MEDIAFLOW LIMITED AND LUCAS MARIN
[2024] NZHC 2835
•1 October 2024
IN THE HIGH COURT OF NEW ZEALAND INVERCARGILL REGISTRY
I TE KŌTI MATUA O AOTEAROA WAIHŌPAI ROHE
CIV-2023-425-80
[2024] NZHC 2835
UNDER Section 164 of the Companies Act 1993 BETWEEN
MEDIAFLOW LIMITED
Applicant
AND
LUCAS MARIN
Respondent
Hearing: On the papers Appearances:
B B Gresson and B Russell for Applicant D L Marriott for Respondent
Judgment:
1 October 2024
JUDGMENT OF MCHERRON J
(Costs)
Introduction
[1] On 22 August 2024, I issued my judgment dismissing the application by Mediaflow Ltd (Mediaflow) for summary judgment but granting Mediaflow an interim injunction against the respondent Mr Lucas Marin.1
[2]In my judgment, I expressed the preliminary view that:
(a)there was no justification to depart from the usual practice, where an application for summary judgment is dismissed, of reserving costs pending trial;2
1 Mediaflow Ltd v Marin [2024] NZHC 2269 [Reasons judgment].
2 At [146], citing NZI Bank Ltd v Philpott [1990] 2 NZLR 403.
MEDIAFLOW LIMITED v MARIN [2024] NZHC 2835 [1 October 2024]
(b)Mediaflow is entitled to costs assessed on a 2B basis in respect of the interim injunction application.
[3] Despite my encouragement, the parties have been unable to resolve matters of costs among themselves. In this judgment, I determine two costs applications:
(a)by Mediaflow for costs on a 2B basis in respect of the interim injunction application; and
(b)by Mr Marin to fix costs in respect of the summary judgment application, and to order that costs on the interim injunction application are to lie where they fall.
Mediaflow’s memorandum
[4] Mediaflow filed a memorandum seeking costs dated 5 September 2024. Attached to the memorandum was correspondence indicating that Mediaflow attempted to resolve costs in line with the preliminary views in my judgment. As Mr Marin did not agree to pay the costs of the interim injunction on a 2B basis, Mediaflow sought an order for costs and disbursements.
Mr Marin’s memorandum
Summary judgment
[5] Mr Marin’s memorandum on costs was also dated 5 September 2024. He referred to a without prejudice save as to costs offer made under r 14.10 of the High Court Rules 2016 (often described as a Calderbank offer) on 6 December 2023 informing Mediaflow of his arguable defence to Mediaflow’s summary judgment application, meaning that application would “inevitably fail”. Mr Marin says his offer justifies departure from the usual practice of reserving costs in a summary judgment context.
[6] Mr Marriott, on behalf of Mr Marin, submits that it is therefore appropriate to fix costs on the summary judgment application according to scale, along with a “sizeable uplift”.
Interim injunction
[7] Mr Marriott submits that Mr Marin’s 6 December 2023 offer is also relevant to the costs of the interim injunction application. Further, given both applications were heard together, and Mr Marin successfully opposed the summary judgment application, the following factors are relevant to the assessment of what proportion of costs ought to be attributed to the interim injunction application:
(a)Mediaflow prepared separate notices of application but all affidavits (other than short supplementary affidavits filed at a late stage) related to both applications.
(b)A single bundle of documents was prepared for both applications.
(c)Mediaflow’s submissions were primarily directed towards the summary judgment application: around one third related to the interim injunction.
(d)The majority of the oral argument focused on the summary judgment application, apart from the short further hearing at a later stage.
(e)There was a “single mention” related to the interim injunction at that short further hearing.
[8] Mr Marriot argues that Mediaflow was “largely unsuccessful” with its interim injunction application, including specific directions not obtained. He submits that the interim injunction application, as pleaded, was “entirely unnecessary”.
