Wholesale Internet Networks Limited v Booker
[2021] NZHC 1390
•11 June 2021
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2020-404-2373
[2021] NZHC 1390
UNDER Rule 7.53 of the High Court Rules 2016 BETWEEN
WHOLESALE INTERNET NETWORKS LIMITED
Applicant
AND
COLIN GRAHAM BOOKER and NICKI BOOKER
Respondents
Counsel: M D Pascariu for applicant E J Taia for respondents Judgment:
11 June 2021
JUDGMENT OF TOOGOOD J
[Costs]
This judgment was delivered by me on 11 June 2021 at 4.00pm, pursuant to r 11.5 of the High Court Rules
Registrar/Deputy Registrar Date:
Solicitors:
Anderson Creagh Lai Ltd, Auckland for applicant Franklin Law, Pukekohe for respondents
WHOLESALE INTERNET NETWORKS LTD v BOOKER [2021] NZHC 1390 [11 June 2021]
[1] Wholesale Internet Networks Ltd (WINL) applies for costs against the respondents, Nicola and Colin Booker, following a successful application for an interim injunction without notice restraining the Bookers from interfering with WINL’s signal transmission equipment, which had been installed on the roof of a workshop at the Bookers’ Tuakau property.
[2] WINL seeks indemnity costs of $9,578.73 including expenses and disbursements; alternatively, it asks the Court to order increased costs of $9,369.79 and disbursements. It also seeks costs of $7,481 on the costs application.
Background
[3] WINL is an internet service provider, specialising in providing rural wireless broadband internet within New Zealand. In a minute explaining his reasons for granting the interim injunction without notice to the Bookers, Venning J set out the background:
To operate its networks [WINL] has entered agreements with property owners to enable WINL to install its equipment on towers and high locations. In a number of cases it has entered formal licence agreements. In March 2015 WINL’s predecessor and the Bookers entered an agreement for the equipment to be located at the Bookers’ property. No formal licence agreement was entered.
[4] It appears from the affidavit evidence filed that there had been difficulties in WINL’s provision of high-speed internet to the Bookers. After several years of what the Bookers say was sub-optimal service, they sought provision from an alternative internet service provider. On 16 November 2020, the Bookers requested WINL to remove their equipment from the property. Mrs Booker says the director of WINL, Mr Warren Hurst, sought a two-week period to undertake the removal. Mr Hurst says that WINL required the two weeks to generate a plan for the removal of the equipment from the Bookers’ property and its replacement so that continued service could be provided to other customers in the area.
[5] At 8.10 am on 4 December 2020, WINL was notified, by a call to Mr Hurst from Mr Booker, that it had until 5.00 pm that day to remove the transmitting
equipment. WINL was unable to comply with that request and sought an interim injunction restraining the Bookers from interfering with the equipment.
[6] On WINL’s without notice application for interim injunction, filed later the same day, Venning J ordered:1
[13]Until further order of the Court:
(a)the defendants, COLIN GRAHAM BOOKER and NICKI BOOKER, are restrained from interfering in any way with the normal operation of the equipment of the applicant, WHOLESALE INTERNET NETWORKS LIMITED, situated at and on the property and dwellings at 100 Roberts Road Tuakau (Property); and
(b)the respondents are required to permit the applicant and its agents enter the Property during 9am and 5pm on working days (or any other time agreed in writing between the parties) for the purpose of removing the applicant’s equipment.
[7] Nevertheless, the Bookers removed the transmitting equipment in breach of Venning J’s orders.
Approach
[8] Matters relating to costs remain at the discretion of the Court.2 However, it must exercise its discretion on a principled basis.3 The determination of costs, so far as possible, should be both predictable and expeditious.4 The party who fails with respect to a proceeding or an interlocutory application should pay costs to the party who succeeds.5
[9] Rule 14.6(3) of the High Court Rules 2016 relevantly provides that the Court may order a party to pay increased costs if the party opposing costs has contributed unnecessarily to the time or expense of the proceeding or a step in it by failing to comply with a direction of the Court.
1 Minute of Venning J, 4 December 2020. Venning J reserved costs (at [16]).
2 High Court Rules 2016, r 14.1(1).
3 Huakiwi Copenhagen Lot 4 Orchard Ltd v Te Moana [2019] NZHC 1582 at [13]; Bi v Westcoast Mining Ltd [2020] NZHC 2940 at [14].
