Richard Zhao Lawyers Ltd v Family Court at Auckland

[2015] NZHC 1837

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2015-404-000316 [2015] NZHC 1837

BETWEEN

RICHARD ZHAO LAWYERS LIMITED

Plaintiff

AND

FAMILY COURT AT AUCKLAND First Defendant

JIE PING CHEN Second Defendant

Hearing:	On the papers
Counsel:	FC Deliu for Plaintiff PF Chambers for Second Defendant
Judgment:	5 August 2015

JUDGMENT OF ASHER J (Costs)

This judgment was delivered by me on Wednesday, 5 August 2015 at 4.30 pm pursuant to r 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Solicitors:

FC Deliu, Auckland.

PF Chambers, Auckland.

RICHARD ZHAO LAWYERS LTD v FAMILY COURT AT AUCKLAND [2015] NZHC 1837 [5 August 2015]

[1]      On 8 May 2015 I delivered a decision in this matter entering judgment for Richard Zhao  Lawyers Ltd on  a judicial  review proceeding, quashing decisions made by the District Court directing that Richard Zhao Lawyers Ltd transfer funds to another lawyer.  In broad terms the reason for my decision was that Mr Zhao had not had an adequate opportunity to be heard, and the decision was made without it being brought to the attention of the Judge that Mr Zhao had given an undertaking not to disperse the proceeds and had a solicitor’s lien over the money.

[2]      The plaintiff was successful in getting the decisions quashed.  On that basis, as Mr Deliu for Mr Zhao points out, the plaintiff is prima facie entitled to an award of costs under r 14.2(a) of the High Court Rules.

[3]      However, Mr Chambers for Ms Chen, whose monies were held by Richard

Zhao Lawyers Ltd submits that:

(a)       With the plaintiff’s agreement the monies, less the lien, have been paid to Ms Chen, the result she sought.

(b)There had been conduct by Mr Zhao as her lawyer that properly had given rise to complaints.

(c)       Counsel  co-operated  through  the  hearing  to  achieve  a  practical compromise.

[4]      I have received extensive submissions from both parties.  The Family Court, which abided the decision of the Court, has made no submissions.

[5]      It is true as Mr Deliu has pointed out that costs reflect how the parties acted during the litigation and not before it.1   However, I do not accept that the background to the proceedings can never be relevant.  In Paper Reclaim the Court of Appeal said it was  wrong to  take into  account  pre-litigation  conduct  as  a specific  factor  in assessing costs.  It did not say that the reasonableness of conduct during litigation is

to be assessed  in a vacuum detached  from the context of events leading up to

1      Paper Reclaim Ltd v Aotearoa International Ltd [2006] 3 NZLR 188, (2006) 11 TCLR 544 (CA)

at [160].

litigation.  It would be unrealistic to ignore context in certain cases, especially when (as here) the issue is the extent to which the outcome of the proceeding can be seen as a practical solution, and the effect that should have on costs.  That can only be assessed by considering what the parties could have reasonably achieved outside the litigation context.

[6]      Here the underlying quarrel was that Ms Chan sought to obtain the release of monies to which she was entitled (save for the lien and undertaking) and plainly needed.  That was her motivation for seeking the impugned orders from the Family Court.   Due to errors on the part of both sides, as outlined in my judgment, the release of the monies was plagued by a procedural tangle.   Although procedural errors are not relevant in a strict sense in judicial review proceedings such as these, I take the view that the background tangle left Ms Chen with little alternative but to oppose the proceedings.  If she had not done so, given the unbending position (at that stage) of Mr Zhao, the result would have been the monies to which she was entitled could have been tied up indefinitely.   Having regard to that background Ms Chen acted reasonably in electing to defend the proceeding.

[7]      Ultimately and with the sensible co-operation of Mr Deliu and his client Mr Zhao as the hearing progressed, she achieved her goal.  While the proceedings led to the result she sought of the unconditional release of the monies held, that was because of the practical solution reached in the course of litigation.  She would have obtained an order for the release of some of the monies as a term of any relief, if Mr Deliu had not sensibly conceded release on the basis that his client was protected.

[8]      The point is that the merits in a practical sense were not resolved by the proceedings entirely against Ms Chen, and if there had not been the sensible compromise, the relief that Mr Zhao succeeded in achieving may well have been significantly qualified, and that outcome would have warranted a decision on costs at least in part against Mr Zhao.

[9]      In the end  I cannot ignore the fact that the  plaintiff was successful,  but equally I cannot ignore the merit of Ms Chen’s claim to have her monies released to her, and the fact that the ultimate decision was a significant practical compromise.  I

consider that the fair solution is to make a modest order for cost in the plaintiff’s

favour, but one that is considerably less than full costs.

[10]     Accordingly, I direct that the second defendant pay the plaintiff the sum of

$4,000 costs, inclusive of disbursements.  There will be no order for costs on this application as both parties have had a measure of success.

……………………………..

Asher J