Earthquake Commission v Krieger

[2013] NZHC 1588

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

CIV-2013-485-000530 [2013] NZHC 1588

BETWEEN

EARTHQUAKE COMMISSION Plaintiff

AND

MARC ALLEN KRIEGER First Defendant

UNKNOWN DEFENDANTS Second Defendant

Judgment:                27 June 2013

JUDGMENT AS TO NON-PARTY COSTS OF COLLINS J

[1]      On 8 April 2013 the Earthquake Commission (EQC) commenced proceedings against unknown defendants in which it sought, amongst other relief, orders preventing the further publication of what EQC believes to be leaked confidential information about 83,000 clients of EQC who own residential properties in Canterbury.

[2]      At the time it commenced its proceeding EQC did not know who was responsible for leaking the information in question.  What it did know was that on

22 March  2013  an  EQC  employee  had  inadvertently  emailed  to  Mr  Staples,  a spreadsheet  containing  details  of  the  83,000  EQC  clients.    Mr  Staples  is  an earthquake repair contractor who should not have received the spreadsheet from EQC’s employee.  EQC also knew when it commenced its proceeding that the same information contained in the spreadsheet that had been emailed to Mr Staples was also obtained by the author of a blog site:  eqctruths.wordpress.com (blog site).  At that stage EQC did not know the author of that blog site (blogger).  It is now known Mr Krieger, a former employee of EQC was the blogger.  Mr Krieger has now been

named as the first defendant in the proceeding.

EARTHQUAKE COMMISSION v KRIEGER [2013] NZHC 1588 [27 June 2013]

[3]      On  8  April  2013   I  made  interim  orders  prohibiting  the  release  by unauthorised persons of the confidential information inadvertently sent to Mr Staples and which appeared to be in the possession of the blogger.  EQC sent a copy of its proceeding and my interim order to Mr Staples.

[4]      On 9 April 2013 I conducted a hearing to determine whether or not the interim orders I made on 8 April 2013 should continue or be varied in any way. Ms Dalziel  had  by  that  stage  been  instructed  by  Mr  Staples  and  appeared,  via telephone link, at the hearing on 9 April 2013.   On 9 April 2013 I issued further orders which effectively continued the orders I had made on 8 April 2013.   I also ordered that:

(1)The author of the blog site and each such recipient of this proceeding is to file and serve an affidavit by 19 April 2013 specifying whether or not he/she:

(a)      has or has had in his or her possession any information obtained directly or indirectly from EQC about identifiable individuals other than him or herself;  and

(b)if so, whether and to whom he/she has provided that information.

(2)The author of the blog site and each such recipient is prohibited from disclosing, except to a lawyer for the purposes of obtaining legal advice  in  relation  to  this  proceeding,  any  information  obtained directly or indirectly from EQC about identifiable individuals other than him or herself.

[5]      Ms  Dalziel  participated  in  further  telephone  conferences  I  conducted  in relation to this proceeding on 12 April 2013, 29 April 2013 and 22 May 2013. At the telephone conference held on 22 May 2013 Ms Dalziel was advised that it was no longer necessary for her to continue to be involved in the proceeding.  Ms Dalziel

informed the Court and counsel for EQC that she would be seeking costs on behalf of Mr Staples.

[6]      The grounds for Mr Staples’ costs application can be distilled to the following key points:

(1)Mr  Staples  should  not  have  been  “served”  with  the  proceeding because when it commenced the proceeding EQC did not have any information to suggest Mr Staples supplied to the blogger the spreadsheet that had been inadvertently sent to Mr Staples.

(2)Mr Staples’ name should not have been referred to in the statement of claim because EQC knew that the information sent to the blogger came from a source that was independent of Mr Staples.

(3)EQC had no cause of action against Mr Staples.  He was not named as a party and there was no causal link between the inadvertent supply of the spreadsheet to Mr Staples and the receipt of the same information by the blogger.

(4)It was an abuse of process to involve Mr Staples in the proceedings and/or unjust and unfair to require him to participate in a proceeding when he did not need to be involved.

(5)Mr Staples should be awarded costs on either an indemnity or uplift basis.

[7]      EQC opposes costs on the following key grounds:

(1)Mr Staples was not “served”.  It was nevertheless entirely appropriate for Mr Staples to be sent a “complimentary copy” of the proceedings and my interim orders so as to give Mr Staples the opportunity to determine if he was a person to whom my interim orders were directed.

(2)       Mr Staples’ position is analogous to that of a prospective intervener.

(3)Orders for costs in favour of non-parties are exceptional and should be treated with considerable caution.1

(4)       If costs are to be awarded they should be calculated on a category A

basis. There is no grounds for awarding an uplift on costs.

[8]      I am satisfied that this is a case in which I should exercise my discretion to award  Mr  Staples  costs.    In  doing  so  I  acknowledge  EQC’s  submission  that Mr Staples was not “served” with the proceeding.  Nevertheless, he was justified in believing he had been served and that he needed to take urgent steps to instruct counsel to represent his interests.

[9]      Mr Jagose, counsel for EQC, acknowledges that perhaps it could have been made clearer to Mr Staples when he was sent the proceedings and my interim order that he was not being served and that he only needed to take steps if he was a person to whom my order applied.  I am not criticising Mr Jagose, but it is now clear that Mr Staples has been put to unnecessary expense and that in these circumstances it is appropriate that he be awarded costs.

[10]     I am, however, far from satisfied that EQC’s conduct justifies a departure from an award on the standard scale 2B basis.   In my assessment EQC acted reasonably and responsibly.  It now transpires Mr Staples did not have to be involved in the proceeding but that does not justify making an award of indemnity costs or an uplift of costs.

[11]     Mr Staples is entitled to costs on a scale 2B basis.

1      O’Keefe v Hayes Knight GTO Pty Ltd [2005] FCA 1559 at [24].

D B Collins J

Solicitors:

Chapman Tripp, Wellington for Plaintiff

Taylor Shaw, Christchurch for B Staples