Red Bull New Zealand Ltd v Drink Red Ltd
[2016] NZHC 1473
•30 June 2016
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV-2015-404-1033 [2016] NZHC 1473
UNDER Trade Marks Act 2002 AND UNDER
Fair Trading Act 1986
BETWEEN
RED BULL NEW ZEALAND LTD First Plaintiff
RED BULL GmbH Second Plaintiff
AND
DRINK RED LTD First Defendant
DRINK RED (AUSTRALASIA) LTD Second Defendant
DRINK RED GLOBAL LTD Third Defendant
Hearing: (On the papers) Counsel:
A H Brown QC and S Wheeldon for Plaintiffs
P D M Johns for DefendantsJudgment:
30 June 2016
COSTS JUDGMENT OF BREWER J
This judgment was delivered by me on 30 June 2016 at 4:00 pm pursuant to Rule 11.5 High Court Rules.
Registrar/Deputy Registrar
Solicitors: Kensington Swan (Auckland) for Plaintiffs
Baldwins Law Ltd (Auckland) for Defendants
RED BULL NEW ZEALAND LTD v DRINK RED LTD [2016] NZHC 1473 [30 June 2016]
Introduction
[1] In my judgment delivered on 24 March 2016, I declined the plaintiffs’ application for an interim injunction preventing the defendants from trading their ready mixed vodka and energy products and their energy drink product.1
[2] This judgment deals with costs.
The issues
[3] The plaintiffs say the defendants should get reduced costs. They argue that the defendants contributed unnecessarily to the time and expense of the proceeding:
(a) by failing to comply with timetable orders; and
(b)by taking an unnecessary step in making and then abandoning an adjournment application.
[4] The defendants resist and seek the additional cost of having Ms Hutchison appear alongside Mr Johns as second counsel.
Failing to comply with timetable orders
[5] Pursuant to r 14.7(f)(i) of the High Court Rules, the Court may refuse to make an order for costs where the party claiming costs has contributed unnecessarily to the time or expense of the proceedings or a step in it by failing to comply with the High Court Rules or a direction of the Court.
[6] This rule and r 14.6(3)(b)(i), which permits the Court to increase costs for the same reasons, have been discussed in a number of cases. In Hall v Roderick, Mander J considered that the “persistent and unexplained failure” of a successful party to comply with clear and comprehensive time tabling orders should affect a
cost order.2 Justice Mander detailed five instances of non-compliance and noted that
there were also numerous delays associated with setting fixture dates, often
1 Because there are multiple plaintiffs and defendants I have found it easier to refer to “the plaintiffs” and “the defendants” rather than to the names of the parties.
2 Hall v Roderick [2015] NZHC 1560.
compounded by the successful party not getting back to registry staff to confirm proposed dates. Justice Mander held that the proceeding could have, and should have, been resolved much earlier and allowed a 50 per cent reduction in costs.
[7] Commissioner of Inland Revenue v Patel was a case where discovery had been delayed, which forced scheduled proceedings to be adjourned.3 Associate Judge Bell applied r 14.7(f)(i) because the defendant’s failure to comply with timetable directions meant the plaintiff could not get her case in order before the scheduled hearing.4
[8] In Curtis v Museum of Transport & Technology Society, Lang J discussed the failure of both parties to comply with timetable directions.5 He concluded that the level of default, however, was not of such magnitude that it should result in an award of increased costs for either party.
[9] Attfield v NZLF Ltd involved the unsuccessful party placing time constraints and pressure on the successful party by failing to comply with timetable directions.6
The failures forced counsel for the successful party to prepare two sets of submissions rather than the one that would have been sufficient had the unsuccessful party complied with the timetable. Associate Judge Osborne increased costs by
80 per cent, but the failure to comply with timetabling directions was just one factor amongst several justifying such a significant uplift.
[10] In Ma v Ming Shan Holdings Ltd, increased costs were awarded because of a failure to comply with timetable directions.7 This was a Court of Appeal decision so the High Court Rules did not apply, but the equivalent provision in the Court of Appeal (Civil) Rules 2005 is substantially the same. In that case, the appellants’ submissions were filed and served very late with no application for an extension of time being made beforehand. The lateness of the submissions meant that counsel for
the respondent was required to prepare, file and serve two sets of submissions in
3 Commissioner of Inland Revenue v Patel [2013] NZHC 477.
4 At [37].
5 Curtis v Museum of Transport & Technology Society HC Auckland CIV-2010-404-6476,
9 November 2011 at [9].
6 Attfield v NZLF Ltd [2016] NZHC 189 at [12] and [13].
7 Ma v Ming Shan Holdings Ltd [2010] NZCA 325.
anticipation of what the appellants might say, and another responding specifically, very close to the hearing date. The respondent was put to additional cost by the appellant’s timetable failures, justifying an award of increased costs.
