Kim v Mao
[2022] NZHC 1959
•9 August 2022
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2019-404-1039
[2022] NZHC 1959
IN THE MATTER of the Insolvency Act 2006 IN THE MATTER
of the bankruptcy of LIANSEN MAO
BETWEEN
HYUN BIN KIM and DUK YOUNG LEE
Judgment Creditors
AND
LIANSEN MAO
Judgment Debtor
Hearing: On the papers Appearances:
C Fourie for Judgment Creditors Judgment Debtor in person
Judgment:
9 August 2022
JUDGMENT OF LANG J
[striking out interlocutory applications]
This judgment was delivered by me on 9 August 2022 at 3.30 pm, pursuant to Rule 11.5 of the High Court Rules.
Registrar/Deputy Registrar Date……………
Solicitors:
Hesketh Henry, Auckland
KIM v LIANSEN MAO [2022] NZHC 1959 [9 August 2022]
[1]The judgment debtor in this proceeding has filed three applications. They are:
(a)An application dated 28 December 2021 seeking an order staying a judgment issued by Associate Judge Sussock on 30 November 2021.
(b)An application by the judgment debtor dated 28 December 2021 seeking to set that judgment aside.
(c)An application by the judgment debtor dated 9 June 2022 seeking an order barring the law firm Hesketh Henry from continuing to act as counsel for the judgment creditors in this proceeding.
[2] Counsel for the judgment creditor asks the Court to make an order under r 5.35B of the High Court Rules 2016 striking the applications out before they can be served. The judgment creditor contends all three applications are an abuse of the Court’s process.
Background
[3] On 6 June 2019 this Court issued a bankruptcy notice requiring Mr Mao to pay to the judgment creditors the sum of $216,773.92. This sum reflected a final judgment the judgment creditors had obtained against Mr Mao in the District Court on 3 October 2018.
[4] Mr Mao applied for an order that the bankruptcy notice be set aside on the basis that he had counterclaims against the judgment creditors that equalled or exceeded the amount claimed in the bankruptcy notice. By the time the Associate Judge came to hear Mr Mao’s application the amount claimed in the bankruptcy notice had been paid in full. However, it remained necessary for the Associate Judge to determine the application so she could properly determine the question of costs payable in the proceeding. The Associate Judge ultimately determined that the application to set aside the bankruptcy notice must fail. This was because Mr Mao could have filed his counterclaims in the earlier proceeding in which the judgment creditors had obtained judgment.
[5] Mr Mao has not appealed to the Court of Appeal against the Judge’s decision as he was entitled to do. Instead, he has filed applications seeking a stay of the decision or, alternatively, setting the decision aside. Finally, he seeks an order that the law firm Hesketh Henry is disqualified from continuing to act for the judgment creditors in this proceeding.
Jurisdiction
[6]Rules 5.35A and 5.35B of the High Court Rules 2016 provide as follows:
5.35A Registrar may refer plainly abusive proceeding to Judge before service
(1)This rule applies if a Registrar believes that, on the face of a proceeding tendered for filing, the proceeding is plainly an abuse of the process of the court.
(2)The Registrar must accept the proceeding for filing if it meets the formal requirements for documents set out in rules 5.3 to 5.16.
(3)However, the Registrar may,—
(a)as soon as practicable after accepting the proceeding for filing, refer it to a Judge for consideration under rule 5.35B; and
(b)until a Judge has considered the proceeding under that rule, decline to sign and release the notice of proceeding and attached memorandum for the plaintiff or the applicant (as appropriate) to serve the proceeding.
5.35BJudge’s powers to make orders and give directions before service
(1)This rule applies if a Judge to whom a Registrar refers a proceeding under rule 5.35A is satisfied that the proceeding is plainly an abuse of the process of the court.
(2)The Judge may, on his or her own initiative, make an order or give directions to ensure that the proceeding is disposed of or, as the case may be, proceeds in a way that complies with these rules, including (without limitation) an order under rule 15.1 that—
(a)the proceeding be struck out:
(b)the proceeding be stayed until further order:
(c)documents for service be kept by the court and not be served until the stay is lifted:
(d)no application to lift the stay be heard until the person who filed the proceeding files further documents as specified in the
order (for example, an amended statement of claim or particulars of claim).
(3) Rule 7.43(3) does not apply. However, if a Judge makes an order on the Judge’s own initiative without giving the person who filed the proceeding an opportunity to be heard, the order must contain a statement of that person’s right to appeal against the decision.
(4)A copy of a Judge’s decision to strike out a proceeding must, if practicable, also be served on the person named as a party or, if more than 1 person is named, those persons named as parties to the proceeding.
(5)See rule 2.1(3)(b) concerning the exclusion of the jurisdiction and powers of a Judge under this rule from the jurisdiction and powers of an Associate Judge.
Decision
[7] I do not consider rr 5.35A and B can be utilised in the present context. They relate to the striking out of a proceeding where a Judge considers it to be an abuse of process. They do not relate to interlocutory applications.
[8] However, the Court has the inherent jurisdiction to protect its own procedure from abuse. This extends to striking out interlocutory applications where they are plainly an abuse of the Court’s process. In Gower v Walker Osborne J observed:1
[15] The High Court Rules specifically provide for the striking out of a pleading and the dismissal of the proceeding or counterclaim on specified grounds. That includes the likelihood to cause prejudice or delay and also where there is “otherwise an abuse of the process of the court”.2 While no express parallel provision is made for the dismissal of an interlocutory application on such grounds, the Court has always held such inherent power over its processes.3
[16] The Court of Appeal’s discussion of the power under the Rules in Commissioner of Inland Revenue v Chesterfields Preschools Ltd is equally applicable to the exercise of the inherent jurisdiction where interlocutory matters are concerned.4 The Court stated that the grounds of strike-out listed in r 15.1(1)(b)-(d) concern the misuse of the Court’s processes. Pleadings which are likely to cause prejudice or delay require an element of impropriety and abuse of the Court’s processes. The express ground relating to abuse of process extends beyond the other grounds and captures all other instances of
1 Gower v Walker [2020] NZHC 1105.
2 Rule 15.1(d).
3 As recognised in r 15.1(4).
4 Commissioner of Inland Revenue v Chesterfields Preschools Ltd [2013] NZCA 53, [2013] 2 NZLR 679 at [89].
misuse of the Court’s processes. That said, the jurisdiction to dismiss a proceeding is only used sparingly.
[9] If Mr Mao was dissatisfied with the Associate Judge’s decision he ought to have appealed to the Court of Appeal. Had he done so he could then have sought a stay of the judgment pending appeal. In the absence of any appeal to the Court of Appeal there is no basis on which the Court can set aside or stay the judgment.
[10] The application seeking an order disqualifying the law firm Hesketh Henry from acting further in this proceeding is also plainly an abuse of process because the proceeding is now effectively at an end. The only remaining issue relates to costs. There is no proper basis on which Mr Mao can object to Hesketh Henry continuing to act for the judgment creditors in relation to that limited issue.
[11] I therefore invoke the Court’s inherent jurisdiction to strike the applications out. Given that I have taken this step without hearing from Mr Mao I point out that he has the right to seek leave to appeal to the Court of Appeal against my decision.
Lang J