Twentieth Century Fox Film Corporation v Dotcom

[2014] NZHC 2175

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2014-404-001272 [2014] NZHC 2175

BETWEEN

TWENTIETH CENTURY FOX FILM

CORPORATION, DISNEY ENTERPRISES INC, PARAMOUNT PICTURES CORPORATION, UNIVERSAL CITY STUDIOS PRODUCTIONS LLLP and WARNER BROS ENTERTAINMENT INC Applicants

AND

KIM DOTCOM First Respondent

BRAM VAN DER KOLK Second Respondent

RSV HOLDINGS LIMITED (FORMERLY KNOWN AS MEGASTUFF LIMITED) Third Respondent

Hearing:	Submissions filed 20 August 2014
Judgment:	9 September 2014

JUDGMENT OF COURTNEY J

This judgment was delivered by Justice Courtney on 9 September 2014 at 4.30 pm

pursuant to R 11.5 of the High Court Rules

Registrar / Deputyr Registrar

Date………………………….

TWENTIETH CENTURY FOX FILM CORPORATION v DOTCOM & ORS [2014] NZHC 2175 [9 September

2014]

[1]      This proceeding started life as an originating application by the plaintiffs for a freezing order restraining Mr Dotcom from dealing with or disposing of assets, and ancillary orders.  The proceedings were commenced to protect the plaintiffs against the possible expiry of criminal restraining orders.1   Pending the determination of that situation the plaintiffs brought an urgent application for an ancillary order requiring immediate  and  full  disclosure  of  Mr  Dotcom’s  financial  position  in  light  of

statements by him suggesting that he had access to substantial funds that were not subject to the criminal restraining orders.   In my decision dated 30 July 2014 I granted the plaintiffs’ application and made an order requiring Mr Dotcom to make full disclosure of his assets by 20 August 2014.2    I subsequently refused a stay of execution  of that  decision  but  varied  the order  so  that  the  extent  of  disclosure required would initially be limited to counsel.

[2]      The plaintiffs have applied for costs on a 3B basis.  Mr Dotcom resists costs being determined at this stage and does not accept that the proceeding meets the criteria for category 3.   Further, he submits that the claim for expert witness fees should be deferred.

Categorisation

[3]      Because of the urgency with which this matter came before the Court there has been no allocation of a category for the purposes of costs.

[4]      Mr Sumpter, for the plaintiffs, seeks to have costs fixed in relation to the ancillary order application on a 3B basis because of its urgency, novelty and complexity.  It is true that the matter fell to be determined under circumstances of considerable urgency.   The matter was first listed before Faire J on 29 May 2014. A timetable was put in place that required all evidence to be filed and served by 17 July

2014 and submissions by 21 July 2014. The matter was then argued before me on 22

July 2014.

[5]      It is also true that the application is of a kind infrequently made in New

Zealand courts.  Only rarely has relief been sought under Part 32 of the High Court

1      That risk has since been allayed by the Court of Appeal’s extension of the restraining orders for a further year: Commissioner of Police v Dotcom [2014] NZCA 408.

2      Twentieth Century Fox Film Corporation & Ors v Dotcom & Ors [2014] NZHC 1789.

Rules in relation to proceedings originating in a foreign jurisdiction and it is true that,  because of the nature of the allegations  made in  the underlying  litigation, complex issues arose regarding the available evidence and the relevant case law.

[6]      However, I am not satisfied that the proceedings are of such complexity or significance  as  to  be  viewed  as  category 3.    The  complexity of  this  particular application is better recognised by allowing time to be assessed under band C.

Should costs be fixed now?

[7]      Under r 14.8(1) costs on opposed interlocutory applications must be fixed when the application is determined unless there are special reasons to the contrary. However,  Ms  Walker,  for  Mr  Dotcom,  submits  that  fixing  of  costs  should  be deferred.   First, she notes that the application for an ancillary order is a precursor application  to  a substantive application  for a  freezing order and  that  there is  a timetable on foot to progress the hearing of the substantive application.  Secondly, the majority of costs and disbursements claimed relate to both the ancillary order and the substantive freezing order sought, which has yet to be determined.  Thirdly, there will be no hardship to the plaintiffs if costs are deferred.

[8]      I do not view any of these grounds as special reasons that would justify not fixing costs now in accordance with r 14.8.   To the contrary, the application for ancillary order, which could have been dealt with relatively cheaply and expeditiously,  ultimately  involved  substantial  time  and  expense  as  a  result  of Mr Dotcom’s decision to oppose the application on grounds which did not succeed. The lack of any hardship to the plaintiffs is beside the point; the scheme of the rules is that costs on interlocutory applications are to be fixed immediately unless there is special reason not to do so and that the party who prevails in an interlocutory application should be entitled to costs.

Disbursements

[9]      The plaintiffs seek reimbursement of the costs of obtaining the two affidavits from Mr Rotstein, a US attorney who gave expert evidence on US copyright law.  He has rendered invoices of US$15,901.80 and US$17,347.05 for the preparation of an affidavit  and  reply  evidence.     Mr  Sumpter  notes  in  his  memorandum  that Mr Rotstein’s fees reflect the urgency under which the evidence was produced and

the fact that they directly addressed statutory criteria of there being a good arguable case and a danger that any judgment in the US proceedings would go wholly or partly unsatisfied if a freezing order were not granted.

[10]     This claim is resisted on the basis that the disbursement is unreasonable. Ms Walker points out that the claim is, in fact, only 50 per cent of the actual amount invoiced, with the balance being for the account of the interested party, RIAA, suggesting that the actual fee was US$66,497.70.   Mr Rotstein’s hourly rate was shown at $795.   Ms Walker points, by comparison, to the expert witness assisting Mr Dotcom, Professor Jaszi, whose hourly rate was US$500 and who charged a fee of US$45,478.

[11]     The reasonableness of Mr Rotstein’s fee is something that I am unable to determine on the information before me.   The plaintiffs may, if they wish, file a further memorandum on this issue within 14 days and Mr Dotcom may respond within a further seven days.

Result

[12]     There are to be costs to the plaintiffs on the application for ancillary order and application for execution on a 2C basis.   Counsel are to confer as to the calculation of those costs.  Leave is reserved to seek further directions if agreement cannot be reached.

[13]     Disbursements of $540 for the filing fee are allowed.  If the plaintiffs wish to pursue a claim for Mr Rotstein’s fee they will need to file a further memorandum and

possible affidavit addressing the issue of reasonableness raised by Ms Walker.

P Courtney J