Huang v Huang

[2022] NZHC 193

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV 2020-404-2519

[2022] NZHC 193

BETWEEN

PEXIAN HUANG

First Plaintiff

HUAIJIAN HUANG
Second Plaintiff

POY TONG WONG
Third Plaintiff

AND

JIEHAO HUANG

Defendant

On the papers
Counsel:	R J Katz QC and H M McKee for the plaintiffs R E Harrison QC and D Liu for the defendant
Judgment:	16 February 2022

COSTS JUDGMENT OF CAMPBELL J

This judgment was delivered by me on 16 February 2022 at 10:00 am pursuant to Rule 11.5 of the High Court Rules

Registrar/Deputy Registrar

HUANG v HUANG [2022] NZHC 193 [16 February 2022]

[1]    In my judgment dated 29 October 2021, I awarded costs to the defendant. I stated that, if they could not be agreed, I would determine costs on the papers after receiving memoranda.

[2]    The parties reached agreement on all costs issues, except for the defendant’s claim for the fees charged by his PRC law expert, Mr Chen. The parties filed memoranda on that issue. Neither party sought to persuade me that I should convene a hearing on that issue.

The defendant’s claim for Mr Chen’s fees

[3]    Mr Chen, or rather his firm in Shenzhen, was engaged by the defendant to provide expert opinion evidence on several matters of PRC law. His opinions on those matters were conveyed in two affidavits that were filed in this proceeding and considered by me in my 29 October 2021 judgment.

[4]    Mr Chen’s firm charged fees totalling ¥298,000, which on current exchange rates is approximately NZD$71,000. The defendant supplied (by memorandum) a timesheet of Mr Chen’s firm’s attendances. This shows that the work was carried out by two persons in Mr Chen’s firm: Mr Chen himself, and an apprentice lawyer. Mr Chen’s hourly rate is shown as ¥10,000 (approximately NZD$2,380), the apprentice lawyer’s as ¥2,000 (approximately NZD$476).

[5]    The timesheet also shows that on the basis of actual attendances the fee for the work would have totalled ¥377,500 (approximately NZD$90,000). The actual fee charged to the defendant, ¥298,000, was about 78.4 per cent of that figure.

[6]    Mr Harrison QC, for the defendant, submitted that in terms of r 14.12 of the High Court Rules 2016 the fees were “specific to the conduct of the proceeding”, “reasonably necessary for the conduct of the proceeding” and “not disproportionate in the circumstances of the proceeding”. He understood that the plaintiffs challenged only the reasonableness of the amount charged by Mr Chen’s firm. As to that, Mr Harrison submitted that the total fees were reasonable when assessed against the many matters on which Mr Chen provided his opinion and when taking into account that Mr Chen’s firm wrote off some of its time. He said the firm’s hourly charge out rates

were, based on his own research, comparable to that of other PRC law firms. His memorandum annexed a printout from another PRC law firm’s website, showing that that other firm charges between ¥2,000 and ¥20,000 an hour for “foreign related legal matters”.

The plaintiffs’ response

[7]    The plaintiffs accept that Mr Chen’s expert evidence was necessary and that recovery of a reasonable amount for his services is appropriate. But they say the amount of fees that the defendant seeks to recover is not “reasonable in amount”.1

[8]    Mr Katz QC, for the plaintiffs, submitted that the defendant bears the burden of establishing, on the balance of probabilities, that the fees are reasonable in amount. He said this burden includes establishing that the hourly rate charged for each author is reasonable relative to the experience of the author and the complexity of the work undertaken. He said Mr Chen’s rate is significantly above the rate of senior counsel practising in New Zealand. Where the amount claimed is particularly large, Mr Katz submitted it is necessary to file an affidavit from an independent person practising in the same field deposing that the hourly rates are appropriate. He noted that the defendant filed no such evidence.

