Zeng v Cai
[2018] NZHC 2277
•30 August 2018
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2014-404-2012
[2018] NZHC 2277
BETWEEN JIANQIANG ZENG
Plaintiff
AND
OU CAI
First Defendant
FANG LI
Second DefendantALEXANDER YUNXIAN CAI
by his iltgation guardian PAUL JOHN DALEThird Defendant
On the papers: 30 August 2018 Appearances:
C J R Baird and A Shinkarenko for the Plaintiff First Defendant is self-represented
Second Defendant is not represented S A Grant, amicus
Judgment:
30 August 2018
COSTS JUDGMENT OF ASSOCIATE JUDGE R M BELL
This judgment was delivered by me on 30 August 2018 at 4:00pm
pursuant to Rule 11.5 of the High Court Rules.
Solicitors:
…………………………………
Deputy Registrar
Quinn Law (H L Quinn), St Heliers, Auckland, for the Plaintiff
Neilsons Lawyers Ltd (E Telle), Onehunga, Auckland, for the Third Defendant
Copy for:
C J R Baird, Auckland, for the Plaintiff
Ou Cai, Epsom, Auckland (first defendant)
Paul J Dale, Auckland (as litigation guardian for Dahai Cai) Sandra Grant, Auckland (as amicus).
ZENG v CAI [2018] NZHC 2277 [30 August 2018]
[1] Between 19 and 26 September 2016 there was a hearing under r 10.15 of the High Court Rules to decide Ms Cai’s affirmative defence that she had been in a de facto relationship with Mr Zeng. The hearing finished on 26 September 2016, when Ms Cai withdrew her defence. In a minute of 16 December 2016, Hinton J gave formal findings for the hearing. This decision deals with costs for that hearing.
[2] Costs ought to have been decided long ago. The parties should have an explanation for the delay. I set out what has happened, but it is not meant to be a justification or an excuse.
[3] In her minute of 16 December 2016, Hinton J recorded that counsel agreed that costs would be reserved.1 It was later clarified that that did not mean that costs should await the outcome of the final hearing, but only that the parties should have the opportunity to submit on costs.
[4] The proceeding was referred to me for case management. A question arose whether Hinton J should decide costs. She had recused herself from further involvement in the case. In response to one of my minutes dated 8 May 2017, Hinton J advised that she was willing to decide costs if the parties had no objection. Mr Baird did object to Hinton J deciding costs on the separate question hearing. In my minute of 27 June 2017, I indicated that I did not consider Mr Baird’s objection sound.2 I believed that the file would be referred to Hinton J to decide costs, but that apparently did not happen. Memoranda on costs had been filed in June and August 2017. The plaintiff’s memorandum is directed at my deciding costs. Ms Grant’s memorandum is addressed to Hinton J. Ms Cai’s memoranda are addressed to both.
[5] In July this year, the file was brought to me to decide costs. A decision on costs is long overdue. With the substantive hearing about to start, costs should be decided now.
1 At [6].
2 At [29]-]30].
[6]Mr Zeng seeks costs of $52,516.50 with a 50 per cent uplift, to give
$78,774.75. He also seeks disbursements of $103,549.88 to make a total of
$182,324.63. He claims for steps taken between 29 June 2016 and the end of the hearing in September 2016, plus costs on the costs application. He proposes that the court should direct under s 99A(1)(b) of the Judicature Act 1908 that he should not pay the costs of amicus but that Ms Cai should pay them. He also seeks costs on Ms Cai’s abortive discovery application heard on 4 August 2016.
[7] Ms Cai filed memoranda in response on 20 June 2017 and 15 August 2017. Large parts of her responses do not address costs issues. Where she does address costs, she has not engaged effectively with particular matters raised by Mr Zeng’s application. As amicus, Ms Grant’s memorandum of 30 June 2017 addresses costs issues in a focused and constructive way.
A jurisdiction question
[8] There is a question whether an associate judge can decide costs on a matter heard by a justice. The hearing under r 10.15 of the High Court Rules to decide whether Mr Zeng and Ms Cai had been in a de facto relationship was not in an associate judge’s court jurisdiction.3 Rule 14.9 of the High Court Rules 2016 recognises that costs may be decided by a different judge:
14.9 Costs may be determined by different Judge or Associate Judge
Costs may be determined by a Judge or an Associate Judge other than the one who heard the matter to which the costs relate, if he or she is not available conveniently to make the determination.
