Sim v Lau

[2012] NZHC 2982

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2011-404-4358 [2012] NZHC 2982

BETWEEN  SHIRLEEN SHIA LING SIM Plaintiff

ANDAUGUSTINE EE KUOH LAU First Defendant

ANDSHEAN SINGH Second Defendant

Hearing:         16 July 2012

Counsel:         E Orlov and M Kim for Plaintiff No appearance for First Defendant D Smyth for Second Defendant

Judgment:      9 November 2012

RESERVED JUDGMENT OF ASSOCIATE JUDGE SARGISSON (Security for Costs)

This judgment was delivered by me 9 November 2012 on at 4 pm pursuant to

Rule 11.5 of the High Court Rules

Registrar/Deputy Registrar

Date ..........................

Solicitors:

Stewart & Associates, P O Box 438, Alexandra

Shean Singh, PO Box 10018, Balmoral, Auckland

SIM V LAU HC AK CIV-2011-404-4358 [9 November 2012]

[1]      In this proceeding the plaintiff, Ms Sim, claims damages against her ex- husband, Mr Lau, and her former solicitors, Shean Singh, to compensate her for a damages award that the High Court has ordered her to pay to Moncrieff Pastoral Ltd for failing to settle her purchase of land under a contract for sale and purchase.

[2]      Mr Lau has taken no formal steps in defence.   Shean Singh has filed a defence and now applies for an order for the giving of security for costs against Ms Sim pursuant to High Court Rule 5.45 which relevantly states:

5.45       Order for security of costs

(1)        Subclause (2) applies if a Judge is satisfied, on the application of a defendant,—

...

(b)       that there is reason to believe that a plaintiff will be unable to pay the costs of the defendant if the plaintiff is unsuccessful in the plaintiff's proceeding.

(2)        A Judge may, if the Judge thinks it is just in all the circumstances, order the giving of security for costs.

[3]      Shean Singh relies on the grounds that Ms Sim will not be able to pay its costs if she is unsuccessful as she is impecunious; there is no merit to her claims against it; and it did not cause her impecuniosity.  At the hearing counsel for Sean Singh submitted that $22,000 would be a reasonable amount as security.

[4]      There is no dispute that the jurisdictional threshold for an order under r

5.45(1)(b) is met as Ms Sim is impecunious and in all probability will be unable to pay Shean Singh’s costs if her claim is unsuccessful. Nonetheless Ms Sim opposes the application for security for costs.  She contends that she has a good case arising from the allegedly negligent conduct of her defence against Moncrieff and failure to protect her rights of appeal.  She says the conduct of Shean Singh’s principal, Mr Dhirendra  Singh  was  unconscionable.    She  also  says  that  as  her  impecunious position has been caused by Mr Singh’s conduct it would be most unfair to require her to give security because she would be unable to pursue her case and Mr Singh would avoid having to account.

[5]      The principal matter at issue is whether Ms Sim’s case arguably has genuine merit as she contends or whether, to the contrary, it has dubious merit with little or no prospects of success.  If the former, then the discretion not to grant security will weigh in Ms Sim’s favour.

Background

[6]      This current proceeding has a litigious history that must be referred to in order to understand the issues that arise.  The Court of Appeal summarised part the history in a judgement issued in February 2011.1  The summary remains apposite:

[4]    In March 2003 Ms Sim entered into an agreement to purchase a rural property near Christchurch from Moncrieff. Ms Sim was acting throughout as the front person for a Mr Lau, her husband. The purchase price was $2,900,000. Ms Sim or, more particularly, Mr Lau intended to use the property for dairying purposes. The agreement contained a critical  clause  which  guaranteed  the  purchaser  access  to  water  in specific terms.

[5]   Settlement was due for September 2004. In the event Ms Sim failed to settle.   Moncrieff   cancelled   the   agreement   and   sought   summary judgment which was denied in the High Court.

[6]  Moncrieff appealed unsuccessfully to this Court. However, the Court largely concurred with Moncrieff’s construction of the critical contractual provision guaranteeing Ms Sim access to water. Moncrieff’s case then  went  to  trial,  essentially on  two  discrete issues.  Keane J upheld  the  validity  of  Moncrieff’s  notice  of  cancellation  of  the agreement and dismissed Ms Sim’s counterclaim for an order directing the return of her deposit. Ms Sim was also ordered to pay costs of

$40,000 together with disbursements.

