Li v Xie - [2022] NZHC 2471

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2020-404-1083

[2022] NZHC 2471

BETWEEN
YUE LI

Plaintiff

AND

LING XIE

First Defendant

WEIBIN JIANG
Second Defendant

X&J TRADING NZ LIMITED

Second Counterclaim Plaintiff

Hearing: On the papers

Counsel:

MSP Pang for Plaintiff

SRG Judd for First Defendant

Judgment:

28 September 2022

JUDGMENT OF WOOLFORD J

[Costs]

This judgment was delivered by me on Wednesday, 28 September 2022 at 2:15 pm pursuant to r 11.5 of the High Court Rules.

Solicitors/Counsel:
Forest Harrison (S Chan), Auckland Integritas Law (MSP Pang), Auckland SRG Judd, Barrister, Auckland

LI v XIE [2022] NZHC 2471 [28 September 2022]

[1] This was a joint venture claim set down for a five day hearing commencing 4 July 2022. On the first day of the hearing, the parties settled, and I ordered accordingly:1

(a)The joint venture came to an end on 12 July 2019;

(b)The parties were to account for the profit/loss of the joint venture;

(c)Certain funds (“the funds”) were to be released into a solicitor’s trust account, to be used to pay debts of the joint venture companies with the parties’ consent;

(d)Costs were to be determined on the papers.

[2]Both parties now claim costs on this hearing.

[3] The proceeding continues; the parties have not yet succeeded in accounting for the profits and losses of the joint venture, and have requested an extension of time.2

Ms Li’s submissions

[4] Ms Li submits both parties sought an account, and this was reflected in the settlement. Therefore, the ordinary rule that costs should lie where they fall should apply.

[5] However, this must be considered in light of Ms Xie’s counterclaim of May 2021, which sought compensatory damages of $805,486.00. Ms Li submits this was wildly unrealistic and in terrorem, that is, an attempt to force a settlement by making an aggressive but baseless claim. This is an improper tactic that should be avoided.3

1      Li v Xie HC Auckland CIV-2020-404-1083, 4 July 2022.
2      Li v Xie HC Auckland CIV-2020-404-1083, 19 September 2022.
3      Citing Ellison v L [1998] 1 NZLR 416 (CA); upheld Harris v McIntosh HC Auckland M1475/98, 13 November 1998.

[6] Ms Xie sought leave to amend this counterclaim on 8 June 2022, but leave was never granted. Ms Li’s counsel therefore prepared for the hearing on the basis of the original counterclaim.

[7] The counterclaim was effectively abandoned shortly before trial. Ms Li submits the abandonment of a hopeless or improper cause of action will usually justify increased or indemnity costs, on the basis that it has unnecessarily contributed to the cost of the proceeding.4

[8] On this basis, Ms Li seeks 2B scale costs, uplifted by 25 per cent, for all steps taken from 25 May 2021, the date of Ms Li’s amended reply and statement of defence to the amended counterclaim.

Ms Xie’s submissions

[9] In her amended statement of defence and counterclaim dated 8 June 2022, Ms Xie abandoned…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Li v Xie

Details

AGLC: Li v Xie [2022] NZHC 2471
Case: [2022] NZHC 2471
Decision Date: 28 September 2022

CaseChat Overview and Summary

In the High Court of New Zealand, Yue Li brought a claim against Ling Xie and Weibin Jiang, relating to a joint venture. The parties settled during the hearing, but both now seek costs. The central issue was whether the court could determine which party was the prevailing party based on the settlement and settlement offers. Both parties sought an account, but Ms Xie also initially sought damages of $805,486.00. Ms Li argued that Ms Xie inflated the damages claim to force a settlement, and that the counterclaim was abandoned. Ms Xie argued she was the prevailing party and that Ms Li unreasonably rejected settlement offers.

The court found that the settlement offers did not necessarily imply that Ms Xie had withdrawn her counterclaim, as settlement offers are often compromises. The court also found that the amended counterclaim was not valid, as leave was not granted to file it. The court could not determine a prevailing party based on the settlement and settlement offers, and thus costs should lie where they fell. Ms Xie was not entitled to an uplift in costs based on the settlement offers.

The court ordered that costs should lie where they fell from the date of the first settlement offer until the commencement of the hearing. The court did not make any further orders regarding costs.

Orders