer to the two proceedings by the numbers 4224 and 1408 respectively. [3] The first plaintiff in proceeding 4224 and the sole plaintiff in proceeding 1408 was placed into liquidation by the High Court at Auckland on 6 April 2000. DB Davidson and VJ Fatupaito were appointed liquidators. On 9 September 2004 RD Agnew was appointed liquidator on the resignation of DB Davidson. The second plaintiffs are the current liquidators of Right Point Investments Limited (in liquidation). [4] The defendant in both proceedings was a shareholder and director of Right Point Investments Limited (in liquidation). [5] Proceeding 1408 is a proceeding first issued by Right Point Investments Limited (in liquidation) against the defendant in the District Court at Auckland. The proceeding alleges that the defendant received advances from the first plaintiff between the date of its incorporation on 23 October 1996 and the date when liquidators were appointed of $193,720. It is alleged that: a) These advances have been recorded against the defendant shareholder's current account; b) The balance advanced is $193,720; c) That sum is payable on demand; d) The liquidators have made demand; and e) The defendant has failed or refused to pay on demand. [6] I need not recount the full procedural history of the proceeding 1408. Suffice to say, judgment by default was entered against the defendant. He applied to set aside that judgment. An order was made on terms. One term required the filing ofstatement of defence. The statement of defence was filed. It contains an allegation that, and I quote from paragraph 10,Between around May 1996 and around April 2000 he, through his own account and via Pacific Consultants Limited and Tasman Merchant Ventures Limited, incurred expenses attributable to the business of the plaintiff, and on behalf of the plaintiff, for which he is entitled to reimbursement totalling $454,071.20.[7] The plaintiff in proceeding 1408 then applied to the High Court for an order transferring the proceeding to this Court. An order was made. The reason for the transfer is set out in paragraph 1 of the Minute of Venning J made on 19 September 2005, where he said:1. This is an application pursuant to s 42(6) of the District Courts Act 1947 seeking to have existing proceedings in the District Court transferred to this Court. The basis for the application as stated in the application is that following the statement of defence filed by the defendant in the District Court and answers to interrogatories by the defendant the liquidators of the applicant company have formed the view that there are alternative causes of action against the respondent properly pursued in this Court under the Companies Act 1993. The District Court does not have jurisdiction to determine these claims. The defendant quite properly does not oppose the substance of the application.[8] Proceeding 4224 was filed in this Court on 2 August 2005. That date has significance for the purpose of one of the strike out applications that have been made. The proceeding contains causes of action alleging that: a) The defendant, as a director of the company, either agreed or caused to allow the business of Right Point Investments Limited to be carried on in a manner likely to create a substantial risk of serious loss (the reckless trading cause of action pursuant to s 135 of the Companies Act 1993); b) The defendant, as a director of the company, owed a duty not to agree to the company incurring an obligation unless he believed, at the time on reasonable grounds, that it would be able to perform the obligation when it was required to do so and, that the company incurred debts totalling $1,710,090.87 at a time when there were no reasonable grounds for the belief that it would be able to pay those amounts (thebreach of duty in relation to obligations cause of action pursuant to s 136 of the Companies Act 1993); c) The defendant, as a director of the company, owed a duty, when exercising powers or performing duties as a director, to exercise the care, diligence and skill that a reasonable director would exercise in the circumstances and failed to do so (the breach of a director's duty of care cause of action pursuant to s 137 of the Companies Act 1993); and d) The defendant, as a director of the company, had a duty to ensure that the accounting records were accurate and failed to comply with that duty (the failure keep to proper accounting records cause of action pursuant to s 194 of the Companies Act 1993). [9] The causes of action in proceeding 4224 are pleaded in the alternative and seek the same relief in each case, namely, judgment for $1,710,090.87. [10] It was accepted by counsel that the application should be determined based on the first amended statement of claim filed on 17 November 2005. [11] I shall now deal with each part of the defendant's application.Security for costs[12] Some further comment is required in relation to the causes of action when this part of the application is considered. [13] In proceeding 4224: a) The causes of action pursuant to ss 135, 136 and 137 of the Companies Act 1993 are based on duties owed to the company by virtue of s 169(3) of the Companies Act 1993. The liquidator is authorised to bring proceedings by virtue of s 260(2) of theCompanies Act 1993 and the Sixth Schedule. Accordingly, although the liquidator has the power to commence, continue or discontinue, or defend legal proceedings, an action by a company in liquidation should be brought in the name of the