Liu v Cuting

[2021] NZHC 1024

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2017-404-001858

[2021] NZHC 1024

BETWEEN

Y (JESSE) LIU

K T (STEVEN) LAU D QIU

Applicants

AND

DEREK EDWIN CUTTING

Respondent

CIV-2019-404-002766

BETWEEN

Y (JESSE) LIU

K T (STEVEN) LAU D QIU

Applicants

AND

DEREK EDWIN CUTTING

Defendant

Hearing:	4 May 2021
Appearances:	K T (Steven) Lau – In Person for Applicants G A Keene for Respondent
Judgment:	7 May 2021

JUDGMENT OF GENDALL J

This judgment was delivered by me on 7 May 2021 at 4 p.m. pursuant to Rule 11.5 of the High Court Rules

Registrar/Deputy Registrar Date:

LIU v CUTTING [2021] NZHC 1024 [7 May 2021]

Introduction

[1]    On 10 December 2020, the applicants filed in this Court an application to rescind two charging orders which had been issued against them. This application was brought in reliance on r 17.44 of the High Court Rules.

[2]    On 28 January 2021, the respondent filed his Notice of Opposition to this application. This opposition was advanced in reliance on r 17.25 of the High Court Rules.

[3]    The hearing of the opposed application by AVL link took place before me on 4 May 2021.

[4]    At the outset, Mr Keene, counsel for the respondent, indicated that the disputes and various proceedings between these and related parties has a very long and convoluted history. He says all this commenced some 12 years ago.

[5]    Notwithstanding this, the issue before me is a relatively simple one relating as it does to the two charging orders I note above. It is useful to set out certain background facts relating to these charging orders, which I now do.

Background facts

[6]    The charging orders in question were each issued by this Court following application by the respondent made on 28 October 2020. Each order was sealed by this Court on 12 November 2020. The first charging order related to proceeding CIV- 2017-404-1858 and was issued over the applicants’ property at 84 Gifford Avenue, Mt Roskill, Auckland. The amount charged under the order totalled $16,359.07. It related to various court judgments and orders both in the High Court and the Court of Appeal, detailed in the order as follows:

(1)        High Court Auckland	CIV-2017-404-1858	31 January 2018	$7,312.07
(2)        High Court Auckland	CIV-2017-404-1858	30 November 2018	$2,423.50
(3)        Court of Appeal,	CA3/2019	18 June 2019	$3,172.00
(4)        High Court Auckland	CIV-2017-404-1858	3 March 2020	$2,535.00
Sub Total		$15,442.07
Plus Solicitors’ costs on charging order 0.3 days		$717.00
And Filing Fee		$200
Grand Total		$16,359.07

[7]    The second charging order against the applicants was also in favour of the respondent charged in the order payment of the total sum of $15,752.01 for a High Court judgment plus costs described in the order as follows:

13 May 2020 Judgment on withdrawal of appeal	$14,835.01
Plus Solicitors’ costs on charging order 0.3 days	$717.00
Plus Filing Fee	$200.00
Total	$15,752.01

[8]    I now set out a chronology of what I see as the key relevant events relating to the current application:

(a)August 2020 – The High Court at Auckland seals a series of costs judgments in favour of the respondent against the applicants. These dated from various times in 2018, 2019 and 2020.

(b)2 September 2020 – Counsel for the respondent, Mr Keene, sends an email letter to the applicants informing them that they are required to pay the High Court judgments along with the Court of Appeal costs judgment noted at [6] above, and an earlier costs judgment of the District Court (amounting to $55,684.96). A grand total owing of

$85,912.54 is identified. Mr Keene’s letter goes on to state specifically:

Please advise immediately what arrangements you intend to make to pay the total amount owing.

If it becomes necessary to take enforcement steps that will involve further expense which you will ultimately be liable for.

I urge you to take legal advice.

