IBuy Property Limited v He

[2023] NZHC 3012

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE

CIV-2023-409-181

[2023] NZHC 3012

BETWEEN

IBUY PROPERTY LIMITED

Plaintiff

AND

XIAOMING HE

First Defendant

CHUNYUE YE
Second Defendant

SAYED MOHSEN MOSADI
Third Defendant

GT CAR DETAILING LIMITED

Fourth Defendant

Hearing:

On the papers

Counsel:

A N Riches for Plaintiff

S D McIntyre and P-Y Liu for Second Defendant

Judgment:

18 December 2023

JUDGMENT OF ASSOCIATE JUDGE PAULSEN

(Costs)

This judgment was delivered by me on 18 December 2023 at 3.45 pm pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar Date:

IBUY PROPERTY LIMITED v HE [2023] NZHC 3012 [18 December 2023]

[1]    In a judgment of 11 October 2023, I granted the plaintiff (IBuy) summary judgment against all defendants.1 I ordered the defendants to deliver up possession of a property at 377 Selwyn Street, Christchurch to IBuy. I also awarded IBuy costs against the defendants and directed that if there was disagreement in respect to the quantum of those costs, memoranda were to be filed.2 I have received memoranda for the plaintiffs and the second defendant.

[2]    By way of background, IBuy purchased 377 Selwyn Street at auction by the Sheriff pursuant to a sale order. The first defendant (Mr Xiaoming) was the registered owner of the property. Mr Xiaoming refused to vacate the property and IBuy applied for summary judgment against him for possession. Prior to judgment the second defendant (Ms Chunyue) applied to be joined as a defendant, claiming she had been granted a lease of the property by Mr Xiaoming which was binding upon IBuy and that she had subleased the property to Mr Xiaoming and the third and fourth defendants. Ms Chunyue and the third and fourth defendants were joined as defendants. Only Ms Chunyue actively opposed IBuy’s application for summary judgment, although the other defendants remained in possession of the property.

[3]    IBuy  was  successful   in   obtaining   summary  judgment.   I  found  that  Ms Chunyue’s lease was a sham and a device to ensure that Mr Xiaoming remained in possession of the property as against his creditors. I also rejected arguments she advanced that IBuy had acquired its title to the property by fraud and that she had an in personam claim against IBuy.

[4]There is disagreement about the following issues:

(a)Should IBuy be refused costs because it filed its memorandum on costs late?

(b)Is Ms Chunyue entitled to costs in respect of her application to be joined as a defendant?

1      IBuy Property Ltd v He [2023] NZHC 2847.

2 At [119].

(c)Is IBuy entitled to an uplift on scale costs?

(d)Is Ms Chunyue liable for several service fees?

Should IBuy be refused costs?

[5]    IBuy was directed to file its memorandum on costs within 21 days of my judgment, and Ms Chunyue had seven days to reply. IBuy’s memorandum was filed on 10 November 2023, which was 21 working days following the issue of my judgment of 11 October 2023 and was therefore filed late. Ms Chunyue argues the memorandum is out of time and costs should lie where they fall.

[6]    The Court has the power under r 1.19 of the High Court Rules 2016 to extend time fixed by any order for doing any act or taking any step in a proceeding. In a case such as this — where IBuy’s entitlement to costs has already been determined, the delay is insignificant and there is no suggestion of any prejudice to the defendants — the interests of justice clearly favour granting an extension of time for the filing of IBuy’s memorandum, and I do so.

Is Ms Chunyue entitled to costs in respect of her application to be joined as a defendant?

[7]    IBuy opposed Ms Chunyue’s application to be joined as a defendant.3 I found that Ms Chunyue had made out the grounds to be joined as a defendant, but reserved costs on that application.4 Ms Chunyue argues she was successful on the application and is entitled to costs, which should be set off against IBuy’s entitlement. She submits that the merits of a substantive proceeding and an interlocutory application in the proceeding are two different things, and that by opposing Ms Chunyue’s application IBuy caused costs to be incurred which would otherwise have been avoided.

[8]    The starting point is that an unsuccessful party in a proceeding or an interlocutory application should generally pay costs.5 In addition, costs on an opposed interlocutory application shall, unless there are special circumstances, be fixed when

3      IBuy Property Ltd v He [2023] NZHC 2847.

4 At [44].

5      High Court Rules 2016, r 14.2(a).

the application is determined and paid when they are fixed.6 However, I also note that under r 14.8(2) of the High Court Rules the Court may reverse, discharge or vary an order of costs made on an interlocutory application if satisfied the original order should not have been made.

[9]    I do not consider that Ms Chunyue is entitled to an award of costs on her joinder application. While IBuy was unsuccessful in opposing the application, and undoubtedly costs would have been avoided if it had not done so, I reserved costs because I considered that should await an evaluation of the merits of the parties’ respective positions in the substantive proceeding.

[10]   I have now reached my conclusion on the substantive merits, which is that Ms Chunyue’s lease was a sham and a device to ensure Mr Xiaoming retained possession of his property.   That carries  with it a finding that Ms Chunyue and     Mr Xiaoming acted together and dishonestly. It would not be just for Ms Chunyue to receive an award of costs to be joined as a defendant to pursue her defence in those circumstances. Indeed, had costs been fixed in her favour earlier this would have been a case where I would have discharged that order. There shall be no order of costs in respect of the joinder application.

