On-Line Digital Solutions Limited v Riddick
[2022] NZHC 58
•1 February 2022
IN THE HIGH COURT OF NEW ZEALAND NEW PLYMOUTH REGISTRY
I TE KŌTI MATUA O AOTEAROA NGĀMOTU ROHE
CIV-2021-443-35
[2022] NZHC 58
BETWEEN ON-LINE DIGITAL SOLUTIONS LIMITED
PlaintiffAND
DEANE JASON RIDDICK
Defendant
Hearing: On the papers Counsel:
L McKeown for Plaintiff
P Dalkie and D Watson for Defendant
Judgment:
1 February 2022
JUDGMENT OF ISAC J
[Costs]
Introduction
[1] In a judgment of 26 November 2021 I dismissed an application by On-Line Digital Solutions Ltd (On-Line) for an interim injunction restraining Mr Riddick from breaching a restraint of trade.1
[2] The question of costs was reserved. As the parties have been unable to resolve the issue this judgment now fixes costs.
Submissions
[3]Mr Riddick seeks costs on an indemnity basis, being his actual costs of
$46,264.40. Alternatively, he seeks a 50—80 per cent uplift on scale costs. In support
1 On-Line Digital Solutions Ltd v Riddick [2021] NZHC 3199.
ON-LINE DIGITAL SOLUTIONS LIMITED v RIDDICK [2022] NZHC 58 [1 February 2022]
of these claims, the defendant points to his letter of 6 August 2021 in which he invited the plaintiff to withdraw its claim on the basis that the parties agree a timetable to fast- track the proceeding towards a substantive hearing. Mr Riddick also warned On-Line that he would seek indemnity costs should the plaintiff’s application fail. Mr Riddick also points to On-Line’s failure to disclose a letter dated 9 May 2014, which he contends was plainly relevant and material to its application.
[4] On-Line opposes the claim for increased or indemnity costs, submitting that 2B costs of $10,638.42 (as calculated by the defendant) are appropriate in the circumstances. On-Line says it was reasonably justified in refusing the offer in the letter of 6 August 2021 and that its conduct in relation to the 9 May 2014 letter “falls well short of the threshold for an indemnity costs award”.
Discussion
[5] All matters relating to costs are discretionary,2 although that discretion must be exercised on a principled basis. So far as possible the determination of costs should be predictable and expeditious.3
[6] I first deal with indemnity costs. Such costs should only be ordered where there are truly exceptional circumstances.4 Rule 14.6(4), which lists several circumstances in which indemnity costs might be awarded, illustrates the high threshold for indemnity costs. For example, indemnity costs may be ordered where a party has acted vexatiously, frivolously, improperly, or unnecessarily in commencing, continuing, or defending a proceeding or a step in a proceeding.5 I do not consider that On-Line has acted that way. To the contrary, I was satisfied that there is a serious issue to be tried, albeit I concluded on the evidence available that the merits of the case likely favoured Mr Riddick.6 I do not consider that circumstances exist which justify indemnity costs.
2 High Court Rules 2016, r 14.1.
3 Rule 14.2(1)(g).
4 Hedley v Kiwi Co-operative Dairies Ltd (2002) 16 PRNZ 694 at [8].
5 High Court Rules, r 14.6(4)(a).
6 On-Line Digital Solutions Ltd v Riddick, above n 1, at [102].
[7] Turning to increased costs, these may only be made where there has been a failure to act reasonably.7 The onus is on Mr Riddick to persuade the court that increased costs are justified.8
[8]As Associate Judge Johnston said in Driver v Radio New Zealand Ltd:9
[11] It is true that the Court retains an overarching discretion, and there is provision for increased and decreased costs. However, it appears to me to be important in achieving the objective of the regime for the Court to resist making orders for increased or decreased costs other than in exceptional circumstances. Certainly, the fact that one side has been wholly successful and the other side wholly unsuccessful is not a basis for departure from scale costs, even if, with the benefit of hindsight, it appears the Court had little difficulty in dismissing the case for the unsuccessful party.
