CCNPP Limited v Lee HC Christchurch CIV 2009-409 2846

[2010] NZHC 523

IN THE HIGH COURT OF NEW ZEALAND

CHRISTCHURCH REGISTRY

CIV 2009 409 002846

BETWEEN  CCNPP LIMITED

Plaintiff

ANDCHANG HO LEE First Defendant

ANDKUN HWAN LEE Second Defendant

ANDDONG JAE LEE Third  Defendant

ANDDONG HOON KANG Fourth  Defendant

Hearing:         17 March and 22 April 2010

Appearances:  N  Jo for Plaintiff (on 17 March 2010)

T Tee for Plaintiff (on 22 April 2010)
G Riach and K Hill-Dunne for Defendants (on 17 April 2010)

G Riach and C Munday-Smith for Defendants (on 22 April 2010) Judgment:  23 April 2010

JUDGMENT OF ASSOCIATE JUDGE OSBORNE

As to application to strike out proceeding

Background

[1]      The  plaintiff  in  this  proceeding  is  CCNPP  Limited. Its statement of  claim purports to be filed by Namgeun Jo, a director of CCNPP Limited. The plaintiff sues

four defendants.

CCNPP LIMITED V CHANG HO LEE AND ORS HC CHCH CIV 2009 409 002846  23 April 2010

Defendants’ application

[2]      The defendants in January 2010 applied for orders that the statement of claim

be  struck  out  and  debarring  Namgeun  Jo  from  representing  the  plaintiff  in  the proceeding.

Preliminary matters - representation of CCNPP Limited by Namgeun Jo

[3]      Namgeun Jo claimed a right to  represent  CCNPP  Limited  by  virtue  as  his status as a director  of that company. He does not purport to be entitled to practise as

a barrister and solicitor of this Court.

[4]      A  body  corporate  has  no  right  of  audience  in  the  superior  courts:  Re  G  J Mannix Limited [1984] 1 NZLR 309.

[5]      The Court of Appeal in Re G J Mannix Limited recognised that the superior courts have a residual discretion to allow unqualified advocates to appear before them in a particular case. All three judgments in the Court of Appeal recognised that the discretion should be exercised only in rare and exceptional cases. The examples given by Cooke J (at 314) were cases of emergency situations where counsel is not available and cases of a straightforward nature where the assistance of counsel is not needed or it would be unduly technical to insist on counsel.

[6]      Because  Mr  Jo  indicated  to  the  Court  that  he  had  been  unable  to  retain counsel to represent the  plaintiff, the Court initially allowed him to appear for the company  at  the  hearing  on 17 March 2010, such leave being  granted  solely  in relation to the defendants’ strike out application. However, after Mr Riach had that day completed his submissions and Mr Jo had commenced his, it became apparent that meaningful advocacy on behalf of the company by Mr Jo was not possible. That situation was dealt with in the Court’s Minute of 17 March 2010. The plaintiff was granted an adjournment to enable it to obtain representation.  At the resumed hearing on 22 April 2010, Mr Tee appeared for the plaintiff, having provided in advance a brief written synopsis.

Preliminary matters – unless order

[7]      The adjournment of the hearing, part heard, on 17 March 2010 had  been caused by the plaintiff’s failure to retain effective representation in advance of the hearing and by its  resulting  need  to  obtain  representation during an adjournment. Although at that point not formally retained, Mr Tee came to the Court on 17 March to assist Mr Jo in relation to translation and understanding the procedure.

[8]      As the Court’s Minute of 17 March 2010 indicates (paragraph [4]), following

a brief adjournment of the proceeding  Mr  Jo  applied  for  an  adjournment  of  the application to enable him to obtain legal advice which was so obviously needed both

by this plaintiff and by himself in the related proceeding (CIV 2009 409 2847).   In the course of the submissions as to an adjournment, the Court made it clear to Mr Jo that an adjournment would be upon the basis that the plaintiffs pay the costs of the adjournment on a 2C basis in any event. It was explained that unless such costs were paid  within  10 working days there would be an order striking out the plaintiffs’ notice of opposition with the consequence that the defendants would be permitted to address  the  Court  as  if on  a  formal  proof  basis  in  support  of  their  application  for striking out. In the event, the quantum of the adjournment costs in relation to this proceeding were set at $800.00 (similarly for the 2847 proceeding).

[9]      Mr Jo did not pay the costs as ordered within ten working days. Indeed, when  the  Court  convened  a  telephone  conference  on  14  April  2010,  the costs  had still not been paid. Mr Jo informed the Court during that telephone conference that

he  would  be  paying the  ordered  costs   that   day. In   the   Court’s   Minute   of

14 April 2010 the Court recorded that Mr Riach reserved the right of the defendants

in each proceeding to assert that the unless orders should be given effect to, in any event, with the consequence that the notices of opposition would be struck out.

