Xiqi Trustee Limited v Zhao
[2024] NZHC 1261
•21 May 2024
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2023-404-1765
[2024] NZHC 1261
IN THE MATTER OF A loan secured by Second Mortgage over 10 Oakland Place, West Harbour, Auckland BETWEEN
XIQI TRUSTEE LIMITED
Plaintiff
AND
YAN ZHAO
Defendant
Hearing: 11 April 2024 Appearaances:
MSP Pang for the Plaintiff
DA Cowan/ JEG San Diego for the Defendant
Date of Judgment:
21 May 2024
JUDGMENT OF ASSOCIATE JUDGE BRITTAIN
[application for leave to appeal]
This judgment was delivered by me on 21 May 2024 at 1.30 pm Pursuant to r 11.5 of the High Court Rules.
…………………..
Registrar/Deputy Registrar
Solicitors/Counsel:
Integritas, Auckland
Cowan Law, Auckland
XIQI TRUSTEE LTD v ZHAO [2024] NZHC 1261 [21 May 2024]
Introduction
[1] The plaintiff, Xiqi Trustee Ltd (Xiqi), seeks leave to appeal my interlocutory order dated 4 March 2024 admitting into evidence Mandarin affidavits of the defendant, Ms Zhao. Ms Zhao opposes a grant of leave.
[2] The Mandarin affidavits were admitted in support of Ms Zhao’s notice of opposition to Xiqi’s application for summary judgment to enforce a loan agreement and a registered mortgage. Judgment on the application for summary judgment has not yet been delivered.
Background
[3] Ms Zhao is named on the loan agreement and registered mortgage as borrower and mortgagor.
[4] The mortgage is the second mortgage registered against the title to Ms Zhao’s property at 10 Oakpark Place, West Harbour, Auckland. In November 2022, Xiqi advanced $150,000 pursuant to the loan agreement and the mortgage.
[5] Ms Zhao’s defence is that her purported signatures on the loan agreement are forgeries procured by her former husband and that she had no knowledge of the transaction or the associated documents at the time of the transaction, and she has never received any part of the advance. She claims that her former husband fraudulently received the advance from Xiqi.
[6]The application for summary judgment raises the following issues:
(a)Is it arguable that the loan agreement and the mortgage are fraudulent and unauthorised by Ms Zhao?
(b)If so, is it arguable that the fraud can be imputed to Xiqi to defeat Xiqi’s indefeasible registered interest?
(c)If not, does the indefeasibility extend to the unregistered loan agreement?
[7] The application for summary judgment was heard before me on 1 February 2024. The relevant procedural background is set out in my minute dated 4 March 2024, which I reproduce for ease of reference:
[2] During the course of the hearing, the plaintiff raised an issue regarding the admissibility of the defendant's affidavits, affirmed in English. After discussion with counsel, my understanding was that a consent position was reached: the defendant would affirm a Mandarin version of her existing English language affidavits, with the translation to be verified by the translator.
[3] At the conclusion of the hearing, I reserved judgment and made the following directions (the directions):
(a)the defendant shall file and serve sworn copies of her three affidavits filed in this proceeding as non-English language affidavits, accompanied by an affidavit of an interpreter in compliance with r 1.15 of the High Court Rules 2016 (HCR), within 15 working days;
(b)the plaintiff shall file a memorandum within a further 10 working days, advising the Court whether any issue is taken with the affidavits filed and served pursuant to direction (a), or whether the Court may proceed to judgment on the basis of the affidavits as filed.
[4] On 19 February 2024, I delivered judgment in respect of the plaintiff's application for summary judgment. I should not have done so, because the time for compliance with the directions had not passed. When that was pointed out to me by counsel for the plaintiff, I issued a minute on 21 February 2024 recalling the judgment.
[5] On 23 February 2024, the defendant filed and served affidavits which are a Mandarin translation of her earlier English affidavits, together with an affidavit from a translator confirming that the translator produced the Mandarin versions from the English versions. This process is what I had intended to record in the directions, and is in accordance with my understanding of what was agreed by counsel during the hearing on 1 February 2024.
[6] With hindsight, I consider that direction (a) made on 1 February 2024 was unfortunately ambiguous. Rule 1.15 of the HCR prescribes a process for the admission of non-English affidavits. The affidavit must be the deponents own evidence given in a language other than English, which is then translated into English. Direction (a) can be read as requiring fresh affidavits which strictly comply with r 1.15 of the HCR. That was not my intention.
