Gao v Starlight Capital Limited

[2021] NZHC 1149

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2020-404-2345

[2021] NZHC 1149

BETWEEN

FENG GAO (as trustee of Gao and Li Family Trust)

First Plaintiff

HUANHONG LI (as trustee of Gao and Li Family Trust)

Second Plaintiff

AND

STARLIGHT CAPITAL LIMITED (6418392)

First Defendant

JASON LI

Second Defendant

Hearing:

On the papers

Counsel:

Appearances:

RM Dillon for the First Defendant

F Gao, First Plaintiff in person (and for Second Plaintiff)

Judgment:

21 May 2021

JUDGMENT OF FITZGERALD J

As to application for leave to appeal]

This judgment was delivered by me on 21 May 2021 at 3.00pm, pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date………………………………

Solicitors:      Queen Street Lawyers, Auckland To:      F Gao, Auckland

H Li, Auckland

GAO v STARLIGHT CAPITAL LTD [2021] NZHC 1149 [21 May 2021]

Introduction

[1]        On 1 April 2021, I delivered a judgment in which I dismissed the plaintiffs’ application to join a solicitor employed by Queen City Law as a third defendant to these proceedings, and a related application that Queen City Law be restrained from continuing to act for the first defendant in these proceedings.1

[2]        The plaintiffs have now applied for leave to appeal my judgment to the Court of Appeal, and also apply for a stay of the costs orders I made in my judgment.

[3]        The background facts to these proceedings are set out in my substantive judgment and are not repeated here.

Legal principles applicable to an application for leave to appeal

[4]        Section 56(1)(a) of the Senior Courts Act 2016 (the Act) gives the Court of Appeal jurisdiction to hear and determine appeals from a judgment of the High Court. However, pursuant to s 56(3) of the Act, no appeal lies from any order or decision of the High Court made on an interlocutory application unless leave to appeal to the Court of Appeal is given by the High Court. The High Court can decide to give leave if the would-be appellant applies for leave within 20 working days after the date of the order or decision to be appealed from (or within any further time that the High Court may allow).

[5]        It appears that in this case, the plaintiffs/applicants originally sought to file an appeal against my judgment with the Court of Appeal, but were notified by email dated 13 April 2021 from the Registrar of the Court of Appeal that they would first need to seek leave to appeal from the High Court. Accordingly, on 13 April 2021, the applicants filed in this Court on application for leave to appeal to the Court of Appeal. They therefore filed that application within time.

[6]        In Finewood Upholstery Limited v Vaughan, I characterised the leave to appeal requirement as a “filtering mechanism” to ensure that unmeritorious appeals of

1      Gao v Starlight Capital Ltd [2021] NZHC 730.

interlocutory orders or appeals of interlocutory orders of no great significance do not unnecessarily delay the proceeding in which the orders were made.2 The Court of Appeal in Greendrake v District Court of New Zealand endorsed those observations.3 In Finewood, I noted that the following considerations would be relevant on an application for leave to appeal:4

(a)a high threshold exists;

(b)the applicant must identify an arguable error of law or fact;

(c)the alleged error should be of general or public importance warranting determination, or otherwise of sufficient importance to the applicant to outweigh the lack of general or precedential value;

(d)the circumstances must warrant incurring further delay; and

(e)the ultimate question is whether the interests of justice are served by granting leave.

The case for leave being granted in this case

[7]        The plaintiffs/applicants say that I erred in my substantive judgment in the following ways:

(a)I erred in determining the matter without considering correspondence from a potential third party lender who was apparently “put off” by the reference to “blackmail” in the first defendant’s solicitor’s correspondence with the plaintiffs. This allegation appears to make further reference to the first defendant providing misleading or modified company financial reports to Westpac Bank and by providing a misleading building contract to Westpac Bank. Whether or not the

2      Finewood Unpholstery Limited v Vaughan [2017] NZHC 1679 at [13].

3      Greendrake v District Court of New Zealand [2020] NZCA 122 at [6].

4      Finewood Upholstery Limited at [9] and [14], referring to an earlier decision of Dobson J in A v Minister of Internal Affairs [2017] NZHC 887. The Court of Appeal in Greendrake v District Court of New Zealand referred to these considerations without adverse comment at [6].

first defendant engaged in such conduct, however, is not relevant to the proposed claims against the first respondent’s solicitor personally.

(b)The plaintiffs/applicants further say that I did not “mention the matter of appellants forward the email correspondence to third party lender that directly affect the lending criteria of appellants”. However, my judgment does refer to the fact the plaintiffs had forwarded the email correspondence received from the first defendant’s solicitor to the potential third party lender, at [19]. It is correct that I did not expressly refer to that causing, on the plaintiffs’ case, the plaintiffs $99,000 in losses and brokerage fees, but again this is not relevant to the plaintiffs’ earlier applications which were determined in my 1 April judgment.

(c)The plaintiffs/applicants say I erred in that concluding that the proposed third defendant, the first defendant’s solicitor, had no duty to give AML/CFT information5 about the first defendant to the plaintiffs. It is correct that I made that finding in my judgment, but the absence of any duty to provide the information is clear in my view from the provisions of the AML/CFT legislation itself.

(d)The plaintiffs/applicants state that the first defendant’s solicitor should not issue a Property Law Act Notice (PLA Notice) based on an expired term loan agreement. Again, whether the PLA Notice was or was not valid at the time it was issued is a matter of substance as between the plaintiffs and the first defendant, rather than necessitating the joinder of the first defendant’s solicitor herself to the proceedings.

[8] Accordingly, in the context of those factors set out at [6] above, I do not consider the proposed appeal to have any significant merit. As explained in my judgment of 1 April 2021, the proper contest is between the plaintiffs and the first defendant.

5      That is, information collected under the Anti-Money Laundering and Countering Financing of Terrorism Act 2009.

[9]        The alleged errors in my judgment are not of general or public importance, or suggested to be of that quality. Further, the substantive issues arising will be appropriately determined between the plaintiffs and the first defendant. The proper resolution of those matters will be unaffected by leave being declined to appeal against my judgment of 1 April 2021.

[10]      The substantive claims between the plaintiffs and the defendants have now been set down for a hearing on 3 June 2021. On that date, the plaintiffs’ application for an injunction and the first defendant’s application for a defendant’s summary judgment will be heard together. Granting leave to appeal would likely mean that the hearing of those applications would not proceed. The injunction and summary judgment applications are the sorts of applications that ought to be heard promptly (particularly given they were filed in December 2020).

[11] Standing back, I am satisfied that it is not in the interests of justice to grant leave to appeal. The appeal does not have significant merit, there is no public importance arising, the substantive issues can still be ventilated as between the plaintiffs and the defendants, and there is an appropriate timetable to resolution of at least some of those issues by way of a hearing of those applications referred to at [10] above on 3 June 2021.

[12]Leave to appeal is accordingly declined.

[13]      For the  same  reasons,  there  is  no  reason  the  costs  award  made  in  my  1 April 2021 judgment ought to be stayed. Costs on interlocutory applications ought to be determined and dealt with promptly. Neither of the applications were an application for summary judgment where the costs principles relating to interlocutory applications can be displaced.

Fitzgerald J