Lu v Industrial and Commercial Bank of China (New Zealand) Ltd

[2020] NZHC 1604

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2019-404-2027

[2020] NZHC 1604

BETWEEN

QIUFEN LU

First Plaintiff

LIANSEN MAO
Second Plaintiff

AND

INDUSTRIAL AND COMMERCIAL BANK OF CHINA (NEW ZEALAND) LIMITED

First Defendant

QIAN HOU

Second Defendant

Hearing:

On the papers

Counsel:

Appearances:

DT Broadmore and LM Edginton for defendants

Q Lu and L Mao, plaintiffs in person

Judgment:

7 July 2020

JUDGMENT OF FITZGERALD J

[As to costs]

This judgment was delivered by me on 7 July 2020 at 4pm pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date……………

Solicitors:           Buddle Findlay, Auckland To:          Q Lu and L Mao

Lu v Industrial and Commercial Bank of China (New Zealand) Limited [2020] NZHC 1604 [7 July 2020]

Introduction and background

[1]                 By way of my substantive judgment in these proceedings delivered on 5 March 2020,1 I:

(a)granted the first defendant’s (the Bank’s) strike out application, with the result that the plaintiffs’ claims were struck out in their entirety; and

(b)declined the first plaintiff’s (Ms Lu’s) application for an anti-suit injunction, which would have enjoined the Bank from continuing proceedings it has commenced against the plaintiffs in China.

[2]                 The background to the proceedings was that the Bank had loaned Ms Lu funds in order to complete the purchase of a property in Albany, Auckland. Ms Lu fell into default under the loan agreement, and there were other issues with the property, namely a caveat being registered against the title and Auckland Council obtaining an enforcement order in relation to it. The Bank said these matters also constituted breaches of Ms Lu’s loan agreement. The Bank issued a notice pursuant to s 119 of the Property Law Act 2007 (the PLA) and, after giving Ms Lu the opportunity to sell the property, sold it in October 2019 by way of mortgagee sale.

[3]                 The Bank thereafter took steps to recover the shortfall due from Ms Lu under her loan agreement. Ms Lu is a Chinese citizen and resides in China. The Bank therefore commenced proceedings against her in China. Those proceedings were also issued against the second plaintiff (Mr Mao, Ms Lu’s husband), on the basis that as a matter of Chinese law, a spouse may in certain circumstances be responsible for the debts of the other spouse.

[4]                 After the Bank had taken these steps, Ms Lu and Mr Mao filed these proceedings alleging a number of breaches and defaults on the Bank’s part. These included misrepresentation claims, claims under the Fair Trading Act 1986 and a claim pursuant to s 176 of the PLA alleging the Bank failed to exercise reasonable care to obtain the best price reasonably obtainable at the time of the sale of the property. As

1      Lu v Industrial and Commercial Bank of China (New Zealand) Ltd [2020] NZHC 402.

noted, Ms Lu and Mr Mao also filed an application for anti-suit injunction in relation to the China proceedings.2 As  also  noted at  the  outset,  I struck out  Ms Lu  and  Mr Mao’s claims and dismissed the application for an anti-suit injunction.

[5]                 At the conclusion of my substantive judgment, I expressed the provisional and non-binding view that there did not appear to be any reason why costs should not follow the event in the ordinary way. I encouraged the parties to seek to agree costs. They have not been able to do so. The Bank seeks scale 2B costs plus disbursements.

The parties’ respective submissions

[6]                 The Bank submits that in accordance with the provisional and non-binding view I expressed in my substantive judgment, there is no principled basis upon which costs should not follow the event in the ordinary way. I dismissed Ms Lu’s application for an anti-suit injunction and struck out the plaintiffs’ claims in their entirety.

[7]                 The Bank also seeks disbursements, which include approximately $3,300 for translation fees. The Bank notes that the majority of the translation work was carried out by a casual employee of the defendants’ solicitors, whose role is stated as being exclusively to perform translations. The Bank says these fees properly meet the definition of a disbursement under r 14.12(1) of the High Court Rules 2016, as they were “incurred for the purposes of the proceeding” and they would “ordinarily be charged for separately from legal professional services in a solicitor’s bill of costs”. The Bank submits the translation work was an office expense that was “necessary and specific to the litigation” and thus can be claimed as a disbursement.3

[8]                 Ms Lu and Mr Mao, who are now acting for themselves, filed a memorandum raising a number of objections to the costs claimed by the Bank. They say that under New Zealand rules and regulations, Mr Mao should be awarded some costs against the Bank as he is not a party to the loan agreement. They say that the “first defendant dragged the second plaintiff in[to] the proceeding without any merit under New Zealand rules and regulations”.

2      In the event, Mr Mao did not pursue the anti-suit injunction.

3      Referring to Mawhinney v Waitakere City Council HC Auckland CIV-1999-404-1850, 26 September 2007 at [12].

[9]                 Ms Lu and Mr Mao also say that the statement of defence and summary judgment application filed by the Bank are similar in content to materials used in the China proceedings, and because the Bank has requested similar costs from the courts in China, the costs sought in these proceedings should be halved.

