Paper Reclaim Ltd v Aotearoa International Ltd

[2007] NZCA 544

IN THE COURT OF APPEAL OF NEW ZEALAND

CA70/04
[2007] NZCA 544

BETWEENPAPER RECLAIM LIMITED

Appellant

ANDAOTEAROA INTERNATIONAL LIMITED

Respondent

Court:William Young  P, Chambers and O'Regan JJ

Counsel:G J Judd QC for Appellant

A F Grant for Respondent

Judgment:28 November 2007 at 10 am

JUDGMENT OF THE COURT

AWith respect to costs in the High Court, the appellant must pay to the respondent costs calculated on a category 2 basis as follows:

(a)all pre-trial steps other than discovery and inspection are to be calculated on a band B basis;

(b)discovery and inspection are to be calculated on a band C basis;

(c)the allowance for trial (schedule 3, item 9.1) to be assessed as if the trial had taken ten days;

(d)trial preparation (schedule 3, item 8) to be assessed on basis of the assumed trial duration of ten days (ie 20 days).

BWith respect to disbursements in the High Court, the appellant must pay to the respondent:

(a)filing fees - $2,655

(b)travel expenses - $38.24

(c)photocopying - $8,289

(d)fax, tolls, courier and internet - $2,000

(e)70% of the hearing fees paid by the respondent.

C        The claim for disbursements in respect of David Appleby’s fees is deferred until the quantum hearing in the High Court, for determination by the judge who hears that quantum hearing. 

DThe appellant must pay to the respondent interest on the total sum payable under orders A and B.  Interest is to be calculated at 7.5% pa from 30 August 2004 down to the date of this judgment.

EThe parties are at liberty to apply to the High Court with respect to any matters arising from the implementation of orders A, B, and D.

F        No order as to costs in this court on this application. 

REASONS OF THE COURT

(Given by Chambers J)

Table of Contents

Para No

The costs aftermath of a paper dispute  [1]
Issues on the appeal  [12]
Should there be no order for costs because of Aotearoa’s
           failure on so much of its claim against Paper Reclaim?  [21]
Should the proceeding be categorised as category 2
           or category 3?  [29]
What bands should apply to pre-trial steps?  [34]
Should interest be allowed on the costs order?  [40]
Should Aotearoa recover the cost of non-party discovery?        [46]
Should the disbursement for photocopying be reduced?           [55]
Should Aotearoa recover Mr Appleby’s fee at this stage?         [57]
Costs in this court  [62]

The costs aftermath of a paper dispute

[1]       Paper Reclaim Limited and Aotearoa International Limited had a business relationship from the 1980s until 2001.  Essentially, Aotearoa undertook the export of Paper Reclaim’s wastepaper on an exclusive basis and was entitled to be remunerated by commission at the rate of 10% of the sales price to the overseas buyer.  The arrangement appears to have been extremely advantageous to both companies.

[2]       In 2001, however, Paper Reclaim moved to end the relationship.  Aotearoa disputed Paper Reclaim's right to end the relationship.  It commenced a proceeding against Paper Reclaim, alleging multiple causes of action. 

[3]       In the High Court, Aotearoa was largely successful.  Nicholson J held that Aotearoa had established, contrary to Paper Reclaim’s denial, that all work done by Aotearoa for Paper Reclaim in arranging sales of paper was pursuant to an oral contract made at a meeting of representatives of the two companies which had occurred either in late 1984 or in early 1985: HC AK CP117/01 19 March 2004.  His Honour found that the contract was terminable on reasonable notice.  He fixed the period of reasonable notice at eight years.  Aotearoa also succeeded on various other causes of action.  The parties had agreed that quantum would be determined at a later date.

[4]       On 30 August 2004, Nicholson J delivered a costs judgment.  He adopted as his starting point an indemnity costs regime on the basis that Paper Reclaim, through its directors and shareholders, Kerry O’Rourke and Grant Taylor, had improperly defended the proceeding.  His Honour had found in his substantive judgment that Messrs O’Rourke and Taylor had furnished false affidavits to the court and given false evidence in denying the existence of the oral contract.  The judge also referred to their conduct prior to the proceedings, which gave Aotearoa no option but to litigate.

