Yao v Shen - [2022] NZHC 221

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2021-404-831

[2022] NZHC 221

BETWEEN
NAN YAO

Plaintiff

AND

JIAN SHEN

First Defendant

BO ZHENG

Second Defendant

Hearing: On the papers

Appearances:

No appearance for the Plaintiff S J Corlett for the Defendants

Judgment:

18 February 2022

JUDGMENT OF ASSOCIATE JUDGE SUSSOCK

This judgment was delivered by me on 18 February 2022 at 4pm pursuant to r 11.5 of the High Court Rules

Registrar/Deputy Registrar

Solicitors:
Brookfields Lawyers, Auckland

Copy to: N Yao

YAO v SHEN & ANOR [2022] NZHC 221 [18 February 2022]

Introduction

[1] The defendants, Jian Shen and Bo Zheng, seek a security for costs order against the plaintiff, Nan Yao, in the range of $35,000 to $40,000 with the proceedings stayed until that amount is paid. The order is sought on two grounds: that the plaintiff resides outside of New Zealand and that it appears that she will be unable to pay costs if her claim is unsuccessful.

[2] If the defendants manage to successfully defend the claim, costs are likely to be awarded in their favour. But if such a costs award is required to be enforced in a foreign jurisdiction or there is no money to pay the costs award, the successful defence may not seem like success. The High Court Rules provide a mechanism for protecting parties from this outcome through security for costs orders. These orders require parties to pay money or to provide security to the Court to ensure that any costs award (or at least a significant part of it) will be paid. They are available either where a party is not resident in New Zealand or where there is evidence that the party bringing the claim may be impecunious. The Court’s discretion is broad with staged orders being common. I note that the Court has the discretion not to make an order if to do so would put an end to an otherwise meritorious claim.

[3] In addition to the security for costs orders the defendants seek suppression and confidentiality orders in respect of a consultancy management agreement which is annexed as Exhibit “D” to the affidavit of the second defendant filed in support of the application for security (“Management Agreement”). The confidentiality orders are sought on the basis that the Management Agreement contains commercially sensitive and confidential financial information, including in regard to the payment structure for remuneration of one of the parties to the agreement.

Issues

[4]The issues for determination are:

(a)Is Ms Yao resident outside New Zealand or is there reason to believe she will be unable to pay costs?

(b)If so, is it just in all the circumstances for a security for costs order to be made in this case?

(c)What amount of security ought to be paid?

(d)Should suppression and confidentiality orders be made in respect of the Management Agreement?

Summary of proceedings

[5] The plaintiff filed her claim on 19 April 2021. She alleges that…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Yao v Shen

Details

AGLC: Yao v Shen [2022] NZHC 221
Case: [2022] NZHC 221
Decision Date: 18 February 2022

CaseChat Overview and Summary

The case of Yao v Shen and Zheng involved an application by the defendants for a security for costs order and suppression and confidentiality orders. The plaintiff, Nan Yao, had filed a claim against the defendants, Jian Shen and Bo Zheng, alleging that they owed her payments under two profit-sharing agreements. The defendants denied the claims and sought a security for costs order on the grounds that the plaintiff was a resident of Singapore and it appeared she would be unable to pay costs if her claim was unsuccessful. They also sought suppression and confidentiality orders in respect of a consultancy management agreement which they argued contained commercially sensitive and confidential information. The court found that the initial threshold for a security for costs order was met as the plaintiff was a resident of Singapore. The cost of enforcing a New Zealand judgment in Singapore was likely to be high and the plaintiff had failed to engage further solicitors or respond to the court after her previous solicitors withdrew. The court considered it appropriate to make a security for costs order of $40,000 and to vacate the date for the scheduled four-day trial. The court also made suppression and confidentiality orders in respect of the management agreement, finding that it contained commercially sensitive and confidential information. The defendants were successful in their application and were entitled to costs on a 2B basis.

Orders