Gibson v Curtis HC Wellington CIV 2007-485-907
[2010] NZHC 1115
•23 June 2010
IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY
CIV 2007-485-907
BETWEEN RODNEY MARK GIBSON First Plaintiff
ANDHABODE IP LIMITED Second Plaintiff
ANDRICHARD JOHN CURTIS First Defendant
ANDHABODE HOLDINGS LIMITED Second Defendant
CIV 2008-485-2735
AND BETWEEN RICHARD JOHN CURTIS First Plaintiff
ANDCURTIS HOLDINGS LIMITED Second Plaintiff
ANDRODNEY MARK GIBSON First Defendant
ANDHABODE IP LIMITED Second Defendant
Hearing: 22 June 2010 (On Papers)
Counsel: C LaHatte for Curtis and Curtis Holdings
D D Vincent for Gibson and Habode IP Ruling: 23 June 2010
COSTS RULING OF SIMON FRANCE J
RODNEY MARK GIBSON AND ANOR V RICHARD JOHN CURTIS AND ANOR HC WN CIV 2007-485-
907 23 June 2010
[1] In a judgment delivered 18 May 2010 I dismissed claims bought by both Mr Curtis and Mr Gibson. This ruling concerns costs. The original judgment is under appeal so I will limit further observations to those which are essential in order to resolve costs.
Background
[2] The two men had been partners in a plan to develop and sell a portable home
– the Habode. The idea was to develop and manufacture it, then market the Habodes in New Zealand, and then hopefully globally. The project collapsed in 2006. Subsequently Mr Gibson, the inventor, formed new development relationships in New Zealand (still unsuccessful) and Australia (much more successful).
[3] The first claim was filed by Mr Gibson. He believed that subsequent to the collapse of the initial joint project, Mr Curtis was trying either to maintain his interest in the Habode project, or to use his knowledge to progress competition in the portable home market. Mr Gibson sought injunctions and declarations designed to establish that Mr Curtis had no on-going interest. Mr Gibson also claimed that he, or his personal company, owned the only Habode unit to land in New Zealand. He alleged that Mr Curtis had, subsequent to the collapse, converted the unit (by selling it and directing the proceeds to the failed New Zealand company). This monetary claim was for $75,000.
[4] The second proceedings were filed 18 months later by Mr Curtis. They alleged that Messrs Curtis and Gibson had been in a joint venture and that Mr Gibson has breached his obligations to Mr Curtis. The aim of the proceedings was to acquire for Mr Curtis, via an accounting of profits, a share of the money that Mr Gibson had made from the successful Australian venture. It is clear that it was expected the accounting would lead to a payment to Mr Curtis of many millions.
[5] Both claims failed.
[6] In the judgment I suggested a global approach to costs, treating the Curtis claim as the substantial claim. I suggested that costs on the whole proceedings be
calculated in favour of Mr Gibson, but reduced by 20% to reflect the loss by
Mr Gibson on his claim. That proposal has not found favour with either party.
What each party claims
(a) Mr Gibson
[7] The base for the Gibson calculations is eight hearing days. The various steps in the High Court Rules, at a 2B rate, produce a total scale costs figure of $85,440. It is submitted that, despite the success of Mr Curtis in defeating the conversion claim, Mr Gibson was the real or de facto winner of the case, and that the starting point therefore ought to be scale costs to the Gibson interests without reduction.
[8] Disbursements of $32,257.81 are also sought. These include fees for two experts – an accountant, and an expert on patent and Chinese law. Only half the fee of the latter expert is claimed as it is accepted the Chinese law component was superfluous.
[9] Costs, additional to the scale costs, of $8,478 are then claimed. These are the sum of figures for time spent chasing up briefs, time spent on irrelevant evidence, and time spent preparing cross-examination of a witness not called.
[10] Next, increased costs of 20–50% are sought on the basis of a Calderbank offer which was made twice. The offer was:
a) both sides discontinue;
b)Mr Curtis transfer his shares in a company, Habode Holdings Limited, to Mr Gibson;
c) Mr Curtis accept he has no on-going interest in the Habode project;
d)Mr Curtis accept that Mr Gibson’s company, Habode IP, owned the unit.
[11] Concerning the proposals in the offer, I observe that discontinuance would have had the same effect as my judgment; that the shares issue was not directly before me but the effect of my judgment is to confirm that Habode Holdings Limited has no on-going interest in the Habode project; that at the hearing Mr Curtis accepted he had no on-going interest in the Habode project; and that at the hearing I rejected the claim by Mr Curtis that his personal company, Habode IP, owned the unit.
(b) Mr Curtis
[12] The basic position advanced for Mr Curtis is that costs should lie where they fall.