[5]       The judge nonetheless reduced the amount of costs by 20% (from indemnity).  This reflected the failure of Aotearoa’s submission on the first cause of action that the contract was of indefinite duration, the failure of Aotearoa’s fourth cause of action, Paper Reclaim’s success on its counterclaim, and the fact that the fifth cause of action (on which Aotearoa succeeded) did not relate to the disputed issue of the existence of the oral contract.

[6]       Aotearoa’s solicitor-client costs came to a little over $515,000.  The award was 80% of that sum, approximately $412,000.  In addition, Nicholson J awarded Aotearoa disbursements totalling $117,000. 

[7]       Paper Reclaim appealed against both judgments.  This court allowed the appeal in part: [2006] 3 NZLR 188.  Although this court upheld Nicholson J’s finding that there was an oral agreement and that it was terminable only upon giving notice, we found the reasonable notice period to be 12 months, rather than Nicholson J’s eight years.  We also allowed Paper Reclaim’s appeal in respect of three of the causes of action. 

[8]       We also allowed the appeal against the costs judgment.  We held the judge to have been wrong to say Paper Reclaim improperly defended the proceeding.  We noted that Aotearoa’s claim for a contract of indefinite duration had failed both in the High Court and before us.  We also held that Aotearoa’s fallback position – namely, that reasonable notice should have been 13 years and 10 months - was “an extremely ambitious argument”, given that no court, so far as counsel’s research had shown, had ever suggested a reasonable notice period of longer than five years: at [152].  Further, Aotearoa had, as a result of this court's judgment, failed on all other causes of action.  For reasons we expressed in some detail, we set aside the costs order. 

[9]       The parties had agreed that, if we allowed the appeal against the costs judgment, we should fix an appropriate costs award with respect to the High Court proceeding.  That course was sensible in view of, at that time, Nicholson J’s imminent retirement.  (He has since retired.)  We gave the parties an opportunity to try to agree what costs in the High Court should have been.  We said that, if they could not agree, memorandums were to be filed in this court. 

[10] As it turned out, the parties were not able to agree costs. But they did not immediately file memorandums. This was because each decided to appeal to the Supreme Court. That court upheld our judgment in all respects but one. (The matter we had got wrong is not relevant for current purposes: suffice to say, the Supreme Court's decision will result in Aotearoa’s receiving even lower damages once quantum is determined.) The Supreme Court held we had “correctly concluded that the High Court costs judgment could not be supported”: [2007] 3 NZLR 169 at [44]. They added:

In view of Nicholson J’s retirement, the Court of Appeal should now fix the costs, taking into account both the respective positions adopted by each party at trial concerning the existence and terms of the contract and the degree to which Aotearoa has succeeded in establishing liability.

[11]     Following the Supreme Court’s decision, memorandums were filed.  By agreement, we have considered the question of costs on the papers.  The original appeal in this court was heard by Anderson P, Chambers and O’Regan JJ.  Since that hearing, Anderson P has been appointed to the Supreme Court.  William Young P, the new President, appointed himself as the third member of the panel to consider the question of costs. 

Issues on the appeal

[12]     This costs dispute has given rise to a myriad of issues. 

[13]     The first issue is whether there should be any costs order at all in the High Court because of Aotearoa’s failure on so much of its claim against Paper Reclaim.  Mr Judd QC, for Paper Reclaim, advanced as his primary submission that costs should lie where they fall.  For reasons we shall give, we do not accept that submission. 

[14]     So we proceed to consider the scale.  Mr Grant, for Aotearoa, submitted the proceeding should be categorised as a category 3 proceeding.  Mr Judd submitted it had originally been categorised as a category 2 proceeding, and should remain as such.  The second issue is, therefore, whether the proceeding should be categorised as category 2 or category 3.

