THE PHONE COMPANY LIMITED v M2 NZ LIMITED [2019] NZHC 3501

THE PHONE COMPANY LIMITED v M2 NZ LIMITED [2019] NZHC 3501 [23 December 2019]IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYI TE KŌTI MATUA O AOTEAROATĀMAKI MAKAURAU ROHECIV-2015-404-2903[2019] NZHC 3502BETWEEN THE PHONE COMPANY LIMITEDPlaintiffAND M2 NZ LIMITEDFirst DefendantM2 TELECOMMUNICATIONS PTYLIMITEDSecond DefendantHearing: On the papersCounsel: D W Grove for PlaintiffJ W J Graham and L L Fraser for DefendantsJudgment: 23 December 2019COSTS JUDGMENT OF PETERS JThis judgment was delivered by Justice Peters on 23 December 2019 at 11.30 ampursuant to r 11.5 of the High Court RulesRegistrar/Deputy RegistrarDate: ...................................Solicitors: Foy & Halse, AucklandChapman Tripp, AucklandCounsel: D W Grove, Auckland[1] In a judgment of 22 August 2018, I answered a preliminary question in favourof the plaintiff ("TPC") and ordered that, absent submissions to the contrary, thedefendants ("M2") should pay TPC's costs on a 2B basis together with all reasonabledisbursements.1[2] In June 2019 the Court of Appeal allowed M2's appeal against my decision,and awarded costs on the appeal to M2.2 The Court of Appeal also ordered that theHigh Court should determine costs in respect of the hearing before me, hence thisjudgment. I now have submissions on costs from each party, each claiming the Courtof Appeal's decision favours them, and each seeking an award of costs anddisbursements in the High Court.[3] By way of background, the preliminary question concerned the construction ofa clause, "clause (f)", in what was referred to as the Termination Agreement. Theparties had discharged the Termination Agreement in a subsequent agreement, referredto as the Variation Agreement. By this proceeding, TPC is seeking to have theVariation Agreement set aside and the Termination Agreement reinstated. TPC willbe entitled to commissions from M2 if it succeeds in doing so.[4] It was common ground between the parties that clause (f) provided forcommission to be calculated on "Net Receipts" deriving from M2 mobile phoneservices customers. The issue was which customers.[5] On M2's proposed construction, it was only those customers whose serviceswere/are delivered on the Vodafone mobile network.[6] On TPC's construction, it was all M2 customers, including those whoseservices were/are delivered on the Vodafone mobile network.[7] The effect of [33] of the Court of Appeal's decision is that the commission isto be calculated on Net Receipts from all mobile phone services customers of M2,unless the customer was procured for M2 by a contractor to, dealer for, or agent of,1 The Phone Company Ltd v M2 NZ Ltd [2018] NZHC 2167 at [49].2 M2 NZ Ltd v The Phone Company Ltd [2019] NZCA 230 at [52].M2 in New Zealand, in which case the commission is payable only if the customers'services are delivered on the Vodafone mobile network.[8] In their submissions to me on costs, each party acknowledges the Court ofAppeal adopted a different construction of clause (f) than those argued before me butsubmits that construction is closer to the one they sought before me. In this way, eachsays it was the successful party or the closest to it and should have costs, in accordancewith r 14.2(a), High Court Rules 2016.[9] The Court of Appeal's construction represents a middle ground. A customerderiving from a contractor, dealer or agent of M2 and whose services are deliveredother than on the Vodafone mobile network is outside clause (f), so M2 has succeededin that respect. But TPC has succeeded because commission will or may be calculatedon at least some — I do not know how many — customers whose services are notdelivered on the Vodafone mobile network. Nor do I know the financial impact of theCourt of Appeal's preferred construction as opposed to the two proposed to me.[10] Counsel for M2 submitted the Court of Appeal must have thought M2 hadsucceeded because it awarded M2 costs. M2 did succeed on appeal, ie the Court ofAppeal rejected TPC's construction. Regardless, neither of the constructions theparties proposed to me was correct and neither proffered the "middle ground" theCourt of Appeal adopted. Given that, I have decided the proper course is for eachparty to bear its own costs and disbursements. I order accordingly.Peters J