Bi v Westcoast Mining Ltd

[2020] NZHC 2940

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE

CIV-2019-418-000003

[2020] NZHC 2940

UNDER

the Companies Act 1993 and Part 18 of the High Court Rules 2016

IN THE MATTER

of an application for relief under section 174 of the Companies Act 1993

BETWEEN

JIANTAO BI

Plaintiff

AND

WESTCOAST MINING LIMITED

First Defendant

AND

GOLDEN COAST HOLDING LIMITED

Second Defendant

AND

CHAO ZHANG

Third Defendant

AND

MINGHOU ZHANG

Fourth Defendant

Hearing:

Determined on the papers

Counsel:

R A Hearn for Plaintiff

J V Ormsby for Third and Fourth Defendants

Judgment:

6 November 2020

COSTS JUDGMENT OF ASSOCIATE JUDGE PAULSEN

This judgment was delivered by me on 6 November 2020 at 4.00 pm pursuant to Rule 11.5 of the High Court Rules

Registrar/Deputy Registrar Date:

BI v WESTCOAST MINING LTD [2020] NZHC 2940 [6 November 2020]

[1]This judgment concerns costs on interlocutory applications:

(a)by the third and fourth defendants (the defendants) that the plaintiff provide a more explicit pleading;

(b)by the defendants that the plaintiff provide particular discovery; and

(c)by the plaintiff that the defendants provide particular discovery.

[2]        I determined the applications in [1](a) and (c) in my judgment of 24 September 2020.1 The third application in [1](b) was withdrawn by the defendants on the basis that the documents sought had been provided but they would be seeking costs.

[3]        The parties have been unable to agree on costs and their counsel have submitted memoranda.

[4]        The defendants seek costs in respect of all applications on the basis that they succeeded overall on all applications. They also seek costs on filing statements of defence to the plaintiff’s amended statements of claim.

[5]        The plaintiff argues costs should lie where they fall. He asserts success was broadly equally shared on the applications that were determined in my judgment and the third application was unnecessary.

[6]There is no dispute that costs (if awarded) should be calculated on a 2B basis.

Some preliminary issues

Two applications or three?

[7]        The defendants’ applications in [1](a) and [1](b) were made in a single document dated 24 July 2020. This document was amended on 14 August 2020. There is a preliminary issue whether it is appropriate for the defendants to make costs claims for discrete applications presented in a single document.

1 Bi v Westcoast Mining Ltd [2020] NZHC 2505.

[8]        Mr Ormsby submits where more than one application is brought in the one document costs are payable on each application. He acknowledges that this will not apply to hearing costs which are payable on the actual hearing time.

[9]        I was referred to Watherston v PGW Rural Capital Ltd.2 There, PGW sought costs on four applications all included in one document. Dunningham J accepted this was appropriate and said:

[15] In this regard, I accept the plaintiff’s submission that these were four discrete applications which could have been filed in separate documents and there was no costs saving (except for the filing fee) in presenting them in a single physical document. The discrete nature of each application was confirmed by the fact that two were resolved before hearing, the strikeout progressed to a hearing, and the application for security for costs, while the subject of discussions, was deferred pending the result of the strikeout application. Each application was made in reliance on separate grounds and supporting caselaw, and the affidavit evidence addressed each application under discrete headings. In my view, therefore, each of the applications should be treated as a separate application for the calculation of a costs award.

[10]      Taking a different view, Mr Hearn relies on Kite v May where Master Faire considered one document seeking a range of orders was to be considered as one application.3 Master Faire said:

[11]     The next specific matter that requires consideration is the fact that the application to strike out and seeking security for costs is in the one document. The Third Schedule refers to an interlocutory application. It seems to me, therefore, if one application is made that embodies a range of orders sought then it is still considered as one application. If there is a need to make any specific adjustment then that is made either under the general discretion given in r 46 or pursuant to r 48(c) which makes provision for increasing costs or for reducing costs under r 48(d), whichever is appropriate. I do not see such approach as a departure from the principles which are set out in r 47.

[11]   I am unable to accept Master Faire’s reasoning which assumes its own conclusion. The approach taken by Dunningham J reflects the reality that when discrete orders are sought in one document each requires proper consideration, evidence and submission. While Master Faire did accept the possibility of specific adjustments to costs awards where appropriate, that would produce much uncertainty

2      Watherston v PGW Rural Capital Ltd [2019] NZHC 1601.

3      Kite v May (2000) 14 PRNZ 296 (HC).

and inconsistency of result and is incongruent with the principle that the determination of costs should be predictable and expeditious.4

[12]   The applications by the defendants for a more explicit pleading and further discovery were discrete. Each application was made on separate grounds with its own relevant affidavit evidence. The law applying to each application was different. While both applications would have been determined at the one hearing they would have been argued as separate matters. Each should be treated as a separate application for costs purposes.

