Loktronic Industries Limited v Diver [2014] NZHC 1189 (30 May 2014)

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BETWEEN	LOKTRONIC INDUSTRIES LIMITED Plaintiff
AND	STEPHEN JOHN DIVER First Defendant SDR LIMITED Second Defendant ROY BOWYER Third Defendant TRIMEC TECHNOLOGY PTY LIMITED Fourth Defendant NEIL RICHARD HINGSTON Fifth Defendant NEIL HINGSTON ENGINEERING LIMITED Sixth Defendant ASSA ABLOY NEW ZEALAND LIMITED _{Seventh Defendant}

[1] In this proceeding the plaintiff alleged breaches of contract by the fourth and fifth defendants and a variety of intentional torts against all the defendants, including inducing breach of contract, interference with its business by unlawful means and conspiracy to interfere by unlawful means. It succeeded in this Court on all the causes of action but the findings on the intentional tort causes of action were

[2] Having succeeded on appeal the defendants now seek costs in relation to the High Court proceedings. Parties filed memoranda over the course of several months last year. I regret that it has taken until now to attend to this matter.

[3] The defendants have generally taken similar positions, though some issues are specific to only certain defendants. he issues are whether:

(a) Costs should be calculated, wholly or at least in relation to the substantive trial, on a 3B basis rather than the current 2B categorisation 2B;

(b) Costs should be increased to reflect the plaintiff’s rejection of joint Calderbank offers, pursuit of arguments that lacked merit and failure to plead the case eventually relied on;

(c) Costs should be awarded on the defendants’ successful application for stays of execution and on the plaintiff’s unsuccessful application to vary the stays of execution;

(d) The first and second defendants should have increased costs to reflect the nature of the allegations made against them;

(e) The third, fourth and seventh defendants should have costs in relation to the steps taken to obtain a release of their bank bond given as

[4] The plaintiff, now in liquidation, has taken no steps in relation to the costs applications. The liquidators have consented to the costs application being made but there is no realistic prospect of any costs judgment being met.²For this reason the defendants seek costs against the plaintiff’s former director, Peter Calvert. Mr Calvert:

(a) Resists the application for costs against him personally except to the extent of the guarantee he provided by way of security for costs at an earlier stage;

[5] The proceedings were categorised as 2B, shortly after they were commenced in 2008. Under r 14.3(2) determination of a proceeding’s category applies to all subsequent determinations of costs unless there are special reasons to the contrary.

[6] The defendants maintain that special reasons exist that justify altering the 2B categorisation. These are that the scope of the proceeding expanded significantly before trial, the trial was longer and more complex than anticipated, the plaintiff ’s submissions shifted during trial and the 3B category would be consistent with the scale applied on appeal (band A for a complex appeal).

[7] I do not accept that special reasons do exist that would justify re-categorising the proceeding as category 3. The parties, the scope of the factual enquiry and the essential nature of the claim remained the same throughout. There were amendments to the statement of claim but they did not alter the fundamental nature of the claim save for allegations of breach of patent, which can be dealt with

[8] It is certainly true that the trial was longer than anticipated but that was largely the result of counsels’ hopelessly inaccurate estimate of the trial time needed. That this matter would require more than the original five days estimated was apparent on the first day of trial. Nor was the trial in itself more complex than might originally have been anticipated. The scope of the factual enquiry was relatively narrow; there was a modest amount of evidence addressing the historical relationship between some of the parties but the factual issues underpinning the intentional tort claims all fell within a relatively narrow compass.

[9] Nor do I accept that the subject matter was sufficiently complex to justify a

3B categorisation. None of the parties were represented by senior counsel. The breach of contract allegations were straightforward, both factually and legally. The intentional tort claims were founded on established principles. Quantum was not unusually complex. I therefore decline to re-categorise the proceedings or to assess costs other than on the 2B categorisation fixed at the outset.

[10] The defendants seek increased costs under r 14.6 of the High Court Rules on the grounds identified at [3](b), (c) and (d) above.

