America's Cup Event Limited v Mayo & Calder Limited

[2021] NZHC 187

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2020-404-001204

[2021] NZHC 187

BETWEEN

AMERICA’S CUP EVENT LIMITED

First Plaintiff

TEAM NEW ZEALAND LIMITED
Second Plaintiff

AND

MAYO & CALDER LIMITED

First Defendant

GRANT CALDER
Second Defendant

THOMAS MAYO
Third Defendant

MICHAEL CHOY

Fourth Defendant

Hearing:	On the papers
Judgment:	17 February 2021

JUDGMENT OF WYLIE J

[Costs on Interlocutory Application]

This judgment was delivered by Justice Wylie On 17 February 2021 at 2.00 pm

Pursuant to r 11.5 of the High Court Rules Registrar/Deputy Registrar

Date:…………………………

Solicitors/counsel:

LeeSalmonLong, Auckland MinterEllisonRuddWatts, Auckland

AMERICA’S CUP EVENT LTD v MAYO & CALDER LTD [2021] NZHC 187 [17 February 2021]

Introduction

[1]    America’s Cup Event Ltd (“ACE”) and Team New Zealand Ltd (“ETNZ”) have commenced proceedings against Mayo & Calder Ltd (“Mayo & Calder”), its directors, Mr Calder and Mr Mayo, and its finance manager, Mr Choy. The proceedings allege negligence, breach of the Fair Trading Act 1986, breach of duties owed as an agent and breach of confidentiality.

[2]    Relevantly, ACE alleges that it engaged Mayo & Calder to assist with the management of aspects of the 36th America’s Cup event. It says that the relationship lasted from May 2018 until it was terminated on 29 June 2020. Inter alia, ACE and ETNZ say that Mayo & Calder had access to and was provided with their confidential and proprietary information. They assert that, as their agent, Mayo & Calder, together with the other defendants owed, and continue to owe, a duty of confidentiality to them. They assert that, without their consent, Mayo & Calder or its officers or agents (including Mr Calder, Mr Mayo and Mr Choy) provided information in respect of which the obligation of confidence was owed to a third party or parties, that they sought an undertaking that the defendants would refrain from any disclosure and return the information held and that the defendants refused to either provide the undertakings sought or to return the information as requested. It is further alleged that the defendants provided the confidential information to a media advisory firm, and either instructed or allowed that firm to communicate the information to members of the media or other third parties. An injunction is sought restraining any disclosure and requiring the defendants to identify, return or otherwise destroy any confidential and proprietary information in their possession or control.

[3]    Mayo & Calder, Mr Calder, Mr Mayo and Mr Choy have filed a statement of defence. They deny that ACE terminated the relationship on 29 June 2020, but they admit that they did have access to confidential and proprietary information. They say however that whether or not the information provided to them imported an obligation of confidence is a matter of law, and they have not pleaded to the allegation made in this regard. Further, they say that disclosure is allowed where it is required and permitted by law. They say that they have only made disclosure of confidential information concerning ACE to the Ministry of Business, Innovation and Employment

and that the disclosure was under the Protected Disclosures Act 2000. They say that they were entitled to make that disclosure as protected “whistle blowers”, due to serious concerns they had regarding ACE’s treatment of financial matters and its ability to deliver a safe America’s Cup event. They admit that property in which the plaintiffs have an entitlement is their property, and they admit that undertakings have been sought but that they have refused to give the same. They further admit that they shared limited information with a media advisory firm, but say that that was for the sole purpose of receiving professional advice. Other allegations made by ACE and ETNZ are denied, and further particulars are sought in respect of a number of the allegations made.

[4]    Other issues relating to the confidentiality of material raised in the pleadings have already been the subject of Court orders. In related proceedings – America’s Cup Event Ltd v NZME Publishing Ltd – ACE obtained an interim injunction restraining NZME, which publishes the New Zealand Herald, from publishing an interim auditor’s report, recordings and transcripts.1 There have also been a number of applications in the current proceedings by the media to access the Court file. Those applications were dealt with initially by Palmer J and more recently by me.

Interlocutory application

[5]    On 10 November 2020, ACE and ETNZ served an interlocutory application on notice seeking injunctive relief against the defendants. Broadly, they sought orders restraining the defendants from publishing or distributing, or causing to be published or distributed, any of their confidential and proprietary information, requiring the defendants to identify all of the confidential and proprietary information in their possession, requiring the defendants to surrender all of that material, and requiring the defendants to identify who has or may have copies of the confidential information.

