Sky Scrapers General Trading LLC v Zoono Limited
[2021] NZHC 2027
•6 August 2021
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2020-404-001374
[2021] NZHC 2027
BETWEEN SKY SCRAPERS GENERAL TRADING LLC
PlaintiffAND
ZOONO LIMITED
First Defendant
ZOONO GROUP LIMITED
Second Defendant
Hearing: On the papers Judgment:
6 August 2021
JUDGMENT OF HINTON J
(Costs)
This judgment was delivered by me on Friday, 6 August 2021 at 9 am pursuant to r 11.5 of the High Court Rules.
Registrar/Deputy Registrar
Solicitors/Counsel: MDS Law, Christchurch.
Chapman Tripp, Auckland. SWB Foote QC, Auckland. J Moss, Christchurch.
SKY SCRAPERS GENERAL TRADING LLC v ZOONO LTD [2021] NZHC 2027 [6 August 2021]
[1] On 10 November 2020 I gave judgment dismissing the plaintiff’s application for mandatory interim relief by way of an order that the first defendant continue to perform its obligations under a distributorship agreement between the parties pending trial.1
[2] At the conclusion of my judgment, I reserved the question of costs, giving counsel for the parties leave to file memoranda in the event they were unable to agree.2 They have not agreed the question of costs and have filed memoranda.
Should costs be reserved?
[3] The defendants seek an immediate award of costs on a 2B basis in respect of some steps and a 2C basis in respect of others, and disbursements, the total amount being $11,154. Counsel for the defendants, Mr Graham, notes that pursuant to r 14.8(1) of the High Court Rules 2016, costs on an interlocutory application are to be fixed on determination of the application, absent special reason to the contrary. He submits there are no special reasons to depart from this principle, such that the defendant or the successful party should now be awarded costs.3
[4] In reply, counsel for the plaintiff, Mr Foote QC, submits that there is special reason to reserve the determination of costs on the interlocutory application pending substantive resolution of the proceeding. He makes three points on this issue.
(a)First, he notes that I recorded in my judgment that, during the course of the hearing on 28 September 2020, Mr Graham accepted the defendants had been withholding USD62,500 from the plaintiff without good reason and that the sum would be immediately repaid. As it is, Mr Foote submits, the funds were not repaid until after my judgment issued on 10 November 2020 and after further demand had been made.
(b)Secondly, Mr Foote submits the defendants acted unreasonably during the course of the hearing in initially adopting one position in relation to
1 Sky Scrapers General Trading LLC v Zoono Ltd & Anor [2020] NZHC 2960.
2 At [52].
3 High Court Rules 2016, r 14.2(1)(a).
the negotiation of the distributorship agreement, only to change its position at the hearing in response to evidence provided by the plaintiff.4
(c)Thirdly, Mr Foote also notes my comments that the plaintiff “as matters presently stand, has a strong case”5 in respect of the substantive issue for trial, even if I declined the application for injunctive relief.
[5] As to the first of these points, Mr Graham submits that the repayment of USD62,500 was not a matter addressed in the plaintiff’s application for interim relief, which was dismissed in its entirety. Accordingly, he submits, the defendants’ concession about that point during the hearing is irrelevant to the question of costs on the application. Also, he notes, the payment was made promptly after the judgment was issued. As to the other points, Mr Graham emphasises that the defendants completely defeated the application, and submits the defendants acted reasonably and in good faith throughout its defence of the injunction application.
[6] I agree with Mr Graham that the first point is not relevant to whether costs on the interlocutory application should be reserved. The status of the USD62,500 sum arose incidentally during the course of the hearing of the injunction application and, as Mr Graham notes, was not a subject of the plaintiff’s notice of interlocutory application. While it was obviously of practical benefit to the plaintiff to have that sum returned, and it obtained an undertaking for the sum to be returned during the course of the hearing, it was not the subject of the hearing. The fact that it took two months for the sum to be repaid after the hearing, while unimpressive, falls into the same category.
[7] Mr Foote’s second point is that the defendants acted unreasonably in advancing their initial position as to the negotiation history of the distributorship agreement. His submission appears to be that the defendants’ failure to admit the factual position was without reasonable justification and contributed unnecessarily to the time or expense of the hearing. This would normally justify the court reducing an order for costs under
4 See, above n 1, at [18].
5 At [30].
r 14.7(1)(f)(iii). I take Mr Foote to say that whether there should be a reduction of costs on the basis the defendants acted unreasonably by not conceding the negotiation point earlier, requires consideration of the overall merits of the claim at the substantive hearing, and therefore that costs should be reserved until then.
