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PICKARD AND ANOR V AMBROSE AND ANOR HC WN CIV-2003-091-143 [2009] NZHC 1019 (13 August 2009)

IN THE HIGH COURT OF NEW ZEALAND
WELLINGTON REGISTRY
                                                                 CIV-2003-091-143



               BETWEEN                    AMANDA PICKARD
                                          First Plaintiff

         
     AND                        TROY TAYLOR
                                          Second Plaintiff

               AND      
                 CHAS AMBROSE
                                          First Defendant

               AND                     
  RINNAI NEW ZEALAND LIMITED
                                          Second Defendant


Hearing:       11 August 2009

Counsel:
      M D Lloyd for Plaintiffs
               A R Armstrong for First Defendant
               G D Simms for Second Defendant

Judgment:
     13 August 2009 at 4.30pm


I direct the Registrar to endorse this judgment with a delivery time of 4.30pm on the
13th day of
August 2009.



                 RESERVED JUDGMENT OF MACKENZIE J



[1]     This proceeding is on a timetable to a scheduled three
week trial commencing
on 27 October 2009. Both defendants have applied for additional security for costs.
Application is also made
for further discovery in respect of medical records of the
plaintiffs.


[2]     A brief description of the background will suffice.
The plaintiffs, who are a
mother and her young son, allege that they were subjected to chronic carbon


PICKARD AND ANOR V AMBROSE
AND ANOR HC WN CIV-2003-091-143 13 August 2009

monoxide poisoning from a gas heater installed in their home. They claim that that
was caused by the negligence of the first defendant as installer, and the second
defendant as supplier, of the appliance.


[3] 
  The proceedings were commenced in 2003. An application for security for
costs was brought in 2005, and was the subject of a judgment
of Ronald Young J on
16 December 2005. He ordered the first plaintiff to provide security for costs in the
sum of $5,000 to both
first and second defendants.


[4]    The Court may make an order for security costs under r 5.45 of the High
Court Rules. The threshold
test is that there is reason to believe that the plaintiff will
be unable to pay the costs. That threshold is admitted here. Security
may be ordered
if the Judge thinks it is just in all circumstances. The general principles are as set out
in A S McLachlan Ltd v
MEL Network Ltd  [2002] 16 PRNZ 747. Both the question
whether or not to order security, and the quantum of security, are discretionary
decisions. The discretion is not
to be fettered by constructing principles from the
facts of previous cases. What is required is a careful assessment of the facts
of the
particular case.


[5]    The authorities referred to by counsel for the second defendant show that a
further order for security
may be made if there has been a change in circumstances
since the previous order. Counsel relies upon a number of changes in this
case. The
first is that, at the time when the previous order for security was made, the plaintiffs
were in receipt of legal aid,
and this has now been withdrawn. The withdrawal of
legal aid has been confirmed by a decision of this Court on 3 July 2009. The second
change of circumstances relied upon is that there is now a non party funder of the
plaintiffs' costs. There is an affidavit from
an anonymous third party who has
agreed to fund the plaintiffs' costs to trial in this matter. The third change relied
upon is that
there have been amendments increasing the amount of damages claimed
by the plaintiffs. The defendants also assert that the plaintiffs'
conduct in relation to
the proceedings justifies an order for the provision of further security. They point to
instances of non-compliance
with timetable orders, and other matters.

[6]    Counsel for the plaintiffs submits that the plaintiffs have a strong claim and
should not be denied access to justice, that access will be denied by increasing the
level of security. The plaintiffs submit that
their impecuniosity is caused by the
actions of the defendants relevant to the proceedings. They further submit that there
is a public
interest element to the litigation. Counsel for the plaintiffs acknowledges
that there have been defaults in the conduct of the proceedings
(I should add, in
fairness to present counsel, largely prior to Mr Lloyd's involvement) but submits that
the plaintiffs' case is
now focussed and will be ready for trial in accordance with the
current timetable. Mr Lloyd submits that previously the plaintiffs'
claim has been
hampered by an insufficiency of evidence of a causative link between the form of
carbon monoxide poisoning which the
plaintiffs allege, and the effects which they
allege. The plaintiffs have now been able to engage the services of an overseas
expert
toxicologist on this aspect, who it is intended will give evidence.


