Ren v Pan

[2025] NZHC 424

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE

CIV-2024-409-555

[2025] NZHC 424

BETWEEN

XIAOJIN REN

Plaintiff

AND

JINYUAN PAN and KE ZHANG

Defendants

Hearing:	On the papers
Counsel:	J A Frampton for Plaintiff K Sun for Defendants
Judgment:	5 March 2025

JUDGMENT OF ASSOCIATE JUDGE PAULSEN

(Costs)

This judgment was delivered by me on 5 March 2025 at 2.45 pm pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar Date:

REN v PAN and KE ZHANG [2025] NZHC 424 [5 March 2025]

[1]                 In a judgment of 14 February 2024 I dismissed the defendants’ application for security for costs.1 I awarded the plaintiff costs of the application and directed that if counsel could not agree on quantum they were to file memoranda within 14 days.2 Counsel have not been able to agree on costs and memoranda have been filed.

[2]The plaintiff seeks 2B scale costs with a 50 per cent uplift in an amount of

$12,152.75. The plaintiff relies on my findings that the application for security for costs lacked merit and had been brought for tactical reasons designed to delay resolution of the plaintiff’s claim rather than out of a genuine concern for the defendants’ inability to recover costs.3

[3]                 The defendants accept that costs should be calculated on a scale 2B basis but say there are no circumstances justifying an uplift on scale costs because:

(a)the defendants were simply seeking to protect their position in response to a substantial claim;

(b)the application was prudent and reasonable given the plaintiff’s acknowledgment of a breach of the Overseas Investment Act which can involve civil and criminal liability;

(c)the defendants had genuine concerns regarding recovering costs from the plaintiff;

(d)the application was not meritless and there is insufficient evidence to substantiate the plaintiff’s claim against them, and

(e)this was not a proceeding of general importance.

1      Ren v Pan [2025] NZHC 184.

2 At [35].

3 At [30].

The law

[4]                 The starting point is r 14.2 of the High Court Rules 2016 (the Rules) which sets out the general principles applying to the determination of costs. Particularly relevant in this context is the principle that as far as possible the determination of costs should be predictable and expeditious.4 While all issues of costs are discretionary,5 a party seeking increased costs bears the onus of demonstrating that such costs are justified.

[5]                 In asking the Court to depart from scale costs the plaintiff relies on r 14.6(3) of the Rules, which provides as follows:

14.6     Increased costs and indemnity costs

...

(3)       The court may order a party to pay increased costs if—

...

(b)the party opposing costs has contributed unnecessarily to the time or expense of the proceeding or step in it by—

…

(ii)taking or pursuing an unnecessary step or an argument that lacks merit; or

…

...

(d) some other reason exists which justifies the court making an order for increased costs despite the principle that the determination of costs should be predictable and expeditious.

...

[6]                 Rule 14.6(3)(b) is concerned with improper or unreasonable conduct on the part of the party against whom increased costs are sought. Increased costs will not be appropriate where there is some reasonable explanation for the losing party’s conduct.6 An uplift on scale costs is justified only to the extent that a party’s failure to act

4      High Court Rules 2016, r 14.2(1)(g).

5      Shirley v Waiarapa District Health Board [2006] NZSC 63; [2006] 3 NZLR 523.

6      Valmar Trustee Ltd v Smart Water Technology [2016] NZHC 1583 at [12].

reasonably contributed to the time and expense of the proceeding or some step in it. The correct approach usually involves the party applying identifying particular steps in respect to which the other party’s unreasonable conduct contributed to increased costs.7 However, where increased costs are sought because the losing party’s position lacked merit, it may be appropriate for increased costs to apply to all steps.8

Analysis

[7]                 There is no dispute that this is a category 2 proceeding and that band B should apply to the steps taken in relation to the security for costs application. What is in issue is whether the plaintiff has justified an uplift on scale costs.

[8]                 In my view it is appropriate to award an uplift on scale costs. For the reasons set out in my earlier judgment, this was an unusual application where the defendants sought security for costs without filing a defence and without providing evidence of a defence to the claim beyond a bare denial. There is still nothing to suggest they have any defence to the claim which would justify security for costs being ordered. The application was not prudent and I do not see that it had any chance of success.

[9]                 For the reasons set out in my judgment, I also do not accept that the application was made out of genuine concerns regarding recovering costs from the plaintiff or that the plaintiff had not provided sufficient evidence to substantiate her claim. As I noted, it appears the defendants received a substantial sum from the plaintiff that was used to acquire a valuable asset from which any costs award in their favour could be recovered. The defendants’ submissions are an attack on the conclusions reached in my judgment.9

[10]              I also addressed in my judgment the issue raised by the defendants concerning the Overseas Investment Act, which again does not provide any justification for the application that was made.10

7      Holdfast NZ Ltd v Selleys Pty Ltd (2005) 17 PRNZ 897 (CA) at [44]–[47].

8      NR v MR [2014] NZCA 623, (2014) 22 PRNZ 636 at [51]–[52]; and Broadspectrum (New Zealand) Ltd v Nathan [2017] NZCA 434 at [57].

9      Ren v Pan, above n 1, at [25] and [30].

10 At [27].

[11]              Put simply, the application for security for costs should not have been made as it could not succeed. It was an unnecessary step and lacked merit for the purposes of r 14.6(b)(ii).

[12]The plaintiff is entitled to an uplift on costs.

[13]              The plaintiff has sought a 50 per cent uplift. In my view a 25 per cent uplift on costs is justified, sufficiently reflecting the costs the defendants unnecessarily caused the plaintiff to incur.

[14]              I have considered the plaintiff’s counsel’s calculation of the costs claimed and it appears in order. I accept that the plaintiff is also entitled to an allowance for the filing of submissions on costs.

Result

[15]              The plaintiff is awarded 2B scale costs of $8,006.50 with a 25 per cent uplift, totalling $10,008.13 and disbursements of $143.00.

O G Paulsen Associate Judge

Solicitors:

Lane Neave, Christchurch Capstone Law Ltd, Auckland