Li v Yeung

[2023] NZHC 2210

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2020-404-2473

[2023] NZHC 2210

BETWEEN

KAREN KAYAN LI

First Plaintiff/Applicant

HUI LING (CATHERINE) KWOK
Second Plaintiff/Applicant

AND

LAM YEUNG

First Defendant/Respondent

YUHONG (CATHERINE) GAO

Second Defendant/Respondent

Hearing:

On the papers

Appearances:

NR Williams and AME Parlane for the Plaintiffs

NJ Scampion and JAR Barrow for the First Defendant OV Collette-Moxon for the Second Defendant

Judgment:

16 August 2023

JUDGMENT OF FITZGERALD J

[As to costs]

This judgment was delivered by me on 16 August 2023 at 3.00pm, pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date……………

Solicitors:        Shine Lawyers, Auckland

Tompkins Wake, Auckland Martelli McKegg, Auckland

To:N Williams, Auckland N Scampion, Auckland J Barrow, Auckland

O Collette-Moxon, Auckland

LI v YEUNG [2023] NZHC 2210 [16 August 2023]

Introduction

[1]                 I delivered judgment on 1 June 2023 on the plaintiffs’ application for leave to continue this proceeding as a representative proceeding pursuant to r 4.24 of the High Court Rules 2016, and the plaintiffs’ application for asset preservation orders against the respondents.1

[2]                 I granted the application for leave to continue this proceeding as a representative proceeding, and declined the application for asset preservation orders.

[3]                 At the conclusion of my judgment I gave a preliminary and non-binding view that the applicants were entitled to costs on the application for representative orders on a scale 2B basis, and the respondents were entitled to costs on the application for asset preservation orders, also on a scale 2B basis. My preliminary and non-binding view was that this was a pragmatic and efficient way for the parties to resolve costs on the applications.

[4]                 The parties have not agreed costs. This judgment therefore determines costs on both of the applications.

Costs on the application for representative orders

The parties’ submissions

[5]                 The plaintiffs seek their costs on the application for representative orders on a scale 2B basis. They provide a schedule attached to their memorandum setting out those steps for which they seek costs. Those steps comprise:

(a)Step 11: filing memorandum for first or subsequent case management conference or mentions hearing.

(b)Step 22: filing interlocutory application.

(c)Step 24: preparation of written submissions.

1      Li v Yeung [2023] NZHC 1373.

(d)Step 26: appearance at hearing of defended application for sole or principal counsel.

(e)Step 27: second and subsequent counsel’s appearance at the hearing.

(f)Step 30: preparation of affidavits.

(g)Step 32: affidavit hearing — preparation for hearing.

(h)Step 37: filing application and supporting affidavits.

[6]                 The plaintiffs do not provide any substantive submissions on why each of these steps ought to be recoverable.

[7]                 The defendants make four points in reply. First, they note that step 37 relates to the hearing of an originating application, which is irrelevant for present purposes. They note that this also duplicates step 22 (filing application) and step 30 (preparation of affidavits).

[8]                 Second, the defendants say that step 11 is not related to the application for representative orders and should be dealt with as part of the overall proceedings once they are resolved.

[9]                 Third, the defendants submit that there should be an award of scale costs to the plaintiff borne equally by the defendants, such that each defendant is responsible for 50 percent of any costs award in favour of the plaintiffs.

[10]             Finally, the defendants submit that either the plaintiffs and the first defendant should both receive scale costs for second counsel, or neither should, noting that second counsel is not usually certified for interlocutory applications.

Discussion

[11]             Given the plaintiffs were successful on their application for leave to continue this proceeding as a representative proceeding, a costs award in their favour is plainly appropriate. I agree that it should be on a category 2B basis.

[12]             Some of the steps claimed for by the plaintiffs are, however, misconceived. Step 11 is to be excluded from the costs award, being a matter relating to the proceeding overall and which should be reserved until the final resolution of the proceedings.

[13]             The only steps applicable to a defended interlocutory hearing are steps 22, 24, 26 and 27 (the latter if it is allowed by the Court).2

[14]             Steps 30 to 32 are steps relating to a substantive affidavit hearing, such as, for example, a judicial review hearing. Those steps are not claimable on a defended interlocutory application. Step 22 encompasses the filing of affidavits in support of the interlocutory application, and steps 24 and 26 encompass preparation generally for the hearing. As the defendants note, step 37 relates to originating applications (and again, a substantive hearing) and is not claimable on a defended interlocutory hearing.

