Mao v Buddle Findlay
[2022] NZHC 2885
•4 November 2022
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2021-404-001054
[2022] NZHC 2885
BETWEEN LIANSEN MAO
First Plaintiff
AND
QIUFEN LU
Second Plaintiff
AND
BUDDLE FINDLAY
First Defendant
AND
INDUSTRIAL AND COMMERCIAL BANK OF CHINA (NEW ZEALAND) LIMITED
Second Defendant
AND
QIAN HOU
Third Defendant
AND
CHARLY JIANG
Fourth Defendant
Hearing: 18 August 2022 Appearances:
No appearance for the First and Second Plaintiffs
Laura O’Gorman KC and Andrijana Milosavljevic for the First to Third Defendants
No appearance for the Fourth Defendant
Katherine Anderson as Counsel Assisting the CourtJudgment:
4 November 2022
JUDGMENT OF MOORE J
This judgment was delivered me on 4 November 2022 at 4:00 pm pursuant to Rule 11.5 of the High Court Rules.
Registrar / Deputy Registrar Date:
MAO &ANOR v BUDDLE FINDLAY & ORS [2022] NZHC 2885 [4 November 2022]
Background
[1] The plaintiffs, Liansen Mao and Qiufen Lu are husband and wife. Ms Lu borrowed money from the Industrial and Commercial Bank of China (New Zealand) Ltd (“the Bank”), the second defendant. They have not repaid it. The Bank has taken steps in New Zealand and China to recover the amount owed. Buddle Findlay, the first defendant, has been acting for the Bank in New Zealand. The third defendant is Ms Hou. She is a director and Chief Executive Officer of the Bank. The fourth defendant is a former employee of the Bank.
[2] In these proceedings Mr Mao and Ms Lu’s substantive claims relate to the conduct of the Bank and Buddle Findlay. The statement of claim is very difficult to follow. However, the various allegations include that they were induced to enter the loan agreement on the basis of a misrepresentation, that the Bank failed to obtain the best price at the mortgagee sale, and that in commencing legal proceedings in China and obtaining freezing orders there, there was a repudiation of the loan agreement. They also claim that Buddle Findlay breached its fiduciary duty in relation to the Bank’s mortgage sale process and committed blackmail.
[3] These proceedings are the eighth claim one or both of the plaintiffs have filed against the Bank and/or Ms Hou in connection with the Bank’s attempts to recover the sums owed to it by Ms Lu.
[4] On 17 August 2021, the first to third defendants applied for strike out orders and/or summary judgment of the plaintiffs’ claims as well as seeking an order under s
166 of the Senior Courts Act 2016 (“the Act”) to restrain the plaintiffs from commencing and continuing certain proceedings (the “Prevention Order”). The plaintiffs opposed all applications and filed written submissions in opposition.
[5] On 22 March 2022, Associate Judge Andrew heard the strike out and summary judgment applications. He determined that the plaintiffs’ claims were incapable of
success and granted the defendants summary judgment.1 He also granted the defendants’ strike out application.2
[6] However, as for the application for the Prevention Order, the Judge considered that Associate Judges do not have jurisdiction to make such an order.3 That jurisdiction, he said, may only be exercised by a High Court Justice.4 He adjourned the application for a Prevention Order to be heard before such a Judge.5
[7]The plaintiffs shortly afterwards responded by filing further applications:
(a)an application to set aside Associate Judge Andrew’s judgment;6 and
(b)an application to stay the judgment.7
[8] Both these applications have been combined for hearing with the application for the Prevention Order. This judgment determines all extant applications.
[9] I shall deal with the plaintiffs’ applications before turning to consider the application for the Prevention Order.
Should Associate Judge Andrew’s judgment be set aside or stayed?
[10] These applications are fundamentally misconceived and can thus be dealt with in short order. Associate Judge Andrew found that the defendants’ application for strike out was made out. A judgment ordering strike out is non-executory. It is not amenable to a stay.8
[11] Significantly, the plaintiffs have not appealed the Associate Judge’s decision. None of the orthodox factors considered on an application for a stay supports the
1 Mao v Buddle Findlay [2022] NZHC 521 at [82].
2 At [83].
3 At [80].
4 At [80].
5 At [80].
6 This application is dated 4 April 2022.
7 This application was filed some time after the previous and is accordingly dated 16 April 2022.
8 Lu v Industrial and Commercial Bank of China (New Zealand) Ltd [2021] NZSC 33 at [8], n 9.
plaintiffs’ application.9 The plaintiffs’ claims are an abuse of process. A stay would prejudice the defendants. Against the background of these and related proceedings they are entitled to finality. The balance of convenience plainly favours the defendants.