[7]   Ms Sim was represented in the High Court and Court of Appeal by an Auckland solicitor, Mr D Singh. He continued to represent her on the appeal against Keane J’s decision, which was filed within time on 21

September 2007. He failed, however, without explanation, to file a case on appeal within the prescribed period of six months.

[8]  On 23 July 2008 the Registry gave Mr Singh notice that Ms Sim’s appeal was deemed to be abandoned. On 29 August 2008 it issued a formal notice of abandonment. Mr Singh responded by letter dated 13

October 2008. He remonstrated with the Registry but took no steps to challenge the notice of abandonment or to apply for an extension of

time.

[9]  Two steps were subsequently taken in the High Court. First, Moncrieff applied for judgment for damages against Ms Sim for the loss suffered on its resale of the property. Ms Sim appeared for herself. Keane J

1 Sim v Moncrieff Pastoral Ltd [2011] NZCA 21.

awarded  Moncrieff  damages  of  $230,000  together  with  interest  of

$380,948 and costs.

[10]Second, Keane J granted an application by Ms Sim for an order staying execution of his damages judgment. He acted on the ground that Ms Sim had filed an application for special leave to appeal his original decision. In the course of his judgment Keane J expressed sympathy for Ms Sim, describing her as Mr Lau’s “instrument”. The Judge did not specify the duration of the stay. But we infer from the terms of his judgment that it was to lapse if Ms Sim’s application for special leave was dismissed.

[11] We add that Mr Singh sought and was granted leave by the High Court on 11 August 2010 to withdraw from representing Ms Sim.

[7]      Other hearings not included in the Court of Appeal’s summary but which

contribute to the relevant historical background include:

a)  an unsuccessful application to the High Court in October 2010 for an order recalling judgement in which the Court held that the “application contains nothing that is new”;2

b) an unsuccessful application to the Supreme Court in May 2011 for leave to appeal to the Court of Appeal’s decision refusing extension of time to appeal Keane J’s August 2007 decision;3 and

c)  an  unsuccessful  application  to  the  High  Court  in  December  2011  for summary judgement against Moncrieff and the real estate agents that facilitated  the  2004  sale.4     Associate  Judge  Gendall  described  that  most recent proceeding as vexatious:

[78] Given that both Mr Lau and Ms Sim were given a stern warning by Keane J in his 20 July 2011 judgment as well as by the Supreme Court's earlier this year, I am satisfied that their bringing the present proceeding was clearly vexatious. I have found in this judgment that all of the claims brought by the plaintiff are statute barred and that the plaintiff is also estopped from bringing the vast majority of those claims under the doctrine of res judicata.

2 Moncrieff Pastoral Ltd v Sim HC Auckland CIV-2004-404-5603, 15 October 2010 (per Keane J) at

[3] .

3 Sim v Moncrieff Pastoral Ltd [2011] NZSC 48.

4 Sim v Moncrieff Pastoral Ltd HC Palmerston North CIV-2011-454-343, 13 December 2011 (per

Associate Judge Gendall).

[8]      Out of all the previous proceedings and hearings, Mr Singh represented Ms Sim in relation to two matters.   The first was her defence at the first trial before Keane J and the second was the matter of her appeal against Keane J’s decision. Materially, Mr Singh did not act for Ms Sim until after Moncrieff ’s unsuccessful summary judgement proceeding was brought against her in 2004 where she was represented by Mr Speed, or on any of the unsuccessful applications  she made between October 2010 and December 2011.

Parties’ positions

[9]      In the present proceeding Ms Sim filed an amended statement of claim on 31

October 2011.  In that claim, she seeks judgment for $621,176.59 in damages from both Mr Lau and Shean Singh based on the damages, interest and costs that Keane J in the High Court awarded against her in favour of Moncrieff.5     In addition, she seeks  from  Mr  Lau  $50,000  as  aggravated damages  and  $25,000  as  exemplary damages.  She also seeks interest and costs.

