Wu v Liu
[2024] NZHC 3822
•13 December 2024
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2022-404-447
[2024] NZHC 3822
BETWEEN HUA WU (also known as DANNY WU) Plaintiff AND
JINXING LIU
First Defendant
YUHUA LIU
Second DefendantYONG LIU (also known as JACKIE LIU) Third Defendant
TIMBER KING LIMITED
Fourth Defendant
WENGUI LIU (also known as RINGO LIU) Fifth Defendant
NANNAN GENG
Sixth Defendant
Hearing: On the papers Counsel:
A Simkiss and A Lloyd for Plaintiff
A Grant and D Archibald for First and Third Defendants A Choi for Second Defendant
No appearance for fourth to sixth defendants
Judgement:
13 December 2024
JUDGMENT OF LANG J
[costs]
This judgment was delivered by Justice Lang
On 13 December 2024 at 11.00 am Pursuant to r 11.5 of the High Court Rules Registrar/Deputy Registrar
Date:…………………………
HUA WU v JINXING LIU [2024] NZHC 3822 [13 December 2024]
[1] On 7 October 2024, I delivered a judgment in which I dismissed a claim by Mr Wu seeking to recover the value of dispositions made in 2018 to the first defendant, Mr Jinxing Liu (Jinxing).1 He and his wife made these pursuant to a Deed of Settlement (the Deed) that they signed on 4 July 2018.
[2] I also dismissed claims against the third defendant, Mr Jackie Liu (Jackie) and the second defendant, Ms Yuhua Liu (Yuhua). Yuhua was the subsequent purchaser of a property that Mr Wu had earlier transferred to Jinxing.
[3] The parties have been unable to reach agreement regarding costs. I am therefore required to determine that issue on the basis of the memoranda counsel have filed.
The arguments
[4] Jinxing, Yuhua and Jackie seek an award of costs in their favour on the basis that they were the successful parties at trial. They seek costs on a category 2B basis together with an uplift of 50 per cent to reflect several factors that they say justify an award of increased costs.
[5] Jinxing and Jackie were represented by the same counsel at trial. They therefore accept that, other than in respect of steps in the proceeding that they were required to take individually, they should receive a single award of costs.
[6] Mr Wu accepts that he should pay costs on a category 2B basis to Yuhua. However, he says that costs should lie where they fall so far as Jinxing and Jackie are concerned. Alternatively, he contends that any costs order should not take effect until after his appeal against my judgment has been determined by the Court of Appeal.
Should costs as between Mr Wu, Jinxing and Jackie lie where they fall or be reduced?
[7] Costs are always at the discretion of the Court.2 The starting point is that, so far as possible, the determination of costs should be both predictable and expeditious.3
1 Wu v Liu [2024] NZHC 2903.
2 High Court Rules 2016, r 14.1(1).
3 Rule 14.2(1)(g).
Further, the unsuccessful party will generally be required to contribute to the costs of the successful party.4 Jinxing and Jackie were obviously the successful parties in this proceeding because Mr Wu’s claim against them was dismissed. Ordinarily, therefore, they could expect to receive an award of costs on a category 2B basis.
[8] However, the High Court Rules 2016 permits the Court to depart from the usual principles relating to costs in certain circumstances. By way of example, it may refuse or reduce costs under r 14.7(d) where, although the party seeking costs has succeeded overall, that party has failed in relation to a cause of action or issue that significantly increased the costs of the party opposing costs. Similarly, under r 14.6(3)(d) and (4)(f) it may order a party to pay increased or indemnity costs where some special reason exists to justify that being done.5 Equally, r 14.7(g) permits the Court to refuse or reduce costs where some reason exists that justifies this being done.6
[9] In the present case I was required to determine two principal factual issues. The first was whether Jinxing and Mr Wu entered into a loan agreement in 2008 under which Jinxing loaned monies to Mr Wu that were never repaid. This was said to underpin the Deed that they entered into in 2018. The second was whether Mr Wu entered into the Deed as a result of improper pressure applied by Jinxing and Jackie. At trial these issues occupied the bulk of the evidence and hearing time. I found in favour of Mr Wu on both issues.7 His claim failed, however, because I held that his failure to take steps to avoid the Deed for more than three years meant he had affirmed it.8 This precluded him from obtaining an order that the Deed was void. The issue of affirmation was only addressed during final submissions. Given Mr Wu’s success on the central factual issues, and the time they occupied at trial, I consider r 14.7(d) is engaged in the present case.
[10] Rule 14.7(g) is a “catch all” provision designed to enable justice to be done where none of the circumstances described in the other paragraphs of r 14.7 apply.
4 Rule 14.2(1)(a).
5 Rule 14.6(3)(d) and (4)(f).
6 Rule 14.7(g).
7 Wu v Liu, above n 1, at [47] and [74].
8 At [89].
However, the Court of Appeal has observed that the rule should only be applied in limited circumstances lest it “swallow the rule” as a whole.9
[11] The learned authors of The Law of Costs in New Zealand express the view that r 14.7(g) may be used in a narrow set of cases where the litigation was induced by fraudulent conduct on the part of the ultimately successful party.10 Similarly, in Moeke v South Waikato District Council, Associate Judge Sargisson noted that, historically, dishonest or fraudulent conduct by a successful party may be taken into account when determining costs.11
[12] I consider the circumstances of the present case engage r 14.7(g) so as to justify departure from the usual principles that apply to costs. Of particular relevance in this context is the fact that the proceeding flows from the fraudulent conduct of Jinxing and Jackie in placing improper pressure on Mr Wu and his wife to enter into the Deed. Jinxing also sought to persuade the Court to rely upon his evidence about the fictitious loan to Mr Wu in 2008. But for one factor, I would therefore have reduced the award of costs to Jinxing and Jackie by 80 per cent.