[9] But can an associate judge decide costs after a substantive hearing of a matter outside an associate judge’s court jurisdiction? In my judgment an associate judge has jurisdiction in this case, but only because Ms Cai abandoned her defence.
[10] In the separate question hearing, Ms Cai tried to make out her affirmative defence but abandoned it when the matter was part heard. Hinton J did not give a judgment with findings of fact and law, but pronounced a result in default. Under r 1.6
3 Judicature Act 1908, s 26I (repealed). See now Senior Courts Act 2016, s 20.
of the High Court Rules, that is analogous to a discontinuance: while a procedure was begun, it has not run its course because the party who started it has given up. By analogy costs can be decided on the same principles as costs on a discontinuance – that is, under r 15.23. It is generally recognised that associate judges have jurisdiction to decide costs on a discontinuance.4 That is part of an associate judge’s chambers jurisdiction under s 22 of the Senior Courts Act.
[11] I am less confident that an associate judge has jurisdiction to decide costs, if the separate question hearing had run its course and Hinton J had given a full decision on facts and law. While r 14.9 allows an associate judge to decide costs on a matter heard by another judge, I do not interpret that as allowing an associate judge to decide costs on a matter outside an associate judge’s jurisdiction. For example, as associate judges cannot hear applications for judicial review, they cannot decide costs on judicial review applications heard by other judges. Section 20(4) of the Senior Courts Act gives an associate judge the jurisdiction and powers of the court to deal with costs and other matters incidental to the matters over which an associate judge has jurisdiction under that section. That suggests that an associate judge does not have power to deal with costs for court matters over which an associate judge does not have jurisdiction. Rule 14.9 should be read as not giving an associate judge a more extensive costs jurisdiction than s 20(4). It is preferable to construe them as consistent with each other.5
Should costs await the outcome of the substantive proceeding?
[12] Ms Grant submits that costs should be reserved until after the substantive hearing. She points out that the affidavits, common bundle and notes of evidence will be used at the substantive hearing. She says that the hearing covered core evidence which will be used later. The position is not comparable to costs on interlocutory applications under r 14.8. The merits of interlocutory applications are often fully removed from the substantive hearing and generally concern procedural matters. The situation is close to the standard approach on unsuccessful summary judgment
4 For a recent example, see Taranaki Galvanisers Ltd v Udderfield Ltd [2018] NZCA 297.
5 Stewart v Grey County Council [1978] 2 NZLR 577 (CA) at 583.
applications, where costs are reserved to await the final hearing.6 At a practical level, Ms Cai is said to have no real property in her own name and a significant costs award could bankrupt her, which would impact on her ability to defend the substantive proceeding.
[13] A hearing under r 10.15 decides a discrete issue. In that sense, it is self- contained, even though the decision on the separate question affects how the rest of the case is run.7 On a final decision on a separate question, the proper approach is to award costs by analogy with costs on an interlocutory application. The standard approach for costs on interlocutory applications is to fix costs when the application is determined.8 That applies here. The fact that matters decided in an interlocutory application may later be used at a substantive hearing is not generally regarded as ground for deferring costs. I do not accept the analogy with unsuccessful summary judgment applications. Costs on unsuccessful summary judgment applications are often reserved because at the summary judgment stage, the ultimate outcome of the proceeding is still unknown. The unsuccessful applicant for summary judgment may ultimately be vindicated on the issues they raised in their summary judgment application. In the case of a defendant’s unsuccessful summary judgment application, it is less common to reserve costs.9 That is because a defendant can normally be expected to establish before the application whether they have good grounds for the application, something that cannot always be expected of a plaintiff.
[14] In the separate question hearing, Ms Cai failed on the de facto relationship issue. She cannot be vindicated later, no matter how the substantive hearing runs. Accordingly, costs on the separate hearing should be decided now.
