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…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2022] NZHC 397
Decision Date: 9 March 2022

CaseChat Overview and Summary

The case of Moda Systems NZ Limited v McLaren Smart Processing Limited involved a dispute between the plaintiffs, Moda Systems NZ Limited, Moda IP Limited, and R G Newcombe, and the defendants, McLaren Smart Processing Limited, A R McLaren, and Multivac Australia Pty Ltd. The plaintiffs sought an interim injunction in relation to claims of breach of confidence, copyright, and other causes of action under the Copyright Act 1994, the Fair Trading Act 1986, and the Trans-Tasman Proceedings Act 2010. The plaintiffs' application for the injunction was declined by the court, and the matter proceeded to the consideration of costs.

The primary legal issue before the court was whether the costs of the interim injunction application should be treated as costs in the cause or whether they should follow the event and be awarded to the successful defendants. The plaintiffs argued that the costs should be treated as costs in the cause, drawing a comparison to applications for summary judgment where costs are typically reserved for determination in the substantive proceedings. They cited the case of Nestle New Zealand Ltd v Mars New Zealand Ltd in support of their argument.

The court rejected the plaintiffs' submissions, holding that there was no established practice of treating the costs of unsuccessful interim injunction applications as costs in the cause. The court noted that Rule 14.8 of the High Court Rules 2016 provided that costs of interlocutory applications must be fixed when the applications are determined, unless there are special reasons. The court concluded that there were no special reasons in this case to deviate from the general rule that costs should follow the event and be calculated in accordance with the schedules.

The court further addressed the calculation of costs, agreeing with the defendants that the proceedings fell into category 2. The court allowed certain steps to be calculated under time band C, while other steps were calculated under time band B. Finally, the court ruled that no costs would be awarded on the costs application itself, as the plaintiffs had a right to be heard on the application for costs by filing brief memoranda.

In summary, the court awarded costs to the successful defendants based on the calculations provided, and no costs were awarded on the costs application itself. The plaintiffs' argument that the costs of the interim injunction application should be treated as costs in the cause was rejected by the court, which adhered to the general rule that costs should follow the event.

Orders