Tian v Zhang

[2018] NZHC 1701

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2015-404-2009

[2018] NZHC 1701

BETWEEN

XIGANG TIAN

Plaintiff

AND

KUN ZHANG

Defendant

Hearing:	On the papers
Counsel:	A Cherkashina for the Plaintiff R Reed for the Defendant
Judgment:	11 July 2018

JUDGMENT OF GORDON J

[As to costs]

This judgment was delivered by me on 11 July 2018 at 11 am, pursuant to r 11.5 of the High Court Rules

Registrar/Deputy Registrar Date:

Solicitors:           Norling Law Ltd, Auckland

Prestige Lawyers Ltd, Auckland

TIAN v ZHANG [2018] NZHC 1701 [11 July 2018]

Introduction

[1]                 On 22 May 2015, Mr Tian filed an application in the Family Court seeking orders:

(a)setting aside an agreement under s 21 of the Property (Relationships)

Act 1976; and

(b)determining the respective shares of the parties in the relationship property.

Mr Tian also sought other related orders.

[2]                 The proceedings were transferred to this Court and a direction was subsequently made that the substantive trial be split into two stages.

[3]                 The first stage of the trial, to determine whether the agreement should be set aside, was set down before me for a two-day fixture to commence on 17 July 2017. My minute dated 17 July 2017 records that the trial was unable to proceed largely due to Mr Tian’s procedural failings. I adjourned the hearing and reserved costs until the conclusion of the substantive hearing.

[4]                 The trial was subsequently set down for a two-day fixture to commence on  23 April 2018.

[5]                 On 18 April 2018, Mr Tian applied by way of memorandum to vacate the fixture because he was not in a position to proceed.

[6]                 A formal application to adjourn the hearing was filed on 20 April 2018. In short, the reason given was that his former counsel was not available and he was not advised of the hearing date by his former solicitor.

[7]                 On 23 April 2018, I granted Mr Tian’s application to adjourn the hearing. My minute of that date includes the following:

[32]  However, on the basis of the evidence before me, it appears the   present position does not arise from any fault on Mr Tian’s part. Therefore, in my view, the interests of justice weigh in favour of an adjournment. The adjournment is to be a final adjournment (on application by Mr Tian).

[8]As to costs, I stated:

[37] My present view is that Ms Zhang is entitled to costs on the adjournment. Costs would be on a 2B basis. My present view is also that costs should now be awarded to Ms Zhang on the adjournment of the hearing on 17 July 2017. At that time, I reserved costs and stated they could be dealt with when costs were considered after the substantive hearing. However, after this further adjournment application I consider that costs on both should be dealt with together and before the substantive hearing.

[9]The parties could not reach an agreement on costs.

Claim for costs and response

[10]             Ms Reed, on behalf of Ms Zhang, filed a memorandum as to costs dated 3 May 2018. She seeks costs of $25,756.50 against Mr Tian. Ms Reed’s schedule of claimed costs is attached as Annexure A to this judgment.

[11]             Ms Cherkashina, on behalf of Mr Tian, filed a memorandum in reply dated   4 May 2018. Ms Cherkashina first takes issue with the quantum of costs sought. Although she accepts that costs should be awarded on a 2B basis, she submits that the total costs should only be $16,725. She has included a table in her submissions which illustrate the specific items that are disputed.

[12]               Ms Cherkashina also submits that the Court should exercise its inherent discretion to order that Mr Tian’s previous counsel, and/or his previous solicitor, are liable for those costs.

