Lun v Kong

[2023] NZHC 2256

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2022-404-795

[2023] NZHC 2256

BETWEEN

DAMIN LUN

Plaintiff

AND

YONGCING KONG

Defendant

On the papers:	18 August 2023
Appearances:	J K Goodall KC / LukeSizer / Zar Sinclair for the Plaintiff R E Harrison KC / Anna Cherkashina for the Defendant
Judgment:	21 August 2023

COSTS JUDGMENT OF ASSOCIATE JUDGE C B TAYLOR

This judgment was delivered by me on 21 August 2023 at 3:00pm

pursuant to Rule 11.5 of the High Court Rules

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

Solicitors:

Buddle Findlay (Luke Sizer / Zar Sinclair), Auckland, for the Plaintiff

Norling Law (Brent Norling / Anna Cherkashina), Auckland, for the Defendant

Counsel:

Jason K Goodall, Auckland, for the Plaintiff
Rodney E Harrison KC, Auckland, for the Defendant

DAMIN LUN v YONGCING KONG [2023] NZHC 2256 [21 August 2023]

Introduction

[1]                 On 1 June 2023 the Court delivered a judgment granting the plaintiff’s application to set aside the defendant’s protest to jurisdiction (the Judgment).1 In the Judgment, the parties were directed to endeavour to agree costs, and if no agreement was reached, the parties were directed to file memoranda on costs for determination on the papers.

[2]                 Counsel have conferred and are not agreed on costs. Counsel for the plaintiff filed a memorandum as to costs dated 17 July 2023, and counsel for the defendant filed a reply memorandum dated 31 July 2023. Having reviewed these memoranda, the Court issued a minute dated 15 August 2023 requesting more information from the plaintiff ‘s counsel in relation to the expert witness fee. On 16 August 2023 the plaintiff ‘s counsel filed a response to the Court’s minute.

[3]The areas of dispute between the parties are:

(a)allowance for a second counsel in the plaintiff’s costs;

(b)a disbursement claim for the expert witness fee.

Submissions

Second counsel

[4]                 In relation to an allowance for a second counsel, the plaintiff’s counsel makes the following submissions:

(a)An allowance for a second counsel is permitted in category 2 cases provided the case has some exceptional feature to justify a second

1      Lun v Kong [2023] NZHC 1370.

counsel  allowance.     The approach to determining this is always objective, and it is focused on the nature of the proceeding.2

(b)The Court has accepted that an allowance for a second counsel is permitted in category 2 cases as part of the proceeding’s “average” characterisation.3

(c)2B costs for a second counsel is appropriate in this case as it involved a complicated fact matrix, with nuanced issues on the conflict of laws, and was of sufficient complexity that both parties engaged King’s Counsel to present their oral arguments.

[5]Counsel for the defendant submits, in relation to this issue:

(a)The interlocutory hearing did not justify the allowance for a second counsel as, while it was accepted that the hearing involved a complex set of legal principles in relation to conflicts of law, the whole argument on behalf of the plaintiff was presented by the principal counsel who is a King’s Counsel;

(b)The hearing was light in evidence and there was no examination of witnesses.

Conclusion in respect of second counsel

[6]                 I am of the view that in line with the authorities noted at footnote 3, the proceeding should be characterised as “average” complexity and second counsel was justified. The proceeding involved a number of complex legal principles relating to conflict of laws and while all the submissions were made by the King’s Counsel, the work embedded in the submissions justified a second counsel.

2      Prattley Enterprises Ltd v Vero Insurance New Zealand Ltd [2017] NZHC 1599, citing Andrew Beck Principles of Civil Procedure (3rd ed, Thomson Reuters, Wellington, 2012) at [13.3.5].

3      Khan v New Zealand Muslim Association [2023] NZHC 802 at [27];

Hodder v Creek [2023] NZHC 561 at [37];

CSR Pokeno Ltd v Yes Investment NZ Ltd [2022] NZHC 2378 at [26]; Commissioner of Inland Revenue v Robertson [2018] NZHC 696 at [62]; Northwest Developments Ltd v Zhang [2017] NZHC 1891 at [38].

