Liu v Cutting

[2021] NZHC 1655

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV 2020-404-1420

[2021] NZHC 1655

BETWEEN

YICHUAN (JESSE) LIU KIN TO (STEVEN) LAU and DINAH QIU

Applicants

AND

DEREK EDWARD CUTTING

Respondent

Hearing:	24 November 2020 and 16 March 2021
Appearances:	Mr Lau for Applicants (in person) G Keene for Respondent
Judgment:	6 July 2021

JUDGMENT OF DUFFY J

This judgment was delivered by me on 6 July 2021 at 11 am pursuant to

Rule 11.5 of the High Court Rules.

Registrar/ Deputy Registrar

Solicitors/Counsel:

Skeates Law Ltd, Auckland

Gregory Keene, Barrister, Auckland Simpson Grierson, Auckland

LAU v CUTTING [2021] NZHC 1655 [6 July 2021]

[1]    Mr Lau seeks leave to appeal out of time a District Court decision which awarded interest, costs and disbursements to the respondent, Mr Cutting (the costs and interest decision).1 The application is opposed.

Background

[2]    This application is the latest step in long running litigation brought by Mr Lau against his former solicitor Mr Cutting. Mr Lau has represented himself throughout the litigation. The two other applicants are his son and his wife. They have not appeared to advance the application. Mr Lau cannot represent them. Accordingly, I am treating him as appearing on his own behalf alone. The findings I make in respect of Mr Lau will by default affect the other two applicants.

[3]    Mr Lau’s son (the applicant Yichuan Jesse Liu) allegedly suffered two serious assaults by another pupil at Auckland Grammar School in early 2007. Mr Lau engaged Mr Cutting to provide legal services preparatory to possible legal proceedings against the Auckland Grammar School Board of Trustees and the pupil. The legal services contract was entered into around March 2007. Mr Cutting instructed a barrister, Gregory Keene, to assist in advising the applicants.

[4]    The claims against Auckland Grammar School and the pupil failed. Mr Lau and his family were dissatisfied by this outcome. Mr Lau complained to the New Zealand Law Society and refused to pay Mr Keene’s legal fees. The merits of those matters, however, are beyond the reach of this judgment.

[5]    Mr Cutting commenced District Court proceedings against Mr Lau and his family for the recovery of unpaid legal fees owed to Mr Keene. Mr Cutting sued on Mr Keene’s behalf2 because a barrister cannot directly sue a lay client.3 The prayer for relief in the statement of claim sought special damages of $15,125.82 (being Mr Keene’s legal attendance costs), with interest on that sum from 1 February 2009 to the date of judgment at the rate of interest prescribed by the Judicature Act 1908,4 and

1      Cutting v Liu [2017] NZDC 29890.

2      Under Lawyers and Conveyancers Act (Lawyers: Conduct and Client Care) Rules 2008, r 10.7.2.

3      Atkinson v Pengelly [1995] 3 NZLR.

4      Judicature Act 1908, s 87.

costs of, and incidental to, the proceedings. On 7 June 2012, Mr Cutting filed an amended statement of claim. The quantum of damages sought and the claim for interest and costs remained the same.

[6]    On 17 July 2017, District Court Judge Hinton delivered a reserved judgment in which he found for Mr Cutting (the substantive decision).5 The special damages award was reduced to $10,500 and judgment was entered for that sum. Leave was granted to the parties to file memoranda on costs. No award of interest was made in this judgment.

[7]    On 4 August 2017, Mr Cutting filed a memorandum as to costs in the  District Court. This alerted Judge Hinton to the fact that the Court had not yet determined the award of interest sought in both the initial and amended statements of claim. The memorandum asked the Court to issue a supplementary judgment to deal with the interest. Counsel submitted that the Court held this power because the reserved decision expressly did not deal with the question of costs and was therefore an interim judgment,6 the Court has power to recall the judgment,7 or correct the judgment when there has been an omission.8

[8]    The memorandum further stated that the respondent was awarded judgment in the sum of $10,500 and interest was claimed in both the initial and amended statements of claim from 1 February 2009 to the date of judgment. The memorandum then set out the quantum of the interest which came to a total of $5,276.10. The memorandum invited Judge Hinton, if satisfied with the interest calculation submitted, to include in the judgment the stated amount of interest to 16 July 2017, being the day before the date of the substantive decision.

