Brother International (NZ) Limited v Calidad Distributors Pty Limited

[2016] NZHC 1152

IN THE HIGH COURT OF NEW ZEALAND

WELLINGTON REGISTRY

CIV-2016-485-251

[2016] NZHC 1152

BETWEEN

BROTHER INTERNATIONAL (NZ) LIMITED
Plaintiff

AND

CALIDAD DISTRIBUTORS PTY LIMITED

Defendant

Hearing:

30 May 2016

Counsel:

R J Gordon for Plaintiff

H McIntosh for Defendant

Judgment:

31 May 2016

JUDGMENT OF CLARK J

(Costs)

[1]    For reasons set out in counsel’s memorandum dated 26 May 2016 the plaintiff no longer pursues its application for an interim injunction. The plaintiff does, however, seek costs on its interlocutory application and proposes a timetable towards determination of costs “on the papers”. In short, and as recorded in Mr Gordon’s memorandum, the plaintiff’s position is that, to all intents and purposes, its interlocutory application has succeeded and costs should now follow the event.

[2]    The defendant opposes that course. Mr McIntosh, counsel for the defendant, submits that the substantive proceeding has not been discontinued and that matters remaining at issue in the substantive proceeding also formed the basis for opposing the interlocutory application. The appropriate course, Mr McIntosh submits, is to reserve costs pro tem.

BROTHER INTERNATIONAL (NZ) LIMITED v CALIDAD DISTRIBUTORS PTY LIMITED [2016] NZHC 1152 [31 May 2016]

[3]    I have reached the view that costs should be determined at the point when the outcome in the substantive proceeding is known. Five particular considerations influence me towards that view.

(a)The reason it is no longer necessary to hear the interim injunction application is because the Warehouse Group has removed from its shelves the products whose promotion and sale the plaintiff sought to restrain. Mr McIntosh makes the point that the defendant took no step towards this outcome. The fact that the interlocutory application does not now require determination is attributable to the actions of a third party.

(b)The interlocutory application has not been determined. Rule 14.8 of the High Court Rules governing costs on interlocutory applications which have been determined is not therefore directly applicable.

(c)Nor has any party “failed” in terms of the principle in r 14(2)(a) that the party who fails should pay costs to the party who succeeds.

(d)Rule 15.23 of the High Court Rules governing discontinuance may be analogous to the present situation where an applicant has effectively discontinued the application. If the r 15.23 presumption does apply the expectation would be that the applicant should pay costs on withdrawal of the application. That presumption may be displaced if there are circumstances which make it just and equitable that it should not apply. Making such an assessment requires the Court to engage in the merits. That engagement is yet to occur because the substantive claim is still afoot.

(e)Further, it seems that both parties may seek increased costs. Again, that will require the Court to assess merits and conduct. Those questions cannot be assessed and determined without hearing from the parties as to whether their claims are justified. The matters to be determined overlap in large measure with the grounds of opposition. Consequently,

it can be expected that the trial Judge who will hear and determine the substantive issues will be well placed to reach a view on the merits of the interim injunction application.

[4]    For these reasons I conclude that the appropriate course is for costs to be determined by the trial Judge. My conclusion is similar to that which Duffy J reached in similar circumstances. In Commercial Factors Limited v Veda Advantage (NZ) Limited a fixture for an interim injunction hearing was vacated at the request of the parties. The defendant sought costs including indemnity costs. Duffy J noted that the High Court Rules did not provide for such a situation and decided that the circumstances before her warranted a departure from the general rule in r 14.8.1

[5]    I am of the view that the interests of justice are best served by reserving costs pending the outcome of the substantive proceeding.

Karen Clark J

Solicitors:

Wilson Harle, Auckland for Defendant

Minter Ellison Rudd Watts, Wellington for Plaintiff

1      Commercial Factors Limited v Veda Advantage (NZ) Ltd HC Auckland, CIV-2010-404-0046798, 21 June 2011 at [9].