Principles

[13]             Costs are at the discretion of this Court.1 The High Court Rules (the Rules) provide guidance as to how the discretion might be exercised.2

1      High Court Rules, r 14.1(1).

2      Rules 14.2-14.7.

[14]             Rule 14.2(1) of the Rules sets out some general principles in relation to the determination of costs. Several are of particular relevance here:

(a)an award of costs should reflect the complexity and significance of the proceeding;3

(b)costs should be assessed by applying the appropriate daily recovery rate to the time considered reasonable for each step reasonably required in relation to the proceeding or interlocutory application;4

(c)an appropriate daily recovery rate should normally be two-thirds of the daily rate considered reasonable in relation to the proceeding or interlocutory application;5 and

(d)what is an appropriate daily recovery rate and what is a reasonable time should not depend on the skill or experience of the solicitor or counsel involved or on the time actually spent by the solicitor or counsel involved or on the costs actually incurred by the party claiming costs.6

[15]Rule 14.5(1) relevantly provides:

(1)For the purposes of rule 14.2(c), a reasonable time for a step is—

(a)the time specified for it in Schedule 3; or

(b)a time determined by analogy with that schedule, if Schedule 3 does not apply; or

(c)the time assessed as likely to be required for the particular step, if no analogy can usefully be made.

Discussion

[16]             Ms Cherkashina submits that a reduction should be made to some items and that others should be disallowed in their entirety.

3      Rule 14.2(1)(b).

4      Rule 14.2(1)(c).

5      Rule 14.2(1)(d).

6      Rule 14.2(1)(e).

Step 32 – Preparation of list of issues, authorities, and common bundle

[17]             Ms Reed claims a time allocation of 1.5 days for this step in relation to the first hearing. Although the time ordinarily allowed is two days, she says she reduced the time allocation because Ms Zhang did not file a common bundle.

[18]             Ms Cherkashina submits that Mr Tian has not received the list of issues and she is unclear whether it was prepared or not. She submits that the claim for 1.5 days is excessive, and it should only be for one day instead. The current claim cannot be appropriate when two of the three tasks were not completed. Further, the common bundle would be the most time consuming with the authorities being the least time consuming.

[19]             Step 32 reads: “Defendant’s preparation of list of issues, authorities, and common bundle”.

[20]             There is no court record of Ms Zhang filing a list of issues. She did file three bundles of authorities. I consider that a claim for one day is appropriate.

Step 33 – Preparation for hearing

[21]             Ms Reed claims a time allocation of three days for both hearings. Ms Cherkashina only takes issue with the claim for the second hearing. She submits that a claim for three days is excessive because Ms Zhang had already prepared for the second hearing prior to the first hearing. She says the preparation for the second hearing would have only involved a refresh of the material from the first hearing. She submits that an allocation of one day is appropriate as preparation for the second hearing.

[22]             I accept Ms Cherkashina’s submission. Most of the preparation should have already been completed for the first hearing. Counsel would only have been required to review the material and refresh their preparation for the second hearing.

[23]I reduce the preparation time allowed for the second hearing to one day.

Step 34 – Appearance at hearing for principal counsel

[24]             Ms Reed claims a time allocation of 0.5 days for step 34 for both hearings. Ms Cherkashina submits that 0.25 days should instead be allocated as each hearing did not last half a day.

[25]             The amount claimable under step 34 is the time occupied by the hearing measured in quarter days. While it is correct that the two hearings did not occupy a full half-day, I count each as a half-day hearing. The time claimed is appropriate.

Step 35 – Appearance at hearing for second counsel

[26]             Ms Reed also claims a time allocation of 0.25 days in relation to the first hearing for the appearance of second counsel. Ms Cherkashina submits that appearances for second counsel are discretionary and generally only awarded in circumstances where the complexity of the case warrants such an appearance. She submits this was not such a case.

[27]             In Nomoi Holdings Ltd v Elders Pastoral Holdings Ltd,7 Chambers J stated that the primary consideration is whether the nature of the proceeding, or the way the trial was conducted, justifies the losing party having to contribute to junior counsel’s cost.8

[28]             I accept Ms Cherkashina’s submission. This is not a proceeding which is sufficiently complex to justify the award of costs for second counsel. I disallow that claim.

Step 36 – Filing of memorandum

[29]             Ms Cherkashina takes issue with the claim for the filing of the memorandum dated 23 April 2018. Ms Reed has allocated 0.4 days to that claim. Ms Cherkashina submits that an allocation of 0.2 days is appropriate because the memorandum is half a page long.