[10]     Ms Sim claims that Mr Lau breached a power of attorney that she conferred on him by placing her name as buyer on the contract with Moncrieff without her authority.  Though the contract apparently bears her signature Ms Sim also alleges that she did not know about it until she was served with Moncrieff’s proceeding. Without expressly stating so, the purport of her pleading seems to be that Mr Lau not only put her name as buyer on the contract but forged her signature.

[11]     As set out in Ms Sim’s amended statement of claim and elaborated upon by her counsel Mr Orlov, the thrust of her allegations against Shean Singh are that:

a)  Mr Singh, failed to ascertain that she did not know about the agreement and what the nature of her real defence was and that he simply relied on Mr Lau’s instructions.   He also failed to advise Ms Sim that there was a conflict of interest between her and Mr Lau and that she should have joined Mr Lau or made claim against him in the Moncrieff case.

b) Mr Singh failed to file Ms Sim’s appeal to the Court of Appeal in time and failed to inform Ms Sim that he did not file the case in time. Shean Singh refused to continue to act for Ms Sim and file her appeal merely because she had failed to pay its fees, even though she never received an invoice from Shean Singh.

[12]     Shean Singh denies that Ms Sim has any case against it.  It maintains that Mr Singh exercised all due care and skill expected of a solicitor. It contends that Ms Sim’s case is so plainly devoid of merit that it is entitled to security to ensure a reasonable measure of  compensation  is  available if  Ms  Sim  is  unsuccessful.  In response to Ms Sim’s allegations, Shean Singh claims that Mr Singh:

a)  took instruction from Ms Sim and Mr Lau as her attorney and that there was no conflict of interest between them and no ground upon which Mr Lau could be joined as a party in the Moncrieff proceeding; and

b) took all reasonable steps to defend Moncrieff’s claim and made it clear that as Ms Sim had not paid its costs, he would simply assist in filing her appeal but would terminate its engagement and not take other steps until its costs were paid.

[13]     Further, it submits that Keane J’s judgements awarding costs and damages against Ms Sim were sound with almost no prospect of being overturned.  The Court of Appeal recorded that Ms Sim’s proposed appeal was “without merit”.6   It submits that Ms Sim’s $621,176.59 loss is a result of her own failure to perform her obligations under her contract with Moncrieff.  Shean Singh did not represent her in that transaction and her loss cannot be attributed to it.

[14]     For reasons I shall come to, I am satisfied that there should be an order that

Ms Sim give security for costs.

Relevant legal principles

[15]     The  cases  that  discuss  security for  costs  applications  emphasise  that  the court’s discretion is not to be fettered by constructing “principles” from the facts of the previous cases as they are not a substitute for a careful consideration of the facts of the particular case. In particular:7

It is not a matter of going through a checklist of so-called principles. That creates a risk that a factor accorded weight in a particular case will be given a disproportionate weight, or even treated as a requirement for the making or refusing of an order, in quite different circumstances.

[16]     Importantly, there is no presumption in the exercise of the Court’s discretion

under r 5.45. The circumstances of the case as a whole are relevant.8

[17]     The discretion whether to grant security therefore involves a balancing of the plaintiff’s and the defendant’s interests.9    The rule itself contemplates an order for security where the plaintiff will be unable to meet an adverse award of costs. This must also be taken as contemplating that an order for substantial security may, in effect, prevent the plaintiff from pursuing the claim. In those circumstances, an order having this effect should only be made after careful consideration, and where the claim has little chance of success. Access to the court for a genuine plaintiff is not lightly to be denied.10

[18]   The difficulties of assessing the strength or weakness of a case at an interlocutory stage are well recognised. However, it is also trite law that where possible, the court should try to assess the merits of the case.11 Dubious prospects of success increase the chances of the plaintiff facing an order for security.

Discussion

[19]   The overarching issue for determination is whether it is just in all the circumstances that I exercise my discretion to require Ms Sim to give security for

7 A S McLachlan v MEL Network Ltd (2002) 16 PRNZ 747 (CA) at [13] and [14].

8 Attorney-General v Transport Control Systems (NZ) Ltd [1982] 2 NZLR 19 (CA) at 20.
9 A S McLachlan at [15] and [16].
10 A S McLachlan at [15].

11 Meates v Taylor (1992) PRNZ 524 (CA) at 527.

Shean Singh’s costs.   If she is a genuine plaintiff with a reasonable prospect of success, this will turn on whether the benefit of giving Shean Singh a measure of protection for its costs if Ms Sim is unsuccessful outweighs the likely adverse effect that such an order will have on Ms Sim.

