Croser v Focus Genetics Limited Partnership

[2019] NZHC 990

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE

CIV-2019-485-164

[2019] NZHC 990

BETWEEN

DAMIEN LEIGH CROSER and KIRSTEN LOUISE CROSER

Plaintiffs

AND

FOCUS GENETICS LIMITED PARTNERSHIP

Defendant

On the papers:
Counsel:	C M Stevens and T Mijatov for Plaintiffs S M Bisley and P J Niven for Defendant
Judgment:	8 May 2019

JUDGMENT OF CHURCHMAN J (COSTS)

Background

[1]                  By application dated 25 March 2019, the plaintiffs applied without notice for an interlocutory injunction in relation to sheep breeding genetic data held by the defendant in respect of sheep on the plaintiffs’ property at Kiranda, South Australia.

[2]                  On 29 March 2019, the Court issued an interim injunction although it was not precisely in the same terms that the plaintiffs had sought. Costs in relation to the interim injunction application were reserved.

[3]                  On 11 April 2019, the plaintiffs lodged an interlocutory application on notice for the determination of a preliminary question before trial. That application related to an issue that had been identified by the Court in its 29 March decision as being a

CROSER & ANOR v FOCUS GENETICS LIMITED PARTNERSHIP (COSTS) [2019] NZHC 990 [8 May 2019]

matter, central to these proceedings, which the Court would ultimately be required to resolve.

[4]                  The application for a hearing on the preliminary question came before Clark J on 15 April 2019 and she issued a minute on 16 April 2019. The minute set a timetable for the filing of a notice of opposition and affidavits in support, and reply affidavits by the plaintiffs, together with synopses of submission.

[5]                  The defendant complied with the timetable, filing a notice of opposition dated 18 April 2019, together with affidavits from Gavin Foulsham, Alastair McMechan and Kate Brabin.

[6]                  The notice of opposition relied on a number of grounds including overlap between the proposed issue and other issues the Court was required to deal with in the substantive hearing; a claim that resolving the preliminary question would not bring the proceedings to an end, in particular because it was said that the defendant intended to file counterclaims and that resolving the proposed question did not offer any time savings. It was submitted that in these circumstances there would be unnecessary duplication of matters such as discovery and the briefing of witnesses and that there was a risk of potential conflicting findings arising from what was suggested to be “inadvertent findings of fact at the first trial”.

Developments

[7]                  The plaintiffs did not file any affidavits in response and neither party filed any synopsis of submissions in relation to the application for a preliminary hearing.

[8]                  The plaintiffs’ Australian lawyer, Ms Despina Anagnostou, on 23 April 2019 wrote to the defendant’s solicitors as a result of issues that had been raised in the material filed by the defendant. The relevant passage in the letter says:

Our only concern is the time the preliminary question might take, in the new light of your indication in the notice of opposition that you will require discovery and cross-examination, and your clients’ indications in the affidavits that you will call a large number of witnesses for the preliminary question– …

[9]                  The letter went on to suggest that in the light of this development, there would be insufficient time to resolve the preliminary question on one day given that the plaintiffs’ counsel would also wish to cross-examine the various defendant’s witnesses. The letter listed the various topics in the evidence filed on behalf of the defendant that cross-examination would be required on.

[10]              The letter also referred to the possibility that other proceedings may be bought against the defendant by  other  plaintiffs  in  a  similar  position  to  the  Crosers.  Ms Anagnostou stated:

We understand that this may lead to an application for consolidation with the current proceedings. That would complicate the efficacy of determining the preliminary question.

[11]              The letter also referred to aspects of the evidence given by Ms Brabin in her affidavit in relation to her co-operation with the plaintiffs regarding the sale of rams and the provision of data for the rams identified for sale. The letter indicated that as a result of these various factors, the plaintiffs were prepared to consider withdrawing the application for determination of a preliminary question. The letters proposed certain terms for the October ram sales.

[12]              By letter of 30 April 2019, counsel for the plaintiffs, Mr Stevens, wrote to the defendant’s solicitors confirming a discussion with them and the plaintiffs’ intention to withdraw the application for determination of a preliminary question. It was said that this was because of concerns about insufficient time the Court having indicated that it only had one day available for a 4 June hearing. The relevant passage in the letter said:

For the reasons set out in your affidavits and the further information which the plaintiffs have now obtained – set out in the letter from AB&C Lawyers to your firm on Friday 26 April – I am concerned that we will not get through the application in a day.

[13]The letter sought agreement that costs on the application be reserved.