7      Nomoi Holdings Ltd v Elders Pastoral Holdings Ltd (2001) 15 PRNZ 155 (HC).

8 At [21].

[30]             In my view, the claimed time is appropriate by reference to step 11 in sch 3 of the Rules.

Step 36 – Filing the notice of cross-examination

[31]             As to the claim for the filing of the notice of cross-examination dated 9 April 2018, Ms Cherkashina submits that the claim should be disallowed because the item is generally not recoverable under sch 3 of the Rules.

[32]             I disagree. Rule 14.5(1)(b) allows for a time to be determined by analogy with sch 3 of the Rules if it does not directly apply. I consider that the claimed time is appropriate.

Step 36 – Costs of costs memorandum

[33]             Ms Cherkashina also takes issue with the claim for the filing of the costs memorandum dated 3 May 2018. She submits that should I hold that Mr Tian’s position as to costs is fully or partially correct, I should hold that costs as to that memorandum should lie where they fall.

[34]             In my view, neither party’s position has been completely accepted by the Court. The Court of Appeal held in Paper Reclaim Ltd v Aotearoa International Ltd,9 that there was to be no order for costs made in respect of the costs application itself as neither side’s position had been completely upheld.10

[35]             That is similarly the case here. I refuse the claim for the preparation of the costs memorandum.

Conclusion on quantum

[36]             Therefore, the total sum of costs is $18,732, as set out in Annexure B to this judgment.

9      Paper Reclaim Ltd v Aotearoa International Ltd [2007] NZCA 544.

10 At [62].

Costs against counsel

[37]             It is clear that the Court has inherent jurisdiction to make a costs order against a client’s lawyer.11

[38]             In Harley v McDonald, the Privy Council stated that the inherent jurisdiction can only be invoked in cases where “there has been a serious dereliction of the solicitor’s duty to the court”.12 It explained the purpose behind such an order:

[49] A costs order against one of its officers is a sanction imposed by the court. The inherent jurisdiction enables the court to design its sanction for breach of duty in a way that will enable it to provide compensation for the disadvantaged litigant. But a costs order is also punitive. Although it may be expressed in terms which are compensatory, its purpose is to punish the offending practitioner for a failure to fulfil his duty to the court …

[39]             As to what type of conduct will lead to a costs order against a client’s lawyer, the Court commented:

[55] … A simple mistake or oversight or a mere error of judgment will not, of itself, be sufficiently serious to fall into that category. Something more is required. In Myers v. Elman [1940] AC 282 at pp 291-292 Viscount Maugham indicated that the test was whether the conduct amounted to a serious dereliction of duty, and that negligence could be so described if it was at a sufficiently high level. At p 304 Lord Atkin described the kind of negligence that could lead to an exercise of the jurisdiction as gross negligence. At p 319 Lord Wright said that, while a mere mistake or error of judgment is not generally sufficient, a gross neglect or inaccuracy in a matter which it was a solicitor's duty to ascertain with accuracy, such as whether he had a retainer to act, might suffice. A more precise definition of the level of seriousness is not appropriate. But where negligence or incompetence is alleged the conduct must be put into its proper context.

[40]             More recently, Gilbert J, in Jin v District Court at North Shore, stated that costs will only be awarded “against solicitors and counsel acting for a party in proceedings in circumstances where they are grossly negligent or abuse the Court's processes”.13

[41]             Ultimately, as Duffy J observed in Zhang v Guan, each case “turns on its own particular circumstances”.14

11     Harley v McDonald [2001] UKPC 18, [2001] 2 AC 678 at [45]; Jin v District Court at North Shore

[2017] NZHC 1481 at [4].

12     Harley v McDonald, above n 11, at [48].

13     Jin v District Court at North Shore, above n 11, at [4].

14     Zhang v Guan [2017] NZHC 2710 at [20].

Submissions

[42]             Ms Cherkashina submits that it is appropriate to exercise the inherent jurisdiction in this case because the reason for the adjournment was Mr Tian’s lawyer’s fault. She says the first hearing was adjourned because Mr Tian’s affidavits did not comply with the Rules. Mr Tian says he was not informed by his previous legal representatives that he needed to amend his affidavits to make them compliant with the Rules.