company, not the liquidator: re Tongariro Hemp Co Ltd (1909) 12 GLR 7; b) The cause of action based on s 194 of the Companies Act 1993 is brought in reliance on s 300. Section 300 authorises:the Court, on the application of the liquidator, may, if it thinks it proper to do so, declare that any one or more of the directors and former directors of the company is, or are, personally responsible, without limitation of liability, for all or any part of the debts and other liabilities of the company as the Court may direct.That cause of action is specifically brought on the application of the liquidator; c) Section 301 of the Companies Act 1993, which permits the Court, on the application of the liquidator, to inquire into the conduct of a director and to make orders to repay or restore money or property could be a justification for the causes of action pleaded in respect of ss 135, 136 and 137 of the Companies Act 1993 as causes of action advanced by the liquidators themselves. [14] In proceeding 1408 the company seeks recovery of moneys allegedly advanced to the defendant. That is a claim on behalf of the company in respect of which the liquidator is empowered to commence by virtue of s 260(2) and the Sixth Schedule to the Act. [15] One of the liquidators has filed an affidavit and has confirmed that the company has no assets available to meet security for costs. [16] The liquidators have confirmed that the liquidators have no external sources of funding to bring the claim. The creditors are not funding the bringing of the claim. The costs of bringing the claim are being funded by the liquidators personallythrough PriceWaterhouseCoopers. No contingency fee arrangements have been entered into with the solicitors who are bringing the proceedings, that is, Bell Gully. They are charging their full fees at the usual rates in whatever the result of the proceeding is. There are, apparently, eighteen creditors who have filed proofs of debt in the liquidation and those debts total $1,053,277.99. [17] Rule 60 of the High Court Rules provides:60 Power to make order for security for costs(1) Where the Court is satisfied, on the application of a defendant,— (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.[18] In AS McLachlan Ltd v MEL Network Ltd (2002) 16 PRNZ 747, the Court of Appeal gave guidance as to the approach that should be taken on applications for security for costs. For the purpose of this application the Court's comments at [13], [14], [15] and [16] are particularly helpful. The Court said:[13] Rule 60(1)(b) High Court Rules provides that where the Court is satisfied, on the application of a defendant, that there is reason to believe that the plaintiff will be unable to pay costs if unsuccessful, "the Court may, if it thinks fit in all the circumstances, order the giving of security for costs". Whether or not to order security and, if so, the quantum are discretionary. They are matters for the Judge if he or she thinks fit in all the circumstances. The discretion is not to be fettered by constructing "principles" from the facts of previous cases. [14] While collections of authorities such as that in the judgment of Master Williams in Nikau Holdings Ltd v BNZ (1992) 5 PRNZ 430, can be of assistance, they cannot substitute for a careful assessment of the circumstances of the particular case. It is not a matter of going through a checklist of so-called principles. That creates a risk that a factor accorded weight in a particular case will be given disproportionate weight, or even treated as a requirement for the making or refusing of an order, in quite different circumstances. [15] 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 effectshould 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. [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.[19] Mr Vizor advanced three specific grounds for opposing an order for security for costs. They are: a) In relation to the proceeding 4224, an order should not be made because the defendant cannot show that the second plaintiff liquidators personally are unable to meet an award of costs against them in the event that they are unsuccessful in those proceedings; b) The evidence discloses that the first plaintiff's position of impecuniosity has been caused by the actions of the defendant; c) In respect of the proceeding 1408, the Court should exercise its discretion not to award security for costs because, this being a proceeding to recover moneys allegedly due to the company by its director, there are no exceptional circumstances which justify the making of an order. [20] In respect of proceeding 1408, Mr Salmon submitted, having regard to the liquidators' acknowledgement that there are no assets in the company available to pay security for costs, that there is, accordingly, reason to believe that the company would be unable to pay the costs and, therefore, the jurisdictional basis for making an order is met. [21] In respect of the proceeding 4224, he observed that the proceeding was brought in the name of both the company and the liquidators. His particular concern, in relation to this proceeding, was what might happen if, in fact, the second plaintiff liquidators discontinued or were otherwise struck out from the proceeding at some later stage. He noted that the liquidators were funding the proceedings from their firm, PriceWaterhouseCooper. He submitted that there was, in essence, nodifference between a case where a creditor or shareholder funded litigation on behalf of an