C R LUSCOMBE & ORS V D O'SULLIVAN & ORS HC NWP CIV 2010-443-000073

C R LUSCOMBE & ORS V D O'SULLIVAN & ORS HC NWP CIV 2010-443-000073

The Court found the threshold test satisfied—there was reason to believe the plaintiffs could not meet a costs award—and, after weighing the merits (which tilted in favour of the defendants), the absence of evidence that impecuniosity was caused by defendants, and legal limits of s 301, it exercised its discretion to order security for costs. The Court ordered NZD 25,000 deposit as security for costs to date, stayed the plaintiffs' claim until payment, adjourned fixing further security pending the Court of Appeal outcome, and awarded costs of the application to the defendants.

Citation
openlaw-9fa0f15a_be4d_449b_9d8d_4287fad56282.pdf
Parties
Plaintiffs: Charles Rex Luscombe; Dorothy Turner; Kathleen Whyte (executors and trustees of the estate of Winifred Anne Luscombe, deceased); First Defendant: Dillon O'Sullivan; Second Defendant: Kelvin John Syms; Third Defendant: Simon Robert Purvis; Fourth Defendant: Andre Gaylard; Fifth Defendant: Bret Paul Jackson; Sixth Defendant: Kenneth David Swain; Seventh Defendant: Donald Francis Curtin; Eighth Defendant: John Perris
Court
High Court
Jurisdiction
New Zealand
Judgment Date
7 September 2012
Procedural Posture
Civil Litigation (investment Losses; Directors' and Fiduciary Duties; Company Law) / Interlocutory – Application for Security for Costs Under High Court Rules R 5.45
Outcome
Order for security for costs granted in part; plaintiffs' claim stayed until security paid; matter remitted for case management to fix further security; costs of the application awarded to defendants.
Legal Topics
Security for Costs, Threshold Test for Impecuniosity, S 301 Companies Act 1993, Aiding and Abetting / Dishonest Assistance, Investment Advisory Duties, Summary Judgment Appeal, Staging of Security
Civil Procedure Company Law Directors' Duties Fiduciary Duty Negligence Trusts Consumer Protection / Fair Trading Act Security for Costs +6 more

Case Brief

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Parties

Charles Rex Luscombe; Dorothy Turner; Kathleen Whyte (executors and trustees of the estate of Winifred Anne Luscombe, deceased)

Plaintiffs

Dillon O'Sullivan

First Defendant

Kelvin John Syms

Second Defendant

Simon Robert Purvis

Third Defendant

Andre Gaylard

Fourth Defendant

Bret Paul Jackson

Fifth Defendant

Kenneth David Swain

Sixth Defendant

Donald Francis Curtin

Seventh Defendant

John Perris

Eighth Defendant

Procedural Posture

Civil Litigation (investment Losses; Directors' and Fiduciary Duties; Company Law) / Interlocutory – Application for Security for Costs Under High Court Rules R 5.45

Legal Issues

  1. 1 Whether there is reason to believe plaintiffs will be unable to pay defendants' costs (threshold test under r 5.45)
  2. 2 Whether security for costs should be ordered and in what quantum and staging
  3. 3 Whether plaintiffs' impecuniosity was caused by defendants' conduct

Ratio Decidendi

The Court found the threshold test satisfied—there was reason to believe the plaintiffs could not meet a costs award—and, after weighing the merits (which tilted in favour of the defendants), the absence of evidence that impecuniosity was caused by defendants, and legal limits of s 301, it exercised its discretion to order security for costs. The Court ordered NZD 25,000 deposit as security for costs to date, stayed the plaintiffs' claim until payment, adjourned fixing further security pending the Court of Appeal outcome, and awarded costs of the application to the defendants.

Court Disposition

Order for security for costs granted in part; plaintiffs' claim stayed until security paid; matter remitted for case management to fix further security; costs of the application awarded to defendants.

Orders

  • Plaintiffs to provide security for defendants' costs up to this stage in the sum of NZD 25,000 by deposit with the Registrar in an interest-bearing account (security excludes costs of the present application)
  • Plaintiffs' claim against the defendants is stayed until the security is given