[43]             Ms Cherkashina also submits that the second hearing was adjourned because Mr Tian was not informed about the hearing date by his previous legal representatives. She says it appears from the affidavits filed in support of the application to adjourn that the previous legal representatives did not take notice of the notice of hearing when it was sent to them.

[44]             As a result, Ms Cherkashina submits that the Court should exercise its discretion to order that Mr Tian’s former counsel and/or former solicitor are liable for the costs.

[45]             Given that submission, I directed that counsel’s submissions and other relevant documents be served on Mr Tian’s former counsel and former solicitor so they might have an opportunity to respond.

[46]             They both responded, including by way of an affidavit, submissions and a memorandum.

[47]             Ms Cherkashina filed a reply memorandum dated 2 July 2018. It contradicted some matters asserted by former counsel. These have no relevance to my decision.

Decision

[48]             I have reached a clear view that a costs order against Mr Tian’s former counsel and/or former solicitor is inappropriate in the circumstances of this case.

[49]             Their conduct does not reach the level of seriousness required to justify a costs order against them. It was not grossly negligent. Nor was it an abuse of court processes.

Conclusion

[50]             Ms Zhang is entitled to an award of costs of $18,732, as set out in Annexure B to this judgment, against Mr Tian.

[51]I make an order accordingly.

Gordon J

Annexure A

Item	Description	Daily Rate	Number of Days	Trial date: 17 to 18 July 2017	Trial date: 23 to 24 April 2018	Total
32	Preparation of list of issues, authorities, and common bundle	$2,230.00	2	1.5	-	$3,345.00
33	Preparation for hearing	$2,230.00	3	3	3	$13,380.00
34	Appearance at hearing for principal counsel	$2,230.00	Time occupied by the hearing	0.5	0.5	$2,230.00
35	Appearance at hearing for second counsel	$2,230.00	50% of allowance for principal counsel	0.25	-	$557.50
36	Filing of memorandum dated 21 September 2017	$2,230.00	As allowed by the court	0.4	-	$892.00
36	Filing of memorandum dated 28 September 2017	$2,230.00	As allowed by the court	0.4	-	$892.00
36	Filing of a notice of cross- examination dated 9 April 2018	$2,230.00	As allowed by the court	-	0.2	$446.00
36	Filing of memorandum dated 18 April 2018	$2,230.00	As allowed by the court	-	0.4	$892.00
36	Filing of memorandum dated 23 April 2018	$2,230.00	As allowed by the court	-	0.4	$892.00
23	Filing opposition to interlocutory application to adjourn dated 23 April 2018	$2,230.00	0.6	-	0.6	$1,338.00
36	Filing of costs memorandum dated 3 May 2018	$2,230.00	As allowed by the court	-	0.4	$892.00
Total costs	$25,756.50

Annexure B

Item	Description	Daily Rate	Number of Days	Trial date: 17 to 18 July 2017	Trial date: 23 to 24 April 2018	Total
32	Preparation of list of issues, authorities, and common bundle	$2,230.00	2	1	-	$2,230.00
33	Preparation for hearing	$2,230.00	3	3	1	$8,920.00
34	Appearance at hearing for principal counsel	$2,230.00	Time occupied by the hearing	0.5	0.5	$2,230.00
36	Filing of memorandum dated 21 September 2017	$2,230.00	As allowed by the court	0.4	-	$892.00
36	Filing of memorandum dated 28 September 2017	$2,230.00	As allowed by the court	0.4	-	$892.00
36	Filing of a notice of cross- examination dated 9 April 2018	$2,230.00	As allowed by the court	-	0.2	$446.00
36	Filing of memorandum dated 18 April 2018	$2,230.00	As allowed by the court	-	0.4	$892.00
36	Filing of memorandum dated 23 April 2018	$2,230.00	As allowed by the court	-	0.4	$892.00
23	Filing opposition to interlocutory application to adjourn dated 23 April 2018	$2,230.00	0.6	-	0.6	$1,338.00
Total costs	$18,732.00