Redcoats Limited v Day

[2023] NZHC 2152

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE

CIV-2023-485-000188

[2023] NZHC 2152

BETWEEN

REDCOATS LIMITED

Plaintiff

AND

CHRISTOPHER DAY

Defendant

AND

ANDCO REALTY LIMITED

Second Defendant

Hearing:	24 May 2023
Appearances:	D G Dewar and J Pietras for Plaintiff S Iorns and J Sylvester for Defendants
Judgment:	16 June 2023
Costs Judgment:	11 August 2023

JUDGMENT OF CULL J

[On Costs]

[1]    By judgment dated 16 June 2023,1 I declined an application by Mr Day and Andco Realty Limited (Andco), the defendants, to set aside the interim injunction obtained by Redcoats Limited (Redcoats), the plaintiff, restraining Mr Day from undertaking any private business or employment that competes with Redcoats within a 15 kilometre radius of Redcoats’ business premises for a period of three months.2 The interim order also restrained Andco, Mr Day’s intended employer, from employing Mr Day in any capacity to undertake work that competes with Redcoats.

1      Redcoats Limited v Day [2023] NZHC 1502.

2      Redcoats Limited v Day [2023] NZHC 1037.

REDCOATS LTD v DAY and ANDCO REALTY LTD [Costs] [2023] NZHC 2152 [11 August 2023]

[2]    I declined to set aside the interim injunction on the basis that there remained a serious question to be tried as to the reasonableness and enforceability of the restraint of trade clause. I concluded that the balance of convenience and overall justice of the case favoured the plaintiffs, and accordingly upheld the interim injunction. I directed that in the event the parties could not agree on costs, they were to file memoranda. Therein the plaintiff states that the interim relief granted to the plaintiff has effectively concluded the case.

[3]    The plaintiff seeks costs on a 2B basis and asks the Court to consider awarding increased costs under r 14.6 of the High Court Rules 2016. They submit that the costs award should reflect an uplift of 20% because of the egregious nature of the defendants’ breach of the plaintiff’s rights.

[4]    The defendants do not dispute conventional scale costs on a 2B basis. However, the defendants take issue with the plaintiff’s scale calculation which includes provision for second counsel, and provision for two applications for injunctive relief, one ex parte and one on notice.

[5]I consider the issues in the following order:

(a)  The disputed aspects of the plaintiff’s calculation of 2B scale costs.

(b) Whether increased costs are appropriate.

Scale Costs

[6]    I consider that these proceedings were of average complexity and that the reasonable time for the steps in this proceeding is a normal time.3 Costs are a matter of the Court’s discretion, and I am of the view that the appropriate scale is 2B for costs in this proceeding.4

3      High Court Rules 2016, rr 14.3 and 14.5.

4      Rule 14.1. I note also the Court’s power to recategorise proceedings under r 14.3(2).

Second Counsel

[7]The plaintiff appended a costs schedule to their memorandum which allocated

0.25 days to second counsel. The plaintiff made no submissions as to the allowance for second counsel, and leave was not sought for second counsel. I am in agreement with the defendants that this was not a proceeding of particular complexity or significance where special assistance from second counsel would have been necessary. An amended costs schedule, removing provision for second counsel, is appended to this judgment as Schedule 1.

Duplication of applications

[8]    The plaintiff allocated 0.6 days to an “Ex Parte Application” and 0.6 days to an “Interlocutory Application On Notice”. The defendants note that both applications sought identical relief and constitute an unnecessary duplication in the plaintiff’s schedule. I accept the defendants’ contention, and reduce the allocation by 0.6 in Schedule 1.

Increased costs

[9]    The plaintiff seeks increased costs by way of a 20% uplift to reflect the defendants’ “egregious actions” and the unreasonable position taken by the defendants in the litigation, on the basis that:

(a)  the defendants acted with full knowledge of the contractual right being infringed, and it is “inconceivable” that the first defendant acted on legal advice that the restraint could be ignored;

(b) the defendants disregarded the plaintiff’s right for commercial gain; and

(c)  the second defendant was acting to defeat the contractual right of a competitor, which is one it holds itself in respect of its own business.

[10]   Increased costs may be awarded in a range of situations including where the party opposing costs has contributed unnecessarily to the time or expense of the

proceeding or step in it by acting unreasonably in the course of the proceedings or pursuing an unnecessary step or argument that lacks merit.5 The onus here is on the plaintiffs to persuade the court that the claimed increased cost award is justified.6 The focus of the inquiry is on the actions of the paying party in the litigation and whether they were reasonable.7

[11]   I am not persuaded that the actions of the defendants in these proceedings were unreasonable, such that increased costs should be awarded. There was an attempt by the defendants to resolve issues. They did receive legal advice and held beliefs, wrongly, in the merits of their position. They were ultimately proved wrong but they were entitled to have their position tested. Costs must follow the event but the facts here do not justify increased costs, in my view.

[12]   2B Costs is the appropriate scale for costs in this case. The application for increased costs are declined.

Result

[13]   The defendants, jointly and severally, are ordered to pay to the plaintiff costs on a 2B basis in the amount of $16,491 plus disbursements in the amount of $1,870.00.

Cull J

Solicitors:

Thomas Dewar Sziranyi Letts, Lower Hutt for Plaintiff Upper Hutt Law, Upper Hutt for Defendants

5      Rule 14.6.

6      Strachan v Benbigh Property Ltd HC Palmerston North CIV-2010-454-232, 3 June 2011, at [27].

7      Bradbury v Westpac Banking Corp [2009] 3 NZLR 400, (2009) 19 PRNZ 385 (CA) at [27].

Schedule 1

Step	Allocation	Cost calculation
1 – Commencement of proceeding by plaintiff	3	$7,170
22 – Filing interlocutory application	0.6	$1,434
25 – Preparation of bundle for hearing	0.6	$1,434
24 – Preparation of written submissions	1.5	$3,585
26 – Appearance at hearing of defended application	0.5	$1,195
29 – Sealing judgment	0.2	$478
40 – Preparation of costs memorandum	0.5	$1,195
TOTAL	6.9	$16,491

Scale Costs

Disbursements

Disbursement description	Costs
Filing fee	$1,750.00
Reasonable disbursements	$120.00
TOTAL	$1,870.00