[9]    On 8 August 2017, Judge Hinton issued a minute in which he stated he had received the plaintiff’s memorandum dated 4 August 2017 and apologised to the parties for overlooking the question of interest. He said he had not reached any

5      Cutting v Liu [2017] NZDC 15680.

6      District Court Rules 2014, r 11.2(a).

7      District Court Rules, r 11.9.

8      District Court Rules, r 11.10.

decision as to whether interest should be awarded. The parties were then given timetable directions to file submissions as to costs and interest. In a memorandum dated 16 August 2017, Mr Cutting made submissions on the question of costs and interest.

[10]   On 15 September 2017, Mr Lau filed submissions as to costs. Despite being the unsuccessful parties, the Lau family sought an award of costs against Mr Cutting. The memorandum also attacked Judge Hinton’s decision on the merits and challenged any award of costs being made to Mr Cutting. However, nothing was said about the interest award sought by Mr Cutting.

[11]   The applicants next filed an appeal to this Court against Judge Hinton’s substantive decision. On 13 October 2017, Mr Cutting filed a further memorandum in which he asked Judge Hinton to determine the issue of costs before the appeal hearing on the substantive decision

[12]   Judgment was delivered by this Court on  31  January  2018  upholding  Judge Hinton’s substantive decision.9 On 30 November 2018, this Court also delivered a costs judgment and refused Mr Lau’s application for leave to appeal to the Court of Appeal.10

[13]   On 9 April 2019, Judge Hinton delivered his decision on costs and interest in respect of the District Court substantive decision (the costs and interest decision).11 He  awarded  Mr Cutting  interest  on  $10,500  at  the  rate  of  five  per  cent  from  1 February 2011 to the date of judgment, being 17 July 2017. He awarded costs against the Lau family of $27,500 and disbursements of $4,000. He also found that the Lau family were entitled to an award of disbursements of $1,500 which could be deducted from the payments he had ordered them to make to Mr Cutting.

9      Liu v Cutting [2018] NZHC 33.

10     Liu v Cutting [2018] NZHC 3130.

11     Cutting v Liu [2017] NZDC 15680.

[14]   On 24 June 2019, the Lau family filed an application seeking  recall  of  Judge Hinton’s costs and interest decision. On 22 November 2019, Judge Hinton dismissed the recall application (the recall application decision).12

[15]   On 27 January 2020, Judge Hinton delivered a decision as to costs on the recall application (the recall costs decision).13 He awarded Mr Cutting costs of $5,157 against the Lau family.

[16]   On 19 May 2020, Mr Lau filed a memorandum challenging: (a) the costs and interest decision; and (b) the recall costs decision. On 21 May 2020, Mr Lau filed a further memorandum submitting that the interest award should be calculated from 21 May 2014 (rather than 1 February 2011).

[17]   On 8 June 2020, Judge Hinton delivered a judgment in which he refused to revisit the question of the award of interest or to make any other alteration to the costs and interest decision.14 He varied his recall costs decision by reducing the amount awarded to Mr Cutting from $5,157 to $4,300.

[18]   On 12 August 2020, the  District  Court  issued  a  sealed  judgment  by  Judge Hinton. This recorded judgment in favour of Mr Cutting, who was awarded the sum  of  $10,500,  plus  interest  at  the  rate   of  five  per cent  per annum  from      1 February 2011 to 17 July 2017, being a sum of $3,390.48. He was also awarded costs of $27,500 and disbursements of $4,000. The defendants were awarded disbursements of $1,500, to be deducted from the amount awarded to Mr Cutting. The costs of sealing the judgment of $382, were also awarded to Mr Cutting.

