Li v Yeung

[2024] NZHC 3559

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2020-404-2473

[2024] NZHC 3559

BETWEEN

KAREN KAYAN LI

First Plaintiff

HUI LING (CATHERINE) KWOK
Second Plaintiff

AND

LAM YEUNG

First Defendant

YUHONG (CATHERINE) GAO

Second Defendant

Hearing:

On the papers

Appearances:

A M E Parlane for the Plaintiffs

N J Scampion and J A R Barrow for the First Defendant

Judgment:

27 November 2024

JUDGMENT OF FITZGERALD J

[As to costs on application for leave to appeal]

This judgment was delivered by me on 27 November 2024 at 2.00pm, pursuant to r 11.5 of the High Court Rules 2016.

Registrar/Deputy Registrar

………………….……………

Solicitors:      Parlane Law, Auckland

Tompkins Wake, Auckland

To:N Scampion, Auckland J Barrow, Auckland

LI v YEUNG [2024] NZHC 3559 [27 November 2024]

Introduction

[1]    By judgment delivered on 16 October 2024, I determined the plaintiffs’ application for leave to appeal against my decision declining to make an asset preservation order under the Financial Markets Conduct Act 2013.1 I granted the application, a key factor in my decision being that an appeal by the defendants against other aspects of my substantive judgment is already on foot (and has been allocated a hearing date in the Court of Appeal), such that granting leave to appeal would not unnecessarily delay the underlying proceedings.

[2]    In granting leave, I noted that the application for leave had been brought following a significant delay, and that much of that delay was unexplained.2 In those circumstances, I gave a preliminary and non-binding view that an appropriate outcome on the application for leave may be that costs lie where they fall.

[3]    Despite this, the plaintiffs now seek costs, including on an increased basis. This is said to be an appropriate outcome given the plaintiffs were ultimately successful on their application for leave, and on the basis that a number of offers were made by them to resolve the application, which they say were unreasonably rejected by the first defendant. The plaintiffs also refer to an affidavit filed in opposition to their application for leave, albeit by the second defendant, which contained privileged information which I found had not been the subject of a waiver of privilege.3 The plaintiffs say that dealing with that affidavit complicated and delayed matters further, and led to further costs being incurred by them.

[4]    In response, the first defendant says that it was not unreasonable for her to have rejected the offers that are properly before the Court, submitting that some of the offers relied on by the plaintiffs were made on a “without prejudice” basis, and not “without prejudice save as to costs”. Further, she notes that the affidavit filed on behalf of the second defendant which contained privileged information was not filed by her, and therefore costs in relation to that affidavit ought not to be visited upon her. Overall, the first defendant says that, for the same reasons I gave when expressing my

1      Li v Yeung [2024] NZHC 3005 [Leave judgment].

2 At [32].

3      Li v Yeung [2024] NZHC 2352 [Privilege judgment].

preliminary and non-binding view on costs, costs on the application for leave to appeal should lie where they fall.

Analysis

[5]    I have concluded that the appropriate course remains that costs on the plaintiffs’ application for leave to appeal lie where they fall.

[6]    Ultimately, the plaintiffs were granted a reasonably significant indulgence in leave being granted. As noted in my judgment determining the leave application, the plaintiffs first required an extension of time to even seek leave to appeal. As I also said in my judgment, the delay in seeking leave was lengthy and largely unexplained. Further, while the filing of the affidavit which contained privileged material did delay and distract matters, I nevertheless concluded that the plaintiffs had waived privilege in some of the material annexed to that affidavit. It was therefore appropriate for at least some of the material annexed to the affidavit to have been put before the Court. Moreover, the costs of dealing with the issues arising from that affidavit (which was filed by the second defendant) should not be solely visited on the first defendant.

[7]    I also agree with the first defendant’s submission that only some of the offers that have been put before the Court ought to be before the Court. A number of the offers upon which the plaintiffs rely in seeking increased costs were made “without prejudice”, and not “without prejudice save as to costs”. To be admitted for costs purposes, any offer must have been made expressly with a reservation for costs. An offer made simply “without prejudice” is not sufficient.4 This reflects the importance of parties being comfortable to engage in a free and frank exchange in without prejudice communications, such that it is vital there is clarity about which communications might later be put before the Court for cost purposes. On this basis, correspondence on  behalf  of  the  plaintiffs  dated  3 September,  4 September  and 9 September 2024 and marked “without prejudice” is not admissible on the present costs application.

4      Blakesfield v Foote [2016] NZHC 1354, [2016] NZAR 1112 at [15]; and Ballantyne Barker Holdings Ltd v Queenstown Lakes District Council [2020] NZHC 49 at [21].

[8]    There were, however, two offers made by the plaintiffs that were marked “without prejudice save as to costs”, and it is appropriate they are addressed in determining costs on the leave application.

[9]    The first offer was made on 27 March 2024. This was not so much an “offer”, however, but rather a communication from the plaintiffs’ solicitor noting that the plaintiffs were proposing to seek leave to appeal against the decision declining to grant asset preservation orders, and seeking the first defendant’s advice (by the following day) on whether she would consent to leave being granted. I do not see it as unreasonable for the first defendant to confirm at that time that she did not consent to leave being granted, pending receipt of the application, and in light of the lengthy delay in making the application to that point. Accordingly, to the extent there was an “offer”, it was not unreasonably refused.

[10]   The second admissible offer was made on 30 September 2024. That offer is described in the plaintiffs’ submissions filed in support of their costs application as being a re-offer by the plaintiffs of an earlier offer to withdraw the application for leave to appeal with costs lying where they fell, and “with the addition that the parties agree to attend a mediation of some form”. However, the offer was to withdraw the application for leave to appeal on the basis that there was no issue as to costs, and that the first defendant agreed “to provide an updated affidavit in the next 7 days (or reasonable time to be agreed) that deposes that she will not sell, dispose of or otherwise encumber her property in Auckland”, and that she agreed to attend a mediation either in person, by AVL or by counsel. The proposed undertaking as to disposition of assets, via the proposed updated affidavit, would have obviated the need for asset preservation orders entirely. I therefore accept the first defendant’s submission that it was not unreasonable for her to decline to accept an offer on those terms and at the time it was made. While leave to appeal has since been granted, that is a separate issue as to whether the Court of Appeal will conclude that asset preservation orders should have been made.

[11]   For these reasons, and given the very significant delay in applying for leave to appeal, I confirm that the outcome will be that costs lie where they fall.

Result

[12]   Costs on the plaintiffs’ application for leave to appeal against the decision declining to grant asset preservation orders are to lie where they fall.

Fitzgerald J