insolvent company and this case. On that basis, he submitted, security should be ordered, having regard to the approach adopted by the Court in Cory-Wright and Salmon Ltd (in receivership and liquidation) v KPMG Peat Marwick [1993] 2 NZLR 701. [22] He observed that there is some difficulty in forming any specific view of the merits of the plaintiffs' claim. That said, he pointed to aspects which will be examined in the strike out portion of this judgment where there appear to be a duplication in the amount claimed. His solution to what is an unusual circumstance is, and in respect of which he could find no specific authority which had to deal with the position, that the Court should order security for costs to be given in the form of an undertaking by the liquidators that they would meet any cost order made in both proceedings personally. [23] With respect to proceeding 4224, where the liquidators are personally named as plaintiffs and are therefore liable for costs, I am not satisfied that there exists jurisdiction to make an order. There is no sound basis for the belief that the liquidators will be unable to pay the costs of the defendant if the liquidators are unsuccessful. The claims of both the company and the liquidators parallel each other. The causes of action are causes of action available to the company and the liquidators in all instances, for the reasons that I have earlier referred to in this judgment. To cover the concern raised by Mr Salmon as to what might happen in the event that there is a discontinuance by the second plaintiffs, or they are otherwise struck from the proceeding, then I record that that would, on its face, appear to be a justification for the granting of leave to bring a second application for security for costs, having regard to r 262 of the High Court Rules. Accordingly, I conclude that there is no jurisdiction for the making of an order in respect of the proceeding 4224. [24] The position is quite different in relation to proceeding 1408. That proceeding is brought in the name of the company, which has no assets or funds available to meet an order for costs. The jurisdiction to make an order under r 60, therefore, exists. What is required is an analysis of the position to determine whetherthe discretion, which is vested in the Court to order security, should be exercised in favour of an order. [25] It will be recalled that the statement of defence makes the claim that the moneys sought to be claimed were reimbursement, in part, for liabilities paid on the company's part by the defendant director. That very issue will be determined, but in a slightly different context, in the proceeding 4224. Undoubtedly, that is why the two proceedings should be heard together. Indeed, I had a discussion with counsel as to whether an approach might be simply to consolidate the two sets of proceedings. The one problem with that approach which is directly relevant to this question of security for costs is that the specific claim in the proceeding 1408 is a claim which vests in the company, and not in the liquidators. [26] The second aspect of the case is that the claim involves a claim against an officer of the company for actions which that officer has allegedly undertaken, both for himself and on behalf of the company. [27] Counsel were agreed that there is no jurisdictional bar to an order for security for costs being made in appropriate cases where a claim is being brought by a company in liquidation. The general practice, however, in New Zealand is that orders for security for costs against a liquidator will rarely be made. Nevertheless, there is jurisdiction to make them if there are unusual circumstances which justify the award of security against the liquidators: Cory-Wright and Salmon Ltd (in receivership and liquidation) v KPMG Peat Marwick.[28] I am not assisted by an examination of the merits of the claim in proceeding 1408, at this stage. Clearly, there will have to be a determination of the defendant's claim that the sum paid to him was a reimbursement. For that reason, the merits cannot be relied upon one way or the other as giving any assistance in the exercise of the discretion. [29] As to the funding of the costs of the proceeding by the liquidators themselves, I do not see that as being akin to a case which is funded by a creditor or shareholder who stands to benefit. The only benefit for the liquidators in thissituation is the recovery of the fees which the liquidators will charge for their services. They have no other interest in the outcome of the proceeding. [30] When I consider the above matters, and the fact that the specific issue in this proceeding will, in fact, be canvassed in the proceeding where the liquidators themselves are exposed to an order for costs, I consider there is no justification for making an order based on the discretion and, accordingly, decline to make such an order.The first strike out application[31] The defendant seeks to strike out the liabilities recorded in Schedule C to the amended statement of claim in proceeding 4224, which were incurred before 1 August 1999. Consequential amendments are also sought to paragraph 6(c) and the prayer for relief. [32] The plaintiffs allege that the defendant allowed Right Point Investments Limited, from around March 1999 to October 1999, to incur liabilities to third parties totalling $1,053,277.99. The specific liabilities are set out in Schedule C and range in date from March 1999 through to March 2000. I have already recorded