N-Tech Limited v Abooth Limited HC Auckland CIV-2006-404-003362

[2011] NZHC 89

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2006-404-003362

CIV-2007-404-000990

BETWEEN  N-TECH LIMITED First Plaintiff

ANDST LUCIA INVESTMENTS LIMITED Second Plaintiff

ANDABOOTH LIMITED First Defendant

ANDOTHER DEFENDANTS AS SET OUT IN SCHEDULE ONE TO THE PLAINTIFFS' STATEMENT OF CLAIM

Second to One Hundred and Twenty First

Defendants

ANDR J CHAPMAN, G D C WALKER, T F MCGRATH

First Third Parties

ANDM V RICHARDSON AND T J GOLDFINCH

Second Third Parties

ANDRUSSELL MCVEAGH Third Third Party

ANDDENHAM MARTIN & ASSOCIATES Fourth Third Party

ANDG S C K SIDNAM Fifth Third Party

ANDH C VINCENT First Fourth Party

ANDJ M K BROWN AND P H CASTLE Second Fourth Parties

ANDK A SCHWASS Third Fourth Party

AND  JOHN ANTHONY REID

Fourth Counterclaim Defendant

N-TECH LIMITED V ABOOTH LIMITED HC AK CIV-2006-404-003362 17 February 2011

AND

HUGH MILLOY

Fifth Counterclaim Defendant

AND

J WONG
Sixth Counterclaim Defendant

AND

BARROCK PARTNERS LIMITED Seventh Counterclaim Defendant

AND

JOHN DONALD CURRIE Eighth Counterclaim Defendant

AND

PETER MICHAEL CONNOLLOY Ninth Counterclaim Defendant

AND

ASIAN GROWTH FUND LIMITED Tenth Counterclaim Defendant

AND

ARMOUR FIDELITY LIMITED Eleventh Counterclaim Defendant

AND

KENSINGTON SWAN
Twelfth Counterclaim Defendant

Hearing:

On the papers

Judgment:      17 February 2011 15:00:00

COSTS JUDGMENT OF VENNING J

This judgment was delivered by me on 17 February 2011 at 3.00 pm,  pursuant to Rule 11.5 of the

High Court Rules.

Registrar/Deputy Registrar

Date……………

Solicitors:          Gilbert Walker, PO Box 1595, Shortland Street, Auckland 1140 (C Walker) Grove Darlow & Partners, PO Box 2882, Shortland Street, Auckland 1140

Copy to:             N R Campbell, PO Box 4338, Shortland Street, Auckland 1140

Introduction

[1]      In  a judgment  delivered  on  16  November 2010  the Court  dealt  with  an application to review a decision of Associate Judge Abbott in relation to security for costs and also the Investor Group defendants’ application for further security up to and including trial.   Costs were reserved.   The parties have been unable to agree costs and have exchanged memoranda.

[2]      The Investor Group defendants seek costs on the application to review but limited to the commencement of the review.  They also seek costs for the application for increased security with a 50 per cent  increase, relying on High  Court Rule

14.6(3)(b)(v).  The Investor Group defendants say that the plaintiffs failed, without reasonable justification, to accept an offer of settlement.  The Investor Group offered to accept $600,000 for security.   The plaintiffs did not accept that.   The Court ultimately ordered a top-up of security in excess of $795,000.

[3]      The plaintiffs submit that there should be no order for costs for the review of Associate Judge Abbott’s decision as they were always willing to agree to an uplift to reflect the recategorisation of the proceedings from category 2 to 3.   They also submit that, having regard to the arguments raised at the hearing, more than half the hearing and preparation time was taken up on issues on which the Investor Group were unsuccessful so that there should be no award for costs citing Paper Reclaim

Ltd v Aotearoa International Ltd.[1]    Alternatively they say that if the Court was

minded to order costs in favour of the Investor Group  the  costs should not be increased from scale as the plaintiffs acted reasonably in rejecting the plaintiffs’ offer because it was made on a number of incorrect premises.

Decision

[1] Paper Reclaim Ltd v Aotearoa International Ltd (2007) 18 PRNZ 743.

[4]      While the plaintiffs advised the Investor Group defendants and the Court at the teleconference on 16 July 2009 they were prepared to agree an uplift to reflect

the recategorisation to category 3, I accept that the Investor Group had incurred the

costs associated with commencing the application for review.  When the application for review was argued before the Court the plaintiffs opposed it.   Ultimately the review was only successful to the extent of the recategorisation.  A fair outcome on the issue of costs for that application is to allow costs to the Investor Group defendants for the commencement of the application but not to allow anything for preparation or hearing.

[5]      I turn to the issue of costs on the application for further security.  Despite Mr Walker’s submission there should be no order for costs, I consider this case to be somewhat different to the Paper Reclaim case.  Both parties raised arguments during the course of the hearing that were ultimately rejected but the Investor Group defendants succeeded on their principal argument.  As the Investor Group defendants succeeded on their principal argument they are entitled to costs.

[6]      To  the  extent  the  Investor  Group  defendants  were  unsuccessful  on  their argument that the increased security should take account of the Investor Group’s potential  liability to  third  parties  that  must  be  balanced  against  the  fact  that  a reasonable time before the hearing the Investor Group defendants had offered to accept a figure for security at less than the Court ultimately offered.

[7]      In my judgment a just result to take account of those factors is to award the Investor Group defendants a full award of costs to scale, but to disallow their application for an increase under 14.6(3)(b)(v).  That reflects that quite a significant part of the hearing (and judgment) was occupied with consideration of the unsuccessful argument that security should be provided to cover the Investor Group defendants’ potential liability to third parties.

Result

[8]      The Investor Group are to have costs on the application in the sum of $7,023 together with disbursements of $1,200 in total $8,223.00.

Venning J