Lee v District Court at Auckland
[2015] NZHC 737
•17 April 2015
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV-2012-404-005404
CIV-2014-404-000114
CIV-2015-404-000408 [2015] NZHC 737
BETWEEN YOON LEE
Applicant
AND
DISTRICT COURT AT AUCKLAND First Respondent
ZHI HONG GAO AND LIN GE Second Respondents
JOHN CARTER, BRENT O'CALLAGHAN AND TIMOTHY UPTON SLACK
Third Respondents
Hearing: 1 April 2015 Appearances:
Applicant in person
G Luen and M Battesby for the Second Respondents
K Robinson for the Third RespondentsJudgment:
17 April 2015
JUDGMENT OF ELLIS J
This judgment was delivered by me on Friday 17 April 2015 at 12.00 pm pursuant to Rule 11.5 of the High Court Rules.
Registrar/Deputy Registrar
Date:………………………….
Counsel/Solicitors:
Y Lee, Solicitor, Takapuna
G Luen, Hesketh Henry, AucklandM Battersby, Hesketh Henry, Auckland
K Robinson, McElroys, Auckland
LEE v DISTRICT COURT AT AUCKLAND [2015] NZHC 737 [17 April 2015]
[1] Mr Lee seeks an interim injunction preventing the execution of sale orders in relation to a property owned by him. The sale orders arise from a number of unpaid costs orders against him in the District Court, this Court, the Court of Appeal and the Supreme Court. Alternatively he seeks a stay of enforcement pursuant to r 17.29.
Background
[2] I can do no better by way of background than to quote from the recent leave decision of the Supreme Court.1 The Court said:
[1] The applicant, Mr Lee, is a solicitor. In 2005 he acted for the second respondents, Ms Gao and Mr Ge (the Gaos), on their intended purchase of a section in a subdivision from Pro Rata Investments Ltd (Pro Rata). The third respondents, Carter & Partners (Carters), acted for Pro Rata on the transaction. The agreement provided that the purchase price was $275,000, a deposit of $27,500 would be paid on signing, a further $137,500 would be paid several months later and the balance would be paid on settlement. The Gaos had not taken legal advice before signing the agreement and paying the initial deposit, but the agreement was conditional on the Gaos' solicitor approving its form within three working days. The Gaos instructed Mr Lee and later went ahead with the contract, paying the additional $137,500 when it fell due.
[2] Pro Rata did not have title to the section when the agreement was executed. It had agreed to purchase several sections in the subdivision from a group of companies trading as Coastal Land Developments (Coastal). In fact, Pro Rata was unable to complete the purchase of the section from Coastal, and Coastal resold it. The Gaos were unable to obtain the return of any of their deposit from Pro Rata, which had used the funds for other purposes and subsequently went into liquidation.
[3] In January 2007, the Gaos issued proceedings against Mr Lee in negligence seeking to recover the lost deposits. Mr Lee denied liability and, in the alternative, alleged contributory negligence on the part of the Gaos. Shortly before trial, Mr Lee joined Carters to the proceedings, alleging that an employee of the firm had given him an oral undertaking that the second deposit would not be released to Pro Rata. This led the Gaos to bring an alternative claim against Carters as second defendant, alleging breach of the oral undertaking and seeking damages of $137,500. The Gaos also included a wasted costs claim against Mr Lee for $60,000 in respect of legal fees unnecessarily incurred due to Mr Lee failing to disclose the alleged oral undertaking from Carters. Ultimately, then, the Gaos brought five causes of action, four against Mr Lee for varying amounts — $165,000, or $137,500 plus general damages; and $60,000 for wasted costs alongside the alternative claim against Carters for $137,500.
