Green Way Limited v Mutual Construction Limited

[2021] NZHC 2727

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV 2021-404-1053

[2021] NZHC 2727

UNDER

Copyright Act 1994 Fair Trading Act 186

IN THE MATTER OF

Breach of Confidence Inducing Breach of Contract Conspiracy

Copyright Infringement Conversion

Misleading and deceptive conduct

BETWEEN

GREEN WAY LIMITED

Plaintiff

AND

MUTUAL CONSTRUCTION LIMITED

First Defendant

Continued…

On the papers

Counsel:

B Molloy for the Plaintiff

J D McBride for the Defendants

Judgment:

12 October 2021

COSTS JUDGMENT OF CAMPBELL J

This judgment was delivered by me on 12 October 2021 at 4:00pm pursuant to Rule 11.5 of the High Court Rules

Registrar/Deputy Registrar

GREEN WAY LIMITED v MUTUAL CONSTRUCTION LIMITED [2021] NZHC 2727 [12 October 2021]

PHILLIP ANTHONY AINSWORTH

Second Defendant

ZHEHUA (WILLIAM) XIANG
Third Defendant

STEFAN MASUTTI
Fourth Defendant

[1]                 Green Way Ltd commenced this proceeding against the defendants for breach of confidence, conspiracy by unlawful means, breach of copyright, conversion, inducing breach of contract, and misleading or deceptive conduct in breach of s 9 of the Fair Trading Act 1986. It obtained, without notice, a search order and an interim injunction against the first defendant and an order that the second, third and fourth defendants file an affidavit disclosing any documents or information in their possession belonging or relating to Green Way. The search order was executed on 18 June 2021.

[2]                 The defendants applied for all three orders to be rescinded. I granted the defendants’ application in a judgment dated 8 July 2021.1 I found Green Way had failed to make full and frank disclosure of all material facts and the orders should be rescinded.

[3]                 I also held the defendants were entitled to costs. The parties have been unable to resolve costs and memoranda have been filed.

[4]                 The defendants seek indemnity costs of $68,282. Alternatively, they say an award of increased costs is appropriate.

[5]                 Green Way resists either, arguing the defendants are entitled only to scale costs. Green Way proposes 2B costs of $6,811.50. Mr Molloy, on behalf of Green Way, submits that if I were minded to award costs beyond scale it is in the interests of justice to have a hearing on costs.

[6]                 I do not consider it is in the interests of justice to schedule a hearing. The outcome of the substantive proceeding is clear, principles on indemnity and increased costs are settled and Green Way has had an opportunity to respond to the defendants’ claim for indemnity or increased costs. Little could be achieved at a hearing other than rehearsing the submissions already before me.

[7]                 Mr McBride, for the defendants, relies on the Court’s power to order indemnity costs under r 14.6(4)(a) where a party has acted “improperly”. He acknowledges there

1      Green Way Ltd v Mutual Construction Ltd [2021] NZHC 1704.

is no general rule that indemnity costs will be granted where without notice orders have been rescinded on the ground of material non-disclosure. But he says for two reasons indemnity costs should be awarded in this case. First, Mr McBride says Green Way’s non-compliance with the obligations that fall on an applicant for without notice orders was serious and “not innocent”. He says this case is analogous to Commissioner of Inland Revenue v Dymock, where indemnity costs were awarded against the plaintiff after a freezing order she obtained was set aside.2 Secondly, he says Green Way insisted the defendants’ application be heard urgently on 30 June 2021, knowing that this would mean the defendants would have to instruct other counsel for that hearing.

[8]                 Indemnity costs under r 14.6(4)(a) are “exceptional and require exceptionally bad behaviour”.3 Green Way’s behaviour did not reach that level. At the hearing of the application to rescind the orders, the defendants submitted Green Way had acted in bad faith, that the non-disclosure was deliberate, and that Green Way’s memorandum in support was intentionally misleading. In my judgment I said I was not satisfied of any of those things.4 Nor is this case analogous to Dymock. There the non-compliance was much worse. There were three separate failures by the applicant, one of which Simon France J described as being at “the upper end of misleading the Court”.5

[9]                 I do not accept Mr McBride’s submission that Green Way’s insistence the hearing proceed on 30 June 2021 is relevant to a claim for indemnity costs. There was nothing unreasonable, let alone improper, in that insistence. All parties wanted an urgent hearing.

[10]I therefore decline to award indemnity costs.

[11]              Before turning to the defendants’ alternative claim for increased costs, I will address the scale costs to which the defendants are entitled. The parties agree on costs category 2. Green Way proposes band B for all steps, whereas the defendants propose

2      Commissioner of Inland Revenue v Dymock [2013] NZHC 3346.

3      Bradbury v Westpac Banking Corp [2009] NZCA 234, [2009] 3 NZLR 400 at [28].

4      Green Way Ltd v Mutual Construction Ltd [2021] NZHC 1704 at [82].

5      Commissioner of Inland Revenue v Dymock [2013] NZHC 3346 at [42].

band C. In my view, of the steps for which the defendants have claimed costs,6 band C is appropriate for item 24 (preparation of written submission). Those submissions were comprehensive, succinct and prepared under urgency.

[12]I calculate scale costs as $10,396.50, comprising as follows:

Step	Activity	Band	Time	Amount
Item 24	Preparation of written submissions	2C	3.0	$7,170.00
Item 25	Preparation of bundle for hearing	2B	0.6	$1,434.00
Item 26	Appearance at hearing	0.5	$1,195.00
Item 27	Second counsel	0.25	$597.50
TOTAL	Daily rate: $2,390	4.35	$10,396.50

[13]              I consider an uplift of 25 per cent on scale costs is appropriate. Although I have not found it appropriate to award indemnity costs, a modest uplift is justified under r 14.6(3)(b). Green Way’s failure to comply with the rules relating to without notice applications contributed unnecessarily to the defendants’ costs in responding to Green Way’s application and obtaining rescission of the orders.7

Result

[14]Green Way is to pay costs of $12,995.63 to the defendants.

Campbell J

6      The defendants did not claim for their memorandum of 23 June 2021, their appearance in the Duty Judge list on 24 June 2021, or the preparation of their four affidavits in support of their application to rescind. Costs for those steps are not determined by this judgment.

7      Zhou v Chi [2018] NZHC 1298 at [82].