[10]     Both counsel addressed me at the resumed hearing on 22 April 2010 as to the unless  order. Mr  Riach  submitted  correctly that  the  unless  order  had  in  its  terms taken effect. Counsel did not differ as to the principles applicable where an unless order has come into effect. In particular, Mr Riach relied upon Ko v  Ko HC Auckland  CP692/98,  20  September 2000, a judgment of Paterson J, in  which  His

Honour applied  the well settled principles  in Hytec Information Systems  Limited v Coventry  City  Council[1997] 1 WLR 1666, especially at 1674 – 1675. It is sufficient to refer to this particular passage:

An  “unless  order”  is  an  order  of  last  resort. Case  management  principles should not in ordinary circumstances override the justice of the situation but in a situation where a judicial officer has felt compelled to make an “unless order”, unless it  can be established that  there were no grounds for making such  an  order  or  that  reasons  beyond  the  party’s  control  caused  non- compliance, the order should be upheld.   An “unless order” is a last chance order and counsel must be aware that non-compliance with it will in normal circumstances  bring  the  proceedings  to  an  end. It  is  only  in  extreme circumstances,   which   will   normally   require   evidence   that   the   non- compliance was caused by something beyond the control of the party, that a Court should intervene and set aside the order.   This is particularly so in a case such as the present one where counsel, knowing that the order was an “unless order” did not apply before the expiry of that order for an extension of  time  to  comply  with  it. In  the  circumstances  of  this  case,  such  an extension may not have been granted but the failure to apply may arguably in  this  case  be  another  example  of  the  manner  in  which  the  plaintiff  has treated Court orders.  It would seriously reduce the value of “unless orders” if  the  defaulting  party  could  without  adequate  explanation  and  without

evidence of intervening extraneous circumstances have such orders set aside.

[11]     In this case, Mr Riach pointed to the absence of any evidence explaining the non-compliance. There had been no application by the plaintiff for an extension of time for compliance. There was also no explanation of the failure to comply with the unless order. Mr Riach noted that difficulties which the plaintiff had apparently had

in obtaining legal representation could not explain a failure to pay a costs orders. An inherent part of the purpose of a ten working day time limit for the payment of the costs order was to ensure that the defendants who had already been inconvenienced and put to expense as a result of the earlier adjournment should not have to start preparing for a second hearing while the plaintiff was in breach of Court orders. As it was, the plaintiff had failed to explain why a costs order of only $800 (or $1,600 if both proceedings are considered) had not been met in a timely manner.

[12]     Mr Tee referred the Court to other litigation in which Mr Jo, or his interests, are  involved. He has faced mortgagee action in  relation  to  his  business  premises which has resulted in substantial time commitments to those  issues and that litigation. Mr Tee also referred to matrimonial difficulties which had ensued for Mr

Jo which had put him under severe pressure not only financially but also mentally.

In the circumstances, Mr Tee sought an order setting aside the unless order.

[13]     Even were the Court to accept the evidence provided from the bar, it does not amount to evidence establishing extreme  circumstances  as  referred  to  in  Ko  v  Ko.

As it is, that case indicates that such would normally require evidence. The adjournment occurred, against the opposition of the defendants, precisely to grant the plaintiff further time to have his response to  the  strike  out  applications  ready  for proper argument. The adjournment had already had regard to the exigencies which Mr Jo had faced in preparing for the previous hearing. The failure to pay modest costs awards strictly in accordance with the Court’s orders remains unexplained.

[14]     I also take into account Mr Tee’s proper and frank concession to the Court that he was not briefed sufficiently in  advance  of  the  resumed  hearing  to make comprehensive submissions (other than on a single point). In other words, despite the adjournment and the failure to pay costs on time, the plaintiff had not put itself in a position of being able to present proper submissions on the resumed hearing.

[15]     On any view of the pleadings of the plaintiff they are extremely unclear and difficult  to  follow.   The  plaintiff  has  not filed  a draft  amended  statement  of  claim which  might  clarify the  intention  of  the  pleadings.   The  synopsis  filed  by Mr  Tee emphasised a single allegation – causation of damage – which is said to be central to the justification of the statement of claim as it stands.  But for reasons I will come to the  statement  of  claim  suffers  for  reasons  much  more  extensive  than  a  failure  to adequately identify a pleading of causation.

