Human Resources Institute of New Zealand Incorporated v Elephant Training & HR Limited
[2015] NZHC 2636
•27 October 2015
IN THE HIGH COURT OF NEW ZEALAND
AUCKLAND REGISTRY
CIV-2014-485-011269
[2015] NZHC 2636
BETWEEN HUMAN RESOURCES INSTITUTE OF NEW ZEALAND INCORPORATED
Plaintiff
AND
ELEPHANT TRAINING & HR LIMITED
Defendant
Hearing: 2 September 2015 Appearances:
C J Griggs for Plaintiff
S C Dench for Defendant
Judgment:
27 October 2015
JUDGMENT OF COURTNEY J
This judgment was delivered by Justice Courtney on 27 October 2015 at 4.30 pm
pursuant to R 11.5 of the High Court Rules Registrar / Deputy Registrar Date……………………….
HUMAN RESOURCES INSTITUTE OF NZ INC v ELEPHANT TRAINING & HR LTD [2015] NZHC 2636 [2
September 2015]
Introduction
[1] The plaintiff, Human Resources Institute of New Zealand Incorporated (HRINZ), is a voluntary professional organisation for those in the human resources industry. The first defendant, Elephant Training & HR Ltd (Elephant), is a private human resources company. The second and third defendants, Mr and Mrs Atkins, are the directors of Elephant. The fourth defendant was, at the relevant time, an employee of Elephant. HRINZ seeks leave to discontinue the proceedings and costs against the defendants. The defendants seek costs against the plaintiff.
[2]Under r 15.23:
Unless the defendant otherwise agrees or the Court otherwise orders, a plaintiff who discontinues a proceeding against the defendant must pay costs to the defendant of and incidental to the proceeding up to and including the discontinuance.
[3] The relevant principles that apply to r 15.23 are well settled, having been articulated by the Court of Appeal in Kroma Colour Prints Ltd v Tridonicatco NZ Ltd1 and Earthquake Commission v Whiting & Ors.2 The Court has a discretion to order that costs lie where they fall or requiring a defendant to pay costs in whole or in part. In essence:
There is a presumption in favour of awarding costs to the defendant which may be displaced if it is just and equitable to do so. However, the Court will not undertake a review of the merits unless they are immediately apparent or so obvious that they ought to be considered and will not speculate on the strength and weakness of the parties’ cases. The reasonableness of the parties’ conduct is however relevant, including the reason the proceedings were brought, continued and defended.
Background
[4] Elephant organised a human resources conference in September 2014. During that conference Mr Atkins announced the establishment of an organisation intended to provide an alternative to HRINZ for professional development and advocacy services.
1 Kroma Colour Prints Ltd v Tridonicatco NZ Ltd (2008) 18 PRNZ 973 at [12].
2 Earthquake Commission v Whiting & Ors [2015] NZCA 144 at [62]-[72].
It would be called the Chartered Human Resources Institute (CHRI). In mid- September 2014 the new entity established an on-line presence through a new website developments came to HRINZ’s notice. Its solicitors wrote to Elephant objecting to the name of the new organisation, including on the grounds that the words “human resources institute” would cause brand confusion and breach s 9 of the Fair Trading Act 1986. HRINZ asked that Elephant cease trading and operating under the CHRI name.
[6] Mr and Mrs Atkins, were overseas when the letter arrived. Their counsel, Mr Dench, advised that CHRI was still being set up and would not be taking any active steps for at least a month and that he would be unable to get instructions for at least a further week, when Mr and Mrs Atkins returned. Although initially unacceptable to HRINZ, on 30 September 2014 its counsel, Mr Griggs, wrote indicating that HRINZ would wait until Mr and Mrs Atkins had returned before taking any steps. Mr Griggs concluded his letter with a specific reservation of right to take further steps should that be necessary.
[7] As things turned out it did prove to be necessary, at least from HRINZ’s perspective. Later on 30 September 2014 Mr Griggs advised Mr Dench that HRINZ had become aware of a blog Mrs Atkins had written which it interpreted as signalling CHRI’s intention not to change its name but instead to resist any legal proceedings that might be issued. As a result, HRINZ filed these proceedings the same day and sought interim relief.
[8] In a letter dated 9 October 2014 Mr Dench advised that the new organisation was not part of Elephant and that Mrs Atkins was not involved in setting it up, though Mr Atkins was the de facto organiser. In relation to the name he advised that:
The new organisation will now go by the name of “Association of People Professionals”. The CHRI website that was under construction has been removed. Problem resolved.
[9] Pointing out that, had HRINZ waited for the Atkins’ return the matter could have been resolved without issuing proceedings, Mr Dench continued:
HRINZ is required to withdraw the proceedings. At the moment my clients will not seek costs. They will seek costs if they are forced to file anything in response. Confirmation that proceedings have been withdraw (sic) is required by close of business on Tuesday next week.
[10] HRINZ did not discontinue the proceedings. Instead, it made a without prejudice offer to settle, the terms of which are not before the Court.
[11] The defendants responded by tendering a draft settlement agreement as a counter-offer. Under the draft agreement HRINZ would discontinue the proceedings and the defendants would agree not to use the objectionable words and would pay 50 per cent of the plaintiff’s scale costs.
