BCH Investments Ltd v Nguy
[2021] NZHC 2730
•12 October 2021
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2019-404-000277
[2021] NZHC 2730
UNDER The Companies Act 1993 and the Contract and Commercial Law Act 2017 BETWEEN
BCH INVESTMENTS LIMITED
Plaintiff/Respondent
AND
JESSE SEANG NGUY
Defendant/Applicant
WENBING ZHU (also known as WILSON ZHU)
Third Party
Hearing: (On the papers) Judgment:
12 October 2021
JUDGMENT OF VENNING J SECOND APPLICATION FOR ADJOURNMENT
This judgment was delivered by me on 12 October 2021 at 2.30 pm pursuant to Rule 11.5 of the High Court Rules.
Registrar/Deputy Registrar
Date……………
Solicitors: Glaister Ennor, Auckland (B Vautier)
Great Wall Lawyers, Auckland
Counsel: D P H Jones QC, Auckland
BCH INVESTMENTS LIMITED v NGUY [2021] NZHC 2730 [12 October 2021]
Introduction
[1] In a judgment delivered on 9 September 2021 the Court dismissed the defendant’s application for adjournment of a fixture scheduled to commence on 18 October 2021.1
[2] The defendant subsequently, and late in the afternoon on 8 October 2021 filed a further application seeking to adjourn the fixture. The application is supported by an affidavit by Mr Nguy and a memorandum of counsel, Mr Jones QC.
[3]The plaintiff has filed a notice of opposition and memorandum in opposition.
[4] Mr Jones confirmed to the Registry that he was content for the application to be dealt with on the papers.
[5] The first hurdle facing the applicant/defendant is that this is his second application to adjourn the fixture. Rule 7.52 of the High Court Rules 2016 requires leave before an applicant can apply again for the same or similar order. Leave may only be granted in special circumstances.
[6] The purpose of the rule is to prevent the Court becoming overwhelmed with repetitive applications seeking the same relief. It is to be considered and interpreted in the context of s 56(3) of the Senior Courts Act 2016 which confirms that leave is required to appeal from a decision of this Court on an interlocutory application.
[7] I treat the application as incorporating an application for leave to make a second application. The overriding consideration as to whether there are special circumstances must be the interests of justice test. That is the same test applied to an application for adjournment under r 10.2.
Factual background
[8] The defendant is a barrister and solicitor. A director of the plaintiff acting as an agent for a company yet to be formed instructed the defendant to act as their
1 BCH Investments Ltd v Nguy [2021] NZHC 2360.
solicitor for the purpose of incorporating the proposed company and in respect of matters related to the proposed development of a property at 79–95 Gills Road, Albany. The plaintiff was the company subsequently incorporated.
[9] The defendant acted as solicitor for the plaintiff in relation to the acquisition of the land, and in relation to the following:
(a)the Buyout Agreement,
(b)the Deed of Nomination;
(c)the plaintiff’s purchase of land;
(d)the registration of the land in the name of the plaintiff; and
(e)various finance arrangements, including mortgage registration.
[10] Ultimately the plaintiff became named as a purchaser under an agreement for sale and purchase (ASP) of a residential development. The Deed of Nomination was not conditional on the plaintiff obtaining Overseas Investment Office (OIO) consent to the purchase of the land under the ASP.
[11] The plaintiff alleges that under s 10(1)(a) of the Overseas Investment Act 2005 the transaction required the consent of the OIO. That consent was never obtained. Subsequently the Chief Executive of Land Information New Zealand commenced proceedings against the plaintiff because of its failure to obtain OIO consent. After taking further expert advice the plaintiff admitted liability and paid the penalty imposed by the Court.
[12] The plaintiff sues the defendant for breach of contract and negligence. It seeks declarations and damages including:
(a)a declaration the defendant failed to exercise the skill, diligence, competence and care reasonably to be expected of a legal practitioner acting in the circumstances;
(b)damages being the legal and other professional costs the plaintiff expended in its attempt to mitigate its position; and
(c)$300,000 being the civil penalty paid and the costs incurred in the enforcement action taken against it for breach of the Overseas Investment Act.
The procedural background
[13]The plaintiff commenced the proceedings in February 2019.
[14] On 20 May 2020 the defendant was granted leave to issue a third party notice against Mr Zhu. Mr Zhu was a property developer who the defendant says was engaged by the plaintiff to advise on the development. The defendant has taken no effective steps to pursue his third party claim.
