Lam v Mo
[2018] NZHC 116
•13 February 2018
IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY
I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-Ā-TARA ROHE
CIV-2013-485-1736 [2018] NZHC 116
BETWEEN MAN FUNG LAM, YUET MING BETTY
WONG AND MORAL DRAGON LIMITED
Plaintiffs
AND
CHIU CHEUNG MO AND LILY YUET HA WONG
First Defendants
SUNLINK DEVELOPMENTS LIMITED Second Defendant
PLIMMERTON HEIGHTS CONSTRUCTION LIMITED Third Defendant
STEVEN WEE HONG LEE Fourth Defendant
Hearing: On the Papers Counsel:
R J B Fowler QC and P W F W Cheng for Plaintiffs
J R Parker and D M Consedine for First, Second and Third
Defendants
P Barratt and S F W Learmonth for Fourth DefendantJudgment:
13 February 2018
JUDGMENT OF CHURCHMAN J (COSTS)
Introduction
[1] This costs decision relates to an application by the fourth defendant for orders as to costs.
LAM, WONG AND MORAL DRAGON LIMITED v MO AND WONG [2018] NZHC 116 [13 February 2018]
Factual background
[2] On 15 December 2017, counsel for Steven Wee Hong Lee (the fourth defendant) filed a memorandum seeking costs. The memorandum said as follows:
(a) During a recent teleconference, it was agreed that the resolution of the fourth defendant’s costs need not wait until completion of the accounting exercise between the other parties.
(b)The fourth defendant’s schedule of costs and disbursements, calculated on a 2B basis, is for $73,639.69.
(c) The plaintiffs agree with the fourth defendant’s quantum. The first through third defendants are neutral in this matter.
(d) The fourth defendant seeks its costs and disbursements be fixed at
$73,639.69, that the $20,000 held in the plaintiffs’ solicitor’s trust account as security for costs plus any interest be paid to the fourth defendant, and that the plaintiffs pay the fourth defendant’s costs and disbursements within 14 days.
[3] On 18 December 2017, the plaintiffs filed a memorandum in response regarding the fourth defendant’s costs. The memorandum said as follows:
(a) The plaintiffs accept the schedule of fourth defendant’s costs and disbursements as an appropriate calculation.
(b)The plaintiffs do not object to fixing the fourth defendant’s costs and disbursements. There are, however, issues as to incidence and timing.
(c) The plaintiffs seek first a ‘Sanderson Order’. If that is not granted, a
‘Bullock Order’ is then sought.
(d) If the Court is unwilling to make a ‘Sanderson Order’ or a ‘Bullock
Order’ at this stage, the plaintiffs propose ordering a release of the total
security of $20,000 by way of part payment, with a stay of enforcement of the balance for the time being.
(e) It was not unreasonable to have included the fourth defendant in the proceedings given the plaintiffs distance and lack of understanding of New Zealand law and culture, and Mr Mo’s control of the information flow.
[4] On 19 December 2017, the first, second and third defendants filed a memorandum regarding the fourth defendant’s costs. The memorandum said as follows:
(a) It was not reasonable for the plaintiffs to join the fourth defendant, so they should bear the costs.
(b)Neither a ‘Sanderson Order’ nor a ‘Bullock Order’ are appropriate in the circumstances.
(c) If, however, the Court considers an order should be made, a ‘Bullock Order’ would be more appropriate, although it cannot be allocated at this stage as it is yet to be determined if the first, second and third defendants are, in fact, ‘unsuccessful defendants’.
(d)If a ‘Bullock Order’ for costs is made, the plaintiff’s proposal to order release of the total security of $20,000 would be appropriate.
Law
[5] Under the High Court Rules 2016 14.1, all matters relating to costs are at the discretion of the court.
