HealthAlliance NZ Limited v Hewlett-Packard New Zealand

[2023] NZHC 3150

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2021-404-1215

[2023] NZHC 3150

BETWEEN

HEALTHALLIANCE N.Z. LIMITED

Plaintiff

AND

HEWLETT-PACKARD NEW ZEALAND

First Defendant

CAPAX DISCOVERY INC
Second Defendant

ZOVY LLC

Third Defendant

Hearing:

On the papers

Counsel:

RJ Hollyman KC and C Maberly for the Plaintiff

G Williams / T Huthwaite / B Carey for the Second and Third Defendants

Judgment

9 November 2023

JUDGMENT OF ASSOCIATE JUDGE BRITTAIN

This judgment was delivered by me on 9 November 2023 at 3 pm, pursuant to r 11.5 of the High Court Rules

Registrar/Deputy Registrar Date:

Maberly & Co, Auckland Tompkins Wake, Hamilton AJ Park, Auckland

RJ Hollyman KC, Shortland Chambers, Auckland

HEALTHALLIANCE N.Z. LTD v HEWLETT-PACKARD NEW ZEALAND [2023] NZHC 3150

[9 November 2023]

Introduction

[1]        In this proceeding, the second defendant, Capax Discovery Inc (Capax) and the third defendant, Zovy LLC (Zovy) have filed a counterclaim against the plaintiff, healthAlliance N.Z. Ltd (healthAlliance).

[2]        On 3 August 2022, healthAlliance applied for summary judgment dismissing the counterclaim (the application). Capax and Zovy opposed the application, which was set down for a half day fixture on 12 December 2022.

[3]        By consent, the hearing was adjourned, and healthAlliance subsequently discontinued the application. This judgment resolves the matter of costs.

Background

[4]        The full background to the proceeding and the adjournment of the application was set out by Johnstone J in his judgment determining a discovery issue,1 and need not be repeated.

[5]        Capax and Zovy have always maintained that their right to sue healthAlliance arises pursuant to an assignment of rights from the first defendant, Hewlett-Packard New Zealand (Hewlett-Packard), to Capax and Zovy in 2016 (the 2016 assignment).

[6]        The application rested on the asserted ground that Capax and Zovy had not in fact taken an assignment of the rights necessary to give Capax and Zovy standing to sue.

[7]In opposition, Capax and Zovy asserted that:

(a)the 2016 assignment was valid; and

(b)in the alternative, healthAlliance is estopped from denying the validity of the 2016 assignment.

1      healthAlliance NZ Ltd v Hewlett-Packard New Zealand [2023] NZHC 1201 at [5]–[13].

[8]        On 25 November 2022, shortly before the scheduled hearing of the application, Micro Focus, a successor to Hewlett-Packard’s rights, entered into a deed of assignment with Capax and Zovy (the 2022 deed), which relevantly provided:

(a)confirmation by Micro Focus that the 2016 assignment was valid; and

(b)to the extent that any rights had not been assigned to Capax and Zovy in 2016, assignment of those rights by Micro Focus to Capax and Zovy.

[9]        The 2022 deed was immediately put into evidence in opposition to the application. I am not aware of any suggestion that there was a dispute between Micro Focus and Capax and Zovy that required the 2022 deed. The deed’s obvious purpose was to thwart the application, should healthAlliance be able to persuade the Court that there was no valid assignment of rights in 2016.

[10]      From Capax and Zovy’s perspective, the 2022 deed had the desired effect. It led to the adjournment and to the discontinuance of the application. The discontinuance of the application was appropriate, as there was no longer any reasonable prospect of healthAlliance discharging the onus on it to satisfy the Court that Capax and Zovy did not have standing to sue.

Legal principles

[11]      Rule 12.15 of the High Court Rules 2016 provides an applicant for summary judgment with the right to discontinue the application at any time before the application is heard. The rule does not expressly provide for the determination of costs following a discontinuance.

[12]      The presumption that the Court determine costs on an opposed interlocutory application when the application is determined does not apply to an application for summary judgment.2 The parties, however, seek that costs be determined now, so I proceed to do so.

2      High Court Rules 2016, r 14.8(1) and (3).

[13]      A party that fails with respect to an interlocutory application should pay costs to the party who succeeds.3 Discontinuance of an interlocutory application would generally reflect success on the part of the respondent.4 The Court may, however, refuse to make an order for costs, or reduce the costs otherwise payable, if justified and despite the principle that the determination of costs should be predictable and expeditious.5

[14]      In the context of a failed application for defendant summary judgment, the Court has frequently reserved costs until final determination of the proceeding.6 There are, however, instances where the Court has allowed costs to follow the event.7

The parties’ positions

[15]      healthAlliance seeks 2B costs on all steps associated with the application for summary judgment, together with an uplift of 50 percent, on the basis that Capax and Zovy are a party whose default caused the summary judgment fixture to be vacated. The default is said to be the late provision of the 2022 deed.

[16]      Capax and Zovy submit that healthAlliance is the unsuccessful party by virtue of its discontinuance of the application, entitling them to costs on a 2B basis. Capax and Zovy argue that the issues regarding standing raised by healthAlliance were never suitable for determination via summary judgment, even before the 2022 deed came into existence.

Discussion

[17]      I do not accept healthAlliance’s submission that Capax and Zovy are parties whose default caused the need for the fixture to be vacated. “Default” in that sense is default in compliance with procedural directions. In this case, there was a change of

3      High Court Rules, r 14.2(1)(a).

4      See Powell v Hally Labels Ltd [2014] NZCA 572 at [19], in respect of discontinuance of a proceeding.

5      High Court Rules, r 14.7(g).

6      See, for example, EBS v CAS [2014] NZHC 2929 at [90]; and Rhodes v Shaw [2015] NZHC 1530, (2015) 16 NZCPR 326 at [31].

7      See, for example, Judge v Dempsey [2014] NZHC 2864 at [57].

circumstances and the late emergence of fresh evidence which was relevant and admissible. That remains relevant to costs, but is not determinative.

[18]      I do not accept healthAlliance’s submission that the 2022 deed confirmed that there had been no assignment of Hewlett-Packard’s rights to Capax and Zovy in 2016. On the contrary, the 2022 deed confirmed the 2016 assignment.

[19]      It is not practical or desirable to analyse in detail whether it was appropriate for healthAlliance to bring the application based on the evidence that was available at the time that the application was filed. That would require analysis of the merits, particularly in respect of the 2016 assignment, and that should wait for the trial of the substantive proceedings.

[20]      Capax and Zovy must  have  perceived  that  the  application  had  some  merit — that appears to be why they entered into the 2022 deed.

[21]      In my view, Capax and Zovy’s decision to procure the 2022 deed shortly before the summary judgment fixture disentitles Capax and Zovy to an award of costs. It was open to Capax and Zovy to take that step when the issue of standing was squarely raised by service of the application, and before the parties incurred the cost of finalising evidence and preparing for the summary judgment fixture.

[22]      I do not consider that Capax and Zovy’s conduct justifies an award of costs in healthAlliance’s favour. Given the history and complexity of this proceeding, the application for summary judgment was always ambitious — and ultimately unsuccessful.

[23]      Much of the work undertaken in respect of the application will be able to be utilised for other purposes. Costs should lie where they fall.

Result

[24]The plaintiff’s application for costs is dismissed.

[25]The second and third defendant’s application for costs is dismissed.

Associate Judge Brittain