[15]     The third issue relates to the banding of all the pre-trial steps.  Mr Grant submitted that all steps should be calculated on a band C basis, whereas Mr Judd submitted each step should be calculated on a band B basis.  Mr Grant also argued for increased costs (above band C) in respect of inspection of documents and preparation.  Banding and the question of increased costs form the third issue. 

[16]     The fourth issue is whether interest should be allowed on the costs order, in view of the fact the actual costs were incurred over a period of time, but some as long ago as 2001.

[17]     Even disbursements have given rise to disagreement, which the parties have not been able to resolve.  Of these, the first issue was non-party discovery.  Nicholson J had awarded Aotearoa $32,000 in respect of non-party discovery by Carter Holt Harvey Limited and almost $10,000 in respect of non-party discovery by Arthur Andersen.  (Except where precision is required, we shall use approximate figures in these reasons.)  Mr Judd disputed Aotearoa’s entitlement to recovery of these sums, given the issues on which Paper Reclaim, following appellate intervention, succeeded.  The issue is therefore: should Aotearoa be able to recover the costs it incurred for non-party discovery? 

[18]     Secondly, the judge awarded Aotearoa $8,289 for photocopying.  Mr Judd submits that sum should be reduced because much of the photocopying related to issues on which Aotearoa ultimately failed. 

[19]     The final issue concerns the fees Aotearoa has paid to its accounting expert, David Appleby.  Nicholson J awarded Aotearoa $15,000 in respect of Mr Appleby’s fees.  Mr Judd submits Mr Appleby’s work is primarily focused on quantum, which has yet to be determined.  He submits it is premature to be awarding any disbursements in respect of Mr Appleby’s fees. 

[20]     We record that Mr Judd, if we rejected his submission that costs should lie where they fall, did not dispute the disbursements referred to in order B(a), (b), and (d).  Nothing further needs be said about them. 

Should there be no order for costs because of Aotearoa’s failure on so much of its claim against Paper Reclaim?

[21]     Mr Judd’s primary submission was there should be no order for costs in the High Court at all: costs should lie where they fall.  He pointed to the fact that Aotearoa had pleaded seven causes of action against Paper Reclaim.  Of those, five ultimately failed.  One cause of action (the sixth) stands adjourned.  Only on the second cause of action (namely, that there was a contract which was terminable on reasonable notice) did Aotearoa succeed, but even then, Mr Judd submitted, the ultimate result was far removed from Aotearoa’s stance at trial.  Its suggested notice period of 13 years and 10 months was reduced to one year.  Mr Judd also referred to Paper Reclaim’s counterclaim, on which it succeeded.

[22]     We accept Aotearoa did fail on much it had pleaded.  But it would be wrong to overlook its success on the fundamental issue at trial, namely its contention there had been an oral contract between Aotearoa and Paper Reclaim, which neither side was able unilaterally to discharge.  Paper Reclaim did unilaterally repudiate that arrangement and will be liable in damages for the 12 months it failed to use Aotearoa as its agent when it should have done.  Aotearoa was ultimately successful against Paper Reclaim, albeit on a much reduced scale from what it had pleaded. 

[23]     We therefore reject Mr Judd’s primary submission that there should be no order for costs.  At the same time, we consider there must be a reduction in costs, given the fact much time was spent on issues on which Aotearoa ultimately failed.  This reflects the principle stated in r 48D(d) of the High Court Rules. 

[24]     Mr Grant’s primary submission was, of course, that there should be no reduction from scale notwithstanding Aotearoa’s failure on a number of the causes of action.  He helpfully, however, went on to consider how much of the trial time was spent on the second cause of action, on which Aotearoa (partially) succeeded, as opposed to those causes of action on which it failed.  He also placed Paper Reclaim’s counterclaim in the latter category.  His submission was that “the amount of time … spent on the second cause of action equated to 70% of the time spent on the case”.  Since the hearing lasted 23 days, that appears to be a submission that the trial, had it been confined to the second cause of action, would have been completed in about 16 days. 