[13] If not, total scale costs of $82,400 are identified, but both them and all disbursements are partitioned to the separate proceedings:
a) to the failed Gibson proceeding, $34,560 costs and $9,190 disbursements;
b) to the failed Curtis proceeding, $47,840 costs and $18,794. [14] Other points made on behalf of Mr Curtis are:
a) it was reasonable to decline the Calderbank offers;
b)the “delayed briefs” were a consequence of inadequate disclosure by the Gibson interests;
c) the irrelevant evidence was not irrelevant, and it was reasonable to call it;
d)the expert costs claimed by Mr Gibson are overstated and should anyway only be recovered at two thirds of the total fee.
[15] Increased costs on the failed Gibson claim are sought because it was a hopeless claim.
[16] Finally some minor adjustments to the costs payable on the failed Curtis claim should be made.
Decision
(a) A global sum?
[17] The Curtis proceeding was filed 18 months after the Gibson proceeding. It is possible to identify, therefore, some initial steps that can be specifically linked to initial Gibson proceedings. However I remain of the view that the two proceedings, heard jointly, should be treated as a whole.
[18] The Gibson claim was about much more than the one Habode unit. Although at the hearing Mr Curtis eschewed any claim to Habode intellectually property, it is plain that he claimed that he had acquired an interest in the on-going Habode project. Further, that this interest entitled him to a share of any investment subsequently made by a third party into the Habode concept.
[19] Further, there was a huge overlap in the two proceedings such that any steps taken on the initial Gibson claim were inevitably relevant to the subsequent Curtis claim and vice versa. Accordingly I consider costs should be calculated as if there was one proceeding.
[20] No specific dispute was taken with Mr Vincent’s scale B costs calculation, which was done on a one proceeding basis, and accordingly I adopt it. The scale costs in issue are therefore $85,440.
(b) Events prior to hearing
[21] Neither party has satisfied me there should be adjustments to account for chasing up briefs, or inadequate discovery, or unnecessary applications.
(c) Irrelevant evidence
[22] I observed in the judgment that I did not see the relevance of some of the evidence called on behalf of Mr Curtis. However, that is not a new experience, and these things are matters of perspective. I see no basis for an additional costs award in relation to these witnesses.
[23] One witness was briefed for Mr Curtis but not called. The brief of evidence had been included in the bundle of briefs handed up to me, but when the witness was not called, I returned the brief unread. The claim by Mr Gibson for additional costs seems to be made because the intended “evidence was important to the Gibson interests”. However, as Mr LaHatte observes, there was time for Mr Gibson to have called the witness once it was known that Mr Curtis was not going to. Notwithstanding that scale costs cover preparation time, I allow some extra time for wasted preparation in relation to this witness, but the amount should be less than that claimed. I allow half a day, which is $800. This will be an additional figure payable to Mr Gibson.
(d) Disbursements
[24] There seems no dispute about Mr Underwood’s fee.
[25] The other expert called was a patent attorney, Mr Pietras. His evidence was not challenged. He gave evidence as to the current status of the intellectual property in Habode, and on intellectual property law in China. The disbursement claim by Mr Gibson is for half Mr Pietras’ fee, it being accepted that the latter evidence on China was not needed. Concerning the evidence of what patents are held for Habodes, I consider that Mr Pietras was a witness of fact. There is nothing before
me to suggest that Mr Curtis had rejected other means of putting this evidence before the Court. If Mr Gibson chose to do it through Mr Pietras and to pay him then that is not a matter that Mr Curtis should be responsible for. I reject this disbursement.
[26] Concerning Mr Underwood (accounting evidence), although the fee is not challenged, it is said that expert fees should only be reimbursed at a two thirds recovery rate. Reliance is placed on Progressive Enterprises Limited v North Shore City Council (2005) 17 PRNZ 919, and Gordon v Auckland City Council CIV
2006-404-004417, 19 March 2007.
[27] In my view the normal position is that disbursements are recovered in full, although it remains open to adjust them as a matter of reasoned discretion. (See Air NZ Limited v Commerce Commission [2007] 2 NZLR 494. Here the evidence in issue was necessary evidence and was of a good quality. I see no reason to decline full reimbursement of Mr Underwood’s fee.
[28] Finally I consider that the costs of all the filing fees, hearing fees, and similar expenses should be shared equally to reflect the mixed outcome.
(e) Adjustment for failed Gibson claim
[29] In the initial ruling I suggested a figure of 20%. Mr Gibson says there should be no deduction because he was the de facto winner. Mr Curtis says he should get increased costs on this claim because it was a hopeless claim.
