WATER TREATMENT PRODUCTS LIMITED (IN LIQUIDATION) V FALLOON HC TAU CIV-2010-470-625

WATER TREATMENT PRODUCTS LIMITED (IN LIQUIDATION) V FALLOON HC TAU CIV-2010-470-625 [25 May 2012]IN THE HIGH COURT OF NEW ZEALANDTAURANGA REGISTRYCIV-2010-470-625[2012] NZHC 1141UNDER The Companies Act 1993IN THE MATTER OF an application under Section 301 of theCompanies ActBETWEEN WATER TREATMENT PRODUCTSLIMITED (IN LIQUIDATION)PlaintiffAND MURRAY JAMES FALLOONDefendantHearing: (on papers)Appearances: Mr King for plaintiff (on papers)Mr G Brittain for defendant (on papers)Judgment: 25 May 2012JUDGMENT OF ASSOCIATE JUDGE DOOGUE[Stay application]This judgment was delivered by me on25.05.12 at 3 pm, pursuant toRule 11.5 of the High Court Rules.Registrar/Deputy RegistrarDateSolicitors:Dennis King Law, P O Box 1092, New Plymouth – by email: dennis@denniskinglaw.comMr G Brittain, Barrister, P O Box 13-473, Tauranga – by email: brittaing@xtra.co.nz[1] This proceeding is in the Chambers List for hearing on Friday 25 May 2012. The issue that will be under consideration if the Chambers hearing goes ahead is the question of unpaid costs which the defendant was directed to pay by a judgment ofthis Court dated 21 October 2011. The defendant/applicant was awarded costs on a2B basis. Those costs total $3,674.20. They have not been paid. There is noargument about the matters that I have just set out.[2] The defendant now seeks an order staying the proceeding because the party and party costs have not been paid. Mr Brittain for the defendant has referred me toa judgment of Cooper J in the proceeding Kidd v Van Heeren1. In that case, HisHonour in reliance on (then) r 258 found that proceedings could be stayed incircumstances where costs orders had not been paid. He has also referred to otherauthorities where the same approach was taken.[3] I am in no doubt that there is jurisdiction to make the type of order which thedefendant seeks in this case.[4] The next issue concerns whether as a matter of discretion the Court ought notto make the order.[5] Mr King in his memorandum has referred to the fact that the litigation in thiscase has been funded by grants from the Liquidation Surplus Account and that therecan be no certainty that the fund would be prepared to provide the amount requiredto meet the costs order in this case. Mr King says that if the Liquidation SurplusAccount did not assist then the amount would not be able to be paid. This would bea hardship to the plaintiff, he submits.[6] Mr King says there have been failures on the part of the defendant to provide access to electronic data other than on the stipulated basis that the plaintiff is to paythe costs that are going to be incurred in accessing that data, the password apparentlyhaving been lost. Mr King says that the defendant has no right to insist uponpayment of that amount as a condition of discovery being given and he ties theshortcomings of the defendant's conduct, as he views them, into the question of thediscretion to order a stay.1 Kidd v Van Heeren, Auckland HC, CIV-2004-404-652, 16 November 2006.[7] My brief reasons for granting a stay are these. First, the order for costs was made in October of last year. Where a Court makes an interlocutory order for costswithout also giving directions at the point at which the order is to take effect isdeferred, then the opposite party is entitled treat it as imposing an immediateobligation. The obligation to pay costs came into effect some six or seven monthsago.[8] Mr King says making an order for stay could spell the end of the litigationand that that would be unjust to the plaintiff. I accept that it would be a blow for theplaintiff if a stay were ordered. On the other hand, in the circumstances of this caseit has to be appreciated that the defendant is a litigant in person who has no doubthad to pay his lawyers for the costs of the litigation generally and for the applicationfor security for costs which was dealt with last year. The Court has determined thatthe plaintiff should make a contribution to the costs that the defendant hasundoubtedly had to pay. Unless payment is made to the defendant in accordancewith the Court order, he will continue, in effect, to have to carry the costs of thatapplication without having the benefit of the contribution that the Court ordered.This too is unfair.[9] On the other hand, I accept that the defendant has had the benefit of asecurity for costs order with regard to other aspects of the costs in the case whichprovide him with a measure of protection in regard to those costs. The Court has totake a balanced approach on these matters.[10] I also consider it relevant that in this case the costs which have been incurredby the defendant have no doubt been exacerbated by the unsatisfactory history on thepart of the plaintiff in dealing with this case. I commented on those matters in myjudgment on the security for costs application which was issued in October of lastyear.[11] Finally, there is the consideration that Mr Brittain referred to, that Courtorders are there to be obeyed. I agree that the Court should ensure that when itmakes ordersit expects that there should be practical consequences arising from them. The Courtdoes not make idle orders in other words.[12] The next issue concerns the discovery point. The Court has yet to deliberateon that issue and therefore the plaintiff's proposition that the defendant's insistenceon being paid the costs of accessing the data is improper, has yet to be tested. It maywell be that the Court will agree with the defendant that it is the plaintiff, as the partywho seeks the advantage of having discovery of the documents in question, will haveto meet any unusual financial costs incurred in doing so which is not the fault of thedefendant, and that therefore it is for the plaintiff to meet the expenses of taking thatstep. I should add that that will not necessarily be the conclusion of the Court.There are however arguments both ways on that point. In my view it cannot be saidthat this is a relevant consideration which should influence the Court whendetermining the stay application.[13] A further issue is that what is now sought is an order for stay (as contrasted with an order dismissing or striking out the proceeding). The possibility that theplaintiff may at some future point be able to meet the costs order cannot be ruled out.Obviously at some point if the proceedings have remained stayed for a long time,their ultimate fate will have to be re-visited. However that is not a matter the Courtneeds to concern itself with at this point.[14] On balance, I conclude that an order for stay as sought by the defendantought to be granted and I make such an order under r 7.48. The stay order is to takeeffect forthwith and is to remain in force until further order of the Court._____________J.P. DoogueAssociate Judge