PURE DEW WATER COMPANY LIMITED AND PANTRANZ LIMITED

[2022] NZHC 3572

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2022-404-000784

[2022] NZHC 3572

IN THE MATTER OF

a claim for passing off and breach of the Fair Trading Act 1986

BETWEEN

PURE DEW WATER COMPANY LIMITED

Plaintiff

AND

PANTRANZ LIMITED

First Defendant

ORAWAI LIMITED

Second Defendant

KYLE WILLIAM PANIORA and SELINA ALICIA PANIORA

Third Defendants

On the papers
Counsel:	P J Napier for the Plaintiff A C Elia for the Defendants
Judgment:	22 December 2022

JUDGMENT OF VAN BOHEMEN J

[on applications for orders under Contempt of Court Act 2019 and costs]

This judgment was delivered by me on 22 December at 4.00pm, pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar Date: ………………………….

Solicitors/Counsel:

Keegan Alexander, Auckland Brookfields Lawyers, Auckland

PURE DEW WATER COMPANY LTD v PANTRANZ LTD [2022] NZHC 3572 [22 December 2022]

Background

[1]    Pure Dew Water Co Ltd (Pure Dew) alleges that PanTranz Ltd, a company with which Pure Dew had an agreement for the distribution of Pure Dew water, and Orawai Ltd, a company now selling its own water to customers formerly supplied with Pure Dew water by PanTranz, have engaged in passing off, breached the Fair Trading Act 1986 and breached PanTranz’s distribution agreement with Pure Dew. Pure Dew is operated by Belinda and Anthony Gillion. PanTranz and Orawai are operated by Kyle and Selina Paniora.

[2]    The proceeding was commenced in May 2022. Although a substantive hearing date has yet to be set down, the proceeding has been the subject of two judgments following hearings on 4 August 2022 (First Judgment) and 5  October  2022  (Second Judgment).1 I have also issued a minute following a hearing on 14 October 2022 of an application by Pure Dew for orders for contempt of court and to vary an order made in the First Judgment.2 At that hearing, I also heard submissions on costs, including a submission by counsel for Pure Dew that indemnity or increased costs should be awarded against the defendants, either in addition to or instead of the contempt orders sought.

Orders and relevant findings to date

[3]In the First Judgment, I made orders requiring:3

(a)PanTranz to provide Pure Dew a list of all customers to which it supplied any water products in its capacity as a Pure Dew distributor in the three months prior to 21 April 2022 (the Customer List Order); and

(b)All defendants (PanTranz, Orawai, Kyle Paniora and Selina Paniora) to deliver up to Pure Dew all Pure Dew bottles in their possession obtained by PanTranz in its capacity as a Pure Dew distributor (the Bottle Order).

1      Pure Dew Water Co Ltd v Pantranz Ltd [2022] NZHC 2027 [First Judgment] and Pure Dew Water Co Ltd v Pantranz Ltd [2022] NZHC 2597 [Second Judgment].

2      Pure Dew Water Co Ltd v Pantranz Ltd HC Auckland, CIV 2022-404-000784, 14 October 2022 (Minute of van Bohemen J).

3 First Judgment, above n 1, at [95].

[4]    The Bottle Order followed a finding that the case for Pure Dew ownership of the bottles was stronger than that advanced by the defendants for ownership of the bottles by PanTranz. 4

[5]In the Second Judgment, I found that:5

(a)PanTranz had not complied with the Customer List Order and that, subject to a review of further material provided by Mr Paniora just before the hearing on 5 October 2022, the requirements for finding PanTranz in contempt of court in respect of the Customer List Order had been satisfied;

(b)The defendants had not complied initially with the Bottle Order but because Mr Paniora had undertaken to comply with, and had apparently been complying with, the Bottle Order, the requirements for finding the defendants in contempt of court in respect of the Bottle Order had not been satisfied; and

(c)There was no need to vary the Customer List Order for Pure Dew to be able to provide customers with a copy of my first judgment.

