Curtis v Gibson
[2014] NZHC 969
•9 May 2014
IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY
CIV-2008-485-2735 [2014] NZHC 969
BETWEEN RICHARD JOHN CURTIS
First Plaintiff
CURTIS HOLDINGS LIMITED Second Plaintiff
AND
RODNEY MARK GIBSON First Defendant
HABODE IP LIMITED Second Defendant
Hearing: On the papers Counsel:
P B Churchman QC and S C McIver for Plaintiffs
D D Vincent and A J Watt for DefendantsJudgment:
9 May 2014
COSTS JUDGMENT OF MACKENZIE J
I direct that the delivery time of this judgment is
4.45 pm on the 9th day of May 2014.
Solicitors: Gault Mitchell, Wellington, for Plaintiffs
Thomas Dewar Sziranyi Letts, Lower Hutt, for Defendants
CURTIS v GIBSON [2014] NZHC 969 [9 May 2014]
[1] The parties have filed memoranda as to costs in accordance with the invitation contained in [70] of my judgment of 31 October 2013.
[2] I must determine costs for the entire proceedings in this Court, in respect of both sets of proceedings which were the subject of the judgment of Simon France J delivered on 18 May 2010, and the subsequent hearing before me following the allowing of the appeal against that judgment. The costs ruling of Simon France J delivered on 23 June 2010 has been set aside by the Court of Appeal.
[3] Mr Churchman QC submits that the Gibson interests were entirely unsuccessful in both the Gibson proceeding and the Curtis proceeding, the Curtis interests narrowed their approach in the Court of Appeal proceedings and this produced a successful outcome and costs should follow that event. He seeks scale costs in both proceedings, on a 2B basis, for all High Court proceedings both before and after the Court of Appeal decision, that is to say all steps relating to both the original hearing before Simon France J, and the subsequent hearing before me fixing quantum.
[4] Mr Vincent, for Mr Gibson, submits that costs for the original High Court hearing before Simon France J should lie where they fall, and that costs regarding the account of profits hearing before me should not be awarded personally against Mr Gibson as he was legally aided throughout that period.
[5] I do not consider that it is appropriate to award full scale costs for the stage of the proceedings up to and including the hearing before Simon France J. The essential broad issues raised by the two sets of proceedings in issue at that hearing were as follows:
(a) the Curtis proceedings were concerned with Mr Curtis’ claim that there was a worldwide joint venture between Mr Gibson and Mr Curtis in respect of the Habode product. The joint venture was initially claimed to involve, inter alia “protecting the intellectual property in the product”; and
(b)the Gibson proceeding involved a claim for declarations to the effect that Mr Curtis or Habode Holdings had no rights in relation to the Habode product, and a claim for conversion of a Habode Unit.
[6] Simon France J held in the Curtis proceedings that there was no joint venture. He declined to make a declaration in the Gibson proceedings because his judgment made it clear that Mr Curtis and his interests did not acquire any rights as regards the Habode product.
[7] The broad essence of Mr Curtis’ stance before the Court of Appeal was that:
(a) Mr Gibson’s ownership (through his interests) of the intellectual property was not challenged; and
(b)the joint venture contended for was narrowed to a joint venture in relation only to the Australian rights in respect of the Habode product.
[8] Mr Curtis was successful in the Court of Appeal, in that the Court held that there was a joint venture in relation to Australia. It was that joint venture for which an account of profits was to be taken.
[9] A party who has failed in the High Court but succeeded on appeal will ordinarily be awarded costs in the High Court as if that party had succeeded there. In this case, I do not consider that Mr Curtis should, following the outcome of the appeal, be treated as if he had succeeded in full at the initial stage. The reason for this is that argument for the joint venture advanced in the Court of Appeal was substantially different from, and narrower than, that which had initially been claimed. The recasting of the claim was extensive. The joint venture for which Mr Curtis initially contended was not upheld by the Court of Appeal. The joint venture held to exist was substantially narrower, in that it did not extend to the intellectual property in the Habode product, and it did not extend beyond Australia. In those circumstances, I do not accept Mr Churchman’s submission that costs should be approached on the basis that Mr Curtis has been entirely successful.
[10] Mr Vincent submits that the costs in respect of the original hearing should lie where they fall. While the matter to which I have referred justifies some reduction in the costs to be awarded for that earlier stage of the litigation, it does not justify depriving Mr Curtis of any award of costs for that period. The assessment I make is that a discount of 50 per cent from the amount which would have been payable if Mr Curtis was treated as having been fully successful in the original High Court hearing is appropriate.
[11] For the hearing before me, I consider that Mr Curtis should be regarded as the successful party, and that costs should follow the event for that stage of the proceedings. That is also subject to the application of s 45 of the Legal Services Act 2011 (the Act).
