Chorus wins court costs after ‘grossly misleading flattery’ case

9:40 pm on 23 February 2020

A telecommunication giant that used "grossly misleading flattery" in a bid to secure a broadband contract with a council has won back court costs.

18072016 Photo: Rebekah Parsons-King. Wellington High Court.

A high court judge has awarded Chorus costs. Photo: RNZ / Rebekah Parsons-King

Chorus sought costs from Creative Development Solutions, which it strung along last year to try and win a deal with the Marlborough District Council to roll out broadband in the Marlborough Sounds.

Creative last year claimed at the High Court, in Wellington, that Chorus breached a non-disclosure agreement by making use of its "confidential information" in a bid for the government's rural broadband initiative.

Justice Dobson dismissed the proceeding in November after finding Creative's information was not of value to Chorus and ordered each party to cover their own costs. But Chorus asked him to "reconsider" a month later, as it tried to settle the dispute before it reached court.

On 12 June, Chorus offered $750,000 if a settlement was reached by 28 June, a day before it was due to submit evidence briefs. It also offered $500,000 if a settlement was reached after 28 June but by 2 August.

Chorus filed papers claiming compensation from the June deadline for Creative's failure to accept their offer, plus "increased costs", as their offer was rejected "without reasonable justification".

But Creative solicitor Michael Wigley said in a response earlier this month that the offer was not enough to overcome the "unusual circumstances".

Last year, Justice Dobson said in his judgement that Chorus used a "misleading, flattering tone of approval" to hide a "negative" view of Creative's intellectual property, in what was a "most unusual dynamic".

The flattery began when Chorus, Creative and the council came together to submit to a Crown Infrastructure Partners initiative in February 2018.

Creative asked Chorus for help after the council's previous submission to the initiative, which it helped develop, was unsuccessful.

But it later discovered Chorus was attempting to bid on its own for the government initiative using what Creative thought was their "confidential information".

Wigley said the circumstances were enough to negate the costs claim.

But Justice Dobson disagreed in a judgement last week, and awarded Chorus half its legal costs and half its disbursement costs from 28 June.

He said despite Creative's "annoyance at the misleading flattery Chorus had subjected it to", their offer was enough to support a claim for costs.

"Acceptance of either offer would have produced a substantially better outcome for [Creative] than has resulted from my substantive judgement."

Creative's communications director Brendon Burns said on Thursday he was unsure how much Creative owed Chorus, and declined to share what it had cost for the company to pursue the court case.

He said Creative had filed an appeal to the Court of Appeal on Justice Dobson's November decision, which he hoped would occur later this year.

no metadata

Local Democracy Reporting is a public interest news service supported by RNZ, the Newspaper Publishers' Association and NZ On Air.