Claim must provide clarity as required

Summary

The Court decided that to consider the strike-out application, the case must be re-pleaded to provide clarity of issues and claim.

Impact of decision

The decision confirms that the Court will hear a case based on any reasonable grounds but will strike out a malicious prosecution tort if the issues involved were not ultimately found in the plaintiffs favour.

Facts

The Commissioner of Inland Revenue ("the Commissioner") applied to strike out Chesterfields Preschools Limited & Ors ("the plaintiffs") claim for damages for malicious prosecution of civil proceedings.

The plaintiffs are associated with David John Hampton and have been property-holding companies and operators of pre-schools involved in longstanding litigation with the Commissioner.

The malicious prosecution claimed by the plaintiffs related to liquidation proceedings and summary judgment proceedings against the plaintiffs.

Strike-out application

The Commissioner submitted that:

• the liquidation proceedings were not resolved in favour of the plaintiffs;
• the plaintiffs' claim that the liquidation proceedings were set aside is unsustainable;
• each proceeding (save CIV-2000-409-803) was discontinued but in the context that the company had either accepted a liability and paid money or would do so;
• it had withdrawn the CIV-2000-409-803 proceeding in light of doubt as to the nature and extent of the debt claimed, with the Commissioner paying a sum of money on account of costs;
• a debt was due and owing and the winding-up of the relevant company was sought.

The plaintiffs opposed the Commissioner's application by alleging that:

• Fogarty J's judgment in Chesterfields Preschools¹ (judicial review) had, "by implication", set aside the liquidation proceedings; and
• the summary judgment proceedings were permanently set aside by the judicial review proceeding and therefore resulted in favour of the plaintiffs.

At issue was whether the Court should strike out all or some of the causes of action advanced by the plaintiffs.

Decision

After analysing the relevant principles², submissions³ and case law⁴, his Honour Associate Judge Osborne found that the proceedings could not arguably amount to a determination in favour of the plaintiffs and that the only tenable claim was in one liquidation proceeding.

His Honour highlighted that there had been no judgment in favour of the plaintiffs and that each summary judgment proceeding remains adjourned⁵.

His Honour also found that debts were paid by the plaintiff to the Commissioner, (satisfactory arrangements were also made) and thus, the substantive outcome in each proceeding (save CIV-2000-409-803) was in favour of the Commissioner. Accordingly, seven of the eight proceedings were struck out.

Reference to the plaintiffs' statement of claim and its lack of clarity was also mentioned⁶:

• There are paragraphs which by their nature do not lend themselves to a clear response by way of defence because separate and distinct facts are not stated separately and clearly as required by r 5.17(1).

Ultimately, the plaintiffs were ordered to:

• file and serve (through a practising solicitor) an amended statement of claim in which the preserved cause of action is pleaded; or
• if Mr Hampton is to continue to represent Chesterfields Preschools Limited, then he must file and serve a representation memorandum with a draft of the amended pleading.

¹ Chesterfields Preschools Ltd v Commissioner of Inland Revenue (2007) 23 NZTC 21,125.

² Paragraph [18].

³ Paragraphs [11], [24], [28], [29], [32], [33], [34] and [43].

⁴ Paragraph [22].

⁵ Paragraphs [40] and [43].

⁶ Paragraph [48].