[6]    As recorded in the Second Judgment, it appeared from an affidavit sworn by Ms Gillion that bottles originally purchased by Pure Dew could be identified because they were branded “Aquatek” or “Aqua Products” on the base and were stamped with dates of manufacture before 2020.6 I also recorded that Mr Paniora had not known that bottles branded “Aquatek” or “Aqua Products” were Pure Dew bottles and acknowledged that, had he known that, it would have been easier to identify and return the Pure Dew bottles.7 I considered it curious Mr Paniora had not understood the significance of the “Aquatek” and “Aqua Products” branding but accepted he had undertaken to comply with his obligations under the Bottle Order and had generally

4 At [90].

5      Second Judgment, above n 1, at [72], [77], [80] and [84].

6 At [29].

7 At [30].

been complying with them once he understood how to distinguish Pure Dew bottles from other bottles used by Orawai.8

[7]In my minute of 14 October 2022, I recorded that:9

(a)Following Pure Dew’s acceptance that there had been compliance with the Customer List Order, there was no longer a basis for a contempt order in relation to that Order;

(b)Following the filing of further evidence and submissions, I would decide on the papers:

(i)whether any contempt order should be made in relation to the Bottle Order; and

(ii)costs on the applications for contempt and variation orders.

Further evidence and submissions

[8]In accordance with timetable orders in the minute:

(a)Mr Paniora has filed a further updating affidavit concerning the identification and differentiation of bottles purchased by Orawai and Pure Dew and the steps taken to give effect to the Bottle Order.

(b)Ms Gillion has filed a further updating affidavit taking issue with aspects of Mr Paniora’s affidavit and setting out why Pure Dew considers the defendants have not complied with the Bottle Order.  Ms Gillion also gives evidence of intimidating behaviour by Orawai staff.

8      At [74] and [77].

9      CIV-2022-404-000784 HC Auckland, 14 October 2022 (Minute of van Bohemen J),

(c)Counsel for the defendants and for Pure Dew have filed submissions on whether contempt orders should be made with respect to the Bottle Order and on Pure Dew’s application for indemnity or increased costs.10

The evidence

[9]    In an affidavit sworn on 20 October 2022, Mr Paniora says that, between February and October 2022, PanTranz and Orawai purchased over 450 bottles from two different suppliers. He exhibits copies of invoices made out to PanTranz and Orawai as proof of purchase. The invoices, from Taylor Purification Ltd and Spring Water Solutions Ltd, show bottles purchased at unit prices ranging from $17.00 + GST to $24.00 + GST.

[10]   Mr Paniora says he has become aware that some bottles purchased by Orawai are themselves branded “Aqua Products”. He exhibits an email from Spring Water Solutions Ltd and a photograph, labelled E1, showing “Aqua Products” on the base of a bottle which, he says, support that position. He says 130 bottles purchased from Spring Water Solutions in March and April 2022 bear the “Aqua Products” brand. He also says there is no date stamp on those bottles.

[11]   Mr Paniora describes factors he has been taking into consideration when deciding whether a bottle is an Orawai bottle or a Pure Dew bottle, including whether there is a date stamp. He says that, in order to simplify the process of distinguishing between Pure Dew and Orawai bottles, he has decided to engrave the word “Orawai” on all bottles he is confident are Orawai bottles. He says he will return to Pure Dew all bottles that he is not confident are Orawai bottles and should not be engraved.   Mr Paniora says he has engraved 30 bottles to date and exhibits, as Exhibit I, a photograph of an engraved bottle.

[12]   Mr Paniora says he anticipates it may be difficult to distinguish between Orawai and Pure Dew owned bottles that are branded “Aqua Products” if the condition and age of the bottle are not immediately obvious. He proposes two possible solutions.

10     Counsel for Pure Dew had already filed a first set of submissions on costs prior to the hearing on 14 October 2022

Either he engraves “Orawai” on 130 of the newest looking Aqua Products bottles and returns the rest to Pure Dew, or he and Ms Gillion work together to agree on which bottles are Orawai’s and he will return the rest.

[13]   Mr Paniora denies he has intentionally refilled any bottles belonging to Pure Dew since 22 September 2022 when he became aware of the significance of the “Aquatek” and “Aqua Products” branding. He also asserts that, because of their age and condition, the bottles in the photographs at Exhibits A to C of Ms Gillion’s affidavit of 13 October 2022 are Orawai bottles and not Pure Dew bottles as contended by Ms Gillion. He also says that the process of distinguishing between Orawai and Pure Dew bottles would have been easier if Pure Dew had provided information on the number of Pure Dew bottles retrieved directly from customers. He says, however, that he has returned 68 Pure Dew bottles to Pure Dew and will return more as he identifies them.

