Maranatha Limited v Tourism Transport Limited HC Auckland CIV 2006-404-6431

[2008] NZHC 2454

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV 2006-404-6431

BETWEEN  MARANATHA LIMITED MICHAEL PHILLIP UPSON

AND BRIAN JOSEPH HICKMAN Plaintiffs

ANDTOURISM TRANSPORT LIMITED Defendant

Hearing:         On the papers

Counsel:         G Mercer and D Smith for Plaintiffs

MJ Tingey and D Elliott for Defendant

Judgment:      31 July 2008 at 4.00 p.m.

JUDGMENT OF RODNEY HANSEN J

This judgment was delivered by me on 31 July 2008 at 4.00 p.m., pursuant to Rule 540(4) of the High Court Rules.

Registrar/Deputy Registrar

Date: ………………………….

Solicitors:           Gellert Ivanson, P O Box 25-239, St Heliers for Plaintiffs (AMA Ivanson) Bell Gully, P O Box 4199, Auckland for Defendant

MARANATHA LIMITED AND ORS V TOURISM TRANSPORT LIMITED HC AK CIV 2006-404-6431 31

July 2008

[1]      In  my  judgment,  delivered  on  3  April  2007,  I  refused  the  plaintiffs’ application for an interim injunction and stayed the proceedings as the substantive matter in issue was the subject of an arbitration agreement.  I awarded costs to the defendant on a category 2 band B basis.

[2]      An issue has arisen as to whether the defendant is entitled to costs in respect of  the  commencement  of  its  defence.    It  claims  the  full  allowance  of  $3,200 permitted under Schedule 3 to the High Court Rules.   The plaintiffs oppose any allowance under this head.

[3]      The defendant operates a road shuttle service, which includes a service to and from Auckland Airport.  The plaintiffs are three franchisees who were contracted to the defendant.  They challenged the defendant’s right to introduce a mechanism to recover the cost of the licence fee it pays for the right to operate its service to and from Auckland Airport.

[4]      I assessed the plaintiffs’ case as weak, although sufficient to found the claim for interim relief.   However, I was satisfied that damages would be an adequate remedy and that all conventional indicia pointed away from the grant of injunctive relief.

[5]      Before the application for interim relief was heard, there were preliminary skirmishes over an issue of confidentiality which was the subject of two separate hearings in December 2006 before Courtney J and Cooper J.  All cost issues arising from those hearings were disposed of in a judgment of Cooper J, delivered on

4 March 2008.

[6]      Item 2 of Schedule 3 allocates two days under band B for:

Commencement of defence by defendant (receiving instructions, researching facts and law, and preparing, filing, and serving statement of defence or notice of opposition)

[7]      Mr Tingey submits the defendant is entitled to the full allowance. He says that a considerable amount of background information had to be assembled.   In

addition, research was required into the application of the facts to the law, the costs of which were exacerbated by the plaintiffs’ failure to narrow the issues at an early stage.    Mr Tingey  submits  that  while  no  statement  of  defence  was  filed,  the defendant was, nevertheless, required to incur costs which exceeded the allowance available.

[8]      In opposing an allowance under this head, Mr Mercer puts forward three arguments.  First, he says that costs awarded in relation to the defendant’s opposition to the interlocutory applications is sufficient compensation for the work done; a further allowance would duplicate the award for preparation.  Secondly, he says the defendant could not rely on the fact that its actual costs were considerably more than the available allowance.  Thirdly, he submits that, as the proceeding has been stayed in favour of arbitration, the defendant has the opportunity to claim costs in the arbitral proceeding.

[9]      The allowance for preparing the defence is plainly intended to cover work that is not encompassed by the allowance for opposing interlocutory applications.  I have no reason to think there was any overlap that would make it unfair to award costs for commencement of the defence.  It is plain that the interlocutory applications by themselves required a lot of work.  I do not doubt that actual costs exceeded the allowance, although Mr Mercer is right to say that it is not a relevant factor.  I note, however, Mr Tingey’s advice in reply that he referred to the actual costs incurred by the defendant in order to satisfy the Court that it would not be awarding costs in excess of those actually incurred.

[10]     The fact that an award could be made in arbitral proceedings is no reason not to award costs to which the defendant is otherwise entitled.   The award is for the costs of the proceedings.  If there is an entitlement, an award should be made.  In any event, there can be no assurance that arbitral proceedings will follow.

[11]     I am satisfied that an award should be made but it should not be for the full amount allowed under Schedule 3 for the commencement of the defence.  The work covered by the Schedule 3 allocation includes the preparation, filing and service of a

statement of defence.  As the defendant did not file a statement of defence, the award under this head should exclude an allowance for such attendances.

[12]     On the information available to me, I consider it reasonable to reduce the allocation to one day which will entitle the defendant to an allowance of $1,600.

[13]     On the basis that the costs claimed are otherwise appropriate, the defendant is entitled to an award of $9,960 and disbursements of $1,240.