Liu v Cutting

[2021] NZHC 1635

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2017-404-001858

[2021] NZHC 1635

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:	(Determined on the papers)
Counsel:	K T (Steven) Lau – In Person for Applicants G A Keene for Respondent
Judgment:	2 July 2021

JUDGMENT OF GENDALL J

As to Costs

LIU v CUTTING [2021] NZHC 1635 [2 July 2021]

[1]                On 7 May 2021 I issued a judgment in these proceedings dismissing an application brought by the applicants to rescind charging orders that had been made in favour of the respondent on 28 October 2020.

[2]                At [28] of that 7 May 2021 decision I addressed the question of costs and stated:

[28] As too 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.

[3]                Counsel for the respondent Mr Cutting has confirmed that the parties have been unable to resolve the issue of costs between themselves. Both he, on behalf of the respondent, and Mr Lau, on behalf of the applicants, have filed costs memoranda. The respondent, as the successful party in opposing the application brought by the applicants, seeks costs here on a slightly reduced solicitor-client indemnity basis together with disbursements at an all up total of $17,038.00.

[4]                The applicants respond through Mr Lau, contending that no order for costs or disbursements is appropriate in this case.

[5]                With the exception of a 21 June 2021 memorandum from counsel for the respondent (which, as my minute of 22 June 2021 confirms, I have not considered) I have now had an opportunity to read and carefully consider the relevant material provided in the other memoranda which is before the Court.

[6]                In this proceeding, the respondent is Derek Edwin Cutting (Mr Cutting). It is Mr Cutting who, as a party to these proceedings, seeks costs. It is true that the counsel he has instructed throughout to appear on his behalf is Gregory Keene (Mr Keene) and the submissions I have received on behalf of the respondent have been provided by Mr Keene. Nevertheless, it needs to be borne in mind that Mr Keene is not a party to these proceedings, and it is Mr Cutting as respondent who seeks a payment of costs and disbursements now.

[7]                So far as costs generally are concerned, r 14.2(1)(a) of the High Court Rules notes the starting point principle is generally that the party who fails with respect to a proceeding or an interlocutory application should pay costs to the party who succeeds. With this in mind, I am left in no doubt here that it is the respondent Mr Cutting who has succeeded in opposing the application by the applicants before me to rescind the two charging orders in question. I also see no reason why the usual position that the unsuccessful party, being the applicants, are required to pay costs on their failed application should not apply here. Nothing that has been put before the Court, in my view, negates the position that this starting point presumption is the appropriate course here.

[8]                I find, therefore, that the respondent is entitled to an award of reasonable costs against the applicants. The amount to be awarded also should reflect the complexity and significance of these proceedings, as r 14.2(1)(b) of the High Court Rules provides.

[9]                And, as to this quantum to be awarded, the respondents here seek an award of indemnity costs (with a slight 20 per cent reduction) in terms of r 14.6 of the High Court Rules. This is on the basis that in terms of r 14.6(4)(a) this 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 a step in a proceeding.

[10]            On this aspect, Mr Keene for the respondent contends there are five grounds in the present case upon which this Court can award indemnity costs. These are:

(a)The applicants have continued with their application to rescind the charging orders after a time when it is said they were provided with information that made it obvious that their application was misconceived and had no reasonable prospects of success.

(b)In light of this, the applicants ignored and completely failed to address the suggestion that their application had no reasonable prospect of

success nor to deal with this in documents filed by them in this Court and information provided to the Court.

(c)In an attempt to prosecute their application, the applicants advanced arguments to justify their position which had no reasonable basis.

(d)In an attempt to strengthen their case, it is contended the applicants attempted to mislead the Court as to their own conduct and the conduct of opposing parties.

(e)The applicants had been warned on several previous occasions by the Court in related litigation that they were fortunate to escape an award of indemnity costs with respect to other misconceived applications they had brought.

[11]Many of these grounds are firmly opposed on behalf of the applicants.

[12]            Notwithstanding this and taking a broad overview of matters which are before the Court, in my judgment it is difficult to conclude otherwise than that the present application to rescind the charging orders was entirely misconceived. The applicants failed to meet the onus upon them under r 17.44 High Court Rules, or to put before the Court any material to show they were prejudicially affected by the charging orders such that they required relief from the Court by way of those orders being rescinded. Monies were still outstanding under the charging orders in question. Until those amounts were paid each charging orders were clearly required to remain.

[13]            Without needing to specifically address each of the specific grounds for an award of indemnity costs advanced by the respondent, I find, nevertheless, that at the least the applicants have acted unnecessarily and improperly in bringing their application to rescind the charging orders in terms of r 14.6(4)(a) of the High Court Rules and indemnity costs are therefore appropriate here.

[14]            I turn now to the question relating to the quantum of these indemnity costs. As to this, material has been provided on behalf of the respondent with cost calculations.

