TTAH Limited v Koninkluke Ten Cate N.V

[2016] NZHC 761

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2011-404-008250 [2016] NZHC 761

BETWEEN

TTAH LIMITED

First Plaintiff

TT INVESTORS LIMITED Second Plaintiff

AND

KONINKLIJKE TEN CATE N.V. First Defendant

ROYAL TEN CATE USA, INC Second Defendant

TEN CATE UK LIMITED Third Defendant

TIGERTURF NZ LIMITED Fourth Defendant

Hearing:	[On the Papers]
Counsel:	D M Salmon and E D Nilsson for the Plaintiffs R B Lange and G K Holm-Hansen for the Defendants
Judgment:	22 April 2016

JUDGMENT OF EDWARDS J [re Costs]

This judgment was delivered by Justice Edwards on 22 April 2016 at 4.00 pm, pursuant to

r 11.5 of the High Court Rules

Registrar/Deputy Registrar
Date:

Solicitors:    Lee Salmon Long, Auckland

Simpson Grierson, Auckland

TTAH LIMITED v KONINKLIJKE TEN CATE N.V. [2016] NZHC 761 [22 April 2016]

Introduction

[1]      By judgment dated 23 February 2016,1 I dismissed an application by the first to third defendants (Ten Cate) to strike out the plaintiffs’ third cause of action on forum non conveniens grounds.

[2]      The plaintiffs (Tiger) seek a 50 per cent uplift on the 2B costs awarded in the judgment on the basis that Ten Cate’s application was unnecessary, unmeritorious, and unreasonably prolonged the proceeding.

Relevant principles

[3]      The principles relevant to an award of increased costs are not disputed.  The Court may award an uplift on scale costs in the circumstances set out in r 14.6(3).  In this case Tiger relies on r 14.6(3)(b)(ii) and (v), and r 14.6(3)(d).

[4]      The touchstone for an award of increased costs is whether the opposing party has failed to act reasonably.2    If increased costs are justified, a four-step process is then applied in order to calculate the quantum of the uplift.3

Are increased costs justified?

[5]      Tiger raises a number of grounds in support of increased costs.  Each of those grounds is considered below.

[6]      In   support   of   its   claim   that   the   application   was   unnecessary   and

unmeritorious, Tiger refers to a letter sent to Ten Cate’s counsel on 23 September

2015 inviting a reconsideration of the position in the interests of achieving a final resolution of the dispute.

[7]      I do not consider Ten Cate’s application to be unnecessary or unmeritorious.

The third cause of action had previously been struck out by decisions of this Court,4

1      TTAH Ltd v Koninklijke Ten Cate NV [2016] NZHC 237.

2      Bradbury v Westpac Banking Corp [2009] NZCA 234, [2009] 3 NZLR 400 (CA) at [27].

3      Holdfast NZ Ltd v Selleys Pty Ltd (2005) 17 PRNZ 897 (CA) at [43]–[48].

4      TTAH Ltd v Koninklijke Ten Cate NV [2014] NZHC 2032 at [48].

and  was  only  reinstated  on  appeal.5      It  was  implicit  in  the  Court  of Appeal’s judgment that a strike-out application on forum grounds would be made so as to allow the issue to be fully argued.6     I found that there were factors leaning both ways, and only dismissed the application because it could not be shown that Texas was a clearly or more distinctly appropriate forum than New Zealand for determination of the dispute.7

[8]      The letter dated 23 September 2015 sent to Ten Cate’s counsel does not change that assessment.  The letter was not an offer of compromise, and did little more than set out Tiger’s position.  Not all of the arguments set out in that letter were accepted by me in the course of dismissing Ten Cate’s application.

[9]      Tiger also claims that increased costs are justified because there was a lack of specificity in Ten Cate’s application as to the affidavits upon which it would rely. Tiger says this resulted in Tiger’s counsel having to review almost all the evidence filed in respect of the claim to identify the evidence likely to be relevant.

[10]     The nature and history of the proceeding required a review of the evidence filed in relation to the claim.  The correspondence annexed to Tiger’s memorandum in  support  of  this  ground  shows  that  counsel  conferred  about  what  was  to  be included in the bundle.   It does not evidence the extent of difficulties Tiger now complains about.  This ground falls far short of the threshold for increased costs in my view.

[11]     Tiger submits that Ten Cate’s late abandonment of the EBITDA part of the

claim, and the failure to clarify quantum issues resulted in further unnecessary costs.

[12]     The EBITDA part of the claim was secondary to the primary claim.  Ten Cate submits  that  it  was  abandoned  after  receiving  Tiger’s  submissions.   A sensible appraisal of the merits of a claim and the abandonment of those issues peripheral to the main dispute are to be encouraged.  Although there may have been some wasted

costs  in  preparation  time,  this  was  offset  by  the  hearing  being  focused  on  the

5      TTAH Ltd v Koninklijke Ten Cate NV [2015] NZCA 348 at [66].

6      At [64] and [65].

7      TTAH Ltd v Koninklijke Ten Cate NV, above n 1, at [81]–[83].

substantive aspect of the warranty claim.   I do not consider increased costs are warranted in that situation.  Nor am I persuaded that the failure to clarify quantum issues contributed to unnecessary costs being incurred in the hearing.  The quantum of damages was but one factor to be weighed in considering the merits of the claim. These grounds do not justify an award of increased costs in my view.

[13]     Finally, Tiger says that the 2B scale costs are inadequate to compensate it for the costs incurred in opposing the forum application.  In that respect, it compares the

2B scale costs ($7,805) with the actual costs incurred being in excess of $40,000 (excluding GST).

[14]     Simply because  2B  scale  costs  are  substantially  less  than  those  actually incurred is not sufficient to justify a departure from the principle that costs should be predictable and expeditious. This ground also fails.

[15]     Overall, I am not persuaded that an award of increased costs is justified in the circumstances.

Quantum

[16]     Tiger’s 2B scale costs are calculated at $7,805.  Disbursements in the sum of

$171.18, plus expert fees of USD 8,910.00 are sought in addition.

[17]     Ten Cate does not oppose the 2B scale costs, but opposes expert fees being awarded on the grounds that the expert’s evidence was unnecessary and had no bearing on the forum argument. There is no challenge to the quantum of the fees.

[18]     The expert’s evidence was directed to an assessment of the merits of the claim according to Texas law.   This included the available causes of action and impact of limitation periods which would likely apply to the end-user claims.  An assessment of the strengths of the claim is a relevant factor to be taken into account in  a  strike-out  application  on  forum  grounds.   Although  it  ultimately  had  little bearing on my decision, I nevertheless consider that the evidence was necessary and

relevant to the forum arguments, particularly as matters stood prior to hearing.   I

consider recovery of the expert fees is appropriate in those circumstances.

[19]     Ten  Cate  also  submits  that  Tiger’s  application  for  increased  costs  is misguided and submits that a deduction of $1,500 to $2,000 from the costs otherwise awarded would be appropriate.

[20]     The Court’s discretion in respect of costs extends to awarding costs on costs applications.   However, this Court has been reluctant to award costs on costs applications, in part because it could lead to an infinite spiralling loop of costs applications.8    In accordance with those principles, I do not consider a reduction of Tiger’s 2B costs is warranted in the circumstances, and certainly not in the quantum suggested by Ten Cate’s counsel.

Result

[21]     The application for increased costs is declined.

[22]     Tiger is awarded 2B costs in the sum of $7,805 plus disbursements in the sum of $171.18, and expert fees in the sum of USD 8,910.00.

Edwards J

8      See Fogg v Frimley Estate Ltd (No 2) [2016] NZHC 314 at [17].