SMITH V COVINGTON SPENCER LIMITED AND ORS HC AK CIV 2005-404-3020

SMITH V COVINGTON SPENCER LIMITED AND ORS HC AK CIV 2005-404-3020 17 October 2008IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY CIV 2005-404-3020BETWEEN PETER FREDERICK SMITH AND ROBYN DENIS GRACE & ORS Plaintiffs AND (1) COVINGTON SPENCER LIMITED, (2) OENONE LOUISE BIDWELL, NEILSON MURDOCH HARRIS & ORS, (3) OENONE LOUISE BIDWELL, (4) JOHN GRAHAM TEDCASTLE (5) JAMES FRANCIS SPEEDY (6) COVINGTON INVESTMENTS LTD (7) DTZ NEW ZEALAND LTD (8) DARROCH VALUATIONS LTD (9) ALBION BANKS VALUATION LTD (10) SHELDON & PARTNERS LTD (11) MINTER ELLISON RUDD WATTS (12) DISCONTINUED (13) RUSSELL MCVEAGH (14) BELL GULLY Defendants AND GEORGE FREDERICK GROVE First Third Party AND MICHAEL JAMES DE SEYMOUR Second Third Party AND ROBERT YOUNG Third Third Party AND DARRYL MACLEAN Fourth Third Party AND LOCHORE'S REAL ESTATE LIMITED Fifth Third PartyContinued over page2 AND L J HOOKER LTD DISCONTINUED Sixth Third Party AND PREMIER CAPITAL LIMITED Seventh Third Party AND ASIA NETWORK BASE (H.K.) LIMITED Eighth Third Party AND BROOKE INTERNATIONAL (RESIDENTIAL) PTE LIMITED Ninth Third Party Hearing: 17 October 2008 Counsel: N W Ingram QC and P J Edwards for Plaintiffs (except 51st Plaintiff) No appearance by or on behalf of 51st Plaintiff L N Milne for First, Fifth, Sixth Defendants P K Spring for Second, Third, Fourth, Eleventh, Fourteenth Defendants G Wadsworth for Seventh Defendant J Bradley-Young for Eight, Tenth Defendants M D Atkinson for Ninth Defendant P J Dale for First and Second Third Parties Judgment: 17 October 2008(ORAL) JUDGMENT (NO. 6) OF HEATH JSolicitors/Counsel: Edwards Clark Dickie, (C A Dickie), Auckland (Plaintiffs) N Ingram QC, PO Box 6569, Auckland Lee Salmon Long, (R Latton) PO Box 2026, Auckland (First, Fifth and Sixth Defendants) N Gedye, PO Box 2097, Shortland Street, Auckland Keegan Alexander (P J K Spring), PO Box 999, Auckland (Second, Third, Fourth Defendants) P Davison QC, PO Box 105-513, Auckland Kennedys, (G Wadsworth) PO Box 3158, Auckland (Seventh Defendant) Keegan Alexander (P Napier), PO Box 999, Auckland (Eighth Defendant) Jones Fee (P Fee), PO Box 1801, Auckland (Ninth Defendant) Phillips Fox (G Macdonald), PO Box 160, Auckland (Tenth Defendant) Gilbert Walker (M Gilbert), PO Box 1595, Auckland (Eleventh Defendant) Connor-Ferguson (D Connor), PO Box 3897, Auckland (Thirteenth Defendant) Bell Gully (C Meechan), PO Box 4199, Auckland (Fourteenth Defendant) A A Lusk QC, PO Box 1379, Auckland McElroys (P Hunt), PO Box 835, Auckland (Fifth Third Party) Stewart Germann Law Office, PO Box 1542, Auckland (Sixth Third Party) M Cole, PO Box 651, Auckland J Thompson, PO Box 33-197, Takapuna Hesketh Henry, Private Bag 92093, Auckland(S Cheah) G S Millar, PO Box 4338, Shortland Street, Auckland P Dale, PO Box 130, Shortland Street, AucklandIntroduction[1] This proceeding involves multiple claims for damages based on alleged misrepresentations or negligent advice given in respect of the purpose for which apartments in the Spencer on Byron complex on the North Shore could be used. The main factual issue involves alleged misrepresentations that the apartments could be used for residential purposes, when that turned out not to be the case. [2] Initially, the claims were brought by 142 plaintiffs, some of which are no longer proceeding. There are 12 active defendants and nine active third parties. [3] The proceeding has been set down for hearing over seven months, beginning on 12 April 2010. As foreshadowed in my conference minute of 18 June 2008, timetabling directions are required to make practical provision for all interlocutory steps and trial directions to be completed by the end of 2009, with additional time being set aside to resolve any "last-minute" interlocutory applications before the trial starts in 2010. [4] I have heard from counsel today on timetabling issues, as well as questions of security for costs. Security for costs was ordered on 16 August 2007, following a format indicated by the Court of Appeal in its judgment on 5 June 2007: Smith v Covington Spencer Ltd [2008] 1 NZLR 75 (CA). [5] The present applications seek additional security. The main issue is whether those plaintiffs against whom security should be ordered should provide a sum of $14,000 in one or two tranches. A secondary issue is whether the proceeding should be stayed pending provision of that additional security.Timetabling[6] I deal first with timetabling issues, because that provides the context in which my decision on security for costs has been made.[7] There is a mediation scheduled for 6 and 7 November 2008 before Hon Robert Fisher QC. The following directions are made on the assumption that settlement is not reached, though I remain hopeful that settlement will occur. [8] A realistic timetable needs to provide sufficient time for the plaintiffs to organise themselves and for their solicitors to take briefs of evidence from all, in a form that can be exchanged by a due date. That issue needs to be addressed pragmatically, in the context of what will be a lengthy trial and the need for the plaintiffs to address what amounts to about 140 different claims in those briefs. [9] I have determined the date by which the plaintiffs shall file and serve witness statements by reference to a time beyond which it would be difficult for the plaintiffs to complain that they had had inadequate time to prepare and serve briefs of evidence, thereby minimising any possible application to extend time. Any extension of that time would hinder significantly