[12] The plaintiffs also claim justice will miscarry if the judgment is not set aside. A summary judgment against a party who does not appear at the hearing may be set aside or varied by the Court on any terms it thinks just if it appears to the Court that there has been or may have been a miscarriage of justice.10
[13] It is by no means clear whether the plaintiffs “appeared” at the hearing. They filed detailed written submissions and requested that the applications be dealt with on the papers. However, irrespective of how that question is resolved, the plaintiffs’ argument that a miscarriage of justice occurred must fail. The plaintiffs’ causes of actions are wholly devoid of merit. That was captured by Associate Judge Andrew when he said:
“[30] The current statement of claim being the eighth proceeding, is in substance an attempt to re-package and/or enlarge the same claims that were contained in the previous seven proceedings. Those proceedings have all either been struck out as untenable or abusive or, in two cases, not been accepted for filing.
[31] In these circumstances, the bringing of the current proceedings is an egregious abuse of process. This is a very clear example of proceedings which violate the public policy principle of promoting finality in litigation and ensuring that defendants are not oppressed by successive suits.”
[14] Associate Judge Andrew’s analysis cannot be faulted. It follows that the plaintiffs will not suffer any miscarriage of justice if the judgment is not set aside. Indeed, to uphold the plaintiffs’ application would amount to a miscarriage of justice to the defendants.
[15]Both of the plaintiffs’ applications under this heading are dismissed.
9 See Yan v Mainzeal Property and Construction Ltd (in rec and in liq) [2014] NZCA 86 at [25] citing Keung v GBR Investment Ltd [2010] NZCA 396 at [11]; Dymocks Franchise Systems (NSW) Pty Ltd v Bilgoa Enterprises Ltd (1999) 13 PRNZ 48 (HC) at [9]; and Body Corporate No 188529 v North Shore City Council (No 6) HC Auckland CIV-2004-404-3230, 11 February 2009.
10 High Court Rules 2016, r 12.14.
Should the defendants’ application for a Prevention Order be made?
[16]I therefore turn to consider whether to make a Prevention Order.
Is there jurisdiction?
[17] By interlocutory application dated 17 August 2021 the first to third defendants applied for a limited or extended order preventing the plaintiffs from “commencing or continuing” civil proceedings for three years.
[18] After Associate Judge Andrew declined jurisdiction the matter was placed in the Duty Judge List before Duffy J for the purposes of setting a hearing date and making any ancillary orders.
[19] Ms O’Gorman KC appeared for the defendants. There was no appearance by the plaintiffs. Ms O’Gorman asked the Judge to make the order on the papers. The Judge, rightly in my view, declined to do so. As she pointed out, the Prevention Order, if granted, would have a material effect on the plaintiffs’ rights to access justice. She noted that the plaintiffs were not legally represented. For these reasons, she considered that the plaintiffs had a right to be heard despite having filed written submissions in anticipation of the hearing before Associate Judge Andrew. She also directed that counsel to assist the Court be appointed to address the question of whether an application for a Prevention Order could be commenced by way of interlocutory application.
[20] Ms Anderson was appointed to assist, and I record the Court’s gratitude to her for her very helpful written and oral submissions.
[21] A Judge of the High Court may make an order restricting a person from commencing or continuing a civil proceeding under s 166 of the Act.11
[22] Sections 166 to 169 enable applications for a Prevention Order but do not address how they should be brought. I agree with Ms Anderson for the reasons she advanced, that an applicant seeking a Prevention Order may commence the process
11 Senior Courts Act 2016, s 166(1).
either by originating application or interlocutory application. Which mode is actually used will be determined by whether there is litigation currently on foot. If litigation is live, then the correct procedural pathway is by way of interlocutory application. If there is no such litigation the appropriate procedure would be to apply for a Prevention Order by way of originating application.
[23] Ms Anderson’s analysis, with which I agree, is that there is a clear distinction between the two procedural modes. Interlocutory applications and interlocutory relief engage notions of ancillary or collateral relief secondary to the substantive proceedings.12 In contrast, an originating application is not generally an appropriate mechanism to commence ancillary relief where the related proceedings are already in train.13 Rule 19.2 of the High Court Rules 2016 specifies which applications must be brought by way of originating application. Significantly, r 19.2(k) specifies that only applications made under s 172 of the Act (which relate to registering memorials of judgments obtained out of New Zealand) must be made by way of originating application. I agree with Ms Anderson that had the legislature intended that applications for Prevention Orders must be made by way of originating application, that would have been expressly stated.
[24] I also agree with Ms Anderson’s conclusion that in the present case, because the related litigation is on foot, the appropriate mechanism to initiate the application is by way of interlocutory application.