[7]    As assessment of the strength or weakness of the plaintiffs'
case may be a
relevant consideration on an application for security for costs. The plaintiffs claim
that their case is supported
by Dr Penny, whom they say is a world expert. The
defendants contest that, and point to the medical evidence they have obtained.
They
also say that there are issues as to whether the defendants are liable for negligence
for any carbon monoxide emissions from
the heater. As I advised counsel at the
hearing, I do not consider it appropriate to address the strength of the case here. I am
the intended trial Judge.     It would not be appropriate to examine, even in a
preliminary way, the merits of the claim, or of the
defence.           That will be an
assessment for trial. I approach this application on the basis that the plaintiffs have a
claim
which they are entitled to take to trial. In doing so express no views on the
merits of the claim, or of the defences.


[8]    Counsel
for the plaintiffs submits that this litigation has a public interest
dimension. Counsel for the defendants contest that. I do not
consider that the public
interest dimension, which the plaintiffs allege, is strong. I do not regard that as an
important consideration
on this application.


[9]    I do not consider that the way in which the proceedings have been conducted
previously is a consideration
which should carry significant weight at this stage. It

would not be appropriate now to make an order for security for costs which
have
already been incurred by the defendant. The proper objective of an order for security
is to protect the position of the defendant for costs to
be incurred. What is important
are the steps to come. This case is now on a tight timeframe to trial. An important
consideration
is the avoidance of any possible further disruption. The relevance of
previous conduct must be seen in that light.


[10]    The
plaintiffs claim that their impecuniosity has resulted from the
defendants' conduct. I do not view that as a relevant consideration
here.


[11]    The plaintiffs have, since the withdrawal of legal aid, been able to make
alternative arrangements to fund this litigation.
A third party, who wishes to remain
anonymous, has agreed to fund the plaintiffs to trial. That person has filed an
affidavit setting
out the reasons for agreeing to do that.


[12]    I am not concerned on this application with the validity or propriety of the
funding
arrangements, or with their detail.        For present purposes, I regard the
availability of a third party funder as relevant only
to the extent that it bears upon the
question of whether, if security were ordered, that would prejudice the ability of the
plaintiffs
to pursue the claim to trial.


[13]    Counsel for the second defendant refers to Dymocks Franchise Systems
(NSW) Pty Ltd v Todd
(No 2) [2005] 1 NZLR 145 as authority for the proposition
that the Court has jurisdiction to make an order for payment of costs by
the non party
funder. Whether a non party costs order would be appropriate is not a matter which
can be explored on the present application.
That will be an issue for resolution after
trial, if the need arises.


[14]    The defendants seek disclosure of the identity of
the third party funder. That
person has expressed a wish to remain anonymous. I do not consider that I could, on
this application,
order disclosure. That issue was considered in Jupiter Air Ltd (In
Liq) v Australian Aviation Underwriting Pool Pty Ltd  (2002) 16 PRNZ 702. Rodney
Hansen J said:

       [32]    Unless directly authorised by the rules, the jurisdiction to order
               disclosure
by discovery or otherwise, appears only to exist when it is
               necessary to make a Court ordered remedy effective. That
is the
               principle which unifies those cases in which disclosure has been
               ordered.

       [33]    It
is not a principle which can be applied in this case, at least not at
               this stage for the purpose of the application
for security for costs.
               The Court will not be precluded from dealing with the application.
               The liquidator
is free to decide what he will disclose for the purpose
               of the application. He, and those standing behind him, will
wear the
               consequences of an election not to provide information about the
               identity and worth of those
funding or standing to benefit from the
               litigation. The absence of that information will, however, not prevent
  
            the Court from exercising its discretion under r 60.

       [34]    I conclude therefore that the Court has no jurisdiction
to make the
               order for disclosure sought by the first defendant. I differ from the
               contrary views in
Hamilton v Papakura District Council and
               Chisholm v Auckland CC, expressed, as I have noted, without the
        
      benefit of the Court of Appeal's judgment in Abraham v Thompson.

[15]   I record my respectful agreement with that reasoning.


[16]   In my view, the most significant consideration in determining the appropriate
exercise of the discretion here is the question
whether the ordering of further security
is likely to mean that the claim cannot be pursued. The Court should be slow to
make an
order for security which will, or is likely to, have the effect that the plaintiff
will be unable to proceed to trial.