The filing of amended statements of claim

[13]   The defendants have sought costs on the filing of amended statements of claim.5 I do not regard these as costs on the interlocutory applications. It is not appropriate that I consider this claim in the present context. The defendants may pursue such costs upon determination of the proceeding in the usual manner.

My approach

[14]   All matters of costs are discretionary but the Court must exercise its discretion on a principled basis in accordance with the High Court Rules 2016. Generally speaking, the party who has lost should pay the costs of the party that has won unless there are exceptional reasons to the contrary.6 As noted above, the determination of costs, so far as possible, should be both predictable and expeditious.7

[15]   The first step is to determine who was the successful party overall on each of the three applications. If one party has achieved overall success that party is generally entitled to costs on that application.

[16]   Once it has been determined which party won overall, it is necessary to consider if there are grounds to increase or reduce/refuse costs upon any of the grounds

4      High Court Rules 2016, r 14.2(1)(g).

5      Rule, r 7.88(8).

6      Shirley v Wairarapa District Health Board [2006] NZSC 63, [2006] 3 NZLR 523 at [19].

7      High Court Rules, r 14.2(1)(g).

set out in the High Court Rules. There is no claim for increased costs here. However, r 14.7 High Court Rules is relevant and provides:

14.7     Refusal of, or reduction in, costs

Despite rules 14.2 to 14.5, the court may refuse to make an order for costs or may reduce the costs otherwise payable under those rules if

---

…

(d) although the party claiming costs has succeeded overall, that party has failed in relation to a cause of action or issue which significantly increased the costs of the party opposing costs; or

…

Who won overall on each application?

[17]   The starting point is Weaver v Auckland Council where the Court of Appeal said:8

[26] In the present case however, the only party to have succeeded by any “realistic appraisal” were the appellants. It is true that they did not succeed to the full extent of their claim but only to roughly half that extent, yet success on more limited terms is still success. We do not therefore see a proper basis upon which the usual rule that the party who fails with respect to a proceeding should pay costs to the party who succeeds should not apply. That said, it is appropriate that the costs ultimately awarded to the appellants should be reduced in accordance with r 14.7(d) because, although the appellants succeeded, the time and resources necessary for the respondent to meet ultimately unsuccessful arguments significantly increased its costs. Like Katz J, we assess that increase at around 100 per cent or roughly a doubling of effort and time. A reduction in entitlement by half is therefore appropriate.

[18]   To similar effect, Dunningham J observed in Emmons Developments New Zealand Ltd v Mitsui Sumitomo Insurance Co Ltd, it is not always easy to determine which party won overall and what is required is a realistic appraisal of the end result.9 There, the appraisal involved consideration of which party won on five distinct issues that had been put before the court for determination. The Judge also took into account the terms of a partial settlement agreement resolving issues which would otherwise

8      Weaver v Auckland Council [2017] NZCA 330, (2017) 24 PRNZ 379.

9      Emmons Developments New Zealand Ltd v Mitsui Sumitomo Insurance Co Ltd, [2020] NZHC 932.

have been determined in the proceeding and the downstream financial implications of her findings on the five issues.10

The defendants’ application the plaintiff provide a more explicit pleading

[19]   Mr Hearn accepts the defendants were successful on this application and does not advance any argument there are grounds to reduce or refuse the defendants costs. It is appropriate the defendants have their costs on this application.

The defendants’ application the plaintiff provide further discovery

[20]    Mr Hearn submits the plaintiff had largely complied with the defendants’ request for documents before the application was made, the application was then amended to seek categories of documents that had not previously been requested and agreement was reached without the need for a Court ruling. In those circumstances, he argues, the application was unnecessary and the defendants should not be awarded costs in relation to it. I am unable to agree with this assessment.