[7] My reference to r 1.15 was intended to call up the requirement for an affidavit from the translator, albeit an affidavit which confirmed the translation from the English version of the affidavits to the Mandarin version of the affidavits.
[8] In my minute dated 4 March 2024 I made an order admitting the defendant’s Mandarin affidavits:
In the present case, I intended a direction permitting the defendant to file a Mandarin version of her existing English language affidavit, in accordance with my understanding of the consent position reached between counsel. The defendant has now done that. I can see no utility in requiring the defendant to file yet another affidavit. She has verified evidence in Mandarin, which I am prepared to admit.1
[9] I note that counsel for the plaintiff now maintains that the plaintiff did not consent to admission of a Mandarin translation of the English affidavits.
Legal Principles
[10] Pursuant to s 56(3) of the Senior Courts Act 2016, Xiqi is required to obtain the leave of this Court to pursue an appeal against an interlocutory order.
[11] The rationale behind the requirement for leave is simple: it serves as a filtering mechanism, ensuring that neither unmeritorious appeals of interlocutory orders, nor appeals against insignificant interlocutory orders, are allowed to proceed so as to delay unnecessarily the proceedings in which the orders are made.2
[12] The approach to an application for leave, and the principles governing its grant or refusal, are well-established:
(a)a high threshold exists;
(b)the applicant must identify an arguable error of law or fact;
(c)the alleged error should be of general or public importance warranting determination or otherwise of sufficient importance to the applicant to outweigh the lack of general or precedential value;
(d)the circumstances must warrant incurring further delay; and
1 Xiqi Trustee Ltd v Zhao CIV-2023-404-1765, Minute of Associate Judge Brittain dated 4 March 2024 at [9].
2 Finewood Upholstery Ltd v Vaughan [2017] NZHC 1679 at [13].
(e)the ultimate question is whether the interests of justice are served by granting leave.3
[13] The threshold for leave may be lower in respect of a judgment that in a practical sense finally determines a proceeding.4
[14]An application to appeal an interlocutory decision is likely to be granted if:
(a)the appeal is not likely to be overtaken by the substantive hearing or cannot otherwise be considered as effectively in the context of an appeal of the substantive decision; or
(b)the appellant is likely to be prejudiced by a postponement of the issue to the substantive appeal; or
(c)the appeal may be dispositive of the case in law or as a practical matter; and
(d)the arguments in the appeal are capable of bona fide and serious argument; and
(e)the issue on appeal concerns a decision of sufficient significance to the parties or a question of law of general principle of sufficient importance as to outweigh the cost and delay of the appeal.5
[15] In the event leave is refused, the applicant is not barred from later raising their intended appeal point in an appeal against the substantive High Court decision in the proceeding.6
3 Tomar v Tomar [2021] NZCA 419 at [6].
4 See Simons v ANZ Bank New Zealand Ltd [2022] NZHC 2842 at [7]; Singh v Body Corporate 207650 [2023] NZHC 1269 at [13]; and D v RMC [2023] NZHC 1931 at [16].
5 Li v Chief Executive, Ministry of Business, Innovation and Employment (No 2) [2018] NZHC 1171 at [18].
6 Senior Courts Act 2016, s 56(6).
[16] The High Court Rules 2016 (HCR) do not specify when a hearing is required for an interlocutory application, including an application for leave to appeal, except to provide that a hearing is not required if a respondent consents or does not oppose the making of an order.7 The parties have agreed to determination of the application for leave on the papers.
Discussion
[17]The issues to be resolved by an appeal include:
(a)whether Ms Zhao’s affidavits were required to be prepared and affirmed strictly in accordance with r 1.15 of the HCR;
(b)whether the Court retained a discretion to admit the affidavits, either in reliance on the Court’s inherent jurisdiction or by agreement under s 9 of the Evidence Act 2006.
[18] For Xiqi, Mr Pang submits that the appeal raises an issue of general importance, which is the proper application of r 1.15 of the HCR given the significant volume of litigation involving parties or witnesses with English as a second language.
[19] I accept that Xiqi’s arguments in the appeal are bona fide and capable of serious argument, and that the issues raised by the appeal are of general application. The issue for a grant of leave in this case is whether the issues raised by the appeal can be considered as effectively in the context of an appeal of a later judgment determining the application for summary judgment.
