Keung v Connolly
[2023] NZHC 2858
•11 October 2023
IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY
I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE
CIV-2022-409-301
[2023] NZHC 2858
BETWEEN SENG BOU KEUNG (also known as PAUL KEUNG)
Appellant
AND
LEISHA MAUD CONNOLLY
Respondent
Hearing: Determined on the papers Appearances:
Appellant in person
W J Palmer and L C Elliott for Respondent
Judgment:
11 October 2023
JUDGMENT OF OSBORNE J (COSTS)
This judgment was delivered by me on 11 October 2023 at 4.00 pm pursuant to Rule 11.5 of the High Court Rules
Registrar/Deputy Registrar Date:
KEUNG v CONNOLLY (Costs) [2023] NZHC 2858 [11 October 2023]
Introduction
[1] In June 2022 the respondent (Ms Connolly) obtained summary judgment against the appellant (Mr Keung) and was ordered to pay her $49,000 plus interest.1
[2] The respondent was subsequently ordered to pay to the respondent the costs and disbursements of the District Court proceeding totalling $28,760.75.2
[3] Interest has accrued and will continue to accrue on the judgment debts from 7 October 2022 until the date of deemed payment.3
[4] Mr Keung appealed the summary judgment. He was represented by counsel at the appeal hearing. The appeal was dismissed with costs reserved.4 Gendall J directed that the costs of the appeal would be determined on the basis of memoranda to be filed sequentially.5
Observation of this Court as to costs
[5] Gendall J had heard and determined the appeal in this Court shortly before his Honour’s retirement. Towards the end of the judgment, his Honour recorded:
[53] At this point I need to indicate my view that this is an appeal which had little merit and arguably it should not have been brought. It has simply delayed matters further. Ms Connolly, the respondent, has succeeded in opposing the appeal and obviously is entitled to an award of costs which here might well, in all the circumstances I have outlined above, be considered as appropriately an order for increased costs.
[6] That was the considered view of the Judge who had the advantage of hearing the full arguments on appeal. As the Judge now determining what the appropriate award of costs should be, the view expressed by Gendall J is one which I properly take into account while primarily having regard to the detailed findings set out in the High Court decision.
1 Connolly v Keung [2022] NZDC 8108 [District Court decision].
2 Connolly v Keung [2022] NZDC 14626.
3 Money Claims Act 2016, s 10.
4 Keung v Connolly [2023] NZHC 2381.
5 At [54].
[7] The parties (or their counsel) subsequently filed memoranda as to how costs issues should be addressed. Mr Keung signalled an intention to appeal the High Court decision and stated he wanted a stay of that decision. Ms Connolly asked that costs be determined in any event.
[8] The Court, by Minute dated 18 September 2023, recorded that the appropriate course was for any stay to be considered once costs had been determined. As Ms Connolly had already (on 14 September 2023) filed her costs submissions, the Court directed that Mr Keung file any memorandum on costs by 2 October 2023.
Form of submissions filed
[9] Ms Connolly’s memorandum as to costs is a comprehensive, traditional costs memorandum in which the application and grounds of application are clearly stated.
[10] Mr Keung did not file a distinct costs memorandum. Rather, at the same time as filing a document entitled “Seeking Leave to Appeal”, Mr Keung filed a lengthy memorandum “as to an appeal and costs …”.
Ms Connolly’s submissions
[11] For Ms Connolly, Mr Palmer sought costs on an indemnity basis, together with disbursements, totalling $67,330.75. Alternatively, he sought costs on an increased basis in the sum of $44,504. Mr Palmer referred in particular to the following findings made in the High Court decision:
(a)The District Court Judge was “emphatic in expressing the view that Mr Keung did not have a reasonably arguable defence”.6
(b)Mr Keung had attempted without justification to have “considerable additional material” admitted, when the material was “quite inconsequential”.7
6 District Court decision, above, n 1, at [15].
7 At [32].
(c)Mr Keung had “flooded both the District Court and this Court with a barrage of material, which was entirely irrelevant or of marginal relevance to the issues to be decided”.8
(d)“There was nothing in [the] first ground of appeal”, that ground having “little substance”, and relying on matters that were “entirely of [the appellant’s] own making”.9
(e)The second ground of appeal was “entirely without merit and quite unsupported by any independent evidence”.10
[12]In dismissing the appeal, Gendall J concluded:11
This is a case where the District Court and this Court need not accept uncritically evidence which Mr Keung has endeavoured to advance which I agree is baseless and riddled with inconsistencies and inherently lacking in credibility.
