PHILIP MOORE & COMPANY LIMITED v SURRIDGE [2018] NZHC 1132

PHILIP MOORE & COMPANY LIMITED v SURRIDGE [2018] NZHC 1132 [21 May 2018]IN THE HIGH COURT OF NEW ZEALANDWELLINGTON REGISTRYI TE KŌTI MATUA O AOTEAROATE WHANGANUI-Ā-TARA ROHECIV-2016-485-735[2018] NZHC 1132BETWEEN PHILIP MOORE & COMPANY LIMITEDPlaintiffAND ANNE JOSEPHINE SURRIDGEDefendantOn the papers:Counsel: S J Iorns for PlaintiffD Grove for DefendantJudgment: 21 May 2018JUDGMENT OF CHURCHMAN J(COSTS)Introduction[1] In a judgment dated 28 March 2018, the Court found that the defendant, AnneSurridge, had breached her obligations under the Fair Trading Act 1986 andintentionally interfered with the business of the plaintiff, Philip Moore & Co Ltd(PMC). Exemplary damages in the total sum of $30,000 were awarded against her.1The Court invited the parties to settle the issue of costs between themselves but, in theabsence of agreement, provided for the exchange of memoranda.[2] Counsel have been unable to agree and memoranda have been exchanged.PMC, as the successful party, seeks disbursements and costs on a 2B basis in theamount of $76,850.13.1 Philip Moore & Company Ltd v Surridge [2018] NZHC 562.[3] Ms Surridge seeks costs of $43,931.00 on the basis that PMC failed to establishany losses. She also submits that an uplift of 50 per cent is appropriate in thecircumstances, bringing the total amount sought to $65,896.50.Costs on filing application for injunction[4] PMC commenced the proceedings by seeking and obtaining an injunction. Thecosts in relation to the injunction, as calculated by PMC, total $5,798.00. AlthoughMs Surridge does not oppose a cost award in relation to this injunction, she submitsthat 1.5 days for the preparation of written submissions, which makes up $3,345.00 ofthis portion of the claim, is excessive. Ms Surridge submits that, in the circumstances,an award of $5,000 for costs relating to the injunction application would beappropriate.[5] PMC states that it was wholly successful in obtaining injunctive relief, whichit maintains was a completely unnecessary step and ought to have been avoided, andtherefore increased costs are sought. It notes that its actual legal costs for the draftingof this application were $7,302.35.[6] Under the High Court Rules, all matters relating to costs are at the discretionof the court2 and increased costs may be ordered in relation to any step in a proceedingif a reason exists which justifies the court making an order for increased costs.3[7] In the circumstances, which includes some quite egregious conduct on the partof Ms Surridge which necessitated PMC seeking injunctive relief, I am prepared togrant the $5,798.00 sought.Costs of balance of proceedings[8] Counsel for Ms Surridge, Mr Grove, submits that these proceedings, at leastafter the injunction application was filed and granted, were a complete waste of theparties' time and money, with the costs incurred by both parties greatly outweighingthe award of $30,000 in exemplary damages. Mr Grove submits that Ms Surridge was2 High Court Rules, r 14.1.3 Rule 14.6.right to vigorously defend these proceedings, given that the damages sought by PMCwere in excess of $300,000. Ms Surridge therefore seeks increased costs on the basisthat PMC failed to act reasonably in pursuit of its claim.4[9] PMC also seeks increased costs on the basis that, as provided for by the HighCourt Rules, r 14.6(3)(b)(iii), there was an unreasonable denial of facts byMs Surridge. Counsel for PMC, Mr Iorns, submits that, while PMC did not obtain allthat it sought, the judgment is nevertheless viewed as a vindication. The monetarydamage was never the critical aspect of the claim, rather it was control of the companythat was sought. Shortly after being granted injunctive relief, PMC had offered tosettle the matter with Ms Surridge for $34,566.90 plus loss of control of KyleChemicals Limited (Kyle). Ms Surridge, in her Statement of Defence, had describedherself as the executive director of Kyle, claiming responsibility for its day to dayoperations, and consistently refused to acknowledge the actual position. Mr Iornssubmits that had she admitted the current factual position from the outset, this mattercould have been dealt with without the need for a full trial to establish the facts.