[11] The defendants made two joint settlement offers. The first was made before trial on 13 October 2009. It was contained in a letter from Minter Ellison, which acted for the third, fourth and seventh defendants. The letter rejected the existence of a contract with either the fourth or sixth defendants but expressed the view that, in the event that the breach of contract causes of action succeeded, quantum would be in the range of $51,000 – $90,000. Minter Ellison also expressed the view that the claims in tort were unlikely to succeed and that, in any event, the damages claimed on those causes of action were excessive. It then conveyed, on behalf of all the defendants, an offer of $150,000 in settlement of all the claims. Alternatively, it invited the plaintiff to withdraw the tort claims, effectively releasing the first, second, third, fifth and seventh defendants entirely and thereby reducing the scope of the trial. That offer was not accepted.

2010. Prior to the resumption of trial Minter Ellison wrote again reaffirming their previous view and making the same offer of $150,000 or, alternatively of the plaintiff withdrawing the tort claims in exchange for the defendants not seeking costs. That approach, too, was refused.

[13] As things turned out, the defendants’ assessment was correct and closely resembled the ultimate result. The defendants seek increased costs on the trial and certain interlocutory applications to reflect the plaintiff’s unreasonable refusal of the offers.

[14] Ms Robertson, for Mr Calvert, submitted that it was not unreasonable for the plaintiff to refuse the offers because they were made very close to the hearing and the amount offered bore no correlation to the damages the plaintiff obtained in the High Court. She suggested that the case ought to be viewed as similar to the facts in Craike v Tilsley in which Asher J refused to award increased costs because of the failure of the plaintiff to accept an offer of $20,000 on the basis that an offer at that level would never be accepted unless the plaintiffs were prepared to surrender

Successful defendants who in letter form record their defences and invite a settlement should not necessarily be in a stronger position than any other defendant who takes the same position without sending a letter.

[15] Although Ms Robertson sought to characterise the Minter Ellison letters as attempts to stop the litigation and save further costs rather than settlement offers, I consider the specific offer of $150,000 set against the (ultimately vindicated) assessment of the plaintiff’s prospects at trial to be a genuine offer. However I am not satisfied that the plaintiff acted unreasonably in refusing it. The risk to the plaintiff always lay in the intentional tort claims. However, the evidence available pre-trial, including the board paper of 24 June 2002, meant that the plaintiff’s case was not obviously doomed. To a significant extent the outcome turned on what the witnesses said in their oral evidence, which would provide the best evidence of the

_{defendants’ subject intentions and beliefs. For these reasons I
conclude that did not}

act unreasonably in rejecting the offer. An increase in costs is, therefore, not justified.

[16] The defendants say that the plaintiff made certain allegations that could not possibly have succeeded, thus unnecessarily prolonging the trial and increasing the costs to the defendants.

[17] The first is the allegation that the defendants had breached a patent. The plaintiff had failed to plead the allegation in accordance with Part 22 of the High Court Rules and it was doomed to failure. The argument over the patent led to additional evidence and submissions and therefore cost to the defendants. A slight uplift is justified. I consider an uplift of 10% to be appropriate.

[18] The second was that the allegation that the first defendant had breached a fiduciary duty, which amounted to unlawful means sufficient for the tort of conspiracy by unlawful means. This allegation ultimately failed. However, it did not significantly prolong the trial; the evidence on which the claim was based was part of the overall factual narrative that applied equally to the successful breach of contract causes of action. Further, whilst the allegation ultimately failed I am not satisfied that an increase in costs is justified.

[19] The third, fourth and seventh defendants seek increased costs on the basis that the case ultimately relied on by the plaintiff in its closing did not reflect the pleadings in either the statement of claim or amended statement of claim. As a result, crucial matters were not put to witnesses.

[20] This complaint is justified and was particularly noticeable in relation to the cross-examination on the intentional tort claims; the Court of Appeal noted that the absence of pleading of misrepresentations comprising the asserted unlawful means meant that there was no evidence as to the first and third defendants’ beliefs and nor was the issue put to them in cross-examination.