[15] While I will fix costs, I direct a stay of execution until ten working days after the end of the substantive hearing. I do that because the substantive hearing is
6 NZI Bank Ltd v Philpott [1990] 2 NZLR 403 (CA) at 406.
7 If Ms Cai had succeeded on her claim of a de facto relationship, Mr Zeng might still have been able to run his case against Fang Li. Other parts would likely have stalled because the division rules under the Property (Relationships) Act 1976 would have been triggered. Ms Cai had started a property relationship proceeding in the Family Court. If she had succeeded on the separate question, the Family Court proceeding might have been transferred to this court.
8 High Court Rules, r 14.8.
9 Nand v Tower Insurance Ltd [2016] NZHC 1455, Commercial Factors Ltd v Meltzer
[2017] NZHC 30, Commissioner of Inland Revenue v Robertson [2017] NZHC 31.
imminent. Ms Cai should be free to prepare for the substantive hearing and to take part without being required to meet costs orders at the same time.
Costs under r 15.23
[16] Under r 15.23, a plaintiff who discontinues must pay costs unless the defendant otherwise agrees or the court orders otherwise. The rule applies by analogy here, because Ms Cai abandoned her attempt to prove a de facto relationship. The presumption that she should pay costs for the separate hearing applies. Once any question of holding costs over is dealt with, I see no reasons for ordering that Ms Cai should not be liable for costs.
Scale costs
[17]Mr Zeng claims under category 2 for 23.55 days at $2,230 per day, a total of
$52,516.50. The case is category 2 for costs. Mr Zeng claims band B for all steps except preparation of affidavits for which he claims 10 days. Most of the steps claimed are uncontroversial, but some require mention.
Preparation of affidavits
[18] Under Schedule 3 of the High Court Rules, the time allocation for preparing evidence or affidavits under band C is five working days. Here Mr Zeng claims 10 working days under r 14.6(3)(a), which allows a claim for increased costs if the nature of the step is such that the time required by the party claiming costs would substantially exceed the time allocated under band C.
[19] I accept the explanation for the claim. Where the parties provided evidence in Mandarin, they were required to provide translations.10 Mr Zeng’s first language is Mandarin. I understand that he has limited English. The need to prepare evidence in both Mandarin and English clearly requires greater time. A number of affidavits in Chinese with English translations were filed, by Mr Zeng and other witnesses whose preferred language was Mandarin. The evidence was extensive. Mr Zeng lives in
10 High Court Rules, r 1.15.
Beijing, China. Working with witnesses at a distance adds to time. Ms Cai apparently served her evidence only in English. It had to be translated so that Mr Zeng could give instructions about it. Many documents in Chinese were used as exhibits. They had to be translated into English. That took time.
[20] Counsel advises that the actual time spent was longer and that the amount claimed for this work was less than two-thirds of the fee charged for it. The claim for
$22,300 for preparing affidavits is allowed.
Second counsel
[21] I accept the claim for second counsel under step 35. The complexity of the case warranted second counsel.
Costs for the costs application
[22] Mr Zeng has claimed .3 of a day under step 36. Costs on costs applications are not automatically awarded. The court has a discretion, but I accept that in this case significant effort was applied to preparing the costs application. The claim of .3 of day is appropriate. While Mr Zeng has not succeeded on every point, he has been overall successful on costs.
[23]I approve the claim of 23.55 days at the category 2 rate of $2,230 per day.
Increased costs under r 14.6?
[24] Mr Zeng seeks increased costs, an uplift of 50 per cent on scale costs because of an alleged complete lack of merit in Ms Cai’s claim that she was at all material times in a de facto relationship with him.11 Mr Baird cited Kós J in N-Tech Ltd v Abooth Ltd:12
It follows from these authorities that increased or indemnity costs may be awarded on the basis of lack of merit, in a case where the trial is not completed, only where the lack of merit is both obvious and incontrovertible. So clearly
11 High Court Rules, r. 14.6(3)(b).
12 N-Tech Ltd v Abooth Ltd [2012] NZHC 1167 at [108].
so that there is no reasonable possibility that the Court might form the different view with the benefit of all the evidence and closing submissions. No difficult or detailed speculation is involved. The claim is and was so flawed that nothing in the evidence and submissions to follow could save it – and the plaintiff has acted unreasonably in bringing or continuing the claim. It is, thus stated, a double hurdle. The first assesses the claim; the second, the claimant’s conduct.
