Telfer Electrical Nelson Limited v Trotter

[2021] NZHC 53

IN THE HIGH COURT OF NEW ZEALAND NELSON REGISTRY

I TE KŌTI MATUA O AOTEAROA WHAKATŪ ROHE

CIV-2017-442-33

[2021] NZHC 53

BETWEEN

TELFER ELECTRICAL NELSON LIMITED

Plaintiff

AND

KENNETH JOHN TROTTER

First Defendant

GAIL ELIZABETH TROTTER AND

KENNETH JOHN TROTTER as trustees of the K & G TRUST

Second Defendants

On the papers

Counsel:

J V Ormsby for Plaintiff

N A Ironside for Defendants

Judgment:

2 February 2021

JUDGMENT OF SIMON FRANCE J (COSTS)

[1]    Counsel’s memoranda of last year were only referred to me on 23 December. There was a system failure with transferring work from a departing Registry staff member. I apologise for the delay.

[2]    Counsel have referred to the relevant principles. Given the circumstances of delay, I will just address directly the key issues.

Indemnity costs

[3]    I place little weight on the warnings. A party may seek indemnity costs with or without such a warning. The existence of the warning does not alter the essential merits of such an application.

TELFER ELECTRICAL NELSON LTD v TROTTER & ORS [2021] NZHC 53 [2 February 2021]

[4]    There are two areas of concern with the plaintiff’s case – the various allegations against Mr Trotter, and the continuation of the Restraint of Trade action subsequent to the observations of Churchman J in his interlocutory judgment.

[5]    I have reflected on the latter but on balance consider it was reasonable to proceed. As counsel observe, they were professionally drafted restraints, and the same business issue was not straightforward. I am also aware through the evidence that surprisingly long restraints are not uncommon in this industry area.

[6]    I commented in the judgment ([128]-[133]) on the more personal allegations made against Mr Trotter. I consider this needs some costs response but not by way of indemnity costs. Generally as regards indemnity costs, I see the case as one where one party won on all points, but otherwise it was unremarkable and falling well short of the type of proceeding meriting such a costs outcome.

Increased costs

[7]    There is some realistic recognition in the plaintiff’s submissions that the breach of director’s duties cause of action,  and  more  generally  the  accusations  against Mr Trotter, should not have been there. Certainly, if they were, then a proper structured effort to prove them needed to be made, and was not. The appropriate inference for a Court to draw is that the evidence was not available to support the claims.

[8]    I understand the thrust of Mr Ormsby’s submission about focusing any increase on those aspects of the case influenced by these allegations, but find it far too complex a task. Rather, I see it as a tempering factor on the size of any increase. I also consider it is artificial to parcel up the impact on litigation of improperly made personal accusations as they are capable of changing the tone of the entire proceeding, the approach of parties to the litigation, and the possibility of settlement.

[9]    Assessing all these matters I consider there should be an uplift on scale costs of 25 per cent.

[10]   I see no basis otherwise for departure from the scale. I do not accept there was improper  motive,  and  the  reality  was  that  the  situation  needed  formalising.   Mr Trotter’s interests maintained formal positions in the company and generally the

situation needed sorting. I cannot allocate responsibility for why it ended up as a six- day High Court trial, but no-one involved should think other than that was the worst resolution method available to the parties.

Specific matters

[11]   I disallow the claim for photocopying the bundle. In my view, that is in part a matter of preference and otherwise just an incident of litigation to be absorbed.

[12] The parties should be able to sort out the daily rate issue raised in [55] of the plaintiff’s submission. Paragraph [56] appears correct to me. As presumably is [57].

[13]   I agree with the plaintiff concerning the third party discovery application. The defendants chose to participate, but I do not consider their success in the overall proceeding leads to entitlement to costs for that appearance. The plaintiff obtained its orders. Any consequent impact on the defendants and the trial is absorbed by the scale in the normal way.

[14]   I agree with the defendants on the third case management conference. Costs were reserved and should now follow the outcome. I do not propose to analyse the value or necessity of individual memoranda.

[15] I agree with the plaintiff on item 17, list of documents. The approach taken to discovery is to be applauded, but tells against this claim, as do the points made in [68] and [69]. I also agree with [77].

[16]   The parties can do the maths concerning implementing these decisions. Any further dispute concerning implementation may be determined by the Registrar.

Simon France J

Solicitors:

Cavell Leitch, Christchurch for Plaintiff Ironside Law, Nelson for Defendants