Relating to this indemnity costs claim, the respondent has filed detailed timesheet calculations of the work involved with respect to the applicants’ substantive application to rescind the charging orders. The respondent maintains that the actual work involved in opposing the applicants’ substantive application totalled 54 hours which, calculated at a rate of $300 per hour, amounted to $18,360.00. A discount of about 20 per cent has then been applied to reach a figure of $14,580.00. To this, GST of $2,187.00 has been added to arrive at a total for indemnity legal costs on the substantive application of $16,767.00. On top of this, disbursements of $271.00 for “printing and binding” and court filing fee is added to reach a grand total claimed of

$17,038.00.

[15]            On its face, the lawyer’s charge out rate in these calculations is an entirely reasonable one. Although what seemed to be the then outstanding amount under the charging orders was a reasonably meagre sum, being about $1,834.00, the time spent on behalf of the respondent in opposing that application did not appear unreasonable. In addition, by way of illustration, the respondent has attached a calculation of scale costs included in a schedule to submissions before me which properly outlines these at $11,950.00 for the five-day period involved plus disbursements. That amount would tend to support any claim by the respondent that by seeking a total indemnity costs figure here of $14,580.00 plus GST is entirely within reason.

[16]            In addition, the respondent has filed a supplementary memorandum claiming an allowance for preparation and filing of his costs memorandum. As I understand it, this is a claim for a further $7,261.68 for recorded time amounting to something over 25 hours. Although it seems to be settled law that a successful party is entitled to an appropriate allowance for the preparation and filing of costs memoranda as Allan J notes in Parsot v Greig Developments Ltd1 in the circumstances of the present case and in light of the true amount outstanding it is my view that no further claim for costs in preparing the costs memorandum as sought by the respondent is appropriate. This

$7,261.68 therefore is disallowed.

1      Parsot v Greig Developments Ltd (2008) 18 PRNZ 995 at [23] confirmed in Ma v Tay & Ors

[2012] NZHC 2624.

[17]            In response on the question of quantum relating to the substantive claim, the applicants have advanced two arguments which are as follows:

(a)The first argument involves the suggestion that there is no evidence before the Court for the alleged time spent by counsel for the respondent in this matter in either opposing the substantive application or in relation to the indemnity costs application itself.

(b)The second argument opposing quantum, as best I can tell, rests upon the argument that counsel, Mr Keene, should not have been acting as counsel for the respondent as various courts “have debarred him from acting as counsel in this litigation”. Therefore, it is argued that the basis for what is in effect a claim to costs by Mr Keene should naturally fall away and the respondent therefore would no longer be able to claim costs in this case.

[18]            Addressing these concerns, first, from the material before the Court it is apparent to me that the respondent has been required in this matter to spend a not inconsiderable amount of time in dealing with what I have found to be a misconceived application on the part of the applicants to discharge what are longstanding charging orders when monies still remained outstanding. Detail of the total lawyer’s time as specified in timesheets which are attached applied in opposing this application are before the Court and, in my view, justify the indemnity amount claimed for the substantive matter. I accept the claim from the respondent for the time claimed in this particular matter, with the 20 per cent discount which has been applied. I dismiss this first ground of opposition advanced on behalf of the applicants.

[19]            So far as the second ground of opposition is concerned, as I see it, this is similarly misconceived. The costs here are sought by the respondent, Mr Cutting. That Mr Cutting has chosen to instruct Mr Keene as a barrister to act on his behalf with respect to this costs claim is a proper matter and one for him. Whether or not Mr Keene may have been the subject of some adverse comment in other courts is a matter of no moment here. If it was not Mr Keene acting on behalf of the respondent, Mr Cutting, to successfully oppose the present application, then clearly it would have

been some other counsel who was instructed. As I see the position, there is nothing of substance in this second argument advanced by the applicants.

[20]            Lastly, it is not insignificant, in my view, that as recently as 11 January 2021 the applicants were warned in correspondence from the respondent’s legal advisors that:

If you are ultimately found to be wrong (in your current application to rescind the charging orders) and liable for the $1,878.07 [sic], I expect costs in the vicinity of $6,000 to $12,000 to be awarded against you. You are taking a major risk, all to avoid paying the balance owing of just $1,878.07 [sic]. I will be seeking indemnity costs.

[21]            This warning clearly was ignored. So too was a comment in the Court of Appeal judgment against the applicants dated 18 June 2019 at [14] which, like the situation which I have found to prevail in the present application, stated:2

[14] The application for leave to bring a second appeal is seriously misconceived, wholly lacking in merit and must be declined. The applicants should regard themselves as fortunate that we have decided not to exercise our discretion to order them to pay indemnity costs.

[22]            With these comments in mind and under all the circumstances outlined above, I conclude that indemnity costs and disbursements on the substantive opposition to the applicants’ application as sought calculated on the indemnity basis outlined, are appropriate and should be awarded here.

[23]The applicants are ordered to pay on a joint and several basis the sum of

$17,038.00    by    way   of   costs    and   disbursements    to    the   respondent   here.

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

Gendall J

Copy to:

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

2      Liu Lau & Qui v Cutting [2019] NZCA 228.