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Holdfast NZ Ltd v Selleys Pty Ltd

Holdfast NZ Ltd v Selleys Pty Ltd

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Case Copied 6 December 2005 21 min read

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IN THE COURT OF APPEAL OF NEW ZEALAND
CA200/04
BETWEENHOLDFAST NZ LTD

Appellant

ANDSELLEYS PTY LTD

Respondent

Hearing:1 August 2005

Court:Glazebrook, Chambers and O'Regan JJ
Counsel:D L Marriott and M C Hayes for Appellant

I M Gault and S D Bell for Respondent

Judgment:6 December 2005

JUDGMENT OF THE COURT

A The appeal is allowed.
BIn place of the costs order imposed in the High Court, there will be an order that the appellant pay costs to the respondent in respect of High Court costs in the sum of $15,940.
CIn respect of costs in this court, the respondent must pay costs to the appellant in the sum of $4,000, plus usual disbursements.

D The costs orders in B and C may be set off against each other.
REASONS
(Given by Chambers J)
Table of Contents

Para No

An order for increased costs  [1]
Issues on the appeal  [10]
The appropriateness of increased costs  [14]
Failure to accept Selleys’ settlement proposals  [16]

Application for adjournment and to join another defendant              [31]
The calculation of increased costs  [37]
Calculation of scale costs  [50]
Costs  [54]

An order for increased costs
[1]        In April 2003, Holdfast NZ Limited commenced a proceeding in the High Court at Hamilton against an Australian company, Selleys Pty Limited. Holdfast alleged that Selleys had committed the tort of passing off and had breached the Fair Trading Act 1986. Holdfast manufactured an adhesive product which it marketed under the trade mark Fix All. Holdfast alleged in its statement of claim that Selleys had started selling its own adhesive product under the trade mark All Fix. Holdfast said that was confusingly similar to its trade mark.
[2]        The case trundled along its interlocutory path. The High Court allocated a fixture for 26 July 2004.
[3]        On 24 June, just a month before trial, Holdfast sought to vacate the fixture. It also, at the same time, sought to join as second defendant a company called Orica New Zealand Limited. That company and Selleys are both subsidiaries of yet another Orica company: Orica is a worldwide group. The reason why Holdfast sought to join Orica NZ (as we shall call Orica New Zealand Ltd) was that, as a result of discovery, it had occurred to Holdfast’s lawyers that they might have sued the wrong company within the Orica group. To cover all bases, they decided it was prudent to join Orica NZ as a defendant in case they failed on the basis that they had sued the wrong company within the group.
[4]        Selleys opposed the application. The application was put before Harrison J. He issued a minute on 30 June. He said that he would hear the application on 2 July. He said in the minute:
I note that I have read the application and supporting affidavit. I have advised Mr [X, counsel for Holdfast] that Holdfast has to meet a high threshold if it is to succeed and that in the event of failure I will consider an application…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2005] NZCA 302
Decision Date: 6 December 2005

CaseChat Overview and Summary

Holdfast NZ Limited commenced a proceeding in the High Court against Selleys Pty Limited, alleging tort of passing off and breach of the Fair Trading Act 1986. Holdfast manufactured an adhesive product under the trademark Fix All, and claimed that Selleys had started selling its own adhesive product under the trademark All Fix, which was confusingly similar to Holdfast's trademark. Selleys opposed the application to join Orica New Zealand Limited as a defendant and sought indemnity costs. Holdfast withdrew its interlocutory application, discontinued the proceeding, and filed new proceedings against Selleys and Orica NZ. Harrison J held that increased costs were appropriate and ordered Holdfast to pay Selleys costs of $58,141, which was almost four times scale costs. Holdfast appealed against Harrison J’s decision.

There were three issues on this appeal. The first was whether this was an appropriate case for an order for increased costs. The second was, even if it was, were they correctly calculated? The third issue arose if this was not an appropriate case for an order for increased costs, in which case Holdfast wished to argue that Selleys’ calculation of scale costs was too high. The court considered that there was insufficient evidence before the High Court to form any conclusion as to whether Holdfast’s conduct in holding out for a contribution towards its legal costs was sufficiently unreasonable as to bring r 48C(3)(b)(iv) into play. The court also rejected Harrison J’s second ground for increased costs. The court considered that the approach adopted by His Honour was fundamentally wrong and that an order for increased costs is defined in r 48C(1)(a) as an order “increasing costs otherwise payable under [rr 47-48B]”. The court concluded that Selleys should have as its scale costs the sum it calculated, namely $15,940. Holdfast has been successful in this court and should have costs in this court on the normal basis for a half day hearing.

Orders