Price v Software Educational Resources Limited HC Auckland CIV 2010-404-2922
[2010] NZHC 1601
•27 August 2010
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV-2010-404-002922
BETWEEN CHRISTOPHER JOHN PRICE CHERYL FRANCES PRICE First Plaintiffs
ANDCALLUM INVESTMENTS LIMITED Second Plaintiff
ANDSOFTWARE EDUCATIONAL RESOURCES LIMITED
First Defendant
ANDSTEPHEN WILLIAM NICHOLS Second Defendant
Hearing: 16 August 2010
Counsel: DPH Jones QC for Plaintiffs
TJ Cooley for Defendants
Judgment: 27 August 2010
JUDGMENT OF RODNEY HANSEN J
This judgment was delivered by me on 27 August 2010 at 12.30 p.m., pursuant to Rule 11.5 of the High Court Rules.
Registrar/Deputy Registrar
Date: ………………………….
Solicitors: Davenports Harbour Lawyers, P O Box 302-558, North Harbour, Auckland for
Plaintiffs
Kensington Swan, Private Bag 92101, Auckland 1142 for Defendants
PRICE AND ORS V SOFTWARE EDUCATIONAL RESOURCES LIMITED AND ANOR HC AK CIV-
2010-404-002922 27 August 2010
[1] The plaintiffs seek costs against the defendants following the grant of an interim injunction to restrain the defendants from breaching a settlement agreement reached in December 2009. The agreement concluded litigation brought by the first defendant against the plaintiffs in relation to the sale to the first defendant in 2004 of the plaintiffs’ business. The second defendant was a party to the settlement agreement and personally undertook to carry out the settlement obligations of the first defendant.
[2] The plaintiffs claim that, notwithstanding repeated attempts by the plaintiffs to secure performance, the defendants failed to comply with their obligations under the settlement agreement. In May the plaintiffs issued proceedings and applied for an interlocutory injunction. The defendants took no steps and an interim injunction was granted on 27 May. The defendants have since fully complied with their obligations.
Costs – basis for award
[3] In granting interim relief Miller J ordered costs in favour of the plaintiffs. The plaintiffs now seek an order for increased costs or indemnity costs on the grounds that:
a) The defendants have been in ongoing and deliberate default of their obligations under the settlement agreement.
b)Their default necessitated the proceedings, including the application for an interlocutory injunction.
c) The plaintiffs have acted reasonably and responsibly throughout.
[4] A threshold question arises as to the proper scope of any order. Mr Jones submitted that the order should include provision for the issue of the substantive proceeding. He pointed out that that was a necessary first step to obtaining interim
relief. Mr Cooley said it would be wrong to include costs for the issue of a proceeding in an order at this stage as the substantive proceeding has not been determined and other matters may arise to affect the costs award which will ultimately be made.
[5] In my view, both principle and practical considerations tell against the plaintiffs’ position. The Rules reflect the need, when determining costs, to distinguish between a proceeding and a step in a proceeding. The general principles set out in r 14.2 include, for example:
Principles applying to determination of costs
The following general principles apply to the determination of costs:
(a) the party who fails with respect to a proceeding or an interlocutory application should pay costs to the party who succeeds:
...
(c)costs should be assessed by applying the appropriate daily recovery rate to the time considered reasonable for each step reasonably required in relation to the proceeding or interlocutory application:
Rule 14.6(2) provides that an order for increased costs or indemnity costs may be made “at any stage of a proceeding and in relation to any step in it”. See also r
14.6(3)(b) and (4)(a).
[6] What is sought at this stage are costs in relation to the interlocutory application for interim relief. That is a discrete step in the proceeding. It is the event which attracted the costs award. It is distinct from the substantive proceeding, the issue of which provides the necessary foundation for interim relief, but which must run its own course. Mr Jones may very well be right when he says that the substantive proceeding will be resolved in his client’s favour but that cannot be assumed at this stage. It would be premature to award costs in relation to the commencement of the proceeding. That is properly the subject of an award when the proceeding is finally disposed of.
[7] The grounds relied on by the plaintiffs for increased or indemnity costs, as set out in [3] above, will be relevant to the determination of costs on the substantive proceeding but can have little weight in fixing costs on the grant of the interim injunction. However, I accept that, as is often the case with interlocutory applications for interim relief, a comparatively large amount of time was required for the step. I consider the time allowance should be by reference to band C under r 14.5(2).
[8] On that basis, the plaintiffs are entitled to costs as follows:
Schedule 3, High Court Rules
Category 2C
Preparing and filing interlocutory application
2 days @ $1,600 per day
[para 4.12] 3,200.00
2 appearances on 27 May and 10 June 2010
2 x [0.2 days @ $1,880 per day]1
[para 4.17] 752.00
Sealing order or judgment
[0.2 days @ $1,880 per day] 376.00
$4,328.00
Disbursements
High Court fees
Filing fee interlocutory application 600.00
Service
Scope Investigations: service fees 353.25 953.25
$5,281.25
1There was no appearance by the defendants. There is no step in Schedule 3 which covers an appearance at the hearing of an undefended interlocutory application. I accept that, by analogy, the time allocation for appearing at a mentions hearing or callover is appropriate.
[9] The defendants must pay the plaintiffs’ costs in the sum of $4,328.00 and disbursements of $953.25 in relation to the application for an interlocutory injunction.
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