Alusi v G J Lawrence Dental Limited
[2018] NZHC 1793
•19 July 2018
IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY
I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-Ā-TARA ROHE
CIV-2018-485-117
[2018] NZHC 1793
BETWEEN ALUSI LIMITED
First Applicant
OPENYD LIMITED
Second ApplicantRUDAYNA IBRAHIM, ABDULAH ABDULQADIR AND OMAR JASSIM
Third ApplicantAND
G J LAWRENCE DENTAL LIMITED
Respondent
Hearing: 4 July 2018 Counsel:
C J Griggs and C M Kenworthy for applicants R C Laurenson for respondent
Judgment:
19 July 2018
JUDGMENT OF GRICE J
(Application for Leave to Appeal on costs award)
[1] The Alusi applicants (Alusi Ltd, Openyd Ltd, Dr Ibrahim, Mr Abdulqadir and Mr Jassim)1 and the respondent, G J Lawrence Dental Ltd (Lawrence), represent the interests of two dentists, Dr Ibrahim (for Alusi) and Dr Lawrence (for Lawrence) who operate their respective professional practices from premises in Raumati. They shared arrangements in terms recorded in various documents. They have fallen out badly.
1 I refer to the applicants collectively as Alusi. They are all related to or controlled by Dr Ibrahim’s interests.
ALUSI LIMITED v G J LAWRENCE DENTAL LIMITED [2018] NZHC 1793 [19 July 2018]
The dentists’ resultant disagreements have been the subject of three separate court hearings and judgments since March this year. These are:
a)Application for Interim Injunction (CIV-2018-485-117)
b)Application for Stay of Proceedings (CIV-2018-485-118)
c)Application for Possession of Premises (CIV-2018-485-267)
[2] On 27 February 2018 Alusi filed appearances under protest to the jurisdiction of the Court in proceedings 117 and 118. The protest to jurisdiction was based on an arbitration clause in one of the documents governing the relationship, and Alusi argued this applied to any dispute between them. The stay was granted by Simon France J on 8 June 2018.
[3] Alusi now seeks leave under s 56(3) of the Senior Courts Act 2016 to appeal against my costs decision dated 26 March 2018.2 In that decision, I refused to grant applications for interim injunctions sought by Lawrence, but awarded it costs on a 2B basis. The amount in issue is approximately $6,855.50.
Proceedings leading up to the present application
[4] On 9 March 2018 Lawrence filed an application seeking two interlocutory injunctions against Alusi in 117. In a minute dated 13 March 2018,3 the application was allocated a hearing date of 14 March 2018. It needed to be heard before 27 March 2018, as a relevant notice of statutory termination of tenancy against Lawrence was to expire that day. At the callover counsel for Alusi gave an oral undertaking, which was recorded in the minute of this Court as follows:
No steps will be taken to enforce the termination of the statutory tenancy of G J Lawrence Dental Ltd pending the High Court’s determination of the application for an order for possession under the Property Law Act 2007.
2 G J Lawrence Dental Ltd v Alusi Ltd [2018] NZHC 533 [Injunction decision].
3 Following a teleconference dated 12 March 2018.
[5] No determination had been made at that point in regard to Alusi’s protest to jurisdiction. Alusi says it had no option but to file a notice of opposition to the injunction application and engage in the hearing one day later in front of me.
[6] Alusi made no submissions on the protest to jurisdiction at the hearing on 14 March 2018. It engaged in the proceedings and opposed the applications solely on the principles relating to interim injunctions, rather than any jurisdictional issues that might have prevented me from hearing the matter.
[7] On 26 March 2018, I declined to grant Lawrence either of the two injunctions it sought. I held that there was a serious issue to be tried, but that on the balance of convenience the injunctions should not follow.
[8] The first injunction sought to restrain Alusi from doing “…any action of any kind against the plaintiff or any director, officer or employee of the plaintiff until further order of the Court”. It was phrased too broadly, and could not be appropriately implemented.4 The second injunction sought to restrain Alusi from “…[enforcing] a document headed Notice of Termination of Statutory Tenancy… until further order of the Court”. I considered this was unnecessary in light of written undertakings provided by Alusi, following the hearing, as follows:5
1. The respondents, Openyd Limited and Alusi Limited, undertake that no steps will be taken to enforce the termination of the statutory tenancy of G J Lawrence Dental Limited pending the High Court’s determination of an application for an order for possession under the Property Law Act 2007.
2. The respondents, Openyd Limited and Alusi Limited, undertake to comply with any order for the payment of damages to compensate the respondent for any damage sustained through non-compliance with this undertaking.
3. I am a director of Openyd Limited and I am authorised to give these undertakings on its behalf. I hold appointment as the agent of Alusi Limited and am authorised to give these undertakings on its behalf.