[10] Although PMC failed to prove its special damages claim and was put on noticein relation to proof of loss well before trial, Ms Surridge was the unsuccessful partyand, given her conduct leading up to and throughout these proceedings, I decline toaward her any costs against PMC, let alone increased costs. The factual claims sheadvanced were untenable and contributed to the length and complexity of the hearing.I have considered whether I should award PMC increased costs on the basis thatMs Surridge's refusal to admit the actual situation in relation to the running of Kyle,however, I have decided not to do so. This decision reflects the fact the shortcomingsin the way the plaintiff's case was run contributed unnecessarily to the expense of theproceeding. It must be said that neither party emerges blameless in how they chose toconduct themselves during the course of these proceedings.[11] PMC pointed out that it made two settlement offers in the lead up to trial on awithout prejudice save as to costs basis. In the initial offer, PMC indicated it wouldbe prepared to settle on payment by Ms Surridge of $150,000 (its calculated actual4 Bradbury v Westpac Banking Corp [2009] NZCA 234, [2009] 3 NZLR 400, (2009) 19 PRNZ 385at [27].losses being $327,635.52) along with the establishment of a joint venture and transferof Kyle. When this offer elicited no response, a second one was made which wassubstantially the same but with the payment reduced to $90,000. It was met with acounter-offer that the parties walk away with costs to lie as they fall.[12] In Sanson v Parval Marketing Ltd, Asher J stated:5[30] However, a plaintiff cannot generally improve its costs position bysending a letter labelled a Calderbank offer seeking more or less the fullamount claimed, and by then seeking to justify an increased award of costsbecause it was not accepted. What the letter effectively sought wascapitulation on the part of the defendants. While the defendants have failed inthe proceeding they were entitled to have their day in Court, and whether ornot a Calderbank offer is sent the option to capitulate is obviously alwaysbefore a defendant whether or not offered by the plaintiff. A refusal to accedeto a request in writing to so capitulate should not make a defendant's costposition ultimately worse.[13] Other than in respect of a counterclaim, Calderbank offers generally flow fromthe defendant to the plaintiff rather than the plaintiff to the defendant. There may becircumstances when a plaintiff can make a Calderbank offer but they will be unusual.However, for any Caldebank offer to be relevant when it comes to assessing costs, theparty relying on it needs to have achieved a better outcome than what they hadpreviously offered to settle for.6 Here, the plaintiff achieved less than their settlementoffer. The fact that they made the offer is therefore completely irrelevant to thequestion of costs. Equally as irrelevant is the defendant's offer to walk away lettingcosts lie where they fall.[14] There were serious defects in PMC's case, particularly around quantifying itsloss. Despite being put on notice as to these defects, the plaintiff did nothing to addressthem and failed to establish its claimed special damages. Under r 14.7, the Court mayreduce the costs otherwise payable where a reason exists which justifies the Courtdoing so. It is my view that due to the significant deficiencies in PMC's case and itsfailure to establish liability for any of the special damages claim, it is appropriate toreduce its costs by 50 per cent for the balance of the proceedings.5 Sanson v Parval Marketing Ltd HC Auckland CIV-2006-404-7231.6 Bluestar Print Group (NZ) Ltd v Mitchell [2010] NZCA 385 at [24].Conclusion[15] I hereby award costs to the plaintiff as follows:(a) costs for the interim injunction of $5,798.00;(b) reduced costs on the balance of the proceedings of $25,310.50; and(c) disbursements of $20,431.13.[16] This comes to a total of $51,539.63.Churchman JSolicitors:Alan Campbell for Plaintiffkplegal Limited, Auckland for Defendant