Mediaflow’s reply
[9] Mediaflow filed a reply to Mr Marin’s memorandum. Mediaflow submitted that reserving costs on the summary judgment was appropriate. It did not consider the r 14.10 offer justified departing from that principle; nor could it justify any increase in scale costs. Mediaflow says:
(a)“The [r 14.10] ‘offer’ was not really an offer at all.” Mr Marin did not offer a compromise or any alternative agreement. Accepting the offer and withdrawing both applications could not reasonably be said to put the plaintiff in a better position than it is in now.
(b)The offer should not impact on the usual practice of reserving summary judgment costs until after the substantive matter is determined. If the offer is at all relevant, it can only be relevant in relation to quantum.
[10] Further, Mediaflow says Mr Marin’s suggestion it was “largely unsuccessful” in the interim injunction application is without merit. It is “irrelevant” that the two applications were heard together. Mediaflow maintains the schedule of costs on a 2B basis is suitable and should be awarded.
Analysis
[11]Key principles relevant to these applications are as follows:
(a)Costs are at the discretion of the Court.3
(b)The ordinary approach to the determination of costs is that the successful party overall should be awarded costs on a scale basis.4
(c)The effect (if any) that the making of an offer under r 14.10 has on the question of costs is at the discretion of the Court.5
(d)Where the successful party has not been successful to the full extent of its claims, it may be appropriate to apply a discount to the costs award to reflect that fact.6 Discounts of that sort are to be considered “in the round”.7
3 High Court Rules 2016, r 14.1.
4 Manukau Golf Club Inc v Shoye Venture Ltd [2012] NZSC 109; [2013] 1 NZLR 305 at [8].
5 Rule 14.11 of the High Court Rules.
6 Minister of Education v James Hardie New Zealand [2018] NZHC 2960.
7 Water Guard NZ Ltd v Midgen Enterprises Ltd [2017] NZCA 36 at [18]; Weaver v Auckland Council [2017] NZCA 330 at [18].
(e)Increased costs may be ordered where there is failure by the paying party to act reasonably.8 This is a high threshold.9
[12]I respectfully agree with Cooke J’s observations that:10
Given the schedular approach the Court should only be involved in the determination of costs in a limited number of cases. The regime is relatively straightforward and costs should be able to be settled by the parties in the majority of cases. Yet it has become increasingly apparent that the Court is being asked to grant uplifts, discounts or exceptions to costs awards almost routinely.
Should I determine the costs for the summary judgment application now?
[13] Mediaflow’s application for summary judgment was dismissed.11 I found Mr Marin had an arguable defence to Mediaflow’s claim under s 161 of the Companies Act 1993.12 But this comment has no bearing on the merits of the substantive arguments: that is to be fully tested at any trial.
[14] Rule 14.8(3) of the High Court Rules exempts an application for summary judgment from the usual rule that costs on interlocutory applications are to be fixed when the application is determined. As I have already indicated, the Court frequently reserves summary judgment costs until the final determination of the proceeding.13 As Associate Judge Paulsen emphasised in Srinagar Ltd v Horowhenua District Council, this approach is to encourage the use of the summary judgment procedure to efficiently resolve proceedings. It also recognises that it may be difficult to determine who should pay costs until the litigation is completed, and that even an unsuccessful application may ultimately prove beneficial to the parties in efficiently resolving the dispute.14
[15] I do not consider that Mr Marin’s 6 December 2023 offer justifies a departure from the usual approach to costs on summary judgment applications. I do not see Mediaflow’s application as falling into the class of cases where the request for
8 Bradbury v Westpac Banking Corp [2009] NZCA 234, [2009] 3 NZLR 400 at [27].
9 Lepionka & Company Investments Ltd v Gibson Sheat [2023] NZHC 2745 at [29].
10 At [7].
11 Mediaflow v Marin, above n 1, at [142].
12 At [65].
13 See, for example, EBS v CAS [2014] NZHC 2929 at [90]; Rhodes v Shaw [2015] NZHC 1530; (2015) 16 NZCPR 326 at [31]; Masterton Investments Ltd v Watson [2021] NZHC 2343 at [2].