[25] The case is relevant because it involved discontinuances, where the court did not give judgment on either the claim or counterclaim. Kós J cited cases where claims had been discontinued, but the judges declined to award costs or to give increased costs, because they did not consider that they were able to predict the outcome of the hearing.13 None of the cases involved an award of increased costs based on lack of merit by a judge who had not heard the proceeding. I am at a disadvantage in assessing the alleged lack of merit in Ms Cai’s defence, because I did not hear the case. In managing the proceeding before the separate question hearing, I considered that the defence was difficult, but not hopeless. There seemed to be enough in it to warrant directing a separate question hearing. I infer that Ms Cai abandoned her defence, because the hearing did not go well for her. But I know nothing more about the hearing and accordingly am not able to assess the reasonableness or otherwise of her defence. If Mr Zeng considers that this has operated adversely to him, he should reflect that this assessment is a result of his own opposition to Hinton J deciding costs. On the information available, I am not satisfied that Mr Zeng has met the test stated by Kós J in N-Tech Ltd v Abooth Ltd.
[26] Mr Zeng also referred to a procedural matter: Ms Cai provided affidavits in English, not in Mandarin. I gave case management directions about giving affidavits in Mandarin, as I believed that both sides would want to give evidence in their preferred first language. Translations are required only for affidavits in languages other than English.14 Parties serving briefs of evidence or filing affidavits in English are not required to provide translations into languages used by other parties. The other parties instead have the cost of translating the affidavits into their own languages.
13 North Shore City Council v Local v Government Commission (1995) 9 PRNZ 182 (HC), McIlroy v The New Zealand Act Party HC Wellington CIV-2003-485-174, 16 December 2005, Kroma Colour Prints Ltd v Tridonicatco (NZ) Ltd, HC Auckland, CIV-2004-404-408. 24 October 2007, Hawkins Construction Ltd v Chan (2002) 20 NZTC 17,699, while also noting other cases where increased costs had been awarded on a discontinuance.
14 Rule 1.15.
Ms Cai was entitled to serve her affidavits without providing translations into Mandarin. It does not warrant increasing costs. Mr Zeng has been able to recover for this aspect by other costs he has claimed – the time required to prepare his affidavits and his costs in retaining an interpreter.
[27] I am not satisfied to the required standard that Ms Cai’s de facto relationship defence was so lacking in merit that increased costs are required. She was entitled to provide her evidence in English, without providing translations. Accordingly, the claim for increased costs is dismissed.
Disbursements
[28]As well as court filing and hearing fees, Mr Zeng claims these disbursements:
Emeritus Professor Baker:
Preparation of affidavit $1,608.51 Travel to and from New Zealand $10,274.04 Accommodation in Auckland $716.59 Attending hearing $3,507.54 Taxis in New Zealand $152.80 $16,259.48
Court interpreter
$6,900.00
Mr Zeng’s interpreter (3 invoices)
$10,140.00
$28,080.00 $21,510.00 $59,730.00 Printing
$2,910.60
Folders $99.80 $3,010.40
With the court fees, the disbursements claimed come to $103,549.88.
Expenses of cultural expert
[29] For her case, Ms Cai retained Emeritus Professor Manying Ip to give evidence about Chinese cultural practices in relation to extra-marital affairs. The intent was to show that women in these affairs are effectively treated as “second wives”. Mr Zeng retained an expert in response, Emeritus Professor Baker, formerly of the London
School of African and Oriental Studies. Professor Baker provided an affidavit and came to New Zealand for the hearing but was not required to give evidence because Ms Cai withdrew her defence.
[30] Since Ms Cai retained a cultural expert, it was appropriate for Mr Zeng to instruct an expert to give evidence in response. I accept Ms Grant’s point that it cannot have been necessary to instruct an expert from England to give evidence, no matter how eminent and qualified. There must surely be other qualified experts in Chinese culture available here or not so far away. On that, I regard retaining Professor Baker as disproportionate under r 14.12(3) of the High Court Rules. Mr Zeng could have called an appropriate cultural expert from the east coast of Australia, if not from New Zealand. For that, I allow a notional representative return air fare of $500.00 between Australia and New Zealand. In all other respects, I allow the claims for Professor Baker.
