Ballance Agri-Nutrients Limited v Quin Environmentals (NZ) Limited
[2019] NZHC 1773
•26 July 2019
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2018-404-2438
[2019] NZHC 1773
BETWEEN BALLANCE AGRI-NUTRIENTS LIMITED
PlaintiffAND
QUIN ENVIRONMENTALS (NZ) LIMITED
Defendant
Hearing: On the papers Counsel:
J Edwards and PE Coulter for plaintiff
CT Patterson and EJ Grove for defendant
Judgment:
26 July 2019
JUDGMENT OF FITZGERALD J
[As to costs of interim injunction application]
This judgment was delivered by me on 26 July 2019 at 12 noon, pursuant to Rule 11.5 of the High Court Rules.
Registrar/Deputy Registrar
Date……………
Solicitors: Russell McVeagh, Auckland
Stace Hammond Lawyers, Auckland (J Cochrane)
Ballance Agri-Nutrients Limited v Quin Environmentals (NZ) Limited [2019] NZHC 1773 [26 July 2019]
Introduction
[1] In March this year, I determined the plaintiff’s (Ballance’s) application for an interim injunction, in which it sought to restrain the defendant’s (Quin’s) advertising, which Ballance says breaches the Fair Trading Act 1986.1 Ballance was largely (though not wholly) successful in its application, including as a result of Quin providing certain undertakings.
[2] At the conclusion of my substantive judgment, I encouraged the parties to agree costs. I gave an initial but non-binding view that Ballance was entitled to costs on its application on a 2B basis, though possibly reduced slightly to reflect that it was not successful on all aspects of its claim.
[3] The parties have not been able to agree costs. This judgment accordingly determines costs on the interim injunction application.
The parties’ submissions
[4] Ballance says it was the successful party overall and therefore costs should follow the event in the ordinary way. It seeks scale costs on a 2B basis, totalling
$7,693.50. It also claims disbursements (court filing fees) of $1,850.00. It proposes a 10 per cent reduction to its costs claim (but not the disbursements) to reflect those aspects of its application on which it was unsuccessful.
[5] Quin says costs on the application ought to be reserved until the substantive proceedings. It says two substantive issues highly relevant to Ballance’s claims are yet to be determined, and will only be determined at the substantive hearing. It says if Ballance fails at the substantive hearing on those issues, its application for an interim injunction would have been neither necessary nor meritorious (at least judged with the benefit of hindsight).
1 Ballance Agri-Nutrients Ltd v Quin Environmentals (NZ) Ltd [2019] NZHC 490.
[6] Counsel for Quin, Mr Patterson, submits that “this is a dilemma which arises in the context of most applications for interim injunctions”. He accordingly submits that:2
The response of the courts has been to near invariably (and contrary to normal practice when dealing with costs on interlocutory applications) reserve costs on applications for interim injunctions until such time as the substantive merits are determined.
Applicable legal principles
[7] Costs are ultimately at the discretion of the Court. Rule 14.8 of the High Court Rules envisages that, in the main, costs on interlocutory applications will be fixed at the time those applications are determined:
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.
(3)This rule does not apply to an application for summary judgment.
[8] The rule reflects that the merits of an interim proceeding will often differ from the substantive merits of the case.3 It also recognises that the costs of an interlocutory application are best fixed contemporaneously by the Judge or Associate Judge who decides it.
[9] There are no special rules applicable to costs on applications for interim injunctions.
2 Referring to W D & H O Wills (NZ) Ltd v Rothmans of Pall Mall (NZ) Ltd (1992) 5 TCLR 115; Gibbston Downs Wines v Perpetual Trust Ltd HC Christchurch, CIV-2010-409-1716, 6 October 2010.
3 Chapman v Badon Ltd [2010] NZCA 613, (2010) 20 PRNZ 83 at [12].
Should costs be reserved?
[10] I am not persuaded there are “special reasons” why costs on Ballance’s application for an interim injunction ought to be reserved until the substantive proceeding.