[11] In my view, these cases illustrate the well-known point that the failure to comply must unnecessarily contribute to some actual and palpable increase in time or expense. Where the failure is persistent and unexplained, as in Hall, the Court may significantly reduce the award of costs otherwise available.
[12] Turning to the present case, the plaintiffs submit that the defendants contributed unnecessarily to the time and expense of the proceedings by failing to comply with timetable orders made by Duffy J on 16 December 2015. Those orders related to an extended timetable negotiated by the defendants and agreed to by the plaintiffs. The defendants were to file and serve their notices of opposition and any evidence in opposition by 5 February 2016. They were to file submissions by
25 February 2016.
[13] The defendants did not file a notice of opposition until 26 February 2016. They did not file any evidence until 29 February 2016. Neither had any submissions been filed by this time.
[14] The plaintiffs argue that, in failing to meet these timetable obligations, the defendants brought themselves within the ambit of r 14.7(f)(i) by contributing unnecessarily to the time required by the plaintiffs to prepare for the hearing. The argument is that the plaintiffs were unable to address the grounds of opposition and evidential matters in their submissions which they filed on 18 February 2016 in accordance with the agreed timetable. Instead, the plaintiffs’ further written submissions had to be prepared in a limited timeframe to respond to the defendants’ notice of opposition and evidence.
[15] In response, the defendants argue that r 14.7(f)(i) does not apply because:
(a) Any non-compliance was cured by the fact they were granted leave to oppose the injunction application out of time.
(b)They opposed the interim injunction on all available grounds and therefore it is difficult to see how the plaintiffs could have further tailored their submissions to a notice of opposition that had been filed on time.
(c) The relevant matters attested to in the defendants’ evidence were already known to the plaintiffs and the plaintiffs dealt with these in their original submissions. Any supplementary arguments could have been made orally.
[16] I do not accept the defendants’ argument that any non-compliance was cured by the fact that they were granted leave to oppose the interim injunction application out of time. Plainly, the defendants’ non-compliance meant that the plaintiffs had to file their submissions without due regard to any of the defendants’ evidence or notice of opposition. The fact the defendants were granted leave to oppose the application out of time did nothing to cure the timetabling non-compliance in this respect.
[17] There is some merit in the defendants’ second argument. The notice of opposition that was finally filed is, if anything, less detailed than the defendants’ statement of defence dated 22 June 2015 as far as the substantive issues are concerned. The notice of opposition does, however, outline the defendants’ argument as to the balance of convenience and the overall interests of justice whereas the statement of defence is silent on those issues.
[18] There is also merit in the defendants’ third argument. The supplementary arguments were minor and substantially the same as those advanced in the plaintiffs’ main submissions. Having said that, the defendants’ failure to comply with timetabling directions resulted in the plaintiffs having to review evidence and submissions after they had already filed their own.
[19] The plaintiffs submit that a 20 per cent reduction would be appropriate. In my view, this is excessive given that the defendants’ failures to comply with timetable directions resulted in only a minor increase in time and expense. The
hearing took place when it was scheduled to and the plaintiffs’ secondary
submissions added little to their main ones.
[20] I have decided that a 10 per cent reduction is appropriate.
Unnecessary step by making and then abandoning an adjournment application
[21] Pursuant to r 14.7(f)(ii), the Court may refuse to make an order for costs where the party claiming costs has contributed unnecessarily to the time or expense of the proceedings or a step in it by taking or pursuing an unnecessary step.
[22] On 29 February 2016, immediately prior to the hearing, the defendants filed an application to file out of time and to adjourn the hearing set down for 2 March
2016. On the morning of the hearing, the defendants withdrew their application to have the interim hearing adjourned.
[23] The plaintiffs argue that the application to file out of time necessitated the preparation and filing of a partial notice of opposition in relation to the adjournment application and an affidavit in support of that notice. The plaintiffs claim that the submissions prepared in opposing the adjournment application were complicated and time-consuming. The complexity of the submissions revolved around the waiver of privilege because one of the grounds raised in support of the adjournment involved the failure of the defendants’ former solicitors to oppose the interim injunction. The plaintiffs say they prepared an affidavit that squarely raised the waiver of privilege issue. In these circumstances, the plaintiffs say the defendants contributed unnecessarily to the time and expense of the proceedings for the plaintiffs.
[24] In response, the defendants argue that:
(a) The Court is only to determine costs in respect of the plaintiffs’ application for an interim injunction and not any costs associated with the defendants’ application for an adjournment.
(b)In any event, the application for an adjournment was not an unnecessary step because the plaintiffs had not signalled that they did not oppose the leave sought.
(c) Even if the step was unnecessary the increase in time and cost to the plaintiffs would have been minimal.
[25] I am unable to accept the defendants’ first argument. The application to adjourn the hearing was a step in the relevant proceedings. It was a step towards changing the date of the hearing. It is relevant to the Court’s determination of costs in respect of the plaintiffs’ application for an interim injunction.
