Cadre Investments Limited v Activedocs Limited [2016] NZHC 1942 (19 August 2016)

Last Updated: 26 September 2016

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2014-404-001381 [2016] NZHC 1942

BETWEEN	CADRE INVESTMENTS LIMITED, MICHAEL SCOTT STANBRIDGE, TREASURY MERCHANT FINANCE LIMITED Plaintiffs
AND	ACTIVEDOCS LIMITED Defendant

Hearing:	On the papers
Judgment:	19 August 2016

_{JUDGMENT OF COURTNEY J}

This judgment was delivered by Justice Courtney on 19 August 2016 at 1.00 pm

pursuant to R 11.5 of the High Court Rules

Registrar / Deputy Registrar

_{Date..............................}

CADRE INVESTMENTS LTD & ORS v ACTIVEDOCS LTD [2016] NZHC 1942 [19 August 2016]

[1] In my decision of 1 July 2016 I made declarations as sought by the plaintiffs who now seek costs. It is agreed that the plaintiffs should have costs on a 2B basis (subject to some items for which 2C costs have been claimed). It is also agreed that second counsel be approved. There are some items on which there is disagreement.

Pre-trial steps disputed

[2] Item 15, preparation for and appearance at pre-trial conference, for which .5 of a day is claimed, is disputed on the basis that there was no pre-trial conference addressing the matters in High Court Rule 7.8.

[3] Mr Wackrow, for the plaintiffs, submits that case management conferences were scheduled for 22 August and 26 November 2014. On both occasions counsel had conferred and filed joint memoranda prior to the conference, enabling directions to be given by the Associate Judges. A telephone conference was held on

27 November 2014, preceded by exchanges of memoranda and resulting in directions made on 28 November 2014 in relation to procedural matters. I consider that the items claimed ought to be allowed.

Item 30 – preparation of briefs and affidavits

[4] The plaintiffs have claimed five days for preparation of briefs or affidavits, being on a 2C basis. Ms O’Gorman, for the defendant, resists this claim on the basis that it was agreed that the evidence could be dealt with by way of affidavit and the parties filed a joint memorandum of that point dated 28 October 2015. She therefore suggests that the proceeding is better dealt with as an interlocutory proceeding.

[5] I consider that the item is properly applied because, whilst the form of the evidence came by way of affidavit rather than brief, the substance of the documents was the same and there is no basis for suggesting that a lesser amount of preparation was required. I do not, however, consider that the nature or volume of the affidavit evidence tendered justifies a 2C basis. Item 30 is properly determined as a 2B basis i.e. 2.5 days.

Preparation of list of issues, authorities and common bundle

[6] This item is claimed on a 2B basis. It is resisted on the basis that no list of issues was required and only a single common bundle was produced. Ms O’Gorman suggests that this item be treated more akin to item 25, being the preparation by the applicant of a bundle for an interlocutory hearing. This matter was not, however, an interlocutory hearing. It was a trial that proceeded on the basis of agreed evidence but in all other respects was a trial in the normal sense. I consider that item 31 is appropriate.

Item 33 – preparation for hearing

[7] The plaintiff claims five days, being preparation for hearing on a 2C basis. Ms O’Gorman submits that item 33 is concerned with preparation for a witness trial and in this case the trial was significantly reduced as a result of no witness having to be called and, moreover, that the plaintiffs had slightly over a week’s notice that the matter would probably proceed without the need to call witnesses and, given the relatively uncontentious nature of the evidence it is unlikely that any extensive trial preparation was required. Ms O’Gorman suggests, instead, treating the preparation for trial as if it were preparation of written submissions in relation to an interlocutory application.

[8] Both parties are right to some extent on this point. Clearly this was not a matter on which substantial preparation would have been required in terms of cross- examination, even before counsel reached agreement that witnesses would not need to be called. On the other hand the substantive issue was relatively complex and is not comparable to an interlocutory application. I consider that the right balance is struck by allowing cost for preparation of hearing as item 33 but on a 2B basis.

Partial success?

[9] The defendant seeks a 30 per cent discount from scale costs on the ground that, although the plaintiffs were successful in obtaining a declaration regarding the conversion of the shares, they failed in their claim for specific performance and damages. I do not accept this approach. The substantive issue between the parties

turned on the proper construction of the prospectus. The identification of the correct principles and the application of those principles in interpreting that document dominated the hearing. The issue of relief was a very minor consideration in comparison. Moreover, it was the defendants who raised the argument that the long established approach to the interpretation of the terms on which preference shares are issued should be departed from. This took up a substantial part of the argument.

[10] Looked at overall, the plaintiffs were substantially successful and the extent to which they did not succeed was so minor as not to justify a reduction in the costs otherwise payable.

Conclusion

[11] I will leave it to counsel to re-calculate the costs payable. Leave is reserved to seek further directions if agreement cannot be reached.

P Courtney J