IN THE Court of appeal OF new Zealand
	
CA533/2013
[2015] NZCA 11

BETWEEN	
KEVIN JAMES POWELL
Appellant	

AND	
HALLY LABELS LIMITED
Respondent	

Court:	
Miller, Heath and Dobson JJ	

Counsel:	
C Stewart and G Tanner for Appellant
C T Patterson and A M Halloran for Respondent	

Judgment:
(On the papers)	
10 February 2015 at 11.15 am	

JUDGMENT OF THE COURT

A	The application for increased costs is declined.
B	The respondent must pay the appellant costs and disbursements of $15,539.08.  
____________________________________________________________________

REASONS OF THE COURT

(Given by Miller J)
[1]	Our judgment allowing Mr Powell’s appeal was delivered on 27 November 2014.  Costs in this Court were reserved pending submissions.  We have received a memorandum dated 12 December 2014 for Mr Powell seeking increased costs and a reply memorandum for Hally Labels Ltd (Hally) dated 16 December.  
[2]	The grounds advanced for a 50 per cent uplift on scale costs are:
(a)	Hally failed, without reasonable justification, to accept a Calderbank offer.  The offer was made two months before the hearing of the appeal and rejected without reason six days later.  Mr Powell offered to abandon his appeal if Hally would permit costs in the High Court to lie where they fell and to not seek costs in the Employment Court.  Ms Stewart submits the offer was reasonable particularly in light of the clear merit of the appeal, as indicated at that stage by the notice of appeal.  She argued that the Employment Court is likely to award costs for the High Court proceeding to Mr Powell.  
(b)	Hally pursued multiple arguments without merit.  Notably, it argued that Mr Powell accepted the reasonableness of its search order and claimed that a minute of Associate Judge Osborne reserving costs displaced the usual rule about costs on discontinuance.
[3]	Mr Patterson for Hally submits increased costs are not justified:
(a)	The Calderbank offer was refused because the costs incurred in the High Court ought to be taken into account by the Employment Court.  While the High Court order has been set aside the costs issue is reserved pending the Employment Court decision.  It is highly speculative to say the Employment Court will award costs to Mr Powell.  The offer made was less favourable than our decision because it would have prevented a possible future costs award.
(b)	The arguments did not lack merit so as to justify increased costs.  The High Court considered that the search order was relevant to costs.  The argument on displacement by agreement was raised in one paragraph of the written submissions and it was not pressed.
[4]	We are satisfied that increased costs are not justified.  The High Court costs order was set aside against the background of a live proceeding in the Employment Court closely connected to the discontinuance.  It remains to be seen how the parties’ actions will be perceived in the Employment Court with the benefit of a full evidential record.  That decision may affect costs in the High Court, for reasons given in our judgment.  We are not prepared to pre-judge where costs will fall, or in what sum.  It is true that Hally advanced some untenable arguments and took a needlessly uncompromising approach.  But we accept Mr Patterson’s submission that its principal arguments were not without merit.
[5]	The application for increased costs is declined.  The respondent must pay the appellant costs and disbursements calculated as for a standard appeal on a band A basis with provision for one counsel, as set out in Schedule Two of Ms Stewart’s memorandum, less $1,000 for the present unsuccessful application.  

Solicitors: 
McKay Mackie, Waipawa for Appellant
Jones Young, Auckland for Respondent