Court-appointed interpreter
[31] In my minute of 22 April 2016, I appointed Mr George Chang as interpreter for the hearing under r 9.36 of the High Court Rules. I directed that his costs were to be met equally by the parties. Ms Cai did not pay. Mr Zeng paid Mr Chang’s invoices in full.
[32] My direction that the parties meet his costs equally was an interim direction, to await the outcome. Now that the final outcome is known, Mr Zeng is entitled to recover that cost in full. Accordingly, I allow the claim for Mr Chang’s fees of $6,900. Payment of the court interpreter’s fees is a proper disbursement claimable by Mr Zeng.
Mr Zeng’s own interpreter
[33] There were many documents in Mandarin. Mr Zeng’s first language is Mandarin. Communications between him and Ms Cai were in Mandarin. Those communications had to be translated to be put into evidence. Mr Zeng’s instructing solicitors and counsel are not conversant in Mandarin. It was reasonably necessary for the separate question hearing to translate evidence by Mandarin speakers into
English and to provide English translations of documents in Mandarin. For that, Mr Zeng’s lawyers engaged a lawyer who works in a legal practice in the same building as counsel’s chambers. She has charged her time out at $120.00 per hour. For one of her invoices she has also charged for sub-contractors, $870 and $1,710.
[34] I accept that an independent translator was appropriate for this case, but the person engaged was more than an interpreter. She was also a lawyer. Her charge-out rate is more consistent with a lawyer’s than an interpreter’s. Mr Chang, the court- appointed interpreter charged $600 a day, a charge-out rate of about $85.00 per hour. As he is highly regarded, I take his rate as appropriate for someone who does no more than interpret. The charge-out rate for the sub-contractors is not shown, but I take it that it does not exceed $85 per hour. While $120 an hour may be an appropriate charge-out rate for a lawyer, it is not for an interpreter. The charge-out rates for translation are reduced to $85.00 per hour.
[35] The lawyer’s invoice of 8 August 2016 has charges for non-translation work – research and expert opinions. I calculate the time spent on that work at 16.25 hours. As a competent interpreter, she should not need to carry out research to provide translations. In the absence of evidence going the other way, I take it that that work was on legal matters. It properly forms part of Mr Zeng’s preparation for the hearing and should not be charged separately. The costs have been covered in the claims for steps 30 and 33 under Schedule 3 of the High Court Rules.
[36] The lawyer was not required at court from 27 to 30 September 2016 because the hearing was abandoned, but she has charged at 7 hours a day for those last four days. I disallow the claim for work she did not do in the last four days.
[37] With adjustments to her invoices, I allow the claim for Mr Zeng’s own interpreter as follows:
Invoice of 15 June 2016 $7,182.50 Invoice of 8 August 2016 $16,681.25 Sub-contractors: First sub-contractor $870.00 Second sub-contractor $1,710.00 $2,580.00 Invoice of 29 September 2016 $12,856.25 Total: $39,300.00
Photocopying charges
[38] Mr Zeng has claimed $2,910.60 for photocopying 1,972 pages, a rate of 35 cents per page, with four bundles of exhibits. Ms Grant points out that that rate is excessive and that 20 cents per page is closer to the market rate. I accept that and reduce the total photocopying costs to $1,663.00.
Summary so far
[39] For the separate question hearing, I allow scale costs of $52,516.50 and disbursements as follows:
Scheduling fee $1,600.00 Hearing fee $16,000.00 Court-appointed interpreter $6,900.00 Professor Baker: $1,608.51 $500.00 $716.59 $3,507.54 $152.80 Mr Zeng’s translator’s fees:
$39,300.00
Sealing fee
$50.00
Photocopying
$1,663.00
Folders $99.80 Total:
$72,098.24
Costs on Ms Cai’s discovery application
[40] In a case management conference on 4 August 2016, I heard argument and gave directions on Ms Cai’s application for further discovery against Mr Zeng. In a minute of 19 August 2016, I fixed costs of the hearing at $1,895.50 and disbursements of $110.00, a total of $2,005.50. I reserved the allocation of those costs to await the outcome of the separate question hearing. Now that it is known, costs should be allocated. I direct that those costs are payable by Ms Cai to Mr Zeng, given his success at the separate question hearing. I do not, however, direct them to be paid now. As
with the costs for the separate question hearing, enforcement of that order is stayed until ten working days after the substantive hearing.