[14]    In a reply affidavit sworn on 17 November 2022, Ms Gillion says Mr Paniora is wrong in a number of important respects. She says all of the different types of water bottles in circulation have manufacturing date stamps on their base. In Exhibit C to her affidavit, Ms Gillion provides photographs of six different types of bottles, being Aquatek, Aqua Products, Greif, Big Spring Water (or BSW) and standard and tall Spring Water Solutions. Although the stamps vary from manufacturer to manufacturer, in every case a bottle bears a date stamp on its base.

[15]   Ms Gillion says that Mr and Mrs Paniora have been working in the bottled water industry since at least 2016 and are familiar with Aquatek and Aqua Products bottles. Ms Gillion says she is confident they know where to find the date stamps on those bottles and notes that dates stamps are shown on the bottles in photographs exhibited to Mr Paniora’s most recent affidavit. Ms Gillion also purports to give evidence of conversations between Mr Paniora and Mr Gillion concerning damaged and leaking bottles when, Ms Gillion says, they looked at the manufacturing dates on the bottles to determine the age of the bottles.

[16]   Ms Gillion says the date stamps are important to the determination of the defendants’ compliance with the Bottle Order and notes that Pure Dew’s solicitors

wrote to the defendants’ solicitors on 25 August 2022 advising that the defendants would have complied with the Bottle Order if they returned all bottles with a date stamp of 2021 or before.

[17]   Ms Gillion also says Mr Paniora’s assertion that bottles in photographs exhibited to her earlier affidavit are Orawai bottles and not Pure Dew bottles is clearly wrong. The photographs themselves show date stamps establishing the bottles were manufactured before 2019.   She also says that 27 of the 68 bottles returned by      Mr Paniora to Pure Dew were damaged and unusable. She says a rejection rate of about 40 per cent is not normal.

[18]   Ms Gillion gives further examples of Orawai branded bottles she has found with former Pure Dew customers and which had dates stamps of before 2021 and “Best Before” dates indicating they were filled by Orawai in August, September and October 2022. Ms Gillion exhibits photographs of most of those bottles at Exhibits F to K of her affidavit. The “Aqua Products” brand, date stamps and “Best Before” dates are visible in the photographs. Ms Gillion acknowledges she also found some Spring Water Solutions bottles which, she accepts, belong to Orawai.

[19]   Ms Gillion says Pure Dew’s supply of bottles is under pressure and it is imperative that Orawai return Pure Dew’s bottles so they can service their customers efficiently.

[20]   Ms Gillion also provides an account and a video clip of an incident in which her vehicle was blocked in by an Orawai vehicle when she was visiting a former Pure Dew customer. One occupant of the Orawai vehicle was wearing Orawai-branded clothing. The other person in the vehicle was not wearing Orawai-branded clothing but engaged in threatening and abusive behaviour until directed to leave by the person in Orawai clothing. The latter person was on the telephone most of the time.

[21]Mr Paniora has not replied to Ms Gillion’s affidavit.

Submissions of counsel for Pure Dew

[22]   In his memorandum dated 13 October 2022 Mr Napier, counsel for Pure Dew, submitted that indemnity costs should be ordered because:

(a)PanTranz’s initial compliance with the Customer List Order was manifestly deficient, excuses given for the non-compliance were false and the evidence demonstrated that Mr Paniora had deliberately excluded high value customers from the second customer list produced to frustrate the Order; and

(b)The defendants had initially failed to comply with the Bottle Order while asserting that they had complied and that, even when they had taken steps to comply, they had continued to reuse bottles they knew to be Pure Dew bottles.