[4] The Gaos succeeded in the District Court against Mr Lee. Judge
Gittos found that Mr Lee was negligent and dismissed Mr Lee's claim that
1 Lee v District Court at Auckland [2014] NZSC 130
the Gaos were contributorily negligent. The Judge awarded the Gaos damages of $165,000 and costs and disbursements of $44,965.61. The Judge found on the facts that no oral undertaking had been given by Carters and dismissed all claims against the firm. On appeal to the High Court, Peters J upheld the finding of negligence but reduced the damages to $68,750 and also, in a subsequent decision, reduced the award of costs to $15,000. Mr Lee then sought leave to appeal to the Court of Appeal but both the High Court and the Court of Appeal refused leave.
[5] Mr Lee then filed an application for judicial review of the District Court decision. Peters J dismissed the application and awarded indemnity costs against Mr Lee. Mr Lee appealed unsuccessfully to the Court of Appeal, which also awarded indemnity costs against him. Mr Lee now seeks leave to appeal to this Court.
[3] The quantum of the outstanding costs awards against Mr Lee and in favour of the Gaos is $90,811.05. The quantum of the outstanding costs awards against Mr Lee and in favour of Carter and Partners is $93,382. They have, collectively, already obtained a number of charging orders against his property. The property is, however, otherwise unencumbered. Mr Lee’s equity in the property considerably exceeds the combined judgments debts. It seems he has no other realisable assets to speak of and, it appears, his ability to raise a loan has been compromised by the reduction in his professional capacity and workload as a result (either direct or indirect) of the above proceedings.
Mr Lee’s application
[4] As I have said, Mr Lee’s application was originally styled as an application for an interim or interlocutory injunction. The problem he faces, however, is that the application is not made in the context of any extant proceedings. The proceedings summarised by the Supreme Court are spent; only issues of enforcement remain at large. Nor has he filed a new claim in the context of which an injunction could be sought.
[5] It appears to me, therefore, that the application should be regarded as one for a stay of enforcement made under r 17.29, which simply provides:
A liable party may apply to the court for a stay of enforcement or other relief against the judgment upon the ground that a substantial miscarriage of justice would be likely to result if the judgment were enforced, and the court may give relief on just terms.
[6] I propose to proceed on that basis.
[7] But whatever form the application takes, Mr Lee’s object is the same. He wishes to halt the forced sale of his property pending the result of his intended application for recall of the Supreme Court’s 2014 leave judgment. He accepts that he faces a formidable obstacle in that respect because that judgment has already been sealed. But he says that his application for recall will be made on the very limited “miscarriage of justice” grounds articulated by the Court of Appeal in R v Smith.2
There is thus some symmetry between the grounds that Mr Lee will necessarily
advance in support of his foreshadowed recall application and the grounds he must establish to sustain his present application for stay.
[8] Mr Lee advised that he would be in a position to file his application for recall within 4 weeks. He said that he was prepared to give the Court an undertaking that if that application was unsuccessful he would then ensure that there was an orderly sale of his property and the various costs awards were met out of the proceeds. Mr Lee therefore accepted that the recall application was his last chance to put right what he perceives as the wrongs arising from the negligence and the judicial review proceedings. He said that if he fails in this endeavour he would give up the practice of law entirely and become a market gardener, like his parents.
[9] I am prepared to accept that Mr Lee would comply with an undertaking of the sort proposed. He strikes me as an honest man, of earnest convictions. And given the relatively short period of time for which a stay would be required, I was tempted to proceed on that basis.
[10] The grant of even a short stay was, however, opposed by the respondents. They referred to past compromises and indulgences to which they have agreed which have only resulted in further delay. They emphasised the considerable effluxion of time since the litigation commenced and the way in which the proceedings, and the costs associated with it, have proliferated. And equally important, perhaps, is the damage that permitting the issues to remain live will do to Mr Lee himself.
Although I acknowledge that he is unable to see things in this way, the virtually
2 R v Smith [2003] 3 NZLR 617.
certain reality is that if he proceeds down his intended path he will be faced with yet further indemnity costs orders for no gain whatsoever.
[11] Accordingly I propose to deal with the stay application on its merits.
