PORTACOM NEW ZEALAND LIMITED V PORT A ROOM LIMITED AND ANOR HC AK CIV 2007-404-002536

PORTACOM NEW ZEALAND LIMITED V PORT A ROOM LIMITED AND ANOR HC AK CIV 2007-404- 002536 27 May 2008IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY CIV 2007-404-002536BETWEEN PORTACOM NEW ZEALAND LIMITED Plaintiff AND PORT A ROOM LIMITED First Defendant AND JOSEPH CHRISTOPHER PARTRIDGE Second Defendant Hearing: 27 May 2008 (on the papers) Counsel: AH Brown QC for plaintiff CL Elliott for defendant Judgment: 27 May 2008 at 1630JUDGMENT OF ASSOCIATE JUDGE FAIRE [on costs]Solicitors: Hesketh Henry, Private Bag 92 093, Auckland for plaintiff D Gates, PO Box 222, Whangaparaoa for defendants[1] The defendants apply for costs consequent upon the plaintiff's discontinuance of this proceeding. [2] The defendants have also discontinued their counterclaim. The plaintiff makes no application for costs in respect of that discontinuance. [3] Mr A Brown QC, in his memorandum in opposition to costs, sets out the relevant chronology which I adopt and which is as follows:Date Description21 November 2006 Hearing of PORTACOM – PORTA CUBE trade mark opposition proceedings before Assistant Commissioner Jones. 7 May 2007 Decision of Assistant Commissioner Jones in trade mark opposition proceedings. Plaintiff successful in preventing registration of PORTA CUBE on grounds of confusion or deception with PORTACOM mark. 7 May 2007 High Court application including application for interim injunction issued against Aptek Services Limited. 1 June 2007 Aptek Services Limited removed as defendant and Port A Room Limited and Mr Partridge added as defendants by consent. 28 Jun 2007 Notice of opposition filed by defendants. This raised, as a ground of opposition, the claim that the mark is "non distinctive, directly descriptive, and generic". No counterclaim or statement of defence was filed at that point. Indeed a statement of defence and counterclaim was not filed until 13 December 2007 – seven days after the interim injunction decision. 28 November 2007 Hearing before Keane J. 6 December 2007 Decision of Keane J refusing interim injunction. As to costs, Keane J stated: "The defendants are entitled to costs, as I should have thought at scale 2B. If that cannot be agreed PNZL's memorandum must be filed within seven working days of the issue of this decision and the defendants' reply within the seven working days after."12-14 December 2007 Counsel for the plaintiff, Ms Macfarlane of Hesketh Henry reached agreement with the defendants' counsel, Mr Elliott, on the issue of costs on a 2B basis at $4,960. 13 December 2007 Defendants' filed a statement of defence and counterclaim. This raised for the first time a specific request for a declaration under the Trade Marks Act 2002 that the trade marks of the plaintiff were invalid and an order directing cancellation and/or removal of them. 17 December 2007 Callover before Priestley J. It is to be noted that Priestley J had had no involvement with the proceedings prior to this callover. February 2008 No substantive steps were taken by the parties; settlement approaches occurred. 19 February 2008 Directions conference adjourned to enable settlement discussions. 27 March 2008 Plaintiff advised intention to discontinue proceedings against defendants. 30 April 2008 Defendants advised discontinuance of counterclaim.[4] It will observed from the summary contained in the chronology that the decision of Keane J refusing the interim injunction made specific provision for costs. My understanding from the memorandum of counsel is that an agreement as to costs is, in fact, acknowledged on both sides. The result is that costs associated with the preparation and filing of an opposition to the application for the interim injunction, preparation for the hearing of the defended interim injunction and appearance at that hearing are all covered by the agreement. That agreement provides an allowance for costs in the defendants' favour in the sum of $4,960. I take the view, therefore, that it is not appropriate to revisit the steps taken in relation to that application in fixing costs arising out the notice of discontinuance. [5] Rule 476C of the High Court Rules provides:476C CostsUnless the defendant otherwise agrees or the Court otherwise orders, a plaintiff who discontinues a proceeding against a defendant must pay costs to the defendant of and incidental to the proceeding up to and including the discontinuance[6] The Rule raises a presumption that a discontinuing party will be liable for costs: North Shore City Council v Local Government Commission 9 PRNZ 182. Generally, the Court will not inquire into the merits of the case unless the answer is clear and obvious. The Court will look at the reasonableness of the bringing of