[23]   Mr Napier submitted that the present situation is comparable to that in Kang v Yu where Nicholson J held that ordering payment of solicitor-client costs can be appropriate in respect of litigation arising from breaches of an interim injunction.11 Nicholson J awarded both indemnity costs and imposed a fine of $1,000 for contempt of court.12 Mr Napier also referred to NeuronZ v Tran, in which Williams J observed that an award of solicitor-client costs was appropriate in circumstances involving a deliberate breach of an Anton Piller order.13

[24]   Mr Napier also submitted that, although I held that the Customer List Order did not need to be varied for Pure Dew to be able to provide customers with a copy of my First Judgment, the application to vary the Customer List Order was properly made and should be dealt together with the application for contempt orders for costs purposes. He also said it would be difficult to separate out the costs incurred in relation to the variation application from the costs incurred on the contempt application.

11     Kang v Yu (1999) 13 PRNZ 380 (HC) at 384.

12     At 385-6.

13     NeuronZ v Tran HC Auckland CP623-SW01, 14 May 2002 at [155].

Submissions of counsel for the defendants

[25]   In her memorandum dated 21 October 2022, Ms Elia, counsel for the defendants, submits that, in the light of my findings in the Second Judgment, and given that, as set out on Mr Paniora’s affidavit of 20 October 2022, there have been no further breaches of the Bottle Order, an award of scale costs is sufficient. She says the defendants strongly oppose Pure Dew’s application for indemnity costs. She also submits that, following my finding that the application to vary the Customer List order was unnecessary, the defendants should be awarded costs on that application.

[26]   Ms Elia submits that PanTranz’s initial delays in complying with the Customer List Order were the result of PanTranz having only an electronic “native format” document with a current list of customers and contact details and not an historic list as was required by the terms of the Customer List Order. In any event, the Court has accepted that the Customer List Order has now been complied with.

[27]   With respect to the Bottle Order, Ms Elia says that Mr Paniora’s affidavit of 20 October 2022 confirms that Orawai has purchased its own “Aqua Products” branded bottles and is confident that, because the age and condition of those bottles, the bottles it is continuing to use are its bottles. On this basis, Ms Elia submits that the Court’s initial finding that the grounds for contempt had not been made out should remain.

[28]   On Pure Dew’s application for indemnity costs, Ms Elia submits that the present circumstances are very different from those in Kang v Yu and those in NeuronZ v Tran. In Kang v Yu, Nicholson J had found the defendant had acted “vindictively and unreasonably throughout” and had “a personal wish to hurt the plaintiff, to make things as difficult as possible for him and drive him from the premises.”14 In NeuronZ v Tran, Williams J considered the defendant had engaged in a conscious and consistent attempt to frustrate the execution of the Anton Piller order.15

14     Kang v Yu, above n 11, at 385.

15     NeuronZ v Tran, above n 13 at [141].

[29]   Ms Elia submits that the defendants’ conduct in the current proceeding cannot be perceived as deceitful, vindictive or unreasonable. She submits that PanTranz made a good faith attempt to comply with the Customer List Order in a timely fashion and took steps to remedy its non-compliance when it was found to have fallen short.

[30]   Ms Elia says the defendants’ conduct was not “flagrant” or “exceptionally bad” in the terms discussed by the Court of Appeal in Bradbury v Westpac Banking Corp Group,16 and does not warrant an order for indemnity costs. Ms Elia also refers to the decision of Lang J in Huakiwi Copenhagen Lot 4 Orchard Ltd v Te Moana where an uplift on scale costs was ordered instead of indemnity costs in relation to breaches of interim orders.17

[31]   Ms Elia submits that because compliance with the Customer List Order has been achieved and no contempt established with respect to the Bottle Order, an order for indemnity or increased costs is not appropriate.

[32]   Ms Elia submits that costs should be limited to scale costs calculated in accordance with r 14.2 of the High Court Rules 2016. Ms Elia has provided her own calculation of Pure Dew’s scale costs. These total $11,233.00 plus disbursements of

$200 for the Court filing fee.

[33]   Ms Elia further submits that, if the defendants should be held to be in contempt, any uplift should be limited to 50 per cent of scale costs, consistently with the Court of Appeal’s decision in Holdfast NZ Ltd v Selleys Pty Ltd.18

[34]   Ms Elia submits that, because I held the application to vary the Customer List Order to be unnecessary, the defendants are entitled to scale costs on that application. Ms Elia has calculated those costs as totalling $5,616.50 plus disbursements of $110 for the Court filing fee. Ms Elia submits further that, because Pure Dew did not an accept an offer made “without prejudice save as to costs” to resolve the application by agreeing mutual “non disparagement” orders, the defendants are entitled to an uplift of 50 per cent on scale costs on the variation application.

