Loktronic Industries Ltd v Diver - [2014] NZHC 1189

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2011-404-004657 [2014] NZHC 1189

BETWEEN
LOKTRONIC INDUSTRIES LIMITED

Plaintiff

AND

STEPHEN JOHN DIVER First Defendant

SDR LIMITED Second Defendant

ROY BOWYER Third Defendant

TRIMEC TECHNOLOGY PTY LIMITED

Fourth Defendant

NEIL RICHARD HINGSTON Fifth Defendant

NEIL HINGSTON ENGINEERING LIMITED

Sixth Defendant

ASSA ABLOY NEW ZEALAND LIMITED

Seventh Defendant

Hearing: On the papers

Judgment:

30 May 2014

JUDGMENT OF COURTNEY J

This judgment was delivered by Justice Courtney on 30 May 2014 at 2.00 pm
pursuant to R 11.5 of the High Court Rules

Registrar / Deputy Registrar

Date………………………………

LOKTRONIC INDUSTRIES LTD v DIVER & ORS [2014] NZHC 1189 [30 May 2014]

Introduction

[1] In this proceeding the plaintiff alleged breaches of contract by the fourth and fifth defendants and a variety of intentional torts against all the defendants, including inducing breach of contract, interference with its business by unlawful means and conspiracy to interfere by unlawful means. It succeeded in this Court on all the causes of action but the findings on the intentional tort causes of action were
reversed on appeal.1

[2] Having succeeded on appeal the defendants now seek costs in relation to the High Court proceedings. Parties filed memoranda over the course of several months last year. I regret that it has taken until now to attend to this matter.

[3] The defendants have generally taken similar positions, though some issues are specific to only certain defendants. he issues are whether:

(a) Costs should be calculated, wholly or at least in relation to the substantive trial, on a 3B basis rather than the current 2B categorisation 2B;

(b)Costs should be increased to reflect the plaintiff’s rejection of joint Calderbank offers, pursuit of arguments that lacked merit and failure to plead the case eventually relied on;

(c) Costs should be awarded on the defendants’ successful application for stays of execution and on the plaintiff’s unsuccessful application to vary the stays of execution;

(d)The first and second defendants should have increased costs to reflect the nature of the allegations made against them;

(e) The third, fourth and seventh defendants should have costs in relation to the steps taken to obtain a release of their bank bond given as
security for a stay of execution pending appeal and, if so, whether it

1 Diver v Loktronic & Ors [2012] 2 NZLR 388; (2012) NZBLC 99-707.

should the costs should be increased to reflect the plaintiff’s conduct

in resisting the release of the bank bond;

[4] The plaintiff, now in liquidation, has taken no steps in relation to the costs applications. The liquidators have consented to the costs application being made but there is no realistic prospect of any costs judgment being met.2 For this reason the defendants seek costs against the plaintiff’s former director, Peter Calvert. Mr Calvert:

(a) Resists the application for costs against him personally except to the extent of the guarantee he provided by way of security for costs at an earlier stage;

(b) Seeks a reduction in…

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: [2014] NZHC 1189
Decision Date: 30 May 2014

CaseChat Overview and Summary

The matter concerned an application for costs by the defendants in a proceeding brought by the plaintiff, Loktronic Industries Limited, against the defendants. The proceeding was categorised as 2B at the outset and the defendants sought a re-categorisation to 3B on the basis that the proceedings were more complex than anticipated and the trial was longer and more complex than anticipated. The Court declined to re-categorise the proceeding as 3B, finding that the parties, the scope of the factual enquiry and the essential nature of the claim remained the same throughout. The Court also rejected the defendants’ applications for increased costs on the basis that the plaintiff did not act unreasonably in refusing the settlement offers and pursuing arguments that lacked merit. The Court did, however, order an uplift of 10% in costs in relation to the defendants’ costs in relation to the steps taken to obtain a release of their bank bond given as security for a stay of execution pending appeal. Finally, the Court ordered that Peter Calvert, a former director of the plaintiff, be liable for costs on the basis that he was the real party in the litigation.

The defendants applied for costs following their successful appeal against the plaintiff’s judgment. The defendants sought costs on a number of bases including that the proceedings should be re-categorised as 3B, that the plaintiff unreasonably rejected settlement offers, pursued arguments that lacked merit, and failed to plead the case as eventually relied on. The Court rejected the re-categorisation and the applications for increased costs, finding that the plaintiff did not act unreasonably in rejecting the settlement offers or pursuing arguments that lacked merit and that the failure to plead the case as eventually relied on did not result in the defendants incurring needless costs. The Court did, however, order an uplift of 10% in costs in relation to the plaintiff’s failure to plead the case as eventually relied on. The Court also found that the plaintiff’s former director, Peter Calvert, was the real party in the litigation and ordered him to pay costs jointly and severally with the plaintiff. The Court ordered that the costs be calculated on a 2B basis.

Orders