Talley's Group Limited v Biomex Trustees Limited
[2022] NZHC 3548
•20 December 2022
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2019-404-000773
[2022] NZHC 3548
BETWEEN TALLEY’S GROUP LIMITED
Plaintiff
AND
BIOMEX TRUSTEES LIMITED
First Defendant
MACLAB (NZ) LIMITED
Second DefendantJ W BROADBENT NOMINEES PTY LIMITED
Third DefendantMACFARLANE MARKETING (AUST) PTY LIMITED
Fourth DefendantMACLAB AUSTRALIA PTY LIMITED
Fifth DefendantCont/…
Hearing: On the papers Counsel:
RJ Hollyman KC and AJ Steel for the Plaintiff ZG Kennedy and OJ Skilton for the Defendants
Judgment:
20 December 2022
COSTS JUDGMENT OF ASSOCIATE JUDGE SUSSOCK
This judgment was delivered by me on 20 December 2022 at 11.30am pursuant to r 11.5 of the High Court Rules
Registrar/Deputy Registrar
TALLEY’S GROUP LTD v BIOMEX TRUSTEES LTD [2022] NZHC 3548 [20 December 2022]
JAMES MEREDYTH BROADBENT
Sixth Defendant
ANDREW CHRISTOPHER BROADBENT
Seventh Defendant
WILLIAM RAMSDEN BROADBENT
Eighth Defendant
Introduction
[1]In my judgment dated 29 October 2021 I determined two applications:1
(a)an application by the plaintiff, Talley’s Group Limited (TGL), for further discovery and a review of claims to confidentiality (TGL’s Application); and
(b)an application on behalf of the first to eighth defendants (together MacLab) for further and better discovery (MacLab’s Application).
[2] I indicated a preliminary view that as each of the parties had had some success, it may be that costs ought to lie where they fall. I asked the parties to confer and endeavour to agree costs with an exchange of memoranda directed if that was not possible.2
[3] The parties were unable to agree and so MacLab filed a memorandum on costs on 26 November 2021 seeking:
(a)costs on a 2B basis of $13,503.50 plus disbursements for steps taken in respect of MacLab’s application; and
(b)that costs lie where they fall in respect of TGL’s application.
[4] TGL filed a memorandum in response dated 3 December 2021 submitting that costs ought to lie where they fall for both applications but that if anything the circumstances warranted a costs award being made in TGL’s favour. TGL further submitted that it ought to be awarded costs on the costs memorandum given MacLab’s unreasonable approach to costs.
[5] The discovery orders made in the original decision required further steps to be taken by the parties. The position on discovery therefore continued to be negotiated throughout this year with orders finally made by consent on 16 September 2022.
1 Talley’s Group Ltd v Biomex Trustees Ltd [2021] NZHC 2922.
2 At [119].
[6] In my Minute dated 29 April 2022, I directed that costs were to be reserved until the remaining issues in relation to the applications had been resolved. I made final orders by consent on 16 September 2022 and directed the exchange of updating costs memoranda if costs were still unable to be resolved between the parties.
[7] An updating memorandum was filed on behalf of MacLab dated 21 October 2022 continuing its application for costs on a 2B basis of $13,503.50 plus disbursements for steps taken in respect of MacLab’s application and for costs to lie where they fall in respect of TGL’s application. TGL submits in its memorandum dated 4 November 2022 that the Court should decline to order costs with costs either reserved or to lie where they fall.
[8] I set out the relevant costs principles below before applying them in respect of the parties’ applications.
Relevant costs principles
[9] Rule 14.1 of the High Court Rules 2016 confirms that “all matters are at the discretion of the Court if they relate to costs of the proceeding”. The discretion vested by r 14.1 is wide but must be exercised subject to the general principles in r 14.2. The first principle set out in r 14.2 is that the party who fails with respect to a proceeding or an interlocutory application should pay costs to the party who succeeds.
[10]The Court of Appeal has confirmed that:3
Success or failure in this context is better assessed by a realistic appraisal of the end result rather than by focusing on who initiated what step, and the extent to which that step succeeded or failed.
[11] Rules 14.3 to 14.5 provide for the categorisation of proceedings, the appropriate daily recovery rate and the determination of a reasonable time for each step by reference to the time specified for each step in Schedule 3.
3 Packing In Ltd (in liq) formerly known as Bond Cargo Ltd v Chilcott (2003) 16 PRNZ 869 (CA) at [6]; and Emmons Development New Zealand Ltd v Mitsui Sumitomo Insurance Company Ltd [2020] NZHC 932 at [28]–[29].