[21] However, although it is said that this failure unnecessarily prolonged the proceeding and forced the defendants to incur needless costs, no specific examples were given. Ultimately, these failings worked to the advantage of the defendants, with the Court of Appeal’s decision based in part on the absence of such evidence. As a result, I do not consider it necessary to impose increased costs to reflect this failing on the plaintiff ’s part.

The defendants’ applications for stay of execution and the plaintiff ’s application to vary the stay orders

[22] My decision was delivered on 30 March 2011. A fortnight later the plaintiff moved to execute the judgment. On 5 and 6 May 2011, notwithstanding notices of appeal having been filed, it served bankruptcy notices on the first and fifth defendants. Hansen J made an order staying the execution of proceedings on the condition that the defendants provide a bank bond in favour of the Court for the judgment sum, including interest to the date of the judgment.

[23] The seventh defendant lodged the bank bond in accordance with the terms of Hansen J’s order. However, the plaintiff complained that the next day the seventh defendant gave notice to Loktronic Innovationz Ltd, to which the plaintiff had transferred its business and with which Mr Calvert was associated, that it would no longer be an authorised product supplier. The plaintiff was seeking a condition that the distribution agreement between Loktronic Innovationz Ltd and the seventh defendant remain on foot until the final determination of all appeals. At the hearing of the application the plaintiff’s counsel made an alternative oral application for an interim mandatory injunction in similar terms. Keane J refused both applications.

[24] The third, fourth and seventh defendants assert that the applications were unnecessary, were made for the benefit of a non-party related to the plaintiff, would have required the seventh defendant to continue a business relationship with that non-party and, finally, that the High Court lacked jurisdiction to make an order

⁴Loktronic Industries Ltd v Diver & Ors HC Auckland CIV-2008-404-465, 6 September 2011.

[25] Whilst I agree that the circumstances of this application would have justified increased costs, Keane J dealt with the issue of costs at the time. He ordered costs on a 2B basis with disbursements. There was no appeal from that decision. It is not appropriate for me to make an additional award of costs now or to increase the costs awarded at the time.

[26] The first and second defendants seek an increase in costs to reflect the fact that the claims against them were “very serious intentional tort claims”. Mr Morrison, for the first and second defendants, referred to the “fraud like” nature of the claims and commensurate high burden of proof required as justifying an increase of costs in the event of a failure to prove the allegations. However, I accept Mrs Robertson’s submission that this is not an appropriate case for an increased costs award on this basis. The allegations were not ones of fraud or deceit. They were ones of economic torts and, further, it cannot be said that there was no evidential foundation for the allegations being made.

[27] When Hansen J granted the stay of execution on 1 June 2011 he did so on the condition that the defendants provide a bank bond in favour of the Court for the judgment sum including interest to the date of judgment. The Court of Appeal released its decision on 4 April 2012. The third, fourth and seventh defendants promptly requested that the Court release the bank guarantee so they could cancel it. They made the same request again on 5 June 2012. However, the plaintiff resisted on the basis that it had applied for leave to appeal to the Supreme Court.

[28] On 22 June 2012 the Court of Appeal ordered that the guarantee would not be released and security for costs not paid out to the defendants (now the successful appellants) pending the Supreme Court’s determination of the application for leave to appeal. The Supreme Court declined that application on 24 July 2012 and the third, fourth and seventh defendants immediately made another request for the release of the bank guarantee. The plaintiff opposed that release on the basis that it was considering applying for a review of the Supreme Court’s refusal to grant leave.

The third, fourth and seventh defendants responded that there was no jurisdiction to review a Supreme Court leave decision and the Court of Appeal would not have jurisdiction to make interim orders beyond the Supreme Court’s refusal of the initial leave application. Still the plaintiff resisted.