4 High Court Rules 2016, r 14.2(1)(g).
5 Rule 14.12.
[10] Rule 14.6(4) provides that the Court may order a party to pay indemnity costs if the party has ignored or disobeyed an order or direction of the Court. Indemnity costs are awarded where a party has behaved either badly or very unreasonably, for example where their misconduct has been “flagrant”.6 As the party claiming increased or indemnity costs, WINL carries the onus of persuading the Court that an award is justified.7
Applicant’s submissions
[11] On behalf of WINL, Mr Pascariu submits that Venning J’s orders prohibited the Bookers from interfering or removing WINL’s equipment on their property but, he says, after receiving notice of the orders, the Bookers deliberately disobeyed it by removing and damaging WINL’s equipment. On this basis, WINL submits the Bookers ignored and disobeyed Court orders to the extent that indemnity costs are appropriate. Counsel refers to Huakiwi Copenhagen Lot 4 Orchard Ltd v Te Moana, in which Lang J awarded increased costs against the respondents, instead of indemnity costs, because the respondents’ contemptuous conduct was motivated out of “genuine concerns”.8 Mr Pascariu seeks to distinguish the conduct of the respondents in that case from the conduct of the Bookers. He argues that, although their desire for the transmission equipment to no longer remain on their property deserves some empathy, they should have abided the Court’s order regardless. Mr Pascariu also refers to the impact on the wider WINL network that the removal of the equipment has caused. Mr Hurst’s affidavit details the long-lasting consequences of the Bookers’ actions.
[12] In the alternative, Mr Pascariu submits, if the Bookers’ conduct does not meet the threshold for an award of indemnity costs, their conduct was unreasonable and warrants an award of increased costs against them (in the sum of $9,321 for the steps taken in obtaining the injunction orders).9 Grounds for an award of increased costs depend on a finding that “the party opposing costs has contributed unreasonably to the time or expense of the proceeding”.10
6 Bradbury v Westpac Banking Corporation [2009] NZCA 234, [2009] 3 NZLR 400 at [28]; Prebble v Huata [2005] NZSC 18 at [6].
7 Strachan v Denbigh Property Ltd HC Palmerston North CIV-2010-454-232, 3 June 2011 at [27].
8 Huakiwi Copenhagen Lot 4 Orchard Ltd v Te Moana, above n 3, at [21].
9 Holdfast NZ Ltd v Selleys Pty Ltd (2005) 17 PRNZ 897 (CA).
10 At [45].
Respondents’ submissions
[13] Relying on the timeline of events on 4 December 2020, Mr Taia says the Bookers were not served and given notice of the injunction until after they had removed the transmission equipment. In addition, he submits the Bookers’ actions cannot be determined on the evidence available to the Court, and such an inquiry can only occur if WINL pursues an action in the District Court.
[14]Mr Taia submits that:
(a)the only manner of service consistent with r 6.1 High Court Rules 2016 that has occurred is personal service;
(b)personal service was not particularly well executed, in that the process server was directed to the wrong address;
(c)the conduct of the Bookers does not meet the threshold of exceptionally bad behaviour, so indemnity costs are inappropriate in the circumstances;
(d)the Bookers were unaware that WINL was the owner of the transmitting equipment because they believed the property was owned by another company, Greenfields Internet Limited;
(e)the Court should be cautious about making an award of indemnity costs on the basis of affidavit evidence alone; and
(f)the Bookers’ actions fall short of the grounds for a grant of increased costs.
Discussion
[15] As the successful party, WINL is entitled to an award of costs on the injunction application. The key issue in deciding whether indemnity or increased costs should be awarded is whether the Bookers were sufficiently notified of Venning J’s orders before they removed the equipment. If the Bookers had not received notice of the
injunction, they could not have been held to have breached it flagrantly. A chronology of communications between the parties on 4 December 2020 is helpful:
Time Event 8.10 am WINL notified by Bookers they must remove equipment by 5pm 3.50 pm Minute granting injunction received by WINL solicitors 4.12 pm Sealed injunction order received by WINL 4.14 pm Mr Hurst on behalf of WINL texts Mr and Mrs Booker, informing them injunction granted 4.26 pm Copy of injunction order emailed to Bookers’ email address
by WINL
5.36 pm Mr Hurst on behalf of WINL receives text from Mrs Booker: “The last thing I needed was a txt threatening me with your high court shit on a Friday afternoon while I’m at work… Your gear is now just inside the gate for
collection.”
6.10 pm Mrs Booker personally served with injunction order11
When did the Bookers receive notice of the order?
[16] The Bookers were personally served with the injunction order after they had removed WINL’s equipment. It is unclear whether the Bookers had provided their email address for service for the purposes of r 6.1(d)(iii). Therefore, an email with the orders attached may have not met the definition for service in r 6.1(d). They claim they did not check their email until 10.30 pm on 4 December 2020.
[17] For present purposes, formal service of the order is not required if it can be proved that the defendant had notice of it.12 The question, therefore, is whether the text message sent to each of the Bookers’ mobile phones at 4.14 pm qualifies as sufficient notice. I am able to make that determination on the affidavits filed, without cross-examination.