[20] In my view, Xiqi’s proposed appeal is premature. Given that I admitted the Mandarin versions of Ms Zhao’s English affidavits on 4 March 2024, the state of the evidence is unchanged since I wrongly delivered judgment on 19 February 2024. On the evidence as it stands, it is appropriate to deliver that judgment unchanged, which would decline the plaintiff’s application for summary judgment.
7 Rule 7.37.
[21] I convened a telephone conference with counsel for the parties on 11 April 2024, to discuss the procedure for disposing of the application for leave to appeal. I invited the parties to consider whether they would consent to orders on the following terms:
(a)I would deliver judgment on the application for summary judgment now, based on the defendant’s Mandarin affidavits. I intimated that my judgment would decline the plaintiff’s application for summary judgment.
(b)Leave would be granted to the plaintiff to appeal the judgment declining the application for summary judgment, including the admission of the Mandarin affidavits.
[22] Mr Pang advised that Xiqi would not consent to those orders. Mr Pang submitted that the issue of the admissibility of the Mandarin affidavits should be resolved by the Court of Appeal before judgment is delivered on the application for summary judgment.
[23] I have carefully considered that submission, particularly given my view that the issues raised by Xiqi regarding the admission of the Mandarin affidavits are worthy of argument.
[24] However, if I grant leave to Xiqi to appeal my evidential ruling, and defer delivery of judgment on the application for summary judgment, then there is the potential for significant delays in the determination of this proceeding:
(a)If Xiqi’s appeal of the evidential ruling is unsuccessful, and judgment declining the application for summary judgment is then delivered on the same terms as the judgment wrongly delivered on 19 February 2024, there is the potential for Xiqi to seek leave to appeal the dismissal of its application for summary judgment.
(b)If the Court of Appeal overturns my decision admitting the Mandarin affidavits, then Xiqi proposes that Ms Zhao be directed to file further affidavits that comply with r 1.15 of the HCR. Counsel for Ms Zhao has confirmed that the substance of Ms Zhao’s evidence will be unchanged, so the result on the application for summary judgment is also likely to be unchanged. That will still give rise to the potential for a second appeal.
[25] The parties may face two applications for leave to appeal and two appeals to the Court of Appeal before the application for summary judgment is finally determined.
[26] As I expressed in the proposed orders that I discussed with counsel during the conference on 11 April 2024, my view is that if judgment declining the application for summary judgment is delivered now then this is an appropriate case for a grant of leave to Xiqi to appeal dismissal of its application for summary judgment. That remains my view.
[27] I consider that the interests of justice are best served by declining leave to appeal my order admitting Ms Zhao’s Mandarin affidavits, followed by delivery of my judgment on the application for summary judgment.
[28] If Xiqi then elects to apply for leave to appeal dismissal of the application for summary judgment, leave will be granted and Xiqi will be able to argue the admissibility point before the Court of Appeal together with any other substantive points of appeal.
Application for a stay
[29] If I decline leave to appeal, then Xiqi applies for a stay of this proceeding, and in particular a stay of delivery of judgment on Xiqi’s application for summary judgment, until the Court of Appeal has determined a signalled application by Xiqi for leave from that Court to appeal my decision admitting Ms Zhao’s Mandarin affidavits.
[30] Xiqi submits that it will be prejudiced if a judgment declining the application for summary judgment is released when the potential remains for the Court of Appeal to exclude the evidence.
[31] I am satisfied that this is not an appropriate case for a stay pending the Court of Appeal’s decision on leave to appeal. There is no material prejudice to Xiqi if a judgment declining Xiqi’s application for summary judgment stands while Xiqi endeavours to pursue its rights of appeal.
Orders
[32] The plaintiff’s application for leave to appeal the interlocutory order dated 4 March 2024 admitting the Mandarin affidavits is declined.
[33] My preliminary view is that it is appropriate for costs to be reserved until the application for summary judgment is finally determined, including any appeal. If the defendant seeks costs on this application now, then:
(a)the defendant shall file and serve a memorandum on costs, of no more than 5 pages, by 31 May 2024;
(b)the plaintiff shall file and serve a memorandum on costs, of no more than 5 pages, by 14 June 2024;
(c)I will then determine costs on the papers.
Associate Judge Brittain
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