Alusi Limited v G J Lawrence Dental Limited
[2018] NZCA 496
•13 November 2018 at 2.15 pm
| IN THE COURT OF APPEAL OF NEW ZEALAND I TE KŌTI PĪRA O AOTEAROA |
| CA422/2018 [2018] NZCA 496 |
| BETWEEN | ALUSI LIMITED |
| AND | G J LAWRENCE DENTAL LIMITED |
| Court: | Brown and Clifford JJ |
Counsel: | C J Griggs for Applicants |
Judgment: | 13 November 2018 at 2.15 pm |
JUDGMENT OF THE COURT
AThe application for leave to appeal is declined.
BThe applicants are jointly and severally liable to pay the respondent one set of costs for a standard application on a band A basis and usual disbursements.
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REASONS OF THE COURT
(Given by Clifford J)
Introduction
The applicants are Alusi Ltd (the first applicant), Openyd Ltd (the second applicant) and Rudayna Ibrahim, Abdulah Abdulqadir and Omar Jassim (the third applicants). The respondent is GJ Lawrence Dental Ltd (Lawrence Dental). Alusi and Lawrence Dental are the dental practices respectively of Dr Ibrahim (one of the third applicants) and a Dr Graham Lawrence.
Drs Ibrahim and Lawrence operated their respective dental practices from shared premises in Raumati. As a result of a falling out between them, Lawrence Dental commenced proceedings against Alusi and its related parties. Openyd Ltd then filed appearances under protest to jurisdiction on the basis that the disputes reflected by those proceedings were governed by an arbitration clause in a deed of association between the parties.
Lawrence Dental subsequently, and before the protest to jurisdiction had been heard, filed an application for an interim injunction. Grice J heard that application on 14 March 2018 and gave judgment on 26 March 2018, declining to award the injunction sought but awarding costs against Alusi and Openyd Ltd.[1]
[1]G J Lawrence Dental Ltd v Alusi Ltd [2018] NZHC 533.
Simon France J subsequently granted Alusi a stay of proceedings, holding it was open to Alusi to claim the arbitration agreement applied if it wished to do so.[2]
[2]G J Lawrence Dental Ltd v Alusi Ltd [2018] NZHC 1342.
The applicants now wish to challenge Grice J’s costs award. They require leave to do so. Grice J declined leave.[3] Accordingly, the applicants apply to this Court pursuant to s 56(5) of the Senior Courts Act 2016 for leave to bring that appeal.
Law
[3]Alusi Ltd v G J Lawrence Dental Ltd [2018] NZHC 1793 [Leave decision].
Leave to appeal under s 56(5) should only be granted where the significance or implications of an arguable error of fact or law, either for the particular case or for the applicant or as matter of precedent, warrants the further delay the appeal process will involve.[4]
Grounds of application
[4]Ngai Te Hapu Inc v Bay of Plenty Regional Council [2018] NZCA 291 at [17].
The applicants advance the following grounds:
(a)Grice J erred in law in awarding costs to the respondent at the same time as declining the respondent’s applications for interim injunctions. The general principle is that costs follow the event. As the respondent did not succeed, it should not have been awarded costs. The Judge’s rationale, namely that a written undertaking given by Alusi during the hearing of the respondent’s unsuccessful application put the respondent in a substantially better position than it had been on the basis of the oral undertaking given by Alusi’s counsel at the first call of the respondent’s applications, was contrary to principle and plainly wrong.
(b)Grice J was wrong to hear the interim injunction application while the applicant’s protest to jurisdiction remained live. There was in effect no jurisdiction for the costs award. This is a matter of general importance, involving an inconsistency in case law.
The respondent opposes the application for leave. In doing so, it supports the Judge’s reasoning.
Analysis
Lawrence Dental commenced its proceedings in the High Court at issue here on 14 February 2018. In effect, it sought the dissolution or termination of all legal relationships between Drs Ibrahim and Lawrence, and their respective associated parties. The applicants’ protest to jurisdiction (made by the second applicant Openyd Ltd) was filed on 27 February 2018. On 1 March 2018 Openyd Ltd itself applied for interlocutory relief by way of interim injunction to halt Lawrence Dental’s application. Lawrence Dental then filed for interlocutory relief on 9 March 2018 to restrain Openyd Ltd from taking “any action of any kind” against it and, more specifically, to restrain it from taking further action to enforce a notice of termination of a statutory tenancy it had given as part of the dispute between Drs Ibrahim and Lawrence.