Expert witness fee

[7]                 Counsel for the plaintiff submits that the fee for an expert witness is recoverable under r 14.12 of the High Court Rules 2016, providing the expense is reasonably necessary, reasonable in amount, and specific to the conduct of the proceeding.4 Counsel for the plaintiff refers to the decision in Air New Zealand Ltd v Commerce Commission,5 and submits this decision establishes, as a general principle, the successful party is entitled to recover actual expenses of its expert witnesses. Counsel also submits that the expenses of obtaining expert evidence which is obtained reasonably and in good faith is still recoverable even if it is ultimately unhelpful and irrelevant to determining the issues, and relies on the authorities noted in her memorandum.

[8]                 The plaintiff submits that the disbursement for JunHe’s expert witness fee was reasonably necessary, reasonable in amount and specific to the conduct of the proceeding. She submits the nature of the application warranted the plaintiff obtaining expert evidence on the laws of the People’s Republic of China to illustrate the “special reasons” as to why, if the courts of the People’s Republic of China were prima facie the more appropriate forum, the case should nonetheless be tried in New Zealand. She submits that costs for the disbursement remains claimable, even though the Court did not find the points to which the evidence was adduced of much significance.

[9]                 Counsel for the defendant submits that the expert witness fee is highly unreasonable in amount. He makes the following submissions:

(a)The body of the affidavit produced by JunHe was only slightly over five pages long, the affidavit itself does not deal with the specific facts of this case but provides a general overview of aspects of a Chinese legal proceedings relating to discovery of evidence, the attendance of witnesses in civil proceedings, and statutory limitation periods.

4      High Court Rules 2016, r 14.12(1).

5      Air New Zealand Ltd v Commissioner of Inland Revenue [2007] 2 NZLR 494; (2007) 18 PRNZ 406 (CA) at [47] and [64].

(b)The remainder of the affidavit are exhibits comprised of the expert’s CV and extracts from Chinese legislation (with unofficial translations).

(c)The claimed fee ofNZ$7,447.56 is highly excessive in amount for the volume and the particularity of the evidence that was produced.

[10]             Counsel for the defendant also raised the issue whether the invoice solely related to the affidavit filed in the proceeding or may have partially related to a proceeding commenced by the plaintiff in a Chinese court (the Chinese Proceeding). Counsel for the plaintiff has confirmed that no part of the fee related to the Chinese Proceeding. This is also apparent from the time and attendance records supplied by JunHe in response to the Court’s query.

Conclusion in respect of expert witness fee

[11]             I am of the view that the expert witness fee claimed by the plaintiff should be recoverable. While the evidence from JunHe was not particularly significant in the context of the Judgment,6 it was nevertheless reasonable and relevant to the proceedings in relation to establishing the plaintiff’s contention that “special circumstances” existed as to why the trial should take place in New Zealand even if the courts of China were a more convenient forum.

[12]             Having reviewed the time and attendance records from JunHe, the time does not appear unreasonable when regard is had to the time taken to swear the affidavit, being the last item in the time and attendance record.

Claim for costs incurred by the defendant in China

[13]             At [12] to [15] of counsel for the defendant’s memorandum of 31 July 2023, counsel avers that the defendant is seeking payment of legal fees incurred by him in relation to the Chinese Proceeding. The defendant is also seeking to set off the defendant‘s legal fees in relation to the Chinese Proceeding against any costs award made against him in favour of the plaintiff in this proceeding.

6 Judgment at [88].

[14]             My view on this issue is that the Court has no jurisdiction to deal with costs in respect of the Chinese Proceeding and these must be dealt with in the relevant Chinese court. Similarly the Court in my view, has no jurisdiction to set off these costs against the award of costs in this Judgment.

Costs on costs

[15]             Counsel for the plaintiff is also seeking costs for the preparation of the memorandum as to costs on the basis that the defendant’s opposition was unreasonable given the clear authority that expert witness fees are properly recoverable in full.

[16]             My view on this is that costs on the memorandum as to costs should lie where they fall, as it was not unreasonable for the defendant to query the amount of the expert witness fee, given the issues raised by the defendant about the usefulness and particularity of the affidavit produced by the expert witness.

Orders

[17]             I order that the defendant is to pay costs and disbursements to the plaintiff for the steps taken in this proceeding as follows:

(a)Scale 2B costs: $11,531.75;

(b)Disbursements: $9,597.56.

…………………………….. Associate Judge Taylor