Cayman Spectrum (NZ) Co v Spark New Zealand Trading Limited

[2023] NZHC 1367

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2018-404-2687

[2023] NZHC 1367

BETWEEN

CAYMAN SPECTRUM (NZ) CO

First Plaintiff

EVEREST WIRELESS PARTNERS I LP
Second Plaintiff

AND

SPARK NEW ZEALAND TRADING LIMITED

Defendant

Hearing:	On the papers
Counsel:	F Pilditch KC and M B Wigley for Plaintiffs Z Kennedy and T Leggatt for Defendant
Judgment:	1 June 2023

JUDGMENT OF LANG J

[on costs]

This judgment was delivered by Justice Lang On 1 June 2023 at 11.00 am

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

Date:…………………………

Solicitors/counsel:

Wigley and Company, Wellington/F Pilditch KC, Auckland MinterEllisonRuddWatts/Z G Kennedy/T J B Leggat, Auckland

CAYMAN SPECTRUM (NZ) CO v SPARK NEW ZEALAND TRADING LTD [2023] NZHC 1367 [1 June 2023]

[1]        I have recently delivered three judgments in this proceeding. It is now necessary for me to determine costs issues relating to each of them.

The judgments

[2]        On 8 May 2023, I issued a judgment in which I granted an application by the defendant, Spark New Zealand Trading Ltd (Spark), seeking orders striking out specific pleadings in the current version of the statement of claim.1

[3]        On 10 May 2023, I issued a further judgment declining an application by the plaintiffs (Cayman) seeking leave to use documents discovered in this proceeding for a collateral purpose.2 Cayman wished to provide the documents in question to the Commerce Commission and to the New Zealand Law Society in support of complaints it wishes to make against several of Spark’s employees.

[4]        On 15 May 2023, I issued a third judgment in which I fixed costs in relation to earlier applications by Cayman seeking various orders against Spark.3 Cayman had withdrawn those applications during and at the end of a hearing conducted on 7 and 8 February 2023. I also fixed costs in relation to an application by Spark for non- publication orders and an application by Cayman requiring Spark to provide answers to interrogatories.

[5]        I am now required to determine the quantum of costs payable under my judgment issued on 15 May 2023. I am also required to fix costs in relation to the applications that led to the judgments delivered on 8 and 10 May 2023.

Quantum of costs payable under judgment issued on 15 May 2023

[6]        In this judgment I directed that Cayman was to pay costs to Spark on a category 3B basis for all steps taken in relation to the discovery applications prior to the filing and service of Spark’s submissions.4 I directed that Cayman was to pay costs on a category 3C basis for memoranda prepared for a case management conference on 25

1      Cayman Spectrum (NZ) Co v Spark New Zealand Trading Ltd [2023] NZHC 1063.

2      Cayman Spectrum (NZ) Co v Spark New Zealand Trading Ltd [2023] NZHC 1094.

3      Cayman Spectrum (NZ) Co v Spark New Zealand Trading Ltd [2023] NZHC 1152.

4 At [19].

October 2022 and in support of a challenge to the admissibility of Cayman’s evidence.5 I also directed Cayman to pay Spark costs on a category 3C basis for the filing of submissions prior to the hearing that took place on 7 and 8 February 2023.6

[7]        I then directed that Cayman was to pay costs on a category 3C basis for the hearing on 7 and 8 February 2023, together with an uplift of 60 per cent.7 This reflected the fact that Cayman should not have proceeded with its argument once it received Spark’s submissions.

[8]        I also directed Spark to pay costs to Cayman on a category 3B basis for its notice to answer interrogatories.8

[9]        Finally, I awarded Spark costs and disbursements on a category 3B basis in relation to its application seeking non-publication orders.9

[10]      The costs claimed by Spark on the various applications are set out Schedule B of its counsel’s memorandum dated 25 May 2023. They total the sum of $29,299 together with disbursements of $530.43. I consider the costs and disbursements have been correctly calculated in accordance with my judgment. Mr Wigley does not raise any issue in relation to the calculations on Cayman’s behalf.

[11]      I therefore make orders requiring Cayman to pay costs as sought by Spark in Schedule B.

Costs on Spark’s strike out application

[12]      Spark seeks costs on a category 3B basis in relation to the strike out application. These are set out in Schedule A to its counsel’s memorandum dated 25 May 2023 and amount to $8,730.28 inclusive of disbursements. Mr Wigley does not challenge these on Cayman’s behalf.