No question of jurisdiction was raised when Grice J considered Lawrence Dental’s applications on 14 March 2018. Given that factor, and that the applicants had in effect themselves applied for interim relief prior to the hearing of their protest, this is an inappropriate case for a grant of leave to resolve inconsistencies in case law.
Moreover, s 9 of the Arbitration Act 1996 anticipates applications to court for interim measures “before or during arbitral proceedings”. Williams & Kawhura on Arbitration states that where an arbitral tribunal has not yet been formed, the court may be properly called on to act if one party seeks interim measures.[5] Cosco (New Zealand) Ltd v Port of Napier Ltd and Marnell Corrao Associates Inc v Sensation Yachts Ltd are two such examples.[6] In Mike Pero Real Estate Ltd v Tauranga Realty Ltd, Associate Judge Bell granted a stay following the plaintiff’s successful application for interim relief.[7] In Dependable Property Management Ltd v Li interim orders were granted on a without notice basis, the defendant protesting jurisdiction. A stay was later granted, and it was held the interim orders were properly made, and could be modified, suspended or cancelled by the Tribunal.[8]
[5]David AR Williams and others Williams & Kawharu on Arbitration (2nd ed, LexisNexis, Wellington, 2017) at 262.
[6]Cosco (New Zealand) Ltd v Port of Napier Ltd HC Napier CP7/99, 31 March 1999; and Marnell Corrao Associates Inc v Sensation Yachts Ltd (2000) 15 PRNZ 608 (HC).
[7]Mike Pero Real Estate Ltd v Tauranga Realty Ltd [2015] NZHC 1162.
[8]Dependable Property Management Ltd v Li [2015] NZHC 3355, (2015) 23 PRNZ 145 at [46].
Advanced Cardiovascular Systems Inc v Universal Specialities Ltd, where this Court indicated a protest to jurisdiction must be determined before a court can embark on hearing the proceeding, whether substantively or in any interlocutory way, did not involve a protest on the basis of an arbitration agreement but rather on the basis of forum non conveniens.[9] That principle was also the focus of Discovery Geo Corp v STP Energy Pte Ltd, a further case on which the applicants relied.[10]
[9]Advanced Cardiovascular Systems Inc v Universal Specialities Ltd [1997] 1 NZLR 186 (CA).
[10]Discovery Geo Corp v STP Energy Pte Ltd [2012] NZHC 3549, [2013] 2 NZLR 122.
We are therefore not persuaded that the challenge the applicants wish to bring to Grice J’s cost decision raises a point of general importance so as to make a grant of leave appropriate.
Nor are we persuaded that the Judge erred in principle or was otherwise plainly wrong when she made the award in favour of Lawrence Dental. Awards of costs are discretionary, but of course must be made in accordance with established principles. Here the Judge, who considered these matters at the hearing which took place before her, reached the view that the applicants’ conduct in the course of the proceedings overall made that award appropriate. In declining leave, she recorded her view that the formal undertaking given by Alusi, by reference to which she declined Lawrence Dental’s application for interim relief, was substantially more advantageous for Lawrence Dental than had been the earlier, oral, undertaking of its counsel.[11] She noted that, although not relevant to her decision at the time, events subsequent had shown the importance of formalising and detailing the terms found in that formal undertaking.[12] Given Alusi’s pursuit of what the Judge described as a “decisive victory”, those formalised terms were of some significance.[13] In our view, in these circumstances the view that the Judge took of the costs significance of the way Alusi had conducted the proceedings was one that was open to her.
Result
[11]Leave decision, above n 3, at [20].
[12]At [21].
[13]At [22].
We accordingly decline this application for leave to appeal.
The applicants are jointly and severally liable to pay the respondent one set of costs for a standard application on a band A basis and usual disbursements.
Solicitors:
Lawler & Co, Auckland for Applicants
Gillespie Young Watson, Lower Hutt for Respondent
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