that this proceeding was filed in the High Court on 2 August 2005. It is the defendant's contention, therefore, that all liabilities allegedly incurred prior to 2 August 1999 are statute-barred. They being incurred, by definition, more than six years before the filing of this proceeding.The Court's approach to strike out applications[33] The general principles to be applied in a strike out application are well known. They were confirmed by the Court of Appeal in Attorney-General v Prince and Gardner [1998] 1 NZLR 262 at 267 where the Court said:A striking-out application proceeds on the assumption that the facts pleaded in the statement of claim are true. That is so even although they are not or may not be admitted. It is well settled that before the Court may strike out proceedingsthe causes of action must be so clearly untenable that they cannot possibly succeed. (R Lucas & Son (Nelson Mail) Ltd v O'Brien [1978] 2 NZLR 289 at pp 294-295; Takaro Properties Ltd (in receivership) v Rowling [1978] 2 NZLR 314 at pp 316-317); the jurisdiction is one to be exercised sparingly, and only in a clear case where the Court is satisfied it has the requisite material (Gartside v Sheffield, Young & Ellis [1983] NZLR 37 at p 45; Electricity Corporation Ltd v Geotherm Energy Ltd [1992] 2 NZLR 641); but the fact that applications to strike out raise difficult questions of law, and require extensive argument does not exclude jurisdiction (Gartside v Sheffield, Young & Ellis).[34] For the purposes of this case further matters should be added. Strike out applications are usually based on the pleadings alone. However, it is permissible to refer to affidavit evidence where the evidence is undisputed and is not inconsistent with the pleadings: Attorney-General v McVeagh [1995] 1 NZLR 558 at 566. [35] The Court takes a different approach where a strike out application is made based on a limitation defence. [36] In Matai Industries Ltd v Jensen [1989] 1 NZLR 525 at 531 Tipping J referred to the decision of the Court of Appeal in England in Ronex Properties Ltd v John Laing Construction Ltd & Ors [1982] 3 All ER 961. In summary he observed: a) That a defendant could never apply to strike out a claim against him as disclosing no reasonable cause of action merely because he might have a good limitation defence; b) A defendant who believes he has a good limitation defence may, however, either plead the defence and seek trial of the defence as a preliminary issue, or, in a clear case, apply to strike out the plaintiff's claim on the grounds that it is frivolous, vexatious and an abuse of process; c) The onus is on the defendant to show that the plaintiff's claim is statute-barred; d) Evidence can be tendered by affidavit;e) The Court should be slow to strike out a claim, or cause of action altogether, but against that, if the position is quite clear, then the defendant should not be vexed by having to go to full trial when the answer is obvious and inevitable. [37] The first, second and third causes of action, so far as they are brought in the name of the liquidators, rely on s 301 of the Companies Act 1993. The fourth cause of action, as I have already recorded, relies on s 300 of the Companies Act 1993. [38] The statutory limitation period for breaches of directors' duties runs from the date the causes of action accrued to the company, not from the date of liquidation:Arataki Properties Ltd v Craig [1986] 2 NZLR 294. The limitation period for the purpose of the first three causes of action runs from the date on which the relevant conduct by the defendant occurred, not from the date of liquidation. [39] So far as the fourth cause of action, which relies on s 300 of the Companies Act 1993, a different position, in relation to the Limitation Act 1950 applies. Time under the Limitation Act 1950 does not start to run until the day before the company is placed in liquidation: re Network Agencies International Ltd [1992] 3 NZLR 325. As Right Point Investments Limited was placed into liquidation on 2 August 2000, the limitation period for this cause of action has not yet expired. [40] Before leaving this aspect of the case, I should mention one matter raised by Mr Vizor and that was whether time might be extended, based on an argument that time was suspended until the damage could be reasonably discoverable. I was not addressed in detail on this point. However, it is appropriate that I simply briefly refer to the position, as I understand it. [41] The starting point is that there is no New Zealand authority that applies reasonable discoverability of the material facts by the plaintiff as the point when time begins to run for limitation purposes in respect of contract claims. The only cases where the reasonable discoverability of the material facts has been held to be the point when time runs for limitation purposes are the building latent defect cases and the personal injury cases: Saunders & Co v Bank of New Zealand [2002]2 NZLR 270 at 279. In that case, O'Regan J reviewed the authorities in reaching the conclusion that I have referred to. In so holding, he was reflecting the view expressed by the Court of Appeal in Invercargill City Council v Hamlin [1994] 3 NZLR 513, S v G [1995] 3 NZLR 681 at 687 and GD Searle & Co v Gunn [1996] 2 NZLR 129. [42] Mr Vizor conceded that the existence of the limitation defence, to use his words, may mean that the plaintiffs' claim for relief is limited to those liabilities incurred after 1 August 1999. He submitted, however, that it