Consult Recruitment Limited v Lloyd
[2025] NZHC 434
•10 March 2025
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2025-404-000276
[2025] NZHC 434
BETWEEN CONSULT RECRUITMENT LIMITED
Applicant
AND
RICHARD ALBERT LLOYD
Respondent
Hearing: (On the papers) Counsel:
A T Grant and A M Kamphorst for Applicant
H Waalkens KC and S R Courtney for Respondent
Judgment:
10 March 2025
COSTS JUDGMENT OF VENNING J
This judgment was delivered by me on 10 March 2025 at 11.00 am, pursuant to Rule 11.5 of the High Court Rules.
Registrar/Deputy Registrar
Date……………
Solicitors: Kiely Thompson Caisley, Auckland
Wotton Kearney, Wellington
Counsel: A T Grant, Auckland
H Waalkens KC, Auckland
CONSULT RECRUITMENT LTD v LLOYD [2025] NZHC 434 [10 March 2025]
[1] On 20 February 2025, the Court granted Consult Recruitment Limited’s (Consult’s) application for interim relief. Costs were reserved to be dealt with by way of memoranda. The parties have now exchanged costs memoranda.
[2] Consult seeks indemnity costs in the sum of $46,860 exclusive of GST. In the alternative it seeks an uplift from scale costs calculated at 75 per cent, which it calculates would lead to a figure of $29,486.63. It also seeks disbursements of $950.
[3] On behalf of Mr Lloyd, Mr Waalkens KC submits the scale costs calculated on a 2B basis for one counsel would support an order of $9,082. No issue is taken with the disbursements claimed of $950.
Principles and jurisdiction
[4] The principles in relation to costs are established by Part 14 of the High Court Rules 2016 and relevant authorities.
Preliminary points
[5] Mr Waalkens took issue with Consult’s claim for item 30, (preparing affidavits by analogy). He submitted item 30 applied where a substantive trial was required but proceeded on the basis of affidavits instead of a viva voce hearing. I agree that item 30 applies to such a situation. However, there is no direct provision for the preparation of affidavits on an interlocutory application and where, as in a case of this nature, the affidavit evidence is crucial, the basic allowance of 0.6 days for filing the application itself is insufficient. Rule 14.7(b) provides for an allowance by analogy. Given the hearing was less than half a day, I consider an allowance of 50 per cent that item 30 provides for is appropriate in this case.
[6] Mr Waalkens also submitted there should be no allowance for second counsel. I agree that on an application of this nature there was no need for second counsel.
Consult’s application for indemnity costs
[7]Rule 14.6(4) provides:
The court may order a party to pay indemnity costs if—
(a)the party has acted vexatiously, frivolously, improperly, or unnecessarily in commencing, continuing, or defending a proceeding or a step in a proceeding; or
(b)the party has ignored or disobeyed an order or direction of the court or breached an undertaking given to the court or another party; or
(c)costs are payable from a fund, the party claiming costs is a necessary party to the proceeding affecting the fund, and the party claiming costs has acted reasonably in the proceeding; or
(d)the person in whose favour the order of costs is made was not a party to the proceeding and has acted reasonably in relation to it; or
(e)the party claiming costs is entitled to indemnity costs under a contract or deed; or
(f)some other reason exists which justifies the court making an order for indemnity costs despite the principle that the determination of costs should be predictable and expeditious.
[8]Items 14.6(4)(b)–(e) do not apply.
[9] Consult submits that Mr Lloyd’s conduct reflected knowing and deliberate disregard of Consult’s rights so that inferentially, HCR 14.6(a) or (f) applies. It submits Mr Lloyd’s breach of contract followed a number of exchanges in correspondence in 2022 and 2024 which raised the issue that the Court determined. Mr Lloyd plainly knew “the legal landscape against which he was embarking” but chose to carry on anyway. Next, it submits that Mr Lloyd put Consult to needless cost by rejecting offers of settlement. On 16 January 2025, Consult sent Mr Lloyd a letter which invited him to give written undertakings that he would comply in all respects with the terms of his restraint. He refused but ultimately that was the result achieved with the judgment.