16     Bradbury v Westpac Banking Corp [2009] NZCA 234, [2009] 3 NZLR 400 at [27]

17     Huakiwi Copenhagen Lot 4 Orchard Ltd v Te Moana [2019] NZHC 1582.

18     Holdfast NZ Ltd v Selleys Pty Ltd (2005) 17 PRNZ 897.

Further submissions of counsel for Pure Dew

[35]   In reply submissions dated 21 November 2022, Mr Napier submits that Pure Dew was the overall successful party in the applications for orders for contempt and the application to vary the Customer List Order.

[36]   Mr Napier submits that Ms Gillion’s affidavit establishes that the defendants have continued to act in contempt of the Bottle Order. In particular, in supplying Orawai water to customers after 22 September 2022, the date Mr Paniora admits he became aware of the significance of the “Aquatek” and “Aqua Products” branding, Orawai has continued to use Pure Dew bottles. The  bottles  are  branded  with “Aqua Products” and have date stamps that clearly establish they were manufactured before 2021. Mr Napier says the time for giving the defendants the benefit of the doubt on the issue of contempt has long passed.

[37]   On costs, Mr Napier says the defendants’ initial response to the Customer List Order was to provide a woefully inadequate first customer list. They had continued to frustrate the Order after the contempt application had been filed by providing a materially deficient second customer list. Pure Dew was put to the time and expense of pursing its remedies in Court while the defendants continued to assert that they had complied with the Order. It was only on the day before the hearing on 5 October 2022 that the defendants provided the customer run sheets that were later considered to have complied with the Order.

[38]   Mr Napier says Pure Dew maintains its application for indemnity costs based on the defendants’ breaches of the Customer List Order and the Bottle Order. He submits that the decision in Huakiwi Copenhagen Lot 4 Orchard Ltd dealt with a very different set of circumstances.

[39]   He says Pure Dew was not seeking a non-disparagement order as offered by the defendants; it wanted to be able to provide a copy of the First Judgment to customers. He says further that a non-disparagement order would not have rectified the damage caused by the defendants’ false statements to customers. He notes that the defendants had opposed the variation application because they did not want the First Judgement distributed. In that respect, they were the unsuccessful party. The

consequence of the Second Judgment was that the First Judgment could be provided to customers.

[40]   In a memorandum dated 21 November 2021, Mr Napier says Pure Dew seeks payment of $71,400.67 by way of indemnity costs incurred in seeking to uphold the Customer List and Bottle Orders and attaches copies of four invoices by Pure Dew’s solicitors as evidence. Mr Napier explains which entries in the invoices are not claimed, because they relate to an earlier stage in the proceeding or to the recovery of costs. The time entries for which costs are claimed include time spent on the variation application.

Analysis

[41]The following questions require decisions:

(a)Have the defendants complied with the Bottle Order?

(b)If the defendants have not complied with the Bottle Order, should an order for contempt of court be made?

(c)Should the Court order indemnity or increased costs against the defendants?

(d)What costs order should be made?

[42]   The following analysis does not into consideration the incident described by Ms Gillion and shown in the video clip. While that incident is regrettable and reflects no credit on Orawai, it is not relevant to these questions.

Have the defendants complied with the Bottle Order?

[43]   On the evidence of Mr Paniora’s own recent affidavit, it is plain that Orawai is continuing to use Pure Dew bottles in the delivery of its water despite Mr Paniora’s statement in that affidavit denying that he has intentionally filled any bottles that belong to Pure Dew since 22 September 2022.

[44]   The defendants do not dispute that bottles branded “Aquatek” or “Aqua Products” and manufactured before 2021 must be Pure Dew bottles – that is, bottles PanTranz obtained from Pure Dew when delivering Pure Dew water. Orawai came into existence in 2022 and purchased its Aqua Products bottles from Spring Water Solutions in March and April 2022. It is unlikely, therefore, that those bottles were manufactured later than 2021.