[17]   The
defendants seek the sum of $30,000 each. The evidence indicates that
security at or near that level would not be available from the
plaintiffs' own
resources. I am satisfied from the affidavits that the plaintiffs would be unable to
provide that security. The third
party funder has made it clear that the resources
available from that source do not extend to providing security. The third party
funder says "I don't have the funds available to pay the security for costs that I
understand the defendants are now seeking. If
the Court orders security I would
have to cut my losses and withdraw". I cannot do other than accept that statement.
Accordingly,
I approach the present application on the basis that if the order sought
by the defendants is made, there is a high probability that
the plaintiffs will be unable
to proceed.

[18]   This case essentially involves a balancing of the potential hardship and
injustice
to the plaintiffs if they are unable to proceed to trial against the potential
injustice to the defendants of an inability to recover
costs if they are successful at
trial. The risk to the defendants is, as Mr Simms correctly submits, one of injustice,
not one of
hardship. Both defendants are insured. While that is not generally
relevant to the question of costs, it does mean that neither defendant
can establish
any particular hardship which will arise from an inability to recover costs, other than
the injustice inherent in an
inability to recover an amount awarded by the Court.
There is not a risk that the inability to recover that amount will cause some
other
hardship to the defendants.


[19]   In weighing the potential injustice to the defendants, it is relevant that the
security
which they seek would mitigate, but not eliminate, the potential injustice.
As counsel for the defendants have pointed out, their
recoverable costs, if they are
successful, are likely to be much greater than the amount of security sought in any
event. So even
if additional security is awarded, that would not remove, it would
merely temper, the potential injustice to the defendants. Counsel for the defendants
submit that, if security
at the level of $30,000 may cause hardship to the plaintiffs, a
lesser amount might be appropriate. I do not consider it appropriate
to attempt to
make any assessment of whether there may be a level at which the provision of
further security would not pose a significant
risk that the claim could not be pursued.
Any amount less than that now sought would not temper the potential injustice to an
extent
which would justify an award.


[20]   Weighing the risk that the plaintiff will be unable to pursue the claim against
the risk of
a potential injustice to the defendant from the incurring of unrecoverable
costs, I am satisfied that the balance comes down heavily
against the imposition of a
requirement for further security. As I have said, it is not appropriate to express any
view on the merits
of the claim. Its merits should be decided by the Court. That will
not be possible if a requirement for extra security cannot be
met by the plaintiffs. I
consider that the risk of that outweighs, to a considerable extent, the potential
injustice to the defendants.


[21]   For these reasons, the application for further security for costs is dismissed.

[22]   The second application is an application
by the first defendant for further
discovery. The first defendant seeks an order that the first plaintiff give an authority
in favour
of the first defendant for the Accident Compensation Corporation to
disclose to the first defendant documents in relation to claims
made by the first
plaintiff to ACC in respect of personal injury by accident and in respect of which
cover has been granted.


[23]
  I am of the clear view that it would not be appropriate, this close to trial, to
make such an order.       There have been previous
issues concerning the medical
examination of the plaintiffs, and of the disclosure of medical information. The first
plaintiff had
earlier given open ended authorities to any person or entity holding any
medical records and/or documents relating to the health
of either plaintiff between
1993 and 2008 to provide all such records and documents to the solicitors for the
defendants. There is
no adequate explanation in the material relied on in support of
the application, to satisfy me that that very extensive authority
should be regarded as
insufficient and that further discovery should be required at this late stage before
trial. Reliance in placed,
in support of the application, to reference in a report from
Dr Marks to head injuries. There is however no explanation of why any
further
information could not have been obtained under the previous authority or, if it could
not, why this application could not
have been made soon after Dr Mark's report and
the other medical reports were obtained about a year ago.


[24]   For these reasons,
this application also is refused.


[25]   As to costs, I think that these should be fixed now as required by the High
Court Rule
14.8(1)(a). Under High Court Rule 14.2(a), the plaintiffs have succeeded
on these applications and are entitled to costs. I fix these
on a 2B basis. I do not
consider that it would be just to require payment of those costs at this stage. I have
held that the potential
injustice to the defendants of a possible unrecoverable award
for costs against the plaintiff after trial does not justify the provision
of further
security. I do however consider that it would be just to ensure that this liability of
the defendants for costs can be
set off against any costs which may subsequently be
awarded in their favour. Those are, in my assessment, special reasons why these

costs should not become payable when fixed under High Court Rule 14.8(1)(b). I
direct that the costs shall not become payable until
further order.




                                                                  "A D MacKenzie J"

Solicitors:    M D Lloyd,
Barrister, Auckland, for Plaintiffs
               Young Hunter, Christchurch, for First Defendant
               McElroys, Auckland, for Second
Defendant