[29] On 3 August 2012 Priestley J issued a minute requiring the plaintiff to file a memorandum advising whether the litigation was at an end, what the guarantee protected and whether it was still required. The plaintiff’s response was that it intended to apply to the Supreme Court to have the leave decision recalled and that there was jurisdiction for the Supreme Court to consider a second application for leave. The plaintiff subsequently did apply for a recall of the Supreme Court decision, which was opposed. On 23 August 2012 Gilbert J issued a minute, finding that it would be inappropriate to release the bank guarantee pending the plaintiff’s application for recall.

[30] On 23 August 2012 the Court of Appeal ordered the release of the security for costs that had been paid by the defendants and confirmed that the orders made in the minute 22 June 2012 only applied until determination of the first application for leave to appeal to the Supreme Court. The third, fourth and seventh defendants advised the High Court of that minute and again sought the release of the bank guarantee. Still the plaintiff resisted.

[31] Finally, on 5 September 2012 the Supreme Court declined to recall its leave decision and on 11 September 2012 the High Court released the bank guarantee.

[32] The third, fourth and seventh defendants assert that there was no basis for opposing the release of the bank guarantee after the Supreme Court refused the application for leave on 24 July 2012 and that unnecessary costs had been incurred in dealing with this issue. Mr Calvert’s response is that it was reasonable for the plaintiff to pursue its avenues for appeal until they were exhausted. That is, of course, true. However, the reality was that the plaintiff’s avenues of appeal were exhausted when the Supreme Court declined leave to appeal.

[33] Ms Robertson also submits that the steps taken in relation to the release of the guarantee in respect of which costs are sought are not steps set out in Schedule 3 to the High Court Rules. Any costs must be entirely at the discretion of the Court. I consider that the third, fourth and seventh defendants were entitled to pursue the issue of a release of the bank guarantee and should be entitled to costs in respect of each memorandum filed on that issue and, further, that such costs should be uplifted by 50 per cent.

[34] Mr Calvert has been on notice from a very early stage in the proceedings that the defendants would seek costs against him personally in the event of the plaintiff failing. The defendants assert that Mr Calvert should be liable for costs either because he is the “real party” to the litigation as a result of his interest in and control over the plaintiff or, alternatively, that he funded the litigation.

[35] Under r 14.1 of the High Court Rules the Court has the power to award costs against a non-party in a proceeding. The circumstances in which such an order should be made are summarised by Millett LJ in Metalloy Supplies Ltd v MA Ltd (UK) Ltd.⁵

The Court has a discretion to make a costs order against a non-party. Such an order is, however, exceptional, since it is rarely appropriate. It may be made in a wide variety of circumstances where the third party is considered to be the real party interested in the outcome of the suit. It may also be made where the third party has been responsible for bringing the proceedings and they have been brought in bad faith or for an ulterior purpose or there is some other conduct on his part which makes it just and reasonable to make the order against him. It is not, however, sufficient to render a director liable for costs that he was a director of the company and caused it to bring or defend proceedings which he funded and which ultimately failed. Where such proceedings are brought bona fide and for the benefit of the company, the company is the real plaintiff. If in such a case an order for cost could be made against the director in the absence of some impropriety or bad faith on his part, the doctrine of the separate liability of the company would be

⁵Metalloy Supplies Ltd v MA Ltd (UK) Ltd [1997] 1 WLR 1613 (CA) at 1618, approved by the Privy Council in Dymocks Franchise Systems (NSW) Pty Ltd v Todd (No. 2) [2004] UKPC 39, [2005] 1 NZLR 145. See also Mana Property Trustee v James Developments (No 2) 2 NZLR 25 at [10] – [11].

eroded and the principle that such order should be exceptional would be nullified.

The position of a liquidation is a fortiori. Where a limited company is in insolvent liquidation, the liquidator is under a statutory duty to collect in its assets. This may require him to bring proceedings ... If he brings the proceedings in the name of the company, the company is the real plaintiff and he is not. He is under no obligation to the defendant to protect his interests by ensuring that he has sufficient funds in hand to pay their costs as well as his own if the proceedings fail. It may be commercially unwise to institute proceedings without the means to provide any security for costs which may be ordered, since this will only lead to the dismissal of the proceedings; but it is not improper to do so. Nor (if he considers only the interests of the company, as he is entitled to do) is it necessarily unreasonable.