(c)2 September 2020 to 14 October 2020 – Despite the warning from   Mr Keene in his 2 September 2020 letter, Mr Lau and the applicants do not pay the outstanding costs judgments. Indeed, Mr Lau even attempts to have the sealing of the High Court judgments rescinded and he makes further attempts, as I see it, to delay and frustrate the sealing of the Court of Appeal costs judgment.  As to this, on 7 September 2020,  Mr Lau provided a formal memorandum to this Court questioning the sealing of four earlier court orders of the High Court and requested simply that those orders be rescinded. This memorandum was addressed by Powell J in this Court in a minute dated 8 September 2020. He confirmed unequivocally that the applicants had identified no basis for challenging the sealed judgments and orders in question and these remained outstanding. Mr Lau claims now that on 3 September 2020 emails he had forwarded to the respondent or his representatives had the objective of making arrangements for payment of the judgment debts. I reject this claim. It is clear those communications say nothing about the applicants wanting to arrange payment. The respondent says these communications and Mr Lau’s subsequent actions indicate nothing other than a real objective to delay and complicate any recovery of the judgment sums by the respondent. I address this aspect later.

(d)28 October 2020 – Given what Mr Keene claims was the applicant’s repeated attempts to frustrate enforcement of the significant and longstanding judgments against them, reluctantly, he says, application was made to the High Court for the two charging orders as the respondent was left with little other enforcement choice. The applications, together with supporting material and filing fees of $400, were sent by courier and lodged with the High Court for filing. Later, a receipt for the $400 filing fees was issued by the High Court on      2 November 2020 through the Court’s administrative processes, but this did not impact upon the fact the two charging order applications were filed on 28 October 2020.

(e)28 October 2020 – Also on this date, perhaps coincidentally, Mr Lau wrote a letter to the respondent, copied to Mr Keene, which stated:

I will arrange to pay the costs and disbursements in the sum of $3,172 in the Court of Appeal judgment for sealing.

Could you please send through a deposit slip for your solicitors’ trust account?

This letter from Mr Lau made no mention, however, of the applicants’ intention to pay any of the other judgments, including those from this Court.

(f)This letter from Mr Lau prompted an exchange of emails between the parties as to arrangements for where payment was to be made and, significantly, in an email from Mr Keene to Mr Lau on 28 October 2020, also included the following:

As previously advised, there is currently due and owing a sum in the vicinity of $85,000.

There will shortly be further charging orders registered against the title to your property and at the point that the further orders are registered, the total charging orders will relate to a debt stated of approximately $85,000.

As you know, there is an existing charging order registered which relates to the District Court proceedings and a sum of approximately $47,000.

I will send you through details of the further charging orders once they are registered.

(g)29 October 2020 – as Mr Lau had raised issues as to where payment of the outstanding costs might be made, on this date the respondent wrote informing Mr Lau that:

I have retired and no longer have a trust account. I believe it will be alright to send the money to Mr Keene’s account. However, if you are not happy to do that send the money to my former firm, Lochhart Legal. Their trust account number will be on their entry on the internet.

(h)30 October 2020 to 5 November 2020 – Further correspondence took place between Mr Lau, the respondent and the solicitors on the record

for the respondent in the present proceedings, Skeates Law Limited. This resulted in a deposit slip being sent to Mr Lau by Skeates Law Limited, on Thursday 5 November 2020.

(i)6 November 2020 – Mr Lau on behalf of the applicants pays $3,172 to Skeates Law Limited. This amount represented  the  outstanding Court of Appeal costs.

(j)9 November 2020 – Mr Lau for the applicants pays a further $9,735.57 to Skeates Law Limited. This amount represented part of the High Court costs.

(k)12 November 2020 – the High Court seals the two charging orders and forwards them to Mr Keene.

(l)13 November 2020 – Mr Lau, again on behalf of the applicants, pays

$17,369.01, being the balance of the High Court costs, again to Skeates Law Limited.

(m)Totalling these amounts at (i), (j) and (l) above paid by Mr Lau comes to $30,276.58. This leaves a balance of $1,834 still outstanding from the applicants representing costs on each charging order of costs and filing fees on each charging order totalling $917 for each order and thus a total due of $1,834.50.

(n)The respondent says with some justification that considering the facts I have outlined above, by 28 October 2010 he had incurred solicitor’s costs and filing fees associated with the issue of the two charging orders, this being well prior to any payment by the applicants and he says prior to any genuine attempts being made by the applicants to communicate an intention to arrange payment of those High Court and Court of Appeal cost amounts. It is useful to note, too, that those costs had dated back as far as January 2018, November 2018, June 2019, March 2020 and May 2020.