[12] Rule 14.7 provides that, despite rr 14.2 to 14.5, the Court may refuse to make an order for costs or may reduce the costs otherwise payable including where the party claiming costs, although succeeding overall, has failed in relation to a cause of action or issue which significantly increased the costs of the party opposing costs or some other reason exists which justifies the Court refusing costs or reducing costs despite the principle that the determination of costs should be predictable and expeditious.4
MacLab’s application
[13] MacLab submits that the Court should exercise its discretion to award MacLab costs in respect of its application because:
(a)its application was successful; and
(b)TGL’s approach to discovery has been wholly inadequate.
[14] MacLab says its application was successful because the Court directed TGL to take the steps sought by MacLab. However, those steps were initial steps. The judgment recorded that if after taking those steps, the number of documents found was unmanageable, then the parties were to negotiate further to modify the keyword search or in relation to access to the Citrix Database and invoices, with leave reserved to the parties to come back to the Court for further orders as necessary.5
[15] TGL says in its memorandum in response, concerns raised by TGL at the hearing with regard to proportionality and the practicalities of accessing the databases have proven to be correct, as the search terms requested by the defendants identified more than one million individual discoverable items.
[16] TGL submits that MacLab goes too far in seeking to draw an inference from the number of documents discovered following the orders made that TGL had not discharged its discovery obligations for the following reasons:
4 Rule 14.7(d) and (g).
5 Talley’s Group Ltd v Biomex Trustees Ltd, above n 1, at [18], [21] and [118].
(a)it was made clear in TGL’s affidavit, and subsequently, that there could be discovery of underlying documents but the proposal to examine samples was not taken up;
(b)similarly counsel sought to engage regarding the Citrix Database but that was not taken up; and
(c)the further searches have not resulted in any material discovery regarding market pricing (said to be the key purpose of the further discovery).
[17] Counsel for TGL submits that it was always prepared to take a pragmatic approach to providing further relevant discovery but had serious concerns regarding the proportionality of the discovery orders sought by the defendants. TGL says these concerns were ultimately borne out by the volume of documents identified in the searches proposed by MacLab
[18] Furthermore, TGL says the searches which MacLab insisted upon, including before the Court, were both oppressive and disproportionate. They were not straightforward but resulted in many tens of thousands of results.
[19] TGL says that it was only when MacLab eventually agreed an appropriate compromise on the breadth of the search terms that progress was able to be made.
[20] In addition, TGL submits that MacLab continued to maintain an entitlement to a live remote connection to TGL’s Citrix Database. Ultimately, MacLab abandoned that claim but nonetheless it was an impediment to resolution.
[21] In my view both parties have had a measure of success in relation to MacLab’s application. Matters may have progressed more quickly if TGL had run the keyword searches proposed by MacLab at an earlier stage so that whether the search was proportionate could have been more clearly determined. However, MacLab’s approach to market pricing information and access to the Citrix Database appears to have drawn out matters.
[22] As there were applications by both parties, I now consider TGL’s application before reaching a final overall view on both applications.
TGL’s application
[23]TGL’s application comprised two parts:
(a)further discovery of certain classes of documents; and
(b)the review of claims to confidentiality by MacLab in its affidavit of documents to allow TGL (as opposed to its counsel and experts only) to review certain documents.
[24] MacLab submits that adopting a realistic appraisal of the end result, costs should lie where they fall on this application because:
(a)TGL significantly expanded the scope of its discovery application, only to narrow it after MacLab was put to the expense of preparing expert evidence demonstrating that the documents TGL sought were unnecessary and disproportionate;
(b)MacLab confirmed prior to the preparation of submissions and well before the hearing that it would disclose the documents TGL sought; and
(c)MacLab was largely successful in its claim for confidentiality, which was the only outstanding issue in TGL’s application by the time of the hearing.
[25] MacLab submits that relevantly in terms of r 14.7(d), TGL clearly failed in seeking to lift MacLab’s claims to confidentiality as it was only a small subset of historical documents from 2017 and 2018 that were determined not to be confidential.
[26] MacLab says that TGL’s position on confidentiality put MacLab to significant cost and expense pointing to the fact that very little of MacLab’s submissions, written or at the hearing, addressed the discovery aspect of TGL’s application because MacLab had already confirmed that it would disclose the documents sought by TGL.
[27] TGL submits in response that its application required MacLab to confirm by sworn affidavit that it had searched for and discovered all documents captured by the categories listed in the schedule to TGL’s application. TGL says that although it should have been a simple matter, prior to the hearing the defendants had refused to do so, with TGL pointing to paragraph [2] of my decision where I record that the first part of the plaintiff’s application resolved during the hearing with MacLab agreeing to swear a further affidavit.