[36] In Dymocks Franchise Systems (NSW) Pty Ltd v Todd (No 2) the Privy Council approved this passage. It also made the following observations about cases in which it would be appropriate for a non-party to pay costs, namely where the non- party controlled, funded or benefited from the litigation:⁶

The non-party in these cases is not so much facilitating access to justice by the party funded as himself gaining access to justice for his own purposes.

[37] Mr Kennedy, for the third, fourth and seventh defendants, also relied on the following statement of Tompkins J in Carborundum Abrasives Ltd v Bank of New Zealand (No 2):⁷

Where proceedings are initiated by and controlled by a person who, although not a party to the proceedings, has a direct personal financial interest in the result, such as a receiver or manager appointed by a secured creditor, a substantial unsecured creditor or a substantial shareholder, it would rarely be just for such a person pursuing his own interests to be able to do so with no risk to himself should the proceedings fail or be discontinued. That will be so whether or not the person is acting improperly or fraudulently.

In many cases a major consideration will be the reason for the non-party causing a party, normally but not always an insolvent company, to bring or defend the proceedings. If the non-party does so for his own financial benefit, either to gain the fruits of the litigation, or preserve assets in which the person has an interest, it may, depending on the circumstances, be appropriate to make an order for costs against that person. Relevant factors will include the financial position of the party through whom the proceedings are brought or defended and the likelihood of it being able to meet any order for costs, the degree of possible benefit to the non-party and

[38] Prior to 2002 Mr Calvert was the plaintiff’s sole director and major shareholder. The events that gave rise to the litigation occurred in 2002. Later that year the plaintiff ceased trading and sold its stock to a new company, Loktronic Innovationz, which Mr Calvert had formed together with a Mr and Mrs Taylor. The plaintiff retained its patents and copyright in the name “Loktonic”.⁸Mr Calvert explained that he did not allow the plaintiff to sell these assets because he hoped that it would eventually be able to return to the market.

[39] Also in October 2002 Mr Calvert settled the Peter Calvert Trust. The trustees were Mr Calvert and a solicitor, Mr Johnston. The beneficiaries, all discretionary, were Mr Calvert, his children and grandchildren. All but two of the shares in the plaintiff were transferred to the trustees. Mr Calvert held the remaining two personally. In 2004 the Coastguard Northern Region was added as a discretionary beneficiary.

[40] In a letter dated 1 September 2009 Lowndes Jordan, the solicitors for the first and second defendants, put the plaintiff on notice that costs would be sought against whoever was funding the litigation and sought details of who the funder was. The plaintiff declined to provide that information. Exactly a month later, by a deed dated

1 October 2009, Mr Calvert and Mr Johnston retired as trustees and new trustees, HPJ Trustees No 50 Limited and DJM Trustees No 68 Limited, were appointed in their place. It is not suggested that Mr Calvert has any interest in or control over these trust companies. Mr Calvert also vested the power of appointment of new trustees, which had previously vested in him, in Brookfields Legal Services Limited.

[41] In his affidavit opposing the costs application Mr Calvert gave details of the changes to the trusteeship of the Peter Calvert Trust but no explanation as to the

reason for them and made no reference to the letter from Lowndes Jordan. The letter and the coincidence in timing between it and the changes to the trusteeship of the Peter Calvert Trust was pointed out in a memorandum filed later by Mr Morrison of Lowndes Jordan. Mr Calvert’s counsel filed a memorandum specifically in response to Mr Morrison’s memorandum but dealt with other matters; the coincidence in timing and reason for the changes was not addressed. The inference is irresistible that it was concern over his personal exposure to costs that prompted Mr Calvert to disassociate himself from the trust. Against this background I turn to consider the factors on which the defendants rely.

