On-Line Digital Solutions Limited v Riddick - [2022] NZHC 58

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
Plaintiff

AND

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…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Keep reading for free

Create a free CaseChat account to read On-Line Digital Solutions Limited v Riddick and more:

Read every judgment in full
Ask AI and get answers linked to paragraphs
See how each paragraph was cited in later cases
Download judgments as PDF or Word

Continue with Google

One click creates your free account or signs you in.

By continuing you agree to the Terms and Privacy Policy.

Details

Case: [2022] NZHC 58
Decision Date: 1 February 2022

CaseChat Overview and Summary

On-Line Digital Solutions Limited initiated proceedings against Deane Jason Riddick, seeking an interim injunction to restrain him from breaching a restraint of trade. The matter was dismissed by the court on 26 November 2021, and the question of costs was reserved. The court was required to determine whether the defendant, Riddick, was entitled to indemnity costs, increased costs, or standard costs for the proceedings. Riddick claimed that he was entitled to indemnity costs based on his unsuccessful offer of settlement and On-Line's failure to disclose a relevant letter. On-Line opposed the claim for increased or indemnity costs, arguing that 2B costs were appropriate in the circumstances. The court found that there were no exceptional circumstances to warrant an award of indemnity costs, as On-Line had not acted vexatiously, frivolously, improperly, or unnecessarily. The court also found that increased costs were not justified, as Riddick's offer was not a Calderbank offer and there was no evidence of improper withholding of the relevant letter.
The court awarded Riddick costs on a 2B basis in the sum of $10,638.42. This decision highlights the importance of adhering to the principles of proportionality and predictability in the determination of costs in the High Court of New Zealand. The court emphasised that increased costs should only be awarded in exceptional circumstances, and that the mere fact that one party has been wholly successful and the other wholly unsuccessful is not a basis for departure from scale costs. The court's decision also underscores the need for parties to act reasonably and in good faith in their dealings with each other, and to avoid unnecessary costs and delays in the proceedings.

Orders