5 At [19].

6 At [20].

7 At [22].

8 At [24].

9 At [26].

[13]      I consider the calculations to be correct and make an award of costs to Spark as sought in Schedule A.

Application to use discovered documents for a collateral purpose

[14]      Spark seeks costs on a category 3B basis for this application, together with an uplift of 50 per cent to reflect the fact that the applicants should never have brought the application. Mr Wigley confirms that his clients have no objection to an award of costs on a category 3B basis but oppose any uplift.

[15]      In seeking an uplift Spark relies on observations I made during the hearing of another application on 7 February 2023. On that occasion I was required to determine an application by Cayman seeking orders under s 67 of the Evidence Act 2006 setting aside legal privilege claimed by Spark in relation to certain documents. Section 67 allows the Court to make such orders where documents have been prepared for a dishonest purpose or to enable the commission of an offence. Having viewed the documents in question, I observed that I did not consider they came close to satisfying the threshold required to satisfy s 67. Following the hearing counsel for Cayman filed a memorandum confirming that Cayman withdrew the application.

[16]      Cayman subsequently sought orders under r 8.30(4) of the High Court Rules 2016 permitting it to forward copies of documents discovered in this proceeding to the Commerce Commission and the Law Society. These included several of the documents that had been the subject of the earlier application seeking orders under s 67 of the Evidence Act. Cayman wished to provide the documents to the Commerce Commission and the Law Society in support of complaints alleging criminal wrongdoing by Spark’s employees.

[17]      In the judgment delivered on 10 May 2023 I declined the application for the following reasons:10

[41]      The applicants submit that the discovered documents constitute evidence that Spark’s staff members misled the Commission and thereby committed an offence under s 103(2) of the Commerce Act. They also contend the documents are evidence of offences against several provisions of the

10     Cayman Spectrum (NZ) Co v Spark New Zealand Trading Ltd, above n 2.

Crimes Act. These include perjury (s 109), making a false statement or declaration (s 111), conspiring to defeat the course of justice (s 116) and obtaining a benefit by deception (s 240).

[42]      The threshold under the present application is obviously lower than under that required under s 67 of the Evidence Act. The Court is not being asked to determine, even to a prima facie standard, whether the documents contain evidence of dishonesty or criminal wrongdoing. However, even applying the lower threshold required for present purposes, I consider the discovered documents cannot be viewed in isolation. They need to be viewed in light of what Spark told the Commission both before it filed the application for clearance and in the application itself. When this is done the discovered documents fall well short of constituting evidence of commission of any of the offences to which the applicants refer.

[18]      Counsel for Spark contend that the applicants ought to have taken heed of these remarks. It says they should have known they could not succeed in an application under r 8.30(4) notwithstanding the fact that the evidential threshold is lower under that rule. They therefore seek an award of costs increased by 50 per cent.

[19]      In opposing any award of increased costs Mr Wigley relies on my observation that the threshold for an order under r 8.30(4) was lower than that for the earlier application seeking orders under s 67. He also confirms that in advancing the application the applicants continued to take advice from senior counsel.

[20]      I am satisfied that Cayman should not have brought its application given the indications I had given during the hearing on 7 February 2023. Although the threshold is lower under r 8.30(4), the applicants were essentially relying on the same evidence as in their previous unsuccessful application. The documents on which they relied could not be viewed in a vacuum. As is evident from the passage set out above, I held that they needed to be viewed in light of the advice Spark conveyed to the Commerce Commission orally before it lodged its application for clearance and in the application for clearance itself. When this was done the documents could not be said the be evidence of criminal wrongdoing as the applicants alleged.

[21]       I am satisfied that in making this application the applicants contributed unnecessarily to the expense of the proceeding by taking an unnecessary step and advancing an argument that did not have merit. They also failed without reasonable justification to accept Spark’s argument, much of which had been traversed at the earlier hearing. Jurisdiction therefore exists under r 14.6(3)(b)(ii) and (iii) to make an

award of increased costs in Spark’s favour. I am satisfied it is appropriate to award Spark an uplift of 50 per cent to reflect this factor.

[22]      Spark seeks costs totalling $15,186.40 inclusive of disbursements. These are itemised in Schedule A to the memorandum filed by its counsel on 25 May 2023. I am satisfied Spark’s calculations are correct and that they reflect the terms of this judgment. Spark will therefore be entitled to costs and disbursements totalling

$15,186.40 on Cayman’s application for leave to use documents for a collateral purpose. I make an order accordingly.

Lang J