[12] I need to consider whether any award of costs should be against Mr Gibson alone, or also against Habode IP Ltd. Mr Vincent submits that the involvement of Habode IP Ltd in the proceedings is a historical accident and that costs should not be awarded against it. That company was added as a plaintiff in the Gibson proceedings in an amendment to the statement of claim. It was at all stages a defendant in the Curtis proceedings. The Court of Appeal, in awarding costs, did not make any distinction, and awarded costs against both Mr Gibson and Habode IP Ltd. I adopt the same approach. I see no basis to depart from the ordinary rule, set out in r 14.14 of the High Court Rules that the liability of the respondents for costs should be joint and several.
[13] Mr Gibson was legally aided from about January 2012. Under s 45(2) of the Act no order for costs may be made against Mr Gibson unless the Court is satisfied that there are exceptional circumstances. I need to consider the implications of that for the award of costs against Mr Gibson.
[14] The relevant considerations which can be taken into account in determining whether there are exceptional circumstances are listed in s 45(3). Mr Churchman relies on the following:
(a) any conduct that causes the other party to incur unnecessary cost; and
…
(c) any misleading or deceitful conduct.
[15] He submits that throughout the proceeding Mr Gibson unnecessarily increased costs by a lack of cooperation and a tendency to draw matters out, particularly in relation to discovery. Mr Vincent submits that the circumstances relating to discovery which he describes were such that while there were some delays in discovering certain documents in 2013, this was largely due to causes outside Mr Gibson’s control and did not substantially delay matters or cause unnecessary costs to the plaintiffs.
[16] I do not propose to examine in detail the merits of the claim that there have been delays in relation to discovery. The matters submitted by Mr Churchman do not satisfy me that these fall within the category that should be regarded as exceptional circumstances in terms of s 45(2).
[17] I must consider the time period to which s 45(2) applies. It clearly applies to all stages of the proceedings after the grant of legal aid. The question here is whether s 45(2) is limited to the period in which the party is legally aided, or whether it applies to any award of costs after legal aid has been granted, even where the costs which are sought relate to a period which predates the grant of aid.
[18] Mr Vincent refers to Goodwin v Rocket Surgery Ltd in support of the proposition that s 45(2) applies to steps in the litigation prior to the grant of legal aid.1 In that case, reference is made to CMD v JT.2 The form of cost order made by the Court of Appeal in that case suggests that s 45(2) does not preclude an award for stages prior to the grant of legal aid, but the point is not specifically discussed. In Carter v Western Viaduct Marine Ltd, this Court held that the predecessor of s 45 applied to that part of the litigation for which the litigant was an aided person, not to
the whole of the proceedings.3 I followed that approach in Pickard v Ambrose.4
1 Goodwin v Rocket Surgery Ltd [2013] NZHC 2046.
2 CMD v JT [2011] NZCA 185, [2011] 2 NZLR 567.
3 Carter v Western Viaduct Marine Ltd [2003] 16 PRNZ 1034 (HC) at [23]-[25].
4 Pickard v Ambrose HC Wellington CIV-2003-091-143, 6 October 2011.
[19] For these reasons the award of costs against Mr Gibson will apply to the period prior to the grant of legal aid, but not subsequently.
[20] The judgment of the Court of Appeal was delivered on 5 August 2011. Mr Gibson was granted legal aid apparently sometime in January 2012. There is no information before me as to what steps were taken in that period which might potentially be the subject of an award of costs. In the absence of any better information, and because it seems to me probable that significant costs would not have been incurred in that period, I treat the division between the costs of the hearing before Simon France J and the costs of the hearing before me as being the same as the division between the costs before and after the grant of legal aid.
[21] I now turn to fix the question of costs, in accordance with the conclusions I
have described.
[22] Scale costs on a 2B basis for the period when Mr Gibson was not legally aided (which I treat as the costs of the hearing before Simon France J) total $87,100. There are disbursements of $53,918.38. Costs on a 2B basis for the period following the grant of legal aid (the costs of the hearing before me) total $39,205. Disbursements of $25,717.26 are claimed.
[23] Because my assessment that a 50 per cent discount is appropriate for this phase, the amount to be awarded as costs up to the hearing before Simon France J is one half of $87,100, that is, $43,550. The disbursements claimed for that period,
$53,918.38, include $33,368.68 for expert witness expenses. Mr Vincent submits that this item should not be allowed, on the grounds that this related primarily to the projected profits for the New Zealand operation of Habode, which was not included in the joint venture held by the Court of Appeal. I consider there is force in that submission. Also, I consider it appropriate to apply to the claim for disbursements the same discount of 50 per cent as I have applied to the costs claim for this period. That gives a figure payable for disbursements for this period of $10,274.85.
[24] The amount of be awarded for costs for the period from the date of grant of legal aid to the hearing before me is $39,205. Disbursements are claimed of
$25,717.26. No discount is required to these figures. They are not to be awarded against Mr Gibson.
[25] The result is that there will be an award of costs and disbursements of
$53,824.85 against Mr Gibson and Habode IP Ltd, and a further award of $64,922 against Habode IP Ltd.
[26] Mr Churchman requests that, under s 45(5), I specify what order would have been made against Mr Gibson if s 45 had not affected his liability. I specify that I would, in that event, have imposed the award which I have made against Habode IP Ltd above jointly and severally on Mr Gibson also.
“A D MacKenzie J”