[16]     With no disrespect to Mr Tee (who does not practise in civil litigation), the plaintiff  has  not  put  itself  in  a  position  to  instruct  a  solicitor  or  barrister  who  is conversant  with  and  practising  in  the  area  of  civil  litigation. The  plaintiff  has therefore, in the four months since its unsatisfactory statement of claim (apparently drafted and certainly filed by Mr Jo personally) was presented, has not been able to take advantage of the additional time to produce a statement of claim which meets pleading requirements.

[17]     This is a strike out application in relation to a pleading which the  plaintiff chose to file without legal representation.  If the proceeding is struck out on a formal proof basis as a result of the enforcement of the unless order, the plaintiff will still

(subject to any limitation issues, which do not appear to arise) have available to it any causes of action which are available on a properly pleaded statement of claim.

[18]     In these circumstances the plaintiff has not made out extreme circumstances justifying an overturn of the unless order which has already come into effect.

[19]     The  plaintiff’s  notice  of   opposition  dated  8  March  2010  therefore  remains struck out and I turn to consider the defendants’ strike out application on a formal proof basis.

Striking out a pleading in relation to its substance

[20]     The defendants assert that the statement of claim  should  be  struck  out  as disclosing no reasonably arguable cause of action. They invoke r 15.1 High Court Rules and the principles summarised by the Court of Appeal in Attorney-General v Prince [1998] 1 NZLR 262 (approved in Couch v Attorney General [2008] NZSC 45

at [33], per Elias CJ  and Anderson  J.) The  defendants also  rely upon  the Court’s powers under the rules and in terms of the Court’s inherent jurisdiction to strike out a proceeding which is frivolous or vexatious or is otherwise an abuse of the process of the Court.

[21]     The plaintiff’s pleading is one of fraudulent conduct by the defendants, which

is classically a proceeding which requires the careful pleading and responsibility of counsel with an understanding of ethical constraints in relation to such a pleading. The  statement  of  claim  as  filed  reflects  the  difficulty  which  a  person  who  is  not legally qualified has in meeting basic requirements of pleading.  Allegations are not distinctly  pleaded. Rather,  they  are  run  together  in  a  way  which  would  make particularised responses difficult if not impossible.  Matters of evidence are pleaded, and  the  claim  goes  so  far  as  to  indicate  what  further  evidence  the  plaintiff  might provide.  No particulars are given in relation to what appear to be central allegations. Those are merely examples of fundamental defects in the pleading.

[22]     The Court has endeavoured to understand exactly what the statement of claim

is  meant  to  say.   It culminates in paragraph 8 with  allegations  that  the  defendants

used false documents and in paragraph 10 with the allegation that they fraudulently obtained money from the plaintiff.  But the path of allegations to that point does not lend  itself to any ready comprehension. The statement of claim  contains  ten paragraphs. The plaintiff is not mentioned in the statement of claim until paragraph

7 when an allegation appears that the fourth defendant on behalf of Yoo Shin Park and  Yun  Jeong  Choi  as  directors  of  the  plaintiff  company made  statements  to the ANZ Bank as to payment of a  deposit. Until that point Yoo Sink Park and Yun Jeong Choi had been mentioned in every paragraph, apparently as participants in a “project agreement” relating to a parcel of land at Rolleston. There is no pleading that any of their involvement (as pleaded up to and including paragraph 6) was other than in their own capacities. In the meantime, the pleading introduces an entity which is not a party in the proceeding, Shane’s Company Limited (pleaded to be a company owned by the second defendant) which is referred to in paragraph 5 as owning land. In paragraph 5 it is alleged that Yoo Shin Park and Yun Jeong Choi were persuaded by the second defendant to invest in that land. That land appears to be land other than the property at Rolleston earlier referred to in the pleadings. At paragraph 6 of the statement of claim there appears to be an intention to plead that the defendants then created a sale and purchase agreement between the fourth defendant and Yun Jeong Choi at a hugely inflated purchase price.

[23]     It is not clear whether Yun Jeong Choi is said to have signed the agreement

or  not.   There  is  in  any event  no  suggestion  that  the  plaintiff  was  involved  in  the arrangement.  In paragraph 7 there is then the first reference to the plaintiff company but simply in the context that Yoo Shin Park and Yun Jeong Choi were directors of the company.   At paragraph 8 there is an allegation that the defendants assured the plaintiff, Yoo Shin Park and Yun Jeong Choi, that a bank loan from the ANZ Bank would be paid within a year but there is no earlier pleading to explain why any such assurance  was  relevant  to  the  plaintiff. The  lengthy  paragraph  8  then  contains further  allegations  about  an  agreement  that  the  fourth  defendant  through  another company   (Vision   Investment   Group   Limited)   entered   into   with   the   plaintiff guaranteeing a sale of the property for at least a given price.  There is then a further allegation  that  Yoo  Shin  Park  has  now  resigned  as  a  director  of  the  plaintiff company.   Again, there is no explanation as to the relevance of that.   Paragraph 8 concludes with an unintelligible allegation that “the plaintiff believes” that a sum of