[25] It follows that I agree with counsel that commencing this application by way of interlocutory application is an available procedural course.14
12 Trotter v Telfer Electrical Nelson Ltd [2018] NZCA 231 at [21].
13 Carter Holt Harvey Ltd v Genesis Power Ltd [2006] 3 NZLR 794 (HC) at [19].
14 Duffy J also directed that counsel to assist should make submissions on whether it was appropriate for the Prevention Order application to be dealt with on the papers rather than at a hearing where the plaintiffs would have a full opportunity to be heard and where counsel assisting could address the Court. Given that the plaintiffs consented to the application being dealt with on the papers and the principle that the Court’s ability to regulate its own procedures enables the Court to determine matters on the papers where the parties consent, this issue fell away.
Should the application for a Prevention Order be granted?
[26] This is the seventh proceeding which Mr Mao has attempted to commence or has commenced against the Bank and Ms Hou. It is the fifth proceeding Ms Lu has attempted to commence or commenced against the Bank and the fourth against Ms Hou. It is the first proceeding of its sort against Buddle Findlay. What links all is the commonality of the central subject matter they all share; the alleged improper conduct of the Bank and others connected to it. All of the propositions advanced by the plaintiffs have failed in the Courts. I do not consider that a fine-grained analysis of each or why and where it failed is necessary. Various Courts have described the proceedings, whether substantive, interlocutory or on appeal, as wholly lacking merit, hopeless and misconceived.
[27]It is against that background that I turn to consider the application.
[28]Section 166 of the Act provides:
“(1)A Judge of the High Court may make an order restricting a person from commencing or continuing a civil proceeding.
(2)The order may have—
(a)a limited effect (a limited order); or
(b)an extended effect (an extended order); or
(c)a general effect (a general order).
(3)A limited order restrains a party from commencing or continuing civil proceedings on a particular matter in a senior court, another court, or a tribunal.
(4)An extended order restrains a party from commencing or continuing civil proceedings on a particular or related matter in a senior court, another court, or a tribunal.
(5)A general order restrains a party from commencing or continuing civil proceedings in a senior court, another court, or a tribunal.
(6)Nothing in this section limits the court’s inherent power to control its own proceedings.”
[29] This provision sets out three sorts of order; limited, extended and general. The first two may be applied for by parties to proceedings.15 An application for the third, a general order, may only be brought by the Attorney-General.16 The effect of this order was formerly captured by s 88B of the Judicature Act 1908, under which the Court made vexatious litigant declarations.
[30] Notably, the defendants seek an “extended order”,17 to “restrain a party from commencing or continuing civil proceedings on a particular or related matter in a senior court, another court, or a tribunal.”18 Section 167 sets out the grounds for making an extended order. A Judge may make an extended order if, in at least two proceedings about any matter in any Court or Tribunal, the Judge considers that the proceedings are or were totally without merit.19 The Judge may take into account the nature of any interlocutory applications, appeals, or criminal prosecutions involving the party to be restrained, but is not limited to those considerations.20
[31] The effect of an extended order is that it may restrain a party from commencing or continuing both general and particular proceedings without leave for up to three years. Section 168 provides:
“168 Terms of section 166 order
(1)An order made under section 166 may restrain a party from commencing or continuing any proceeding (whether generally or against any particular person or persons) of any type specified in the order without first obtaining the leave of the High Court.
(2)An order made under section 166, whether limited, extended, or general, has effect for a period of up to 3 years as specified by the Judge, but the Judge making it may specify a longer period (which must not exceed 5 years) if he or she is satisfied that there are exceptional circumstances justifying the longer period.”
15 Section 169(1).
16 Section 169(2).
17 Section 166(2)(b).
18 Section 166(4).
19 Section 167(2).
20 Section 167(4).
[32] Proceedings are “totally without merit” if every cause of action pleaded is “bound to fail”.21 In practice there is unlikely to be any real difference between this and the test for strike out.22
[33] If this threshold is met, the Judge must then make a discretionary judgment on whether an order is appropriate.23 Relevant considerations include how the proceedings were conducted and any wider circumstances that weigh for, or against, an order being made.24
[34] Ms O’Gorman submitted that the plaintiffs have continually brought proceedings seeking to relitigate the same matters, showing no understanding of legal principle or merit. She submitted that despite this, the plaintiffs have refused to pay or have been unable to pay the outstanding costs they have been ordered to pay. The plaintiffs have also failed to comply with procedural rules and have filed pleadings and submissions which are very difficult to follow.
[35] I accept Ms O’Gorman’s submissions that the threshold is easily met in this case. As noted, the plaintiffs, in various combinations, have unsuccessfully prosecuted substantive claims, interlocutories and appeals since their first claims were struck out by Fitzgerald J.25 They have all met a similar fate.26 Some were so plainly defective they were not accepted for filing.27 It is plain that the plaintiffs have filed multiple proceedings concerning the same subject matter which are totally without merit.