Allocation of costs of amicus
[41] I appointed Ms Grant amicus in my minute of 4 July 2016. I directed that her fees would be met from the consolidated fund. The court kept its power under s 99A of the Judicature Act 1908 to require the parties or either of them to pay all or part of Ms Grant’s fees. Section 99A of the Judicature Act 1908 has been replaced by s 178 of the Senior Courts Act 2016, but the court’s power to order a party to pay part or all of the costs of the amicus is in the same terms.15
[42] I raised the appointment of an amicus in my minute of 29 June 2016. Until then, Ms Cai had legal representation, but she had incurred very substantial legal fees and said that she was no longer able to pay her lawyers. They were granted leave to withdraw. There were challenges to the smooth and fair running of the case because Ms Cai did not have legal representation, the case was complex, a high level of legal skill would be required to present her case effectively. She seemed to have limited English. I appointed Ms Grant as amicus to assist the court, but that would include assistance for Ms Cai. Fang Li, the second defendant, Ms Cai’s mother, had been represented by the same lawyers as Ms Cai’s, but now she did not have any representation at all. In my minute of 4 July 2016, I recorded that the court retained the power under s 99A of the Judicature Act to require the parties or either of them to pay all or part of Ms Grant’s fees. At no stage up to the hearing in September 2016 did Ms Cai object to Ms Grant’s appointment as amicus. I understand that Ms Grant’s advice played a part in Ms Cai’s decision to withdraw her defence under s 2D of the Property (Relationships) Act.
[43] It turns out that Ms Cai’s English may have been better than I appreciated. Hinton J thought that Ms Cai’s English was reasonable and that she was a resourceful person.16 Mr Baird also suggests that Ms Cai was better off than she let on. For that
15 Judicature Act 1908, s 99A(1)(b) and Senior Courts Act 2016, s 178(2)(b).
16 Minute of Hinton J of 16 December 2016 at [14].
he refers to the purchase and on-sale of a property in Epsom, Auckland, which seems to have netted a gain of $400,000. Mr Baird also submitted that during the hearing on 22 September 2016, Hinton J discussed with counsel whether Ms Cai had been advised about the court’s jurisdiction to shift costs, and whether Ms Cai understood the consequences of the matter. He says that her honour was reassured on the point. Mr Baird submits that Mr Zeng ought not to bear the costs of amicus but that Ms Cai should carry those costs because there is no public interest element in the case, there is no question of substantial public importance, it is a purely private law proceeding, the appointment was for the benefit of Ms Cai, the appointment of an amicus should not be a back-door method of providing legal aid outside the Legal Services Act, and the costs should not fall on the taxpayer.
[44] In response, Ms Grant submits that Ms Cai never asked for an amicus to be appointed and she should not be asked to pay for services that she did not request. The appointment was to assist the court, not Ms Cai. The court was the primary beneficiary of her assistance, not Ms Cai. Public money was saved through efficiency of the appointment of amicus.
[45] In my judgment this is not be a proper case for the costs of amicus to be carried by the taxpayer. The primary reason for appointing an amicus was the difficulties arising out of Ms Cai’s lack of representation, and the risk of a miscarriage of justice without the benefit of submissions to counter the case for Mr Zeng. Accordingly, as the appointment was to protect Ms Cai from a miscarriage of justice, and she acquiesced in that appointment, I see no reason why she should not pay the costs of amicus. I make an order that she is to pay those costs in full. Mr Zeng is not required to pay.
Result
[46]I order Ms Cai to pay Mr Zeng these costs:
(a) Costs on the separate hearing $52,516.80 (b) Disbursements on the separate hearing $72,098.24 (c) Costs on the discovery application $1,895.50 (d) Disbursements on the discovery application $110.00 Total $126,620.54
[47] Enforcement of these costs orders is stayed until ten working days after the end of the substantive hearing.
[48] Ms Cai is to pay the Crown the costs of amicus. The Registrar is to advise Ms Cai of those costs.
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Associate Judge R M Bell
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