the proceeding and of the defending of the proceeding. [7] Once the above considerations are taken into account, the matter is to be considered pursuant to the cost regime which was introduced on 1 January 2000 and is found in rr 46 to 53 of the High Court Rules. [8] It is appropriate that I refer briefly to the approach which the Court must take on an applications for costs. Rule 46 provides that costs are to be in the discretion of the Court. In Mansfield Drycleaners Ltd v Quinny's Drycleaning (Dentice Drycleaning Upper Hutt) Ltd CA 296/01 29 September 2002 the Court of Appeal, in noting the Court's over-riding discretion pursuant to r46 said:there is a strong implication that a Court is to apply the regime in the absence of some reason to the contrary: Body Corporate 97010 v Auckland City Council. We do not think that a Court should hesitate to depart from the regime where appropriate but we agree that some articulation of the reason for doing so is to be expected, however succinct. If no reason is given it will expose the award to close appellate scrutiny.[9] The general principles to be applied in the exercise of that discretion are those contained r47. [10] In Glaister & Ors v Amalgamated Dairies Ltd & Anor [2004] 2 NZLR 606 the Court of Appeal endorsed the proposition it made in the earlier decision inMansfield Drycleaners Ltd v Quinny's Drycleaning (Dentice Drycleaning Upper Hutt) Ltd. It noted that if there was any departure from the costs regime as set out by the High Court Rules, that could only be done on a particularised and principled way. [11] Mr Elliott, in his memorandum on the defendants' behalf, has put in issue the following matters: a) The appropriate category for the proceeding – r 48(1);b) The appropriate allowance for each step – r 48B; c) Whether increased costs should be ordered – r 48C; and d) Whether an allowance for an expert's fee as a disbursement in the sum of $3,542.75 should be made – r 48A. [12] The summary of matters in issue is a convenient starting point for determining the appropriate quantum of costs in this case. That is because it follows the approach which the Court of Appeal, in Holdfast NZ Ltd v Selleys Pty Ltd (2005) 17 PRNZ 897 described as the correct approach. [43]. [13] I deal, firstly, with the categorisation of the proceeding. Rule 48 sets the three possible categories that may apply. What has been advanced on the defendants' behalf is that this is a Category 3 proceeding which, by definition, must be:Proceedings that, because of their complexity or significance, require counsel to have special skill and experience in the High Court.[14] Mr Brown submitted that the case fell within Category 2 which is defined as:Proceedings of average complexity requiring counsel of skill and experience considered average in the High Court.[15] I am called upon here to consider the category for the proceeding. The exercise necessarily, leaving aside the interim injunction hearing, is being carried out at a relatively early stage of the proceedings. It occurs after the filing of a statement of defence and counterclaim. Mr Elliott submitted that I could take into account the fact that had the matter proceeded to trial it might well have been a test-case on genericism under New Zealand trade mark law. He submitted that that might well have justified the involvement of counsel with specialised experience. [16] Mr Brown saw no such need in this case. To some extent, he is supported also by the view that Keane J took of the proceeding when he issued his judgment on the interim injunction application.[17] When I consider the material that is on the Court file which consists principally of the pleading, I am driven to the position that this is a Category 2 case as that is defined in r 48 of the High Court Rules. In reaching that view I do not overlook the fact that a category for a proceeding may be reviewed at case management conferences applying r 429 and Schedule 5 of the High Court Rules. However, at the stage to which this case has reached, I conclude that Category 2 remained the appropriate categorisation up to, and including, the filing of the notice of discontinuance. [18] The next inquiry that must be made is what are the appropriate allowances for the steps that have been taken. Again, I am looking at steps not covered by the interim injunction application. The first step is Item 2 in Schedule 3. That covers the commencement of the defence by the defendant (receiving instructions, researching facts and law and preparing, filing and serving a statement of defence). Item 2 covers the general preparation of the commencement of the defence. Counsel's memoranda did not assist me specifically with this item. What I take from Item 2, however, is that it is wider than simply