[30] As to this latter proposal, I do not accept it was any more lacking in merit that Mr Curtis’ unsuccessful claim which had aspects of the exaggerated, and which – concerning the Ihouz issue – was devoid of evidence. The fact that some Gibson claims were abandoned before the hearing is cancelled out by the somewhat shifting sands of the Curtis claim. I simply decline to differentiate between the two in terms of merit.
[31] Mr Curtis then seeks to allege that the tortious conversion claim had an aura of criminal allegation. This is not merited. It was never suggested that Mr Curtis
sold the Habode for his own benefit, and it was well known that the proceeds went to Habode NZ (in liquidation). I do not overlook Mr Curtis was a creditor of Habode NZ and so would indirectly benefit, but I reject the implication alleged by Mr Curtis that this was a claim of criminal conduct.
[32] Putting therefore all those matters that have been raised to one side, I return to the issue of what adjustment is appropriate. Any figure must be to an extent arbitrary. It is informed now by fuller submissions of counsel but they have not led me to move away from 20% as a reasonable assessment of the contribution of this claim to the overall trial.
(f) Calderbank letter
[33] The Calderbank letter was first sent on 3 March 2009, being four months after the Curtis proceedings were filed.
[34] In opposition to any increase based on this offer, on behalf of Mr Curtis it is submitted it was reasonable to decline the offer. It is said that the Curtis interests never claimed a share of the intellectual property, so that was irrelevant. It is noted that it was correct to decline to acknowledge ownership by Habode IP of the unit, and it is submitted that the offer was not clear in its terms.
[35] I am of the view that the submissions on behalf of Mr Curtis on this topic are not at all convincing. The Calderbank offer was clear, and accurately predicts the outcome of the proceeding other than as to ownership of the Habode unit. Concerning that, however, it is to be noted that the offer made by Mr Gibson was that if Habode IP ownership of the unit was acknowledged (thereby removing Mr Curtis’ right to sell it as a director of Habode NZ), there would be no claim against Mr Curtis. It was therefore an effective offer in terms of Mr Curtis’ liability.
[36] It is submitted by Mr Curtis that it was not open to him to acknowledge Habode IP’s ownership, because that would be contrary to Habode NZ’s position. Whilst that is partially correct, Mr Curtis’ acknowledgement could not have bound the Official Assignee who was the recipient of the funds on Habode NZ’s behalf. In
that sense what Mr Curtis did was irrelevant to Habode NZ. Further, the response of Mr Curtis to the Calderbank offer was not premised on any desire to protect Habode NZ. Rather it asserted the strength of Mr Curtis’ claim, and how much he has invested. The other was rejected because it did not give Mr Curtis sufficient money.
[37] Overall I consider that the letter was a reasonable offer of settlement on the matters dividing the parties. It was not better than the judgment outcome, but it effectively mirrors it.
[38] The effect of a Calderbank offer, in terms of what adjustment to costs should be made, is discretionary. Looking at other factors, there are aspects about the claims of both parties on which I could comment, but in the end they would balance each other out, and so are better left unsaid. I do not consider it was a particularly compelling offer; it was very much in the category of a suggestion that both sides should just call it quits. I do not intend to undervalue the commonsense of that, but given the disproportion in claims, the fact that Mr Curtis had suffered losses, and the fact that Mr Gibson had seemingly gone on to do quite well out of the project, it is not surprising the offer was rejected.
[39] I consider only a modest increase is appropriate given that at trial both sides have had success, and given that I did not form an unfavourable credibility assessment of either party. I increase the costs which Mr Gibson would be entitled to but for the letter by 20%. That produces the total costs of $82,022. To that figure should be added the $800 earlier identified for the witness not called.
Conclusion
[40] Basic scale costs of $85,440 are confirmed.
[41] There is then a 20% reduction to reflect the failed Gibson claim; I calculate the adjusted figure is $68,352. These are the costs to which Mr Gibson would be entitled but for the Calderbank offer. I reflect the Calderbank offer by a 20%
increase which I apply to this figure. That produces the total costs of $82,022. To that figure should be added $800 for the witness not called.
[42] The final costs figure is $82,822.
[43] Concerning disbursements I take Mr Vincent’s figure of $32,257.81 but deduct Mr Pietras’ fees, and halve all filing and hearing fees. This leaves a disbursement figure of $22,059.69.
[44] The final award is therefore costs of $82,822, and disbursements of
$22,059.69 in favour of Mr Gibson.
Solicitors:
C LaHatte, Mike Garnham, Barristers & Solicitors, PO Box 10 240, Lower Hutt
Email: chri[email protected]
D D Vincent, Thomas Dewar Sziranyi Letts, PO Box 31 240, Lower Hutt email: [email protected]
Simon France J
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