[13] The factor that justifies them receiving a greater award flows from the fact that Mr Wu abandoned one of his causes of action in the days leading up to the trial. This was a claim for the recovery of a payment in the sum of $400,000 that Mr Wu made to Jackie’s company, Timber King Ltd, after Jackie alleged he had stolen that sum from the company. This claim had little merit because, when Mr Wu consulted lawyers about the issue in March 2018, he effectively acknowledged that he had paid the money to Timber King because he had stolen it.
[14] Mr Wu ought to have recognised at a much earlier stage that his argument in relation to this payment had little chance of success. I also accept that Jinxing and Jackie would have been put to considerable expense in adducing evidence to answer this aspect of the claim.
9 Roberts v Professional Conduct Committee of the Nursing Council of New Zealand [2014] NZCA 141 at [24].
10 David Bullock and Tim Mullins The Law of Costs in New Zealand (LexisNexis, Wellington, 2022) at 3.51.
11 Moeke v South Waikato District Council [2019] NZHC 3457 at [8].
[15] I therefore propose to allow Jinxing and Jackie costs on a category 2B basis but to reduce the award by 60 per cent to reflect the issues I have referred to above. I decline to stay execution of the judgment pending disposition of Mr Wu’s appeal. It remains open to him, however, to apply for a stay of execution if Jinxing and Jackie attempt to enforce this judgment before the appeal has been determined.
[16] In case I am wrong on this issue I propose to briefly consider the factors that Jinxing and Jackie contend justifies an award of increased costs in their favour.
Offer of settlement
[17] On 3 July 2024, Jinxing and Jackie offered not to seek costs from Mr Wu for all steps taken in the proceeding up until that point if he agreed to discontinue his claims. Yuhua also signalled her agreement to this offer. The defendants contend that Mr Wu rejected the offer without reasonable justification and that he would now be in a demonstrably better position if he had accepted it. They say this justifies an uplift under r 14.6(3)(b)(v).
[18] The problem with this argument is that, as I have already noted, Mr Wu was able to establish that he and his wife entered into the Deed under which they made the dispositions to Jinxing because of improper pressure exerted on them by Jinxing and Jackie.12 Mr Wu’s claim ultimately failed because I held that he had affirmed the Deed by failing to seek to avoid it in a timely manner.
[19] I consider the question of affirmation was a contestable issue. Mr Wu therefore had reasonable justification for rejecting the offer of settlement. An award of increased costs is not justified on this basis.
Pursuing claims that had no merit
[20] The defendants contend that Mr Wu pursued his claims against them when they had no merit and that an award of increased costs is therefore justified under r 14.6(3)(b)(ii).
12 At [74].
[21] For the reasons already given I do not accept this argument in relation to the dispositions made by Mr Wu and his wife under the Deed. However, I accept that it would be established in relation to the claim that Mr Wu abandoned shortly before the trial commenced. I would have increased costs by 20 per cent to reflect this factor.
Unclear pleadings and poor case management
[22] The defendants contend that the manner in which Mr Wu framed his pleadings and advanced his case led to them incurring unnecessary costs. They say an uplift is therefore justified under r 14.6(3)(d).
[23] I accept that Mr Wu’s claim was poorly pleaded. It contained much unnecessary factual material and, as I noted in the judgment,13 the central pleading relating to duress did not include any allegation that the Deed under which they made the dispositions was void. However, Jinxing and Jackie would have understood that Mr Wu’s claim in blackmail was based on established principles relating to contracts entered into under duress.
[24] Jinxing and Jackie also claim that increased costs should be payable under this head to reflect the fact that Mr Wu served notices to admit facts and answer interrogatories on both of them, thereby requiring them to provide four separate responses. He also amended his statement of claim twice and applied unsuccessfully for freezing orders on two separate occasions. In addition, he objected to large parts of the defendants’ evidence just before the trial commenced.
[25] I consider the answer to all but the last of these arguments is that a standard award of costs is sufficient to compensate the defendants for these matters. So far as the late objections to evidence are concerned, these did not require separate argument or prolong the trial. I do not consider any increase is justified under this head.
Mr Wu’s conduct
[26] The defendants contend that Mr Wu’s conduct prior to and at trial was sufficiently bad to justify an award of indemnity costs under r 14.6(4). However, they are prepared to settle for an award of increased costs to reflect this factor.
13 At [78].
[27] This submission is largely based on findings that I made about Mr Wu’s lack of credibility.14 It is true that I did not find Mr Wu to be a satisfactory witness. Indeed, in closing submissions his counsel acknowledged several obvious shortcomings in his performance as a witness. However, as I noted in my judgment,15 much the same can be said about Jinxing and Jackie. They were prepared to invent the fictitious loan that Jinxing allegedly made to Mr Wu in 2008. I therefore do not see their claim under this head as having any merit.
Result
[28] Mr Wu is to pay costs on a category 2B basis to Yuhua together with disbursements as fixed by the Registrar.
[29] I make a single award of costs (but not disbursements) to Jinxing and Jackie other than in respect of the steps identified in paragraph 4 of their counsel’s memorandum dated 15 October 2024. Jinxing and Jackie are each entitled to costs on the steps identified in that paragraph.
[30] The costs payable to Jinxing and Jackie are to be calculated on a category 2B basis but are to be decreased by 60 per cent to reflect the factors I have identified in this judgment.
Lang J
Solicitors/counsel:
PCW Law/A Grant, Auckland
Winston Wang & Associates/A Choi, Auckland MinterEllisonRuddWatts, Auckland
14 At [64].
15 At [64].