[25]     Mr Judd disputed that assessment.  He submitted that, if one excluded the causes of action on which Aotearoa failed and the counterclaim, the trial would have been disposed of in about five sitting days. 

[26]     It is, of course, difficult for us as appellate judges to assess these rival submissions accurately.  In the end, however, we are satisfied Mr Grant is much closer to the mark than Mr Judd.  Mr Judd in his submissions accepted that “the bulk of the trial time involved evidence resulting from Aotearoa’s contention for a ‘single meeting express oral agreement’ incorporating a term that the contract was of indefinite duration”.  He further accepted 70% was probably “a not unreasonable estimate” of that “bulk of the trial time”.  This contention, when unravelled, appears to amount to a submission that, had Aotearoa confined itself to an assertion the parties had an oral contract determinable on notice, the trial would have concluded within five days, but because Aotearoa asserted that oral contract incorporated “a term that the contract was of indefinite duration” trial time expanded to about 16 days (70% of the overall total).  We do not accept that submission at all.  Whether the oral contract contained an implied term that the contract was of indefinite duration or an implied term that it was terminable on reasonable notice took very little trial time at all.  In either case, after all, the term was, at best, implied.  The real dispute between the parties was whether there was an oral contract at all.  On that point, Aotearoa succeeded. 

[27]     Looking at the matter as best we can from this distance, we conclude there should be a reduction in the allowance for trial (schedule 3, item 9.1) and that that item should be assessed as if the trial had taken ten days.  The total trial took 23 days.  If 70% of the time was spent on matters on which Aotearoa was broadly successful, then 30% of the time was spent on matters on which Paper Reclaim was successful.  Netting these gives 40% (9.2 days) – say, ten days, for which Aotearoa is entitled to costs.  Netting is clearly appropriate: it is, after all, the principle underlying the normal “no costs” award where plaintiff and defendant have been equally successful (50% - 50% = 0).  There should also be a corresponding adjustment to the allowance for trial preparation (schedule 3, item 8).  That too should be assessed on the basis of the assumed trial duration, after netting, of ten days (ie 20 days).  We have provided for those adjustments in order A(c) and (d). 

[28]     We mention at this stage order B(e), the disbursement for hearing fees.  Clearly this disbursement should be split 70-30 between the parties to reflect the logic of our decision as to costs on the hearing time of the trial.  Since the hearing fees were paid entirely by Aotearoa, Paper Reclaim should now pay Aotearoa 70% of those hearing fees. 

Should the proceeding be categorised as category 2 or category 3?

[29]     The proceeding started with an application for an interlocutory judgment.  At that time, the proceeding was categorised as category 2.  Where such categorisation is done at an early stage, the category applies to all subsequent determinations of costs in the proceeding unless there are special reasons to the contrary: r 48(2).  The idea behind early categorisation is that it assists the parties in calculating, as a proceeding goes forward, their potential exposure to costs.  In that way, it assists general principle (g) as set out in r 47, namely that “so far as possible the determination of costs should be predictable and expeditious” (emphasis added). 

[30]     At no stage after that categorisation did Aotearoa suggest it had become inappropriate.  It is far too late to be suggesting a recategorisation after the substantive hearing and after the result is known.  Would Aotearoa be asking for a recategorisation had it failed in the proceeding?  Of course not. 

[31]     Mr Grant seeks to justify the recategorisation on the grounds that the litigation changed character after the original categorisation.  We do not accept that, at least if attention is confined (as it must be) to the case on which Aotearoa succeeded.  This case did to some extent spiral out of control, especially in view of the amount of money truly at stake.  But it remained at its core a proceeding “of average complexity requiring counsel of skill and experience considered average in the High Court”.  Both sides chose counsel of above-average skill and experience, but that was their choice, and it is a fundamental premise of the High Court costs regime that the losing party is responsible only for a contribution towards the costs of the notional counsel suitable for the particular proceeding, not the actual counsel involved: see r 47(e). 

