Li v Green Land Investment Limited

[2019] NZHC 3247

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2019-404-002171

[2019] NZHC 3247

BETWEEN

YUTIAN LI

Applicant

AND

GREEN LAND INVESTMENT LIMITED

First Respondent

LIANSEN MAO

Second Respondent

Hearing:	On the papers
Appearances:	G M Illingworth QC and D Liu for First Respondent Submissions received from Non-party Ms J Mao dated 6 December 2019
Judgment:	10 December 2019

COSTS JUDGMENT OF ASSOCIATE JUDGE P J ANDREW

This judgment was delivered by Associate Judge Andrew on 10 December 2019 at 4.00 pm

pursuant to r 11.5 of the High Court Rules Registrar / Deputy Registrar

Date…………………………..

LI v GREEN LAND INVESTMENT LTD [2019] NZHC 3247 [10 December 2019]

Introduction

[1]    In my judgment of 15 November 2019,1 I dismissed the application by the applicant, Yutian Li, to sustain Caveat No. 11086665.1, brought pursuant to s 143 of the Land Transfer Act 2017 (and in relation to 387 Ormiston Road, Flat Bush, Auckland).

[2]    The successful party, namely the first respondent, now seeks costs on an increased basis and against a non-party, Ms Jiawen Mao.

[3]    This judgment contains my decision on costs following receipt of submissions from both the first respondent and Ms Jiawen Mao.

Relevant legal principles

Increased costs

[4]    Rule 14.6(3) of the High Court Rules 2016 provides that the Court may order a party to pay increased costs if:

(a)the nature of the proceeding or the step in it is such that the time required by the party claiming costs would substantially exceed the time allocated under band C;2 or

(b)the party opposing costs has contributed unnecessarily to the time or expense of the proceeding or step in it by failing to comply with these Rules or with the direction of the Court.3

Non-party costs order

[5]    In a recent decision Lepionka & Co Investments Ltd v Naldapat Ltd,4 Bell AJ cited the well-known principles stated by the Privy Council in Dymocks Franchise Systems (NSW) Pty Ltd v Todd (No 2) for ordering costs against non-parties:

1      Li v Green Land Investment Ltd [2019] NZHC 2991.

2      High Court Rules, r 14.6(3)(a).

3      High Court Rules, r 14.6(3)(b)(i).

4      Lepionka & Co Investments Ltd v Naldapat Ltd [2019] NZHC 2679 at [30].

1.Although costs orders against non-parties are to be regarded as “exceptional”, exceptional in this context means no more than outside the ordinary run of case where parties pursue or defend claims for their own benefit and at their own expense. The ultimate question in any such “exceptional” case is whether in ordinary circumstances itis just to make the order. It must be recognised that this is inevitable to some extent a fact-specific jurisdiction and that there will often be a number of different considerations in play, some militating in favour of an order, and some against.

2.Generally speaking the discretion will not be exercised against “pure funders” described as … “those with no personal interest in the litigation, who do not stand to benefit from it, and are not funding it as a matter of business and in no way seek to control its course”. …

3.Where, however, the non-party not merely funds the proceedings but substantially also controls or at any rate is to benefit from them, justice will ordinarily require that, if the proceedings fail, he will pay the successful party’s costs. The non-party in these cases are not so much facilitating access to justice by the party funded as himself gaining access to justice for his own purposes. He himself is “the real party” in the litigation, a concept repeatedly invoked throughout the jurisprudence. …

Decision

[6]    I find that there is a proper basis to make an order that the applicant pay increased costs because she has contributed unnecessarily to the time and expense of the proceedings by failing to comply with the High Court Rules.

[7]As noted in [19] – [35] of my judgment:

(a)The applicant’s initial originating application dated 9 October 2019 was identified by Gault J to be deficient;

(b)An amended application was filed with the applicant on 3 October 2019 along with a further supporting affidavit containing some 252 pages of exhibits;

(c)The amended application and the further affidavit were discursive, unintelligible and did not cure the deficiencies identified by Gault J; and

(d)The further affidavit filed by the applicant on 4 November 2019 was filed out of time and in breach of rr 7.26(2) and 19.10(h) of the High Court Rules.