[8] In Craig v Social Media Consultants Ltd, Woolford J reserved costs on an interlocutory application until resolution of the substantive proceedings as consideration of the full merits of the case was required to determine whether there was reason to order a reduction in costs.6 In that case, it needed to be determined whether the value of the claim was so low as to warrant a reduction in costs.7
[9] I am not convinced the present case is comparable as I do not think consideration of the full merits of the case is necessary to determine whether the defendants acted unreasonably. Firstly, the defendants appropriately conceded the factual position in submissions filed just before the hearing. The negotiation history of the agreement was not the key issue in the hearing, such that even with the concession the hearing was still necessary. I do not think it was unreasonable conduct that would warrant a reduction in costs under r 14.7(1)(f)(iii) nor does the point provide a special reason to reserve costs.
[10] Mr Foote’s final point is that the strength of the plaintiff’s argument should be taken into account and costs reserved for that reason. This point is not elaborated on and he does not provide authority to support this proposition. As advanced by Mr Graham, the defendants successfully defended the entire application for interim relief. While there was plainly some merit in aspects of the plaintiff’s position, as canvassed above, as I found, the balance of convenience plainly favoured not issuing relief. Given the plaintiff’s goal was to obtain an interim injunction, and it did not, and nor did the matters in respect of which Mr Foote now takes issue dominate the hearing, I see no good reason to depart from the basic principle.
[11] Accordingly, pursuant to r 14.8 of the High Court Rules 2016, I determine that costs on the plaintiff’s unsuccessful interlocutory application should now be fixed.
6 See Craig v Social Media Consultants Ltd [2017] NZHC 1613, at [19]-[20].
7 At [19].
Quantum of costs
[12] As to quantum, Mr Graham submits that the defendants should be awarded costs on a 2B basis in respect of most steps, except the filing of their notice of opposition. Costs in respect of this step should be awarded on a 2C basis because, Mr Graham submits, it was necessary for counsel to work with representatives of the defendants based in the United Arab Emirates. He notes that, in National Plant & Equipment Party Ltd v P Mundy Heavy Equipment Ltd,8 Bell AJ recently awarded costs on a 2C basis in respect of certain steps where one party was based entirely overseas, making reasonable a greater amount of time.
[13] As Mr Graham acknowledges however, that case is somewhat distinct in that the successful party there had no presence in New Zealand whatsoever, being based entirely in Australia. Here, while the relevant personnel were based abroad, and the case relates to the defendants’ activities overseas, the defendants are New Zealand based companies. I do not accept that it would reasonably have taken counsel for the defendants over three times as long9 to prepare the defendants’ opposition to this routine interlocutory injunction, compared to a counterfactual in which only their New Zealand operations were at issue. In particular, as Mr Foote notes, the evidence given by employees of the defendants domiciled abroad was limited to three pages of narrative and various annexures that, while voluminous, were presumably readily available in the defendants’ New Zealand offices.
[14]Accordingly, costs are to be awarded on a 2B basis only, in respect of all steps.
[15] Finally, I do not accept Mr Foote’s submission that I ought not to allow the defendants’ claim for costs and disbursements as relate to sealing any costs judgment. This is on the basis that the plaintiff’s solicitors are holding a sum on trust, and the plaintiff undertakes to pay any adverse costs award within 48 hours of judgment issuing, rendering obtaining a sealed judgment unnecessary. It is elementary that, where judgment issues, the successful party is entitled to obtain sealing of the
8 National Plant & Equipment Party Ltd v P Mundy Heavy Equipment Ltd HC Auckland CIV-2019- 404-2443, 9 September 2020.
9 The time allocation for a band C step being 2 days and the allocation for a band B proceeding being only 0.6 days: High Court Rules 2016, sch 3 item 23.
judgment, even where there is no practical question as to its ability to obtain enforcement of any order.
Result
[16] For all of the above reasons, I order that the plaintiff is to pay the defendants’ costs in relation to the plaintiff’s interlocutory application dismissed by me on 10 November 2020 on a 2B basis, and disbursements, in the total amount of $8,047.
Hinton J
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