LIANSEN MAO AND QIUFEN LU AND BUDDLE FINDLAY AND INDUSTRIAL AND COMMERCIAL BANK OF CHINA (NEW ZEALAND) LIMITED AND QIAN HOU AND CHARLY JIANG
[2023] NZHC 3036
•30 October 2023
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2021-404-001054
[2023] NZHC 3036
BETWEEN LIANSEN MAO
First Plaintiff
AND
QIUFEN LU
Second Plaintiff
AND
BUDDLE FINDLAY
First Defendant
AND
INDUSTRIAL AND COMMERCIAL BANK OF CHINA (NEW ZEALAND) LIMITED
Second Defendant
AND
QIAN HOU
Third Defendant
AND
CHARLY JIANG
Fourth Defendant
Hearing: (On the papers) Counsel:
No appearance for the First and Second Plaintiffs
Laura O’Gorman KC and Andrijana Milosavljevic for the First to Third Defendants
No appearance for the Fourth Defendant
Katherine Anderson as Counsel Assisting the CourtJudgment:
30 October 2023
JUDGMENT OF MOORE J
[Costs]
This judgment was delivered by me on 30 October 2023 at 4:00 pm pursuant to Rule 11.5 of the High Court Rules.
Registrar / Deputy Registrar Date:
MAO & ANOR v BUDDLE FINDLAY & ORS [2023] NZHC 3036 [30 October 2023]
Introduction
[1] The plaintiffs, Liansen Mao and Qiufen Lu, failed to repay a loan from the second defendant, the Industrial and Commercial Bank of China (New Zealand) Ltd (“the Bank”). The Bank has taken steps in both New Zealand and China to recover the amount owed.
[2] The plaintiffs have together filed a total of eight proceedings against the Bank and/or related parties in connection with the Bank’s attempts to recover the sum. The eighth was filed against the Bank together with its representatives Buddle Findlay (the first defendant), the director and Chief Executive Officer (the third defendant), and a former employee (the fourth defendant).
[3] On 22 March 2022, Associate Judge Andrew (as he then was) granted the first to third defendants’ applications for strike out and summary judgment of the plaintiffs’ claims (“Strike Out Judgment”).1 He adjourned an application for an order under s 166 of the Senior Courts Act 2016 restraining the plaintiffs from commencing or continuing these or related proceedings (“Prevention Order”), on the basis that the jurisdiction could only be exercised by a High Court Judge.
[4] On 4 November 2022, I declined the plaintiffs’ applications to set aside and stay the Strike Out Judgment and granted the first to third defendants’ application for a Prevention Order (“Prevention Order Judgment”).2
[5] I also directed that these defendants, as the successful parties, were entitled to costs. I made timetabling directions in the event the parties were unable to agree. The defendants filed a joint memorandum on 6 December 2022, a day after the filing deadline. Regrettably, however, this did not come to the attention of the Court until earlier this month. The plaintiffs failed to file any memorandum as to costs.
[6] This judgment deals with costs on the papers. I extend an apology to the parties and counsel for the delay in doing so.
1 Mao v Buddle Findlay [2022] NZHC 521 [Strike Out Judgment].
2 Mao v Buddle Findlay [2022] NZHC 2885 [Prevention Order Judgment].
Defendants’ position
[7] The first and second defendants seek costs and disbursements on an indemnity basis, including for steps taken before the Strike Out Judgment. In the alternative, 2B scale costs are sought with a 50 per cent uplift.
[8] The defendants explain that in April 2022, having succeeded in obtaining orders for strike out and summary judgment, they filed a joint memorandum as to costs. This recorded their view (at that time) that indemnity costs would be appropriate, but that recovery of any amounts was unlikely because the plaintiffs had not paid any cost amounts from proceedings to date. The defendants therefore only sought 2B scale costs with a 50 per cent uplift. The plaintiffs did not file a memorandum in response, instead applying to set aside and stay the Strike Out Judgment. The Court has therefore not yet determined the issue of costs.
[9] The defendants acknowledge that, in respect of the steps taken before the Strike Out Judgment, seeking indemnity costs is a change of position from its earlier memorandum. However, it says the plaintiffs have continued to pursue claims against the Bank and that greater costs liability might discourage further claims. Moreover, there is no prejudice to the plaintiffs (other than potentially having to pay a higher award) as a costs judgment has not been delivered.
[10] The defendants argue that an award of indemnity costs is appropriate as the plaintiffs’ claim was vexatious, oppressive, an egregious abuse of process and entirely without merit. They submit that the proceeding was commenced and continued with wilful disregard of known facts and established fact, and pursued for the collateral purpose of maintaining a proceeding in New Zealand to support the proceeding in China. The plaintiffs continued to file multiple meritless application after the Strike Out Judgment, responding to which was the defendants’ main focus thereafter.
[11] As to quantum, the Bank seeks indemnity costs of $69,070.78 while Buddle Findlay seeks $26,196.88. This reflects:
(a)The fee arrangement: Buddle Findlay’s fees paid by the Bank were 50 per cent of its standard rate, given it was a co-defendant. The costs
of Couch Harlowe Kovacevich and Laura O'Gorman KC (as she then was) were divided 50/50 between the Bank and Buddle Findlay.