Preliminary issues

[9]    At the hearing before me, certain preliminary issues were raised. These are quickly disposed of:

(a)First, Mr Lau objects to the fact that Mr Keene, counsel for the respondent, has filed an affidavit in this proceeding, sworn 22 March 2021 when, as counsel, he is appearing for the respondent. On its face, that objection, in my view, is one properly made here. Mr Keene says, however, that the purpose of his affidavit was simply to put before the Court information and material including communications between the parties, to assist a proper resolution of this matter. He maintains none of this is contentious in any way. On this I note that some of the material in Mr Keene’s affidavit simply repeats that already before the Court, as provided in the 8 March 2021 affidavit for the applicants by Mr Lau. And, in any event, I am satisfied there is little truly disputed in a real way or of contention in the matters which Mr Keene has included in this affidavit. I note, too, that Mr Lau, on 29 March 2021, has chosen to provide an affidavit in reply to Mr Keene’s affidavit. Generally, however, I leave any matters that might be seen as contentious that are raised in Mr Keene’s affidavit on one side.

(b)Secondly, Mr Keene raises an objection to that 29 March 2021 reply affidavit of Mr Lau on the basis he contends it contains submissions only. Mr Keene does acknowledge, however, this is a rather minor and trivial matter. I agree. Again, I will leave issues concerning Mr Lau’s reply affidavit on one side.

(c)Thirdly, Mr Lau raises issues over the bundle of documents prepared for this hearing by Mr Keene. This included Mr Lau’s unsworn affidavit dated 5 March 2021. His complaint is that his sworn affidavit of 8 March 2021 was not included in the bundle. In response, Mr Keene said he did not expect this to be an issue as he understood there was no difference of any kind between the unsworn and the sworn affidavit.

Mr Lau did not question this. Again, I place this preliminary objection on one side.

Law on the present application and its opposition

[10]   The applicants contend they  bring their  current  application  in  reliance  on r 17.44 of the High Court Rules which states:

17.44Application for relief by persons prejudicially affected

(1)At any time, a person alleging that he or she is prejudicially affected by a charging order may apply to the court for relief.

(2)The court may—

(a)vary or rescind the order; or

(b)cancel the registration or modify the effect of registration of any order affecting land.

(3)The powers of the court under this rule are in addition to its powers under rule 7.49.

[11]Addressing this r 17.44, McGechan on Procedure1 relevantly states:

HR17.44.01 Eligibility to apply

Rule 17.44 is to be liberally interpreted as to the right to apply. It requires alleged rather than proven prejudice, “although this would seem to imply that some prejudice must be shown”: Motor Vehicle Dealers Institute Inc v UDC Finance (1991) Ltd [1994] 1 NZLR 659 (CA) at 665, commenting on a contrary view expressed by Barker J in Molyneux v Cramp [1980] 1 NZLR 713 at 715.

HR17.44.02 Onus

The onus under r 17.44 is on the applicant for relief: Isolare Investments Ltd v Fetherston HC Auckland CIV-2002-404-1791, 15 September 2006 at [11].

[12]   In the respondent’s Notice of Opposition to this application, he indicates he relies on r 17.25 of the High Court rules which states:

17.25Expenses of enforcement

(1)An entitled party is entitled to the costs and expenses in respect of and incidental to issuing and effecting an

1      McGechan on Procedure, (looseleaf ed, Thomson Brookers) at HR17.44.01.

enforcement process, and may levy those costs and expenses from the liable party.

(2)Subclause (1) is subject to rule 17.26.

Stated grounds for the application

[13]   In their application seeking relief here, the applicants set out the grounds upon which relief is sought in this way:

3.The grounds upon which relief is sought are: Evidence clearly records –

(a)Payments and arrangement for payments regarding the amount mentioned in the relevant judgments and orders had been made before the two charging orders were sealed by the Court and obtained by the respondent;

(b)The whole amount had been paid in full before or around the date on which the two charging orders were sealed;

(c)19 days before the respondent informed the applicants of the existence of the two charging orders, the whole amount had been paid in full; and

(d)While fully aware of the facts set out in paragraphs (a) to (c), the respondent failed to inform the Court and continued to unnecessarily pursue the two charging orders.

