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AutoM8 NZ Ltd v The Open Polytechnic of New Zealand [2019] NZDC 15084

Published 08 December 2021

Breach of contract — security for costs — stay of proceedings — nominal plaintiff — impecuniosity — AS McLachlan Ltd v MEL Network Ltd (2002) 16 PRNZ 747 — Highgate on Broadway Ltd v Devine [2012] NZHC 2288; [2013] NZAR 1017 — Saturn Portfolio Management Ltd v Chamberlain & Ors [2017] NZHC 1962 — District Court Rules 2014, r 5.48. The plaintiff company had sought damages for breach of contract, emotional harm and related consequences after the defendant terminated its contract for services. In the current matter, the defendant applied for security for costs, plus an order staying proceedings until the plaintiff had paid the first instalment. The plaintiff argued that it was unable to pay either security for costs, or the defendant's costs if the plaintiff's application failed. Rule 5.48 of the District Court Rules provides the court with the discretion to order security for costs. In deciding whether to exercise its discretion, the Court referred to the High Court decision in Highgate on Broadway v Devine. The Court found the director of the plaintiff company had personal immunity for paying costs, that the plaintiff's case had serious weaknesses, and that the proceedings were burdensome for the defendant. These factors favoured making an order for security for costs, but there was also a risk that making the order would impinge on the plaintiff's right to access to justice. On balance, the Court decided to make the order, setting the amount at $7500. The plaintiff's proceedings were stayed pending payment of the first instalment. Judgment Date: 2 August 2019.

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