[6] Where one defendant is successful and others are not, there is no rule governing the question of costs; these remain at the discretion of the judge.1
1 Lane Group Ltd v DI & L Patterson Ltd [2000] 1 NZLR 129, (1999) 13 PRNZ 509 (CA) at [83].
[7] Tipping J in the case of Lane Group Ltd v DI & L Patterson Ltd identified a number of factors to be considered when determining costs in such a situation:2
(a) The reasonableness of the original joinder;
(b)Whether the unsuccessful defendant did anything to contribute to the joinder of the successful defendant;
(c) How the proceedings developed; and
(d)Whether the unsuccessful defendant was found liable for significantly less than the claim made against both itself and the successful defendant.
[8] In the case of Brown v Heathcote County Council (No. 2), Hardie Boys J stated that:3
Whether an unsuccessful defendant should be required to contribute at all to the costs payable by the plaintiff to the successful defendant, and if so to what extent, are questions to be decided according to the justice of the case.
[9] An unsuccessful defendant will only be relieved of liability for costs where it was not a reasonable and proper course for the plaintiff to have joined the successful defendant.4 In the case of Clarke v Avondale Transport Ltd, Richmond J said that:5
The matter must be judged upon the material which ought to have been available to the plaintiff's legal advisers at the time when the writ was issued.
[10] Costs orders in circumstances where there is one successful defendant and one or more unsuccessful defendants can be made by either of the following:
(a) A ‘Sanderson Order’ by which an unsuccessful defendant is ordered to pay directly the costs of the successful defendant.6
2 At [84].
3 Brown v Heathcote County Council (No. 2) [1982] 2 NZLR 618 at 626.
4 Public Trustee v Auckland Electric Power Board [1944] NZLR 782 at 833.
5 Clarke v Avondale Transport Ltd [1969] NZLR 361 at 363.
6 Sanderson v Blyth Theatre Co [1903] 2 KB 533 (CA); Brown v Heathcote CoC (No 2) [1982]
2 NZLR 618 at 627.
(b)A ‘Bullock Order’ by which the plaintiff is ordered to pay the successful defendant’s costs but may then recover all or part of the costs from the unsuccessful defendant.7
Analysis
Was the original joinder of the fourth defendant reasonable?
[11] In his judgment, Williams J said: “The claim against Steven Lee is fraught with both factual and legal difficulty.”8
[12] Evidence to support the Lam’s claim that there was an express retainer was sparse, and Williams J found the evidence was very much against the proposition that Mr Lee was subject to a retainer.9
[13] Furthermore, the Limitation Act barred action in respect of any alleged breaches prior to 27 June 2007 which covered all payments by the Lams in the joint venture.10
[14] The sparsity of evidence in support of their claim against the fourth defendant, combined with the Limitation Act working to bar any action in respect of the alleged breaches, should have been clear to the plaintiffs’ legal advisors when they filed proceedings.
[15] The plaintiffs’ submission that it was not unreasonable to include the fourth defendant in the proceedings, given their lack of understanding of New Zealand law and culture, and Mr Mo’s control of the information flow, lacks merit and is not accepted.
[16] I therefore find that the original joinder of Mr Lee by the plaintiffs was unreasonable.
7 Bullock v London General Omnibus Co [1907] 1 KB 264 (CA); Ronaldson v Rankin [1948] NZLR
850 (SC).
8 Lam v Mo [2017] NZHC 997 at [196].
9 At [197] and [201].
10 At [209].
[17] The plaintiffs are seeking to recover costs from the first, second and third defendants, however, that exercise should not delay the resolution of costs as between the plaintiffs and the fourth defendant. The other defendants did nothing to contribute to the plaintiffs’ joinder of the fourth defendant.
[18] The plaintiffs should bear the costs of the fourth defendant.
Decision
[19] The plaintiffs are ordered to pay the fourth defendant’s costs and disbursements which are fixed at $73,639.69.
[20] The $20,000 held in the plaintiff’s solicitor’s trust account as security for costs plus any interest is to be paid to the fourth defendant immediately, with the plaintiffs
paying the balance of the fourth defendant’s costs and disbursements within 14 days.
Churchman J
Solicitors:
Paul Cheng & Co, Wellington for Plaintiffs
Morrison Kent, Wellington for First, Second and Third Defendants
Jones Fee, Auckland for Fourth Defendant