[42] When the proceedings commenced in 2008 the plaintiff was not trading and had no significant assets. By the time the trial started on 6 November 2009 Mr Calvert was still the director of the plaintiff but had not held any significant beneficial interest in the company for some six years and no longer held a legal interest of any significance either. The defendants say, first, that Mr Calvert initiated and controlled the litigation as the plaintiff’s sole director and played an active part in the proceedings. That is undoubtedly true. Alone it would not justify treating Mr Calvert as the real party to the litigation. However, coupled with the next factor, it does.

[43] The defendants say, secondly, that Mr Calvert had a direct personal financial interest in the fruits of the litigation in his capacity as a beneficiary of the Peter Calvert Trust and the only major creditor of the plaintiff. The defendants point to evidence given by Mr Calvert in an affidavit sworn on 29 April 2009 in which he described himself as the plaintiff’s principal shareholder. Mr Calvert’s explanation of the changes to the plaintiff’s shareholding over the relevant period drew a strong response from the defendants. Counsel for the third, fourth and seventh defendants has asserted that his explanation contradicts sworn evidence he gave during the proceeding. Specifically, Mr Kennedy referred to the statement in Mr Calvert’s affidavit dated 29 June 2009 that he was “the principal shareholder in Loktronic” and his evidence in cross-examination that “I was a substantive shareholder by my trust in Loktronic”. Mr Kennedy submitted that, by this evidence, Mr Calvert held himself out as the principal shareholder of Loktronic at least from April 2009 and should therefore be treated as such for the purposes of costs. In his memorandum

Mr Kennedy suggested that Mr Calvert’s evidence “is the best evidence of the true

[44] I do not accept this submission. Neither of the statements relied on were untrue and indeed, the statement made in cross-examination makes it clear that his shareholding is as a trustee. Further, the submission overlooks the fact that Mr Calvert was not a sole trustee. An independent trustee was the co-owner of the relevant shareholding. Given Mr Calvert’s status as a discretionary beneficiary along with several other beneficiaries I am unable to conclude that he was the beneficial owner of the shares. It is well established that a discretionary beneficiary

[45] However, in the event of the plaintiff succeeding the benefit of that success would inevitably have flowed to Mr Calvert and his children and grandchildren. Success in the litigation would produce funds for the plaintiff and, consequently, increased value in the trust assets available for distribution. Even though Mr Calvert no longer has the power to determine distributions or to appoint trustees, the fact that he, his children and grandchildren represent the majority of the beneficiaries means that, in practical terms, Mr Calvert will benefit directly or indirectly. It is this aspect, coupled with Mr Calvert’s close and continuous control of the plaintiff and the litigation that, in the end, satisfies me that Mr Calvert was the real party in the litigation.

[46] The suggestion by Mr Calvert’s counsel that the claim was brought in part for the benefit of the plaintiff’s creditors, shareholders and future customers does not advance matters at all. Mr Calvert or the trust is the plaintiff’s major creditor and Mr Calvert and his family represent the majority of the beneficiaries of the shareholder whereas future customers had no interest in whether the litigation succeeded or not.

[47] Thirdly, the plaintiff was never going to be able to meet a costs award against it. That is the reason security for costs were required and it was Mr Calvert’s

_{personal guarantee offered in part as security that enabled the
litigation to proceed.}

In these circumstances I am satisfied that there should be an award of costs against him personally.

[48] Given my earlier conclusion, it is unnecessary to consider that aspect but because the matter was deal with at some length in submissions I address it briefly.

$276,960 to the plaintiff to assist it with the legal costs of the litigation and that all but $26,000 of that came from repayment by the plaintiff of advances owed to him. The movement of money from the plaintiff to Mr Calvert and back to the plaintiff is not entirely clear on the evidence. Although it was Mr Calvert who made the advances the plaintiff’s balance sheet for year ended 31 March 2009 showed it as being indebted to the Peter Calvert Trust for $199,971 and the relevant note to the financial statements shows the current account for the 2008 year as standing at

[50] In his memorandum Mr Morrison referred to advice from the plaintiff’s liquidators that the plaintiff had incurred $460,420 in legal fees since 2001. Mr Calvert said that the balance in excess of the $276,960 he had advanced was partly met by the plaintiff itself and partly by a partial contingency arrangement with counsel. In his affidavit of 11 July 2013 Mr Calvert elaborated, setting out details ofthe legal costs incurred and how they were paid: between September 2002 and March 2009 it paid a further $76,018 in legal fees. Mr Calvert said that he considered that most of the legal work had been done by the time the proceedings were commenced in 2008, though there was no clear indication of what the costs might be going forward.