[19]   On 12 August 2020, the District Court also issued a sealed interlocutory order recording that the recall application regarding both the substantive decision and the costs and interest decision were dismissed. Mr Cutting was awarded costs as detailed above at [17] and [18].

12     Cutting v Liu CIV 2009-004-000678 District Court, 30 August 2019.

13     Cutting v Liu [2020] NZDC 1157.

14     Cutting v Liu [2020] NZDC 10360.

[20]   On 27 August 2020, Mr Lau filed a notice of appeal in this Court against the costs and interest decision and the recall costs decision, both of which were sealed on 12 August 2020. This appeal application was out of time.

[21]   Then, on 28 August 2020, Mr Lau filed an interlocutory application in this Court for an order granting leave to appeal out of time.

The application for leave to appeal out of time

[22]   The application for leave to appeal out of time first came before me on 24 November 2020. At that time, I became concerned about the process by which Judge Hinton had ordered interest on the judgment sum. The judgment awarding interest was delivered almost two years after the substantive judgment and following an appeal hearing in this Court.

[23]   The Judge correctly recognised that the proceedings were commenced prior to the commencement of the Interest on Money Claims Act 2016 and accordingly that Act does not apply. Instead s 62B of the District Courts Act 1947 continues to apply.15

[24]Section 62B of the District Courts Act states:

Subject to sub-section 2 in a proceeding for the recovery of any debt or damages the court may, if it thinks fit, order that there shall be included in the sum for which judgment is given interest at such rate, not exceeding the prescribed rate … (emphasis added).

[25]   The wording of the section suggests that interest is to be awarded at the same time as judgment is given on the judgment sum. This is supported by the fact that the order dictating the interest rate maximum per s 63B(4) repeats this wording:

This order which comes into force on 1 July 2011 deceases from 8.4 percent to 5 percent.  The maximum rate of interest that a District Court can, under   s 62B(1) or (3) of the District Courts Act 1947 include in the sum for which judgment is given in proceedings for the recovery of a debt or damages. (emphasis added).

[26]   Further, failure to award interest as a result of oversight does not provide grounds for recall of a judgment

15     Interest on Money Claims Act 2016, ss 5, 7 and sch 1, pt 1, cl 2.

[27]   This Court considered whether to award interest some time after the delivery of a substantive judgment in Ashe v Tauranga Marina Society and Cooper Davies Trustees No. 6 Ltd v Cooper. and held that the failure to award interest as a result of oversight does not provide grounds for a recall.16 This suggests to me those Courts recognised that typically an award of interest could not be made subsequent to a substantive judgment, and as part of an ancillary judgment such as a costs judgment. If a substantive judgment were delivered as an interim judgment which left room for subsequent findings the outcome may be different.

[28]   Here Judge Hinton did not deliver an interim judgment on liability for the judgment debt leaving the question of interest to be determined later. Nor did he expressly reserve leave to come back to him regarding an award of interest. He simply provided leave to address him on costs.

[29]   The above factors caused me to doubt Judge Hinton had jurisdiction to award interest by way of the costs judgment. Once he had delivered the substantive judgment in 2017 without referring to interest, I was concerned he may have become functus officio regarding his power to make any subsequent award of interest. If my concern was correct, I considered this could provide a basis for granting Mr Lau leave to appeal against the costs judgment out of time, because that judgment would otherwise presently include a monetary award for interest which may have been made ultra vires.

[30]   Because Mr Lau was representing himself, and may not have appreciated the matter of concern, I considered further enquiry needed to be made about the award of interest. Counsel for the respondent responsibly accepted there was a basis for this concern and he agreed the hearing should be adjourned. I explained the situation to Mr Lau and adjourned the hearing.

