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Accident Compensation Cases

Liu v Boyes (DC, 14/09/11)

Judgment Text

Judge D M Wilson QC
This is a claim for exemplary damages by the plaintiff arising from two assaults on him by the defendant when both were pupils of the Auckland Grammar School. The first is alleged to have occurred on 30 November 2004 during an assembly when the plaintiff claims the defendant used to bend a metal bead wrapped round his fist to punch the plaintiff in the head. 
The plaintiff also alleges that on 13 May 2005 in a classroom at Auckland Grammar School the defendant assaulted him and broke his jaw. 
The defendant admitted assaulting the plaintiff in his response to the notice to admit facts dated 8 November 2010. 
This is an application by the defendant for security for costs. This is the second such application. An earlier application was declined in a written judgment of Judge Joyce QC on 23 February 2010. That decision was dealt with at the same time as His Honour declined the plaintiff's application to proceed by way of summary judgment. Perhaps more relevantly to the present application, at the same time he dismissed an application to strike out the claims made by the plaintiff. His Honour said that whether the “punitive element of exemplary damages is available for either or both of the assaults should in all justice here be decided after a full trial”. He rejected a submission that exemplary damages could not be awarded in these circumstances. 
At an interlocutory directions hearing Judge Mathers granted leave to the defendant to bring a further application for security for costs given that his own legal aid had been withdrawn. 
Legal principles on strike out applications 
This proceeding was filed before 1 November 2009 so that the previous rules of Court apply. That rule is rule 61 of the District Courts Rules 1992. Under rule 61 the Court may make an order for security of the costs where “there is reason to believe that a plaintiff will be unable to pay for costs of the defendant if the plaintiff is unsuccessful in the plaintiff's proceeding”
Before both Judge Joyce QC and before me Mr Lenehan referred to McLachan Limited v MEL Network Limited (2002) 16 PRNZ 747Has partially negative history or cases citing, but has not been reversed or overruled[Yellow] . The Court of Appeal as Judge Joyce observed at paragraph [56] of his judgment noted the discretionary nature of the remedy of exemplary damages and emphasised the need for a careful assessment of the facts of the particular case. 
McLachan is authority for the proposition that the security for costs rule contemplates that the plaintiff will be unable to meet an award of costs, and that an order for substantial security may effectively prevent the plaintiff from pursuing the claim. An order having that effect should only be made after careful consideration and in the case where the claim has little chance of success. Access to the Courts for a genuine plaintiff is not likely to be denied. On the other hand defendants must be protected against being drawn into unjustified litigation, particularly where it is over-complicated and unnecessarily protracted1
| X |Footnote: 1
See paragraphs [15] and [16] of McLachan
The Court is entitled to act on credible evidence of surrounding circumstances from which it might reasonably be inferred that the plaintiff would be unable to pay the costs2
| X |Footnote: 2
Totara Investments Limited v Abooth Limited CIV-2007-404-000990, High Court Auckland, judgment of Associate Judge Abbott 4 March 2009 at paragraph [27]. 
. Further, there must be some evidential foundation or indications to support “reason to believe” before the Court is justified in drawing adverse inference from a plaintiff's failure to respond to a request to furnish details of his financial position. 
Evidential foundation 
The factual basis on the issue of inability to pay has not changed much since the argument proceeded before Judge Joyce QC. The additional material relates to further inferences which the defendant submits ought to be drawn from apparent disputes between the plaintiff and previous legal advisors over costs. Counsel cited a judgment by default obtained by counsel Mr D E Cutting against the present plaintiff and family members for $15,125.82 and $1,863.39 for costs. That judgment by default was set aside by Justice Williams in the Auckland High Court because of an apparent failure to comply with time requirements and the proceeding is still unresolved. No affidavit evidence was before Judge Joyce. 
Two affidavits were relied on in the argument before me. The first was an affidavit by Mr S R Joyce who is the solicitor on the record for the first defendant3
| X |Footnote: 3
Although curiously he describes himself as corporate counsel. 
. In that he refers to and annexes a copy of an affidavit by the plaintiff's previous solicitor Ching Yeung Lam who was granted leave to withdraw. He also referred to the claim by Mr Cutting through his instructing solicitor Mr Keene and produces the default judgment and the High Court judgment I have referred to above. 
He also sought fit to produce a letter recently sent to the plaintiff dated 13 July 2011 which concludes with the words “this letter is not without prejudice and it will be put before the Court”. This is apparently regarded by him and Mr Lenehan as an open letter. The plaintiff objects to this letter and submits that it is unprofessional and inappropriate for it to be produced. I am not in a position to make a finding on that objection given the final words of the letter. The presentation of that material before me however has had no impact on the decision that I have come to concerning the application. 
The second affidavit relied on by the defendant is from a Mr Rodney Moratti dated 24 August 2011. He is a private investigator. He gave evidence of searching the Insolvency Register held by the Ministry of Economic Development and found no entries in the name of the plaintiff or his father who is supporting him in these proceedings. He could find no property in the names of either the plaintiff or his father and no assets held in the name of the plaintiff. The affidavit does not say when those searches were made. I granted leave to the defendant to produce an updated affidavit advising that and correcting that omission. This has been done. The searches were carried out on 23 August 2011. 