[26] I note in passing that if the application for an adjournment is characterised as a separate proceeding then the defendants would ordinarily be liable for costs. As Duffy J said in Commissioner of Police v Burgess:8
It is a general principle in civil proceedings that when an application is abandoned or discontinued then unless the parties have resolved costs as between themselves, the party who brought the abandoned application pays costs.
[27] The defendants’ second argument is that their application for an adjournment was necessary until the plaintiffs made it clear they would not oppose the application for leave. The defendants say they perceived at the time that if leave were granted then justice would require time for the plaintiffs to file a reply. Counsel for the defendants (being very recently instructed) also thought that time would be needed for the plaintiffs to file written submissions, being unaware that the plaintiffs had already filed these. Had the plaintiffs advised promptly that they did not oppose the leave sought then, in the defendants’ submission, they would not have found it necessary to apply for an adjournment. This would have prevented the plaintiffs from needing to expend resources addressing an adjournment application.
[28] I fail to see how this argument assists the defendants. The plaintiffs were opposed to the adjournment irrespective of whether the defendants were granted
leave to file out of time. It is not for the defendants to pursue an adjournment for the
8 Commissioner of Police v Burgess [2016] NZHC 267 at [14]. See also r 15.23.
benefit of the plaintiffs. The fact that the plaintiffs were opposed to this course of action illustrates the flaw in the defendants’ argument. I do not think the defendants can avoid the application of r 14.7(f)(ii) on this basis.
[29] The third argument is that any increased time or expense would have been minimal. The defendants argue that the submissions said to have been prepared by the plaintiffs must have been drafted between service of the notice of the application which occurred on 1 March 2016 and the hearing on the morning of 2 March 2016. There is nothing in this point. The plaintiffs themselves acknowledge that the preparation of their notice of opposition and supporting affidavit took place solely on
1 March 2016. The question is whether costs should be reduced to take into account the time spent on those documents on that day.
[30] The plaintiffs say that costs should be reduced by the amount the plaintiffs would be entitled to on a scale costs basis for preparing their opposition to the
adjournment application:
Step Time
AllocationCosts
AllocationTotal
23
Filing opposition to interlocutory application
0.6
2B
$1,338
24
Preparation of written submissions for adjournment application
1.5
2B
$3,345
$4,683
[31] In my view, this kind of analysis distorts the extent of the increase in time and expense. The defendants would ordinarily be entitled to costs in the order of
$6,913 for successfully defending the application for an interim injunction. To reduce the costs award by the $4,683 contended for by the plaintiffs would greatly overcompensate the additional time and expense incurred in opposing the adjournment when viewed in the overall context of the application for an interim injunction. For example, the time allocation given to step 24 is 1.5 days, which
manifestly exceeds the actual time spent on the written submissions given they were necessarily prepared within one day.
[32] A modest reduction in costs, commensurate with the relatively minor increase in time or expense is appropriate. I fix this at $400.
Defendants’ entitlement to costs for second counsel
[33] The final issue is whether the defendants should be entitled to the costs of Ms Hutchinson appearing with Mr Johns as second counsel. The defendants say the hearing was conducted without the benefit of bundles or consolidated lists of authorities even though submissions and evidence were voluminous. As a result, Ms Hutchinson was required so that the Court could be referred quickly to the relevant pages of the submission and the evidence.
[34] The relevant law appears in schedule 3 to the High Court Rules. Item 27 provides that costs for second counsel can be given “if allowed by Court”. If the Court decides to allow costs for second counsel then those costs are to be 50 per cent of the costs allowed for the appearance of principal counsel.
[35] In OM Hardware Ltd v Body Corporate 303662, Dunningham J said:9
The last challenged claim … is for second and subsequent counsel if allowed by the Court. While I accept that it was not unreasonable to have second counsel on this sort of case, the focus, particularly in a 2B proceeding, is on whether second counsel was necessary rather than reasonable. For example, in Roading & Asphalt Limited v South Waikato District Council,10 Keane J considered that the decision to award of costs for second counsel turns on whether the hearing could have been conducted by principal counsel only. On that basis, I am satisfied that this case was neither sufficiently complex nor intensive to justify a costs allowance for second counsel.
[36] The question is therefore whether the defendants’ second counsel was necessary given the voluminous nature of the evidence. In my view, to paraphrase Dunningham J, the hearing was neither sufficiently complex nor intensive to make
necessary the presence of second counsel.
9 OM Hardware Ltd v Body Corporate 303662 [2015] NZHC 574 at [18].
10 Roading & Asphalt Ltd v South Waikato District Council [2012] NZHC 2243.
Orders
[37] I order that:
(a) The plaintiffs pay costs to the defendants on a 2B basis, reduced by
10 per cent.
(b) These costs are to be reduced by $400 as per [32].
(c) The defendants are not entitled to costs for second counsel.
Brewer J
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