(b)The complexity and significance of work: seven different causes of action, $9.9 million sought, reputational matters at issue, and a high volume of relevant material from seven prior proceedings. The plaintiffs by seeking to have Buddle Findlay removed as the Bank’s solicitor also caused the cost of new counsel having to familiarise themselves with this material.
(c)Time and cost incurred: 190.67 hours, $95,267.66 in legal fees and an average hourly rate of $499.64.
[12] Schedule A to the memorandum sets out a table of costs incurred before and after the hearing of the Strike Out Judgment. Copies of the relevant invoices have also been enclosed, while Schedule B summarises the work that has been carried out.
[13] In the alternative, the first and second defendants seek 2B scale costs with a 50 per cent uplift, totalling $46,248 as set out in Schedule C.
[14] Total disbursements of $530.43 are also sought in respect of court filing fees, as set out in Schedule D.
Relevant law
[15] The power to order increased or indemnity costs is set out in r 14.6 of the High Court Rules 2016, which relevantly provides:
14.6 Increased costs and indemnity costs
…
(3)The court may order a party to pay increased costs if—
…
(b)the party opposing costs has contributed unnecessarily to the time or expense of the proceeding or step in it by—
…
(ii)taking or pursuing an unnecessary step or an argument that lacks merit; or
(iii)failing, without reasonable justification, to admit facts, evidence, documents, or accept a legal argument; or
…
(d) some other reason exists which justifies the court making an order for increased costs despite the principle that the determination of costs should be predictable and expeditious.
(4)The court may order a party to pay indemnity costs if—
(a) the party has acted vexatiously, frivolously, improperly, or unnecessarily in commencing, continuing, or defending a proceeding or a step in a proceeding; or
…
(f)some other reason exists which justifies the court making an order for indemnity costs despite the principle that the determination of costs should be predictable and expeditious.
[16] In Bradbury v Westpac Banking Corporation, the Court of Appeal distinguished between the different types of costs as follows:3
(a)standard scale applies by default where cause is not shown to depart from it;
(b)increased costs may be ordered where there is failure by the paying party to act reasonably; and
(c)indemnity costs may be ordered where that party has behaved either badly or very unreasonably.
[17] The Court went on to give examples of circumstances in which indemnity costs have been ordered, noting that the categories are not closed:4
…
(c)commencing or continuing proceedings for some ulterior motive; or
(d)doing so in wilful disregard of known facts or clearly established law; or
3 Bradbury v Westpac Banking Corporation [2009] NZCA 234, [2009] 3 NZLR 400 at [27].
4 At [29].
(e)making allegations which ought never to have been made or unduly prolonging a case by groundless contentions, summarised in French J’s “hopeless case” test.
Discussion
[18] Having analysed the extensive material filed as against the relevant law, I am satisfied that the first and second defendants are entitled to indemnity costs and disbursements as claimed.
[19] First, I am satisfied that the defendants are entitled to claim for steps leading up to the Strike Out Judgment as well as following. There has been no determination of costs on this proceeding to date.
[20] Secondly, I am satisfied that the plaintiffs acted vexatiously, frivolously, improperly, and unnecessarily in commencing, continuing, and defending the proceeding.5 As Associate Judge Andrew found and I reiterated, the proceeding was an attempt to relitigate matters that had been traversed seven times already.6 Of these, five were struck out as abusive or untenable and two were not accepted for filing. For the reasons set out in the Strike Out Judgment, the plaintiffs’ causes of action were each misguided and meritless.7 The plaintiffs’ subsequent applications to set aside and stay the Strike Out Judgment were equally so, for reasons set out in the Prevention Order Judgment.8
[21] Thirdly, I am satisfied that the proceeding was commenced and continued for an ulterior motive.9 The plaintiffs seek the resolution of the substantive dispute in New Zealand courts in accordance with New Zealand law. Having a proceeding afoot in this country allows the plaintiffs to maintain a forum conveniens argument in the Chinese proceeding. This is not a proper purpose.
5 High Court Rules, r 14.6(4)(a).
6 Strike Out Judgment, above n 1, at [30]–[31]; and Prevention Order Judgment, above n 2, at [11]– [14].
7 Above n 1, at [81].
8 Above n 2, at [10]–[15].
9 Bradbury v Westpac Banking Corporation, above n 3, at [29c].
[22] Finally, I am satisfied that the amounts claimed represent the actual costs and disbursements reasonably incurred by the first and second defendants based on the fee arrangement, significance and complexity of the work, time incurred and average hourly rate.
Result
[23]I order that the plaintiffs, Liansen Mao and Qiufen Lu, are to pay:
(a)the first defendant, Buddle Findlay, $26,196.88 in indemnity costs;
(b)the second defendant, the Bank, $69,070.78 in indemnity costs; and
(c)the first and second defendants, jointly, $530.43 in disbursements.
Moore J
Barristers/Solicitors:
Couch Harlowe Kovacevich, Auckland
Copy to:
The Plaintiffs
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