Discussion
[12] As I have said, the threshold that Mr Lee must meet in order for a stay to be granted is that a substantial miscarriage of justice would be likely to result if the various costs judgments were enforced through the sale order. My understanding of Mr Lee’s position in that regard is that such a miscarriage would arise because, in the event that a stay is not granted and the Supreme Court later recalls its judgment, he will be denied the fruits of that recall because his property will have been sold. There must, however, be a question whether that outcome is sufficiently grave to meet the miscarriage threshold.
[13] In any event, implicit in Mr Lee’s contention is the assumption that the outcome of a positive recall decision would be that Mr Lee is granted leave to appeal, presumably either on grounds already considered and rejected by the Supreme Court or on grounds that were not raised in his first application. In other words, he seeks by his proposed recall application to have the Court completely reverse its original decision. Although the making of such applications is a strategy that is all too often deployed by unsuccessful litigants (particularly those who are self-represented) in all but the rarest of cases they turn out to be merely the last refuge for a hopeless cause.
[14] In Mr Lee’s case, the merits of his application for leave were addressed by
the Supreme Court in the following way:
[6] In his application, Mr Lee raised three grounds. The first was that the District Court's decision was made without jurisdiction as the Gaos' various claims exceeded $200,000 in total, which is the monetary limit of the District Court's jurisdiction. The second was that, as a result of a deed of assignment between Pro Rata and Coastal under which Pro Rata assigned to Coastal its interests in sale and purchase agreements with the Gaos and other purchasers, the Gaos should have claimed against Coastal rather than him. The third was that the costs award against him in respect of the District Court hearing (as modified by Peters J) and the award of indemnity costs made against him in the High Court on the judicial review application were
unjustified. In his written submissions, Mr Lee pursued only the first and third grounds.
[7] We are not satisfied that it is necessary in the interests of justice that we hear and determine this appeal. On the facts of this case, the jurisdiction issue does not raise a question of general or public importance. It is clear that the Gaos' claims were within the District Court's jurisdiction given that the wasted costs claim, which is alleged to take the total claim over the $200,000 limit, was an alternative to other claims. The Gaos could not succeed on all their claims. Two outcomes were possible: if the Gaos had succeeded on their primary claim in negligence against Mr Lee they could have received no more than $165,000, as occurred before Judge Gittos; their claim against Carters would have failed, as would their wasted costs claim against Mr Lee. If they had failed on their negligence claims against Mr Lee but succeeded on their claim against Carters on the basis of the oral undertaking, they would have received no more than $137,000 from Carters and may have succeeded on their wasted costs claim against Mr Lee for $60,000. At best, then, the Gaos could have been awarded a total of $197,500, which is within the $200,000 limit.
[8] The issues about the assignment and costs do not raise any matter of general or public importance. Nor do we see anything of general commercial importance or any risk of a substantial miscarriage of justice in relation to any of the grounds advanced.
[9] Accordingly, we dismiss the application for leave to appeal. We should not be taken, however, as necessarily endorsing the Court of Appeal's view that, because of the late stage at which the point was raised, it did not need to decide the jurisdiction point. Our decision is based on the fact that it is clear in any event that there was jurisdiction.
[15] The leading statement in New Zealand as to recall of judgments remains that of Wild CJ in Horowhenua County v Nash (No 2) [1968] NZLR 632 (SC):
Generally speaking, a judgment once delivered must stand for better or worse subject, of course, to appeal. Were it otherwise there would be great inconvenience and uncertainty. There are, I think, three categories of cases in which a judgment not perfected may be recalled — first, where since the hearing there has been an amendment to a relevant statute or regulation or a new judicial decision of relevance and high authority; secondly, where counsel have failed to direct the Court's attention to a legislative provision or authoritative decision of plain relevance; and thirdly, where for some other very special reason justice requires that the judgment be recalled.