was appropriate to refer to liabilities pre 1 August 1999 because the incurring of the later liabilities had to be measured against the company's overall indebtedness at the time. [43] I am not persuaded by Mr Vizor's submission. It will be for the liquidators to prove that the post 1 August 1999 accounts have not been paid. The liquidators will have to prove that it was evident from the company's financial position, at the time the debts were incurred, that they could not be paid. The inquiry will be as to the overall indebtedness of the company at the time the debt was incurred. There is, in fact, no need to go into every transaction that makes up that indebtedness unless, of course, there is an allegation that all have been paid. [44] The position, in summary, is that there is no foundation advanced that indicates that any of the liabilities incurred prior to 1 August 1999, and included in Appendix C, are recoverable from the defendant, having regard to s 4 of the Limitation Act 1950. Accordingly, I find that this part of the defendant's application has been made out and there should be an order striking out those entries on Schedule C before 1 August 1999. In addition, there should be a corresponding amendment to paragraph 6(c) to reflect this order and also a corresponding amendment to the amount for which judgment is claimed in the prayer for relief.Striking out of Schedules A and B and paragraphs 6(a) and (b) of the statement of claim[45] The matters which I have analysed under the preceding paragraphs, dealing with Schedule C, apply equally to those transactions listed in Schedules A and Bwhich occurred prior to 1 August 1999. That is because, in the case of Schedule A, it relates to an allegation that the defendant incurred expenses of behalf of Right Point Investments Limited and, in the case of Schedule B, the defendant authorised a payment to himself of certain moneys. [46] Mr Salmon, however, did not rely on the limitation defence as the only ground for the application to strike out Schedules A and B and the corresponding parts of the statement of claim and prayer for relief. [47] In respect of Schedule A, he noted that that included matters which were debts to third parties and which were paid for by the defendant himself. The defendant, himself, has not sought to prove those debts in the liquidation. No other person can prove those debts in the liquidation because, of course, they were paid by the defendant. The short point then, is, that without a proof of debt by the defendant for the matters listed in Schedule A there is no liability of the company to any person, including the defendant, for the debts contained in that schedule. It follows that those matters simply cannot form part of the claim which is before the Court. [48] Schedule B raises a different matter. It is pleaded that the defendant authorised Right Point Investments Limited to incur debts. Schedule B, however, which is framed in this way, namely:the defendant authorised payment to himself, in the sum of $193,720 as set out in Schedule B of the statement of claimdoes not reflect a debt at all. What I suspect the plaintiffs intend is that they wish to assert that the defendant authorised the incurring of debts as set out in Schedule B by the company. There may well be a basis for retaining, in a repleaded claim, the debts which reflect a reimbursement to the defendant for transactions which incurred debts after 1 August 1999. At best, they could amount to three only, being the matters which are said to be reimbursement of transactions dated 4 August 1999 in the sum of $1,500, 11 August 1999 in the sum of $2,000 and 14 August 1999 in the sum of $26,500.[49] Accordingly, although I conclude that paragraph 6(b) and Schedule, in the present form, must be struck from the proceeding with a corresponding amendment to the prayer for relief, my ruling should not prevent an amendment which seeks to recover from the defendant the liability reflected in the three sums which he has recovered from the company.The application for particulars[50] The particulars sought are those which I have set out in [1](d) of this judgment. That, in fact, reproduces the notice which was served on the plaintiffs to provide further particulars of claim, dated 17 August and which is the foundation for the relief sought in the application which I am considering. The application is specifically made in relation to the entries which are set out in Annexure C to the statement of claim. [51] Rule 108 of the High Court Rules provides that:108 Statement of claim to show nature of claim, etcThe statement of claim— (b) Shall give such particulars of time, place, amounts, names of persons, nature and dates of instruments, and other circumstances as may suffice to inform the Court and the party or parties against whom relief is sought of the plaintiff's cause of action[52] Rule 185 of the High Court Rules provides:185 Notice requiring further particulars or more explicit pleading(1) A party may, by notice, require any other party— (a) To give such further particulars as may be necessary to give fair notice of— (i) The cause of action or ground of defence; or (ii) The particulars required by these rules; or (b) To file and serve a more explicit statement of claim or of defence or counterclaim. (3) If the party on whom a notice under subclause (1) is served neglects or refuses to comply with the notice within 7 days after service thereof, the Court may, if it considers that the pleading objected to is defective or does not give particulars reasonably required by the notice, order a more explicit pleading to be filed and served.