Carpet Court Partnerships Limited v Nicholls

[2016] NZHC 3009

IN THE HIGH COURT OF NEW ZEALAND HAMILTON REGISTRY

CIV-2016-419-000270 [2016] NZHC 3009

BETWEEN

CARPET COURT PARTNERSHIPS

LIMITED First Plaintiff

CARPET COURT NEW ZEALAND LIMITED

Second Plaintiff

AND

JOHN NICHOLLS First Defendant

KAREN MCGILL Second Defendant

On the papers
Counsel:	Y Lee for Plaintiffs W C Pyke for First Defendant
Judgment:	12 December 2016

COSTS JUDGMENT OF GILBERT J

This judgment is delivered by me on 12 December 2016 at 4 pm pursuant to r 11.5 of the High Court Rules.

..................................................... Registrar / Deputy Registrar

Solicitors/Counsel:

MinterEllisonRuddWatts, Solicitors, Auckland

W Pyke, Barrister, Auckland

B Bluett, Hamilton

CARPET COURT PARTNERSHIPS LTD & ANOR v NICHOLLS & ANOR [2016] NZHC 3009 [12 December

2016]

[1]      The plaintiffs claim that the first defendant breached a restraint covenant in an agreement for sale and purchase of shares entered into in May 2016 between the defendants as vendor and the first plaintiff as purchaser.  The plaintiffs issued this proceeding   in  August   2016   seeking   a   permanent   injunction   restraining   the defendants from breaching the sale and purchase agreement and restraining the first defendant from using or disclosing confidential information belonging to the plaintiffs.    They  also  seek  an  inquiry  as  to  damages  arising  out  of  the  first defendant’s alleged breaches.

[2]      The  plaintiffs  also  applied  for  an  interim  injunction  against  the  first defendant.  This was initially opposed and affidavits and submissions were prepared on each side.  However, the first defendant withdrew his opposition part way through the hearing and consent orders were made in the terms sought by the plaintiffs.  The parties were unable to agree on costs for the interim injunction.  This judgment deals with that issue.

[3]      The plaintiffs seek costs against the first defendant for the interim injunction calculated on a category 2 band B basis with a 50 per cent uplift.  They contend that the first defendant’s opposition to the plaintiffs’ application lacked merit and that his interpretation of the covenant in the sale and purchase agreement is untenable.

[4]      Mr Pyke, for the first defendant, accepts that the plaintiffs are entitled to costs calculated on a 2B basis and he agrees with the plaintiffs’ calculation of these. However, he argues that there is no proper basis for an uplift.

[5]      Whether or not the first defendant breached the restraint covenant in the agreement for sale and purchase is a disputed issue that can only be determined at trial.  The plaintiffs did not seek summary judgment.  The plaintiffs’ entitlement to an interim injunction was not determined because the first defendant consented to orders being made.  That consent was not accompanied by any admission of liability or concession that the plaintiffs would have succeeded in obtaining an interim injunction had the first defendant maintained his opposition.

[6]      In arguing that the first defendant’s resistance to the interim injunction was based on an untenable interpretation of the covenant, the plaintiffs are in effect inviting the Court to pre-judge the substantive issue.  The Court cannot predetermine this issue in the context of a costs application for an interlocutory application that was  resolved  by agreement.    For this  reason,  the whole basis  of the  claim  for increased costs falls away.

[7]      The plaintiffs are entitled to costs against the first defendant in relation to the application for interim injunction calculated on a 2B basis.

M A Gilbert J