the ability of defendants to respond to the claims made against them and could put the trial date in jeopardy. [10] Having said that, I recognise that there will always be contingencies that cannot be foreseen. For example, if a plaintiff were seriously ill and unable to provide instructions over a lengthy time, serious consideration would need to be given to a variation. But what I have said, I hope, makes it clear that some significant reason will need to be advanced for their to be a variation to the proposed timetable. [11] I will also be directing that the expert witnesses meet before the date on which the plaintiff's witness statements are to be served. I will leave it to counsel to arrange the terms on which the experts will meet, though they have leave to apply to the Court for specific directions if they were unable to agree. [12] I am told that quantum issues relating to dimunition in value will need to be addressed among valuation experts. It is hopeful that they can reach agreement, or at least limit the issues to be considered. The narrowing of issues should assist in limiting the number of witness statements the plaintiffs will be required to serve to deal with quantum issues.[13] Specific time is also required to deal with any interlocutory issues that may arise this year. Mr Wadsworth has signalled the possibility of an application being made in relation to objections to answer interrogatories. However, he does not close the door to the possibility of such issues being resolved by agreement. But, nevertheless, the nature of the issue raised is sufficient to require some time to be set aside this year to resolve any interlocutory applications that must be dealt with before the plaintiffs embark upon preparation of extensive witness statements. [14] Another issue which has arisen today may have considerable impact on the ability to progress this claim to trial in 2010. In a memorandum filed for today's conference, Mr Ingram QC, for the plaintiffs, indicated that consideration was being given to the possibility of joinder of Keegan Alexander as a defendant in the proceeding. [15] No decision has yet been made on whether that partnership will be joined. Indeed, independent advice will need to be obtained from alternative senior counsel on that issue, as Mr Ingram QC is unable to advise due to what he perceives (rightly in my view) to be a conflict of interest. [16] I direct the plaintiffs to file and serve any application to join Keegan Alexander as a party to this proceeding by midday on 30 October 2008. Affidavits in support of that application shall be filed and served contemporaneously. Any application shall be listed before me at 9am on 3 November 2008 for mention, so that any consequential issues can be addressed. If no application were made, no conference need be held on 3 November. [17] The significance of this particular point is that, under ethical rules, Mr Spring is likely to be prevented from acting further in the proceeding. Not only would that put the substantive hearing in jeopardy, it may also raise the spectre of the mediation not being able to proceed. [18] It is important that any application be brought to my attention promptly, to consider its impact. I have made the direction also, so that Mr Spring is in a position to reassess his situation before the mediation is due to take place. I record thatKeegan Alexander are also solicitors on the record for the eighth defendant, so any potential conflict goes beyond the second to fourth defendants for whom Mr Spring currently acts. [19] I make the following directions: a) Any interlocutory applications, arising out of information currently available to the parties, shall be filed and served on or before 30 November 2008, with affidavits in support. Any response to any application shall be filed and served on or before 7 December 2008, with affidavits in opposition. The Registrar is directed to allocate time for me to consider any applications during the week of 14 December 2008. b) The experts shall meet no later than 30 April 2009 and circulate a report on points of agreement to all counsel on or before 15 May 2009. That report shall also specify the issues on which they disagree and the reasons for those disagreements. I leave it to counsel to finalise the rules for that conference and form of the report, but reserve leave to apply if further directions are required. c) On or before 2 June 2009 the plaintiffs shall: i) Serve witness statements on all parties ii) Serve copies of all documents not listed in verified lists but referred to in the witness statements. iii) File and serve an Amended Statement of Claim. I record that the right to amend the Statement of Claim to increase or decrease quantum will exist but, otherwise, leave would be required to amend the Statement of Claim further. d) On or before 2 October 2009, the defendants shall file and serve a Statement of Defence to the Amended Statement of Claim and anyamended third party proceedings. Contemporaneously they shall serve witness statements in response to those served by the plaintiffs and any witness statements that relate solely to third party claims. They shall also serve copies of all documents not listed in verified lists but referred to in the witness statements. e) On or before 1 December 2009, third parties shall serve witness statements together with a Statement of Defence to third party claims. They shall also serve copies of all documents not listed in verified lists but referred to in the witness statements. [20] Each party when serving