Brandlines Limited v Central Forklift Group Limited HC Wellington CIV-2008-485-2803 [2011] NZHC 734 (14 June 2011)

Last Updated: 30 July 2011

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

CIV-2008-485-2803

_{CIV-2009-485-384}

BETWEEN BRANDLINES LIMITED First Plaintiff

AND CONTAMO PALMERSTON NORTH LIMITED

Second Plaintiff

AND CENTRAL FORKLIFT GROUP LIMITED First Defendant

AND EXIDE TECHNOLOGIES LIMITED Second Defendant

Counsel: P.M. Smith - Counsel for First Plaintiff L.J. Taylor - Counsel for Second Plaintiff D.J.S. Parker - Counsel for First Defendant

A.L. Holloway - Counsel for Second Defendant

Judgment: 14 June 2011 at 2:30 PM

_{JUDGMENT AS TO COSTS OF ASSOCIATE JUDGE D.I. GENDALL}

This judgment was delivered by Associate Judge Gendall on 14 June 2011 at 2.30 pm under r 11.5 of the High Court Rules.

Solicitors: Fortune Manning, Solicitors, PO Box 4139, Auckland

Fitzherbert Rowe, Solicitors, Private Bag 11016, Palmerston North

Parker & Associates, Solicitors, PO Box 23 270, Wellington

_{DLA Phillips Fox, Solicitors, PO Box 2791, Wellington}

BRANDLINES LIMITED V CENTRAL FORKLIFT GROUP LIMITED HC WN CIV-2008-485-2803 14 June

2011

Introduction

[1] These proceedings relate to a fire which occurred at a warehouse in Palmerston North on 15 June 2007. On 6 December 2010 I heard applications brought by the first defendant (Central Forklift Group Limited) and second defendant (Exide Technologies Limited) challenging the first plaintiff’s (Brandlines Limited) and second plaintiff’s (Contamo Palmerston North Limited) claims to litigation privilege and solicitor/client privilege in respect of a number of documents identified on discovery.

[2] On 11 February 2011 I released a judgment on that issue finding, in part, for the plaintiffs and, in part, for the defendants.

[3] The first defendant contested privilege with respect to 61 of the first plaintiff’s documents. Privilege was found to exist in relation to two. A claim to privilege was also challenged against 53 of the second plaintiff’s documents. Privilege was found to exist for

17 of those.

[4] The second defendant contested privilege with respect to 90 of the first plaintiff’s documents. Privilege was found on only five of those. A claim to privilege for 61 of the second plaintiff’s documents was also challenged and privilege was found to exist in respect of 31 of those.

Counsels’ Submissions and My Decision

[5] Counsel are in agreement that if costs are to be awarded that they should be calculated on a 2B basis. I agree with that assessment.

[6] The general starting point principle applicable to the determination of costs is that the party who fails with respect to a proceeding or an interlocutory application should pay costs to the party who succeeds: r 14.2. There needs to be a “good reason” for departing from this general principle: International Airline Trading (NZ) Ltd v Rohlig NZ Ltd HC Auckland CIV-2003-404-3464, 23 February 2004. Under r 14.7(d), the court may refuse to make an order for costs or may reduce the costs otherwise payable under those rules if, although the party claiming costs has succeeded overall, that party has failed in relation to a cause of action or issue which significantly increased the costs of the party opposing. The Court in Packing In Ltd (in liquidation) v Chilcott [2003] NZCA 124; (2003) 16 PRNZ 869 provides guidance on that point. In that case, Tipping J, for the Court, stated at [5]:

In a case such as the present, where in broad terms each party has had similar success, we do not consider it helpful to focus too closely on the question which party has

failed and which has succeeded. Costs in a case such as this should rather be based on the premise that approximately equal success and failure attended the efforts of both sides. To that starting point should be added issues such as how much time was spent on each transaction or group of transactions in issue, and any other matters which can reasonably be said to bear on the Court’s ultimate discretion on the subject of costs. In the end, as in all costs matters, the Court must endeavour to do justice to both sides, bearing in mind all material features of the case.

