Liu v Cutting

[2018] NZHC 3130

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2017-404-001858

[2018] NZHC 3130

BETWEEN

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

AND

DEREK EDWIN CUTTING

Respondent

Hearing:	20 November 2018
Appearances:	K T Lau in Person and on behalf of Y Liu and D Qiu G Collecutt for the Respondent
Judgment:	30 November 2018

JUDGMENT OF HINTON J [COSTS AND LEAVE TO APPEAL]

This judgment was delivered by me on 30 November 2018 at 10.00 am pursuant to Rule 11.5 of the High Court Rules

…………………………………………………………………… Registrar/Deputy Registrar

Counsel:
Grant Collecutt, Barrister, Auckland

Party:
Yichuan (Jesse) Liu, K T Lau, D Qiu

LIU v CUTTING [2018] NZHC 3130 [30 November 2018]

[1]    This judgment relates to costs and leave to appeal applications arising out of a fee recovery issue between these parties. The litigation has been running for over nine years. The sum involved is very small. The original claim by Mr Cutting was for approximately $15,000 for unpaid legal fees. On 17 July 2017, judgment was granted by Judge Hinton in the District  Court for a  reduced amount of $10,500,  plus costs. On 31 January 2018, that judgment was upheld by me, with costs again awarded to the respondents.1 I have commented before on the long and careful judgment delivered by the District Court Judge.2

[2]    Along with submissions on the application for leave to appeal, I have received numerous memoranda as to costs in both this Court and the District Court.

Costs and disbursements

Costs on the appeal

[3]    As to costs, I ruled as part of my judgment that the respondent was entitled to costs on the appeal.3

[4]    The respondent has provided a schedule of costs on the appeal, calculated on a 2B basis in accordance with the scale, totalling $10,481. The respondent makes no claim for disbursements.

[5]    I consider the costs calculation is uncontentious, and I award costs in the sum of $10,481. Mr Lau raises various points of no substance to the determination of costs, including reliance on my reference to the District Court judgment containing some errors.4 This was a reference to some factual inaccuracies raised by the appellants, which had no significance to determination of the appeal.5 I did not find that the District Court Judge had erred on any of the grounds of appeal put to me by the appellants.

1      Liu v Cutting [2018] NZHC 33.

2      At [17] and [68].

3 At [66].

4 At [68].

5      For example, the Judge makes reference (at paragraph [24]) to Mr Keene saying that his hourly rate was shown in an invoice. It seems it was not. But liability was based on a reasonable cost,  or quantum merit assessment, in any event.

Costs in the District Court

[6]    Costs and disbursements relating to the District Court proceedings, which spanned a period from March 2009 to July 2017, have apparently not yet been fixed. The District Court has referred the substantial costs memoranda filed in that Court to me, under the understandable, but mistaken view that I had assumed responsibility for costs orders in that Court. At [66] of my judgment, I said that if there are issues as to “costs on previous hearings on which no ruling has been given”, those matters should be addressed by the parties. That was a reference to any outstanding costs issues in this Court, there having been two prior hearings before Moore J and Williams J.

[7]    I am not sure that I would even have jurisdiction in terms of costs in the District Court, but in any event, it would be near-impossible for me to exercise it. The District Court costs applications span a period of eight years. They are voluminous, and far from straightforward. I had no part in any of those hearings. I do not have  the District Court files. I regret any confusion, but I am obliged to direct that all District Court costs memoranda be referred back for costs and disbursements to be fixed in that Court.

[8]    I also noted in my judgment that there may be issues as to costs arising from a ruling of the NZLS Standards Committee6 in respect of which there was an application for review to the Legal Complaints Review Officer, and an application for judicial review filed in this Court. Those matters can be dealt with in the separate proceedings and are not appropriately considered by me.

Disbursements on earlier interlocutory appeals

[9]    I observed in my judgment that the appellants, although not entitled to costs as self-represented parties, might be entitled to disbursements in relation to an earlier successful appeal by them of an interlocutory ruling in the District Court, that appeal having been heard by Moore J. However, Mr Collecutt, for the respondents, submits that Moore J in fact dismissed Mr Liu’s claim for disbursements.7 Having now read Moore J’s Minute of 11 May 2015, I agree that there is no outstanding issue regarding

6 At [66].

7      At paragraph [4] of the Minute of Moore J dated 11 May 2015.

disbursements in respect of that proceeding. That issue has already been determined by the Judge who considered the appeal.

[10]   The appellants also seek disbursements in relation to the appeal in front of Williams J.8 At first instance, in the District Court, the appellants applied to have default judgment issued against them set aside and to have Mr Keene cease acting in the proceedings. The District Court dismissed both applications. On appeal to the High Court, Williams J granted their appeal in respect of both applications.