[51] Looking at the totality of the evidence it appears that until the point the proceedings were actually commenced the plaintiff funded itself in terms of legal

_{advice. I am also satisfied that its repayment of shareholder advances
(whether to}

¹⁰Against that possibility Mr Morrison submitted that the trust should also be liable but there is no application for costs against the trustees and without hearing from the trustees I can only deal with the application as it currently stands.

Mr Calvert or the trust) was the source of further funds through new advances but that a sizeable portion is represented in the contingency arrangement with counsel. There can be no doubt that had the plaintiff chosen not to repay the shareholders’ advances those funds would have remained with the plaintiff, enabling the plaintiff to meet all its legal costs itself. Therefore, whether the funds were paid by the plaintiff to the trust and then on to Mr Calvert, or whether the advance was made by the trust is immaterial.

Should there be a reduction in costs to reflect the plaintiff ’s partial success?

[52] Mr Calvert has contended that any costs award in favour of the third, fourth and fifth defendants should be reduced to reflect the plaintiff’s partial success. Such an outcome is provided for by r 14.7(d), which allows a reduction in costs claimed by a party that has succeeded overall but failed in relation to a cause of action or issue which significantly increased the costs of the party opposing an award. This is opposed strenuously by the defendants on the basis that the plaintiff’s success was limited only to the fourth defendant and, further, that in practical terms no damages award was obtained.

[53] The defendants’ points are correct. However, the existence of the manufacturing and distribution contracts were hard fought issues that took up a very substantial amount of time at trial. They were, of course, the threshold issues for some of the intentional tort causes of action. Whilst they did not produce a specific damages recovery for the plaintiff, nor can it be said that there was any unreasonableness on the plaintiff’s part in advancing these causes of action. To it was strenuous resistance by the defendants to the existence of the contract that lacking in merit. I consider that a reduction of 10% in the costs awarded to the fourth and sixth defendants is warranted.

[54] Because the application for costs has been made jointly by the fourth defendant with the third and seventh defendants and by the fifth and sixth defendants jointly this inevitably means that the global costs award in favour of those parties will be subject to the reduction.

[55] There will be costs to the first and second defendants jointly on a 2B basis of

$89,176 and disbursements of $12,259.33 in accordance with Schedule A to this judgment.

[56] There will be costs of $103,415 and disbursements of $1,759.99 to the third, fourth and seventh defendants jointly in accordance with Schedule B to this judgment

[57] There will be costs of $92,672 and disbursements of $1,146.66 to the fifth and sixth defendants jointly in accordance with Schedule C to this judgment.

[58] There is an order that Peter Calvert, a non-party, is liable jointly and severally with the plaintiff for the costs and disbursements awarded in [55] – [57].

Costs for substantive proceeding- 2B
Step	Time	Rate	Amount
2	2	1,600	$ 3,200
4.5	1.5	1,600	$ 2,400
4.6	1	1,600	$ 1,600
4.7	1.5	1,600	$ 2,400
4.10	.4 (x5)	1,600	$ 3,200
4.11 and 4.17	.2 (x6)	1,600	$ 1,920
8	10 12	1,600 1,880	$ 16,000 $ 22,560
9.1	5 6	1,600 1,880	$ 8,000 $ 11,280
9.2	2.5 3	1,600 1,880	$ 4,000 $ 5,640

Subtotal			$ 82,200

Costs for interlocutory application for further security for costs- 2B
Step	Time	Rate	Amount
4.12	.6	1,600	$ 960
Subtotal			$ 960

Costs for application for stay of execution of judgment- 2B
Step	Time	Rate	Amount
22	.6	1,880	$ 1,128
24	1.5	1,880	$ 2,820
25	.6	1,880	$ 1,128
26	.5	1,880	$ 940
Subtotal			$ 6,016

Based on the above tables the total costs amount owed to the first and second defendants is $101,435.33.

