Mao v Best Capital Limited - [2021] NZHC 2685

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2019-404-2197

[2021] NZHC 2685

BETWEEN
JIAWEN MAO

First Plaintiff

LIANSEN MAO
Second Plaintiff

YINTIAN CO LIMITED
Third Plaintiff

AND

BEST CAPITAL LIMITED
First Defendant

HYUN BIN KIM

Second Defendant

DUK YOUNG LEE

Third Defendant

Hearing: On the papers

Counsel:

CE Lewis for the defendants

Judgment:

7 October 2021

COSTS JUDGMENT OF ASSOCIATE JUDGE SUSSOCK

This judgment was delivered by me on 7 October 2021 at 3.30pm pursuant to r 11.5 of the High Court Rules

Registrar/Deputy Registrar

Solicitors:
JC Legal, Auckland Hesketh Henry, Auckland

MAO v BEST CAPITAL LIMITED [2021] NZHC 2685 [7 October 2021]

Introduction

[1] In my judgment dated 1 April 2021 I granted the defendants’ application to strike out all three of the causes of action pleaded by the plaintiffs so that the amended statement of claim was struck out in its entirety.

[2] I further held that the defendants, having succeeded in their application, were entitled to costs and that they ought to be awarded on an indemnity basis because the proceedings were an abuse of process and had the ulterior motive of being brought to delay bankruptcy proceedings.

Background

[3]The proceedings related to two Auckland properties.

[4] The allegations in relation to the first property in Chester Avenue were made after the plaintiffs failed to defend District Court proceedings and after having paid the default judgment.

[5] The plaintiffs then alleged in respect of the second property in Fairburn Road that the defendants, as mortgagee, had breached a duty of care by not selling the property. Not only is the law clear that there is no such duty of care on a mortgagee, the first plaintiff had been found guilty of serious breaches of the Resource Management Act 1991 in respect of that property, including dumping asbestos and other rubbish and failing to respond to six enforcement orders.

[6] Before the hearing of the strike-out application, the plaintiffs had been directed to amend their pleadings several times. Despite this, the plaintiffs’ pleading still failed to plead essential facts to support the allegations made.

[7] In the circumstances, an order for indemnity costs reasonably incurred was made, including for the amendment to the application to strike out necessitated by the amendments to the statement of claim.

[8] I directed the parties to confer and attempt to agree quantum. They have been unable to do so and so a memorandum together with an affidavit in support has been filed on behalf of the defendants. No memorandum has been filed on behalf of the plaintiffs, but they have had sufficient opportunity to respond. I therefore determine quantum in the absence of any memorandum from the plaintiffs.

Relevant costs provision

[9] Rule 14.6 of the High Court Rules 2016 provides for indemnity costs to be awarded, stating that:1

“a court may make an order … that the costs payable are the actual costs, disbursements, and witness expenses reasonably incurred by a…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2021] NZHC 2685
Decision Date: 7 October 2021

CaseChat Overview and Summary

The High Court of New Zealand was asked to decide on a matter where three plaintiffs brought claims against three defendants in relation to two Auckland properties. The defendants successfully applied to strike out the plaintiffs' causes of action, leading to a consideration of costs. The court was required to decide on the appropriate costs order under Rule 14.6 of the High Court Rules 2016, and whether the proceedings constituted an abuse of process warranting an indemnity costs order. The court found that the plaintiffs' claims were without merit, as they were either time-barred or not supported by the law. The first plaintiff had previously failed to defend District Court proceedings and paid a default judgment in relation to the first property. The court further found that the plaintiffs' claims were brought with ulterior motives, namely to delay bankruptcy proceedings.

The court awarded indemnity costs on the basis that the proceedings were an abuse of process. The court considered the defendants' affidavit, which outlined the steps taken by their legal team in responding to the plaintiffs' claims. The court found that the steps taken were reasonably necessary and that the rate at which the steps were charged was reasonable. The court also compared the costs claimed with an estimate of the likely 2B scale costs, which supported a finding that the costs claimed had been reasonably incurred. The court awarded indemnity costs, including GST, in the amount of $30,333.31. The court further directed that the plaintiffs were to pay the defendants' costs.

Orders