[8]    I accept the submission of counsel for the first respondent that all of these factors would have unnecessarily added to the first respondent’s costs of the proceedings.

[9]    I further find that another factor that supports an order for increased costs is the fact that the applicant acted improperly by commencing and/or continuing the proceedings.5

[10]   At the first call of the application Gault J queried the basis of the applicant’s caveat. In response to his Honour’s query, the applicant (via her attorney, Ms J Mao) informed the Court that she held a mortgage over the subject property and on that basis Gault J adjourned the proceedings and the determination of the application was delayed until 8 November 2019. Ultimately, the applicant was unable to produce any satisfactory evidence in support of the alleged mortgage and I concluded that the applicant has no arguable beneficial interest in the subject land.6

[11]   In the circumstances of this case, I find that there should be a 25 per cent uplift on 2B costs and not the 50 per cent sought by the first respondent or the alternative calculation based on an award of 2C costs.7 That was the approach adopted by the Court of Appeal in Jarden v Lumley General Insurance (NZ) Ltd.8 The Court held that the claim as pleaded was misconceived and the appellants had exposed themselves to the risk of an increased costs award by pursuing it.

[12]   I also conclude that this is an appropriate case to make a costs award against Ms Jiawen Mao, the non-party. The “exceptional” threshold has been made out and it is clear that Ms J Mao, the non-party, has substantially controlled the proceedings. I further find, and for reasons set out in my judgment of 15 November 2019, that it is

5      High Court Rules, r 14.6(4)(a).

6      At [54] of my judgment of 15 November 2019.

7 See [11] and [12] of the first respondent’s memorandum dated 28 November 2019.

8      Jarden v Lumley General Insurance (NZ) Ltd [2018] NZCA 6.

likely that Ms J Mao sought some personal benefit from the proceedings. For all intents and purposes, she is the “real party” in this litigation.9

[13]   I note that all of the  applicant’s  documents  were  prepared  and  filed  by Ms J Mao and all but one of them were signed by her as the applicant’s attorney and not by the applicant herself.

[14]   I also find there is merit to the first respondent’s submission that a conclusion can properly be drawn from the documentation (including the fact that the applicant has not been in New Zealand since 2014/2015 and was having difficulty paying a lawyer’s retainer because her New Zealand bank account had been blocked) that the caveat lodged in mid-2018 had been lodged by Ms Mao as attorney for the applicant and that the filing fee and hearing fee associated with the applicant had also been funded by Ms J Mao.

[15]   I also accept that a further factor supporting a costs award against Ms J Mao is the fact that the applicant resides in China and is effectively judgment-proof as she owns no assets within the jurisdiction.

[16]   I reject the submission of Ms Mao in her memorandum of 6 December 2019 that it would be a miscarriage of justice for her to pay any costs given that she was not allowed to argue the case. As outlined in my judgment, Ms Mao was given repeated warnings from Gault J and myself that she would be unable to represent the applicant

– and in any event, as part of my judgment, I considered all of the affidavits and documents filed by Ms Mao on behalf of the applicant, and despite the further affidavit of 4 November 2019 being filed out of time.10

[17]   I further note that Ms Mao was given the opportunity of addressing the costs application against her and in coming to my decision I have taken into account the matters she has raised. I would note, however, that many of the contentions in the memorandum of 6 December 2019 are an attempt to re-litigate issues addressed in my

9      See also [53]–[54] of my judgment of 15 November 2019 where I discuss the unusual position of Ms Mao and her conflict of interest.

10     At [33]–[35] of my judgment of 15 November 2019.

earlier judgment (i.e. arguments addressing the merits of the application that the caveat not lapse).

Result

[18]   I order that the applicant, Yutian Li, and the non-party, Ms Jiawen Mao, are to pay costs to the first respondent on a 2B basis as calculated in the schedule to the first respondent’s memorandum dated 28 November 2019 with a 25 per cent uplift and disbursements (on a GST exclusive basis) in the sum of $182.61.

[19]   The total amount of costs (i.e. 2B scale plus 25 per cent) to be paid by the applicant and Ms J Mao is $15,983.12.

[20]   In accordance with r 14.14, both the applicant and Ms J Mao are jointly and severally liable for the costs and disbursements awarded.

Associate Judge P J Andrew