Costs for substantive proceeding- 2B
Step	Time	Rate	Amount
2	2	1,600	$ 3,200
4.10	0.4(x5)	1,600	$ 3,200
4.11	0.3(x6)	1,600	$ 2,880
4.17	0.2(x3)	1,600	$ 960
4.5	1.5	1,600	$ 2,400
4.6	1	1,600	$ 1,600
4.7	1.5	1,600	$ 2,400
8	10 12	1,600 1,880	$ 16,000 $ 22,560
9.1	5 6	1,600 1,880	$ 8,000 $ 11,280
9.2	2.5 3	1,600 1,880	$ 4,000 $ 5,640
4.10	.4	1,880	$ 752
Subtotal			$ 84,872
Reduction of 10% and increase of 10%			No change required.

Costs for interlocutory application for security for costs proceedings- 2B
Step	Time	Rate	Amount
4.12	.6	1,600	$ 960
4.10	.4 (x2)	1,600	$ 1,280
4.11	.3	1,600	$ 480
4.14	.5	1,600	$ 800
4.15	.5	1,600	$ 800
Subtotal			$ 4,320

Costs for interlocutory application for further security for costs- 2B
Step	Time	Rate	Amount
4.10	.4	1,600	$ 640
Subtotal			$ 640

Costs for application for stay of execution of judgment- 2B
Step	Time	Rate	Amount
4.12	.6	1,600	$ 960
4.10	.4 (x2)	1,600 (x1) 1,880 (x1)	$ 1,392
4.14	.5	1,880	$ 940
4.15	.5	1,880	$ 940
Subtotal			$ 4,232

Costs for release of Bank Guarantee
Step	Time	Rate	Amount
4.12	.4	1,880	$ 752
4.10	.4	1,990	$ 796
4.14	.4 (x6)	1,990	$ 4,776
Subtotal			$ 6,234
Increase of 50%			$ 9,351

Based on the above tables, the total costs amount owed to the third, fourth and seventh defendants is $105,174.99.

Costs for substantive proceeding- 2B
Step	Time	Rate	Amount
2	2	1,600	$ 3,200
4.10	0.4(x5)	1,600	$ 3,200
4.11	0.3(x6)	1,600	$ 2,880
4.17	0.2(x3)	1,600	$ 960
4.5	1.5	1,600	$ 2,400
4.6	1	1,600	$ 1,600
4.7	1.5	1,600	$ 2,400
8	10 12	1,600 1,880	$ 16,000 $ 22,560
9.1	5 6	1,600 1,880	$ 8,000 $ 11,280
9.2	2.5 3	1,600 1,880	$ 4,000 $ 5,640
Subtotal			$ 84,120
Reduction of 10% and increase of 10%			No change required.

Costs for interlocutory application for security for costs proceedings- 2B
Step	Time	Rate	Amount
4.12	.6	1,600	$ 960
4.10	.4 (x2)	1,600	$ 1,280
4.11	.3	1,600	$ 480
4.14	.5	1,600	$ 800
4.15	.5	1,600	$ 800
Subtotal			$ 4,320

Costs for application for stay of execution of judgment- 2B
Step	Time	Rate	Amount
4.12	.6	1,600	$ 960
4.10	.4 (x2)	1,600 (x1) 1,880 (x1)	$ 1,392
4.14	.5	1,880	$ 940
4.15	.5	1,880	$ 940
Subtotal			$ 4,232

Based on the above tables the total costs amount owed to the fifth and sixth defendant is $93,818,66.

Hearing:	On the papers
_Judgment:	_{30 May 2014}

High Court of New Zealand Decisions

Loktronic Industries Limited v Diver [2014] NZHC 1189 (30 May 2014)