Nicon Limited v Tower Insurance Limited

[2015] NZHC 2447

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

CIV-2015-409-111 [2015] NZHC 2447

BETWEEN

NICON LIMITED

Plaintiff

AND

TOWER INSURANCE LIMITED First Defendant

AND

STREAM GROUP NZ PTY LIMITED Second Defendant

Hearing:	7 October 2015 (On the papers)
Appearances:	P McMenamin for Plaintiff J Forsey for the First and Second Defendants
Judgment:	7 October 2015

JUDGMENT OF DUNNINGHAM J

[1]      In the judgment I issued on 4 September 2015, I granted the defendants’ application seeking security for costs from the plaintiff, and staying the proceeding until such security is given.1  At the conclusion of the decision I reserved the issue of costs and provided a timetable for filing memoranda on that issue, if agreement could not be reached. An agreement has not been reached.

[2]      The  defendants  seek  2B  costs  uplifted  by  50  per  cent,  along  with disbursements totalling $550.00 (being the filing fee for the application and the fee for sealing the order). This is a total of $14,767.

[3]     The plaintiff accepts that the defendants are entitled to 2B costs and disbursements,  but  challenges  the  claim  for  costs  associated  with  the  first  case

management conference.  It also challenges the claim for a 50 per cent uplift.

1      Nicon Ltd v Tower Insurance Ltd [2015] NZHC 2132.

NICON LIMITED v TOWER INSURANCE LIMITED [2015] NZHC 2447 [7 October 2015]

[4]      The issues between the parties are therefore straight-forward. They are:

(a)      whether it is appropriate for the defendants to claim for items 10, 11 and 13 of schedule 3 which relate to preparation for and participation in the case management conference on 15 June 2015; and

(b)whether there are circumstances which support a claim for uplift in accordance with r 14.6(3)(b) of the High Court Rules.

Claim for attendances in relation to case management conference

[5]      As the plaintiff explains, on 29 April 2015, the Court gave notice of a case management conference to be heard on 15 June 2015 at 3.45 pm with an estimated time of one hour.  After this notice was given, the defendants filed an application seeking security for costs and, in the alternative, for the plaintiff to provide further and  better  particulars.    That  application,  too,  was  given  a  first  call  date  of

15 June 2015  (although  there  is  a  difference  of  opinion  as  to  whether  it  was anticipated this was in fact the hearing date for the application).

[6]      Prior to the conference the plaintiff filed a case management  conference memorandum addressing the matters which are required to form the agenda of a case management conference, as prescribed by r 7.3.  This memorandum suggested that a further case management conference be held after completion of discovery and the disposition of the defendants’ applications.

[7]      On 10 June 2015, the plaintiff filed a notice of opposition to the application for security for costs, but no affidavit was filed, despite r 7.25 requiring any affidavit evidence to be filed with a notice of opposition.  On 10 June 2015, the defendants’ counsel filed a case management conference memorandum which also submitted that the timetable for discovery await the outcome of the security for costs application, whether that application was “dealt with at the conference or set down for hearing”. As the plaintiff points out, it seems the defendants did not anticipate the security for costs application would necessarily be heard on 15 June.  This was reinforced by the fact there was no compliance with r 7.39 which requires the applicant’s synopsis of

argument, together with relevant documents and a list of authorities, to be filed at least three working days before hearing.

[8]      In summary therefore,  while the defendants assert that they believed  the security for costs application was to be heard on 15 June 2015, and seek costs for that  appearance,  because  in  fact  the  application  was  deferred  for  hearing  on

31 August  2015,  the  plaintiff  says  preparation  for,  and  attendance  at,  the  case management conference was required in any event and it is not reasonable that these steps be attributed to the hearing of the security for costs’ application.

[9]      While I accept the defendants are correct when they say that the majority of the case management conference was taken up with discussion regarding the security for costs application, I am not satisfied that attendance at this conference was necessitated only because of the security for costs application.   Even if that application had not been made, the conference would have been required and, as there was still other unresolved matters relating to requests for further and better particulars and in relation to discovery, there would inevitably have been a further case management conference.  Accordingly, I see preparation for, and attendance at, this  case  management  conference  as  being  relevant  to  the  progress  of  the proceedings in general and not generated specifically by the application for security for costs.

[10]     Accordingly,  I accept the plaintiff’s submission that steps 10, 11 and 13

should be excluded from the costs calculation.

Claim for uplift

[11]     The defendants submit that this is an appropriate case for the awarding of an uplift of the costs calculated on the category 2B basis.

[12]     Under r 14.6(3)(b) the Court may order a party to pay increased costs if:

(b)      the party opposing costs has contributed unnecessarily to the time or expense of the proceeding or a step in it by –

…

(ii)      taking or pursuing an unnecessary step or an argument that lacks merit; or

(iii)     failing,  without  reasonable  justification,  to  admit  facts, evidence, documents, or accept a legal argument;

…

[13]     The threshold for ordering an uplift is “where there is a failure by the paying party to act reasonably”,2  and where the failure to act reasonably contributed to the time or expense of the proceeding, as it is that consequence which justifies an uplift in costs.3

[14]     In  the  present  case  the  defendants  argue  that  the  plaintiff  “failed  to acknowledge the evidence in respect of its parlous financial position presented not only by the defendants, but also the evidence of Mr Lay relied on by the plaintiff”, and the plaintiff elected not to provide any evidence from the plaintiff ’s director, despite the fact that this was plainly required.

[15]     The defendants also say that they put the plaintiff on notice on 8 May 2015 that increased costs would be sought in the event that an application was required and this notice was ignored.  The defendants also point to the lack of merit in the claim identified in my 4 September 2015 judgment, along with the failure of the plaintiff to provide “adequate initial disclosure or to properly particularise its claim”. They say that the plaintiff “adopted an intransigent approach toward the security application” and, as in The Hong Kong & Shanghai Banking Corporation Ltd v

Rick Dees Ltd,4  and Extreme Communications Ltd v OSL Systems Ltd,5  an uplift is

justified.

[16]     While the defendants may justifiably feel frustrated that the plaintiff has not either  accepted  their  assertions  as  to  solvency,  or  provided  robust  evidence  in

defence,  the  plaintiff  was  entitled  to  rely  on  the  technical  argument  that  the

2      Bradbury v Westpac Banking Corporation [2009] NZCA 234, [2009] 3 NZLR 400 at [27].

3      Commissioner of Inland Revenue v Chesterfields Preschools Ltd [2010] NZCA 400, (2010) 24

NZTC 24,500 at [165].

4      The Hong Kong & Shanghai Banking Corporation Ltd v Rick Dees Ltd HC Auckland CIV-2006-

404-5278, 21 September 2006.

5      Extreme Communications Ltd v OSL Systems Ltd HC Wellington CIV-2010-485-627, 28 July

2010.

defendants had not supplied sufficient evidence to discharge the threshold test in r 5.45(1)(b).  In arguing that, the plaintiff did not extend the time required to hear the matter, and so I cannot say that the technical defence adopted by the plaintiff added to the cost of the proceedings.  For this reason I am not prepared to award an uplift.

Conclusion

[17]     As a consequence of my findings above, the defendants are entitled to costs, calculated on a 2B basis, for all steps listed in schedule A attached to the defendants’ costs submissions, except steps 10, 11 and 13.  The defendants are also entitled to disbursements of $550.00.  No other costs are awarded.

Solicitors:

K J McMenamin & Sons, Christchurch

Duncan Cotterill, Christchurch