[13] The respondent invokes r 14.6(4)(a) High Court Rules 2016. Thereby the Court may order a party to pay indemnity costs if (relevantly) the party has acted vexatiously, frivolously, improperly, or unnecessarily in commencing, continuing or defending a proceeding or a step in a proceeding”.
[14] One situation which the courts recognise as justifying indemnity costs is where the case is truly hopeless – it is then presumed to have been commenced for some ulterior motive.12
[15] Mr Palmer observed that it was the vast amount of material filed by Mr Keung on the appeal that led to the respondent’s need for a detailed response.
[16] Mr Palmer attached a schedule summarising his firm’s 197 hours of attendances from the filing of the appeal in July 2022 to the filing of submissions on
8 At [43].
9 At [29], [33].
10 At [39], [41(i)], [44].
11 At [50].
12 Ben Nevis Forestry Ventures Ltd v Commissioner of Inland Revenue [2014] NZCA 348 at [27].
costs and other matters raised by Mr Keung since the High Court decision was issued. The average hourly charge out rate equated to $287.
[17] Mr Palmer noted that indemnity costs, where awarded, are determined with reference to actual costs but may be less if the Court considers the actual costs are unreasonably high.13 In Mr Palmer’s submission, Ms Connolly’s actual costs were reasonable when regard is had to the manner in which Mr Keung conducted the appeal and to the significance and complexity of the work undertaken.
[18] In the alternative, Ms Connolly sought increased costs, on the basis of a 50 per cent uplift above scale.
[19] The appeal had been appropriately categorised as a Category 2 proceeding.14 Mr Palmer provided a scale calculation, generally categorising (under r 14.3) the proceeding as band B (average complexity), but band C in relation to matters of substantive preparation. The latter categorisation had regard to the additional time and resources required due to the nature and large volume of material filed by the appellant.
[20] Mr Palmer invoked r 14.6(3)(b)(ii) High Court Rules on the basis that Mr Keung had unnecessarily increased Ms Connolly’s costs by raising and persisting with arguments that lacked merit.
[21] Mr Palmer also invoked r 14.6(3)(b)(v) in relation to settlement offers. He produced copies of offers made to Mr Keung on behalf of Ms Connolly in August 2022 (shortly after Mr Keung filed his notice of appeal) and in August 2023 (after Ms Connolly’s submissions were filed). In each, Ms Connolly offered to accept sums less than her entitlement in terms of the District Court judgments. Mr Keung did not respond to the offers. Mr Palmer submitted, having regard to the lack of merit in the appeal, Mr Keung is to be treated as having failed without reasonable justification to accept the settlement offers.
13 Jessica Gorman and others McGechan on Procedure (online ed, Thomson Reuters) at [HR14.6.03(2)(a)].
14 High Court Rules 2016, r 14.3.
[22] Mr Palmer provided a schedule calculating scale costs totalling $29,636. With a 50 per cent uplift ($14,818), Ms Connolly’s alternative claim (for increased costs) totalled $44,454 (together with a disbursement of $50).