approximately  $1,345,000.00  was  taken  by  the  defendants  from  the  ANZ  Bank through the plaintiff.   It is alleged that false documents were used.   At paragraph 9 there  is  a  pleading that  the  Rolleston  property was  subsequently sold  by the  ANZ Bank  by  mortgagee  sale  “because  the  plaintiff  was  unable  to  repay  the  loan obtained”  but  to  that  point  of  the  pleading  there  is  no  allegation  of  relevant ownership. The  pleading  then  concludes  at  paragraph  10  with  a  summary  of plaintiff’s  claims  with  reference  to  the  fraudulent  obtaining  of  money  and  similar allegations   –   the paragraph appears to be intended as   a   summary  of   earlier allegations.

[24]     This  is  a  case  where  the  statement  of  claim  fails  to  disclose  a  reasonably arguable cause of action.

Conclusion as to the pleading

[25]     In these circumstances it is appropriate that the Court strike out the pleading. The order made below deals with that.

Other grounds of application

[26] In these circumstances it is unnecessary for me to determine the defendants’ application with regard to the likelihood of prejudice or delay, or in terms of whether the proceeding is frivolous and/or vexatious. I do not consider I have enough evidence to justify a finding on the latter ground. The former ground – prejudice or delay – is a justified ground of complaint for very similar reasons to those which I have traversed above. As is indicated in McGechan on Procedure HR 15.1.03, classic examples of the exercise of the Court’s jurisdiction in this area include unnecessarily prolix pleadings (Hill v Hunt Davis (1884) 26 ChD 470 (unintelligible pleadings (Philipps v Philipps (1878) 4 QBD 127) and the pleading of irrelevant material (Cowles v Prudential Assurance Co. [1957] NZLR 124). The underlying rationale of such cases is that bad pleadings are apt to prejudice and delay.

Orders

[27]     I order:

(a)       The plaintiff’s statement of claim is struck out.

(b)       The Registrar is not to accept for filing any further document sought

to  be  filed  by  the  plaintiff  in  relation  to  the  subject  matter  of  this proceeding  unless  the  document  is  filed  by  a  person entitled  to practise as a barrister and solicitor of this Court, unless the plaintiff obtains the leave of the Court in that regard.

Costs

[28]     Mr Riach applies for costs.

[29]     An order of costs is appropriate in this case as costs should follow the event. Mr Tee accepts that this is the case.

[30]     Mr Riach submits that this an appropriate case in which to order the payment

of  increased  costs  pursuant  to  r  14.6(3)  High  Court  Rules.   I agree.   Fundamental rules of pleading have not been observed.   In breach of r 5.17(1) there has been a failure to state separately and clearly distinct facts.

[31]     Taking   into   account   the   fact   that   the   company   initially   sought   its representation through a lay person, the uplift on an ordinary costs award should not be extreme.

[32]     Mr Tee to the contrary submits  that  there  should  be  no  uplift  from  a  2B

award.  He notes the financial difficulties Mr Jo and his interests are under, by virtue

of the mortgagee sale which Mr Tee referred to yesterday.  Mr Tee says it is doubtful that Mr Jo or his company will be able to meet a costs award.  Those are not reasons

for altering what would otherwise be the appropriate level of an order of costs.  This

is  commercial  litigation  which  the  plaintiff  chose  to  initiate  knowing  its  own circumstances.

[33]     I  order  that  the  plaintiff  pay  to  the  defendant  costs  on  an  increased  basis, namely  at  a  level  which  represents  a  50%  uplift  on  a  2B  award,  together  with disbursements to be fixed by the Registrar.

[34]     Mr Riach seeks a particular certificate in relation to Item 2, Schedule 3 High

Court Rules.  He notes that although the defendants did not have to file a statement

of  defence  a  significant  proportion  of  the  attendances  covered by Item 2 (such as receiving instructions and researching facts and law) were required in this case, particularly because of the difficulty in understanding the allegations in the statement

of claim.  Mr Tee opposes any certificate upon the basis that the proceeding moved promptly to a strike out application, and that the recoverable items for that should be sufficient. I accept Mr Riach’s submission that the defendants will have had attendances which are properly referable to Item 2. I consider Mr Riach’s suggestion of a certificate for two thirds of Item 2 (that is one and a third day) to be appropriate.

I certify accordingly.  There is to be no uplift on that item.

Solicitors

Ambler Tee, Christchurch
Harmans , Christchurch