Tempest Litigation Funders Limited v Zhang

[2022] NZHC 496

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2020-404-1376

[2022] NZHC 496

BETWEEN

TEMPEST LITIGATION FUNDERS LIMITED
Plaintiff/Respondent

AND

WEN ZEN ZHANG

First Defendant

TENG MA
Second Defendant

TIAN TIAN
Third Defendant

XIANG ZOU
Fourth Defendant

Cont’d:…/2

Hearing:	On the papers
Counsel:	W van Roosmalen for the Plaintiff / Respondent Ms Pang for the Fifth Defendant / Applicant
Judgment:	17 March 2022

JUDGMENT OF GORDON J

[As to costs]

This judgment is delivered by me on 17 March 2022 at 11 am

pursuant to r 11.5 of the High Court Rules.

.....................................................

Registrar / Deputy Registrar

Solicitors:           Adam Stevenson Botterill, Auckland, for Tempest Litigation Funders Ltd Counsel W van Roosmalen, Auckland, for Tempest Litigation Funders Ltd

MSP Pang, Auckland, for Kelly Yin

TEMPEST LITIGATION FUNDERS LTD v ZHANG [2022] NZHC 496 [17 March 2022]

…/2

KELLY YIN

Fifth Defendant/Applicant

SHUANG QIN
Sixth Defendant

DANIEL OVERTON GOULDING LAWYERS

Seventh Defendant

[1]This is an application for costs by the fifth defendant, Kelly Yin.

[2]                 In a judgment of 14 February 2022 (the judgment)1 I granted Ms Yin’s application to set aside the judgment obtained by the plaintiff Tempest Litigation Funders Ltd (Tempest) against Ms Yin on a formal proof basis (formal proof judgment).2

[3]                 In the judgment I left it open to Ms Yin to make an application for costs. I indicated my preliminary view that this may be a case where costs should lie where they fall. That was because although Ms Yin had been successful, her application was only required because of her default (in failing to file a statement of defence).3

[4]                 In his memorandum on behalf of Ms Yin, Mr Pang refers to my findings that Ms Yin had a defence to Tempest’s claim which ought to be heard; her delay in responding to the service of the proceeding on her was lengthy, but excusable; and there will be no irreparable harm to Tempest if the judgment were set aside.4

[5]                 Mr Pang refers to two judgments of this Court regarding costs on an application to set aside a judgment obtained by formal proof. First, in Callis v Ward McCulloch Doogue J said:5

In the ordinary course, when a party seeks the indulgence of the Court because of its own default, the other party would be entitled to costs. That is not, however, the case here, where the defendants have had to apply to the Court because of the plaintiffs’ error. On the other hand, if the defendants had filed their defence within the appropriate time, the difficulties would never have occurred. This is not a case, therefore, where it is appropriate that there be any order as to costs, and neither party is ordered to pay costs.

[6]                 Mr Pang also refers to the judgment of (then) Master Faire in Active Leisure Sports (Pty) Ltd v Crocodile Sports & Leisurewear Ltd where the above analysis was adopted.6

1      Tempest Litigation Funders Ltd v Zhang [2022] NZHC 170.

2      Tempest Litigation Funders Ltd v Yin [2021] NZHC 614.

3      Tempest Litigation Funders Ltd v Zhang, above n 1, at [51].

4      Tempest Litigation Funders Ltd v Zhang, above n 1, at [48]-[49].

5      Callis v Ward McCulloch (1993) 7 PRNZ 175 at 176.

6      Active Leisure Sports (Pty) Ltd v Crocodile Sports & Leisurewear Ltd [1997] 1 NZLR 350 at 358.

[7]                 Mr Pang, however, submits that the above two cases can be distinguished from the present case. First, he says counsel for Tempest made submissions at the formal proof hearing that were plainly wrong and on a correct view of the facts Tempest has no standing to sue Ms Yin. Mr Pang also submits there is an issue as to the knowledge of counsel for Tempest in relation to a document said to be relevant to the issue of standing. Mr Pang submits that counsel for Tempest cannot realistically claim lack of knowledge or inadvertence. Mr Pang submits this is not merely an error as occurred in the two cases referred to above.

[8]                 Mr Pang submits that costs on a 2B basis are appropriate but reduced by 50 per cent in acknowledgement of what he says was Ms Yin’s “partial contribution” by failing to file a statement of defence.

[9]                 Tempest opposes the application for costs. Tempest says it does have standing to sue Ms Yin and entirely rejects the submission on behalf of Ms Yin that there was some lack of candour on behalf of counsel in the formal proof hearing. Tempest says this is a case where costs should lie where they fall.

[10]              I did not make findings in the judgment on the issue of standing or in relation to the conduct of Tempest or counsel for Tempest in the formal proof hearing. In setting aside the formal proof judgment the defence I considered ought to be heard was in relation to the interpretation of cl 34 in the Auckland District Law Society standard form Deed of Lease regarding deemed assignment of a lease. I do not consider a costs judgment is the appropriate place to make findings on the disputed issue of standing or conduct of a party and counsel.

[11]              Tempest was entitled to apply for judgment by way of formal proof. Ms Yin failed to file her statement of defence in time. Although I found she had a defence which ought to be heard and in that sense she was successful, on the findings I made, it was her default that lead to the formal proof judgment. In applying to set aside the formal proof judgment Ms Yin was seeking the indulgence of the Court.

[12]              For all the above reasons I confirm my preliminary view that costs should lie where they fall. Ms Yin’s application for costs is refused.

Gordon J