Is IBuy entitled to an uplift on costs?

[11]   IBuy seeks increased costs against Ms Chunyue, but only on steps taken in the proceeding after she was joined as a defendant.

[12]   The Court may make an order for increased costs in circumstances set out in  r 14.6, which relevantly provides:

(1)Despite rules 14.2 to 14.5, the court may make an order—

(a)increasing   costs   otherwise   payable   under   those   rules (increased costs); or

…

(2)The court may make the order at any stage of a proceeding and in relation to any step in it.

6      High Court Rules, r 14.8(1).

(3)The court may order a party to pay increased costs if—

…

(b)the party opposing costs has contributed unnecessarily to the time or expense of the proceeding or step in it by—

…

(ii)     taking or pursuing an unnecessary step or an argument that lacks merit; or

(iii)    failing, without reasonable justification, to admit facts, evidence, documents, or accept a legal argument; or

….

…

(d) some other reason exists which justifies the court making an order for increased costs despite the principle that the determination of costs should be predictable and expeditious.

…

[13]   For the same reason as Ms Chunyue is not entitled to costs on her joinder application, I consider it is appropriate to award increased costs. That must follow from the finding that the lease was a sham. IBuy seeks a 50 per cent increase on scale costs. There was clearly an argument available to IBuy that indemnity costs should be awarded, but as they are not claimed I consider a 50 per cent uplift on steps taken after Ms Chunyue was joined to the proceeding is very reasonable, and I order accordingly.

Is Ms Chunyue liable for service fees for serving the proceedings on the third and fourth defendants?

[14]   Ms Chunyue should not be liable to pay service fees which relate to service of documents upon other parties.

Quantum

[15]   In relation to Ms Chunyue, IBuy is awarded costs of $21,032.00 and disbursements of $3,310.00 as follows:

Item	Particulars	Allocated days and daily rate	Amount	Increase by 50 per cent
1.	Commencement of proceedings by plaintiff	3 @ $2,390.00	$7,170.00
22.	Application for summary judgment	0.6 @ $2,390.00	$1,434.00
12.	Appearance at first call over – 22/6/2023	0.2 @ $2,390.00	$478.00
11.	Memorandum for first call over	0.4 @ $2,390.00	$956.00
11.	Memorandum as to extent of orders	0.4 @ $2,390.00	$956.00
24.	Preparation of written submissions for summary judgment	1.5 @ $2,390.00	$3,585.00	$5,377.50
25.	Preparation of bundle of documents for summary judgment	0.6 @ $2,390.00	$1,434.00	$2,151.00
26.	Appearance at hearing	0.5 @ $2,390.00	$1,195.00	$1,792.50
29.	Sealing orders	0.2 @ $2,390.00	$478.00	$717.00
Total costs	8.5 @ $2,390.00	$17,686.00	$21,032.00

Schedule of disbursements

Particulars

Amount

High Court filing fee

$1,350.00

Filing fees for amended statement of claim and affidavit

110.00

200.00

Hearing fee

1,600.00

Sealing fee

50.00

Total disbursements

$3,310.00

Claim against first, third and fourth defendants

[16]   In respect to the first defendant, IBuy seeks costs only in respect to the commencement of the proceeding and for the first call over. This is justified as the proceeding was only necessary because of Mr Xiaoming’s refusal to vacate the property, notwithstanding that his defence he was entitled to remain in possession was ultimately advanced through Ms Chunyue.

[17]I award IBuy costs against Mr Xiaoming in the sum of $9,082.00 as follows:

Item	Particulars	Allocated days and daily rate	Amount
1.	Commencement of proceedings by plaintiff	3 @ $2,390.00	$7,170.00
22.	Application for summary judgment	0.6 @ $2,390.00	$1,434.00
12.	Appearance at first call over – 22/6/2023	0.2 @ $2,390.00	$478.00
Total	3.8 @ $ 2,390.00	$9,082.00

[18]   In respect of the third and fourth defendants, costs are sought only for the commencement of the amended application for summary judgment. I award IBuy costs against the third and fourth defendants in the sum of $1,434.00 as follows:

Item	Particulars	Allocated days and daily rate	Amount
22.	Amended application or summary judgment	0.6 @ $2,390.00	$1,434.00

Result

[19]IBuy is awarded costs and disbursements as follows:

(a)as against the first defendant in the sum of $9,082.00;

(b)as against the second defendant in the sum of $21,032.00 for costs plus disbursements of $3,310.00; and

(c)as against the third and fourth defendants in the sum of $1,434.00.

[20]   The defendants’ liability for IBuy’s costs and disbursements is joint and several but no defendant shall be required to contribute to IBuy’s costs in an amount greater than the awards stated in [19] above, and IBuy shall not recover any costs or disbursements beyond the total amount awarded against Ms Chunyue.

O G Paulsen Associate Judge

Solicitors:

Saunders & Co, Christchurch Duncan Cotterill, Christchurch