[11]   While I am surprised that the disbursements in respect of an appeal, determined as long ago as 14 July 2011, have not yet been settled, Mr Collecutt in submissions did not suggest that the matter had already been disposed of.

[12]   The amount claimed by the appellants is $2,441.43. The filing fees in the District Court, on 15 November 2010 and 6 December 2010, at a rate of $189.11 each, should be addressed by the District Court Judge. The same applies to the claim for

$481.60 for photocopying fees and $13.50 for postage.

[13]   The amount of $137 for traffic and parking is claimed to relate to both the District Court proceeding and the appeal in the High Court. I will not allow it in any event, as I consider the scope of what is being claimed is unclear and the appellants have not provided any evidence to verify that it was in fact incurred.

[14]   I will allow for the filing fee in the High Court and the setting-down fee in the High Court at $408.89 and $1,022.22 respectively.

[15]   The amount of disbursements I will allow to the appellants in respect of the appeal before Williams J is therefore $1,431.11.

Application for leave to appeal

[16]   An application for leave to appeal was filed by the appellants on 27 February 2018. This was in time. A copy of the application was first provided to the respondent

8      Liu v Cutting HC Auckland CIV-2011-404-695, 14 July 2011.

in late-March 2018 by the Court Registrar, the appellants not having attended to service. The copy was incomplete, so that in fact the application was not served on the respondent until 4 April 2018, on which date it was forwarded to the respondent by both the Court and the appellants.

[17]   An application to the High Court for leave to appeal to the Court of Appeal is an interlocutory application, and in accordance with r 7.22 of  the  High  Court  Rules 2016 must be served promptly on the respondent. I do not consider a delay of over a month to be prompt service of an application.

[18]   However, I am prepared to consider the application for leave as if it were served promptly, given the appellants are self-represented, there was a genuine mistake on their part regarding the service process, and Mr Collecutt did become aware of the application in late-March, albeit via the Registry and the copy was incomplete.

Test on appeal

[19]   For a party to be given leave for a second appeal, they must raise some question of law or fact capable of bona fide and serious argument in a case involving some interest, public or private, of sufficient importance to outweigh the cost and delay of the further appeal.9

Points of appeal

[20]   I now turn to the points raised by Mr Lau in support of the application for leave to appeal.

Whether rr 3.4, 3.5 and 3.6 of the Lawyers’ 2008 Rules applied?

[21]The appellants advance a number of interrelated submissions concerning rr 3.4,

3.5 and 3.6 of the Lawyers and Conveyancers Act (Lawyers: Conduct and Client Care) Rules 2008 (the 2008 Rules). I consider that they are largely the same and can be dealt with as a single proposed point of appeal.

9      Waller v Hider [1998] 1 NZLR 412 (CA) at 413.

[22]   On the appeal before me, the appellants argued that the provisions of the 2008 Rules applied, and that Mr Cutting and Mr Keene were in breach of the requirements of rr 3.4 and 3.5 regarding provision of client information, such that  Mr Cutting should not be able to recover Mr Keene’s fees. I ruled that r 3.10 applied, which expressly provides that rr 3.4 and 3.5 do not apply to retainers entered into prior to 1 August 2008.   Both Mr Lau and Mr Collecutt confirmed that  the retainer of   Mr Cutting commenced in April 2007.

[23]   The appellants wish to challenge my ruling on their proposed appeal to the Court of Appeal. They submit that the Rules should be interpreted differently, on the basis that r 3.6, which requires a lawyer to update information provided to the client in accordance with rr 3.4 and 3.5 if that information becomes inaccurate in a material respect, should have impacted the analysis. They point out that r 3.6 is not expressed as subject to r 3.10.

[24]   As regards r 3.6, the information required to be updated must have first been provided by a lawyer in terms of rr 3.4 or 3.5. If the lawyer never had an obligation to provide such information, there is nothing that became inaccurate and required to be updated.

[25]   The appellants also argue that r 3.10 should not apply when a lawyer, having entered a retainer prior to 1 August 2008, continues to provide services and charges fees after that date.

[26]That is not capable of serious argument on the clear wording of r 3.10.

[27]   I do not agree that the  statements  of  the  Court  of  Appeal  in  Orlov  v  New Zealand Law Society and Deliu v New Zealand Law Society, as to the objectives of the Act, are relevant to the interpretation point at issue here.10

[28]   As the respondent submits, even if it were possible to argue for a different interpretation of r 3.10, there is no important point of principle involved, because such

10     Orlov v  New Zealand Law Society  [2013] NZCA 230; and Deliu  v New Zealand Law  Society

[2015] NZCA 12.

point of interpretation is unlikely to have any impact on other cases. My decision only applies to retainers which were entered into prior to 1 August 2008, which is over   10 years ago. It is highly unlikely that any retainer falling into that category will be incomplete, such that the point will arise again.

