Official Assignee in bankruptcy v Rogan
[2012] NZHC 1156
•28 May 2012
IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY
CIV-2011-409-002348 [2012] NZHC 1056
UNDER the Trade Marks Act 2002 and the Fair
Trading Act 1986
BETWEEN RIO TINTO MINING AND EXPLORATION LIMITED First Plaintiff
ANDRIO TINTO LIMITED Second Plaintiff
ANDRIO TINTO LONDON LIMITED Third Plaintiff
ANDRIO TINTO ALCAN (NEW ZEALAND) LIMITED
Fourth Plaintiff
ANDRIO TINTO ALCAN PTE. LIMITED Fifth Plaintiff
ANDJOHN GORDON RUTHERFORD First Defendant
ANDIRONZ LIMITED Second Defendant
ANDRIO TINTO MINING AND EXPLORATION LIMITED Third Defendant
Hearing: (Determined on the Papers) Appearances: P R Jagose and J W Upson for Plaintiffs
G M Brodie for Defendants
Judgment: 16 May 2012
COSTS JUDGMENT OF ASSOCIATE JUDGE MATTHEWS
RIO TINTO MINING AND EXPLORATION LIMITED V JOHN GORDON RUTHERFORD HC CHCH CIV-
2011-409-002348 [16 May 2012]
[1] This proceeding has been settled, with costs left to a decision of the Court.
[2] The plaintiffs issued this proceeding and an application for summary judgment seeking directions that the first and/or second defendants, for or on behalf of the third defendant, apply to the Registrar of Companies within a limited period either to remove the third defendant from the New Zealand Companies Register or to change its name to a name which does not include the words “Rio Tinto” or similar words. Injunctive relief was also sought to prevent any attempt to restore the third defendant to the New Zealand register, or to register any other company with a name including the names “Rio Tinto”, or similar words. The application for summary judgment was based on four causes of action in the statement of claim, alleging passing off, misleading or deceptive conduct in trade, and breach of trademark.
[3] I have been informed that issue of the proceedings followed nearly a year of requests to change the name of the third defendant, the plaintiffs being companies which carry on the New Zealand operations of the global Rio Tinto group which is said to carry substantial goodwill in its name. In addition, the words “Rio Tinto” are the subject of registered trademarks in this country, and use of the words “Rio Tinto” has not been licensed to any of the defendants. Apart from the issues in this proceeding, there are other substantial issues between the parties and others which are the subject of a separate proceeding.
[4] The proceeding followed a formal demand for change of the third defendant’s
name on 21 October 2011 which was not met. The proceeding was filed on
17 November, with an application for summary judgment. On 13 December the plaintiffs made a Calderbank offer to discontinue the proceeding on receipt of evidence that the third defendant’s name had been removed from the register, and a satisfactory undertaking that none of the defendants would attempt in future to register a company implying a connection with the plaintiffs. Payment of costs of
$38,380 said to have been incurred in the proceeding to the date of its filing was also sought. Later the offer was repeated with a costs payment of $15,000 required. Again, settlement was not achieved on these terms. On 19 January 2012 the
defendants filed notices of opposition to all orders sought but indicating a
willingness to give undertakings to change the third defendant’s name.
[5] The plaintiffs now seek indemnity costs of $47,998, or alternatively increased costs of no less than 75 percent above scale, amounting to $18,424. Scale fees claimed as a third alternative amount to $10,528. In each case disbursements are sought in the sum of $1,434.83.
[6] I have considered detailed memoranda from the parties. The plaintiffs’ position is that whilst costs are at the discretion of the Court, and the scale costs regime is regulatory and should only be departed from in a particularised and principled way, there are sound reasons to award indemnity costs, or at least a substantial uplift in scale costs, in this case. Reliance is placed on r 14.6(3) relating to increased costs and r 14.6(4) relating to indemnity costs. These provide:
(3) The court may order a party to pay increased costs if –
(a) the nature of the proceeding or the step in it is such that the time required by the party claiming costs would substantially exceed the time allocated under band C; or
(b) the party opposing costs has contributed unnecessarily to the time or expense of the proceeding or step in it by –
(i) failing to comply with these rules or with a direction of the court; or
(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; or
(iv) failing, without reasonable justification, to comply with an order for discovery, a notice for further particulars, a notice for interrogatories, or other similar requirement under these rules; or
(v) failing, without reasonable justification, to accept an offer of settlement whether in the form of an offer under rule 14.10 or some other offer to settle or dispose of the proceeding; or
(c) the proceeding is of general importance to persons other than just the parties and it was reasonably necessary for the party claiming costs to bring it or participate in it in the interests of those affected; or
(d) some other reason exists which justifies the court making an order for increased costs despite the principle that the determination of costs should be predictable and expeditious.
(4) The court may order a party to pay indemnity costs if –
(a) the party has acted vexatiously, frivolously, improperly, or unnecessarily in commencing, continuing, or defending a proceeding or a step in a proceeding; or
(b) the party has ignored or disobeyed an order or direction of the court or breached an undertaking given to the court or another party; or
(c) costs are payable from a fund, the party claiming costs is a necessary party to the proceeding affecting the fund, and the party claiming costs has acted reasonably in the proceeding; or
(d) the person in whose favour the order of costs is made was not a party to the proceeding and has acted reasonably in relation to it; or
(e) the party claiming costs is entitled to indemnity costs under a contract or deed; or
(f) some other reason exists which justifies the court making an order for indemnity costs despite the principle that the determination of costs should be predictable and expeditious.
