N-Tech Limited v Abooth Limited HC Auckland CIV-2006-404-003362 [2011] NZHC 89 (17 February 2011)

Last Updated: 23 May 2011

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2006-404-003362
_{CIV-2007-404-000990}

BETWEEN N-TECH LIMITED First Plaintiff

AND ST LUCIA INVESTMENTS LIMITED Second Plaintiff

AND ABOOTH LIMITED First Defendant

AND OTHER DEFENDANTS AS SET OUT IN SCHEDULE ONE TO THE PLAINTIFFS' STATEMENT OF CLAIM

Second to One Hundred and Twenty First

Defendants

AND R J CHAPMAN, G D C WALKER, T F MCGRATH

First Third Parties

AND M V RICHARDSON AND T J GOLDFINCH

Second Third Parties

AND RUSSELL MCVEAGH Third Third Party

AND DENHAM MARTIN & ASSOCIATES Fourth Third Party

AND G S C K SIDNAM Fifth Third Party

AND H C VINCENT First Fourth Party

AND J M K BROWN AND P H CASTLE Second Fourth Parties

AND K A SCHWASS Third Fourth Party

AND JOHN ANTHONY REID

_{Fourth Counterclaim Defendant}

N-TECH LIMITED V ABOOTH LIMITED HC AK CIV-2006-404-003362 17 February 2011

	AND	HUGH MILLOY Fifth Counterclaim Defendant
	AND	J WONG Sixth Counterclaim Defendant
	AND	BARROCK PARTNERS LIMITED Seventh Counterclaim Defendant
	AND	JOHN DONALD CURRIE Eighth Counterclaim Defendant
	AND	PETER MICHAEL CONNOLLOY Ninth Counterclaim Defendant
	AND	ASIAN GROWTH FUND LIMITED Tenth Counterclaim Defendant
	AND	ARMOUR FIDELITY LIMITED Eleventh Counterclaim Defendant
	AND	KENSINGTON SWAN Twelfth Counterclaim Defendant
Hearing:	On the papers

Judgment: 17 February 2011 15:00:00

_{COSTS JUDGMENT OF VENNING J}

This judgment was delivered by me on 17 February 2011 at 3.00 pm, pursuant to Rule 11.5 of the

_{High Court Rules.}

Registrar/Deputy Registrar

Date...............

Solicitors: Gilbert Walker, PO Box 1595, Shortland Street, Auckland 1140 (C Walker) Grove Darlow & Partners, PO Box 2882, Shortland Street, Auckland 1140

Copy to: N R Campbell, PO Box 4338, Shortland Street, Auckland 1140

Introduction

[1] In a judgment delivered on 16 November 2010 the Court dealt with an application to review a decision of Associate Judge Abbott in relation to security for costs and also the Investor Group defendants’ application for further security up to and including trial. Costs were reserved. The parties have been unable to agree costs and have exchanged memoranda.

[2] The Investor Group defendants seek costs on the application to review but limited to the commencement of the review. They also seek costs for the application for increased security with a 50 per cent increase, relying on High Court Rule

14.6(3)(b)(v). The Investor Group defendants say that the plaintiffs failed, without reasonable justification, to accept an offer of settlement. The Investor Group offered to accept $600,000 for security. The plaintiffs did not accept that. The Court ultimately ordered a top-up of security in excess of $795,000.

[3] The plaintiffs submit that there should be no order for costs for the review of Associate Judge Abbott’s decision as they were always willing to agree to an uplift to reflect the recategorisation of the proceedings from category 2 to 3. They also submit that, having regard to the arguments raised at the hearing, more than half the hearing and preparation time was taken up on issues on which the Investor Group were unsuccessful so that there should be no award for costs citing Paper Reclaim

Ltd v Aotearoa International Ltd.[1] Alternatively they say that if the Court was

minded to order costs in favour of the Investor Group the costs should not be increased from scale as the plaintiffs acted reasonably in rejecting the plaintiffs’ offer because it was made on a number of incorrect premises.

Decision

[4] While the plaintiffs advised the Investor Group defendants and the Court at the teleconference on 16 July 2009 they were prepared to agree an uplift to reflect

_{the recategorisation to category 3, I accept that the Investor Group had incurred the}

costs associated with commencing the application for review. When the application for review was argued before the Court the plaintiffs opposed it. Ultimately the review was only successful to the extent of the recategorisation. A fair outcome on the issue of costs for that application is to allow costs to the Investor Group defendants for the commencement of the application but not to allow anything for preparation or hearing.

[5] I turn to the issue of costs on the application for further security. Despite Mr Walker’s submission there should be no order for costs, I consider this case to be somewhat different to the Paper Reclaim case. Both parties raised arguments during the course of the hearing that were ultimately rejected but the Investor Group defendants succeeded on their principal argument. As the Investor Group defendants succeeded on their principal argument they are entitled to costs.

[6] To the extent the Investor Group defendants were unsuccessful on their argument that the increased security should take account of the Investor Group’s potential liability to third parties that must be balanced against the fact that a reasonable time before the hearing the Investor Group defendants had offered to accept a figure for security at less than the Court ultimately offered.

[7] In my judgment a just result to take account of those factors is to award the Investor Group defendants a full award of costs to scale, but to disallow their application for an increase under 14.6(3)(b)(v). That reflects that quite a significant part of the hearing (and judgment) was occupied with consideration of the unsuccessful argument that security should be provided to cover the Investor Group defendants’ potential liability to third parties.

Result

[8] The Investor Group are to have costs on the application in the sum of $7,023 together with disbursements of $1,200 in total $8,223.00.

Venning J

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[1] Paper Reclaim Ltd v Aotearoa International Ltd [2007] NZCA 544; (2007) 18 PRNZ 743.