Stated grounds in opposition to the application

[14]   In response, the respondent’s specified grounds in opposition to the application are stated as:

THE GROUNDS on which the plaintiff opposes the making of the orders sought are as follows:

When the applicant failed to pay a series of sealed costs judgments for this High Court at Auckland and for one sealed judgment of the Court of Appeal (around August 2020), the respondent, by his counsel, took steps to obtain two charging orders. The applicant did not take his first serious steps to pay the judgments until 28 October 2020. The applicant did not make payment on 28 October, but advised the respondent, on that date, in effect, that he did intend to satisfy the amounts of the judgment.

3.By approximately the same time on 28 October, as the applicant gave notice that he intended to pay the amounts of the judgments, the respondent’s counsel had filed with the

High Court the documentation necessary to procure the issue of two charging orders. The initial steps to issue the two charging orders, including liaison with the High Court, had been taken by the respondent’s counsel prior to 28 October.

4.The respondent and his counsel were not under any obligation on or before 28 October, to allow the applicant further time to pay, before proceeding to apply for the issue of two charging orders.

5.The applicant subsequently made payment of the amounts of the sealed judgments between approximately 9 November and 13 November 2020 but failed to pay the additional amount of

$1,834 being the costs incurred by the respondent to achieve the issue of the two charging orders.

6.The applicant remains liable to pay the costs associated with the respondent applying for and obtaining, the said two charging orders and is not entitled to a rescission or discharge of the two charging orders until he has so paid.

Issues

[15]Before me, Mr Lau identified what he said were the two main issues here as:

(a)Whether there was a need for the respondent to issue the two charging orders in the circumstances of this case?

And:

(b)Whether the respondent and his counsel, Mr Keene, acted in good faith in applying for and having the two charging orders issued?

[16]   Mr Keene raised no objection to a consideration of these issues before me. I now turn to this as part of my analysis in this matter.

Analysis

[17]   The position in this case, as I see it, is a relatively straightforward one. As I have noted above, r 17.25 of the High Court Rules provides:

…

An entitled party is entitled to the costs and expenses in respect of and incidental to issuing and effecting an enforcement process and may levy those costs and expenses from the liable party.

[18]   Here, there is no question the applicants are the “liable party”, and had been for some considerable time, owing significant Court ordered costs and disbursements to the respondent. Some of those costs and disbursements ordered by this Court, as I have noted, dated back to January 2018 and November 2018 and the Court of Appeal costs award dated back to June 2019. By October 2020, none of these amounts, including the additional High Court costs awards made in March 2020 and May 2020, had been paid.

[19]   Mr Keene suggests that when he, as counsel for the respondent, filed in this Court the charging order documentation on 28 October 2020 it was with a sense of frustration and desperation, given that, in his submissions he said this occurred only where:

…It was after various attempts by Mr Lau to set aside and/or frustrate the ability of the respondent to enforce the judgments had failed and after Mr Lau had failed to take any steps to effect payment.

[20]    Before me, Mr Lau made a number of claims which, regrettably it seems, were wrong. The first was at para 26 of his written submissions which stated:

This [2 December 2020] was the first time the applicants were informed of the existence of the two charging orders. Before that they knew nothing about the charging orders.

This claim was made despite the fact that, first, in Mr Keene’s letter to Mr Lau and the other two applicants of 2 September 2020, as I have noted above, he stated:

If it becomes necessary to take enforcement steps, that will involve further expense which you will ultimately be held liable for.

And secondly, on 28 October 2020, again Mr Keene emailed Mr Lau, as I have noted above, specifically stating:

There will shortly be further charging orders registered against the title to your property and at the point that the further orders are registered, the total charging orders will relate to a debt stated of approximately $85,000.

As you know there is an existing charging order registered which relates to the District Court proceedings and the sum of approximately $47,000.

I will send you through details of the further charging orders once they are registered.

[21]   Further, Mr Lau has endeavoured to maintain throughout that the only reason there was delay on the part of the applicants in paying the outstanding costs awards was because he was awaiting bank account deposit details to be provided on behalf of the respondent.

[22]   Again, the evidence before me does not in any way support this claim. As I note at para [8](e) above, effectively Mr Lau did nothing about arranging payment of these Court ordered costs for some considerable time and at least until the end of October 2020. That was the point where, at best, it might be suggested he made his first real move to indicate a payment might be made. The respondent, however, had already by 28 October 2020 incurred the costs of issuing the two charging orders through this Court. Indeed, despite his protestations to the contrary, evidence before me indicated that on 7 September 2020 Mr Lau was trying to have various of the cost judgment awards set aside when he filed his memorandum to this effect with the High Court. This, as I note, was dismissed in a minute of Powell J in this Court dated 8 September 2020. It has been clearly misleading on the part of Mr Lau to suggest, first, that throughout the only reason for delay in payment of the outstanding amounts was that he awaited deposit account details and, secondly and therefore, the charging orders were inappropriate.