Dated at Wellington this 14th day of March 2018 For Openyd Limited and Alusi Limited:
4 Injunction decision, above n 2, at [58].
5 At [59] – [60].
Abdula Abdulaqadir Director
[9] Although I dismissed Lawrence’s application, I awarded it costs for the following reasons:6
Costs
[60] The plaintiff applied for costs on a 2B basis. The application was made on the basis that even if the injunction were not granted as sought, it was justified in making the application. In that respect I note that the undertaking as to damages in the present form was not filed until following the hearing. To that extent the application was justified. The application was in a large part resolved by the provision of the undertaking as to damages.
[61] Accordingly, I am of the view the plaintiff is entitled to costs on the 2B basis upon which they were sought. Any disbursements are to be fixed by the Registrar.
[10] Two and a half months later, both 117 and 118 were stayed following the hearing of Alusi’s protest to jurisdiction of the Court.7 Simon France J, in his 8 June 2018 decision, confirmed that Alusi’s participation in the interim injunction hearing before me was not a voluntary submission to the jurisdiction of the Court.
Consideration for leave to appeal under s 56(3) of the Senior Courts Act 2016
[11]Section 56(3) of the Senior Courts Act 2016 provides:
56 Jurisdiction
…
(3)No appeal, except an appeal under subsection (4), lies from any order or decision of the High Court made on an interlocutory application in respect of any civil proceeding unless leave to appeal to the Court of Appeal is given by the High Court on application made within 20 working days after the date of that order or decision or within any further time that the High Court may allow.
…
6 At [60] – [61].
7 G J Lawrence Dental Ltd v Alusi Ltd [2018] NZHC 1342 [Jurisdiction decision].
[12] Of relevance when considering an application for leave to appeal from an interlocutory application are the following:8
a)A high threshold exists for the granting of leave. An allegation of error of law or fact is generally insufficient. An applicant should raise an arguable error.
b)Leave should only be granted where the circumstances warrant incurring further delay.
c)The alleged error should be of general or public importance that requires determination, or otherwise be of sufficient importance to the applicant to outweigh the lack of any general or precedential importance.
[13] Taking those factors into account, the court must then “…stand back and assess, in a pragmatic and realistic way, whether the interests of justice are served by granting leave to appeal.”9
The proposed appeal
[14] Alusi wishes to appeal against my costs decision of 26 March 2018 for two reasons:
a)Firstly, I erred when I awarded costs to Lawrence even though it failed to secure either of the two interlocutory injunctions it sought. Alusi argues the costs award was wrong in substance, and that I disregarded material factors as the failure of the application was unrelated to the reasons given for my award of costs; and
b)Secondly, I erred by hearing the interlocutory injunction application before the protest to jurisdiction had been heard. The case law from the
8 Finewood Upholstery Ltd v Vaughan [2017] NZHC 1679 at [9] referring to A v Minister of Internal Affairs [2017] NZHC 887.
9 Finewood Upholstery Ltd v Vaughan, above n 8, at [14].
High Court is unclear in this area, and Alusi argues this, therefore, is a matter of general importance that should be decided by the Court of Appeal.
[15] At the hearing Mr Griggs for Alusi confirmed that the appeal was only against costs. He submitted that if I dealt with the costs order in some other way, for instance by way of a review under r 14.8,10 he would not pursue the appeal.
Ground one: costs order unrelated to reason for refusal to grant injunctions
[16] It is not in dispute that counsel were invited to and made submissions on the issue of costs at the 14 March 2018 hearing. Counsel for Lawrence made a submission to the effect that the activity of Alusi and its directors justified a costs order being made in its favour in the event the interim injunction application was dismissed. In response, counsel for Alusi submitted that costs should follow the event as usual.
[17]Counsel for Alusi says the costs award was in error because:
a)The undertaking filed on 14 March 2018 in writing was in essence the same oral undertaking given on his and his clients behalf on 12 March 2018 in a teleconference. The oral undertaking was recorded in a minute of this Court dated 13 March 2018. The costs decision therefore disregarded material factors; and
b)Costs should follow the event in terms of r 14.2 of the High Court Rules 2016. This promotes certainty for the parties.
The undertakings
[18] The first injunction was to stop Alusi from “…taking any action of any kind against…” Lawrence until further order of the Court. Alusi argues the undertakings it subsequently gave in writing were entirely irrelevant to the failure of this injunction.
10 Rule 14.8 of the High Court Rules 2016 allows the court to reverse, discharge or vary an order for costs in certain circumstances.
I agree, I indicated I would grant the first injunction in that (or the subsequently modified) form in which it was sought. That application failed as it was too broad.