[32]     Mr Grant has not established special reasons for recategorisation. 

[33]     When discussing interest, a topic to which we shall come, Mr Grant noted that the daily recovery rates had increased since trial.  Lest there be any doubt on the matter, we make clear that the costs assessment we are ordering is to be made on the category 2 rates as applied at the time the relevant steps in the proceeding took place.

What bands should apply to pre-trial steps?

[34]     Mr Judd submitted each step in the proceeding should be calculated on a band B basis.  Mr Grant argued for a band C basis, except for inspection of documents and preparation for trial, which should get increased costs awards above band C.  Nicholson J did not consider this question because, as we have said, he made his costs assessment on an entirely different basis, which we and the Supreme Court have rejected.  We put to one side for the moment inspection of documents and preparation.  Should the remaining pre-trial steps be band B or band C? 

[35]     Mr Grant submitted “it would take days for the parties and the court to read all of the relevant documents and attempt to make an assessment of how much time was involved with each of them”.  He submitted that, “in the unusual circumstances of this case, it is appropriate for the court to adopt a blanket assessment for banding”.  While we agree we are not as well placed as the trial judge to assess the amount of time reasonably required for each step, we do not accept a blanket approach is desirable, or even possible, under the rules.  This is especially the case where a party is arguing for a blanket band C.  If a party wants other than band B, that party must demonstrate why “a normal amount of time for the particular step” would be insufficient: see r 48B(2). 

[36]     Save in the case of discovery, Mr Grant has not in our view shown that band B should not apply. We are, however, satisfied discovery should be calculated on a band C basis.  Indeed, we note that Paper Reclaim accepted before Nicholson J that “discovery and inspection of documents was very substantial”, although in the end Mr Judd accepted only inspection should have a band C classification.  Mr Judd, in his submissions before us, attempted to resile from that concession, on the basis that Aotearoa’s success has, since Nicholson J’s substantive judgment, “been pared back to something very narrow”.  We do not accept that Aotearoa’s “narrower” victory does affect the categorisation of the discovery item.  It clearly, in our view, necessitated “ a comparatively large amount of time”, making band C reasonable. 

[37]     We now turn to inspection.  Mr Grant submitted band C was not sufficient for this item and that therefore increased costs above band C should be awarded.  But Mr Grant’s submission was based on a false premise: he thought band C provided for an allocation of six hours, whereas in fact it provides for six days.  Mr Grant submitted that he and his junior had between them spent about 40 hours inspecting documents, on which basis, he said, there should be “an award of increased costs [above band C] for an additional 34 hours”.  We can well understand that inspection in this case could have taken the sort of time suggested by Mr Grant, but 40 hours is, of course, within band C’s allocation of six days.  Had Mr Grant appreciated this error, we have no doubt he would have been satisfied with a band C (six day) allocation.  That is what we have ordered. 

[38]     Mr Grant made a similar error when he sought increased costs for trial preparation.  He thought the scale provided two hours’ preparation for each day of the hearing, whereas in fact it allows for two days’ preparation for each day of the hearing.  Mr Grant estimated that “on a very conservative basis” he and his junior between them would have spent 20 days on preparation.  As it happens, 20 days’ preparation (based on the assumed ten day trial) is exactly what the scale provides.  Again, had Mr Grant appreciated his error in interpretation of the scale, it is unlikely he would have sought increased costs for preparation.

[39]     In summary, therefore, we are satisfied band B should apply to all pre-trial steps other than discovery and inspection, which should be calculated on a band C basis. 

Should interest be allowed on the costs order?

[40]     Nicholson J delivered his costs judgment on 30 August 2004.  We do not know whether Paper Reclaim paid the costs His Honour ordered.  Even if it did, we suspect Aotearoa repaid those costs after we set aside the costs order on 14 March 2006.  The likelihood is, therefore, that Aotearoa currently holds nothing towards its costs. 

[41]     Mr Grant submitted that interest should run from the date of Nicholson J’s liability judgment, namely 19 March 2004.