Reference to case law

[29]   Another point made by the appellants on their proposed appeal is that the judgment does not mention leading cases in support of the finding that the appellants were liable to Mr Cutting for Mr Keene’s fees, acting as their barrister.

[30]   This cannot be categorised as a point of appeal, as no argument or authority is put up to the effect that the finding itself was wrong.

[31]   There was no need to cite authority. The liability arose as a matter of simple agreement. The District Court Judge found, and I agreed, that the appellants authorised Mr Cutting to brief Mr Keene; they knew Mr Keene was carrying out the work; and Mr Lau accepted he had to pay a reasonable fee for reasonable work. Consistent with that, he had paid earlier fee accounts of Mr Keene without demur. The New Zealand Law Society and Legal Complaints Review Officer both upheld the reasonableness of Mr Keene’s fees. Judge Hinton reached the same view, but with a modest adjustment. I upheld that finding.

Re-opening of cross-examination of Mr Keene

[32]   The appellants also refer to an error allegedly made by  me  as  to  the  District Court Judge refusing to allow the appellants to re-open cross-examination of Mr Keene in the District Court. As a consequence of Judge Hinton’s refusal, the appellants say that he wrongly made a finding that Mr Keene was a credible witness.

[33]   In my judgment, I recorded that the District Court Judge did in fact allow further cross-examination of Mr Keene, but he stopped Mr Liu because the questions were repetitive.11 It seems that while that may be correct, the appellants were wishing to re-open cross-examination a further time, to ask further questions of Mr Keene

11 At [39].

regarding his appearing on hearings of a procedural nature before Judge Joyce and Judge Cunningham  (recorded  in  Court  Minutes  dated  3  November  2011  and   28 February 2012), in the face of a finding of Williams J that Mr Keene was not allowed to act for himself.12 These appearances were evidence of dishonesty, says  Mr Lau. Also, Mr Lau wanted to cross-examine Mr Keene further to show that he was lying to Judge Hinton when he said in evidence that he did not appear at the directions conference before Judge Cunningham.

[34]   Mr Collecutt submits that the appellants have failed to demonstrate how further cross-examination of Mr Keene might have changed the nature of the proceeding to their advantage.

[35]   I agree with Mr Collecutt. In my appeal judgment, I recorded that the appellants had not indicated what new questions they wished to ask, and I could not detect any further questioning that could have been helpful to their case.13 On the application for leave, Mr Lau explained the general purpose of further questions, as I have recorded above, but I remain of the view that further cross-examination would have made no difference. Given the appellants are self-represented, I endeavour to set this out below.

[36]   Without  any  further  cross-examination,  the  appellants   could   establish Mr Keene did appear at the two directions conferences by reference to the Judges’ Minutes, (and Mr Liu had already raised in cross-examination, Mr Keene’s appearance before Judge Cunningham). They could make submissions accordingly, to the effect that such appearances were dishonest (in  their  view).  Also,  if  they  were  right, and Mr Keene “lied” before Judge Hinton about  whether  he  appeared  before  Judge Cunningham, they were already in a position to make that submission based on the notes of evidence and the same Minutes. Mr Collecutt says the evidence given as to whether Mr  Keene  appeared  or  not  on  the  directions  conference  before  Judge Cunningham was clarified by Mr Collecutt, as shown by a notation on the record.  Mr Lau may be aggrieved by that clarification being allowed, but even if   Mr Keene had been further questioned and vehemently denied appearing before

12 n 8 above at [22].

13 At [39].

Judge Cunningham (which he was not in the evidence he had given), that would not be taken as evidence of dishonesty when it was so easily able to be corrected. There could be no intention to deceive.

[37]   In net effect, further cross-examination  would  have  made  no  difference. Mr Lau told me he had not appreciated he could just make the submission. I fully expect he did make that submission, given the appellants’ exhaustive approach to this case, but if he did not, that is his own issue, and nothing to do with the Judge bringing cross-examination to an end.

[38]   I gather cross-examination of Mr Keene had gone for well over one day, if not close to two days, which itself is fairly extraordinary.

[39]   Further still, while I agree that best practice would have had Mr Keene not appear at the two directions conferences, I do not agree that it was dishonest or disreputable for him to do so. He obtained leave from the Court in each instance, admittedly once in Court, and these were brief procedural hearings, not substantive hearings.

[40]   I do not consider any of this would have affected the Judge’s  finding that   Mr Keene was a credible witness, which is the material point.

[41]   No seriously arguable question of law arises. Plainly it is not an important point of principle justifying leave to appeal a second time.

Errors in the District Court judgment

[42]   The appellants’ next submission is in reference to a passage in my judgment where I noted that there were a few errors in the District Court judgment.14 They submit that, had the details of those errors been revealed, the outcome in front of me on appeal could have been different.