[15] On 25 September 2020 a fixture to commence on 18 October 2021 was allocated for the case. Seven days were set aside.
[16] On 2 August 2021 the solicitor then representing the defendant was granted leave to withdraw.
[17] On 30 August 2021 Moore J dismissed an application by the plaintiff for an adjournment.2
[18] On 1 September 2021 Moore J confirmed the trial would be limited to four days.3 The plaintiff had advised that it intended to call only two factual witnesses and one expert witness, a property lawyer.
[19] The defendant then applied to vacate the fixture and for an adjournment of the trial. That application was dealt with by the Court in its judgment of 9 September 2021.4 In support of that application the defendant’s then solicitor had submitted:
2 Minute of Moore J, dated 30 August 2021.
3 Minute of Moore J, dated 1 September 2021.
4 BCH Investments Ltd v Nguy, above n 1.
(a)the plaintiff had failed to comply with earlier timetable directions;
(b)notwithstanding belated compliance and a shortened trial duration the delay had caused the defendant prejudice;
(c)an adjournment would be in the interests of justice for the reasons set out by Mr Nguy sworn in support of the application.
[20] In his affidavit Mr Nguy noted the plaintiff’s default had effectively reduced the time for him to respond from 42 days to 29 days.
[21] Mr Nguy also advised that he had a disciplinary hearing which had been scheduled by the Auckland Standards Committee of the New Zealand Law Society for 18 October 2021.
[22] Next, Mr Nguy referred to his medical condition. He then submitted that an adjournment would enable him time to “either regroup, instruct new counsel, and prepare adequately for trial, or alternatively bankruptcy may intervene and the plaintiff will not be put to further expense in prosecuting its case”.
[23] The Court dismissed the application for the reasons set out in the judgment of 9 September 2021.5 It extended the time for Mr Nguy to exchange his evidence in reply so that he would have had 37 days to respond with his evidence.
[24] Rather than prepare for trial, Mr Nguy has renewed his application for adjournment. In it he:
(a)repeats that he is unable to properly prepare and present his defence; and
(b)says it is in the interests of justice to grant the adjournment.
5 BCH Investments Ltd v Nguy, above n 1.
[25] Mr Nguy has filed a further affidavit in support. Mr Jones has filed a memorandum.
[26] In his affidavit Mr Nguy says he has been unable to find a lawyer who can represent him at trial. Mr Jones has confirmed he is instructed only in relation to the application for adjournment and will not represent Mr Nguy at the fixture in the event the application is unsuccessful.
[27] Mr Nguy also says he has been unable to access the full legal file from his previous solicitors. Next, he notes that the plaintiff intends to call two witnesses, a Mr Tang and Ms Huang. Mr Nguy says he has never met Mr Tang, and while he has met Ms Huang, she was not the primary person he dealt with. People he dealt with are not being called and he has no access to them. There was a Mr Zhou who initially instructed him. He suggests that Mr Zhou needs to be called for the Court to properly understand the factual situation.
[28] Mr Nguy says generally there are witnesses in China who may have been able to assist his case. Mr Nguy says he wishes to call two witnesses, including the agent who referred the plaintiff to him but he believes she now lives in Hong Kong.
[29] Mr Nguy refers again to his Disciplinary Tribunal hearing scheduled for 18 October 2021, which he is not taking an active part in.
[30] In support of the application Mr Jones in his memorandum has referred to Mr Nguy’s inability to access his legal file, his inability to instruct counsel, and to access witnesses. Mr Jones submits that costs would be an adequate remedy.
[31] Mr Jones also noted that whether any mode of evidence application was to be made or whether any practical arrangements have been put in place for the particular trial was unknown.
[32] Mr Jones submitted that forcing Mr Nguy to proceed with the case would lead to a decision which, if adverse to him, would be appealed. Declining an adjournment would lead to an unnecessary and significant drain on Court resources in the future.
Analysis
[33] The interests of justice do not support leave being granted for Mr Nguy to pursue this second application and for the fixture scheduled to commence on 18 October 2021 to be vacated.
[34] The starting point is that Mr Nguy has been aware of the trial date since September 2020. He has had ample time to make arrangements to ensure he was in a position to arrange representation to ensure he was in a position to defend the proceedings and to arrange any witnesses he might have wished to call.