[45]   It is apparent from the photographs exhibited by Ms Gillion and by Mr Paniora that, in the case of Aqua Products bottles, the date stamp comprises two circles with numbers around their circumferences. In one case, the numbers are 1 to 12. In the other case, the numbers run in a sequence such as 15, 16, 17, 18, 19, 20. Inside each circle, an arrow points to a number on the circumference. It is clear the two circles represent the months and years of manufacture, with the arrows indicating the month and year a particular bottle was made.

[46]   Exhibits F to J of Ms Gillion’s affidavit of 17 November 2022 have photographs of Aqua Products bottles with date stamps showing the bottles were manufactured in October 2019 and September 2014 (Exhibit F); December 2015 (Exhibit G); August 2017 (Exhibit H); December 2015; May 2018, December 2018, August 2017, September 2014 and August 2017 (Exhibit I); and August 2017 (Exhibit J). In all of these cases, the bottles have “Best Before” dates in October 2023, indicating they were filled in October 2022. 19

[47]   Exhibit K of Ms Gillion’s affidavit dated 17 November 2022 has a photograph of an Aqua Products bottle with a date stamp showing the bottle was manufactured in December 2017. The bottle has a “Best Before” date of 3 November 2023, indicating it was filled in November 2022. The bottle has also been engraved with the word “Orawai”.

19 These dates align with those at [28] – [36] of Ms Gillion’s affidavit dated 17 November 2022. However, they have been verified independently from the relevant photographs, albeit with the assistance of a magnifying glass. The list excludes bottles with no apparent “Best Before” dates or with “Best Before” dates prior to October 2017. It also excludes reference to non “Aqua Products” branded bottles.

[48]    I infer from these photographs that, since 22 September 2022, Orawai has delivered Orawai water in Aqua Products bottles that were manufactured before 2021 despite Mr Paniora’s acceptance that bottles manufactured before 2021 are Pure Dew bottles and are to be returned to Pure Dew. It is plain, therefore, that Orawai and the other defendants have failed to comply with the Bottle Order.

[49]Accordingly, the answer question (a) is “No”.

Should an order for Contempt of Court be made?

[50]   In terms of s 16(3)(b) of the Contempt of Court Act 2019, and as set out in the Second Judgment,20 I am satisfied it has been proven beyond reasonable doubt that the Bottle Order was made in clear and unambiguous terms and is binding on the defendants, who had knowledge of its terms. The essential question is whether it has been proven beyond reasonable doubt that the defendants have “knowingly” failed to comply with the Bottle Order.

[51]   On that question, the evidence, as it related to Aqua Products bottles is equivocal. (There is no issue with Aquatek bottles. There is no suggestion Orawai purchased Aquatek bottles.)

[52]   It is clear from Mr Paniora’s affidavit of 20 October 2022, and from his affidavit of 4 October 2022, that Mr Paniora knew and accepted that Aqua Products bottles that had not been purchased by Orawai were presumed to be Pure Dew bottles and had to be returned to Pure Dew in accordance with the Bottle Order. It is less clear, however, whether Mr Paniora knew how to distinguish between Pure Dew Aqua Products bottles and Orawai Aqua Products bottles on the basis of the date stamps.

[53]    Ms Gillion says she is confident Mr Paniora and Ms Paniora know where to find the date stamps given their experience in the bottled water industry. That is a reasonable supposition, but it is not proof that Mr Paniora and Ms Paniora knew what the stamps on the base of the bottles were or how to interpret the stamps. Ms Gillion’s statement that Mr Gillion and Mr Paniora had looked at the manufacturing dates on

20     Second Judgment, above n 1, at [62] – [68].

bottles in their discussions about damaged and leaking damaged bottles is hearsay and inadmissible. It does not assist.

[54]   As discussed at [45], the date stamp on Aqua Products bottles comprises two circles with numbers and arrows. To the uninitiated, those markings may not convey any particular meaning. However, as Ms Gillion says, Mr Paniora has been in the bottled water industry since 2016. In addition, the date stamps on the Aqua Products bottles are similar to those on the Creiff, BSW and Spring Water Solutions bottles. Given Mr Paniora’s experience and that generality of practice, it would seem unlikely Mr Paniora would not know the meaning of the date stamps on the Aqua Products bottles. The significance of the dates of the bottes was also brought to his attention in the email of 25 August 2022 from Pure Dew’s solicitors to the defendants’ solicitors.

