Union Air Service Company Limited v Wasan International Co., Ltd HC Auckland CIV 2006-404-2190

[2007] NZHC 1665

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV 2006-404-2190

UNDER  the Fair Trading Act 1986

BETWEEN  UNION AIR SERVICE COMPANY LIMITED

Plaintiff

AND  WASAN INTERNATIONAL CO., LTD First Defendant

AND  EDWARD KANG Second Defendant

Hearing:         23 February 2007

Appearances: Mr R Connell for Plaintiff

Mr Hong, Respondent, in person

Judgment:      23 February 2007

ORAL JUDGMENT OF ASSOCIATE JUDGE DOOGUE (application for order striking out:  application for order that counsel pay costs)

Solicitors:

Yoon Cheol Hong, P O Box 34-845, Birkenhead, Auckland

Connell & Connell, P O Box 5275, Auckland

UNION AIR SERVICE COMPANY LIMITED V WASAN INTERNATIONAL CO., LTD AND ANOR HC AK CIV 2006-404-2190  23 February 2007

[1]      I have previously dealt with litigation between the parties in this matter and made an order for security for costs on the application of the defendants on 21

September 2006.  The order was a staged one requiring total security to be lodged of

$27,500.  Some $9,000 was to be paid within 21 days of the date of the judgment and there is no dispute that that amount has not been paid.  It is because of the failure to comply with that order that the defendants filed their application dated 26 January

2007 for an order that the plaintiff’s proceedings be dismissed.

[2]      The defendants also sought an order that Mr Y C Hong should pay to the defendants certain costs and disbursements that I ordered to be paid to the defendants on the application for security for costs, and as well that I make an order directing Mr Hong to pay the costs and disbursements of the application dated 26January 2007 on a solicitor client basis.

[3]      The grounds as stated in the application were, as I have said, first that the plaintiff has failed to comply with the order as to payment for security for costs.  As to the second part of the application the ground given was that:

BThere is no evidence before the Court that the solicitor purporting to act  on  behalf  of  the plaintiff  had  authority  from  officers  of  the Plaintiff to issue the proceedings on its behalf.

[4]      I should say a little more about the background to Mr Hong’s involvement in these proceedings.   He was the solicitor acting  for Union Air Service Company Limited when it filed proceedings in the High Court at Auckland on 24 April 2006. Since that time Mr Hong has informed the Court that he has not had further instructions in the matter.  At a case management conference on 30 January 2007 I granted him leave to withdraw as counsel.  At that same conference I made reference to the fact that the defendants had filed the application to dismiss the proceedings and also for an order that Mr Hong pay costs personally on a solicitor-client basis. Notwithstanding his release as counsel, I required Mr Hong to ensure that the Minute in which I summarised the fact that the applications had been brought, should be sent on to his former client.

[5]      On the hearing of the application today Mr Hong has appeared in person to represent his own interests.  There was no appearance for the plaintiff company.

[6]      In  due  course  Mr  Hong  filed  a  notice  of opposition  to  that  part  of  the application which concerned him.  He said:

The grounds on which Y C Hong opposes the making of the orders are:

1.Y C Hong, then solicitor for the plaintiff, had authority from the officer of the plaintiff to issue proceedings on the plaintiff’s behalf.

[7]      No steps were taken by the plaintiff to oppose the application to which it was respondent, namely the application to dismiss the proceedings.

[8]      I deal first with the application to dismiss proceedings.  Mr Connell referred me to the well-known authority of Jagwar Holdings Ltd v Fullers Corporation Ltd [1991] 4 PRNZ 577.  In that case the defendants’ application to strike out proceeded on the grounds, inter alia, that the plaintiff had failed to furnish security for costs.  In that decision Thorp J said (at 578):

It has long been accepted that the Court has a discretion to dismiss proceedings for failure to comply with an order to give security for costs: see eg La Grange v McAndrew (1879) 4 QBD 210 which is cited in McGechan as an authority on our present r 60.  However, the authorities also establish that such a course will not be taken unless the circumstances of the case make it appropriate to do so and that the dismissal of proceedings for failure to comply with an order of the Court where the applicant to strike out cannot make out the more general ground for failure to prosecute with due diligence is only appropriate if the failure to comply with the order is “intentional and contumelious”:  Birkett v James [1978] AC 297 per Lord Diplock at p 321.

[9]      His  Honour  then  went  on  to  consider  other  matters  that  bore  on  the jurisdiction to dismiss.  These included a balancing of the detriment which would be caused to the defendants by not providing for the termination of the proceedings against  the  detriment  which  would  be  caused  to  the  plaintiff  by  an  order  for dismissal.

[10]     There is no  information as to the reasons why the plaintiff has failed to comply with the order for security for costs.  As Thorp J said, the Court can only act upon the evidence put before it and upon appropriate inferences from that evidence: p 580.