[35] There is no evidence to suggest that postponing or adjourning the fixture will enable Mr Nguy to instruct other counsel who would be willing to represent him at any adjourned fixture. It seems that Mr Nguy has insufficient financial resources to instruct counsel. The Court notes he was practising as a barrister and solicitor but is now not opposing the disciplinary proceedings against him scheduled for next week. There is no evidence as to Mr Nguy’s current livelihood or means. Any adjournment on the basis of giving Mr Nguy time to instruct counsel is likely to be a pointless exercise. Mr Nguy’s bankruptcy may well intervene as he himself suggested in his previous affidavit.
[36] I note that rather than prepare for trial, Mr Nguy has instructed two different counsel to make two separate applications for adjournment and in each case has filed affidavits in support. If Mr Nguy had given that time and attention to preparation for the fixture he would be in a position to respond to the claim against him.
[37] While Mr Nguy may not have access to his full file, the matters in issue at trial will be confined. The existing pleadings and the admissions in the statement of defence to the second amended statement of claim admit a number of important factual background matters. The plaintiff will not be required to lead evidence to prove those matters. The matters in issue are essentially distilled down to:
(a)whether in the circumstances s 10(1)(a) of the Overseas Investment Act 2005 applied and the plaintiff was correct to act on advice and admit liability under the proceedings taken against it by the Chief Executive
of Land Information New Zealand. This is a legal issue which Mr Nguy can make submissions on;
(b)whether Mr Nguy’s obligations under the contract of retainer (which he admits existed) required him to consider whether the land was sensitive land within the meaning of the Overseas Investment Act and advise the plaintiff that it would require OIO consent for the transaction and advise him of the consequences of failing to do so. This will be the subject of expert legal evidence which Mr Nguy can test by cross- examination but ultimately will be a question for the Court; and
(c)whether the plaintiff can recover a civil penalty and associated costs in addition to its out-of-pocket expenses. Again, this is a legal question.
[38] Given the matters in issue Mr Nguy should be in the position to address them from his personal knowledge. Mr Nguy as a lawyer should be in a position to respond to the above legal issues. Despite his health issues he has obviously been able to engage with counsel regarding his disciplinary hearing and also the two applications for adjournment.
[39] Mr Nguy complains that the witnesses the plaintiff intends to call have had limited dealings with him. For the reasons given above that does not assume any particular significance. Further, it is for the plaintiff to prove its case on the pleadings and on its evidence. If the witnesses are inadequate to do that, that is an issue for the plaintiff rather than Mr Nguy as defendant.
[40] The hearing, like other hearings during the COVID constraints, will proceed by VMR. The Courts (Remote Participation) Act 2010 will apply. The parties can arrange for the witnesses to join the VMR connection as required. The witnesses can be examined and cross-examined by VMR as necessary.
[41] While it is unfortunate Mr Nguy has a disciplinary hearing scheduled to commence next week on 18 October 2021 as well, that fixture was accepted when Mr
Nguy knew of this civil fixture. Further, I note that Mr Nguy does not intend to take an active role in defending that matter.
[42] The other matters that Mr Nguy sets out in his affidavit of 8 October 2021 are a repeat of the matters raised and dealt with by the Court on the previous application.
[43]As Moore J observed in his decision of 30 August 2021:
[16] Litigants are entitled to have their cases resolved with reasonable expedition. The public is entitled to the efficient dispatch of justice, the parties’ interests represent only one component of the various matters which this Court is required to take into account in considering where the interests of justice lie on an application to adjourn. While the litigants’ views may converge, even to the point of consent in some cases, the consequences of an adjournment to litigants engaged in other, unrelated litigation, must also be taken into account. Adjournments have a “knock on” effect. An adjournment means that the Court must find further time at a later date. At the present time, the pressures on the Court system are very considerable. The lists are very full and the demand for fixture time is high, particularly following the consequences of elevated COVID alert levels.
Result
[44] For the above reasons the application for leave to bring a second application to adjourn the fixture and to have the fixture adjourned is declined. The plaintiff’s claim against Mr Nguy will proceed on 18 October 2021.
Costs
[45] Mr Nguy is to pay the plaintiff’s costs of this application on the notice of opposition and memorandum in opposition on a 2B basis.
Venning J
3