Marlborough Lines Limited v Takeovers Panel HC Wellington CIV-2010-485-001150

[2011] NZHC 200

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

CIV-2010-485-001150

UNDER  the Judicature Amendment Act 1972

BETWEEN  MARLBOROUGH LINES LIMITED Plaintiff

ANDTHE TAKEOVERS PANEL First Defendant

ANDHORIZON ENERGY DISTRIBUTION Second Defendant

Hearing:         On the papers

Counsel:         M T Scholtens QC and J B Orpin for Plaintiff

B W F Brown QC and S L Bacon for First Defendant
D J Cooper and S V A East for Second Defendant

Judgment:      11 March 2011 at 3:30 PM

I direct the Registrar to endorse this judgment with a delivery time of 3.30pm on the

11th day of March 2011.

JUDGMENT OF MACKENZIE J

[1]      In my judgment delivered on 12 October 2010, I reserved costs and invited the submission of memoranda.  The parties have been unable to agree on costs and memoranda have now been submitted.

[2]      Marlborough seeks an award of costs in its favour.  It submits that it was the successful party and that costs should follow the event.  It seeks costs on a category

2 band B basis.  It submits that the first and second defendants should be jointly and

severally liable.

MARLBOROUGH LINES LIMITED V THE TAKEOVERS PANEL HC WN CIV-2010-485-001150 11 March

2011

[3]      Counsel  for  the  Panel  submits  that  no  order  should  be  made  against  it. Counsel submits that the usual convention is that a decision maker does not take a substantive role in proceedings where the decision maker’s decisions are judicially reviewed, but generally appears only to assist the Court, where the response to the plaintiff’s contentions may not otherwise be fully argued.  Counsel notes that it may be appropriate for a decision maker to take an active role where the integrity of the decision maker has been questioned.   Counsel submits that the convention would have been followed had the plaintiff not made allegations of actual and apparent bias against the Panel, including questioning the legitimacy of the Panel’s long standing practice to review draft documents.   Counsel submits that the plaintiff was not successful in relation to those issues in respect of which the Panel sought to play an active role and in particular the Court confirmed the Panel’s jurisdiction to review draft documents and that such review does not disqualify the Board from exercising its powers under s 32 of the Act.  Counsel submits that in those circumstances costs should not be awarded against it.

[4]      Counsel for the second defendant accepts that costs ordinarily follow the event, and that costs are recoverable in judicial review proceedings, generally on a

2B basis.   However, counsel submits that Horizon was required to be joined as defendant given its position as party to the decision of the Panel under review but that only one ground of relief was sought against Horizon directly and that relief on that question was refused.   Counsel submits that Horizon should not be liable for costs.

[5]      The ordinary principle is that costs should follow the event, and, if that ordinary principle is to be displaced, there must be particular considerations which dictate otherwise.  Here, there are several considerations to be taken into account in this regard.

[6]      The principal matter questioned by Marlborough was the decision by the Panel not to make a determination on whether the Cameron Partners’ report or summary of that report should have been included in the target company statement. The relief sought was a declaration that the Panel should have considered whether Horizon acted in breach of the Code by failing to disclose the Cameron Partners’

report or a summary of it in the target company statement.   By the time of these proceedings, and indeed by the time that question was raised by Marlborough before the Panel, the question was essentially moot.  Marlborough’s takeover bid had failed several  months  before  Marlborough’s  request  for  a  s 32  meeting  was  made. Marlborough was entitled to seek that declaration.   Under s 2 of the Declaratory Judgments Act 1908, no objection could have been taken on the grounds that a merely declaratory judgment was sought.  However, I consider that it is relevant, in determining  whether the  general  principle  that  costs  should  follow  the event  is displaced, that the relief sought could have had no practical utility to Marlborough. The most that Marlborough could have obtained as a consequence of the declaration was a reconsideration by the Panel, an outcome which Marlborough specifically eschewed.  Marlborough was unsuccessful on its submission that the Court should itself determine the question which the Panel had not determined.   The point on which the declaration was sought was case specific and did not involve a point of potential general application where clarification of the law might provide an element of public benefit.

[7]      In my view, when the matter is viewed from the perspective of whether an award in favour of the plaintiff should be made, the consideration that the relief sought  was  essentially  academic  weighs  against  the  operation  of  the  normal principle, so far as the first issue is concerned.  That is confirmed when the matter is viewed from the perspective of whether it is just that an award should be made against either of the respondents in respect of that issue.  There is a public interest in ensuring that the work of the Panel is not unduly hampered by concerns as to an adverse costs award in litigation.  The Panel’s role in ensuring compliance with the Takeovers Code is an important one.   Its role in a s 32 meeting is an inquisitorial one, but that will often, as in this case, be invoked in the context of a contest between commercial parties. A decision maker whose role involves the resolution of such a contest should not ordinarily be constrained in its performance of that role by the possibility of an adverse costs award in any proceedings which may challenge the decision.   There is also a public interest in ensuring that the Court has the

assistance of the decision maker.[1]    In such circumstances, the costs consequences ought not ordinarily to be borne by the decision maker.

