Ironsands Investments Limited v Toward Industries Limited HC Auckland CIV-2010-404-004879

[2011] NZHC 1386

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2010-404-004879

BETWEEN  IRONSANDS INVESTMENTS LIMITED First Applicant

ANDCHEUNG KONG INFRASTRUCTURE HOLDINGS LIMITED

Second Applicant

ANDTOWARD INDUSTRIES LIMITED First Respondent

ANDNEW ZEALAND STEEL LIMITED Second Respondent

Hearing:         On the papers

Judgment:      30 August 2011 at 4:00 PM

JUDGMENT OF COURTNEY J

This judgment was delivered by Justice Courtney on 31 August 2011 at 4:00 pm

pursuant to R 11.5 of the High Court Rules.

Registrar / Deputy Registrar

Date....................................

Solicitors:           Bell Gully, DX SX11164, Wellington Fax: [phone] – F J Tregonning Chapman Tripp, DX CP24029, Auckland 1140

Fax: [phone] – J Graham / J Hodder

Counsel:             F M R Cooke QC, P O Box 1530, Wellington 6140

Fax: [phone]

IRONSANDS INVESTMENTS LTD V TOWARD INDUSTRIES LTD HC AK CIV-2010-404-004879 30

August 2011

[1]      In this proceeding the applicants (together CKI) have made an originating application to set aside an interim arbitral award and an arbitral ruling.   They advanced five grounds of challenge.   The respondents (together NZS) applied to strike out the application.  I held that all but one of the grounds were untenable and made an order striking out CKI’s originating application except to the extent of that one ground.  NZS now seek costs on their strike out application.

[2]      NZS  have  submitted  that  costs  should  be  fixed  on  a  3B  basis  with certification for two junior counsel to reflect the complexity of the matter.  They also seek an uplift of those costs on the basis of unnecessary steps taken by CKI.  CKI does not resist costs being awarded against it but opposes costs being awarded on a

3B basis, certification for more than one junior counsel and any uplift.  In addition, CKI seeks a 20% discount to any costs awarded to reflect the fact that NZI was not wholly successful.

[3]      I start with the costs categorisation. I do not regard this application as being one of average complexity.  Although an interlocutory application, it was argued on both sides by senior counsel and required careful consideration of the grounds on which an arbitral award might be set aside.  There was no authority in relation to some of the points being argued and on some of the grounds the arguments went beyond the wording of the Arbitration Act 1996 and into the public policy that lay behind the Act.   The only ground of challenge to survive was one of the more straightforward grounds.  I consider that a 3B basis would be an appropriate basis for the costs in this case.

[4]      I do, however, agree with CKI’s submission that certification for only one junior counsel is appropriate.  It is true that the arguments were complex.  However, the arguments were carried by the same counsel and the number of documents required was manageable.   On this interlocutory application, even allowing for its complexity, there is no justification for certifying for two junior counsel.

[5]      Turning, then, to the uplift sought.   NZS maintains that CKI’s last minute (unsuccessful) application for adjournment of the fixture and its late application for leave to include a fraud and corruption ground in its application to set aside were

unnecessary steps which contributed to the cost of determining the strike out application.  NZS seeks an uplift from its calculated sum of $23,352 to $30,000.

[6]      I accept that CKI’s application for adjournment and application to add a further ground to its setting aside application contributed unnecessarily to the time and expense of the proceeding and justify an uplift under r 14.6(3)(b)(ii).   The grounds advanced in support of the application for adjournment were unconvincing. NZS had to deal with the written memorandum seeking the adjournment, attend a telephone conference before Asher J and spend time arguing the matter before me at the outset of the fixture.   The application for leave to amend the originating application to include allegations of fraud and dishonesty were also premature because there was, at that stage, insufficient information to allow an amended claim to be properly particularised.   In those circumstances, time should not have been devoted to the issue.  I allow an uplift of 10%.

[7]      I acknowledge that CKI did succeed in retaining one ground of challenge to go   forward   to   a   substantive   hearing.      However,   that   ground   was   fairly straightforward and required less argument than the others.  It seems very likely that, had  CKI  limited  its  application  to  set  aside  the  award  to  this  ground,  NZS’ application  might  have  been  avoided  altogether.    I therefore  do  not  consider  it necessary to discount the costs award to reflect CKI’s partial success.

[8]      The result is that there will be an order for costs in favour of NZS of $22,409 together with disbursements of $600.

P Courtney J