[31]   The application was then recalled before me on 16 March 2021. By then the respondent and I had had further time to enquire into the basis for the interest award. Mr Cutting had obtained some helpful case law which made it clear that on occasion

16     Ashe v Tauranga Marina Society (1991) 4 PRNZ 89 (HC); Cooper Davies Trustees No. 6 Ltd v Cooper [2014] NZHC 355.

interest has been awarded after the entry of a money judgment. I propose to address this issue first and deal with the grounds on which Mr Lau relies for recall second.

Is the legality of the interest award open to question?

[32]   I am satisfied the legality of the interest award is not open to question. The circumstances here are distinguishable from those in either Ashe or Cooper Davies Trustees, where the prayer for relief did not include a claim for interest. Likewise, the question of interest was not raised by the party seeking it until after the substantive judgment was delivered.17

[33]   In the present case interest was very much part of Mr Cutting’s claim. Both the initial and amended statement of claim expressly sought an interest award on the judgment sum. When the substantive decision omitted to address an interest award, Mr Cutting responded promptly. In a memorandum to Judge Hinton dated 4 August 2017, Mr Cutting identified three ways of remedying the omission to award interest. The Judge responded on 8 August 2017, acknowledging the omission to deal with interest and stating that he had yet to decide whether to award interest or not. Timetable directions were made for the parties to file submissions on interest and costs. Both parties did so, although Mr Lau’s memorandum only addressed costs.

[34]   Accordingly, here Mr Cutting did all he could at the appropriate time to advance his claim for interest. In such circumstances the Judge’s omission to deal with interest was in principle an error or slip that he had authority to cure under either r 11.9 (recall of judgment) or r 11.10 (slip rule) of the District Court Rules then in force. Alternately, the substantive decision could be viewed as an impliedly interim judgment because it did not deal with all issues raised before the Judge.

[35]   In Hanmore v Ganley, Tompkins J overlooked dealing with the issue of interest sought. He accepted the oversight and was prepared to recall the judgment. However, recall was not appropriate because on being served with the recall application, the other party had already moved to seal the judgment.18 Consequently, Tompkins J used

17     See Ashe v Tauranga Marina Society, above n 16, at [10] and Cooper Davies Trustees No. 6 Ltd v Cooper, above n 16, at [61]-[62].

18     Hanmore v Ganley (1995) 9 PRNZ 25 (HC) at 26. Sealed judgments cannot be recalled.

what was then r 12(1) of the High Court Rules (the slip rule) to fix the omission and make an award of interest.

[36]   Here, the way Judge Hinton approached the awards of interest and costs has caused no prejudice to Mr Lau. The delivery of a separate judgment on interests and costs gave Mr Lau and the other applicants a further right of appeal. Had they wanted to challenge those awards they could have done so by appeal to this Court.

[37]   It follows that the initial concerns I had regarding whether the award of interest was ultra vires were misplaced. The process Judge Hinton followed was lawful. I see no other basis for finding error in the award of interest.

Has the Court overlooked an earlier notice of appeal against the costs decision?

[38]   In his written submissions dated 30 March 2021, Mr Lau referred me to the notice of appeal he filed on 19 December 2019 (the December appeal notice) and argued that this notice included an appeal against the costs and interest decision. He further argued that Lang J had confirmed this appeal right in a separate matter before this Court.19

[39]   I was, therefore, concerned that an earlier notice of appeal may have been overlooked, given the wealth of material the proceeding has generated since its commencement in the District Court and that Mr Lau is self-represented. Whilst the December appeal notice would still have been out of time, it would not have been as late as the present notice of appeal, which was filed 28 August 2020 (the August appeal notice). However, it is clear to me that the December appeal notice applied solely to the recall application decision.

[40]   I acknowledge the December appeal notice refers to the costs and interest decision, but this is done as part of the description of the decisions that were the subject of the unsuccessful recall application. The December appeal notice was confined to an appeal against Judge Hinton’s refusal to recall the two earlier decisions. Accordingly, I am satisfied the only notice of appeal that directly challenges the costs

19     Liu v Cutting [2020] NZHC 974.

and interest decision is the August appeal notice. It follows that the appeal is being brought some 16 months after delivery of the decision to be appealed.