[21]   The defendants requested  documents  from  the  plaintiff  in  April  2020.  Mr Hearn filed a memorandum with the Court on 23 June 2020 advising that the plaintiff would provide his further discovery by 3 July 2020. On 2 July 2020, I directed that any applications by any party for further and better discovery were to be filed and served by 24 July 2020. The plaintiff did not provide further discovery until 17 July 2020. It appears the defendants’ solicitors did not know of the receipt of the further discovery and on 24 July 2020 the defendants filed their application. Once the plaintiff’s further discovery was inspected deficiencies were noted which resulted in the defendants filing their amended application on 14 August 2020. The plaintiff then filed a third affidavit of documents dated 25 August 2020 disclosing further documents.

[22]   The plaintiff failed to provide documents initially requested on 20 April 2020. While he provided further discovery before the defendants’ application was filed on

10 At [29].

24 July 2020, that discovery was incomplete requiring the defendants to file their amended application. I am satisfied that at least some of the documents sought in the amended application were previously requested by the defendants. I am satisfied the application was necessary and the defendants are entitled to costs.

The plaintiff ’s application the defendants provide further discovery

[23]Both sides claim success on this application.

[24]   Mr Hearn argues the plaintiff was partially successful because the defendants were required to disclose bank statements sought by the plaintiff which was a significant category that “will have a serious impact on the trial” and was a key focus of the interlocutory hearing.

[25]   Mr Ormsby argues the plaintiff substantially failed. He submits the application significantly overreached and the plaintiff mostly realised this by the time of the hearing. He contends the defendants properly opposed the application and they mostly succeeded. Accepting that the plaintiff did obtain some success, the defendants seek an award of 75 per cent of costs in their favour.

[26]   The application originally sought seven categories of documents but, as set out in my earlier judgment, at the hearing the plaintiff pursued the application in respect of just four categories.11 Following the hearing, the third defendant agreed to provide documents in one category and the plaintiff withdrew his application in respect of another. The parties agreed these arrangements were to be irrelevant to costs. However, as a result of them there were just two categories of documents that were the subject of my judgment. The plaintiff was unsuccessful in respect of one of the remaining categories but succeeded in respect of the other.

[27]   There is force in Mr Ormsby’s submission that the plaintiff’s application considerably overreached. His application did not succeed in respect of most

11     Bi v Westcoast Mining Ltd, above n 1, at [32].

categories of documents. That said, as a result of the application, the plaintiff was successful in obtaining bank statements relating to the source of funds introduced into the companies which were, as Mr Hearn submits, a key focus of the application and strongly opposed by the defendants. It is not known what influence the documents will have on the ultimate outcome of this case but the plaintiff was entitled to discovery of them and pursued the application accordingly.

[28]   The view I take is that the plaintiff had some success on the application but he failed in most respects and to a degree that under r 14.7(d) High Court Rules it is appropriate to refuse him costs. Costs on this application lie where they fall.

Further considerations

[29]   The defendants seek to recover a half day for counsel’s appearance at the hearing. Much of the hearing was concerned with the plaintiff’s application for the bank statements. Due to the plaintiff’s partial success in relation to that matter, I consider it appropriate to reduce that to a 75 per cent allowance. I consider this is consistent with my finding that upon that application costs are to lie where they fall.

[30]   The defendants have sought allowances for preparing for case management conferences and filing memoranda for those conferences. There is no allowance in Schedule 3 High Court Rules for preparing for case management conferences other than the first case conference. The defendant is entitled to an allowance for filing a memorandum for the case management conference scheduled for 25 June 2020. I make no allowance for filing a memorandum for the case management conference scheduled for 2 July 2020. The memorandum filed was a very short joint memorandum seeking agreed timetable orders.

The calculation of costs and disbursements

[31]The defendants are entitled to the following costs and disbursements.

Step	Days Allowed	Daily Rate	Costs	Disbursements	Total High
Interlocutory Application for Discovery by Third and Fourth Defendants	0.6	$2390	$1434	$500	$1934
Interlocutory Application for Further and Better Statement of Claim	0.6	$2390	$1434	$1434
Written Submissions in Support of Interlocutory Application for Further and Better Statement of Claim	1.5	$2390	$3585	$3585
Appearance at Hearing of Interlocutory Applications (75 % allowance of half day)	0.5	$2390	$1195	$1195
Filing Memorandum for Judicial Conference on 25 June 2020	0.4	$2390	$956	$956
Total	3.60	$2390	$8,604	$500	$9104

Result

[32]   The plaintiff is ordered to pay costs to the defendants on the interlocutory applications referred to in [1] above in the sum of $9,104 including disbursements.

O G Paulsen Associate Judge

Solicitors:

Corcoran French, Christchurch
RVG Law, Christchurch