[11] First, despite Quin’s submission at [6] above, it is not uncommon for costs on a successful application for an interim injunction to be fixed at the same time the application is determined.4
[12] Second, while there are links between the matters determined on an application for an interim injunction and those to be determined at the substantive hearing (given on the former, the Court must determine whether there is a serious question to be tried), I do not consider this, in and of itself, is sufficient to give rise to “special reasons” for the purposes of r 14.8. If it were, then it would be a factor arising on all applications for interim injunctions, and one might expect such applications to be excluded from the scope of r 14.8. Moreover, unlike a summary judgment application, the Court on an application for an interim injunction does not consider the merits of the underlying claims beyond determining whether there is a serious question to be tried. In addition, the Court also considers the balance of convenience and the overall interests of justice, which differ from matters to be considered in the substantive proceedings.
[13] Third, and allied with the above point, in cases where costs on interim injunction applications are reserved until the substantive proceedings, there are often additional factors, beyond the “linking” discussed above, which make that an appropriate course. For example, in the second authority relied on by Quin,5 the fact the unsuccessful applicant had been willing to negotiate an interim arrangement with the opposing party was a factor leading to costs being reserved.6 Similarly, in Alarm New Zealand Ltd v 15 Hopetoun Ltd, there were additional factors which persuaded
4 Recent examples include Haines v Memelink [2019] NZHC 1086; Mad Butcher Holdings Ltd v Standard 730 Ltd [2019] NZHC 589; N v Radio New Zealand Ltd [2018] NZHC 2120; GJ Lawrence Dental Ltd v Alusi Ltd [2018] NZHC 533; Sealegs International Ltd v Zhang [2016] NZHC 3143; Aqua Technics Pool and Spa Centre NZ Ltd v Tyree [2016] NZHC 2942; Specialised Structures New Zealand Ltd v Findlater Construction Ltd [2016] NZHC 1752; Tyre Collection Service Ltd v Le Roy [2016] NZHC 898.
5 Gibbston Downs Wines Ltd v Perpetual Trust Ltd, above n 2.
6 At [8].
Thomas J to reserve costs pending the substantive proceeding. In considering that issue, she stated:7
The allegations about the defendant’s behaviour should be determined before costs are awarded to either party. The matters at the heart of this interim injunction will be the precise matters before the Court at trial of any substantive hearing. Although links between the merits of a party’s interim application and any subsequent substantive success will not, as a general rule, justify deferring entitlements to costs, it can be an additional factor which adds to the overall appropriateness of deferring a costs order.
[Emphasis added]
[14] There are no particular additional factors in this case that persuade me costs ought to be reserved. I am also mindful that the substantive hearing is not until June 2020. That is a reasonably lengthy delay. I accept that if the substantive hearing is to take place a very short time after the hearing of an application for an interim injunction, that might be a factor pointing to costs being reserved. But that is plainly not the case here.
[15]I will therefore fix the costs payable on Ballance’s application now.
What costs ought to be awarded?
[16] Given its position that costs ought to be reserved, Quin has not made any submissions as to the quantum of costs to be awarded to Ballance. As noted, Ballance seeks scale costs on a 2B basis reduced by 10 per cent. It does not seek certification for second counsel.
[17] I am satisfied the costs sought by Ballance are appropriate, and that they should be awarded on a 2B basis. While Quin did provide undertakings that dealt with some of Ballance’s claims on the interim injunction, these were only offered during the course of the hearing itself, and after the hearing at the invitation of the Court. I also agree that 10 per cent is an appropriate reflection of those aspects on which Ballance was unsuccessful on its application.
7 Alarm New Zealand Ltd v 15 Hopetoun Ltd [2016] NZHC 2080 at [22].
Result
[18] There is an order of costs against Quin and in favour of Ballance on the basis of the schedule attached to Ballance’s memorandum on costs dated 3 April 2019.
Fitzgerald J
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