Moda Systems NZ Limited v McLaren Smart Processing Limited

[2022] NZHC 397

IN THE HIGH COURT OF NEW ZEALAND NAPIER REGISTRY

I TE KŌTI MATUA O AOTEAROA AHURIRI ROHE

CIV-2021-441-96

[2022] NZHC 397

UNDER

the Copyright Act 1994

the Fair Trading Act 1986
the Trans-Tasman Proceedings Act 2010

BETWEEN

MODA SYSTEMS NZ LIMITED

First Plaintiff

MODA IP LIMITED

Second Plaintiff

R G NEWCOMBE

Third Plaintiff

AND

MCLAREN SMART PROCESSING LIMITED

First Defendant

A R MCLAREN

Second Defendant

MULTIVAC AUSTRALIA PTY LTD

Third Defendant

Hearing:

On the papers

Appearances:

J E M Lethbridge for the Plaintiffs

K M Quinn for the First and Second Defendants

Judgment:

9 March 2022

JUDGMENT OF COOKE J

(Costs of interim injunction application)

MODA SYSTEMS NZ LIMITED v MCLAREN SMART PROCESSING LIMITED [2022] NZHC 397 [9 March 2022]

[1]                 By judgment dated 4 February 2022 I declined the plaintiff’s application for an interim injunction in connection with the plaintiff’s claims for breach of confidence, copyright and other causes of action.1

[2]                 The parties have been  unable to  agree on  costs.  By memorandum  dated  23 February 2022 the successful first and second defendants seek costs and by memorandum dated 2 March this is opposed by the plaintiffs.

Costs in the cause?

[3]                 The unsuccessful plaintiffs argue that the costs of the application should be treated as costs in the cause. They argue that the position is similar to applications for summary judgment where there is a practice of deferring costs to be determined in the substantive proceedings. They say that such a practice was recognised by the High Court in Nestle New Zealand Ltd v Mars New Zealand Ltd,2 and that it would be particularly appropriate in the case of interim injunction applications that are unsuccessful because of balance of convenience considerations.

[4]                 I do not accept these submissions. Rule 14.8 of the High Court Rules 2016 provides that costs of interlocutory applications must be fixed when the applications are determined unless there are special reasons. Rule 14.8(3) expressly provides that that rule does not apply to applications for summary judgment. With an unsuccessful application for summary judgment costs are usually reserved.3 There is no such rule applicable to applications for interim injunctions (or other forms of interim relief). I do not discount the possibility of special reasons arising with applications for an interim injunction such that costs should be treated as costs in the cause, but I do not accept that that approach should be treated as a practice. The general scheme of the rules is that costs should follow the event, that they should be fixed as matters are determined in the course of a proceeding, and that they should be calculated in accordance with the schedules. This encourages predictability in terms of costs

1      Moda Systems NZ Ltd v McLaren Smart Processing Ltd [2022] NZHC 96.

2      Nestle NZ Ltd v Mars NZ Ltd [2014] NZHC 2369.

3      NZI Bank Ltd v Philpott [1990] 2 NZLR 403 (CA).

outcomes, and ensures that parties face the costs consequences of their litigation decisions when they are adopted.

[5]                 In the present case there are no special reasons, and costs should follow the outcome in the normal way.

Calculation

[6]                 The first and second defendants have calculated their costs entitlement on the basis that the proceedings are in category 2, with which I agree. The time bands claimed are for the most part in time band B apart from two items — items 23 and 24

— where time band C is sought for filing the opposition to the interlocutory application under step 23 (two days as opposed to 0.6 days), and for preparing written submissions under step 24 (three days as opposed to 1.5 days). The plaintiffs say time band B should apply to both steps.

[7]                 I agree that preparation for an application for an interim injunction will usually involve a comparatively larger amount of time than most interlocutory applications in accordance with r 14.5(2)(c) and that this was so here. That is particularly so for preparing the papers in opposition in accordance with step 23. I accordingly allow this step under time band C. It is less apparent for the preparation of written submissions, however. Here the argument took less than a day and the written submissions were not extensive. It seems to me that the preparation of written submissions involved the normal amount of time in accordance with r 14.5(2)(b).

Costs on costs application

[8]                 The successful defendants seek costs on this costs application which is opposed.

[9]                 I accept the plaintiffs’ submission that costs are not usually awarded on costs applications. If a party puts the other to the cost of making an application when plainly the rules prescribe the costs outcome then there is no jurisdictional barrier to awarding costs.4 Such awards may also be appropriate if the costs arguments are substantial and

4      Tyre Collection Services Ltd v Le Roy [2016] NZHC 898 at [20].

require a hearing. But the filing of memoranda after a judgment would not normally attract an award. A party has a right to be heard on an application for costs by the filing of brief memoranda on what costs should be awarded against them. I see that principle as applying here. Accordingly there will be no costs awarded on the costs memoranda.

[10]              The first and second defendants are awarded costs on the basis referred to above.

Cooke J

Solicitors:

Martelli McKegg, Auckland for the Plaintiffs

Sainsbury Logan & Williams, Napier for the First and Second Defendants Simpson Grierson for the Third Defendant