[42]     We are satisfied we have jurisdiction to order interest.  Under r 48(4) of the Court of Appeal (Civil) Rules 2005, this court has power to “give any judgment and make any order which ought to have been given or made”, and may make any further or other orders that the case may require (emphasis added).  It is, somewhat naturally, our view that the costs order Nicholson J should have made on 30 August 2004 is the costs order we now make.  We consider it appropriate that our order should effectively be backdated to that date, even though in technical terms our judgment will be given at its delivery time, as set out in r 49.  The way to achieve fairness is to provide that Paper Reclaim should pay interest on the sum we have awarded from 30 August 2004 down to the date of this judgment.  That will ensure Aotearoa is properly compensated for the delay in securing a “proper” costs award. 

[43]     We do not have to provide for interest after the date of this judgment.  That is because the entire sum we have awarded (costs, disbursements, and interest) will be a “judgment debt” which, pursuant to r 538 of the High Court Rules, will carry interest at 7.5% pa “from the time of [this] judgment being given until the judgment is satisfied”. 

[44]     While we have substantially acceded to Mr Grant’s submission on this matter, we have not backdated interest to the date of Nicholson J’s liability judgment.  It seems unfair to lumber Paper Reclaim with interest on costs when it did not know what costs were to be ordered until later. 

[45]     If we are wrong in our assumption that Paper Reclaim has paid nothing towards Aotearoa’s costs, then obviously Paper Reclaim will be able to set off against its liability under this judgment whatever it has paid.  In that event, interest will run only for such period and on such amount as was underpaid from time to time.

Should Aotearoa recover the cost of non-party discovery?

[46]     In 2001, Aotearoa successfully sought non-party discovery from Carter Holt and Arthur Andersen.  Carter Holt and Arthur Andersen duly made discovery, charging Aotearoa $32,000 and $10,000 respectively as their compliance costs.  Nicholson J allowed these disbursements.

[47]     Mr Judd submitted neither disbursement should be allowed.  He submitted this non-party discovery related to causes of action on which Aotearoa had succeeded before Nicholson J but on which Aotearoa had failed before us and the Supreme Court.

[48]     It seems clear to us that submission is correct.  The documents were sought in relation to those causes of action involving Carter Holt.  (The discovery against Arthur Andersen was in the same category: it was thought Arthur Andersen may have held relevant documents in its capacity as Carter Holt’s auditors.) 

[49]     Mr Grant effectively conceded that the non-party discovery could not be directly attributed to the cause of action on which Aotearoa had succeeded.  But, he submitted, that did not matter.  It was nonetheless relevant to the credibility of Messrs O’Rourke and Taylor.  The argument apparently is: if these documents showed the Paper Reclaim directors had deceived Carter Holt’s auditors on the correct net ex-plant price which Paper Reclaim had received for its products, that made it more likely they were telling lies on the issue of whether there was an oral contract of the nature contended for by Paul Cash, Aotearoa’s director.  In short, even if the non-party discovery was not directly relevant to the second cause of action, it was indirectly relevant as it went to the credibility of Paper Reclaim’s directors. 

[50]     To that argument Mr Judd made the following rejoinder.  Relevance to credibility was not the basis upon which the non-party discovery was sought and obtained.  It is a new submission now advanced because the actual basis upon which the discovery was sought and obtained will not support a costs order, Aotearoa having lost on the causes of action to which the discovery was directly relevant.  Further, had non-party discovery been sought on the basis that it was relevant only to credibility, it would not have been ordered. 

[51]     In his reply submissions, Mr Grant conceded that discovery of documents going solely to credibility will generally be refused, but he said that was not an invariable rule.  He said here the discovery sought had not been oppressive.

