ALUSI LIMITED v G J LAWRENCE DENTAL LIMITED [2018] NZCA 496

ALUSI LIMITED v G J LAWRENCE DENTAL LIMITED [2018] NZCA 496 [13 November 2018]IN THE COURT OF APPEAL OF NEW ZEALANDI TE KŌTI PĪRA O AOTEAROACA422/2018[2018] NZCA 496BETWEEN ALUSI LIMITEDFirst ApplicantOPENYD LIMITEDSecond ApplicantRUDAYNA IBRAHIM, ABDULAHABDULQADIR AND OMAR JASSIMThird ApplicantsAND G J LAWRENCE DENTAL LIMITEDRespondentCourt: Brown and Clifford JJCounsel: C J Griggs for ApplicantsR C Laurenson for RespondentJudgment:(On the papers)13 November 2018 at 2.15 pmJUDGMENT OF THE COURTA The application for leave to appeal is declined.B The applicants are jointly and severally liable to pay the respondent one setof costs for a standard application on a band A basis and usualdisbursements.____________________________________________________________________REASONS OF THE COURT(Given by Clifford J)Introduction[1] The applicants are Alusi Ltd (the first applicant), Openyd Ltd(the second applicant) and Rudayna Ibrahim, Abdulah Abdulqadir and Omar Jassim(the third applicants). The respondent is GJ Lawrence Dental Ltd (Lawrence Dental).Alusi and Lawrence Dental are the dental practices respectively of Dr Ibrahim (one ofthe third applicants) and a Dr Graham Lawrence.[2] Drs Ibrahim and Lawrence operated their respective dental practices fromshared premises in Raumati. As a result of a falling out between them,Lawrence Dental commenced proceedings against Alusi and its related parties.Openyd Ltd then filed appearances under protest to jurisdiction on the basis that thedisputes reflected by those proceedings were governed by an arbitration clause in adeed of association between the parties.[3] Lawrence Dental subsequently, and before the protest to jurisdiction had beenheard, filed an application for an interim injunction. Grice J heard that application on14 March 2018 and gave judgment on 26 March 2018, declining to award theinjunction sought but awarding costs against Alusi and Openyd Ltd.1[4] Simon France J subsequently granted Alusi a stay of proceedings, holding itwas open to Alusi to claim the arbitration agreement applied if it wished to do so.2[5] The applicants now wish to challenge Grice J's costs award. They requireleave to do so. Grice J declined leave.3 Accordingly, the applicants apply to this Courtpursuant to s 56(5) of the Senior Courts Act 2016 for leave to bring that appeal.Law[6] Leave to appeal under s 56(5) should only be granted where the significanceor implications of an arguable error of fact or law, either for the particular case or for1 G J Lawrence Dental Ltd v Alusi Ltd [2018] NZHC 533.2 G J Lawrence Dental Ltd v Alusi Ltd [2018] NZHC 1342.3 Alusi Ltd v G J Lawrence Dental Ltd [2018] NZHC 1793 [Leave decision].the applicant or as matter of precedent, warrants the further delay the appeal processwill involve.4Grounds of application[7] The applicants advance the following grounds:(a) Grice J erred in law in awarding costs to the respondent at the sametime as declining the respondent's applications for interim injunctions.The general principle is that costs follow the event. As the respondentdid not succeed, it should not have been awarded costs. The Judge'srationale, namely that a written undertaking given by Alusi during thehearing of the respondent's unsuccessful application put the respondentin a substantially better position than it had been on the basis of the oralundertaking given by Alusi's counsel at the first call of the respondent'sapplications, was contrary to principle and plainly wrong.(b) Grice J was wrong to hear the interim injunction application while theapplicant's protest to jurisdiction remained live. There was in effect nojurisdiction for the costs award. This is a matter of general importance,involving an inconsistency in case law.[8] The respondent opposes the application for leave. In doing so, it supports theJudge's reasoning.Analysis[9] Lawrence Dental commenced its proceedings in the High Court at issue hereon 14 February 2018. In effect, it sought the dissolution or termination of all legalrelationships between Drs Ibrahim and Lawrence, and their respective associatedparties. The applicants' protest to jurisdiction (made by the second applicantOpenyd Ltd) was filed on 27 February 2018. On 1 March 2018 Openyd Ltd itselfapplied for interlocutory relief by way of interim injunction to halt Lawrence Dental'sapplication. Lawrence Dental then filed for interlocutory relief on 9 March 2018 to4 Ngai Te Hapu Inc v Bay of Plenty Regional Council [2018] NZCA 291 at [17].restrain Openyd Ltd from taking "any action of any kind" against it and, morespecifically, to restrain it from taking further action to enforce a notice of terminationof a statutory tenancy it had given as part of the dispute between Drs Ibrahim andLawrence.