EBR Holdings Ltd (in liquidation) v McLaren Guise Associates Ltd

[2016] NZHC 803

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2014-404-2008 [2016] NZHC 803

BETWEEN

EBR HOLDINGS LTD (IN

LIQUIDATION) Plaintiff

AND

MCLAREN GUISE ASSOCIATES LTD First Defendant

NIGEL DALE HARRISON Second Defendant

Hearing:	(On the papers)
Counsel:	P Murray and J O'Connell for Plaintiff J N Bierre and L G Cox for Defendants
Judgment:	27 April 2016

JUDGMENT OF BREWER J

This judgment was delivered by me on 27 April 2016 at 11:00 am pursuant to Rule 11.5 High Court Rules.

Registrar/Deputy Registrar

Solicitors:           Meredith Connell (Auckland) for Plaintiff

Morgan Coakle (Auckland) for Defendants

EBR HOLDINGS LTD (IN LIQUIDATION) v MCLAREN GUISE ASSOCIATES LTD [2016] NZHC 803 [27

April 2016]

Introduction

[1]      On 21 August 2015, I delivered my judgment in EBR Holdings Ltd (in liq) v McLaren  Guise  Associates  Ltd.1     In  that  Judgment,  I  partially  allowed  the defendants’ application for review of a decision of Associate Judge Christiansen. Judge Christiansen had refused to strike-out the plaintiff’s causes of action.   The Judge also made a costs award against the defendants.  On review, I struck out two of the three causes of action. This judgment determines issues of costs.

[2]      The defendants want costs on a 2B basis on both the strike-out and the review applications.   The former would require an order quashing Associate Judge Christiansen’s costs order.

[3]      The plaintiff argues that both parties were partially successful on the review application and that there is no clear winner.  The plaintiff submits that costs on the review application should lie where they fall and that the costs order of Associate Judge Christiansen should stand.

Issues

[4]      There are two issues:

(a)       Are the defendants entitled to costs on the review application?

(b)      Should the costs order of Associate Judge Christiansen be quashed?

Are the defendants entitled to costs on the review application?

[5]      Rule 14.2 of the High Court Rules provides:

The  party  who  fails  with  respect  to  a  proceeding  or  an  interlocutory application should pay costs to the party who succeeds.

1      EBR Holdings Ltd (in liq) v McLaren Guise Associates Ltd [2015] NZHC 1996, [2016] 2 NZLR

96.

[6]      The parties agree on the principles relating to costs following a decision where both parties have had similar success.  In Packing In Ltd (in liq) v Chilcott,2 the Court of Appeal held:3

In a case such as the present, where in broad terms each party has had similar success, we do not consider it helpful to focus too closely on the question which party has failed and which has succeeded. Costs in a case such as this should rather be based on the premise that approximately equal success and failure attended the efforts of both sides. To that starting point should be added issues such as how much time was spent on each transaction or group of transactions in issue, and any other matters which can reasonably be said to bear on the Court’s ultimate discretion on the subject of costs. In the end, as in all costs matters, the Court must endeavour to do justice to both sides, bearing in mind all material features of the case.

[7]      And:4

Success or failure in this context is better assessed by a realistic appraisal of the end result rather than by focussing on who initiated what step, and the extent to which that step succeeded or failed.

[8]      Mr Murray for the plaintiff referred me to a number of decisions where the Court has concluded that a “realistic appraisal of the end result” showed that both parties enjoyed broadly similar success such that it was appropriate for costs to lie where they fall.5     Mr Murray submitted that in this case neither party can claim complete success and both parties enjoyed similar success.   This is because the defendants were unsuccessful in their attempt to strike out the entire proceeding.  He emphasised that the proceeding will still go to  trial with substantially the same factual  basis  because  the  remaining  cause  of  action,  misuse  of  confidential

information, arises out of the same factual background as the two causes of action that were struck out.  His ultimate submission was that a realistic appraisal of the end result leads to the conclusion that costs ought to lie where they fall.