Mr Keung’s submissions
[23] Although Mr Keung had received Ms Connolly’s submissions, he did not respond directly to the detail of those submissions. Rather, in a lengthy memorandum primarily focussed on matters relating to the possibility of a further appeal, Mr Keung addressed two paragraphs touching on costs:
18.In the last two and half years I have made no contact with Ms Connolly, her family and or work and friends. I have been forced to defend myself constantly, suffering with legal costs for these proceedings and the same for the family court. While I have been ‘outgunned’ I have told the truth. Ms Connolly is fully funded by legal aid with a disclosed NON repayment agreement for the family court which has cost me over
$150,000 alone so far, her father is funding these proceedings and Buddle Findlay are subsiding the claims as they have a working relationship with her fathers workplace. I have spent over $300,000 on Ms Connolly’s personal living cost, lent her funds of over $30,000, my trust has lent her over $10,000, I paid her half of the initial seed money, valuations and property related costs being $25,000 for 2 Frankleigh Street, and not gone ahead with the project, our family Trust paid off the mortgage to allow us to secure our interests in 2 Frankleigh Street, of $300,000. I paid into court $78,000 and are now being asked to provide another $70,000 for legal fees under what I say is fraud. I want Ms Connolly out of my life without hooks but will not accept a lie to the Court nor that the Court find I needed the funds from Ms Connolly at the time, it’s just not real.
…
22. I plead with the court to allow me this time before costs are awarded.
…
[24]In a subsequent affidavit, Mr Keung added this:
25) If the Judge is inclined to address the issue of costs, I can place any required funds immediately in the court trust account. I do not accept that increased costs are suitable to this application as I flat out are telling the truth. One of my major concerns is how this will set a precedent to other people and personally relationships in my position. Ms Connolly has refused all invitations for mediation and resolution. In general we had agreed with her approach in July 2021 to settle, on the basis that there were no further disparaging remarks and attacks, she did not accept this.
Discussion
[25] The starting point is that the primary principle — costs follow the event — appropriately applies in this case.15 The fact Ms Connolly was legally aided does not alter the position — she is entitled to seek costs in the normal way.
[26] There is no basis on which to defer to a later date the determination of costs. All the information relevant to their determination is appropriately before the Court.
[27] Assertions made by Mr Keung as to unreasonable conduct by Ms Connolly “in July 2021” have no relevance to the costs incurred on this appeal — the date of the alleged conduct precedes the date of the District Court hearing by some 10 months.
[28] The real issue in this case is whether the respondent should be awarded indemnity costs or increased costs.
[29] At the least, the appeal must be regarded as having lacked merit and having done so by a substantial margin.
[30] Ms Connolly’s suggested alternative approach — involving a 50 per cent uplift above scale — would be clearly justified, having regard to the fact the daily recovery rate is two-thirds of the daily rate considered reasonable for the particular proceeding.16
[31] I conclude, however, that Ms Connolly’s application for indemnity costs is justified in this case. The sheer hopelessness of the appeal clearly points to its having been conducted for ulterior purposes. The evidence indicated that Mr Keung, notwithstanding written commitments he had made to repay Ms Connolly the sum he had borrowed from her, was prepared to litigate to the end rather than see her receive repayment of the debt from him.
[32] I am satisfied there should be an order for payment of indemnity costs under r 14.6(4).
15 High Court Rules, r 14.2(a).
16 McGechan on Procedure, above n 13, at [HR14.6.02(2)(a)].
[33] I must then determine what sum represents Ms Connolly’s actual and reasonable costs. I make that assessment in light of the extent to which Mr Keung’s approach to the appeal involved, as Gendall J observed, “a barrage of material … which was entirely irrelevant or of marginal relevance to the issues to be decided”. In relation to the extent of work undertaken for Ms Connolly, Mr Keung must be viewed as the author of what now becomes, in terms of costs, his own misfortune. That said, the District Court decision which Ms Connolly was seeking to have upheld, truly turned on a relatively narrow range of evidence and involved judgment sums of
$49,000 and $28,760.75 (plus interest). I cannot hold, even allowing for the escalation of work caused by Mr Keung’s approach to this litigation, that Ms Connolly’s incurred legal costs of $58,505 (excluding GST) represent what a reasonable observer would expect to be incurred by way of costs in relation to the subject matter of this appeal.
[34] I assess the actual costs reasonably incurred at $48,000 (excluding GST), equating to $55,200 (including GST). Ms Connolly’s disbursement is also recoverable.
Order
[35] I order the appellant to pay to the respondent the costs and disbursements of the appeal fixed in the sum of $55,250.
Osborne J
Solicitors:
Buddle Findlay, Christchurch
Copy to:
Mr Keung, Appellant
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