[20]     There are a number of problems with the case Ms Sim relies on.  The first concerns the merits of her new defence.

Is there merit to Ms Sim’s forgery defence?

[21]     Fundamental to Ms Sim’s claim against Mr Lau is that she had no knowledge of the property purchase agreement with Moncrieff.   Her amended statement of claim pleads that “on 18 March 2003, the first Defendant signed a contract in the plaintiff’s name with Moncrieff Pastoral Limited to purchase 202 ha of land in Christchurch.”  It also states that:

At the time of signing the said contract, the said contract was signed in the name of the Plaintiff but by the first Defendant or others...

The signature placed on the contract was made without authority and/or outside of the Power of Authority.

[22]     In support, Ms Sim deposes in her 12 June 2012 affidavit that “I had never involved [sic] in the purchase of property from Moncrieff at any stage.   I did not know anything about the agreement until received [sic] the court notice.”

[23]     This aspect of Ms Sim’s claim is inconsistent with the position she has taken

from the inception of Moncrieff ’s proceeding against her.   In an affidavit dated 2

November 2004 which she filed in opposition to summary judgment when Mr Speed was acting for her, Ms Sim stated:

2.  I was asked to sign the sale and purchase agreement the subject of these proceedings by my husband on behalf of overseas investors based in China.   The reason I was asked to sign the agreement was so that the property could be purchased in my name as an interim measure prior to overseas investment commission approval being obtained and a company being incorporated to be eventually owned  by the Chinese  investors. This was potentially a lengthy and complicated process and purely for reasons of expediency, I understand, I was asked to sign the agreement.

...

4. I did know where the property was located.   I did view the agreement before I signed it and was aware that water rights were an issue as well as access to water.

[24]     Ms Sim offers little by way of explanation in her latest evidence for her inconsistent depositions.  Though she now disavows her role as purchaser and her signature on the agreement for sale and purchase, she makes no claim that her affidavit evidence for the earlier proceeding was not hers. She does not deny that it was she who signed the affidavit and affirmed the truth of its contents. Nor does she suggest that she did not understand the contents or that they did not accord with the instructions that she gave to Mr Speed.   She makes no suggestion that he misunderstood her position when preparing her affidavit.   Without an adequate explanation that goes some way to explain why she gave evidence that she now disavows, or why such evidence should not be taken as true, that evidence clearly cuts against present claim.

[25]     Furthermore, there is no evidence that Ms Sim ever raised her current defence on the various occasions she had opportunity to do so.  There is no suggestion that she  raised  the  forgery  defence  at  any  of  the  hearings  where  she  was  either represented by Mr Speed or self-represented.   Relevantly, she has had several opportunities to raise the defence in proceedings where she was self-represented, but has chosen not to.  It is particularly odd that she did not raise the defence in her 2010 application  for  recall  and  in  her  2011  applications  to  the  Court  of Appeal  and Supreme Court.  The forgery defence has been raised, it seems, only after Ms Sim has exhausted every possible avenue relying on her previous defence where she acknowledged acting knowingly as purchaser in the Moncrieff deal albeit as Mr Lau’s instrument.   That, in addition to her conflicting affidavit evidence, does not point to a strong or seemingly meritorious case.  Arguably, it points to a case that bears the hallmarks of a convenient change of story.

[26]     Even if Ms Sim’s current position does have a foundation in truth it seems Ms Sim elected not to raise it.  It is difficult in these circumstances to see any strong basis for claiming Mr Singh was negligent.    In these circumstances  I can only

conclude that the likely merits of her claim against Sean Singh are not strong.12   The evidence of forgery seems weak and is unlikely to support such a claim.

Did Mr Singh’s failure to file Ms Sim’s appeal contribute to her loss?

[27]     Ms Sim also faces problems with her claim that she suffered loss by reason of Shean Singh’s allegedly wrongful failure to file the case to the Court of Appeal in time and to preserve her rights of appeal.