[9]      Mr Murray further submitted that it is artificial to assign relative importance

to each of the plaintiff’s causes of action based on the time spent on each during submissions.  His reason was that each cause of action shares a common factual and

2      Packing In Ltd (in liq) v Chilcott (2003) 16 PRNZ 869 (CA).

3 At [5].

4 At [6].

5      Lihua Limited v Body Corporate 366611 [2014] NZHC 267; Karaka v Ngai Tak Ki Tamaki

Tribal Trust [2014] NZHC 603; Harvey v Gateshead Investments Limited [2014] NZHC 464.

legal background and so cannot be considered in isolation.  He argued that the time spent on the two causes of action that were struck out provided the basis for the submissions for the misuse of confidential information claim.

[10]     I disagree in part with Mr Murray’s submissions.   In my view, a realistic appraisal of the end result leads to the conclusion that the defendants are entitled to some costs on the review application.   Associate Judge Christiansen’s decision is entirely devoted to the availability of witness immunity.  He held that the plaintiff’s claims  should  not  be  struck  out  because  the  law  in  New  Zealand  on  witness immunity  is  unclear.    The  parties’ submissions,  the  hearing  and  my  Judgment substantially  focussed  on  whether  the  defendants’ statements  were  protected  by witness immunity.  The plaintiff argued that witness immunity did not apply.  The defendants said it did.  I agreed with the defendants.  I held that the Judge was in error.   The availability of witness immunity was the key issue on review, the resolution of which knocked out two causes of action.

[11]     However, the plaintiff is correct that it enjoyed a similar level of success to the defendants because it resisted successfully strike-out in relation to the second cause of action.

[12]     I  have  decided  to  award  costs  against  the  plaintiff  at  50  per  cent  on  a

2B basis.

Should the costs order of Associate Judge Christiansen be quashed?

[13]     Mr Bierre for the defendants submitted that, as the plaintiff was originally awarded costs on the strike-out application, the defendants are entitled to an order quashing that award and costs on a 2B basis on the first-instance strike-out application.

[14]     Mr Murray submitted that no authority was cited by the defendants in support of this approach.  He said that in the usual course, following a successful appeal, an appellate court does not determine costs on the initial decision and that the issue of

costs is often remitted back to the initial court for determination.6    If, however, I were to accept that I have jurisdiction to decide the costs available at first instance, Mr Murray submitted that the Associate Judge’s award should not be quashed in the present case because there had not been a wholly successful review.

[15]     Neither party directed me to any authority addressing the usual approach the Court  takes  in  relation  to  an  Associate  Judge’s  costs  award  where  there  is  a successful review.  I note that s 26P(1)(b) of the Judicature Act 1908 provides that the Court on review “may make such order as may be just”.   Given the broad language of s 26P(1)(b), I am of the view that it is within my jurisdiction to quash Associate Judge Christiansen’s costs award and substitute another if it would be just

to do so.7

[16]     In the present case, it would be just to quash the initial costs order.  I found that Associate Judge Christiansen made an error of law in refusing to strike out two of the three causes of action.  Therefore, it would be inappropriate to maintain the costs award.   But, the costs awarded in relation to the initial decision must acknowledge the reality that, but for the error of law, the defendants would not have enjoyed complete success.  The Judge quite appropriately refused to strike out the second cause of action.  I have decided that the just result is to again order that costs be paid at 50 per cent on a 2B basis.

Result

[17]     I make the following orders:

(a)      The  plaintiff  is  to  pay  to  the  defendants  costs  on  the  review application at 50 per cent on a 2B basis, to be fixed by the Registrar in event of dispute.

(b)      The costs award of Associate Judge Christiansen is quashed.

6      Relying on the discussion in Americhip v Dean [2015] NZHC 1871 at [25]–[27].

7      See, for example, Schumacher v Summergrove Estates Ltd [2014] NZHC 3369 where Woolford J rejected the argument that, following a successful review, the Associate Judge’s costs judgment should still stand. He held that it is implicit in an application for review that it was to include, if successful, a review of the order for costs (at [5]–[6]).

(c)       The plaintiff is to pay to the defendants costs on the initial strike-out application at 50 per cent on a 2B basis, to be fixed by the Registrar in

event of dispute.

Brewer J