Hemu Trade Company Limited v Le

[2018] NZHC 2272

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2016-404-416

[2018] NZHC 2272

BETWEEN

HEMU TRADE COMPANY LIMITED

First Plaintiff

CHIN WEN LI
Second Plaintiff

CHING-CHI LI
Third Plaintiff

AND

CHUN MAO LE

Defendant

Hearing:	On the papers
Counsel:	R Reed and A Manuson for plaintiffs PF Chambers for defendant
Judgment:	30 August 2018

JUDGMENT OF FITZGERALD J

[As to application to stay costs award pending appeal]

This judgment was delivered by me on 30 August 2018 at 2:30 pm, pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date……………

Solicitors:           Prestige Lawyers Ltd, Auckland

Henley-Smith Law, Auckland (M Henley-Smith)

Hemu Trade Company Limited v Le [2018] NZHC 2272 [30 August 2018]

[1]    In my substantive judgment in these proceedings delivered on 8 May 2018, I found (broadly) in favour of the plaintiffs (primarily the first plaintiff) on a resulting trust claim.1 I ordered the sale of the property in issue and division of the proceeds of sale in accordance with the terms of my judgment. The form of orders giving effect to the judgment were resolved by consent and include a declaration the defendant holds 41 per cent of his legal share of a property in Auckland on resulting trust for the first plaintiff.

[2]    The parties also agreed that the plaintiffs are entitled to costs on the proceedings on a scale (2B) basis, and agreed the total amount of costs to be paid by the defendant to the plaintiffs as being $90,535.03. By consent, on 27 June 2018, I made an order to that effect.

[3]    The defendant has appealed my substantive judgment. He accordingly sought a stay of that judgment, and in particular, the order that the property in issue be sold and the proceeds of sale distributed to the parties in accordance with the terms of my judgment. The sale of the property to a third party, prior to the appeal being determined, could not be reversed in the event the defendant is successful in his appeal, and the plaintiffs properly agreed to a stay. The parties also agreed the terms on which the stay would operate.

[4]    The plaintiffs have cross-appealed certain aspects of my earlier judgment, including my finding that the defendant retains a nine per cent interest in the relevant property.

[5]    The defendant has subsequently sought a stay of the costs award against him in the substantive proceedings. The sole issue in this judgment is accordingly whether the earlier order that the defendant pay costs of $90,535.30 to the plaintiffs should be stayed.

[6]    The defendant says that the “norm” is for costs also to be stayed where a proceeding is stayed pending the outcome of an appeal. Reliance is placed on

1      Hemu Trade Co Ltd v Le [2018] NZHC 982.

commentary on r 12 of the Court of Appeal (Civil) Rules 2005.2 The commentary recognises that the Court may stay a costs award that has not itself been appealed in some circumstances,3 but does not explicitly suggest that is the normal course.

[7]    The plaintiffs say in response that there is no authority for staying a costs award simply because the underlying substantive judgment, or aspects of it, has been stayed pending appeal. They cite Zhong v Ong as an example in which the High Court refused to stay the costs order.4

[8]    The plaintiffs are correct. I disagree that it is the “norm” for an award of costs to be stayed solely on the basis that the substantive judgment has been stayed pending appeal. Zhong v Ong is an example to the contrary, as are observations of Jagose J in another recent decision of this Court.5

[9]    The principles for a stay are settled. The competing rights of the party who obtained judgment must be balanced against the need to preserve the appellant’s position for the appeal.6 There are several factors to be taken into account, none of which has been relied on by the defendant in this case, but for completeness include:7

(a)whether the appeal may be rendered nugatory by the lack of a stay;

(b)whether the successful party will be injuriously affected by the stay; and

(c)the overall balance of convenience.

[10]   I do not consider the defendant’s appeal would be rendered nugatory by paying costs in the interim, nor that there is any injurious effect of such payment. The defendant does not in fact suggest this to be the case. The overall balance of convenience accordingly favours the payment of costs to the plaintiffs, who have been

2      McGechan on Procedure (online ed, Thomson Reuters) at [CR12.01(3)].

3      See Sullivan v Wellsford Properties Ltd [2018] NZHC 708.

4      Zhong v Ong [2017] NZHC 2476.

5      Hojsgaard v Chief Executive of Land Information New Zealand [2018] NZHC 1563.

6      Duncan v Osborne Buildings Ltd (1992) 6 PRNZ 85 (CA) at 87.

7      Keung v GBR Investment Ltd [2010] NZCA 396 at [11], endorsing Dymocks Franchise Systems (NSW) Pty Ltd v Bilgola Enterprises Ltd (1999) 13 PRNZ 48 (HC) at [9].

successful in the underlying proceeding and are entitled to be partially reimbursed for their expense.

[11]   I consider, however, that it is appropriate for some form of security to be provided by the plaintiffs in the event the defendant’s appeal is successful and the costs paid in the interim are ordered to be reimbursed. I am conscious that the plaintiffs are resident in China, as indeed is the defendant. While the defendant has not raised this point, it is not clear how any order of this Court, or the Court of Appeal, as to reimbursement of costs were the defendant’s appeal to be successful, would be enforced in China (if required), and the timeframes involved in that process.

[12]   In Sullivan v Wellsford Properties Ltd, Gordon J declined to stay a costs judgment and rather ordered a portion of costs to be held in the successful party’s solicitor’s trust account until an appeal had been determined.8 The remaining portion was paid to the successful party.

[13]   I accordingly decline to grant the application for a stay of the costs award against the defendant, but on terms that the costs are to be paid by the defendant to the plaintiffs’ solicitors’ trust account, and 50 per cent of those costs are to be retained in the plaintiffs’ solicitors’ trust account pending further order of this Court, or the Court of Appeal, as to the final disbursement of those funds. The other 50 per cent may be distributed to the plaintiffs as a contribution to their costs in the interim.

Fitzgerald J

8      Sullivan v Wellsford Properties Ltd [2018] NZHC 708.