[14]              The defendant’s solicitors wrote to  the  plaintiff’s  Australian  lawyer  and Mr Stevens by email of 30 April 2019. The defendant’s solicitors did not agree to reserve the question of costs. They asserted that they were entitled to costs on a 2B

basis with an uplift. It sought for costs to be resolved on the papers saying that the costs of a hearing would be out of all proportion to the sum in issue.

[15]              No agreement could be reached and on 1 May, the defendant filed an affidavit seeking 2B costs of $2,676 with a 50 per cent uplift producing a figure of $4,014, along with disbursements of $110.

Analysis

[16]              As at the present date, the defendant has not filed the counterclaim against the plaintiffs that the solicitors had indicated will be forthcoming. Indeed, no statement of defence has yet been filed. It appears that the plaintiffs were not aware, at the time that they applied for a determination of a preliminary issue, that the defendant intended filing a counterclaim or counterclaims.

[17]              While an application for determination of what will be a (if not the) central issue in the ultimate proceedings, was a reasonable step at the time it was taken, once it became apparent what volume of the evidence the defendant intended calling (evidence which the plaintiffs would have to respond to) it ceased to be a realistic proposal particularly given the Court could only allocate one day.

[18]              It is not clear when the plaintiffs became aware of the possibility of other proceedings being bought by a different party against the defendant, and the potential need for consolidation. However, once that came to their attention, it was a factor that made attempting to argue the preliminary question unrealistic.

[19]              The defendant claims that it incurred unnecessary costs in preparing a notice of opposition to the application and supporting evidence in circumstances of urgency. The effort put into preparing the affidavit evidence is not wasted as it is the sort of evidence that would have been required in any event at the substantive hearing, albeit further supplementary evidence may also be required.

The law

[20]              HCR 14.8 provides that costs on opposed interlocutory applications must be fixed when the application is determined unless there are special reasons to the contrary.

[21]              HCR 15.23 provides that unless the defendant otherwise agrees or the Court otherwise orders, a plaintiff who discontinues a proceeding against the defendant must pay costs to the defendant, incidental to the proceeding up to and including the discontinuance.

[22]              Although no formal notice of discontinuance of the application for determination of a preliminary issue has been filed, the failure by the plaintiffs to comply with the timetable order, and the indication from the correspondence put before the Court that the plaintiffs accept that it is not appropriate to continue with the application, can be treated as the equivalent of a discontinuance of that application.1

[23]              The real issue for the Court in this case is whether the defendant should get a 50 per cent uplift on 2B costs.

[24]              The defendant argues that this is justified under HCR 14.6(3)(b)(ii) (taking or pursuing  an  unnecessary  step  or  an  argument  that  lacks   merit),   or   under HCR 14.6(3)(b)(iii) (failing, without reasonable justification to admit facts, evidence, documents, or accept a legal argument).

[25]              Given the centrality of the proposed question for determination to the plaintiffs’ case, it was predictable that a one-day hearing would be insufficient. However, at the time of filing the application, the plaintiffs would not have known that the date to be allocated could not extend beyond one day. Neither would the plaintiffs have then been aware of the defendant’s intention to file a counterclaim or counterclaims.

[26]              There is no doubt that the defendant has been put to the trouble of drafting substantial affidavit evidence in opposition.  However, as mentioned, that evidence is

1      MV Celebre Ltd v Airwork Flight Operations Ltd [2015] NZHC 1400 at [10], Grant v McCullagh

[2013] NZHC 2210 at [29].

not wasted as it is relevant to the substantive hearing and would have had to be briefed and filed in any event.

[27]              The plaintiffs’ acted responsibly in abandoning the application when it became obvious that there was no prospect of it being able to be heard within the Court hearing time available.

[28]              I am not satisfied that the conduct of the plaintiffs in this regard meets the standard of being “unreasonable”, so as to justify a 50 per cent uplift.

[29]              Costs are frequently determined on the papers and, given the very modest amount actually in issue in this case, the further costs incurred by having an oral hearing could not possibly be justified given that the respective positions of the parties were clearly set out in the documentation filed.

Outcome

[30]              Costs and disbursements in favour of the defendant are fixed in accordance with Schedule A to the defendant’s 1 May 2019 memorandum, minus the claimed  50 per cent uplift.

Churchman J

Solicitors:

Succeed Legal Limited, Wellington for Plaintiffs Buddle Findlay, Wellington for Defendant

Counsel:
C Stevens and T Mijatov, Capital Chambers, Wellington for Plaintiff