Zeng v Cai

[2016] NZHC 503

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2014-404-2012 [2016] NZHC 503

BETWEEN

JIAN QIANG ZENG

Plaintiff

AND

OU CAI
First Defendant

AND

FANG LI

Second Defendant

Hearing:	10 March 2016
Counsel:	CJR Baird for the Plaintiff to oppose A Manuson for the Defendants in support
Judgment:	17 March 2016
Reasons:	23 March 2016

REASONS JUDGMENT OF TOOGOOD J

This judgment was delivered by me on 23 March 2016 at 11:00 am

Pursuant to Rule 11.5 High Court Rules

Registrar/Deputy Registrar

ZENG v OU CAI [2016] NZHC 503 [23 March 2016]

[1]      On  28 July 2015,  Bell  AJ  made  discovery  and  other  orders  in  an  oral judgment, the written transcript of which was signed and released to the parties on

7 September 2015.1   On 24 November 2015, the first and second defendants filed an

application for review, under s 26P(1) of the Judicature Act 1908, of the Associate Judge’s decision.   Rule 2.3(2)(a) of the High Court Rules provides that, unless a Judge or an Associate  Judge  directs  otherwise,  an  application  for  review under s 26P(1), if made by a party who was present or represented when the decision was given, must be made within five working days of the decision.   The defendants accepted the application was filed out of time, 84 working days after the decision. The  plaintiff  opposed  the  application  and  I  heard  submissions  at  a  hearing  on

10 March 2016.

[2]      The   proceeding   is   scheduled   for   a   five-day   hearing   beginning   on

15 August 2016, to determine a separate question before trial about whether the plaintiff and the first defendant were ever in a qualifying de facto relationship under s 2D of the Property (Relationships) Act 1976, and, if so, its duration.  Determination of that question will affect decisions as to the jurisdiction of the Court to address substantive issues in the proceeding.

[3]      Under the current timetable, the first defendant is due to serve her affidavit evidence by 8 April 2016, the plaintiff being required to serve his affidavit evidence by 3 June 2016.  Compliance with discovery orders is necessary if the parties are to have a fair and reasonable opportunity to draft their affidavit evidence.  In view of the time constraints, therefore, I was satisfied that a decision on the application for review should be made promptly.  On 17 March 2016, I released a result judgment

dismissing the application2 and said I would give my reasons later.

[4]      My reasons for doing so are set out below.

1      Zeng v Cai [2015] NZHC 1798.

2      Zeng v Cai (Result) [2016] NZHC 463.

[5]      The defendants’ proposal that the Court should review the decision was based

on four grounds:

(a)      The discovery order was outside the jurisdiction of the High Court: Bell AJ’s orders were outside his jurisdiction because the draft amended statement of claim was not on foot, and the discovery orders went beyond the scope of the pleadings.

(b)Errors relating to procedure:   the plaintiff filed a second amended application for discovery on 21 July, only four working days before the hearing.  This revised application significantly expanded the scope of discovery orders sought.   The defendants did not have sufficient time to consider the new statement of claim, and were unable, therefore, to file a draft amended statement of defence or any other opposition to the application.

(c)      Errors of law relating to discovery:  Bell AJ’s discovery orders were too wide.  The Associate Judge concluded that the extensive approach to discovery requested by the plaintiff was unnecessary, but then made discovery orders which canvassed the tracing of funds, which was not sought by the plaintiff.

(d)Errors of law relating to costs:  The Associate Judge erred in granting costs  on  a  category 2C  basis.   The  conveyancing and  accounting experts’ advice was not relevant.   Their costs, therefore, were not reasonably necessary and should not be borne by the defendant.

[6]      No principles of law were given to support any of these proposed grounds of review but the defendants’ submissions are supported by an affidavit from Ms Cai which elaborates on factual matters relating to them.

[7]      The defendants submit that the delay in bringing their application is justified because of various matters which hindered communication and their ability to properly instruct counsel.  The defendants claim that they do not understand English and that this has resulted in communication difficulties with counsel on the complex discovery issues.  The plaintiff’s late filing of documents is said to have exacerbated these communication difficulties.  The defendants also submit that the delay in the application for review would be unlikely to create undue prejudice to the plaintiff because,  at  the  date  of  the  application,  the  plaintiff  had  not  filed  an  amended statement of claim.

