Tamihere v MediaWorks Radio Ltd

[2015] NZHC 268

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV 2013-404-5279 [2015] NZHC 268

BETWEEN

JOHN TAMIHERE

First Plaintiff

AND

CONSULTUS DOWN UNDER LIMITED Second Plaintiff

AND

MEDIAWORKS RADIO LIMITED Defendant

Hearing:	On Papers
Counsel:	T J G Allan and J E M Lethbridge for Plaintiffs J Miles QC and R J Hollyman for Defendant
Judgment:	4 March 2015

JUDGMENT OF SIMON FRANCE J (Costs Ruling)

[1]      In a judgment dated 1 September 2014, I upheld the defendant’s application for a stay of proceedings filed by the plaintiffs.  The causes of action were breach of contract  and  defamation,  and  the  issue  was  whether  the  arbitration  agreement existing between the parties covered the subject matter of the proceedings.  I held it did and required referral to arbitration. This is the consequent costs ruling.

[2]      The defendant seeks indemnity costs.  The primary submission is that English and  Australian   case   law   provide   good   precedents   for   the   proposition   that commencing proceedings in breach of an arbitration agreement merits indemnity costs for the party required to go to Court to seek enforcement of the arbitration

agreement.  The authorities relied upon are A v B (No 2)1 and Pipeline Services WA

1      A v B (No 2) [2007] EWHC 54 (Comm), [2007] 1 All ER (Comm) 633.

TAMIHERE v CONSULTUS DOWN UNDER LTD [2015] NZHC 268 [4 March 2015]

Pty Ltd v Atco Gas Australia Pty Ltd.2    The defendant also relies on High Court

Rules 14.6(4)(a) and (f).

[3]      It is further alleged that the plaintiffs’ proceedings were used to provide the plaintiff with an opportunity to publicise his grievance, something that could not be done under the arbitration route.  This improper purpose is said to be an aggravating factor supporting an award on indemnity costs.

[4]      Finally,  it  is  argued  that  the  proceedings,  because filed in  breach  of the arbitration agreement, were an abuse of process.

[5]      I do not consider a case for indemnity costs has been made out.  To the extent that the submissions appear to suggest a discrete category should be recognised where indemnity costs are the norm or the presumption, that proposition is inconsistent with the High Court Rules.3    If all that is being suggested is that the particular case merits such an award, it is an uncontroversial proposition, but not one supported by the facts of the particular case.

[6]      Rule 14.6(4) identifies the specific situations in which indemnity costs may be awarded. The Rules identify six situations, only two of which could be applicable here.  Rule 14.6(4)(a) refers to vexatious, frivolous or unnecessary actions by a party during proceedings.  I do not consider that the plaintiffs’ conduct attracts any of these labels.  Rule 14.6(4)(f) preserves the capacity to order indemnity costs if any other reason exists for justifying such an order.  Adopting indemnity costs as the norm for situations where proceedings are in breach of an arbitration agreement is inconsistent with the rationale of that provision as being one reserved for specific circumstances occurring in the particular proceedings.    A non-exhaustive list of relevant considerations  was  recently  discussed  in  Ben  Nevis  Forestry  Ventures  Ltd  v

Commissioner of Inland Revenue.4     The present proposition bears no conceptual

relevance to any of the situations identified there.

2      Pipeline Services WA Pty Ltd v Atco Gas Australia Pty Ltd [2014] WASC 10 (WASC).

3      High Court Rules, pt 14.

4      Ben Nevis Forestry Ventures Ltd v Commissioner of Inland Revenue [2014] NZCA 348.

[7]      The proposition that filing proceedings in breach of an arbitration agreement will always merit indemnity costs has not to date been recognised in New Zealand. A New Zealand text, Williams and Kawharu, refers to the capacity to obtain costs on a stay application, but there is no suggestion of the type of principle being advanced here.5     The defendant’s position is difficult to reconcile with the wording of the Rules, and indeed their underlying philosophy.  Plainly, the more obvious or blatant the breach of the arbitration agreement, the stronger may be the case for increased costs6  but the proposition cannot be put more strongly than that.   The authorities relied on by the plaintiff make tenable arguments for a contrary approach but it is not clear, on the material provided, as to the extent to which they represent the law of their own countries.7   The Western Australian decision, for example, cites Victorian authority declining to follow A v B (No 2).  Essentially because it is inconsistent with the philosophy of the rules, I reject the primary basis advanced by the defendant for indemnity costs.

[8]      Moving from the proposition of indemnity costs as the norm to this particular case, the proposition that the arbitration clause covered the defamation claim was not straightforward. Although the defendant ultimately succeeded in its stay application, I do not regard the plaintiffs’ conduct in filing the proceedings as an obvious breach of the arbitration contract.  The litigation itself was unremarkable, and I consider the basic philosophy of the costs regime should apply.  There was no undue complexity,

although the matter had a degree of difficulty.

5      David Williams & others Williams and Kawharu on Arbitration (LexisNexis, 2011, Wellington), at [4.15].

6      Bradbury v Westpac Banking Corp [2009] 3 NZLR (CA).

7      In relation to A v B (No 2) the plaintiffs raise various points of difference from the present proceedings.  The points of difference do suggest the case is not a particularly sound basis for setting a general principle.  However, the reasoning of the Court is not overly influenced by the unusual facts and does tend towards a general statement of principle.

[9]      I award 2B costs to the defendant together with reasonable disbursements to

be fixed by the Registrar if necessary.

Simon France J

Solicitors:

Grove Darlow & Partners, Auckland

J G Miles QC, Auckland

R J Hollyman, Auckland