[6]    ACE and ETNZ requested that the application should be determined on an urgent basis. The matter was called before van Bohemen J in the Duty Judge List on 16 November 2020. Counsel advised that the defendants were prepared to accept an interim restraint, pending a hearing. The Judge granted an order on agreed terms,

1      America’s Cup Event Ltd v NZME Publishing Ltd [2020] NZHC 1756.

pending further order of the Court, and put in place a truncated timetable to bring the matter on for an early hearing.

[7]    A hearing was allocated on 1 December 2020. The defendants then filed a memorandum seeking an alternative fixture date. I declined that request.

[8]    On 27 November 2020, the parties filed a joint memorandum, recording that they had come to an agreed position. They sought consent orders, inter alia restraining the defendants from publishing or distributing any of ACE’s or ETNZ’s confidential and proprietary information. They advised, however, that they had not resolved the issue of costs and they sought timetabling directions to enable this issue to be resolved.

[9]I issued a minute on 27 November 2020 making the orders sought.

Costs on interlocutory application

[10]I have now received memoranda in relation to costs from the parties.

[11]   The defendants say that they are entitled to costs on the application. They submit that:

(a)the application was served without first giving them the opportunity to comment on the same and without exploring the possibility of reaching an agreed position;

(b)the application was not urgent; and

(c)there is no evidence that they were the source of any leaks which occurred. They note that affidavits have been filed to this effect, and say that such information that has been disclosed by them is consistent with their status as “whistle blowers”. They say that there is no evidence that they were the source of any other leaks, or which supports the need for the urgent orders sought by ACE and ETNZ.

Costs are sought in the sum of $3,824.

[12]   ACE and ETNZ submit that they are entitled to costs on the application. They say that a successful party on an interlocutory application is entitled to be paid costs by the party who fails. They say that they were the successful party. They note that:

(a)they wrote to the defendants on several occasions prior to the application, but that the defendants refused to identify or return their confidential and proprietary information, or to provide undertakings that the information would not be disseminated;

(b)they did not delay in making application and that they only applied when it became clear that leaks were occurring, and only once they had gathered sufficiently cogent evidence of a connection between the leaks and the defendants to support the application.

(c)they acknowledge that the defendants deny that they are responsible for any leaks that occurred, and accept that the evidence in this regard will fall to be tested at trial. They assert however that affidavit evidence they have filed suggests that the defendants were the source of the leaks.

They argue that generally costs on interlocutory applications should be fixed when the application is determined – High Court Rules, r 14.8 – and that there are no special reasons to delay the determination of costs in this case.

Analysis

[13]Relevantly, r 14.8 provides as follows:

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.

(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.

…

[14]   As can be seen, normally costs fall to be fixed on an interlocutory application when the same is determined, unless there are special reasons which indicate that that course is not appropriate.

[15]   An interlocutory application can be determined either by decision of the Court or by another mechanism, such as the agreement of the parties.2 Contrary to the submissions made for Calder & Mayo, I accept that ACE’s and ETNZ’s interlocutory application has been determined.

[16]   In my view, however, there are special circumstances in this case which compel the conclusion that it is not appropriate to award costs at this point. There are two unresolved factual disputes – first, were the defendants responsible for such leaks as occurred and, secondly, was the interim relief application necessary and/or appropriate? The Court has not had the opportunity to consider the merits of the case or to hear argument on either of these issues. I am not prepared to speculate on the merits or on the answer to either of these factual disputes at this point.

[17]   It is also noteworthy that the orders sought in the interlocutory application largely mirrored the relief sought in the substantive proceedings. The consent orders did not however mirror the orders sought. Both parties compromised their respective positions to reach a middle ground interim agreement. That was pragmatic and sensible. However, it counts against any conclusion being made as to who was the successful party on the interlocutory application. It is arguable that neither party was wholly successful.

[18]   In my view, no costs order should be made at this stage. If ACE and ETNZ succeed at trial, then the costs of the interlocutory application can be recovered at that point. If they fail, and the defendants’ arguments prevail, then the defendants can

2      Ip v Ip [2016] NZHC 528 at [12]; Winton v Winton [2018] NZHC 486 at [16]-[17].

recover the costs they incurred in dealing with the interlocutory application at that point.

[19]   Accordingly, I direct that the issue of costs on the interlocutory application is to be determined at the conclusion of the substantive proceedings.

Wylie J