[19] The second injunction sought to stop Alusi from taking any action to enforce its notice of termination of Lawrence’s statutory tenancy until order of the Court. Alusi argues that the 12 March 2018 oral undertaking preferred by Mr Griggs was materially the same as the 14 March 2018 written undertaking.
[20] I disagree for a number of reasons. One significant difference between these two undertakings is that clause 2 of the 14 March oral undertaking, is that it covers damages. This is a new clause. I noted this in my original decision.11 Further, the 14 March undertaking was signed by Alusi. It was a written rather than oral undertaking from counsel. The argument that the two undertakings were in essence the same must fail. It is clear they are different. The detail of undertakings and who makes them is important.
[21] While not relevant to my decision future events would show the importance provision of a robust undertaking, signed by Alusi, rather than a limited undertaking given orally through counsel. The written undertaking was vital in preventing Openyd Ltd (controlled by Alusi and a defendant in these proceedings) from obtaining exclusive possession of the Raumati practice rooms before all disputes were properly dealt with. Alusi attempted to evade the clearly intended effect of its undertaking provided to me when it pursued possession of the premises before Cooke J.12 In his decision, he noted:13
[30] I see the current matter as simply a continuation of the disputes, and the misplaced ambition to achieve a decisive legal victory. Dr Imbrahim, through Openyd, again seeks to evict Dr Lawrence. In substance, this is the same matter that came before Grice J, which was resolved when Dr Imbrahim’s interests gave undertakings. As it happens, however, the precise terms of the undertakings given allowed these proceedings to be continued. It is, in substance, the same matter that was addressed by Grice J, however.
[22] As Cooke J highlighted, the ambition of the Alusi interests was to achieve a decisive victory. Its intent to evict Lawrence might have found more fertile ground
11 Injunction decision, above n 2, at [60].
12 G J Lawrence Dental Ltd v Alusi Ltd [2018] NZHC 1618.
13 At [30].
had Alusi not given a comprehensive written undertaking not only to refrain from enforcing the eviction of Lawrence but that this was backed up by an undertaking as to damages. It is obvious that written undertaking to do or refrain from doing something is more effective with an undertaking as to damages to back it up.
Was there an arguable error of law?
[23] Alusi submits that I failed to apply the principle prescribed by r 14.2(1)(a) of the High Court Rules 2016 which provides:
…The party who fails with respect to a proceeding or an interlocutory application should pay costs to the party who succeeds
[24] The final result must ordinarily be given primary weight when exercising the r 14.1 discretion.14 Only in exceptional or unusual cases costs do not follow the event.
[25] I believe this is such an unusual circumstance and it was appropriate to exercise my discretion and award costs to Lawrence. The written undertaking was a key part in my reasoning in not granting an injunction.
[26] An oral undertaking by counsel, given personally and on behalf of his clients, without the provision of a written undertaking signed by Alusi would have presented Alusi with a number of arguments that were not available where the undertaking was in writing and so read and signed by the parties. This would be the case, particularly if the clients or instructing solicitor withdrew instructions from counsel.
[27] These difficulties are substantially lessened where there is a written and signed undertaking supported by an undertaking as to damages.
[28] The written undertaking specifically dealt with the part of the injunction as it related to Alusi’s attempt to gain possession of the premises. The other injunctive order sought was, in my view, too wide. It would have encompassed not only steps to evict Lawrence but virtually any action or inaction by Alusi controlled entities (specifically Openyd).
14 UV Water Systems Ltd v Midgen Enterprises Ltd [2017] NZCA 36 at [13].
[29] There is an argument that costs should have not been ordered at all, or costs awarded as to 50 per cent to Lawrence and 50 per cent to Alusi as only part of the injunction as sought had been met by the written undertaking.
[30] While this might have been an option, I exercised my discretion to award costs to Lawrence. In the event that the written undertaking was not provided and the injunction had been granted, costs would likely have been granted to Lawrence without any apportionment. Therefore, it was appropriate not to apportion costs here.
General, public or sufficient importance?
[31] I do not believe this alleged error is of such general, public or sufficient importance as to justify an appeal. In Bradbury v Westpac Banking Corporation the Court of Appeal held that an award of costs is a judicial discretion and therefore:15
…the award will not be upset unless contrary to principle, as by adopting a wrong approach or disregarding a material factor, or wholly wrong...
[32] As I have already outlined, I do not believe the costs award was arguably contrary to principle or wholly wrong.
Ground two: protest to jurisdiction
Was there an arguable error of law?