witness statements shall contemporaneously serve an index of documents contained in the briefs exchanged, so that a common bundle can be prepared from the various indices in due course. [21] I envisage holding a conference in December 2009, at which stage directions will be made in relation to the preparation, filing and service of a common bundle and the filing and service of things such as a chronology and opening statements. That conference will also discuss the best way for the various claims to be heard, so that counsel for particular defendants are required to Court no more than is reasonably necessary. [22] That timetable will permit the parties to reflect on the state of evidence during December 2009 and January 2010. I direct the Registrar to make available two weeks in late February and/or early March 2010 for any further interlocutory applications to be resolved before trial. [23] The Registrar is directed to set down a conference before me for two hours on the first available date after 2 June 2009, to review progress with the litigation and to address any issues that have arisen. [24] Leave to apply generally is reserved, should any unexpected issues arise.Security for costs[25] In my judgment of 16 August 2007, orders for security for costs were made against owners of apartments who are resident overseas (Schedule 1 to that judgment) and owners resident in New Zealand (Schedule 2 to that judgment) whose impecuniosity, for the purpose of r 60 of the High Court Rules, had been accepted. [26] The additional orders for security are sought against the same owners, save for plaintiff 34, whose claim has been struck out. It is proposed that any further security be given in the same form as ordered in my judgment of 16 August 2007, as subsequently sealed. [27] Mr Ingram has provided a draft order which identifies the basis on which he submits staged security should be given. The plaintiffs listed in Schedule 1 and Schedule 2 to that draft order will be the plaintiffs against whom the orders I am about to make will bite. [28] The way in which the timetable has been structured is designed to limit significantly the amount of work required to be undertaken by counsel and solicitors for defendants and third parties pending service of witness statements on behalf of the plaintiffs on 2 June 2009. It is important, in my view, that all issues of security be resolved before the defendants are required to undertake significant work in response to the witness statement. [29] I do not see any purpose in requiring security in two tranches. The number and location of the plaintiffs in issue means there are real logistical issues in finalising security for costs. Therefore, I propose to order that each of the relevant plaintiffs provide security in the sum of $14,000, in addition to security already given. [30] Nor do I see a need for a stay to be ordered. That is because the way in which the timetabling orders have been structured. But, if any plaintiff has not provided security by the time it has to file witness statements, it would be difficult tosuggest that further time should be provided. Hence, I propose to make an "unless order" in respect of the provision of security by that date. Leave is reserved for any particular plaintiff to apply, before 2 June 2009, to vary that order in respect of the particular plaintiff should there be compelling grounds to do so. [31] Further security is ordered against the plaintiffs listed in Schedules 1 and 2 to my judgment of 16 August 2007 (save for plaintiff 34) in the sum of $14,000. Such security shall be provided in the same form of bond identified in the earlier sealed order as to security for costs. Security shall be posted in that form by midday on 2 June 2009. If security were not posted by that time, the plaintiffs in default of that order shall be struck out. [32] Ms Bradley-Young, for the eighth defendant, raised issues relating to three particular plaintiffs with claims against her client. They related to the value of the residential units. Those particular plaintiffs fall within the impecunious category at present, but the present valuation evidence (Ms Bradley-Young suggests) indicates that additional security is required. [33] Those specific issues were not signalled in the application for further security and the plaintiffs have not had an adequate opportunity to respond. For that reason, I am not prepared to entertain that application at this stage. [34] However, it is clear that the current economic climate is such that variations in the value of the apartments can be expected over the time leading up to trial. Further complications arise from discovery of leaks within some apartments. For that reason, I reserve leave for further applications for security for costs to be made if there were grounds to suggest that the existing orders were inadequate.Costs on security applications[35] Costs were sought by the applicants for further orders for security.[36] I reserve those costs, pending the outcome of the mediation. In the event that the proceeding does not settle, counsel shall advise the Registrar, on or before 28 November 2008, if they require the issue of costs to be resolved. [37] The Registrar shall allocate a hearing before me at 9am one day during December 2008 to deal with that application. [38] I do not require memoranda to be filed in advance of any such hearing. I only require counsel involved with the application to appear. [39] All other costs relating to issues debated today are reserved. ____________________________ P R Heath J