[12] HRINZ rejected that proposal and made an alternative suggestion by tendering a draft settlement agreement, which would have seen the defendants agree not to use the objectionable words, the plaintiff discontinue the proceedings, the parties bear their own costs and, in addition, agree to a variety of measures directed towards controlling any acrimony between the plaintiff and the new organisation. The defendants rejected that proposal.
[13] On 27 February 2015 there was a court hearing at which it was suggested that the matter might be resolved with undertakings from the defendants. That course was accepted and the defendants’ undertaking not to use the objectionable words in relation to the new organisation was recorded in Muir J’s minute of the same date. Attempts continued to resolve the issue of costs, with HRINZ seeking to draw other issues into the ambit of any settlement. On 26 March 2015 Mrs Atkins contacted the HRINZ’s chief executive directly, suggesting that HRINZ simply withdraw the proceedings and the parties bear their own costs. HRINZ reiterated the offer that had been made on 18 February 2015. That was rejected. The defendants, once again, proposed that the proceedings be discontinued and neither party seek costs and, if necessary, there be a formal agreement that the objectionable name not be used.
[14] On 24 April 2015 NRINZ made a further proposal, namely an agreement that the defendants would not use the objectionable words and would pay the plaintiff costs of $6,000 and that neither party would publish defamatory material about the other.
This was not accepted and the plaintiffs brought the present application for leave to discontinue the proceedings and for costs.
Application
[15] The defendants say that the plaintiff’s claim was without merit because the proposed name, coupled with other distinctive features meant that there was no real risk of passing off or breach of the Fair Trading Act. Further, Ms Atkins and Elephant were not responsible for the name of the new organisation.
[16] I cannot reach any conclusion on the substantive issues in the context of the present application. I do note that the matter was ultimately resolved through an undertaking by the defendants not to use the objectionable words and, further, that in draft settlement agreements they prepared a similar provision was included, though the defendants say that this was merely pragmatism. I also think it relevant that, whilst the defendants (through counsel) conveyed that no response could be provided until Mr and Mrs Atkins returned to New Zealand, Mrs Atkins was plainly able to consider and respond (through her blog) to the letter from HRINZ’s solicitors.
[17] Mr Griggs, for HRINZ, argued that HRINZ was justified in issuing the proceedings, seeking interim relief and not discontinuing the proceedings earlier (save for the concession that the proceedings should have been filed in Auckland and acceptance that the defendants should therefore be entitled to costs on their application to transfer the proceedings).
[18] As to the reasonableness of its actions and in joining all the defendants, Mr Griggs, for HRINZ, pointed out that the conference at which the organisation was launched was been organised by Elephant, that Mr Atkins had publicly stated that he was involved, that although Mrs Atkins had not made the same express statement it was evident from her relationship with Mr Atkins and her position as a director of Elephant (and her subsequent blog) that she was directly involved. He pointed to an email sent by Elephant on 7 August 2014 which included the following statement:
Here at Elephant we’ve been involved in the establishment of a new Institute
– which will be far more innovative, forward thinking and focused on HR as
a real business partner. This will be another step in transforming our profession!
If you’re not able to make it to the conference, but want information about the new HR Institute, let us know – and we can make sure it gets to you.
[19] Ms Hunter had published an “announcement” by Facebook on or around 7 August 2014. The material provided in the common bundle included a screen shot of a Facebook page titled CHRI update by Ms Hunter advising that an overview pack for CHRI was to be emailed out in the next week or so.
[20] I accept Mr Griggs’ submission that, against this background, it was reasonable for HRINZ to apprehend that Mrs Atkins was directly involved in CHRI and there would be no immediate resolution. It was therefore reasonable for it to issue the proceedings along with the application for interim relief. However, maintaining the proceedings after the letter of 9 October 2014 was unreasonable. It was evident from that letter (proven by subsequent events) that the defendants were prepared to commit themselves to not using the name that HRINZ objected to. In reality, the substantive complaint that HRINZ had was capable of final resolution at that time. What kept the proceedings alive was HRINZ’s desire to widen the ambit of the settlement negotiations beyond the issue of the name of the new organisation and the question of costs. In particular, HRINZ continued to seek agreement from the defendants regarding their future conduct in relation to the new organisation.
[21] The parties have very different views about HRINZ’s motivation, which I do not need to consider in the context of the present application. But it is clear that, had settlement negotiations been limited to the issues raised in the proceedings, there would have been no need for the application for interim relief to have been maintained as long as it was. I therefore consider that the plaintiff should be entitled to costs up to 9 October 2014 but that the defendants should be entitled to costs after that date. This means that:
(a)There will be costs to the plaintiff on a 2B basis for the commencement of the proceedings, preparation of statement of claim and filing of the interlocutory application for interim relief. It appears from the file that submissions were also prepared at that time. If so, the plaintiff is
entitled to costs on that item and the preparation of the bundle if that, too, was done at the same time.
(b)The defendants are entitled to costs on a 2B basis for steps subsequent to 9 October 2014, including the conference on 27 February 2015.
[22] I do not make any order for costs on the present application. Both parties have succeeded in part. Costs will lie where they fall.
P Courtney J
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