[33] Alusi submitted that the hearing should not have proceeded at all and so the costs award was unfounded. This submission was based on an argument that the protest to jurisdiction ousted the Court’s jurisdiction to determine the application for interim injunctions. In effect, this means the subsequent decision of Simon France J had retrospective effect so that all decisions that went before were made without jurisdiction and so without effect.
[34] Alusi noted that there was conflicting law as to the effect of the protest and whether it should have been heard first. Therefore, leave should be granted in order for the Court of Appeal to clarify the legal position.
15 Bradbury v Westpac Banking Corporation [2009] 3 NZLR 400 (CA) at [32] citing Lewis v Cotton
[2001] 2 NZLR 21 (CA) with approval.
[35] This point was not raised at the hearing before me on 14 March 2018. Nor was it raised before Clark J on 12 March 2018 when she directed that the urgent interim injunction application should receive an early hearing date to accommodate counsel’s other commitments. Therefore, this point has not been argued before this Court in these proceedings.
[36] Counsel for Alusi said it was, in effect, directed to engage in the interim injunction hearing by virtue of the directions given on 13 March 2018 in a minute of this Court allocating the urgent fixture. The relevant portion of that minute noted:
[3] Mr Griggs is overseas from 21 March to 28 March. Mr Griggs submitted Openyd’s interim injunction application filed in proceeding CIV-2018-485-
118 did not need to be heard urgently.16 He was prepared to give an undertaking in the following terms:
No steps will be taken to enforce the termination of the statutory tenancy of G J Lawrence Dental Ltd pending the High Court’s determination of the application for an order for possession under the Property Law Act 2007.
[4] At Mr Laurenson’s insistence Mr Griggs confirmed the undertaking was not only his but also his client’s.
[5] Mr Laurenson requires a hearing of the interim injunction application filed in proceeding CIV-2018-485-117 before expiry of the notice of statutory termination of tenancy issued against the plaintiff. That notice expires on 27 March 2018.
[6] Accordingly, that application is to be allocated a fixture before 20 March (in light of Mr Griggs unavailability from the 21st).
[37] Counsel for Alusi says there is conflicting authority as whether interlocutory injunction hearings or the protest to jurisdiction matters should be heard. This was not an issue which was argued in the proceedings from which Alusi seek leave to appeal in relation to costs. The point might have been appropriately raised in the stay application proceedings before Simon France J, as the issue of whether Alusi had submitted to the jurisdiction of this court by engaging in the interlocutory application
16 Alusi filed an application for an interim injunction in proceeding CIV-2018-485-118 on 8 March 2018. The application itself does mention Alusi’s protest to jurisdiction. However, I note that at no point in Alusi’s synopsis of arguments did it refer to the Arbitration Act 1996 or the protest to jurisdiction. In fact, in the chronology of events provided by Alusi for this application omits the protest to jurisdiction being filed on 27 February, although events on 26 and 28 February are listed.
hearing was argued. The effect of the stay on previous costs orders might be relevant to an appeal from that decision.17
[38] Counsel for Alusi candidly submitted that he had taken the fundamental point as it might import an issue of general or public importance into the appeal against the award of costs. However, it is not a point that was the subject of the application before me in the interim injunction hearing and it has no direct relationship to the order for costs made in those proceedings. It raises no arguable error of law for appeal in relation to the order for costs.
Is this a matter of general, public or sufficient importance?
[39] As discussed above, I do not believe there is an arguable error of law in this case.
Are the interests of justice served by granting leave to appeal?
[40] Observing my conclusions listed above under both grounds put forward by Alusi, I believe it is clear that the interests of justice are not served in this case by granting leave to appeal. There are no arguable errors of law that are of either general or sufficient importance, and no other reasons I can see that support leave being granted.
Variation of costs order: r 14.8 of the High Court Rules 2016
[41] Counsel for Alusi submitted that it was open to me to use r 14.8 to vary the relevant costs order. That rule provides:
14.8 Costs on interlocutory applications
(1)Costs on an opposed interlocutory application, unless there are special reasons to the contrary,—
(a)must be fixed in accordance with these rules when the application is determined; and
(b)become payable when they are fixed.
17 Jurisdiction decision, above n 7.
(2)Despite subclause (1), the court may reverse, discharge, or vary an order for costs on an interlocutory application if satisfied subsequently that the original order should not have been made.
(3)This rule does not apply to an application for summary judgment.
[42] The argument before me in relation to the leave application centred around whether the costs order should have been made at all. I am of the view it should have been for the reasons set out above.
[43] Additionally, no application was made under r 14.8. In those circumstances, it would be inappropriate to review the costs order without a proper application and detailed submissions relating to that provision.
Conclusion
[44]For the reasons given above the application for leave to appeal is dismissed.
[45]Lawrence is entitled to costs on a 2B basis on this application.
Grice J
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