Is there any other basis for allowing the appeal out of time?

[41]   The above matters appeared to me to be specific matters that warranted consideration. However, after doing so, for the reasons given above, I am satisfied neither matter supports the grant of leave to appeal out of time. I now turn to consider the remaining issues raised by Mr Lau.

[42]   The considerations affecting the discretion to extend time for appealing were set out by the Court of Appeal in My Noodle Ltd v Queenstown Lakes District Council.20 They are: the length of the delay and the reasons for it; the parties’ conduct; the extent of the prejudice caused by the delay; the prospective merits of the appeal; and whether the appeal raises any issue of public importance. Where there has been only a short delay which is properly explained leave is likely to be granted in the absence of prejudice.21

[43]   Rule 20.4 of the High Court Rules requires an appeal to be brought within 20 working days after the decision appealed against is given. Thus, the present proposed appeal is well out of time. Mr Lau has given no satisfactory explanation for the late filing. In his memorandum dated 16 October 2020 he refers to the judgment sealing date (12 August 2020) and states no extension of time is needed. He clearly misunderstands r 20.4; time for filing runs from the date the decision is given, not from when it is sealed.

[44]   When Mr Lau received the costs and interest decision he chose to make a recall application. When that was refused, he chose to appeal against the dismissal of the recall application. He also appealed to this Court, albeit unsuccessfully, against the earlier substantive decision. He has even gone as far as seeking leave to appeal to the Court of Appeal. Whilst he is self-represented, the length of time he has spent

20     My Noodle Ltd v Queenstown Lakes District Council [2009] NZCA 224, (2009) 19 PRNZ 518.

21     Whaanga v Smith [2013] NZCA 606, (2013) 21 PRNZ 655.

litigating this proceeding, both in the District Court and appellate Courts, indicates he is familiar with the available Court processes and capable of using them.

[45]   The delay to date has prejudiced Mr Cutting because the interest and costs remain unpaid. His conduct has not contributed to the late filing of the appeal. Indeed, when the application was first called before me in November 2020, Mr Cutting responsibly accepted that there could be some basis for finding the Judge was functus officio when he awarded the interest. Mr Cutting therefore did not oppose the application being adjourned part heard to enable further enquiry into that matter.

[46]   I am satisfied there is no merit to the proposed appeal and there is no public interest engaged. Both the awards of interest and costs are less than those sought and therefore less than could have been awarded. The general principle is that costs follow the event. The applicants’ defence to the claim brought by Mr Cutting failed, as did their counterclaim. In such circumstances, costs would typically be awarded against the unsuccessful party, which is what happened here. The Judge exercised his discretion by making reductions to the interest and costs sought, to reflect what he considered to be factors specific to this case that warranted some departure from the general approach. Those adjustments have been to the applicants’ benefit.

[47]   Mr Lau argues, in his submissions dated 13 November 2020 (November submissions), that Judge Hinton breached natural justice by delivering the costs and interest decision when he had earlier said he would wait until the appeal against the substantive decision was determined. However, that appeal did not operate as a stay of proceedings.22 The Judge was obliged to deliver the costs and interest decision despite the appeal.

[48]   The remainder of Mr Lau’s arguments in the November submissions, attempt to revisit the merits of the costs and interest decision and show why that judgment was wrongly decided. He cannot do this. Mr Lau also argues that Judge Hinton’s decision to award costs on the unsuccessful recall application was wrong. I reject that argument. The costs award applies the standard principle that costs follow the event.

22     High Court Rules 2016, r 20.10.

Mr Lau also challenges the quantification of those costs but I see no basis for him to do so.

[49]   Accordingly, I am satisfied there is no proper basis for granting leave to appeal out of time.

Result

[50]Leave to appeal out of time is refused

[51]The parties have leave to file memoranda on costs.

Duffy J