Oldco Pti Ltd v Houston
 NZEMPC 161
IN THE EMPLOYMENT COURT AUCKLAND
IN THE MATTER of Proceedings removed from the Employment Relations Authority
AND IN THE MATTER OF an application for further and better Particulars
AND IN THE MATTER OF an Application for Security for Costs
AND IN THE MATTER OF an Application for Stay
Tony Drake and Mark Donovan, counsel for plaintiff
Penny Swarbrick and Karen Jones, counsel for defendant
Application by defendant for orders requiring the plaintiff to provide better particulars of its claim, security for costs, and for the substantive claim to be stayed pending payment of security for costs and amounts previously awarded to the defendant by the Employment Relations Authority and Employment Court — whether the defendant's applications were barred owing to previously — made applications — what was the relevance of the plaintiff's insolvency — whether the Court had jurisdiction to order proceedings to be stayed conditional upon payment into Court — and what was the correct approach to seeking further particulars close to trial.
At issue was: whether H's stay and security for costs applications were barred owing to previously — made applications under r7.52(1) High Court Rules (“HCR”) (a party failing on an interlocutory application not to apply for same or similar order without leave) and whether these were merited; whether the Court had jurisdiction to order proceedings to be stayed, conditional upon payment into Court; and what was the correct approach to seeking further particulars close to trial.
Held: In respect of the application for further particulars, a list of the purportedly illegitimate business expenses was annexed to Oldco's statement of claim and what H and the Court would benefit from was a statement of criteria used by Oldco in so classifying each allegedly illegitimate expense, rather than how each item was expended and for what purpose, as sought by H. Since the trial date in respect of Oldco's claim was near, rather than forcing Oldco to re-plead its statement of claim, the Court encouraged the necessary information to be provided by Oldco through exchanges of briefs of evidence. H's application in this respect was adjourned with leave to re-apply if necessary.
H's application for security for costs and stay of proceedings were not barred under r7.52(1) HCR since both previous applications occurred prior to Oldco launching its own substantive claim. Oldco's substantive claim remained separate from its challenge until both were consolidated and in any event the extensive nature of Oldco's substantive claim would have created special circumstances on which H's applications could have been made again without leave.
Addressing the security for costs application, it was clear that if H was successful in defending Oldco's challenge and substantive claim, his prospects of recovering costs would be negligible unless the Court assisted him.
As for the application for stay of proceedings, the Court was inclined towards the view that it had jurisdiction to order a stay conditional upon payment into Court but it was not required to make a definitive determination. The Court was not minded to grant the application on its merits since H was essentially seeking to put himself into a better position had Oldco not challenged the ERA determination and brought a substantive claim against H. H made a grievance claim against Oldco knowing that it was insolvent and the stay application essentially required the bank funding Oldco's litigation to satisfy Oldco's obligations to H. Oldco's claim against H was also arguable.
H's application for security for costs was granted and $100,000 was ordered to be paid to H. H's application for a stay of proceedings was refused.
INTERLOCUTORY JUDGMENT OF JUDGE B S Travis
At this hearing the defendant, Mr Houston, sought three orders against the plaintiff company (Oldco).
a) that it be required to provide better particulars of its claim;
b) that it be required to pay security for costs before its claim could be allowed to proceed; and
c) that the substantive proceedings lodged by the plaintiff under ARC 27/09 be stayed pending payment by the plaintiff of;
i) the sums payable by the Authority including costs and the costs awarded by this Court under AC 18A/06;
ii) any amount ordered by the Court as security for costs.
AH these applications were opposed by Oldco.
Ms Swarbrick observed that Mr Houston was facing a substantial claim for damages from Oldco which were filed first in the Employment Relations Authority in August 2008, together with an application for removal. She submitted there has therefore been no discussion between the parties as to the matters alleged and that Mr Houston had not had the opportunity to properly understand either the basis of the claim, or the information that Oldco was relying on to bring it. She said the claim had been raised for the first time four years after Mr Houston's dismissal.
Ms Swarbrick also claimed there had been considerable difficulties in obtaining discovery from Oldco. There have been several requests for particulars and a considerable amount of additional material has been filed by Oldco which has been included in a consolidated statement of claim filed on 1 September 2010. The consolidated statement of claim now includes Oldco's election to challenge the substantive determination of the Employment Relations Authority which found Mr Houston had been unjustifiably dismissed, two costs determinations, a claim for damages of 10 million dollars, a claim for allegedly missing funds of $1.3 million, the refund of wrongly paid expenses in excess of $224,000 and other miscellaneous claims and penalties which, all together, allegedly total just under $12 million (the damages claim).
Mr Drake, for Oldco, noted that there is no procedure in the Employment Relations Act 2000 or the Employment Court Regulations 2000 for ordering further particulars and the Court has used the mechanism provided under relevant High Court rules to deal with such applications. He cited 1 where Chief Judge Goddard stated:,
The primary purpose of particulars is to inform the Court and the opposite party of the nature of the case being pleaded, while a secondary purpose is to set boundaries on that case and to avoid surprise at the hearing.
Mr Drake contended Mr Houston's application sought evidence of the facts of the plaintiff's claim, which was contrary to regulation 11 of the Regulations which requires the facts, but not the evidence of the facts, upon which the claim is based, to be pleaded.
I have considered the pleadings and in particular the consolidated statement of claim and accept Mr Drake's submission that it does comply with regulation 11.
What was particularly being sought by Mr Houston were details of items of expenditure spent on certain overseas trips allegedly paid to Mr Houston which are now being claimed back by Oldco, on the basis that they were not legitimate business expenses and not payable to him as contractual entitlements. A list of those expenses is annexed to the consolidated statement of claim. To plead how it is said each item was expended and for what purpose would result in an extremely prolix statement of claim. What would assist Mr Houston and the Judge having to determine the issues is a statement of the criteria used by Oldco for determining what expenses were personal to Mr Houston and should therefore be refunded. Rather than requiring the consolidated statement of claim to be repleaded at this late stage, the liability trial having been set down to commence on 21 February 2011 for six days, I suggested the following approach to counsel. The basis for categorising the expenses should emerge from the exchange of briefs of evidence, a process upon which the parties have now agreed. If it does not become clear from Oldco'sbriefs of evidence what criteria was used and Mr Houston is thereby disadvantaged, I reserve leave for him to reapply for further particulars, using the application presently before the Court and bringing it up to date on any alleged deficiency in the briefs of evidence to be filed. The present application for particulars is therefore adjourned awaiting the exchange of briefs.
There was no issue between counsel that the Court has the jurisdiction to order security for costs. Regulation 6 of the Regulations allows the Court to embody the High Court Rules which in this case would be r 5.45. The jurisdiction to order security has been confirmed in a number of cases. Both counsel cited 2 and the broad discretion the Court has in this area. There was no issue that Oldco will be unable to pay Mr Houston's costs if Oldco is unsuccessful in its consolidated proceedings.
Mr Drake noted that the Employment Court has shown a reluctance to grant security for costs, citing 3 except where the parties are domiciled beyond the jurisdiction of the Court., He submitted ordering security can have the effect of preventing parties presenting their cases on the merits. This had been particularly so in cases where...
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