[18] The text sent separately at 4.14 pm from Warren Hurst on behalf of WINL to Mr and Mrs Booker stated:13
A high court injunction has been issued this afternoon in the Auckland high court preventing yourselves or anyone else interfering with the normal operation of our equipment on your workshop. That includes the supply of
11 Affidavit of Michael Steven Holt as to Service, dated 22 December 2020 at [4].
12 Cook v Doyle [1946] NZLR 398 (SC) at 400 and 401.
13 Affidavit of Warren John Hurst in support of application for indemnity costs, 21 December 2020, annexure B.
power to it. A copy of the orders is being sent to your ruraltradeservices email address by my lawyers
[19] Mrs Booker’s response at 5.36 pm shows she had notice of the injunction order at that time and she acknowledges in her affidavit that she saw the 4.14 pm text message. Although her affidavit does not state when she received the text, she does say she checked her email and that “nothing was there”. I draw the reasonable inference that Mrs Booker had checked her email as a result of seeing the text message before the orders were sent to her at 4.26 pm. Accepting the affidavit evidence, I hold that it is highly probable that Mrs Booker had notice of the injunction by 4.30 pm at the latest.
[20] Mr Hurst says in his affidavit that customers of WINL experienced internet outages at 5.15 pm on 4 December 2020; that leads me to infer that the equipment was removed at approximately 5.10 pm. I conclude, therefore, that it is highly probable that Mrs Booker had been informed, prior to the removal of the equipment, that the High Court had made an order directing the Bookers not to do that.
[21] Mr Taia refers to the Bookers’ lack of confidence in their dealings with Mr Hurst and says that, if the orders had been “properly” brought to their attention before the removal of the equipment, they would have complied with the orders. I accept that, when her response is viewed in the context of the apparently difficult relationship with WINL, Mrs Booker may have thought the text message regarding the injunction was not genuine. But she took the risk that, if she and/or Mr Booker removed the equipment after receiving Mr Hurst’s text message, they would be contravening an order of the Court.
[22] I find, therefore, that Mrs Booker, if not her husband also, acted in wilful but not flagrant disobedience of the order, causing unjustifiable loss to WINL and that an award of either indemnity costs or increased costs against the Bookers is appropriate.
What amount of costs should be awarded?
The injunction application
[23] Either indemnity costs or increased costs may be ordered where there is a failure by the paying party to act reasonably.14 The Bookers acted unreasonably by disobeying the Court’s order, running the risk that they would be held to have breached it deliberately. They did not need to remove the equipment within minutes of receiving Mr Hurst’s text message.
[24] The Court uplifts from scale; it is not a question of awarding a percentage of actual costs, and the first step is to categorise the proceedings under r 14.3.15 I categorise this proceeding under category 2 because the proceeding was of average complexity requiring counsel of skill and experience considered average in the High Court. The reasonable time for each step is that categorised in schedule 3 of the High Court Rules. As far as I am able to determine, no step in this averagely complex application required more than a normal amount of time.
[25] To reflect the degree of the Bookers’ culpability, I award increased costs based on category 2B costs with a 50 per cent uplift.
[26] For WINL, Mr Pascariu argued that the quantum of increased costs and disbursements (claiming 2B costs of $6,214.00 with a 50 per cent uplift) should be
$9,369.79. In response, Mr Taia submits that Mr Pascariu has incorrectly calculated 2B costs on the injunction application by applying the costs rules related to an originating application under part 19 of the Rules and relying on cl 37 in schedule 3 of the Rules. WINL’s application for interim injunction, however, was expressly made under r 7.53, not part 19.
[27] I agree with Mr Taia that the correct calculation of 2B costs in this matter is as follows:
14 Bradbury v Westpac Banking Corporation, above n 6, at [27].
15 Holdfast NZ Ltd v Selleys Pty Ltd, above n 9.
Item Description Time Costs 22 Filing interlocutory application 0.6 $1,434.00 24 Filing memorandum for first or subsequent
case management conference or mentions hearing
0.4 956.00 29 Sealing order or judgment 0.2 470.00 Total $2,860.00
[28] Applying a 50 per cent uplift, the amount of increased costs payable on the injunction application is $4,290.00. I order the Bookers to pay that sum, plus disbursements.
Costs on the costs application
[29] In addition to the above, WINL seeks costs and disbursements on a 2B basis for the costs application, seeking $7,481.00. An award of costs on a costs application is available,16 but it can be difficult to attribute “success” on such an application as justifying costs. Here, the costs application was conventional and, although WINL succeeded in obtaining increased costs, it failed in its application for indemnity costs.
[30]I decline to award costs on the costs application.
Toogood J
16 Strata Title Administration Ltd v Body Corporate Administration Ltd [2014] NZCA 96 at [10]-[14].
0
6
1