Siemens (NZ) Limited v Contact Energy Limited

[2016] NZHC 1837

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2016-404-1450 [2016] NZHC 1837

BETWEEN

SIEMENS (NZ) LIMITED

Applicant

AND

CONTACT ENERGY LIMITED Respondent

Hearing:	On the papers
Counsel:	S Fitzgerald and M Mabbett for Applicant S Bisley for Respondent
Judgment:	9 August 2016

JUDGMENT OF WHATA J AS TO COSTS

This judgment was delivered by me on 9 August 2016 at 4.00 pm, pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date: ………………………….

Solicitors:           Russell McVeagh, Auckland

Buddle Findlay, Wellington

SIEMENS (NZ) LIMITED v CONTACT ENERGY LIMITED [2016] NZHC 1837 [9 August 2016]

[1]      This judgment addresses the issue of costs as between Siemens (NZ) Limited

(Siemens) and Contact Energy Limited (Contact).  Contact submits that:

(a)      Contact is entitled to costs, because Siemens’ application for interim relief was abandoned and there is no basis for displacing the usual presumption that costs follow the event.

(b)2C  scale  costs  are  appropriate  for  some  steps  in  the  application, because of the urgency with which the application had to be prepared and the complex evidence required.

(c)      Contact is also entitled to uplifted costs, because the application was wholly unnecessary.

[2]      Siemens   submits   that   the   presumption   as   to   costs   arising   from   a discontinuance are displaced, given:

(a)      The merits of Siemens’ claim against Contact reflect the merits of its interlocutory application against General Electric International Inc (GE) on which Siemens was successful.

(b)      Correspondence from Contact did not adequately address Siemens’

concerns in terms of protecting Siemens’ confidential information.

(c)      Siemens   did   not   have   visibility  of   the   contractual   and   other arrangements between the parties until receipt of evidence and Contact’s insistence that it could facilitate continued access to the Turbine.

(d)The application was only abandoned after evidence was exchanged and when a proper assessment could be made

Background

[3]      My judgment in the interim injunction proceedings provides the context to

Siemens’ claims: see in particular [2]-[38].1

[4]      In order to address the specific merits of the cost claim by Contact in these proceedings a synopsis of key steps is needed:

(a)      On 19 June 2016, Russell McVeagh, on behalf of Siemens, wrote to Contact requiring that the following amended undertaking by 5.00 pm, 20 June 2016:

[T]hat pending further engagement with Siemens on this matter, Contact will take no steps to complete any sale of the Equipment to GE; or, if that sale has already completed, will not deliver up the Equipment  and/or any associated documents or information on the maintenance and operation of the Equipment (including any operating and/or maintenance procedures, manuals or records) to GE or otherwise permit it to be removed from its current site.

(b)Buddle Findlay, for Contact, responded that Siemens has no basis for its express concern that there has been, or will be, a breach of intellectual property rights and that Contact was not prepared to provide the undertakings sought.

(c)      A subsequent email from Buddle Findlay on the same day records that:

The land was sold to Stonehill Property Trust pursuant to an ASP executed on 23 December 2015.  Title in the plant and equipment on the land was transferred to Stonehill pursuant to a subsequent agreement dated 19 February 2016 (i.e. after the NZX release).

(d)On 23 June 2016 Russell McVeagh wrote to Buddle Findlay stating that Siemens intends to refer to arbitration alleged breaches of clauses

9.4  and  16.1  of  the  Long Term  Maintenance Agreement  between

Siemens and Contact.

1      Siemens (NZ) Ltd v Stonehill Trustee Ltd [2016] NZHC 1710, 27 July 2016.

(e)      Buddle Findlay replied the same day stating that Contact maintains the view that there is no arguable case for relief sought by Siemens and rejects any claim that the simple sale of the Turbine, without more, is a breach of duty to Siemens.

(f)       Russell  McVeagh  responds  that  day,  disagreeing  with  Contact’s

observations that the Siemens claim against Contact is without merit.

(g)On 24 June 2016 an application is made for interim measures under the Arbitration Act  1996,  seeking  a  number  of  orders  preventing disclosure of confidential information.

(h)By memorandum dated 28 June, Siemens sought timetabling and associated orders in respect of the applications filed for seeking applications for interim injunctive relief and interim relief in the arbitration proceeding.

(i)By memorandum dated the same day Contact indicated acceptance of the timetabling orders.

(j)Timetabling orders were made on 29 June 2016, with the respondents given until  5.00  pm, Thursday,  7 July 2016,  to  file any notice in response and supporting affidavits.

(k)A notice of opposition, together with an affirmation in support of opposition were filed on 8 July 2016.

(l)       The proceedings against Contact were abandoned on 18 July 2016.

Assessment

[5]      Rule 15.23 of the High Court Rules provides:2

2      The principles relating to the application of this rule are discussed in Kroma Colour Prints Ltd v Tridonicatco NZ Ltd [2012] NZCA 150; FM Custodians Ltd v Pati [2012] NZHC 1902; Opus International Consultants Ltd v Colac Bay Vision Ltd [2015] NZHC 1782.

Unless the defendant otherwise agrees or the court otherwise orders, a plaintiff who discontinues a proceeding against a defendant must pay costs to the defendant of and incidental to the proceeding up to and including the discontinuance.

[6]      Contact is entitled to costs on a 2B scale basis given that the application for interim relief was abandoned. In short, Siemens abandoned an application for interim relief having put Contact to the cost of responding to it. The apparent merits of the Siemens’ claim, or Contact’s refusal to capitulate, are not sufficient reasons to depart from the presumption.3 Conversely, while the matter had to be dealt with under some urgency, there was nothing particularly deficient, difficult or complex about the proceedings to warrant an uplift on 2B scale costs.4  In those circumstances costs should follow the event according to the 2B scale.

[7]      There shall be, accordingly, an order in favour of Contact on a 2B basis for the  steps  set  out  in  the  attachment  to  Contact’s  submissions,  together  with  the claimed disbursements.

3      Kroma Colour Prints Ltd v Tridonicatco NZ Ltd, above, at [12]; FM Custodians Ltd v Pati, above, at [11].

4      High Court Rules, rr 14.2–14.4, 14.6.