[1] Commerce Commission v Southern Cross Medical Care [2004] 1 NZLR 491 at [17]; Alliance

Party v Electoral Commission [2010] NZCA 4 at [46].

[8]      That would suggest that, in respect of the first issue, the incidence of costs should be borne by either Marlborough or Horizon, and not the Panel.   So far as Horizon is concerned, the issue was, as I have noted, purely academic by the time it came to be considered by the Panel.   Marlborough’s takeover bid had long since failed, because Horizon’s majority shareholder had rejected it.  Further, the point in issue involved a decision made by the Panel, not to determine the additional question raised, rather than an action taken by Horizon. Horizon’s position was upheld by the Panel in its decision.  Marlborough was entitled to contest that decision, but I do not consider that it follows that it is entitled to costs against Horizon for doing so.   I consider that the ordinary principle is displaced for this issue, and that costs for it should lie where they fall.

[9]      The decision on Marlborough’s second ground of challenge, the Panel’s apportionment of its costs, was largely consequent upon the decision on the main issue.   I consider that, so far as this costs application is concerned, the costs consequences should be the same as for the main ground of challenge.

[10]     Marlborough’s third ground of challenge, to the Panel’s decision to hold a s 32 meeting in respect of Horizon’s claims for expenses recoverable pursuant to r 49(2) of the Takeovers Code, did raise a live issue, on which the Court’s decision does have future consequences for the parties.   Horizon had itself invoked the jurisdiction of the Panel to resolve the quantum of costs recoverable under r 49. Marlborough was successful in its challenge to the existence of jurisdiction.  That aspect is of ongoing relevance to the determination of the parties’ dispute over the quantum of costs.  I consider that there is nothing to displace the ordinary principle that Marlborough should recover costs against Horizon in relation to the third issue.

[11]     That necessarily requires some apportionment of costs between the three issues.   It will not normally be desirable to enter into a detailed issue by issue

consideration, so as to assess costs by reference to success or failure on particular issues.  However, I consider that, for the reasons I have given, there is a distinction between the various issues, based not on success or failure on the different issues but on the costs consequences which those issues should have, which justifies an apportionment here.  The apportionment must necessarily be a broad brush one.   I would  assess  the  relative  contribution  of  the  third  issue  to  overall  costs  as representing approximately one quarter of the total.

[12]     For   these   reasons,   I   consider   that   the   appropriate   outcome   is   that Marlborough should be awarded costs against Horizon of one quarter of the total costs of the proceedings calculated on a 2B basis.

[13]     There are some differences between the parties on quantum.   Marlborough calculates  the  total  at  $38,540.     For  preparation,  Marlborough  has  claimed allowances under steps 7.1, 7.2 and 8.  As counsel for Horizon points out, steps 7.1 and 7.2 apply only where a trial does not eventuate.  Step 8 covers preparation where the case proceeds to a hearing.  Marlborough’s claim must be reduced by five days.

[14]     Horizon also contests Marlborough’s claim under step 4.12 on a claim for interim relief.  Costs in respect of an interim application should normally be assessed at the time, and necessarily independently of the outcome of the proceeding as a whole.  Having regard to the history of the application for interim relief, as set out in para 3.1(b) of counsel for Horizon’s submissions, I consider that costs on the interim relief application should lie where they fall.   That gives a deduction from Marlborough’s claim of 0.6 days.

[15]     Horizon also questions Marlborough’s claim for an allowance for second

counsel.  I consider that that allowance is appropriate.

[16]     That leads to a total of 14.9 days at $1,800 per day, a total of $26,820. Disbursements of $4,690.69 are also claimed.  That totals $31,510.69.  The award of costs is one quarter of that, namely $7,877.67.

“A D MacKenzie J”

Solicitors:           Radich Law, Blenheim for Plaintiff (email:  [email protected]) (Counsel acting: M T Scholtens QC, Wellington

(email:  [email protected])
Izard Weston Lawyers, Wellington for First Defendant

(email:  [email protected]) (Counsel acting: B W F Brown QC, Wellington (email:  [email protected])

Bell Gully, Auckland for Third Defendant (email: [email protected])