[10] No question of jurisdiction was raised when Grice J consideredLawrence Dental's applications on 14 March 2018. Given that factor, and that theapplicants had in effect themselves applied for interim relief prior to the hearing oftheir protest, this is an inappropriate case for a grant of leave to resolve inconsistenciesin case law.[11] Moreover, s 9 of the Arbitration Act 1996 anticipates applications to court forinterim measures "before or during arbitral proceedings". Williams & Kawhura onArbitration states that where an arbitral tribunal has not yet been formed, the courtmay be properly called on to act if one party seeks interim measures.5Cosco (New Zealand) Ltd v Port of Napier Ltd and Marnell Corrao Associates Inc vSensation Yachts Ltd are two such examples.6 In Mike Pero Real Estate Ltd vTauranga Realty Ltd, Associate Judge Bell granted a stay following the plaintiff'ssuccessful application for interim relief.7 In Dependable Property Management Ltd vLi interim orders were granted on a without notice basis, the defendant protestingjurisdiction. A stay was later granted, and it was held the interim orders were properlymade, and could be modified, suspended or cancelled by the Tribunal.8[12] Advanced Cardiovascular Systems Inc v Universal Specialities Ltd, wherethis Court indicated a protest to jurisdiction must be determined before a court canembark on hearing the proceeding, whether substantively or in any interlocutory way,did not involve a protest on the basis of an arbitration agreement but rather on the basisof forum non conveniens.9 That principle was also the focus of Discovery Geo Corpv STP Energy Pte Ltd, a further case on which the applicants relied.105 David AR Williams and others Williams & Kawharu on Arbitration (2nd ed, LexisNexis,Wellington, 2017) at 262.6 Cosco (New Zealand) Ltd v Port of Napier Ltd HC Napier CP7/99, 31 March 1999; andMarnell Corrao Associates Inc v Sensation Yachts Ltd (2000) 15 PRNZ 608 (HC).7 Mike Pero Real Estate Ltd v Tauranga Realty Ltd [2015] NZHC 1162.8 Dependable Property Management Ltd v Li [2015] NZHC 3355, (2015) 23 PRNZ 145 at [46].9 Advanced Cardiovascular Systems Inc v Universal Specialities Ltd [1997] 1 NZLR 186 (CA).10 Discovery Geo Corp v STP Energy Pte Ltd [2012] NZHC 3549, [2013] 2 NZLR 122.[13] We are therefore not persuaded that the challenge the applicants wish to bringto Grice J's cost decision raises a point of general importance so as to make a grant ofleave appropriate.[14] Nor are we persuaded that the Judge erred in principle or was otherwise plainlywrong when she made the award in favour of Lawrence Dental. Awards of costs arediscretionary, but of course must be made in accordance with established principles.Here the Judge, who considered these matters at the hearing which took place beforeher, reached the view that the applicants' conduct in the course of the proceedingsoverall made that award appropriate. In declining leave, she recorded her view thatthe formal undertaking given by Alusi, by reference to which she declined LawrenceDental's application for interim relief, was substantially more advantageous forLawrence Dental than had been the earlier, oral, undertaking of its counsel.11 Shenoted that, although not relevant to her decision at the time, events subsequent hadshown the importance of formalising and detailing the terms found in that formalundertaking.12 Given Alusi's pursuit of what the Judge described as a "decisivevictory", those formalised terms were of some significance.13 In our view, in thesecircumstances the view that the Judge took of the costs significance of the way Alusihad conducted the proceedings was one that was open to her.Result[15] We accordingly decline this application for leave to appeal.[16] The applicants are jointly and severally liable to pay the respondent one set ofcosts for a standard application on a band A basis and usual disbursements.Solicitors:Lawler & Co, Auckland for ApplicantsGillespie Young Watson, Lower Hutt for Respondent11 Leave decision, above n 3, at [20].12 At [21].13 At [22].