The Phone Company Limited v M2 NZ Limited

[2019] NZHC 3502

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2015-404-2903

[2019] NZHC 3502

BETWEEN

THE PHONE COMPANY LIMITED

Plaintiff

AND

M2 NZ LIMITED

First Defendant

M2 TELECOMMUNICATIONS PTY LIMITED

Second Defendant

Hearing:

On the papers

Counsel:

D W Grove for Plaintiff

J W J Graham and L L Fraser for Defendants

Judgment:

23 December 2019

COSTS JUDGMENT OF PETERS J

This judgment was delivered by Justice Peters on 23 December 2019 at 11.30 am pursuant to r 11.5 of the High Court Rules

Registrar/Deputy Registrar Date: ...................................

Solicitors:           Foy & Halse, Auckland

Chapman Tripp, Auckland

Counsel:            D W Grove, Auckland

THE PHONE COMPANY LIMITED v M2 NZ LIMITED [2019] NZHC 3501 [23 December 2019]

[1]                  In a judgment of 22 August 2018, I answered a preliminary question in favour of the plaintiff (“TPC”) and ordered that, absent submissions to the contrary, the defendants (“M2”) should pay TPC’s costs on a 2B basis together with all reasonable disbursements.1

[2]                  In June 2019 the Court of Appeal allowed M2’s appeal against my decision, and awarded costs on the appeal to M2.2 The Court of Appeal also ordered that the High Court should determine costs in respect of the hearing before me, hence this judgment. I now have submissions on costs from each party, each claiming the Court of Appeal’s decision favours them, and each seeking an award of costs and disbursements in the High Court.

[3]                  By way of background, the preliminary question concerned the construction of a clause, “clause (f)”, in what was referred to as the Termination Agreement. The parties had discharged the Termination Agreement in a subsequent agreement, referred to as the Variation Agreement. By this proceeding, TPC is seeking to have the Variation Agreement set aside and the Termination Agreement reinstated. TPC will be entitled to commissions from M2 if it succeeds in doing so.

[4]                  It was common ground between the parties that clause (f) provided for commission to be calculated on “Net Receipts” deriving from M2 mobile phone services customers. The issue was which customers.

[5]                  On M2’s proposed construction, it was only those customers whose services were/are delivered on the Vodafone mobile network.

[6]                  On TPC’s construction, it was all M2 customers, including those whose services were/are delivered on the Vodafone mobile network.

[7]                  The effect of [33] of the Court of Appeal’s decision is that the commission is to be calculated on Net Receipts from all mobile phone services customers of M2, unless the customer was procured for M2 by a contractor to, dealer for, or agent of,

1      The Phone Company Ltd v M2 NZ Ltd [2018] NZHC 2167 at [49].

2      M2 NZ Ltd v The Phone Company Ltd [2019] NZCA 230 at [52].

M2 in New Zealand, in which case the commission is payable only if the customers’ services are delivered on the Vodafone mobile network.

[8]                  In their submissions to me on costs, each party acknowledges the Court of Appeal adopted a different construction of clause (f) than those argued before me but submits that construction is closer to the one they sought before me. In this way, each says it was the successful party or the closest to it and should have costs, in accordance with r 14.2(a), High Court Rules 2016.

[9]                  The Court of Appeal’s construction represents a middle ground. A customer deriving from a contractor, dealer or agent of M2 and whose services are delivered other than on the Vodafone mobile network is outside clause (f), so M2 has succeeded in that respect. But TPC has succeeded because commission will or may be calculated on at least some — I do not know how many — customers whose services are not delivered on the Vodafone mobile network. Nor do I know the financial impact of the Court of Appeal’s preferred construction as opposed to the two proposed to me.

[10]              Counsel for M2 submitted the Court of Appeal must have thought M2 had succeeded because it awarded M2 costs. M2 did succeed on appeal, ie the Court of Appeal rejected TPC’s construction. Regardless, neither of the constructions the parties proposed to me was correct and neither proffered the “middle ground” the Court of Appeal adopted. Given that, I have decided the proper course is for each party to bear its own costs and disbursements. I order accordingly.

Peters J