[7] In each case the Court may rely on other reasons to justify the making of an order in the respective categories.
[8] The plaintiffs submitted that from the outset of the dispute, and carrying on through the brief life of the proceeding, the defendants acted unreasonably by refusing on fundamentally erroneous grounds to properly respond to the plaintiffs’ requests. They submit that each of the elements of the first cause of action were readily established and noted that opposition by Mr Rutherford to the claim based on passing off implied that the third defendant was not conducting business in competition with the plaintiffs. This is irrelevant, on established case law. I accept the plaintiffs’ submission that it is sufficient for injunctive relief to establish that a defendant “is equipped with or is intending to equip another with an instrument of fraud”, and an instrument of fraud in this context includes “a name which will by reason of its similarity to the name of another inherently lead to passing off”: British
Telecommunications plc v One in a Million Ltd.[1]
[1] British Telecommunications plc v One in a Million Ltd [1999] 1 WLR 903 (CA), 920.
[9] The evidence for the plaintiffs shows intervention by Mr Rutherford with
New Zealand’s Petroleum and Minerals, the Crown agency responsible for
administering the permit regime under the Crown Minerals Act, in relation to a potential exploration permit application in the joint names of the second defendant and the first plaintiff during which he informed the agency, in response to a request about whether RTME (the first plaintiff) consented, that RTME “now reregistered with the Companies Office unable to ‘do business’ in NZ .... will consent”. Later he confirmed again that RTME would consent and when evidence was sought he described the “RTME” to which he was referring as “the only one able to do business in NZ” and it was owned by the second defendant of which he was a director. In short it is said that Mr Rutherford deliberately sought to mislead NZPAM, or at least to derive an advantage from the RTME name. This, counsel submitted, is the use of the plaintiff’s name to his own ends by equipping himself with the third defendant company and using it as an instrument of fraud.
[10] If proven this evidence is strong; on this application I am mindful that although the proceeding has been settled, the plaintiffs’ claims are not the subject of a judgment.
[11] Similarly, strong grounds were argued in support of each of the other causes of action. To an extent the second and third causes of action overlap with the first. The claims made by the plaintiffs are extremely serious. The self-evident resemblance between the name of the third defendant and the names of the plaintiffs amply demonstrate the potential strength of the claims and there can be no realistic doubt whatever that the plaintiffs’ claims would have succeeded and directions made for change of the third defendant’s name and prevention of any further use of the plaintiffs’ names, as sought. Settlement merely avoided the inevitable.
[12] The defendants accept that costs are properly payable but maintain that they should be on a 2B basis. Counsel submitted that this proceeding was simply an application by way of summary judgment for an order requiring a company registered on the Companies register to change its name. The application for liquidation was unnecessary. The allegation that the defendants had inappropriately used a name in respect of which the plaintiffs claimed by means of one name or another various rights was in essence relatively simple; costs should therefore be awarded on a conventional basis. Counsel submitted that no business had been
conducted by the third defendant. Nothing had occurred which could cause the public to believe that the goods or services being provided by the defendants were those of the plaintiffs. There could not have been any damage to the plaintiffs’ goodwill nor any likelihood of same, and any allegation of damage to the plaintiffs’ reputation is remote and overstated. In relation to the claim for indemnity costs, counsel submitted that information provided by the plaintiffs suggested that 93.4 hours had been spent, or a total of 13.35 days if 7 hours per day is utilised. He noted an absence of detail on what “the people who spent 93.4 hours on this file were in fact doing” and indicated that the defendants do not accept that this amount of time was either required or reasonable. Apart from the filing of the notice of opposition and documents in support the proceedings were settled promptly.
[13] I am satisfied that the defendants have contributed unnecessarily to the time or expense required in the proceeding by unnecessarily opposing it, when its prospects of success were, on the papers, quite self-evident. On the material before the Court no justification can be seen for the third defendant having been incorporated deliberately by those involved with a name substantially similar, if not virtually identical to the names of the plaintiffs which are not only well-recognised in this country, but are the subject of registered trademarks.
[14] Further, in my opinion the defendants acted vexatiously and unnecessarily in defending this proceeding. I need not comment further on its merits. A ground for ordering indemnity costs has been amply made out.
[15] Indemnity costs are to be determined by reference to actual costs but may be less than the actual costs incurred if the Court considers that the sum charged was not reasonably incurred: Bradbury v Westpac Banking Corp.[2] There is force in the submission of counsel for the defendants in relation to the level of indemnity costs sought. I do not accept that this proceeding is as simple as counsel described it but I do not consider that a claim for some 13 days of full time work by a suitably competent solicitor is a justified basis upon which to order the defendants to pay
[2] Bradbury v Westpac Banking Corp [2008] 18 PRNZ 859.
costs to the plaintiffs.
Outcome
[16] Taking into account all factors I award costs in favour of the plaintiffs against the defendants in the sum of $30,000 plus disbursements of $1,434.83.
J G Matthews
Associate Judge
Solicitors:
Chapman Tripp, PO Box 993, Wellington 6140. Email: [email protected]
Cordner Hill Law, PO Box 21009, Edgeware, Christchurch (P J Cordner). Counsel - G M Brodie. Email: [email protected]
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