[23]   This leads me to turn briefly to the first issue as to whether there was a need here for the respondent to issue the two charging orders. I am in no doubt the answer to this question based on all the evidence before the Court is, yes. Warnings had been issued to Mr Lau and the applicants that enforcement steps would be taken which would involve additional expense for them. These warnings were ignored. Clearly it was out of a sense of frustration that by 28 October 2020 charging orders were sought and the present cost issues were incurred. I am satisfied these costs were properly incurred in all the circumstances. I am satisfied they were incurred at a time when no payment had been made and it is clear many attempts had occurred on the part  of  Mr Lau and the applicants to frustrate and delay payment.

[24]   And, indeed, the first part-payment towards costs of $3,172 was not made until 6 November 2020. Further payments of $9,735.57 on 9 November 2020 and of

$17,369.01 on 13 November 2020 followed. In the meantime, the Court had sealed the charging orders on 12 November 2020. All the necessary work to obtain the charging orders undertaken on behalf of the respondent’s lawyers and counsel had effectively been completed by 28 October 2020. Although the total $30,276.58 ultimately paid on this part payment basis by the applicants did settle the basic costs debts the subject of the charging orders, the solicitor’s costs of $717 plus the Court filing fee of $200 for each charging order (making in all a total of $1,834), amounts clearly specified as part of the charging orders, remained outstanding.

[25]   The evidence before me illustrates that, first, there was a clear need for the respondent to issue the two charging orders in question and, secondly, that in doing so the respondent and his counsel acted entirely in good faith. It does seem that Mr Lau, in effect, is claiming here that the respondent should have tried to stop the issue of the charging orders once (as Mr Lau claims) the respondent or Mr Keene knew that initial steps had been taken to arrange some payment. As I have noted above, I have rejected this claim in all the circumstances here. There is nothing substantive before the Court to suggest Mr Lau was unequivocally taking steps to arrange payment before the first payment settling the Court of Appeal costs of $3,172 was made on 6 November 2020. Indeed, given the entire history of this matter apparent from the evidence, it is clear, in my view, that before November 2020 Mr Lau and the applicants had done all they could to dispute and delay payment of the Court ordered judgments they faced. And, in November 2020, once the part payments from the applicants commenced, it was simply too late to avoid the costs and expenses on the two charging orders which had been incurred prior to and as at 28 October 2020.

[26]   As noted, the applicants have the onus under r 17.44 to show they are prejudicially affected by the charging orders and that they require relief from this Court by way of those orders being rescinded. But it is clear here that only part of the monies owing under each charging order in question has been paid by the applicants. On each charging order, $717 for solicitor’s costs plus a Court filing fee of $200 formed part of the total amount the subject of the charge. Those solicitor’s costs and filing fees have not been paid. Each charging order, therefore, must remain extant for

this $917. This means that a total of $1,834 remains outstanding and the subject of the two charging orders. I am satisfied these costs and disbursements were properly incurred by the respondent at a time when no real and reliable assurances of any kind existed that the applicants would meet the amounts due. The applicants have been quite unable to show here that they are prejudicially affected by the charging orders and that this Court should make an order rescinding those orders. This is reinforced, in my view, by the provisions of r 17.25 whereby the respondent is entitled to costs and expenses in properly issuing and effecting the charging orders as part of the legitimate enforcement process he adopted.

Result

[27]   For all these reasons, the applicants’ application to rescind the charging orders is dismissed.

[28]   As to costs, at the hearing before me no submissions were advanced with respect to this issue. Costs are, therefore, reserved. In the event the parties are unable to settle the issue of costs between themselves then they may file (sequentially) memoranda on costs (five pages maximum) which are to be referred to me and I will make a decision on costs based upon the memoranda filed and all material on the file before me.

...................................................

Gendall J

Copy to:

Gregory Keene, Barrister, Auckland K T (Steven) Lau for Applicants