Chen v Zeng

[2017] NZHC 2667

NOTE: PURSUANT TO S 35A OF THE PROPERTY (RELATIONSHIPS) ACT 1976, ANY REPORT OF THIS PROCEEDING MUST COMPLY WITH SS 11B TO 11D OF THE FAMILY COURTS ACT 1980.  FOR FURTHER INFORMATION, PLEASE SEE

THE-FAMILY-COURT/LEGISLATION/RESTRICTION-ON-PUBLISHING- JUDGMENTS.

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV 2016-404-002997 [2017] NZHC 2667

UNDER THE	Property (Relationships) Act 1976
IN THE MATTER OF	an appeal against a decision of the Family Court
BETWEEN	YING CHEN Plaintiff
AND	WEN ZENG Defendant

Hearing:	On the papers
Judgment:	31 October 2017

JUDGMENT OF DUFFY J

This judgment was delivered by me on 31 October 2017 at 4.00 pm pursuant to

Rule 11.5 of the High Court Rules.

Registrar/ Deputy Registrar

Solicitors/Counsel:

Prestige Lawyers Ltd, Auckland

Philip Lee Law, Auckland

L Kearns, Auckland

CHEN v ZENG Costs [2017] NZHC 2667 [31 October 2017]

Introduction

[1]      Ms  Chen  and  Mr  Zeng  are  former  spouses  who  are  now  engaged  in relationship property proceedings.   On 25 July 2017, I allowed Ms Chen’s appeal against a Family Court decision refusing to make orders for further discovery.1

[2]      Ms Chen now seeks costs in respect of the appeal, including the costs of independent inquirer Mr Goodall.  Alternatively, she submits that costs should lie where they fall, but Mr Zeng should meet Mr Goodall’s costs.  Mr Zeng submits that costs should lie where they fall, and that the parties should share Mr Goodall’s costs.

Background

[3]      Ms  Chen  considered  that  Mr  Zeng  had  not  properly  complied  with  his discovery obligations, and that further material was required by her forensic accounting expert Mr Sutherland.  She made this complaint in the Family Court, but it was rejected by Judge Malosi who considered that sufficient information had been made available.2    Ms Chen appealed against that decision.   Mr Zeng resisted the appeal on the basis that he had provided all that was required by way of discovery,

and that Ms Chen’s continual requests for fresh discovery were oppressive.

[4]      On appeal, I appointed chartered accountant Mr Goodall as an independent inquirer to assess whether or not further discovery was required.3     Mr Goodall prepared a report dated 31 May 2017 in which he concluded that further information about the Schedule 10 transactions needed to be provided.  In a telephone conference after the release of his report, Mr Zeng agreed to provide that information.

[5]      Following that telephone conference, Mr Sutherland filed another affidavit identifying other transactions (the Schedule 11 transactions) about which he asserted further discovery was required.   I then directed Mr Goodall to provide a second report in response to those assertions.  Mr Goodall expressed the view in his second report that information regarding the Schedule 11 transactions was required to enable

Mr Sutherland to prepare his report on value.  In a subsequent telephone conference I

1      Chen v Zeng [2017] NZHC 1721.

2      Chen v Zeng FC Auckland FAM-2015-004-1068, 9 November 2016 (Minute).

3      Pursuant to s 38 of the Property (Relationships) Act 1976.

expressed concern that Ms Chen had not brought the Schedule 11 transactions to Mr Goodall’s attention before he had prepared his first report.  Her conduct appeared consistent with Mr Zeng’s complaints about facing continual requests for fresh discovery.  I informed her that her conduct was likely to be reflected in an award of costs against her.  Ms Chen then disavowed a request for discovery of the Schedule

11 transactions.

[6]      I therefore allowed the appeal to the extent that Mr Zeng was ordered to provide discovery relevant to the Schedule 10 transactions.  At Ms Chen’s election, Mr Zeng was not required to provide discovery relating to the Schedule 11 transactions, and I ordered that discovery was complete: no further discovery (other than genuinely updating information) was required.

[7]      At [40] I expressed my preliminary view that costs on the appeal should lie where they fall.  However, I gave leave to the parties to file memoranda on costs and as to whether the costs of obtaining Mr Goodall’s reports should be shared equally between them.

Submissions

[8]      Relying on the principle that costs follow the event, Ms Chen now seeks costs in relation to the appeal.  However she has provided no itemised schedule of costs and accordingly I am not informed as to the scale of costs or the quantum of costs sought.   She also submits that Mr Zeng should pay Mr Goodall’s costs. Alternatively, she submits that costs should lie where they fall but Mr Zeng should meet Mr Goodall’s costs.

[9]      Mr Zeng’s position is that costs should lie where they fall, and that the parties

should share Mr Goodall’s costs.

Analysis

[10]     I consider that Ms Chen has had ample opportunity to provide the Court with a properly made application for costs.  For this reason I do not propose to provide her with the opportunity to provide the Court with a properly itemised costs schedule

that quantifies the costs she seeks.  I consider that Ms Chen’s conduct in relation to the Schedule 11 issue had some disentitling effect on her entitlement to costs following the measure of success that she enjoyed in this appeal. Accordingly I may have awarded reduced costs to reflect those counter-balancing factors.  However as matters stand I consider an order that costs lie where they fall is appropriate. Sufficient time and effort has already been expended on this appeal by the parties. The time and costs involved in offering Ms Chen a further opportunity to provide the necessary itemisation of her costs application would outweigh the benefit she might then receive.   It would also entail further expense for the respondent who is not responsible for the circumstances with which the Court is now faced.  Accordingly I find that costs should lie where they fall.

[11]     Regarding payment for Mr Goodall’s reports, I consider the costs should be shared equally by the parties.  That Ms Chen has benefited from Mr Goodall’s first report is a factor favouring payment falling on Mr Zeng.  The cost incurred regarding the second report was the result of Ms Chen’s conduct relating to the Schedule 11 issue.    Ultimately the  second  report  was  a  wasted  effort  and  expense,  because Ms Chen decided not to pursue discovery of the Schedule 11 items.  That is a factor favouring payment falling on Ms Chen.  Looked at overall, I consider the conduct of both Mr Zeng and Ms Chen and the benefits each has derived from Mr Goodall’s services  to  be  such  that  I  find  each  should  contribute  equally  to  payment  of Mr Goodall’s services.  This payment will therefore be a debt the parties are required to pay to the registry on demand.

Result

[12]     Costs lie where they fall.

[13]     The parties are jointly liable in equal shares for the costs of Mr Goodall’s

reports.