[15]             I am satisfied on an interlocutory application of this nature, which was relatively substantive, it is appropriate to certify for second counsel and I do so.

[16]             There is accordingly a costs award in the plaintiffs’ favour comprising steps 22, 24, 26,3 and 274 on a scale 2B basis. This gives rise to a total costs award of

$6,811.50.

[17]             Pursuant to r 14.14, the liability of each defendant for the costs award in the plaintiffs’ favour is joint and several. There is no basis to order otherwise.

2      The plaintiffs do not claim for step 25 — preparation by applicant of bundle for hearing.

3      On the basis of half a day.

4      On the basis of a quarter day.

Costs on application for asset preservation orders

The parties’ submissions

[18]             Each defendant seeks a costs award of $16,969 on a scale 2B basis in relation to its opposition to the application for asset preservation orders. Each defendant seeks costs for the following steps:

(a)Step 23: filing opposition to interlocutory application.

(b)Step 24: preparation of written submissions.

(c)Step 26: appearance at hearing of defended application for sole or principal counsel (and for the first defendant, step 27: appearance of second counsel, if awarded to the plaintiff).

(d)Step 30: preparation of affidavits for affidavits hearing.

(e)Step 32: preparation for affidavit hearing.

[19]             While acknowledging that the usual rule is that the Court must not allow more than one set of costs for defendants where it appears to the Court that some or all of them could have joined in their defence, the defendants note this rule is subject to there being good reason to depart from it. The defendants submit that the plaintiffs’ application for asset preservation orders was directed to their separate property and each defendant was entitled to defend it separately. The defendants also refer to authority in which the Court has stated that where defendants are alleged to have acted fraudulently or been in collusion or traded unfairly, the Court is more likely to accept separate representation as reasonable.5 The defendants refer to the plaintiffs’ case alleging misleading or deceptive conduct on the part of the defendants and that the defendants introduced the plaintiffs to the MFC Club in New Zealand, which was a “sham investment scheme”.

5      Referring to Hook v Gulf Harbour Town Centre Ltd (in liq) (No 2) HC Auckland CIV-2002-404- 1931, 11 February 2008 at [15].

[20]             The plaintiffs submit that the first and second defendants should only be awarded one set of costs. Referring to commentary on r 14.15 and various related authorities, the plaintiffs note that their application only involved two defendants not several, the application sought the same orders against both defendants, and that save for the first defendant being overseas, the issues arising on the application were materially the same in relation to both defendants. The plaintiffs further submit that the substantive nature of the proceedings against the defendants is not relevant to whether or not there should be a joint or separate costs award, given those matters were not relevant to the issues of costs on the asset preservation orders.

Discussion

[21]             I am satisfied that the defendants should be awarded costs on the asset preservation orders application, and that there should be a separate award in favour of each of them. In my view, where an application seeks intrusive asset preservation orders in relation to a defendant, that defendant ought to be entitled to be represented separately on such an application. I also note that the original form of the application sought much more draconian orders, such as prohibiting the defendants from leaving the jurisdiction. This reinforces that it was appropriate for there to be separate representation.

[22]             Despite coming to this clear view on this particular type of application, however, this should not be taken as a precedent for any future cost awards that might be made in the defendants’ favour. Counsel for the defendants will no doubt need to work together to consider the most efficient way to respond to other aspects of this proceeding, and the substantive proceeding overall. It seems there will likely be a considerable overlap between the defendants in relation to many of the issues to be determined.

[23]             As to the particular steps claimed by the defendants, the defendants also include steps 30 and 32, which are not claimable on a defended interlocutory application.

[24]             There is accordingly a costs award on a scale 2B basis in favour of each of the defendants for steps 23, 24 and 26, though for step 26, which is for the appearance at the defended interlocutory hearing, the allocation is a half day only, rather than the one day as sought. The one day hearing covered both the representative orders application and the asset preservation orders application, and therefore it is inappropriate for the defendants to have claimed this step on a one day basis.

[25]             Consistent with [15] above, I also certify for second counsel for the first defendant, at an allocation of a quarter day. Again, while second counsel would not ordinarily be allowed for defended interlocutory applications, I am mindful of the nature of this particular application, including that it was only the second time the High Court has had to deal with such an application, and the first such application being made by private litigants rather than the regulator.

[26]             There is accordingly a costs award in the first defendant’s favour of $6,811.50 and the second defendant’s favour of $6,214.

Fitzgerald J