[12] Any other approach it seems to me would risk costs becoming unpredictable and another regular source of contention that would only lead to further costs being incurred.
[9] The essence of Mr Riddick’s claim for increased costs is that On-Line failed to accept the 6 August 2021 offer, without reasonable justification, and this caused unnecessary time and expense in the proceeding.10 The difficulty with that argument is that the letter did not contain an offer of settlement. The letter read:
1. I refer to the interim injunction proceedings your client has filed.
2. In view of the evidence contained in Mr Riddick’s affidavit, I believe there are some substantial difficulties with your client’s application.
3. Mr Riddick proposes that:
a)your client withdraw its interim injunction application (costs reserved),
b)the parties agree a timetable to fast track any interlocutory stages and promptly bring this matter to trial.
4. In the event Mr Riddick succeeds on his opposition and is entitled to costs, this letter will be put before the court in support of an application for full indemnity costs against your client.
5. This offer will lapse at 5 pm 13 August 2021. This offer is is (sic) not to be taken as any concession there is a serious question to be tried.
7 Bradbury v Westpac Banking Corp [2009] NZCA 234, [2009] 3 NZLR 400 at [27].
8 Strachan v Denbigh Property Ltd HC Palmerston North CIV-2010-454-232, 3 June 2011 at [27].
9 Driver v Radio New Zealand Ltd [2020] NZHC 3398.
10 High Court Rules, r 14.6(3)(b)(v).
[10]In Nandro Homes Ltd v Datt, Asher J said:11
The letter that was sent on behalf of Nandro by its lawyers, seeking to persuade the Datts to drop the second proceedings, was a detailed and intelligent letter, sent for the justifiable purpose of trying to stop the litigation at that point and save further costs. However, it was not a Calderbank letter. No offer was made which was later vindicated by the quantum of damages, as occurs when orders are made on the basis of a Calderbank letter. Rather, one party stated, as parties often do at the outset of proceedings, that it considered the other side’s case to be hopeless. I do not consider that the sending of such a letter is a circumstance warranting a departure from the usual rule as to costs. It does not constitute a failure to accept an offer of settlement under r 14.6(3)(b)(v).
[11]The same analysis applies here. The letter of 6 August 2021 did not contain a
Calderbank offer and therefore r 14.6(3)(b)(v) is not engaged.
[12] I now turn to the letter of 9 May 2014 which Mr Riddick says was improperly withheld and was clearly relevant. On-Line’s memoranda explains that the letter was originally provided to Mr Riddick’s former lawyer and that, subsequently, Mr Riddick himself forwarded the letter to On-Line. It follows that the letter was already in Mr Riddick’s possession, and the plaintiff’s possession of the document only arose through Mr Riddick.
[13] While I expressed concern about the fact the document had not been disclosed by the plaintiff in support of its application for an injunction in advance of the hearing,12 given that—
(a)the document was disclosed by the plaintiff (albeit at the hearing);
(b)it was certainly in Mr Riddick’s control (at some point at least); and
(c)the lack of any evidence currently to indicate improper withholding—
I am not persuaded that increased costs are justified in the circumstances. Following trial the Court will be in a better position to consider the circumstances surrounding the late disclosure of the letter and whether any costs consequences flow from it.
11 Nandro Homes Ltd v Datt HC Auckland CIV-2008-404-6676, 13 July 2009 at [13].
12 On-Line Digital Solutions Ltd v Riddick, above n 1, at [75] and [82].
Result
[14] I award Mr Riddick costs on a 2B basis in the sum of $10,638.42 (being costs of $9,799 and disbursements of $839.42).
Isac J
Solicitors:
Duncan Cotterill, Wellington for Plaintiff Nicholsons, New Plymouth for Defendant
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