Wang v Xie

[2025] NZHC 355

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2024-404-1625

[2025] NZHC 355

IN THE MATTER

of a claim for money

BETWEEN

HAOYU WANG

Plaintiff

AND

XIANGZHONG XIE

Defendant

Hearing:	On the papers
Appearances:	D C Oh and R Y Wang for the Plaintiff K Sun for the Defendant
Judgment:	28 February 2025

JUDGMENT OF GAULT J

(Costs)

This judgment was delivered by me on 28 February 2025 at 4:00 pm pursuant to r 11.5 of the High Court Rules 2016.

Registrar/Deputy Registrar

……………………………………

Solicitors:

Ms J Leenoh, Ms D C Oh and Ms R Y Wang, K3 Legal Ltd, Auckland Mr K Sun, Capstone Law Ltd, Auckland

WANG v XIE [2025] NZHC 355 [28 February 2025]

[1]    Following resolution of the defendant’s application for security for costs,   the parties could not agree on the issue of costs. I encouraged further dialogue but provided for the parties to file memoranda and for costs to be determined on the papers.1

[2]The parties could still not agree.

[3]The defendant seeks 2B costs of $3,346 plus disbursements of $650.

[4]The plaintiff seeks indemnity costs or increased costs with a 50% uplift.

Background

[5]    The defendant’s application for security for costs dated 11 September 2024 sought security of $62,723 to be paid into Court.

[6]    On 23 September 2024, the plaintiff raised concerns about the application but also offered to pay $32,000 as security (first offer). This offer was rejected by the defendant.

[7]    On 14 October 2024, the plaintiff offered to pay $62,723 into its solicitor’s trust account as security for costs. The defendant accepted this offer. Consent orders provided for the plaintiff’s solicitor to hold $62,723 as funds for security for costs and the application was withdrawn by consent.

[8]    After the Court encouraged further dialogue in relation to costs, the plaintiff proposed to the defendant that costs lie where they fall. This offer was rejected.

Applicable costs principles

[9]    The applicable costs principles are well settled. One general principle is that costs follow the event, including on interlocutory applications.2

1      Wang v Xie HC Auckland CIV-2024-404-1625, minute dated 4 November 2024 at [9].

2      High Court Rules 2016, r 14.2(1)(a).

[10]   Another general principle is that costs should be assessed by applying the appropriate daily recovery rate to the time considered reasonable for each step reasonably required,3 that is, applying the scale in the High Court Rules 2016. However, r 14.6(3) provides for indemnity and increased costs in certain circumstances.

Indemnity costs

[11]   Indemnity  costs  are  provided  for  in  r  14.6(4).    The  plaintiff  relies  on   r 14.6(4)(a) which provides:

(4)The court may order a party to pay indemnity costs if—

(a)the party has acted vexatiously, frivolously, improperly, or unnecessarily in commencing, continuing, or defending a proceeding or a step in a proceeding…

[12]   As the Court of Appeal said in Bradbury v Westpac Banking Corporation, “unnecessarily” in the context of r 14.6(4)(a) takes its meaning from the adverbs which precede it: “vexatiously, frivolously, improperly”.4 Indemnity costs may be ordered where a party has behaved either badly or very unreasonably.5 The Court went on to say  that  indemnity  costs,   which   depart   from   the   predictability   of   the   Rules Committee’s regime, are exceptional and require exceptionally bad behaviour. That is why to justify an order for such costs, the misconduct must be “flagrant”.6

[13]   The onus is on an applicant for indemnity costs to persuade the Court that such an award is justified.

Increased costs

[14]The plaintiff relies on r 14.6(3)(b)(ii), which provides:

(3)       The court may order a party to pay increased costs if—

…

3      Rule 14.2(1)(c).

4      Bradbury v Westpac Banking Corp [2009] NZCA 234; [2009] 3 NZLR 400 at [26].

5      At [27](c).

6 At [28].

(a)the party opposing costs has contributed unnecessarily to the time or expense of the proceeding or step in it by —

…

(ii)taking or pursuing an unnecessary step or an argument that lacks merit…

[15]   As the Court of Appeal said in Bradbury in the context of r 14.6(3)(b)(ii), increased costs may be ordered where there is failure by the paying party to act reasonably.7

[16]   Again, the onus is on an applicant for increased costs to persuade the Court that such an award is justified.

Discussion

[17]   It is unfortunate that the parties cannot resolve a straightforward costs issue in relation to a resolved interlocutory application where the costs argument may well cost each party more than the amount in dispute.

[18]   The defendant submits that he was fully successful in his application and relies on the general principle that costs follow the event.

[19]   The plaintiff submits he was compelled to file a notice of opposition and affidavit as the defendant failed to respond to the first offer by the stipulated date.     I note the stipulated date was the day after the plaintiff’s first offer was made and the day before it filed its notice of opposition and affidavit.

[20]   The plaintiff submits that whilst some funds were provided as security for costs, the arrangements differed from those originally sought by the defendant and were made in the spirit of this Court’s emphasis on resolving matters as simply and efficiently as consistent with justice. On that basis, the plaintiff submits he should be regarded as the successful party. Alternatively, he submits that, at minimum, the defendant should not be regarded as having succeeded, having at best achieved partial

7      Bradbury v Westpac Banking Corp [2009] NZCA 234; [2009] 3 NZLR 400 at [27](b).

success. Indeed, the plaintiff submits that costs should be awarded to him on either an indemnity basis or with a 50 per cent uplift.

[21]   In support of his claim for indemnity or increased costs, the plaintiff submits that:

(a)the defendant proceeded directly to file an application without any prior attempt to discuss security for costs with the plaintiff;

(b)the application contained fundamental flaws, a position subsequently vindicated by the ability to provide security for costs by payment into the solicitor’s trust account; and

(c)despite the Court’s encouragement of further dialogue regarding costs, the defendant declined to engage meaningfully and in doing so failed to accept, without reasonable justification, the plaintiff’s sensible proposal as to costs.

[22]   I note at the outset that, irrespective of who was the successful party, the relevant scale costs here are limited to those for the steps required for the security for costs interlocutory application before it was resolved. Each party claims costs for other case management steps in the substantive proceeding. They are not claimable as steps on this application.

[23]   I consider the defendant was the successful party. He applied for security for costs of $62,723 and an order was made for that amount by consent (even though the application was also said to be withdrawn). That the security is held in a solicitor’s trust account rather than in Court does not change the result. Nor should the plaintiff be regarded as the successful party because he may have offered security in the spirit of resolving matters simply and efficiently.

[24]   It follows that the plaintiff’s claim to indemnity of increased costs fails. Indeed, the plaintiff has not even quantified his actual costs to support a claim for indemnity costs. The residual relevance of the plaintiff’s criticisms of the defendant’s

actions would be to support an argument of reduced costs. While it would have been preferable for the defendant to seek security in correspondence before filing an interlocutory application, that does not warrant a reduction in scale costs here given the plaintiff’s response when the application was filed. Nor is it appropriate in a costs context to review the merits of the interlocutory application after it has been resolved by consent. Also, I do not accept the criticism of the defendant’s later rejection of the offer for costs to lie where they fall. The defendant is entitled to costs as the successful party and was not unreasonable in rejecting an offer to pay nothing. In any event, unreasonably rejecting a settlement offer would be relevant to costs on costs, which are not sought.

[25]   The defendant is entitled to 2B costs but only for filing the interlocutory application, that is $1,434 plus the filing fee disbursement of $650.

Result

[26]   The plaintiff is to pay the defendant 2B costs and disbursements of $2,084   in respect of the defendant’s application for security for costs.

Gault J