3I Innovation Limited v Black Magic Design Studio Limited

[2020] NZHC 1776

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2020-404-458

[2020] NZHC 1776

BETWEEN

3I INNOVATION LIMITED

Applicant

AND

BLACK MAGIC DESIGN STUDIO LIMITED

Respondent

Hearing:	On the papers
Counsel:	M J Fisher and J Yoon for the Plaintiff E J Grove for the Defendant
Judgment:	23 July 2020

COSTS JUDGMENT OF MUIR J

This judgment was delivered by me on Thursday 23 July 2020 at 4.00 pm Pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar Date:…………………………

Counsel:

M J Fisher, Barrister, Auckland J Yoon, Barrister, Auckland

E J Grove, Barrister, Auckland

Solicitors:

J D Ryan, Claymore Partners Limited, Auckland S A Rohde, Lateral Lawyers Ltd, Auckland

3I INNOVATION LIMITED v BLACK MAGIC DESIGN STUDIO LIMITED [2020] NZHC 1776 [23 July

2020]

Introduction

[1]    In my substantive judgment dated 29 May 2020,1 I granted the plaintiff’s application to set aside the defendant’s statutory demand under s 289 of the Companies Act 1993. I also reserved costs (with a provisional indication that a 2A award may be appropriate). Memoranda are now to hand including a reply which I grant leave to file. This is my costs judgment.

The submissions

[2]    The plaintiff seeks costs on a 2B basis. It does so because it says it was the successful party and it refers to multiple cases,2 where awards have been made or provisionally indicated on that basis.

[3]    The defendant says that it “may be appropriate to let costs lie where they fall” but in any event, at least some of the steps for which costs are claimed should attract a 2A award and not a 2B. It also says that any such award should lie in court pending the outcome of its Disputes Tribunal proceedings, which by the time of publication of this judgment, it says will have been filed.

Discussion

[4]    On the application of standard principles, the plaintiff is entitled to costs as the successful party. There is nothing in its conduct which would disqualify it from doing so. In particular, I do not accept that because part of the reason for the dispute between the parties may lie in the absence of clear terms of contract, it is appropriate to deny costs to the plaintiff. It was always open to the defendant to resolve those issues at the time. Nor is it appropriate to reserve costs pending determination of the substantive

1      3I Innovation Limited V Black Magic Design Studio Limited [2020] NZHC 1173.

2      Maruti Investments Ltd v Riteline Roofing Ltd [2017] NZHC 2905; Confident Trustee Ltd v Garden and Trees Ltd [2017] NZCA 578; DNS Forest Products 2009 Ltd v Logic Forest Solutions Ltd [2018] NZHC 1214; Specialist Helicoptor Solutions Ltd v Rotor Lease Ltd [2018] NZHC 1552; Moffat Road Ltd v North Harbour Motors Ltd (in liq) [2018] NZHC 2023; Clover4 Ltd v Bourke & Ors as Trustees of the JHB Trust [2018] NZHC 2585; Wallace Homes Ltd v Pearlfisher Trustee Ltd [2018] NZHC 2654; Leisurecom (NZ) Ltd v W M T Construction Taranaki Ltd [2018] NZHC 3172; MCAM Medical (2011) Ltd v Striker Electrical Ltd [2019] NZHC 119; Glots Ltd v Tsang [2019] NZHC 1568; Cromi Investments Ltd v CMP Construction Ltd [2019] NZHC 2142 and Target Painters & Decorators Ltd v Omid Construction Management Group Ltd [2019] NZHC 2544.

dispute. Such would be inconsistent with the practice invariably adopted by this Court,3 which is itself consistent with Rule 14.8 requirements on interlocutory applications.

[5]    I accept also that having regard to awards in other cases, including where relatively small sums of money were involved, my provisional 2A indication requires reassessment. But as the Court of Appeal pointed out in Commissioner of Inland Revenue v Chesterfield Preschools Ltd,4 neither is it appropriate to simply apply a blanket 2B assessment to all steps (unless it reflects that the case is an average one requiring a normal amount of time for each step).

