Spring v Browne

• Jurisdiction: New Zealand
• Judge: Associate Judge Gardiner
• Judgment Date: 22 February 2022
• Neutral Citation: [2022] NZHC 247
• Docket Number: CIV-2021-404-000992
• Court: High Court

Between

Marc Robert Spring

Plaintiff

and

Cory David Browne

First Defendant

Glenn Charles Tulloch

Second Defendant

[2022] NZHC 247

Associate Judge Gardiner

CIV-2021-404-000992

IN THE HIGH COURT OF NEW ZEALAND

AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA

TĀMAKI MAKAURAU ROHE

Civil Procedure — application for an order for security for costs — applicable principles — standard of proof — Court discretion — High Court Rules 2016

Appearances:

Plaintiff in Person

J Evans for the Defendants

The application for security for costs was dismissed.

JUDGMENT OF Associate Judge Gardiner

This judgment was delivered by me on 22 February 2022 at 3.30 p.m. pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date

Introduction

1 The defendants seek an order for security for costs under r 5.45 of the High Court Rules 2016, in the amount of $50,000. The application is made in the context of Marc Spring's claim for injurious falsehood. Specifically, he claims that the defendants made false statements to a police officer that led to his property being searched, his detention and ongoing financial harm.

2 The defendants contend that Mr Spring's claim is without merit and will not succeed. They claim that if Mr Spring is unsuccessful at trial, he will not be able to meet a costs award, as he has limited income and assets and is involved in several other High Court proceedings.

3 Mr Spring opposes the application on the basis that he does have adequate income and assets to meet a costs award in this proceeding and the other proceedings in which he is involved. Furthermore, he argues that his claim against the defendants is meritorious.

4 This application calls me to decide, first, the threshold question of whether there is reason to believe that Mr Spring will be unable to meet the defendants' costs if he is unsuccessful in the proceeding.

5 If the answer to that question is yes, I will then consider whether it is “just in mall the circumstances” for the Court to order security for costs, and if so, how much. This involves considering all the circumstances and endeavouring to balance the defendants’ interests in being protected from a barren costs order and the plaintiff's right of access to the Court. 1 I will consider:

• (a) whether Mr Spring's claim is unmeritorious; and

• (b) any other relevant circumstances.

Legal principles

6 The Court may, if it thinks it would be just in all the circumstances, order a plaintiff to give security for costs where there is reason to believe that a plaintiff will be unable to pay the costs of the defendant if the plaintiff is unsuccessful in the proceeding. 2

7 An application for security usually requires the Court to determine the following three issues:

• (a) Is there reason to believe the plaintiff will be unable to meet an award of costs against it (the threshold requirement)?

• (b) Is it appropriate for an order for security for costs to be made?

• (c) How much security is appropriate?

8 The determination of each of these issues is at the Court's discretion, which is generally not to be fettered by constructing “principles” from the facts of previous cases. 3

9 It is accepted however that the overriding consideration here is the balance of interests of the plaintiff and the defendant. 4 For a plaintiff, there is always a strong right to access to justice. 5 Accordingly, it will be in entirely exceptional circumstances where this Court will make an order for security for costs which would have the effect of preventing the plaintiff from pursuing a claim. 6 The Court will also consider the extent to which the plaintiff's impecuniosity may have been caused by the defendant's conduct. 7

10 For a defendant, the Court will recognise their interest in not being drawn into unjustified litigation, particularly where it is overcomplicated and unnecessarily protracted. 8 To determine whether litigation is justified, this Court will consider the merits of the claim, to the limited extent that is possible at this early juncture. 9 Notwithstanding that it would be inappropriate for the Court to predetermine the merits, an impression that the plaintiff's claim is unmeritorious may weigh in favour of granting the defendant an order. 10 A security for costs order that will have the effect of preventing the plaintiff from pursuing its claim should only be made after careful consideration and in a case in which the claim has little chance of success. 11

Is there reason to believe Mr Spring will be unable to meet a costs award?

11 The Supreme Court has said that what is contemplated is that “there should be credible … evidence of surrounding circumstances from which it may be reasonably inferred that the [party] will be unable to pay the costs”. This does not amount to proof that the party will, in fact, be unable to pay them. 12

12 In an unsworn affidavit filed in support of the application and an affidavit in reply sworn on 26 October 2021, Glenn Tulloch offers evidence to support the argument that there is reason to believe that Mr Spring will be unable to pay an adverse costs order. This evidence can be summarised as:

• (a) His estimate that Mr Spring's wholesale car business generates annual sales of around $100,000 and an annual profit after tax of around $70,000. Mr Tulloch bases this estimate on his knowledge of Mr Spring's business from the period he worked with him under a Heads of Agreement (10 June 2019 to 21 October 2020).

• (b) His understanding that Mr Spring has no other assets.

• (c) His understanding that Mr Spring is involved in at least four other High Court proceedings.

• (d) An indemnity costs award against Mr Spring in separate High Court proceedings.

13 In response, Mr Spring has sworn three affidavits addressing his financial position and the other court proceedings, and an affidavit by John Robert Marshall Rowe, chartered accountant.

14 Mr Spring's evidence is:

• (a) He can pay any costs award against him in this proceeding and the other proceedings, including if he is unsuccessful in all of them.

• (b) He has a personal net worth (assets less liabilities) of approximately $1 million. His personal income over the last 12 months has been $150,000.

• (c) He is the director and sole shareholder (personally and through a related trust) of a company called Daytona Group Limited. It is a wholesale car business. The company generated a profit before tax and owner remuneration of $228,999,70 for the six months ended 30 September 2021. Mr Spring has exhibited to one of his affidavits a one page unaudited profit and loss account for...