The Phone Company Limited v M2 NZ Limited

[2016] NZHC 2667

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2016-404-2903 [2016] NZHC 2667

BETWEEN

THE PHONE COMPANY LIMITED

Plaintiff

AND

M2 NZ LIMITED First Defendant

M2 TELECOMMUNICATIONS PTY LIMITED

Second Defendant

Hearing:	On the papers
Appearances:	D Grove for the plaintiff LL Fraser and RMA Jones for the defendants
Judgment:	8 November 2016

JUDGMENT OF FITZGERALD J [ON COSTS]

This judgment was delivered by me on 8 November 2016 at 3:15 pm pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date……………

Solicitors:           Ellis Law, Auckland

Chapman Tripp, Auckland

The Phone Company Limited v M2 NZ Limited [2016] NZHC 2667 [8 November 2016]

[1]      In my judgment dated 27 September 2016, I made orders striking out certain aspects of the plaintiff’s statement of claim.1   Those orders did not extend to the full relief sought by the defendants in their application for a defendant’s summary judgment and/or strike out.

[2]      I encouraged  the parties  to  agree  costs.    I observed  that  M2  had  had  a measure of success on its application.  I expressed a provisional (but non-binding) view that M2 should recover its costs on a 2B basis, but discounted to reflect that it is has not been successful on all aspects of its application.

[3]      The parties were not able to agree costs.   I therefore received memoranda.

The parties’ positions are as follows.

[4]      The  defendants  seek  costs  on  the  basis  of  2B,  reduced  by 50  per  cent. Counsel for the defendants submits that such an award “conservatively reflects the balance of [my] judgment giving relative success to all parties”.

[5]      Counsel for the defendants goes on to submit that the plaintiff ’s failure to properly plead a sustainable claim is aggravated by the fact that the defendants had sought particulars from the plaintiff on two earlier occasions and the plaintiff is yet to properly plead its claim.  Counsel submits that the plaintiff’s failure to properly plead a sustainable claim is reflected in my direction to “replead every cause of action”.  I observe that I did not make a specific direction to this effect, but rather the requirement to file an amended statement of claim flows from the directions I made as to the aspects of the statement of claim I directed be struck out.  I did not direct that the first cause of action be amended.

[6]      Mr Grove,  for  the  plaintiff,  opposes  an  order  of  costs  in  favour  of  the defendants.   The plaintiff seeks an order of costs in its favour, namely that the defendants pay 50 per cent of the plaintiff ’s costs on a 2B basis.  This is said to be appropriate in that the plaintiff was successful in opposing “the vast majority of the

application and that the orders obtained by the defendants (relating only to two

1      The Phone Company Ltd v M2 NZ Ltd [2016] NZHC 2283.

issues) are minor”.   Mr Grove goes on to state that “[t]he short point is that both

parties had a measure of success in relation to the application”.

[7]      Pursuant to r 14.2(a), a party who fails with respect to a proceeding or an interlocutory application should pay costs to the party that succeeds.  This reflects the common principle that “costs follow the event”.   Difficulties can arise where there is only partial success on an application and, as a result, determining what the “event” is and who has been successful.

[8]      In Packing In Ltd (in liquidation) formerly known as Bond Cargo Ltd v Chilcott,2 the Court of Appeal considered a costs claim where both parties submitted that they had been successful.  It observed:

[5]       In a case such as the present, where in broad terms each party has had  similar  success,  we  do  not  consider  it  helpful  to  focus  too closely on the question which party has failed and which has succeeded. Costs in a case such as this should rather be based on the premise that approximately equal success and failure attended the efforts of both sides. To that starting point should be added issues such as how much time was spent on each transaction or group of transactions in issue, and any other matters which can reasonably be said to bear on the Court’s ultimate discretion on the subject of costs. In the end, as in all costs matters, the Court must endeavour to do justice to both sides, bearing in mind all material features of the case.

[9]      Taking those principles into account, and despite my initial observations as set out in my judgment, I consider the appropriate result in this case is that costs lie where they fall.

[10]     In  their  respective  costs  memoranda,  counsel  have recognised  that  “both parties had a measure of success in relation to the application”3  and my judgment “[gave] relative success to all parties”.4   In addition, I do not consider those aspects of the statement of claim that I ordered be struck out are “minor”, in the sense referred to by Mr Grove for the plaintiff, such as to justify an award of costs in

favour of that entity.  Paragraph 9(d) of the amended statement of claim formed one

of four alleged misrepresentations that were central to each of the second, third and

2      Packing In Ltd (in liq) v Chilcott (2003) 16 PRNZ 869 (CA).

3      Counsel for the plaintiff ’s memorandum.

4      Counsel for the defendants’ memorandum.

fourth causes of action.  In addition, the Black & White matters formed the basis of much of the explicit pleading and particulars given to date.

[11]     However, it is fair to say that, despite these observations, the defendants equally did not succeed on significant aspects of their application.

[12] I do not consider the fact that the defendants have sought particulars from the plaintiff on two earlier occasions to be an “aggravating” factor for the purposes of costs on this application, as suggested by counsel for the defendants. Requests for further and better particulars often precede an application to strike out and/or a defendant’s summary judgment application. That fact alone does not, in my view, influence the costs of the outcome of that application itself, which ought to be judged on the basis of the guiding principle as set out at r 14.2(a) and cited at [7] above.

[13]     For all of these reasons, I consider an appropriate outcome on this particular application is that costs lie where they fall.

Fitzgerald J