[9]    Mr Katz also said that it is irrelevant that Mr Chen’s fees were less than one per cent of the plaintiffs’ substantive claim. Finally, the plaintiffs compared Mr Chen’s firm’s fees with those charged by Dr Liao, the plaintiffs’ expert. They said Dr Liao charged NZD$27,356.

Decision

[10]   Rule 14.12(2) provides that a disbursement must be included in the costs awarded for a proceeding to the extent that it is, among other things, “reasonable in amount”.

1      The plaintiffs also say, at [2] of their memorandum, that Mr Chen’s services must be reasonably necessary for the conduct of the proceeding. But their memorandum does not otherwise suggest that his services were not reasonably necessary. For the avoidance of any doubt, I find that the services of Mr Chen’s firm were reasonably necessary for the conduct of the proceeding.

[11]   In Auckland Waterfront Development Agency Ltd v Mobil Oil New Zealand Ltd,2 Katz J held that the party claiming a disbursement bore the burden of establishing, on the balance of probabilities, that the amount claimed was reasonable in amount. I respectfully agree.

[12]   Katz J also said that in some cases, such as where the quantum claimed is “particularly large”, it may be necessary to file a supporting affidavit from an independent person practising in the same field deposing that the hourly rates charged are, or the overall fee is, appropriate and in accordance with industry standards.3 To put that comment in context, Katz J was dealing with a claim for about $821,000 in experts’ fees.4

[13]   Here the defendant’s claim is for ¥298,000, or approximately NZD$71,000. That is much less than what was in issue before Katz J. It is nonetheless a significant amount. It is also a relatively large amount in the context of a claim for disbursements, particularly where there has not been a trial. Further, it must have been clear to the defendant that what was in issue was the reasonableness of the hourly rates charged by Mr Chen’s firm. The issue was a narrow one.

[14]   For those reasons, this is a claim which I would have expected to be supported by an affidavit deposing as to appropriate hourly rates (in the PRC) for the type of work carried out by Mr Chen’s firm. As I have noted, the defendant did not file any supporting affidavit evidence.

[15]   This does not mean that the defendant’s claim fails in its entirety. Rule 14.12(2) provides that a disbursement is to be included in a costs award “to the extent that” it is reasonable in amount. A pragmatic approach is required in this context.5

[16]   In assessing what is a reasonable amount, I note that, because Mr Chen’s firm charged only about 78.4 per cent of the time recorded, the effective hourly rates were

2      Auckland Waterfront Development Agency Ltd v Mobil Oil New Zealand Ltd [2015] NZHC 470, (2015) 23 PRNZ 200 at [42] and [55].

3 At [44].

4 See [30].

5      As Katz J recognised in Auckland Waterfront Development Agency Ltd v Mobil Oil New Zealand Ltd [2015] NZHC 470, (2015) 23 PRNZ 200 at [53].

about NZD$1,866 for Mr Chen and NZD$373 for the apprentice lawyer. To a New Zealand court those rates seem very high. My pragmatic assessment is that ¥198,000, being about two-thirds of the overall fee, would be a reasonable amount. That allows recovery on the basis of hourly rates that are still high by New Zealand standards. In doing so, I take account of Mr Chen’s evident expertise and of the urgency under which at least some of his work was undertaken.

[17]   The amount awarded to the defendant is expressed in PRC currency, as the parties have agreed that whatever amount determined by this Court will be paid by the plaintiffs in RMB to a bank account in the name of the defendant in the PRC.

[18]   For completeness, I note that r 14.12(3) provides that, despite r 14.12(2), a disbursement may be disallowed or reduced if it is disproportionate in the circumstances. It is for that reason that the defendant compared Mr Chen’s fees to the amount claimed by the plaintiffs. The amount allowed is not disproportionate.

Result

[19]   The plaintiffs are to pay ¥198,000 to the defendant in respect of the defendant’s claim for disbursements for the amounts charged by Mr Chen’s firm.

Campbell J