Exportrade Corporation v Irie Blue New Zealand Limited

[2016] NZHC 1806

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2008-404-7130 [2016] NZHC 1806

BETWEEN

EXPORTRADE CORPORATION

Plaintiff

AND

IRIE BLUE NEW ZEALAND LIMITED First Defendant

EDITH SHELLEY ROZANNE GRIBBLE, aka ROZANNE GRIBBLE Second Defendant

SCOTT GEOFFREY GRIBBLE Third Defendant

Hearing:	On the papers
Appearances:	G J Thwaite for plaintiff H Fulton for first defendant
Judgment:	5 August 2016

JUDGMENT OF LANG J

[on application for costs by first defendant]

This judgment was delivered by me on 5 August 2016 at 3 pm, pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date……………

EXPORTRADE CORPORATION v IRIE BLUE NEW ZEALAND LTD [2016] NZHC 1806 [5 August 2016]

[1]      Irie Blue New Zealand  Limited (Irie Blue) has been a  defendant in this proceeding since  Exportrade Corporation  (Exportrade)  filed it  in  2008.    It  only ceased to have that status when Exportrade filed a fifth amended statement of claim on 15 April 2016.  This did not contain the first cause of action pleaded against Irie Blue in earlier versions of the statement of claim.   Irie Blue has never been a defendant in respect of the remaining causes of action pleaded by Exportrade.

[2]      Given that the proceeding against it is now at an end, Irie Blue seeks an award of costs in its favour.  It seeks costs on a category 2B basis, together with a 50 per cent uplift to reflect Irie Blue’s assertion that Exportrade maintained its claim against Irie Blue for a significant period after it knew that the claim had no tenable legal basis.

The arguments in opposition to costs

[3]      Mr Thwaite, for Exportrade, advances four arguments in opposition to Irie Blue’s application for costs.  First, he submits that no order for costs should be made at this point, and that determination of costs should occur once the outcome of Exportrade’s claims against the remaining defendants is known.   Irie Blue is no longer a party to the proceeding, however, and is therefore entitled to ask the Court to fix costs at this point.  It should not be required to wait for months or years whilst Exportrade’s claims against the remaining defendants wend their way to a final conclusion.

[4]      Next, Mr Thwaite submits that no costs should be awarded in favour of Irie Blue because of the evasive manner in which he argues the third defendant, Mr Gribble, has conducted his defence of the proceeding.  This submission overlooks the fact that Irie Blue is a separate legal entity to Mr Gribble, and is entitled to have the issue of costs assessed on that basis.

[5]      Mr Thwaite next submits that, if Irie Blue is to receive an award of costs, it should be assessed on a Category 1 basis.  There is no justification for that argument. The proceeding raises issues that are far more complex than would be raised by a

Category 1 proceeding.  Earlier interlocutor judgments have also awarded costs on a

Category 2B basis.1

[6]      Finally, Mr Thwaite contends that if the Court awards Irie Blue costs on a Category 2 basis, there should not be an award of increased costs.  That is the only real issue to be determined, because Irie Blue was ultimately the successful party in relation to the only cause of action pleaded against it.  It is therefore entitled to an award of costs in its favour.2

Should the Court make an award of increased costs?

[7]      The Court may make an award of increased costs where the party opposing costs has contributed unnecessarily to the time or expense of a proceeding by taking or pursuing an unnecessary step that lacks merit.3   Irie Blue relies on this principle in seeking an increased award of costs.

[8]      The  tortuous  progress  of  this  proceeding  is  set  out  fully  in  earlier interlocutory judgments, and I do not propose to recount it again in this judgment. A convenient summary is contained in a judgment delivered on 23 March 2016, in which I granted Irie Blue’s application for an order striking out the first cause of

action.4

[9]      The important point for present purposes is that Exportrade and its advisers have known since 22 December 2010 that Exportrade had no legal basis for continuing its claim against Irie Blue.     On that date Duffy J issued a judgment granting Irie Blue’s application for an order reviewing a decision of an Associate Judge in which the Associate Judge had set aside Irie Blue’s appearance under

protest to jurisdiction.5    Duffy J held that the courts in New Zealand did not have

1      Exportrade Corporation v Irie Blue New Zealand Ltd HC Auckland CIV-2008-404-7130, 25

February 2011;  Exportrade Corporation v  Irie  Blue  New Zealand Ltd  [2013] NZHC 427; Exportrade Corporation v Irie Blue New Zealand Ltd [2013] NZHC 1613; Exportrade Corporation v Irie Blue New Zealand Ltd (No 3) [2015] NZHC 399.

2      High Court Rules, r 14.2(a).

3      Rule 14.6(3)(b)(ii).

4      Exportrade Corporation v Irie Blue New Zealand Ltd [2016] NZHC 500 at [4]-[12].

5      Exportrade Corporation v Irie Blue New Zealand Ltd HC Auckland CIV 2008-404-7130, 22

December 2010.

jurisdiction to determine the claim pleaded in the first cause of action because it was based on a judgment of a Florida court that is not enforceable in New Zealand.6

[10]     Exportrade did not appeal against Duffy J’s decision, and must therefore be taken to have accepted it.  As I observed in my judgment striking out the first cause of action, Exportrade appears initially to have acknowledged that its claim against Irie   Blue   could   not   proceed   further   but   subsequently   changed   its   mind.7

Notwithstanding the plain effect of Duffy J’s decision, however, Exportrade persisted in maintaining the first cause of action until I struck it out on 23 March 2016.

[11]     In doing so I consider that Exportrade contributed unnecessarily to the cost of the proceeding.   Irie Blue should not have been put to the expense of applying to have the first cause of action struck out when the legal position was so clear. Exportrade ought to have taken the initiative by filing an amended statement of claim that omitted the first cause of action once it decided not to appeal against Duffy J’s judgment.  Irie Blue is therefore entitled to an award of increased costs.

Orders

[12]     I direct that Irie Blue is to receive costs on a Category 2B basis uplifted by 50 per cent in respect of the application to strike out the proceeding.  Irie Blue is also entitled to recover the filing fee paid in respect of the application to strike out the first cause of action.

[13]     The award of costs needs to recognise that Mr Fulton has acted for both Irie Blue and Mr Gribble throughout.   It is therefore appropriate to adopt a different approach in respect of all other steps taken after 22 December 2010 where Mr Fulton has acted on behalf of both defendants.  Exportrade should not be required to meet Mr Gribble’s costs in respect of those steps.

[14]     To the extent that costs have not already been fixed in respect of those steps, I

therefore direct that Irie Blue is to receive an award of costs calculated at 50 per cent of costs payable on a Category 2B basis but then uplifted by 50 per cent to reflect the

6 At [26].

7      Exportrade Corporation v Irie Blue New Zealand Ltd, above n 4, at [20].

award of increased costs.  In other words, Irie Blue will receive 75 per cent of costs on a Category 2B basis in respect of those steps notwithstanding the fact that Mr

Fulton acted for both defendants in respect of them.

Lang J

Counsel/Solicitors:

G J Thwaite, Auckland

H Fulton, Auckland

Bell-Booth Sherry, Takapuna