[7] In light of the above, the first defendant requests that the first and second plaintiffs pay its costs jointly in respect of its application to set aside the plaintiffs’ claims to privilege.

[8] The second defendant argues that the first plaintiff claimed privilege with respect to a total of 187 documents and about 40 per cent of those claims have been found to be wrong. That imprecise approach, the second defendant argues, requires an award to it of 100 per cent costs. With respect to the second plaintiff’s partial success, the second defendant argues that that success should be reflected in a reduction of its share of a 100 per cent costs award to, say, liability for 75 per cent.

[9] The first plaintiff submits that it is not the amount of documents on which each party succeeded, but rather whether there was split success on the arguments. As the first plaintiff succeeded on an important issue in the hearing, that its experts and investigators were held to be its agents for the purposes of privilege, it is said no party had complete success. Therefore, costs should lie where they fall.

[10] Finally, the second plaintiff contends that as no party has entirely “failed” that costs should lie where they fall. Further, the focus of the proceeding was on the agency point of law. As the plaintiffs succeeded in that respect, a costs award should not follow. Alternatively, the second plaintiff also notes that it was put to substantial cost in meeting the defendants’ extensive challenge to its documents, some of which were clearly protected by litigation privilege.

[11] In my view, addressing the issue of the claim for costs against the first plaintiff, I accept that focus should not be entirely on who succeeded in the outcome, but some regard ought to be had to the parties’ success as to the issues which had a bearing on that decision and the relative amount of focus on those issues in the hearing. However, that consideration cannot be determinative. The overall victor in the case is also relevant. In the present case, I am not satisfied that the first plaintiff’s mere success on the issue of agency is enough to avoid a costs award. Here, while the first plaintiff was successful in arguing that its experts and investigators were its agents for the purposes of privilege, it failed to satisfy me that privilege should extend to the overwhelming majority of its documents. That cannot be said to be equal success. I am satisfied that the first plaintiff should be liable for both

defendants’ costs. I will return to consider the quantum after first assessing the second plaintiff’s liability.

[12] The second plaintiff had much more measured success. As such, it succeeded in its claims in relation to close to half of its documents. Further, it did have success in relation to the agency issue. In those circumstances, I am satisfied that the second plaintiff should not be liable for an award of costs. Further, it was also put to expense in defending privilege in relation to arguments of privilege which were, objectively, clearly covered by privilege.

Conclusion

[13] I have, therefore, found that only the first plaintiff is liable for an award of costs here. In a case where the costs of the defendants were in relation to claims against two respondents, it would not be fair to require only one to bear the full liability for the opposing parties’ costs in bringing the application against both of them. In the present case, I am satisfied that time would not have been overwhelmingly spent pursuing privilege against one plaintiff over the other. I therefore consider the first plaintiff is liable to half of the costs and disbursements of both the first and second defendants.

[14] As to quantum, the first defendant claims $3,008.00 in costs and $600.00 in disbursements. The second defendant claims $4,136.00 in costs and $600.00 in disbursements. That disparity arises from the second defendant’s claim for an additional 0.6 days under para 4.12 for preparation and filing an amended interlocutory application for orders setting aside claims to privilege by the first and second plaintiffs. I consider the first defendant to be correct in not claiming that additional 0.6 day for filing an amended interlocutory application. The application was not greatly amended. In those circumstances I do not consider an additional claim to be justified.

[15] The first plaintiff is accordingly liable to the first and second defendants for one-half of $6,016.00 being the total net costs of each (amounting to $3,008.00 each) and one-half of the total filing fee disbursements of $1,200.00 (amounting to $600.00 each).

[16] An order is now made that the first plaintiff is to pay costs to the first and second defendants on these applications amounting to one total sum of $3,608.00. Otherwise, costs are to lie where they fall.

‘Associate Judge D.I. Gendall’