[52]     We do not have to determine whether this non-party discovery would have been ordered had it been made clear that its relevance was confined to the credibility of Paper Reclaim’s directors.  The reason we do not have to decide that is that it is clear that was not the basis upon which such discovery was sought.  It is clear from the stated grounds of the application for non-party discovery that the documents were needed in respect of the causes of action involving Carter Holt.  Since all Mr Cash’s allegations involving Paper Reclaim’s dealings with Carter Holt failed, it would be unfair to order Paper Reclaim to meet the compliance costs of Carter Holt and its auditors. 

[53]     We may add that we think it very unlikely this non-party discovery would have been ordered had it in fact been sought on a “credibility” basis. 

[54]     Had we decided Paper Reclaim should, in principle, have met these disbursements, we would have had to go on to consider a further argument Mr Judd raised, namely as to the reasonableness of Arthur Andersen’s fee to Aotearoa.  As it turns out, we do not need to consider that issue. 

Should the disbursement for photocopying be reduced?

[55]     Aotearoa claimed $8,289 for photocopying.  Mr Judd disputed the claim on the basis that “the bundle of documents contained large quantities of shipping documents and similar material” which had no relevance to the cause of action on which Aotearoa succeeded.  In response, Mr Grant said almost all of the documents in the two volumes of shipping document bundles related to the second cause of action.  In particular, he said, they related to the shipments which Paper Reclaim made after 2 February 2001, the date of Paper Reclaim’s repudiation of the agreement.  Aotearoa will be entitled to damages in respect of that period.  The documents also related, he said, “to the numerous defences which Paper Reclaim raised unsuccessfully to the second cause of action”.

[56]     We find this dispute difficult to assess.  Nicholson J considered the claim for this disbursement to be well made.  Mr Judd’s challenge is rather lacking in specifics.  Accordingly, we have decided to allow the claim. 

Should Aotearoa recover Mr Appleby’s fee at this stage?

[57]     Mr Appleby is Aotearoa’s accounting expert.  His fee up to the end of the liability trial was $15,000. 

[58]     Mr Judd submitted Mr Appleby’s work was primarily focused on quantum, which has yet to be determined.  He submitted it was premature to be awarding any disbursements in respect of Mr Appleby’s fees. 

[59]     Mr Grant submitted in reply that the evidence Mr Appleby gave concerning the moneys Aotearoa received from its different businesses was relevant to the second cause of action.  He submitted that, if the evidence had shown that Aotearoa was likely to be able to replicate its revenues from other activities within a period of, say, a month, it was inconceivable that this court and the Supreme Court would have allowed Aotearoa a period of 12 months’ notice. He said it would invariably be important in cases involving the assessment of a reasonable period of notice that the court should have an understanding of the disadvantaged party’s revenue streams and the likelihood of the revenues being continued. 

[60]     This is another matter we have found difficult to assess.  We note, however, that Nicholson J did not refer to Mr Appleby’s evidence when fixing the reasonable notice period of eight years.  We have also looked back to Mr Grant’s submissions on the substantive appeal.  When he was arguing for the retention of the eight year period, he did not refer us to Mr Appleby’s evidence.  It was not a factor in our decision as to what the period of reasonable notice should have been.  Nor does Mr Appleby’s evidence appear to have been either referred to in counsel’s arguments in the Supreme Court or a factor in that court’s decision upholding our assessment of a 12 month notice period.

[61]     It seems to us that Mr Appleby’s day in the sun will come with the quantum trial next year.  We think the judge who hears that will be in a much better position than we are to assess the reasonableness of the claim for Mr Appleby’s fee.  In short, therefore, we accept Mr Judd’s submission that it is premature to be awarding at this stage disbursements in respect of Mr Appleby’s fees.  The judge presiding over the quantum hearing will be able to determine what is reasonable, bearing in mind how much of Mr Appleby’s work was undertaken with respect to the cause of action which succeeded compared with the causes of action on which Aotearoa ultimately failed. 

Costs in this court

[62]     There will be no order for costs in respect of this application as neither side’s position has been completely upheld.  The levels of success are roughly equal. 

Solicitors:
Wells & Co, Auckland, for Appellant
Morrison Kent, Auckland, for Respondent