[28] TGL submits that it was put to the cost of filing its discovery application as a result of MacLab’s failure and “ongoing and inexplicable difficulties” in complying with the discovery order noting:
(a)Since the judgment there has been another tranche of about 40 documents provided by the defendants (despite claiming at the hearing that there were no more to provide) which it appears that the defendants had in their possession but had not provided by way of discovery with TGL saying some of the documents disclosed are highly relevant to the dispute.
(b)TGL’s concerns regarding completeness of the defendants’ discovery were justified given that by the time of the hearing there had been four separate tranches of discovery from the defendants and each time the defendants disclosed additional documents, further concerns arose about the completeness of their discovery.
(c)TGL still has questions about the adequacy of MacLab’s discovery, arising from the latest tranche of documents. Overall TGL submits the defendants’ discovery has been piecemeal, confusing, delayed and incomplete, referring to my comments in the judgments in respect of Natoli Reports.6
6 Talley’s Group Ltd v Biomex Trustees Ltd, above n 1, at [119].
[29] TGL further submits that its application in relation to confidentiality was successful with the findings that MacLab’s confidentiality claims over a number of documents were unjustified. TGL says access to these documents is critical, as recognised in paragraph [63] of the judgment.
[30] TGL submits that in this instance having confidentiality restrictions lifted over even one document, would have been a success for TGL so having the confidentiality restrictions lifted over a number of documents of critical importance is even more so. In support of this, TGL relies on Weaver v Auckland Council where the Court of Appeal considered that although the applicant only succeeded to roughly half of the extent of its claim, it still achieved success.7
[31] In my view TGL’s application for further and better discovery can be seen as successful because without that application it appears that MacLab would not have provided documents that ought to have been provided in the first place and would not have clarified the position by swearing an affidavit that there were no further documents. Furthermore, TGL succeeded in respect of some of its challenges to MacLab’s confidentiality claims.
[32] In Weaver v Auckland Council, a significant reduction was made in the costs ultimately awarded in accordance with r 14.7(d) because although the applicant partially succeeded, the time and resources necessary for the respondent to meet ultimately unsuccessful arguments significantly increased its costs.
[33] I do not consider the same applies in this case as the aspects of the confidentiality claim on which TGL did not succeed, do not appear likely to have significantly affected the costs of MacLab.
Other factors
[34] TGL further refers to the fact that the hearing of the above applications was originally scheduled to occur on 2 March 2021 but that date had to be abandoned because counsel for MacLab was unwell. The second hearing was set down for 26
7 Weaver v Auckland Council [2017] NZCA 330, (2017) 24 PRNZ 379 at [26].
May 2021 but was also adjourned due to unavailability of counsel for MacLab. In both instances, TGL says it did not oppose the defendants’ requests for an adjournment despite incurring costs of preparation. TGL says that these indulgences are relevant to the costs award.
[35] I accept that the adjournment of the original fixture would have resulted in wasted preparation costs for TGL but the fixture on 26 May 2021 was adjourned to 17 June 2021 on 29 March 2021. Whilst TGL may have incurred costs associated with the adjournment I do not expect that they were costs in preparation for the hearing itself.
Conclusion
[36] Taking all of the above into consideration and particularly the fact that the costs claimed are in respect of the original application, I have not been dissuaded from my preliminary view that costs ought to lie where they fall. A realistic appraisal of the end result, rather than focussing on who initiated what step and the extent to which that step succeeded or failed, supports this conclusion as both parties have succeeded to a certain extent as a result of the applications. Whether that is in precisely equal measure is very difficult to assess without more detailed evidence and submissions from the parties. Given the size of the costs award sought, I do not consider it appropriate or proportionate to require more detailed evidence to be filed. Nor do I consider that it would be appropriate to reserve costs. The position in respect of costs on these applications is not likely to become clearer as a result of the substantive decision.
[37] Taking a pragmatic and robust approach I therefore consider it is appropriate for costs for both applications to lie where they fall.
Result
[38]I order that costs are to lie where they fall for the following applications:
(a)TGL’s application for further discovery and for review of claims of confidentiality; and
(b)MacLab’s application for further and better discovery.
Associate Judge Sussock
Solicitors / Counsel:
Solutions Law Office, Auckland MinterEllisonRuddWatts, Auckland
RJ Hollyman KC, Auckland
A Steel, 45 Chancery, Auckland ZG Kennedy, Auckland
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