[53] Mr Vizor drew attention to the following matters: a) The defendant, as director, has not kept proper accounting records. The claim has been formulated based on primary records such as bank statements; b) The Courts, in many cases, have held that where the party seeking particulars knows that the party from whom particulars are sought does not have them, and the Court considers the former is not genuinely embarrassed by the lack of particulars, or where the particulars sought are within the knowledge of the requesting party, particulars will not be ordered: Shaw Savill v Auckland Harbour Board (1907) 9 GLR 396. [54] Mr Vizor drew attention to Ms Fatupaito's affidavit where she deposes:I have thoroughly investigated the affairs of Right Point since my appointment as liquidator of Right Point. From the information which has been provided to me as liquidator of Right Point I am not aware of the dates upon which the authorisation for each and every one of the debts was provided by the defendant and am unable to provide the particulars signed for that reason. It is likely that authorisation was provided on or shortly before the dates upon which the debts were incurred. However, the exact date upon which authorisation was provided is a matter entirely within Mr Mottram's knowledge as the director of Right Point. It is not a matter which is within my knowledge, given the information which has been provided to me as liquidator of Right Point.And, further:While there were two directors, from my investigations into Right Point's affairs it is apparent that the defendant was the director responsible for the day-to-day running of Right Point. It is therefore likely that the defendant made the decisions to authorise Right Point to incur the debts.[55] There has been no response to Ms Fatupaito's affidavit.[56] What Schedule C provides, then, is the name of the party to whom the alleged debt is owed, the amount of the alleged debt, and the approximate time of that debt. [57] I assume, for the purposes of this case, that the items in Schedule C have, in fact, not been paid and are debts owed by the company. I make that assumption because paragraph 6 of the statement of claim refers to the subparagraphs as identifying debts incurred by Right Point Investments Limited. If the debts, in fact, are part of proofs of debt lodged by the creditors concerned, one would have thought that the liquidator could have obtained the particulars sought from the creditor concerned. [58] If the debts listed in Schedule C to the statement of claim are claims by creditors who are unsecured, then the liquidator has ample powers pursuant to r 304 to provide the particulars which are sought. To that extent, the liquidator is in a position of some advantage. If the creditor concerned cannot prove the claim satisfactorily, then, obviously, the liquidator would not be entitled to rely on it for the purposes of this claim. On the other hand, if the creditor can provide the particulars with appropriate documentary evidence, then that is something that should be disclosed to the defendant. [59] I propose to adjourn this part of the application so that the plaintiff liquidators can provide, by affidavit evidence, answers to the following matters: a) Are the debts which are listed in Schedule C to the statement of claim debts which have been proved by creditors in the liquidation? b) If so, is there any reason why the particulars sought by the defendant cannot be obtained by the liquidators utilising their powers under s 304 of the Companies Act 1993 and other provisions of the Companies Act 1993? c) If the debts are not the subject of proofs of debt, what factual foundation exists to show that they are, in fact, debts?Orders[60] As a result of the conclusions I have reached I now make the following orders: a) The application for an order for security for costs is refused; b) In respect of the first, second and third causes of action: i) The entries in Schedule C on or before 1 August 1999 are struck out; ii) Paragraph 6(c) of the first amended statement of claim is struck out to the extent that it refers to liabilities incurred on or before 1 August 1999; iii) Paragraph 6(a) of the first amended statement of claim and Schedule A are struck out; iv) Paragraph 6(b) of the first amended statement of claim and Schedule B are struck out, subject to the reservation referred to in [49] of this judgment; c) The application for further particulars is adjourned to 9am on 12 April 2006. If the liquidators have not filed and served an affidavit covering the matters referred to in [59] of this judgment, then: i) I will consider fixing a timetable for the filing and service of such affidavit; and ii) A time to review such affidavit evidence so that the application for particulars can be determined. If the liquidators have filed affidavit evidence by the next conference counsel should then be ready to address submissions on what order isappropriate in respect of particulars having regard to the disclosure made in the liquidators' affidavit.Costs[61] Because further steps relating to the application which I have heard are required, I reserve costs at this stage. On completion of the application, applications for costs will be considered having regard to the direction contained in r 48E of the High Court Rules. _____________________ JA Faire Associate Judge