[36] I also accept Ms O’Gorman’s submission that I should exercise my discretion to make an extended order. At the risk of repetition, the plaintiffs have persistently filed meritless claims and repeatedly appealed or sought to review the decisions which found against them. Many of the steps initiated by them have been unnecessary and/or
21 Mawhinney v Auckland Council [2021] NZCA 144, [2021] 3 NZLR 319 at [60].
22 At [87].
23 At [67].
24 At [67].
25 Lu v Industrial and Commercial Bank of China (New Zealand) Ltd [2020] NZHC 402.
26 See for example Mao v Industrial and Commercial Bank of China (New Zealand) Ltd HC Auckland CIV-2020-404-1382, 25 August 2020 (Minute of Downs J); Mao v Industrial and Commercial Bank of China HC Auckland CIV-2020-404-1968, 28 October 2020 (Minute of Whata J); Lu v Industrial and Commercial Bank of China (New Zealand) Ltd [2021] NZHC 1232; and Mao v Buddle Findlay [2022] NZHC 521.
27 By way of example these include CIV-2020-404-475 and CIV-2020-404-1382.
inappropriate. Ms O’Gorman provided an example of one where the plaintiffs appealed the Court of Appeal Registrar’s decision not to waive security for costs, sought review of that decision, and subsequently applied for leave to appeal the decision dismissing the review. There are other examples which have been referred to me. In addition to being meritless, many of the claims and applications filed by the plaintiffs are non-compliant with the relevant procedural rules.
[37] Over the course of their conduct the plaintiffs have put the defendants to significant undue time and expense. When they have lost and been met by adverse costs awards, they have failed, refused or simply been unable to pay the awards made against them.
[38]It follows I consider that an extended order is entirely warranted.
[39] The final question is whether the term of the order should be three years as sought by the defendants. Three years is the maximum period a Court may order absent exceptional circumstances justifying a longer period which, itself, may not exceed five years.
[40] I am satisfied that the three years sought by the defendants is appropriate. I am conscious that the consequences of making the order are to deprive the plaintiffs’ access to justice, albeit limited to the circumstances defined by the proposed order. For that reason the Court should not impose a term greater than that which is reasonably necessary to achieve the statutory purpose and to provide the applicants protection from frivolous and vexatious litigation. My reasons follow.
[41] This litigation is founded in events which took place in 2015, some seven years ago. The first proceedings were issued in September 2019. These were the proceedings which Fitzgerald J was so trenchantly critical of and which were unsuccessfully taken on appeal to the Court of Appeal28 and Supreme Court,29 concluding in 2021. Following Fitzgerald J’s decision, the plaintiffs initiated another
28 Lu v Industrial and Commercial Bank of China (New Zealand) Ltd [2020] NZCA 538.
29 Lu v Industrial and Commercial Bank of China (New Zealand) Ltd [2021] NZSC 33.
seven claims, some of which were contemporaneously on foot with those preceding, over the past four years.
[42] Such a pattern demonstrates a determined course of conduct over a lengthy period. Unless the order is of itself of a duration measured in years, it seems all but inevitable that more related, if not identical, proceedings will be initiated by the plaintiffs. The plaintiffs’ genuine rights to commence bona fide proceedings are protected by the leave requirement.
Result
[43] The plaintiffs’ applications to set aside and stay Associate Judge Andrew’s judgment are declined.
[44] The defendants’ application for a Prevention Order is granted. I order that the plaintiffs are restrained from commencing or continuing proceedings in this matter (and any related matter) against the first, second and third defendants as specified below, in any Court or Tribunal for a period of three years. “Proceedings in this matter (and any related matter)” includes:
(a)the Bank’s former lending relationship with the plaintiffs; and
(b)the steps taken by the Bank to recover the amounts outstanding and owing to the Bank by the second plaintiff, including the claim and the freezing order obtained by the Bank against the plaintiffs in China and the sale by the Bank as mortgagee of the property located at 41A Claudia Road, Swanson, Auckland (NA299874).
Costs
[45] The defendants, as the successful parties, are entitled to costs. I encourage the parties to resolve any costs issues between themselves. If they are unable to do so, leave is reserved to file memoranda not exceeding five pages (excluding tables and appendices):
(a)any memorandum on behalf of the defendants is to be filed and served
no later than 5:00 pm on 5 December 2022; and
(b)any memorandum on behalf of the plaintiffs is to be filed and served
no later than 5:00 pm on 12 December 2022.
Moore J
Barristers/Solicitors:
Ms Gorman KC, Auckland
Couch Harlowe Kovacevich, Auckland
Copy to:
The Plaintiffs
6