The arguments 
Mr Liu submitted that the affidavit did not assist the defendant and favoured his own case. There were no insolvency records relating to himself and no evidence of assets or debts. He pointed to the circumstance that he had been pursuing his claims over the last six years without the assistance of legal aid and entirely dependent on his own funding. 
Mr Lenehan submitted that the plaintiff was 22 years old who as far as the defence knew was still a university student as he had been two years ago. He submitted that “the defendant is being forced to retain counsel to defend allegations against him in a 10-day hearing against the 22 year old plaintiff with no apparent means to pay for costs and who is represented by his father”
He submitted that an appropriate award of costs would be a close relationship to the 2B costs on a 10-day hearing which would be in excess of $50,000.00 and could be about $60,000.00. He asked for an order for security for costs for $45,000.00 and consequential orders directing on the date on which security must be given in the absence of which he asked that the plaintiff's claim be struck out. 
Discussion and conclusion on the ability to pay costs 
Applying the principles of law and drawing the appropriate inferences from that evidence I do not draw the inference that the plaintiff would be unable to pay the costs should his claim fail. The case is markedly different from the Totara Investments case on which Mr Lenehan placed much reliance. In that cause there were limited liability companies with many danger signs of total impecuniosities and no basis upon which any other inference than inability to pay could be drawn. 
I find that there is no credible evidence of credible surrounding circumstances from which it might reasonably be inferred that the plaintiff would be unable to pay the costs. A reference to an affidavit of his in 2009 saying he was a university student establishes nothing. In the circumstances I would not be justified in drawing an adverse inference from the plaintiff's failure to provide details of his financial position especially in the absence of a clear request to furnish details of it. He may simply not want the defendant to know what his circumstances are. 
Likelihood of success 
In the event that my decision on ability to pay is overturned I now consider the causes of action and the likelihood of their success. Neither of the causes of action was struck out by Judge Joyce QC in his judgment of 23 February 2010. His Honour put the failure of the strike out application on the basis that “one simply cannot say that either or both of the claims (the respective circumstances of which might in fact found to be ‘propensity’ linked has no possible prospect of success”. I bear in mind as Mr Lenehan submitted to me that Justice Summers in Donselaar v Donselarr4
| X |Footnote: 4
[1982] 1 NZLR 97 at 117. 
“Indeed without some additional feature as for example an abuse of power or the invasion of other rights of the plaintiff, it is not easy to envisage a case of personal injury which would not have been met by compensatory or aggravated compensatory damages, the recovery of which is barred by the Accident Compensation Act. ”
As the learned author of Todd on the Law of Torts said:5
| X |Footnote: 5
5th Edition Brookers (2009) at 25.3.03(1). 
“Exemplary (or punitive) damages are awarded to punish a defendant who is guilty of outrageous wrongdoing, deter that person and others from similar misconduct in the future, and register the Court's condemnation of that behaviour …  
Exemplary damages will be awarded only where the total amount of compensatory damages is considered inadequate to punish and deter, an award of compensatory damages is not a pre-requisite of exemplary damages.6
| X |Footnote: 6
See section 319 of the Injury Prevention Rehabilitation and Compensation Act 2001. 
As before me Mr Lenehan pressed on Judge Joyce QC the decision in Donselaar v Donselaar. That was a dispute between two brothers. A prime facie case for the serious and exceptional remedy of exemplary damages was not made out. 
Before there can be an award of exemplary damages the Court must find that compensation would be “inadequate to punish [the defendant] for his outrageous conduct, to mark disapproval of such conduct and to deter him from repeating it”. With respect I agree with Judge Joyce QC that an assessment of the chances of success cannot be made without hearing the evidence. It is clearly open on the plaintiff's case to a Court to find that the two attacks on the plaintiff by the defendant had elements of outrageous conduct. These elements include the alleged targeting of him by a physically very much bigger and stronger school pupil and the second occasion where his jaw was broken. The defendant is alleged to have said to him “want some more bitch?” 
Whether the Judge at trial will find that in favour of the plaintiff on the facts cannot be foreseen at this stage. 
There is no legal bar to the proceeding. 
It cannot be said that the plaintiff has “little chance of success” nor that the litigation is unjustified. There is no suggestion that the proceedings are either over-complicated or unnecessarily protracted7
| X |Footnote: 7
See paragraph [16] of McLachan
The application for security of the costs against the plaintiff is refused on this basis as well. 
The plaintiff is self-represented so would not be entitled to anything other than legal costs actually incurred and out of pocket expenses relating to this application. If the parties cannot agree on the appropriate award within those parameters I invite the plaintiff to file memorandum and serve it on the defendant's counsel within 14 days. 
The defendant will then have 14 days to reply. The file can then be referred for further consideration. 

See paragraphs [15] and [16] of McLachan
Totara Investments Limited v Abooth Limited CIV-2007-404-000990, High Court Auckland, judgment of Associate Judge Abbott 4 March 2009 at paragraph [27]. 
Although curiously he describes himself as corporate counsel. 
[1982] 1 NZLR 97 at 117. 
5th Edition Brookers (2009) at 25.3.03(1). 
See section 319 of the Injury Prevention Rehabilitation and Compensation Act 2001. 
See paragraph [16] of McLachan

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