Sealegs International Limited v Farr

[2020] NZHC 641

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2019-404-000823

[2020] NZHC 641

BETWEEN

SEALEGS INTERNATIONAL LIMITED

First Plaintiff

FUTURE MOBILITY SOLUTIONS LIMITED
Second Plaintiff

AND

WARREN FARR

First Defendant

STRYDA MARINE LIMITED
Second Defendant

STRYDA MARINE LIMITED PTY (QLD)

Third Defendant

YUN ZHANG

Fourth Defendant

Hearing:

[On the Papers]

Counsel:

B P Henry for the Plaintiffs

K McHaffie for the First and Third Defendants
P J K Spring for the Second and Fourth Defendants

Judgment:

31 March 2020

JUDGMENT OF EDWARDS J

[re Costs]

This judgment was delivered by me on 31 March 2020 at 4.00 pm pursuant to r 11.5 of the High Court Rules.

Deputy Registrar

SEALEGS INTERNATIONAL LTD v FARR [2020] NZHC 641 [31 March 2020]

[1]        The plaintiffs commenced proceedings in 2019 seeking summary judgment. The second and fourth defendants (defendants) applied to strike out the claims against them. On 18 December 2019, the plaintiffs filed a notice of discontinuance bringing this proceeding to an end. The question of costs remains extant.

[2]       The defendants seek indemnity costs on the basis that the “plaintiffs acted vexatiously, frivolously, improperly and unnecessarily in commencing and continuing this claim, including the summary judgment application”. The defendants say that the claim was:

(a)procedurally irregular;

(b)bereft of substantive merit and unlikely to succeed; and

(c)premature and unnecessary in any event.

[3]       The first two grounds invite the Court to engage with the substance of the proceeding and its merits. Whether the injunctive relief was in fact otiose, and whether there had been breaches that would ordinarily give rise to a claim for contempt requires an evaluative assessment of the plaintiffs’ claim. Similarly, the allegation that the claim was without merit because the plaintiffs provided no evidence of copyright infringement, and the evidence was based on conjecture, also requires the Court to consider the respective claims and potential defences.

[4]       These arguments are no doubt the same as those that would have been put forward in support of the defendants’ strike-out application. A hearing on that application was rendered unnecessary by the discontinuance. The Court should be cautious about delving into the substance and merits of a claim in circumstances where that claim has been discontinued before a substantive hearing has taken place.

[5]       In terms of the third ground, the defendants say that the proceeding was premature and unnecessary because it was entirely reliant on a High Court judgment in a related proceeding which was the subject of an appeal at the time the current proceedings were issued. The defendants say that the prudent course of action would

have been to defer any action until the final judgment in the related proceeding had been obtained.

[6]       I am not persuaded that commencing the proceedings in those circumstances was vexatious or so improper as to attract an award of indemnity costs. The plaintiffs were successful at first instance in the High Court. There was nothing preventing them from commencing other proceedings in reliance on a judgment in their favour.

[7]       Whether considered alone, or in total, I am not persuaded that any of these grounds reach the threshold for indemnity costs. It cannot be said that the plaintiffs have acted so badly or so unreasonably that indemnity costs may be warranted.

[8]       Accordingly, I award costs to the defendants on a schedule 2B basis plus reasonable disbursements as fixed by the Registrar.

Edwards J

Counsel:     B P Henry, Auckland

Solicitors:    Goodwin Turner, Auckland

A J Park Law Ltd, Wellington Keegan Alexander, Auckland