McLean v Marshall
[2014] NZHC 2447
•6 October 2014
IN THE HIGH COURT OF NEW ZEALAND DUNEDIN REGISTRY
CIV-2013-412-000188 [2014] NZHC 2447
BETWEEN DWF MCLEAN
First Plaintiff
DWF MCLEAN AND G H THORP AS TRUSTEES OF THE MCLEAN FAMILY TRUST
Second Plaintiffs
AND
R R MARSHALL Defendant
Judgment: 6 October 2014
JUDGMENT AS TO COSTS OF GENDALL J (Dealt with on the papers)
Introduction
[1] This judgment deals with costs in this proceeding following my judgment dated 11 July 2014.
Context
[2] In a minute issued in this Court by Panckhurst J on 18 July 2014 reference was made to the need for memoranda as to costs to be provided in the event that the parties were unable to agree on this question. No agreement it seems has been reached.
[3] Mr Andersen, counsel for the first and second plaintiffs, filed a memorandum on costs and other matters dated 8 August 2014. Mr Marshall filed and served memorandum on costs in response on 5 September 2014. Mr Andersen filed a reply
memorandum on 12 September 2014.
MCLEAN v MARSHALL [2014] NZHC 2447 [6 October 2014]
Background to the proceedings
[4] On about 12 March 2007 the first plaintiff (Mr McLean) and the defendant (Mr Marshall) entered into a Joint Venture Agreement (the agreement) which concerned the development of a software system which would enable automated trading of foreign exchange.
[5] On 12 March 2012 Mr Marshall gave three months notice under the agreement to terminate the agreement as from 12 June 2012. Mr McLean and the second plaintiff (the Trust) say that at the 12 June 2012 termination date, there was “significant international interest in the purchase of the system and/or the right to use the system under license”.
[6] Mr McLean claimed to have suffered loss totalling $635,991.87. As a further and alternate claim, the Trust alleged that Mr Marshall owed it $17,896.90.
[7] As to liability in this case, I found that Mr McLean had established that
Mr Marshall breached his obligations under the agreement in a number of respects.
[8] As to quantum, I found that damages were to be awarded against Mr Marshall in favour of Mr McLean for these breaches of the agreement but only in the sums of $4997.25 for trading losses and $12,961.54 for costs of reviewing and discovering the malicious software code.
Plaintiffs’ position on costs
[9] The first plaintiff as the largely successful party here seeks costs and disbursements totalling $29,785.61 with witnesses’ expenses of $757 in relation to Mr Mark Hook. These costs are sought on a category 2B basis.
[10] The first plaintiff argues here states that it is relevant to consider what the plaintiffs have achieved overall as a result of these proceedings:
(a) A claim by the second plaintiffs for $17,896.90 was paid by the defendant after the issue of summary judgment proceedings and prior
to the matter being determined and costs of $5000 on that aspect were awarded to the second plaintiffs;
(b)The defendant remedied his breach of contract for the non-provision of the source code by providing this in April 2013, which was after the issue of summary judgment proceedings and before they were heard; and
(c) The first plaintiff has been awarded damages of $17,958.79 in this proceeding after a 1.5 day trial.
[11] Costs with respect to the first plaintiff ’s summary judgment application were reserved by Associate Judge Osborne on 3 July 2013 on the basis that the most appropriate time to justly determine costs in this proceeding would be at the conclusion of the trial. That time has now arrived.
[12] According to the plaintiffs a calculation of total costs on this proceeding on a
2B basis reaches $28,357.50, with disbursements incurred of $6,428.11, and witnesses’ expenses of $747. A reduction of $5,000 is sought to these figures as that is the amount previously awarded to the second plaintiffs noted at [10](a) above.
Defendant’s position on costs
[13] Mr Marshall opposes any award of costs. In summary, he states that the level of damages awarded in this case could have been determined by the Disputes Tribunal where no costs are awarded. He submits that the proceedings were conducted with no regard to his ability to bear the costs of a High Court proceeding.
[14] Mr Marshall submits that the costs claimed by the plaintiffs are excessive, because in any event the proceedings should have been conducted in the District Court.
Analysis
[15] As best I can tell here, most of the issues raised in Mr Marshall’s memorandum are unrelated to the question of costs. His main issue is whether costs should be awarded pursuant to the High Court scale or the District Court scale.
[16] In my view the High Court scale is appropriate for this proceeding. This is because there is a reasonable argument here that the proceeding needed to be conducted in the High Court so the first plaintiff could obtain his copy of the source code, which was fundamental to his ability to personally use and commercially licence the programme. An earlier attempt to bring proceedings in the District Court had not resulted in any resolution of the issues between the parties.
[17] Therefore, Part 14 of the High Court Rules governs the procedure for awarding costs. An award of costs is at the discretion of the Court.1 The discretion conferred in respect of costs is to be exercised in a principled manner consistent with the more detailed costs rules.2
[18] Rule 14.2(a) encapsulates the primary principle that “costs follow the event”
unless particular considerations dictate otherwise.3
[19] In this case, costs should follow the event in favour of the plaintiffs, who are the largely successful parties. Mr Marshall has raised no legitimate point to suggest why I should not award costs to the first plaintiff, nor has he put forward any real queries as to the quantum of those costs sought by the plaintiffs here.
[20] As to quantum, Mr Anderson at [2.5] to 2.8] of his 8 August 2014 memorandum has set out a detailed 2B breakdown of the costs sought, together with details of the disbursements and witness expenses incurred. All these are not challenged in any real way by Mr Marshall and I am satisfied they are at appropriate
levels here.
1 High Court Rules, r 14.1.
2 Manukau Golf Club Inc v Shoye Venture Ltd [2012] NZSC 109, [2013] 1 NZLR 285 at [7];
Shirley v Wairarapa District Health Board [2006] NZSC 63, [2006] 3 NZLR 523 at [15]-[22].
3 Manukau Golf Club Inc v Shoye Venture Ltd [2012] NZSC 109, [2013] 1 NZLR 285 at [8].
Conclusion
[21] Accordingly, costs and disbursements are awarded to the plaintiffs on a 2B
basis for the net amount of $29,785.61 and witness expenses of $747.00.
...................................................
Gendall J
Solicitors:
Bramwell Grossman, Hastings
L A Andersen, DunedinCopy to Defendant
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