preparing a statement of defence. To consider the matter otherwise and to somehow merge the preparation undertaken in respect of the interlocutory application would confuse the fact that Item 2 and Item 4.12 are usually mutually exclusive provisions so far as Schedule 3 is concerned. What, then, is required here, is some assessment of what was needed to commence the defence, research the facts and law and prepare the appropriate statement of defence. In determining that issue what is required, then, is to ascertain, in terms of r 48B(2) whether this was a case where a normal amount of time for the particular step is considered reasonable, in which case Band B is appropriate, or whether a comparatively large amount of time was considered reasonable, in which case Band C would be appropriate. [19] The immediate difficulty I faced when I consider this application is that no special allowance appears to have been made for the filing of affidavits in opposition. In other words, it was treated as a Band B allowance for that work. Mr Elliott, in his submissions, referred to the fact the defendants were required to file substantial evidence on the interim injunction application and that that effort was wasted and would have been, even if the case had gone to trial. He also refers to thefact that evidence on the substantive issues is equally wasted now that the substantive action is not to proceed. I was not, however, provided with any detailed information as to the preparation that was undertaken for the purpose for preparing the defence generally. I have considered the pleading and the affidavits filed in opposition to the interim injunction with a view to gaining an insight into that part of the preparation of the case that could properly be referred to under Item 2 of the Schedule 3 to the High Court Rules. I am not convinced that this particular case would justify a Band C allowance for the commencement of the defence in terms of Item 2. In my view, the correct allowance is that which is provided under Band B. [20] The remaining items that must be dealt with are the conferences that were scheduled for 17 December 2007, 19 February 2008, 27 March 2008 and 30 April 2008. The conference on 19 February 2008 was vacated as a result of a joint memorandum of counsel and, therefore, can be excluded. Each of the conferences, otherwise, required memoranda. Each seems, to me, to fit within Band B. An allowance of 1.2 days for the conferences must be made. An allowance for memoranda of 1.6 days must be made. I also allow for the joint memorandum for the vacated 19 February 2008 conference. That makes the allowance for memoranda of two days. [21] As a result of the exercise I have undertaken, the costs based on Category 2 Band B, and applying the Schedule 2 rate indicates a cost figure of $8,960 based on 5.6 days. That, of course, is additional to the agreed figure for the interim injunction hearing of $4,960. [22] The next question that I must consider is whether a case is made out for increased costs pursuant to r 48C. I have carefully considered counsel's memorandum but do not consider that any of the grounds specified in r 48C can be applied in this case. There has been a notice of discontinuance filed after the refusal of the interim injunction application by Keane J and one perceives before any substantial additional work was undertaken before the filing of the notice of discontinuance. I conclude that increased costs, accordingly, are not justified.[23] The remaining issues relates to the disbursements. That must be analysed in terms of r 48H. The difficulty that I face with this matter is that the appropriate time to deal with that disbursement appeared to be with the conclusion of the interim injunction application. The person in respect of whom the recovery is sought filed an affidavit in opposition. It does therefore seem to me that it is not appropriate to make an additional allowance arising out of the proceeding generally for this disbursement as the charge appears to relate specifically to the interim injunction hearing and the preparation of Mr Innes's affidavit. [24] Counsel's memoranda refer to general disbursements which, of course, can be analysed by the Registrar on receipt of the appropriate invoices pursuant to r 48H and do not require separate analysis in this judgment.Conclusion[25] I therefore reach the conclusion that the total costs, not including the interim injunction costs, that should be allowed are $8,960 together with disbursements as fixed by the Registrar. That is on the express understanding that there are additional costs to be paid pursuant to the agreement arising out of the interim injunction hearing of $4,960.Orders[26] I order accordingly. _____________________ JA Faire Associate Judge