14 At [68].

[43] I disagree. I clearly stated in my judgment that none of those errors affected the correctness of the District Court decision and that the judgment was a model of thoroughness.15 As stated in my discussion of costs at [5] above, the reference to “errors” was to factual inaccuracies, which had no bearing on the correctness of the decision, but rather were subsidiary points seized upon by Mr Liu in his submissions on the appeal. I note Mr Lau did not identify any of these “errors” in his written or oral submissions on the application for leave, which he would have needed to do, to indicate how the outcome could have been different.

[44]   This ground does not constitute a question of law which is seriously arguable or of sufficient importance to justify an appeal.

Should the appellants have been granted leave to introduce evidence in support of their counter-claim?

[45]   The appellants’ next point of appeal is in relation to their counter-claim, for which they sought special damages of $20,000 and general damages of $30,000. The counter-claim involved a series of complaints by the appellants against Mr Keene, including that he had wrongly claimed a lien at the point they terminated their instructions, and had dishonestly claimed before the Law Society, the Legal Complaints Review Officer and the District Court that he believed the appellants had received a settlement with Auckland Grammar School of $20,000.

[46]   The appellants submit, in relation to their counter-claim, that I wrongly declined leave for them to seek out evidence of loss after the appeal hearing. I declined on the basis it was too late to introduce new evidence, if it existed. The appellants now submit that in fact it was not too late, because the evidence had already been adduced in the District Court, prior to the hearing in the High Court, and would not take extra time to locate. The appellants say the “evidence” was introduced in the District Court via their costs submissions dated 15 September 2017. However, the document referred to is a schedule which does not constitute evidence and does not annex any invoice or proof of payment, nor provide relevant detail.

15 At [68].

[47]   I also do not consider that there is any basis for a “counter-claim” resulting from an alleged false claim by Mr Keene about the settlement entered into between Mr Liu and the school. First of all, there is no, or insufficient evidence that the claim was false, but even if it were, no loss flows from it. The Law Society might have been influenced by the fact that a settlement was achieved, but the fact of settlement is undisputed. It makes no difference whether it was $20,000 or more, or less. What is relevant is that an offer was made while Mr Keene was still in charge of the file, in the sum of $20,000 and a settlement was later achieved. Whatever the quantum was of that settlement, Mr Keene and Mr Cutting’s efforts will no doubt have been material. That cannot be seriously challenged. The only point Mr Keene was really making in his submissions in earlier proceedings is that he claimed to have (indirectly) contributed to the settlement.

[48]   Understandably, but regrettably, much of the appellants’ approach has involved raising points that are non-sequiturs and have no merit.

[49]   I consider for the reasons set out in my judgment, which on the whole are also set out in the District Court judgment, that there is no seriously arguable point raised in connection with the declining of the counter-claim. In particular, there was no evidence of any material loss caused to the appellants.

Conclusion on the application for leave to appeal

[50]   The application for leave raises no issues which are capable of bona fide and serious argument in the Court of Appeal. There also is no public or private interest sufficient to outweigh the cost and delay of a further appeal. The amount at issue in this litigation is extremely modest, less than the maximum jurisdiction of the Disputes Tribunal, as Mr Collecutt points out. After nine years of argument in the District Court and High Court, the need for finality and the avoidance of further significant costs far outweighs the interests of the appellants in continuing to litigate this matter.

Reserving costs

[51]   I asked Mr Lau if he accepted that whoever succeeded on the application for leave should receive costs in connection with that application, which he said he did.

[52]   The appellants, however, request that I reserve questions of costs, or stay costs, for the meantime, as they intend to apply to the Court of Appeal for leave. They also point out that, in the history of the various proceedings between the parties, they have been successful against the respondent on three separate occasions.

[53]   In seeking that costs be reserved, the appellants rely on the judgment of Asher J in Laywood v Holmes Construction Wellington Ltd. Asher J granted leave to appeal his decision to the Court of Appeal and, while fixing costs payable to the successful applicant on the leave application, decided that the payment of those costs should be reserved until the appeal had been determined.16 That is different to the position before me, where the two costs issues relate to the failed appeal and the unsuccessful application for leave.

[54]   I do not consider it in the interests of justice to reserve the question of costs in this case.

Orders

[55]I award costs on the appeal in favour of the respondent, in the sum of $10,481.

[56]   I award disbursements to the appellants, in respect of the appeal before Williams J in the High Court, in the sum of $1,431.11.

[57]   All other issues as to costs and disbursements, arising from proceedings in the District Court, are to be dealt with in that Court.

[58]The application for leave to appeal is dismissed.

16     Laywood v Holmes Construction Wellington Ltd HC Auckland CIV-2006-404-4152, 15 February 2008 at [15]–[17].

[59]   The respondent is entitled to costs on a 2B basis on the unsuccessful application for leave to appeal.

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Hinton J