[11]     I conclude that the plaintiff in this case must have known of the order that I made.  It has failed to take any steps to comply with that order.  It has also failed to seek a review of that order or a suspension of that order for some circumstance such as inability to raise the money, or some other factor of that kind.  The result is that the defendants are required to perpetuate its instructions to its solicitors so long as the proceeding is on foot.  I accept it does not have to take any further steps at the moment because I have made an order for stay already.  So while I am prepared to accept that the inferences available to me justify a conclusion that the failure by the plaintiff has been intentional and contumelious I am not so sure that any prejudice is on-going at the present time.  The position might be different, for example, where a trial date has been allocated and preparation is required to continue or accompanied by an uncertainty as to whether or not the defendants would ever recover costs against the plaintiff.   I think the appropriate course is to continue the stay until further order of the Court.  In due course it will be open to the defendants to seek to strike out the proceedings on the basis of non-prosecution of the proceeding.

[12]     Turning to the application for costs against Mr Hong I will not add my voice to those who have commented on the lack of wisdom that has attended some of Mr Hong’s interventions in the dispute between Union Air and the defendants.   I will confine myself to considering whether or not the grounds of the application have been made out, which are essentially that he issued proceedings without authority.

[13]     Rule 41B provides that every solicitor by whom a document is filed in the Court shall be deemed to warrant to the Court and to all parties that he is authorised by the party on whose behalf the document purports to be filed to file the document.

[14]     Mr Hong, as I have said, was the solicitor on record in this proceeding.  He has not personally filed an affidavit concerning the existence of authority or otherwise.  A woman who is apparently his secretary, a Ms Yi, has filed an affidavit which has certain annexures bearing on the matter of Mr Hong’s authority.  Ms Yi’s affidavit has annexed to it as “B” an authority to uplift files directed to Mr Hong. The purpose of that authority was apparently to obtain the files relating to Union Air Service Company Limited’s claim from Minter Ellison Rudd Watts.  That authority is dated 23 April 2006.  Also annexed to Ms Yi’s affidavit as “A” is what appears to

be a copy of an extract from a Korean Companies Register.  Included in the records is a table showing details of the Board of Union Air.  It establishes that Mr Lim was not himself a director of the company at the date when the authority was signed, namely  23  April  2006.    However,  there  is  a  further  document  annexed  to  the affidavit which purports to be a delegation of authority from someone who seems to have been a director of the company,  a Mr  Cho,  generally delegating  authority relating to the present proceedings to Mr Lim.  That authority is dated 23 April 2006. As I understand it, Mr Hong says that Mr Cho authorised Mr Lim, and Mr Lim authorised Mr Hong to bring the proceedings.

[15]     Mr Connell objected to the receipt of these documents.  He said that they are patently copies and not originals, and also said there was some queries about whether they bore genuine dates.

[16]     There seems to be no doubt that the Courts have authority to make awards for costs against practitioners to pay costs where the solicitor’s actions have caused another party to incur costs and where the solicitor’s actions amount to misconduct: Utah  Construction  and  Mining  Company  v  Watson  [1969] NZLR 1062. That decision makes clear, the jurisdiction is a summary one. That was reiterated in Harley v McDonald [2002] 1 NZLR 1. In that case the Privy Council stated that if the Court were contemplating making an order for costs the Court had to take great care to confine its attention to facts clearly before it, or to facts which were immediately and easily verifiable. That case was concerned with rather different subject matter from this. It concerned a failure to observe proper standards of care when advising a client on the viability of causes of action. But I think that the point about the jurisdiction being a summary one and the limits of the inquiry should guide me in the present case.

[17]     In this case I consider that only a limited inquiry is possible into Mr Hong’s actions.   This, after all, is an interlocutory application.   There is some uncertainty about exactly what authority Mr Hong possessed.  But Mr Hong has also made the point that whatever the accurate position was as to his authority he considered that he had authority to issue the proceedings on the part of the plaintiff.   Mr Hong also submitted to me that lawyers generally are entitled to take at face value instructions

that they are given to issue proceedings and to assume that those instructions are properly authorised by the company.   Whether that is true in every case is not a matter I want  to  comment  on here,  but  there  is  some  material  available  which supports Mr Hong’s position.  I agree that there is uncertainty about reliability of the documents which he refers to.  But these are not matters that the Court can readily resolve in exercising the summary jurisdiction which it  does have  in respect  of solicitors.  There is some evidence before the Court that Mr Hong had authority to issue the proceedings.   But the exact extent of his authority and the extent of his knowledge I cannot finally determine in a summary hearing of this kind. I therefore decline the application to make the orders which the defendants seek.  It would be unsafe to take the step of ordering him to pay costs in person, and for that reason, as I have said, I decline the application made by the first and second defendants.

[18]     The final matter I need to deal with is costs.   On the application for costs against Mr Hong neither party seeks the costs of and incidental to this hearing.  I will therefore  make  no  order.    On  the  application  by the  defendants  to  dismiss  the plaintiff’s proceeding for failure to comply with the order, Mr Connell seeks costs.  I accept that his application has been properly brought and I direct that the plaintiff is

to pay costs on a 2B basis relating to the application and the hearing today.

Doogue AJ