[10] Ms Lu and Mr Mao further submit that because the Bank is a Chinese-based financial institution and has many staff who can translate documents from Chinese to English, the translation fee discussed at [7] above should be excluded altogether from the disbursements award. A similar submission is made in relation to external translation services provided to the defendants’ solicitors for translation of Chinese court documents into English.

[11]              Ms Lu and Mr Mao also say that costs should be reserved in any event, given Ms Lu’s property in China has been frozen by the Chinese courts.

[12]              Ms Lu and Mr Mao also appear to raise further matters of substance in opposition to the Bank’s steps to proceed to a sale of the property by mortgagee sale. These appear to have led Ms Lu to file a new statement of claim against the Bank and also Auckland Council, which the Bank says is an attempt to relitigate matters already determined in this proceeding. The new matters raised by Ms Lu appear to be additional grounds why it is said the Bank breached its duty under s 176 of the PLA, but which were not matters raised in the hearing before me.4

[13]              Finally, Ms Lu and Mr Mao’s memorandum raises matters concerning name suppression orders (made by what court and in which proceedings are unknown to me). These have nothing to do with the costs of the present proceedings and I therefore say nothing further in relation to them.

Discussion

[14]              The starting point is that costs follow the event, such that the successful party overall will generally be awarded costs of the proceedings (on a scale basis). This may then be adjusted upwards or downwards, depending on whether there are any

4      I am not aware of the status of any new proceedings filed by Ms Lu.

matters or steps taken by either party which would warrant an award of increased or indemnity costs, or which weigh in favour of reducing what would ordinarily be awarded to the successful party.

[15]              I am clear in my view that there is no principled basis upon which costs should not follow the event in this case. I found that the plaintiffs’ claims were misconceived or plainly untenable. In addition, I dismissed the application for the anti-suit injunction. The Bank was clearly the successful party overall.

[16]              Responding to the matters raised by Ms Lu and Mr Mao, the Bank did not “drag” Mr Mao into these proceedings. On the contrary, Ms Lu and Mr Mao commenced these proceedings, and it was accordingly a decision by them to include both of them as plaintiffs. The fact the Bank had commenced proceedings against both Ms Lu and Mr Mao in China did not mean both needed to commence these proceedings in New Zealand. And as matters transpired, Mr Mao did not proceed with his application for the anti-suit injunction in any event.

[17]              Further, the fact that some materials before this Court are similar to those that have evidently been filed before the Chinese courts is not a basis upon which to reduce or refuse to grant costs. Counsel for the Bank will be well aware of the principle that a scale costs award must not exceed actual costs. On the basis the Bank’s actual costs incurred in connection with these proceedings are greater than the scale costs sought, it is irrelevant that some papers filed in these proceedings may be the same as or similar to those filed in the China proceedings.

[18]              I am similarly not persuaded that the disbursement for translation fees ought to be excluded from the costs award. There was a large volume of material put before the Court which needed to be translated from Chinese to English. And irrespective of whether the translation was carried out internally or externally, it would have been quite reasonable to engage external translators to carry out that task.

[19]              I do have some queries, however, in relation to the disbursements charged for the casual employee of Buddle Findlay whose role is exclusively to perform translations. Some of the time included is narrated “annual leave-on termination”. No

explanation is provided. While these amounts are minor, I consider the appropriate course is to make an award of the (rounded) figure of $2,800 for the translation fees of that employee. I do not consider that level of fee to be out of line with the fee likely to have been charged had external translation agencies been used. And as noted, translating documents from Chinese to English was plainly a reasonable (and necessary) step to be taken in connection with these proceedings. Nor do I consider it unreasonable for the Bank to have had the translations carried out externally; indeed, it would be far from ideal for important documents in a court proceeding to be translated by employees of the party itself. For this reason, there is also no basis to exclude the translation fee for HIH Translating and Assisting Ltd from the disbursements award.

[20]              Ms Lu and Mr Mao also raise financial hardship as a reason not to award costs. That is not, however, a reason to decline to determine and award costs. Those matters are properly considered in an application for a stay of enforcement of any costs award made.5

[21]              In terms of the further evidence Ms Lu and Mr Mao say they have located and which bears upon the result in these proceedings, this also has no relevance to the determination or making of a costs award for the proceedings. There has been no application to recall my judgment or an appeal lodged against it together with an application to adduce further evidence on the appeal.

Result

[22]There is accordingly a costs award in the Bank’s favour on a scale 2B basis of

$20,076, plus disbursements as set out in the schedule to the defendants’ memorandum on costs, subject to that minor adjustment noted at [19] above in relation to internal translation costs.

Fitzgerald J

5      See generally, Young v Television New Zealand Ltd [2012] NZHC 3460 at [12]; and Gerritsen v Gerritsen [2018] NZHC 1324 at [9], [16] and [29].