[6]    In respect of preparation of submissions for hearing, the defendant says that a 2A award would be appropriate having regard to the fact that the submission was only three and a half pages in length and cited one authority.

[7]    Although length is not necessarily a predicator of quality, and although counsel certifies that the 1.5-day 2B allowance was expended in preparation, I consider the submissions to have been in a form which at least should have taken “a comparatively small amount of time to prepare”. The first 1.5 pages are a basic summary of the interlocutory history and what the plaintiff deposed. There then follows a summary (one page) of the “grounds of opposition” which is substantially a factual recitation. Under the heading “Disputed invoices” it is alleged that the claimed services were variously not authorised, conditional on “an event that has not happened” or were outside the scope of works. The proposed set off is then briefly described. Although the submission refers in a footnote to the statutory provisions relevant to the defendant’s “administrative restoration” in the United Kingdom, those had already been presaged in the plaintiff’s affidavit in reply and I am not persuaded that extensive further attendances were required in that respect. Overall, I consider a 2A allowance appropriate.

3      The respondent cites the oral judgment of Associate Judge Abbot in Westpark Marina Limited v Automated Solutions Limited HC Auckland CIV-2011-404-7295, 30 November 2011 where costs were reserved pending final determination. However, no authority was cited for the approach adopted by the Associate Judge.

4      Commissioner of Inland Revenue v Chesterfield Preschools Ltd [2010] NZCA 400, (2010) 24 NZTC 24,500.

[8]    The defendant makes a similar point in respect of the preparation of bundles of documents for which the 2A allowance is 0.4 of a day and the 2B allowance is 0.6. I accept there were only nine documents in the bundle, but the extensive annexures to the affidavits had to be separately collated and indexed. A 2B allowance is appropriate.

[9]    The defendant submits that any such award should, in the interim, lie in court. That is because my orders setting aside the statutory demand were made against an undertaking by the plaintiff to co-operate in prompt disposition of the intended Disputes Tribunal Proceedings. As a further condition of the orders, I specified that such co-operation extend to the defendant’s director’s participation in the hearing by AVL link from overseas.

[10]   Although acceding to the defendant’s request might at one level be thought to incentivise adherence to the undertaking, there is nothing to suggest it will not in any event be fulfilled. It was voluntarily given and is recorded in a judgment of the Court should it be necessary for the defendant to rely on it. Nor is it irrelevant that the plaintiff asserts a counterclaim which it appears enthusiastic to pursue meaning that there is further incentive to have the dispute promptly resolved.

[11]   I accordingly reject the submission that this judgment should lie in court pending the outcome of the substantive dispute.

Result

[12]I award costs and disbursements in favour of the plaintiff in the amount of

$10,772.34 in accordance with the schedule annexed to this judgment.

Muir J

ANNEXURE

Step	Description	Time allocation x daily recovery rate	Amount
37	Filing application and supporting affidavit.	2 x $2,390	$ 4,780.00
12	Appearance at mentions hearing or callover: 8 May 2020.	0.2 x $2,390	$    478.00
12	Appearance at mentions hearing or callover: 19 May 2020.	0.2 x $2,390	$    478.00
40	Preparation of written submissions	0.5 x $2,390	$ 1,195.00
41	Preparation by applicant of bundle for hearing	0.6 x $2,390	$ 1,434.00
42	Appearance at hearing for sole or principal counsel	0.5 x $2,390	$ 1,195.00
Total Costs	$ 9,560.00
Disbursements
Filing fee for originating application to set aside statutory demand dated 13 March 2020.	$540.00	$469.56 (GST exclusive)
Copying of bench bundles (Vol 1 & 2)	322 pages x $0.20 per page x 3 copies	$168.00 (GST exclusive)
Copying of applicant’s bundle of authorities	35 pages x $0.20 per page x 3 copies	$18.26 (GST exclusive)
Scheduling fee	556.52
Total Disbursements	$ 1,212.34
Total costs + disbursements			$10,772.34