[10] Consult notes that Mr Lloyd responded by denying the reasonableness of the restraint and stated that he “will not be providing any more information or responding to the demand for undertakings”. Following that Consult issued the proceedings and application for injunctive relief which were ultimately successful. On 12 February 2025, Consult’s solicitors responded to a letter from Mr Lloyd’s solicitors in which Mr Lloyd had offered to give the undertakings but only if Consult agreed not to sue for damages. Mr Lloyd again declined to provide the undertaking requested. The
undertaking that Mr Lloyd proffered to the Court was effectively an attempt to rewrite the terms of the contract on Mr Lloyd’s basis.
[11] For the above reasons Consult submits that Mr Lloyd’s behaviour, the nature of the breach and his subsequent behaviour when challenged, put Consult to the costs of the application to enforce its rights which met the Bradbury threshold of conduct.1
[12] Despite the submissions on behalf of Consult I agree with Mr Waalkens’ response that this case is quite different to that of Bradbury and other cases where indemnity costs have been ordered. Mr Lloyd’s position throughout the litigation stemmed from his belief that the restraint clause (which he acknowledged), was unenforceable as unreasonable. Ultimately the Court found that it was seriously arguable that it was enforceable, and that Mr Lloyd was bound by it for the reasons given in the judgment. However, Mr Lloyd’s refusal to accept that position from the outset, while ultimately wrong, and for the reasons that follow was unreasonable, falls short of the vexatious or improper type of behaviour or other special reason required to support an award of indemnity costs.
Increased costs
[13]Increased costs are provided for in r 14.6(3):
The court may order a party to pay increased costs if—
(a)the nature of the proceeding or the step in it is such that the time required by the party claiming costs would substantially exceed the time allocated under band C; or
(b)the party opposing costs has contributed unnecessarily to the time or expense of the proceeding or step in it by—
(i)failing to comply with these rules or with a direction of the court; or
(ii)taking or pursuing an unnecessary step or an argument that lacks merit; or
(iii)failing, without reasonable justification, to admit facts, evidence, documents, or accept a legal argument; or
1 Bradbury v Westpac Banking Corp (2009) 18 PRNZ 859 (HC).
(iv)failing, without reasonable justification, to comply with an order for discovery, a notice for further particulars, a notice for interrogatories, or other similar requirement under these rules; or
(v)failing, without reasonable justification, to accept an offer of settlement whether in the form of an offer under rule 14.10 or some other offer to settle or dispose of the proceeding; or
(c)the proceeding is of general importance to persons other than just the parties and it was reasonably necessary for the party claiming costs to bring it or participate in it in the interests of those affected; or
(d)some other reason exists which justifies the court making an order for increased costs despite the principle that the determination of costs should be predictable and expeditious.
[14] The one matter that supports an increased award in this case is Mr Lloyd’s failure, without reasonable justification to accept an offer of settlement, namely Consult’s offer to accept an undertaking from him to comply with his contractual obligations.
[15] Mr Waalkens submitted that Mr Lloyd had not acted unreasonably in contesting Consult’s injunction application, and it was premature to come to that conclusion at this interlocutory stage. If the matter proceeds to trial the reasonableness of his challenge will be considered in full. He makes the point that surely the time to assess the unreasonableness is at the point of completion of the proceedings. Mr Waalkens also referred to the offers made by Mr Lloyd to resolve the matter through his solicitors on 11 and 12 February 2025.
[16] While I accept the injunction granted was an interim injunction and the matter has not been fully heard, I do consider it relevant that Mr Lloyd’s conduct was clearly contrary to the terms of the agreement he had made. For the reasons given in the judgment there was sufficient reason to distinguish Mr Lloyd’s case from the usual line of employer/employee restraint of trade cases. Mr Lloyd could have resolved the matter short of the hearing by providing an undertaking (which was for a relatively short period of time as it eventuated). I place no weight in Mr Lloyd’s favour on his attempts to resolve the matter by the undertakings he suggested which were effectively his attempt to rewrite the contract.
[17] I accept that Mr Lloyd’s behaviour, given the clear contractual obligations and his failure to accept the undertakings and to settle the matter by providing the appropriate undertaking was unreasonable, which supports an uplift in costs. However, I consider in this case an uplift of 50 per cent, which is the usual uplift, to be appropriate.
Result
[18]I fix costs in Consult’s favour in the sum of $20,793 (calculated as 5.8 days x
$2,390 x 150%) together with disbursements of $950.
Venning J
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