14 Srinagar Ltd v Horowhenua District Council [2022] NZHC 1094 at [7].
summary judgment is “clearly unmeritorious” or “hopeless” or “should not have been made in the first place”.15 Being unsuccessful in the application does not mean that the decision to bring the application, even when on notice of Mr Marin’s arguable defence, was an “abuse of the summary judgment process” such that costs now are justified.16
[16] As Cooke J commented recently when determining an application to uplift costs on an unsuccessful summary judgment:17
A party has a right of access to the Court. It does so when it has an argument that it wants the Court to adjudicate on. If it is unsuccessful it is likely to be obliged to pay costs in accordance with the principle set in r 14.2(1)(a). The rule is not triggered because a party knew that there was a real prospect that its proceedings could fail. It arises when there is a failure, without reasonable justification, to accept facts, evidence or a legal argument.
[17] Accordingly, I reserve the costs of the summary judgment application to the appropriate time for determination: after the conclusion of the substantive proceeding. If the parties do not pursue their litigation, a course of action I have observed would be prudent,18 they are invited to agree on costs. If that is not possible, they can return to the Court.
Rule 14.10 offer
[18] The offer meets the formal requirements for a r 14.10 offer: it is written (r 14.10(1)), expressly stated to be “without prejudice save as to costs” (r 14.10(1)(a)) and it relates to the proceeding (r 14.10(1)(b)).19
[19] However, I have two concerns with the offer. First, the offer was open for a very short time; it was sent at 7:40pm and an answer was required by 4pm the next day. Second, the offer was to (“in accordance with the best wishes of the company”) “allow [the plaintiff] to withdraw both [applications]”. I do not consider this to be
15 Masterton Investments, above n 13, at [7] and [8] citing Emmons Developments New Zealand Ltd v Mitsui Sumitomo Insurance Co Ltd [2016] NZHC 1244; Mason v Dodd [2020] NZHC 2005; and Fullarton v AWN Holdings Ltd [2021] NZHC 1873.
16 Olliver v Sparks [2021] NZHC 1714 at [11].
17 Lepionka, above n 9, at [29].
18 Mediaflow v Marin, above n 1, at [149]–[152].
19 Rules 14.10 and 14.11 of the High Court Rules.
truly an offer within the ambit of r 14.10, in that it offered little incentive to settle, and so it follows that Mr Marin is not entitled to costs. However, the offer may be taken into account in any costs award under r 14.11(4).
Costs for the interim injunction
[20] Mr Marriott’s r 14.10 offer does not displace my preliminary view that Mediaflow is entitled to costs on a 2B basis. Mediaflow was successful on its injunction application and therefore was successful overall. Costs follow the event in accordance with the schedule in Mr Gresson’s memorandum of 5 September 2024, plus an extra 0.3 day for the telephone conference on 23 September 2024 which was needed to amend the terms of the injunction. However, I think it is appropriate for the overall costs award to be discounted by 15 per cent, to $9,040.18 because:
(a)I accept Mr Marriott’s argument that to some extent the preparation and hearing time for the interim injunction were entangled with the summary judgment application. Rather than engage in protracted mathematical calculations reducing the schedule provided by the plaintiff, I have decided a modest discount “in the round” is more suitable.
(b)Despite its limitations, Mr Marin made an offer to resolve the litigation that Mediaflow declined.
(c)I was initially persuaded by aspects of Mr Marin’s argument on the injunction application.20 I consider it is appropriate in this case to recognise that, as time and cost was incurred in making those submissions before circumstances changed in late July.
[21] To the costs sum of $9,040.18, I add disbursements of $500 for the injunction filing fee.
20 See Mediaflow v Marin, above n 1, at [139]–[141].
Conclusion
[22]Mediaflow is entitled to costs and disbursements totalling $9,540.18.
McHerron J
Solicitors:
Todd & Walker Law Ltd, Queenstown
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