Skids Program Management Limited v McNeill HC Auckland CIV-2010-404-1696
[2011] NZHC 1396
•28 October 2011
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV-2010-404-1696
BETWEEN SKIDS PROGRAM MANAGEMENT LIMITED
First Plaintiff
ANDSKIDS HOLDINGS LIMITED Second Plaintiff
ANDSAFE KIDS IN DAILY SUPERVISIONS LIMITED (FORMERLY KNOWN AS SKIDS NEW ZEALAND LIMITED) Third Plaintiff
ANDBARBARA WINSOME MCNEILL First Defendant
Hearing: (on papers)
Counsel: M Karam for the Plaintiffs
K Quinn for the Defendants
Judgment: 28 October 2011 at 3:30 PM
JUDGMENT OF WOODHOUSE J (Costs)
This judgment was delivered by me on 28 October 2011 at 3:30 p.m. pursuant to r 11.5 of the High Court Rules 1985.
Registrar/Deputy Registrar
……………………………………
Counsel:
Mr M Karam, Barrister, Auckland
Mr K Quinn, Barrister, AucklandInstructing Solicitors:
Mr P Kemps, Kemps Weir, Solicitors, Auckland
Mr S L Germann, Stewart Germann Law Office, Solicitors, Auckland
SKIDS PROGRAM MANAGEMENT LIMITED V MCNEILL HC AK CIV-2010-404-1696 28 October 2011
Cont …
ANDMCNEILL ENTERPRISES LIMITED Second Defendant
ANDNATASHA MAY-BABETTE MCNEILL- O'KEEFFE
Third Defendant
ANDAATA BAYKIDS LIMITED Fourth Defendant
ANDKIDS CHOICE LIMITED Fifth Defendant
[1] The defendants have sought costs on the judgment dated 20 April 2011. The plaintiffs oppose the application. The primary submission for the plaintiffs is that costs should lie where they fall.
[2] The grounds on which the defendants seek costs were summarised as follows:
(a) The plaintiffs failed completely against the 2nd, 3rd and 4th
defendants;
(b) The plaintiffs succeeded only to a nominal extent against the 1st and
5th defendants;
(c) The plaintiffs applied unsuccessfully for an injunction against all five defendants. The application, heard over two days in April 2010, was based principally on a cause of action (restraint of trade) which ultimately failed entirely;
(d) The plaintiffs unsuccessfully opposed an application by the 5th defendant, made in October 2010, to vary the undertakings given in April 2010 restricting the business activities of the fifth defendant; and
(e) The plaintiffs rejected a calderbank offer made in May 2010 which included an offer of a cash payment exceeding the nominal amount which has been awarded, and which as a whole offered terms more beneficial than the judgment obtained.
[3] It is, of course, correct that the plaintiffs failed in all of their claims against the second, third and fourth defendants. The plaintiffs succeeded in one only of a number of claims against the first defendant, with that successful claim effectively providing the foundation for the related judgment against the fifth defendant. Although the plaintiffs failed against three of the defendants, and succeeded only in part against two defendants, the defendants seek a single sum of costs in favour of all five defendants. Costs are sought on a 2B basis.
[4] The plaintiffs’ submissions are founded on two main propositions. The first is that both “parties” (the plaintiffs globally and the defendants globally) achieved some success. The second is that there was a “dishonest course of conduct” by Mrs McNeill in the proceeding such that “any award of costs in favour of the defendants
would be entirely repugnant to justice”.1 This concerns in particular Mrs McNeill’s
1 Plaintiffs’ submissions paras 41 and 43.
initial failure to make adequate discovery in relation to documents retained or documents produced for the fifth defendant and Mrs McNeill’s denial in evidence that she had copied any of the plaintiffs’ documents.
[5] A substantial part of the submissions for the plaintiffs was directed to the points relating to Mrs McNeill’s conduct. These submissions provided the main foundation for the primary submission that costs should lie where they fall. Mr Karam, in support of the submission, also relied on rr 14.7(d) and (f). (There was also reference to r 14.6(4), although this is concerned with the grounds on which indemnity costs may be awarded.)
[6] Subject to some questions relating to the appropriate allowances for particular cost items, I am satisfied that the defendants, jointly, are entitled to a single award of costs as sought on a 2B basis. In recording my reasons I do not propose to discuss all of the submissions made for the parties.
[7] There is some relative force in the plaintiffs’ submissions relating to Mrs McNeill’s conduct. However, the negative conclusions that may be drawn in relation to Mrs McNeill’s conduct are not sufficient to outweigh the entitlement of the defendants as a whole to costs on the basis that the defendants as a whole have undoubtedly succeeded.