[55]   On the other hand, Mr Paniora has made a number of statements in this affidavit of 20 October 2022 that suggest he does not know what the stamps on the Aqua Products bottles mean.

[56]   First, he states that the Aqua Products bottles Orawai purchased from Spring Water Solutions do not have date stamps. That seems highly unlikely. Indeed, in Exhibit E to his affidavit, Mr Paniora produces photographs of three different types of bottles to illustrate the kinds of bottles distributed by Spring Water Solutions. Each bottle has a date stamp that uses numbered circles and arrows, including the standard bottle in photograph E1. So, on the one hand, Mr Paniora says the Aqua Products bottles purchased from Spring Water Solutions do not have date stamps. On the other hand, he produces photographs that show they do.

[57]   Secondly, the bottle in photograph E1, which Mr Paniora says is an example of the Aqua Products bottles purchased by Orawai, has a date stamp showing it was manufactured in May 2018. It is unlikely, therefore, it was one of the bottles purchased by Orawai in 2022. It is more likely to be a Pure Dew bottle. Its inclusion contradicts one of the points Mr Paniora was trying to make – namely that Orawai has bought Aqua Products bottles that he can distinguish from the Pure Dew Aqua Products bottles. This suggests Mr Paniora really did not know what the date stamp was.

[58]   Thirdly, the bottle at Exhibit I of Mr Paniora’s affidavit, which Mr Paniora engraved with the word “Orawai”, has a date stamp of August 2017. Yet Mr Paniora says he had clearly identified that bottle as being an Orawai bottle. It is not an Orawai bottle. As Ms Gillion says, it is a Pure Dew bottle. In terms of the Bottle Order, it should have been returned to Pure Dew. This further suggests Mr Paniora does not know what the date stamp was.

[59]   Fourthly, the bottles in the photographs in Exhibits A and B of Ms Gillion’s affidavit of 13 October 2022, which Mr Gillion says are Orawai bottles because of their age and condition, are clearly not Orawai bottles. They have date stamps indicating the bottles were manufactured in October 2019, February 2017, September 2016, and February 2017 (Exhibit A) and in December 2015, December 2018,

December 2016, and September 2014 (Exhibit B).21

[60]   These four examples illustrate that Mr Paniora either genuinely does not know what the date stamps mean, or he has deliberately chosen to pretend to the Court that he does not know the meaning of the date stamps. I do not exclude the latter possibility. However, in the context of an application considered on the basis of affidavit evidence and in the absence of cross-examination, I cannot be sure. Accordingly, I am left with a reasonable doubt that Mr Paniora, and therefore the defendants collectively, knew these bottles were manufactured before 2021 and “knowingly” failed to comply with the Bottle Order.

[61]   For these reasons, I have concluded I should not make an order under s 16 of the Contempt of Court Act.

Should the Court order indemnity or increased costs against the defendants?

[62]As Lang J succinctly said in Huakiwi:22

[13]      Although matters relating to costs remain at the discretion of the Court, the Court must exercise its discretion on a principled basis. To the forefront of these is the principle that the unsuccessful party must pay costs to the successful party.

21     Exhibit C does not show date stamps on the bottles photographed.

22     Huakiwi Copenhagen Lot 4 Orchard Ltd v Te Moana, above n 18 (footnotes omitted).

[14]      In Bradbury v Westpac Banking Corporation the Court of Appeal summarised the distinction between standard scale costs, increased costs and indemnity costs as follows:

(a)Standard scale costs apply by default where cause has not been shown to depart from the scale;

(b)Increased costs may be ordered where there is failure by the paying party to act reasonably;

(c)Indemnity costs may be ordered where that party has behaved either badly or very unreasonably.

[15]      Rule 14.6(4) provides that the Court may order a party to pay indemnity costs if the party has “ignored or disobeyed orders or directions of the Court”. To justify an order for indemnity costs the misconduct must be “flagrant” and, as such, indemnity costs are to be “exceptional and require exceptionally bad behaviour.”

[16]      Where the breach of a court order constitutes contempt of court, it will often justify indemnity costs being awarded against that individual. Contempt of court will be evident where the terms of the court order were clear, unambiguous and binding on the party, and the party deliberately acted in breach of those terms after having received proper notice of them (normally as a result of personal service).