[28]     Even if Mr Singh had filed Ms Sim’s appeal within time, it appears that she would have been unsuccessful.   This is borne out by the outcome of Ms Sim’s application for an extension of time to appeal.  After presenting her case herself to the Court of Appeal the Court observed that “Ms Sim's proposed appeal is without

merit.”13    The point is that Ms Sim cannot argue that Mr Singh deprived her of an

opportunity to run a successful appeal when the basis for the proposed appeal has been  found  to  be  without  merit.    In  that  circumstance,  there  appears  to  be  no causative  link  between  Mr  Singh’s  alleged  delay  and  the  loss  Ms  Sim  claims. Rather, it appears that Mr Singh’s failure to file her appeal is of no ultimate consequence and is not the reason why she continues to be held liable to Moncrieff.

Did Mr Singh cause Ms Sim’s impecuniosity?

[29]     Based on the findings above, and given the Court of Appeal’s finding that Ms

Sim’s appeal lacked merit, this limb of Ms Sim’s argument faces obvious difficulty.

[30]     Further, as Ms Sim’s affidavit of 2 November 2004 indicates, she both saw the property and personally signed the purchase agreement with Moncrieff.  A result of her signing that agreement and not following through with the purchase was that the High Court awarded approximately $621,000 in damages, interest and costs

against her and in favour of Moncrieff.14   While that award is a direct cause of her

impecuniosity, it is not apparent on the evidence how Mr Singh was an indirect

12 It also suggests the case against Mr Lau is not strong (at least as it is pleaded presently).  I do not overlook that several High Court decisions observed that Mr Lau was the “real party” in the litigious history. However if Ms Sim has a case against Mr Lau with obvious merit, it is not the case that she currently pursues.

13 Sim v Moncrieff Pastoral Ltd [2011] NZCA 21 at [18].

14 Moncrieff Pastoral Limited v Sim HC Auckland CIV 2001-404-5603, 1 October 2010 (per Keane J).

cause.  There is no apparent reason to suggest that when Mr Singh acted for Ms Sim her real defence was based on her current forgery claim.  Nor is there any reason to suggest  that  Mr  Singh  could  or  should  have  raised  the  forgery  grounds  in  the instances in which he represented Ms Sim.

[31]     The  contention  that  Mr  Singh  is  responsible  for  Ms  Sim’s  impecunious

position seems dubious.

Are there other factors that weigh against Ms Sim?

[32]     There is a further reason that supports a finding that a security for costs order is appropriate.  In the application that Ms Sim brought against Moncrieff last year,15

Associate Judge Gendall noted that in Ms Sim’s nine previous hearings16 relating to

the Moncrieff sale transaction,  she has consistently failed to pay costs:

[26]   Furthermore, substantial costs have been awarded against Ms Sim at each stage of the Auckland High Court proceeding and the Court of Appeal and the Supreme Court appeals. To date, as I understand it, Ms Sim has declined to pay any of those costs.

Result

[33]     Overall,  Ms  Sim  has  failed  to  make  out  a  case  for  the  exercise  of  the discretion to decline the application for the giving of security.  I am satisfied that it is just in all the circumstances that she be required to give a meaningful amount of security in respect of the claim against Shean Singh.

[34]     That brings me to the question of the appropriate amount of security that should be provided.  Counsel referred to the probable scale costs in the event that Ms Sim is unsuccessful.  I accept that is a relevant factor.  However, I also bear in mind Ms Sim’s impecuniosity which is a key factor weighing against the imposition of a higher figure.   (To a degree counsel recognised this in his indication that $22,000

would be acceptable).

15  Sim v Moncrieff Pastoral Ltd HC Palmerston North CIV-2011-454-343, 13 December 2011 (per

Associate Judge Gendall).

16 At [4].

[35]     With those two competing influences in mind, I would fix the amount of security at $20,000.  I think that sum is appropriate on the basis that it will provide Shean Singh with a reasonable degree of protection in the event that it is the successful party.

Orders

[36]     I make orders as follows:

(a)       Ms Sim is ordered to give security for Shean Singh’s costs in the sum of

$20,000 cash or other form of security to the satisfaction of the Registrar; (b)    The proceeding is stayed pending the giving of security;

(c)      Leave is  reserved  to  seek  further orders by way of memorandum  if security is not provided within a period of 3 months from the date of this judgment.   A memorandum may be filed on two days notice for that

purpose.

Associate Judge Sargisson