[8] The fact that the defendants seek a single award of costs is of some importance in my conclusion. The assessment of success in favour of the plaintiffs or the defendants is overwhelmingly in favour of the defendants. The claims of the plaintiffs against different defendants are summarised at [5]-[9] of the substantive judgment. There were 10 causes of action, and with some of these containing more than one substantive claim. In substance, the plaintiffs succeeded only with one specific claim contained in one of the three causes of action against Mrs McNeill. This is the claim summarised in the substantive judgment at [7]a)(2) – breach of the master franchise agreement by misuse of confidential information by copying parts of the plaintiffs’ documents. This in turn led to the judgment against the fifth defendant for breach of copyright. But the relief in favour of the plaintiffs against the fifth defendant arose out of the copying by Mrs McNeill.
[9] The total awarded in favour of the plaintiffs for the wrongful copying by Mrs McNeill was only $3,000. In relation to the proceedings as a whole, and far greater sums sought by the plaintiffs on other causes of action, this award is properly described as nominal. Mr Quinn, in his submissions for the defendants, was also not far off the mark in submitting that “the plaintiffs can consider themselves very lucky
to receive any award of damages”.2 The reasons are as recorded in the defendants’
submissions and follow from my observations in the substantive judgment at [126]- [131]. Mrs McNeill’s misconduct has already been marked by what is, in the circumstances, a generous assessment of damages in favour of the plaintiffs who failed to provide any adequate proof. This is on top of the injunction relating to the copied documents.
[10] The plaintiffs’ modest success against Mrs McNeill and, through her, the fifth defendant, on this single claim, needs to be weighed firstly against the plaintiffs’ failure on all other claims against Mrs McNeill. In particular, the plaintiffs failed in their claim for breach of the restraint of trade provision. This was a more significant claim than the successful claim. The plaintiffs failed on all elements of this claim. This included a failure to prove loss. The failure to prove loss is particularly relevant to my assessment of the claim for costs. The plaintiffs advanced a claim for damages in a sum which, in relation to these proceedings, was a substantial sum. It was a particularly substantial sum for Mrs McNeill. The plaintiffs persisted in this claim, on top of the claim for the injunction, in spite of the fact that the evidence in support of a claim for damages fell well short of what was required. In considerable measure the pursuit of this claim, without adequate evidence, is a factor offsetting the conclusions against Mrs McNeill in relation to her conduct over the plaintiffs’ documents and the copying.
[11] The plaintiffs’ submissions on costs are, in any event, unduly focused on Mrs McNeill. Apart from the judgment against the fifth defendant, properly described in the defendants’ submissions as “nominal”, the plaintiffs failed in all claims against all other defendants. In particular, the plaintiffs failed in their claims against Mrs
McNeill-O’Keeffe. The claims against Mrs McNeill-O’Keeffe for breach of
2 Defendants’ submissions para 5.
contractual obligations, and in particular breach of a restraint of trade provision, were hopeless.
[12] Assessing the question of costs having regard to the rules and well established principles, and having regard to the matters discussed to this point, I am satisfied that my discretion on the question of costs should be exercised in favour of the defendants to award costs generally as sought. That conclusion is reinforced by the points made for the defendants and summarised above at [2](c)-(e). In referring to these further matters I have not overlooked the submissions for the plaintiff in response. Some reasonable points are made by Mr Karam in respect of these matters, but it is not necessary to analyse the detail. The broad conclusions favour the defendants.
[13] This leaves the question of calculations for specific items in schedule 3 of the
Rules. Referring to paragraph 57 of the plaintiffs’ submissions:
(a) The daily allowance for each of these items will need to be recalculated depending on the rate applying at the relevant time. I will leave that to counsel. This will be further subject to the directions in the following sub-paragraphs relating to items 4.10, 4.11, 4.14 and
4.15.
(b) Item 3.6. The defendants are entitled to costs on this.
(c) Items 4.5-4.7. The claim for 1.5 days for the first defendant’s list of documents is disallowed. This is to make some allowance in favour of the plaintiffs for the steps the plaintiffs had to take to secure the supplementary list of documents.
(d) Item 4.10: memorandum 29/3/10. This claim is disallowed.
(e) Item 4.10: memorandum 11/5/10. Unless the defendants take issue with the statement of fact that this was a brief joint memorandum prepared by the plaintiffs, this claim is reduced by 50%.
(f) Item 4.10: memoranda 20/7/10 and 3/8/10. These claims are disallowed.
(g)Item 4.10: memorandum 16/9/10. Unless the defendants take issue with the statements of fact, this claim is reduced by 50%.
(h) Item 4.11: appearance 4/8/10. This claim is disallowed.
(i)Item 4.14: the duration of the April hearing. Unless there is an issue as to the length of the hearing, the allowance is for 1.5 days, not 2 days.
(j)Item 4.15. The conclusion is the same as the conclusion for the preceding item.
(k) Items 7.3, 7.4, 8 and 9. The defendants are entitled to costs as claimed.
(l) Disbursements. The defendants are entitled to disbursements as claimed.
[14] In the usual way, leave is reserved to the parties to apply for further directions if required. However, it is to be hoped that counsel will now be able to agree on the
quantum in the light of these further directions.
Woodhouse J
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