Natural Habitats Limited v Wearmouth

[2016] NZHC 744

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2016-404-000430 [2016] NZHC 744

BETWEEN

NATURAL HABITATS LIMITED

Plaintiff

AND

LAURENCE DAVID WEARMOUTH First Defendant

EDEN LIMITED Second Defendant

Hearing:	(On the papers)
Counsel:	L Herzog for Plaintiff S J Ropati for First defendant S J Corlett for Second Defendant
Judgment:	20 April 2016

COSTS JUDGMENT OF VENNING J

This judgment was delivered by me on 20 April 2016 at 4.30 pm, pursuant to Rule 11.5 of the High

Court Rules.

Registrar/Deputy Registrar

Date……………

Solicitors:           Smith & Partners, Auckland John Ropati, Auckland Brookfields, Auckland

Copy to:            L Herzog, Auckland

NATURAL HABITATS LTD v WEARMOUTH & ANOR [2016] NZHC 744 [20 April 2016]

[1]      Natural  Habitats  Limited  (Natural  Habitats)  sought  an  interim  injunction against Mr Wearmouth and Eden Limited.  The proceedings were filed on 10 March. The matter was first called before the Court on 16 March and allocated a fixture for

21 March.  On the morning of 21 March counsel for Natural Habitats advised the defendants neither the injunction nor the substantive proceedings would be pursued.

[2]      At  the  request  of  counsel  the  application  for  interim  injunction  was withdrawn by leave and the Court confirmed the substantive proceedings were discontinued.   Costs were reserved to be dealt with by way of exchange of memoranda.  I have now received those memoranda.

[3]      The defendants  seek  costs  on  a 2C  basis  or alternatively on  a 2B basis uplifted by 40 per cent in each case because of Natural Habitats’ actions.   They submit  Natural  Habitats’  claim  was  without  merit  or  substance  and  was  not supported by the evidence.

[4]      Natural Habitats accepts costs are payable but submits they should be on a 2B basis and also limited to a single costs award to be shared by both defendants equally.

[5]      As the plaintiff withdrew its application and discontinued the substantive proceedings the defendants are prima facie entitled to costs.   The starting point would be costs on a 2B basis.

[6]      I do not accept the submission for the plaintiff that there should only be one award of costs.  Mr Wearmouth and Eden Limited are separate legal entities.  They were separately represented.   They were entitled to be separately represented. Although Mr Wearmouth has a shareholding and a directorship in Eden Limited he is not the only director and is a minority shareholder in the company.   The plaintiff chose to sue both parties and must take the cost consequences.

[7]      The defendants are not however entitled to costs on a category 2, time band C allocation.   While the work required to respond to the application for interim injunction required urgency, the work involved, namely preparation of notices of

opposition and affidavits in opposition would not have required a comparatively large amount of time.1

[8]      However I accept that, given the urgency of the situation and the apparent difficulties faced by the plaintiff’s claim, reasons exist for a modest uplift in relation to costs in this case.

[9]      Mr Herzog submits that the urgency was sought by the defendants, not the plaintiff.    However  the  urgency  arose  because  of  the  plaintiff ’s  application  for interim injunctive relief which would have affected Eden Limited’s contract with a third party (and for that matter it would also have affected a third party).   The plaintiff chose to seek injunctive relief and cannot complain that the defendants acted promptly to respond to that injunctive relief.

[10]     I accept that the plaintiff’s claim faced difficulties.   The plaintiff relied on cl 19.2 of the employment agreement which provided that Mr Wearmouth was not to:

…  attempt  to  encourage  or  persuade  any  of  the  Company’s  client’s, suppliers, and customers whom you have dealt with and whose trade circumstances you are aware to terminate or restrict their trade relations with the Company.

[11]     It is difficult to see that the evidence filed in support of the application supported the claim that Mr Wearmouth had breached that clause.  The contract in issue was a fresh contract, albeit with a company that had used the services of the plaintiff.   That is however a different issue to Mr Wearmouth encouraging or persuading the company to terminate or restrict trade relations with the company. While the matter may have been debatable it was put beyond doubt by the evidence of Mr Drinnan, the construction supervisor employed by the third party Broadspectrum Limited.

[12]     Further, as noted, the defendants were required to respond as a matter of urgency thereby causing disruption to the other business of the defendants.  Some

1      High Court Rules, r 14.5(2)(c).

modest increase is appropriate for that.   I allow an increase of 25 per cent above scale.

Result

[13]     The plaintiff is to pay each of the first and second defendants costs on a 2B

basis,  uplifted  by  25  per  cent.    In  each  case  that  equates  to  $7,825  including disbursements.  Orders accordingly.

Venning J