[16] None of the matters canvassed by Mr Lee before me would appear easily to fit within these very limited three categories. On the contrary, it seemed to me that he was merely contending that the Court had not fully or properly considered (or, possibly, understood) the grounds for his proposed appeal.
[17] Having listened to Mr Lee at some length it seemed to me that his best point (“best” being a relative term) was based on a contention that the Court of Appeal’s decision in Wagner v Gill has materially changed (or helpfully clarified) the law in relation to the pleading of a loss of chance claim.3 In that decision the Court held that damages for loss of chance constitute special damages which must be very specifically pleaded, in accordance with r 5.33. Mr Lee says that the pleading of the
damages claim against him contained inadequate particularity in this respect and that this deficiency meant that he was deprived of the opportunity to call evidence in relation to a loss of chance counter-factual.
[18] One immediate difficulty with this submission, however, is that it was Mr Lee’s then counsel, Mr Katz QC, who appears to have urged upon the High Court a loss of chance analysis.4 Moreover such an analysis (which appears to have been opposed by the Gaos) in fact favoured Mr Lee, as the outcome of his first appeal to this Court shows (the damages awarded against him were halved). And it seems clear from the High Court judgment that Peters J considered that there was sufficient
evidence before her to develop the hypotheticals that were necessary to determine the matter on that basis. It can be inferred that Mr Katz acquiesced in that process.
[19] The next difficulty is that the judgment in Wagner v Gill was issued several months before the Supreme Court’s leave decision. I do not know whether Mr Lee raised this issue in his application for leave to appeal to the Supreme Court although the tenor of the Court’s judgment suggests that he did not. If that is so then all Mr Lee is really seeking to do is to advance a fresh application for leave on an entirely new basis which was available to him previously.
[20] The only other contention advanced by Mr Lee that I propose to address in any detail here relates to the involvement (or not) of the Official Assignee in this matter. As I understood it, he submitted that because one of the third respondents, Mr Slack, is now bankrupt the Official Assignee should be joined as a party.
Presumably his position is that, until this occurs, enforcement steps cannot be taken.
3 Wagner v Gill [2014] NZCA 336. As will be evident from my traversal of the history above, loss of chance damages were awarded against Mr Lee.
4 Lee v Gao HC Auckland CIV 2010-404-3599 19 May 2011 at [72].
[21] I reject that contention. As Mr Robinson submitted, neither Carter & Partners (Mr Slack’s former firm) nor Mr Slack personally has ever brought any claims against Mr Lee. They have consistently been found to have no liability to him and now seek merely to enforce multiple costs awards. Rule 4.50 has no application because the proceeding is, in substantive terms, at an end.
[22] In any event the costs awards are, in my view, partnership property, not the property of Mr Slack. Indeed, the Official Assignee has confirmed in writing that:
(a) The partnership was dissolved prior to Mr Slack’s adjudication
(although it would in any event have ceased to exist on that date);
(b)The costs awards (which were made before the dissolution) are partnership property;
(c) The Assignee has no right to partnership assets or liabilities;
(d) The Assignee therefore has no interest or standing in the proceeding. [23] In the end, while I accept that there may yet be important matters of principle
at stake from Mr Lee’s perspective, the threshold for a stay of execution is not met. The possibility of Mr Lee’s recall application having a successful outcome appears to me to be remote. It follows that the possibility of any miscarriage of justice flowing from enforcement steps being taken now is equally so.
[24] I am fortified in my conclusion that a stay should be declined by the fact that over six months have now elapsed since the delivery of the Supreme Court’s leave judgment. That serves only to emphasise that, on the face of the judgment, there was no basis that was immediately obvious even to Mr Lee for recall. Accordingly the reality is that Mr Lee seeks by both the belated application for recall and the present application for stay only to delay further what appears to be inevitable.
[25] The application for a stay of enforcement is dismissed accordingly. I can see no alternative but to order once again that the respondents are entitled to indemnity
costs.
Rebecca Ellis J
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