[63]   Because I have not found the defendants to have been in contempt of court in terms of the requirements of s 16 of the Contempt of Court Act, to justify an order for indemnity costs, I must be satisfied the defendants’ conduct was “flagrant” and constituted “exceptionally bad behaviour”. While I consider the defendants’ conduct to have been slow and foolish, I am not satisfied it was flagrant or exceptionally bad.

[64]   I do not consider that I have sufficient basis to conclude Mr Paniora and the other defendants have behaved “vindictively and unreasonably throughout” or have been driven by a personal desire to hurt or make things as difficult as possible for Pure Dew. Nor am I satisfied that Mr Paniora has engaged in a conscious and consistent attempt to frustrate the execution of the Bottle Order.

[65]   For these reasons, I do not order the defendants to pay Pure Dew’s costs on an indemnity basis.

[66]   However, I am satisfied that PanTranz behaved slowly and unreasonably in its initial response to the Customer List Order. I am also satisfied that Mr Paniora and the other defendants acted slowly and unreasonably in responding to the Bottle Order.

I also consider they behaved unreasonably in opposing Pure Dew’s application for the Variation Order. While I held that no order was necessary, there is no doubt that the application for the order was properly made and that the defendants were the unsuccessful party because they sought to prevent customers being provided with copies of the First Judgment. I am satisfied that, in all these respects, the defendants put Pure Dew to considerable costs that would not have been incurred if they had acted reasonably and expeditiously.

[67]   For these reasons, I consider Pure Dew is entitled to an uplift of 75 per cent on scale costs.

What costs order should be made?

[68]   Because Mr Napier has not provided an analysis of scale costs, and because he has not commented on Ms Elia’s analysis of scale costs, I direct counsel to agree on scale costs and to apply a 75 per cent uplift to that figure. That process should not require further intervention from the Court.

Result

[69]   I decline to make contempt of court orders against the defendants but order the defendants to pay Pure Dew’s costs of enforcing the Customer List Order and the Bottle Order, including the costs incurred in applying to vary the Customer List Order, on a 2B basis with an uplift of 75 per cent.

Postscript

[70] As noted at [4] above, the Bottle Order followed a finding in the First Judgment that the case for Pure Dew ownership of the bottles was stronger than that advanced for PanTranz ownership of the bottles. That finding was based principally on an invoice put in evidence by Ms Paniora that showed per unit deductions and credits of

$19.13 for “Bottle deposits” when PanTranz purchased water from Pure Dew.23  Those

figures were exclusive of GST.  Given the use of the term “Bottle deposits”, I was not

23 At [90].

persuaded by the evidence of Ms Paniora that PanTranz believed they purchased both bottles and water when collecting supplies from Pure Dew.

[71]   It is now apparent from the invoices of purchases of bottles by PanTranz and Orawai from Taylor Purification Ltd and Spring Water Solutions Ltd that the current price of new bottles ranges from between $17.00 to $24.00, exclusive of GST.

[72]   Had the  invoices  of those purchases  been  in  evidence  at  the hearing  on  4 August 2022, as they could have been, the Bottle Order may not have been made. If new bottles cost between $17.00 to $24.00 in 2022, there must be a question whether the sum of $19.33 that were deducted and credited each time a bottle was taken from and returned to Pure Dew was truly a deposit or represented the price of sale and repurchase of the bottle that had initially been purchased by Pure Dew prior to 2021. Therefore, the case for Pure Dew ownership of the bottles and the balance of convenience in making or not making the Bottle Order would have been more finely balanced than I had appreciated in August.

[73]   The ownership of the bottles can be determined only at the substantive hearing. Considerations other than sum paid by PanTranz when uplifting full bottles from Pure Dew are likely to be relevant, including the price Pure Dew paid when purchasing the bottles initially and who bore the loss for damaged bottles.

[74]   In the meantime, the Bottle Order stands and, absent an application for variation by the defendants, it continues to apply. However, given the question over the issue of ultimate ownership of the bottles, the parties may wish to consider the merits of spending further energy and cost over enforcement of its terms. They may also wish to take into account the financial accounting that may have to be made once ownership of the bottles has been determined.

G J van Bohemen J