The plaintiff ’s submissions

[8]      The plaintiff opposes the application for leave and the application for review on the grounds that Bell AJ’s decision was correct in fact and law; that it addressed all the proper considerations; and that it was delivered following full argument from the parties’ counsel at a defended hearing.  The plaintiff argues that the application for review is defective, in that it does not fully state the precise grounds of review or what aspects of the decision are being challenged, as required by the High Court

Rules.3    The defendant’s proposed grounds of appeal are only general, and do not

refer to any cases or principles of law.

[9]      Further, it is submitted that the defendants’ application is well outside the five working day period for the filing and serving of review applications, as specified in r 2.3(2)(a) of the High Court Rules, and that no good reason has been given for the inordinate delay between the judgment date of 8 July 2015 and the filing of the application on 12 November 2015.  The plaintiff also says that the proceeding has moved on since the making of Bell AJ’s orders and that it is important that he should not be distracted from his preparation for the hearing of the preliminary question by an interlocutory hearing on matters which no longer have any practical significance

for the conduct of the case.

3      Rules 2.3(1) and 7.19(1).

[10]     Whether an application for leave to apply for a review out of time should be granted involves the exercise of judicial discretion.   The essential question in any case is to consider where the interests of justice lie, an exercise which involves weighing the prejudice which would be suffered by an unsuccessful applicant for

leave against that which would be suffered by an unsuccessful opponent.4     The

factors which the Court should take into account include:5

(a)       the lapse of time between the expiry of the period when a review may be brought as of right and the filing of the leave application;

(b)      the explanation for the delay;

(c)       the substance or merit of the proposed review application;

(d)the  need  to  ensure  that  a  proceeding  as  a  whole  is  dealt  with expeditiously; and

(e)       the consideration that a party seeking an indulgence carries the burden of justifying it.

Application of the principles to this case

Errors relating to jurisdiction

[11]     I am satisfied that the orders were well within the jurisdiction of an Associate

Judge, as conferred by the Judicature Act 1908 and the High Court Rules.6

4      Body Corporate 325261 v Stephen Mitchell Engineers Ltd [2014] NZHC 761 at [15].

5      At [15]-[18], adopting Sutton v New Zealand Guardian Trust Co Ltd (1989) 2 PRNZ 111 (HC) at

113.

6      Judicature Act 1908, ss 26I, 26IA, 26J, 26O, 26P and High Court Rules, r 2.1.

[12]     The defendants raised no serious objection to the late filing of the second amended application for discovery at the time of the hearing, at which the defendants were fully represented by legal counsel.  They did not seek to avoid any prejudice by asking for an adjournment of the hearing and submissions were made on that matter on their behalf.   The second amended application for discovery also reduced the scope of discovery categories sought by the plaintiff.  The matter was plainly one for the Associate Judge to address as a matter of discretion and no reviewable procedural error occurred.

Errors of law relating to discovery

[13]     The  Judge’s  discovery  orders  were  relevant  given  the  existing  live  and pleaded  issues  arising out  of the original  statement  of claim  and  the draft  first amended  statement  of  claim.    The  plaintiff  also  notes  that  the  first  amended statement of claim has now been filed, as of 13 November 2015.  It is not materially different to the draft first amended statement of claim in relation to scope, the causes of action, and issues.  It conforms to the requirements set out in Bell AJ’s decision so as to enable the defendants to limit the scope of their discovery by narrowing what is an issue on the pleadings.   The Judge did not err in relation to the scope of the discovery orders.

Errors of law relating to costs

[14]     Bell AJ’s costs determination was an exercise of discretion made on the papers after both parties had an opportunity to make submissions.   Although the amount awarded is high, it was inflated by the costs of an expert witness whose involvement in the case was not criticised.   The defendants cannot make out any tenable grounds for review of the discovery decision by attacking a subsequent costs judgment which has not been challenged independently.

[15]     I  am  not  in  the  least  persuaded  that  the  defendants  have  any justifiable grounds for the lengthy delay in making the application for leave.  Judge Bell gave full reasons for his decisions when he delivered his oral judgment.  The defendants’ counsel was present then and would have been able to assess the merits of the decision, and to report the reasons and give advice to the defendants.   It was not necessary to wait until a written transcript of the reasons became available before registering a challenge to the decision, even if that had to be done on a pro forma basis pending release of the transcript.  Moreover, the defendants delayed a further two months after the written judgment was released.

[16]     There is no merit in the claims about the defendants’ difficulties with the English language.  The first defendant has affirmed two affidavits in English, despite Bell AJ’s indication that when there is a problem with a deponent’s understanding of English the Chinese version of the affidavit should be verified and then translated into English. The defendants have counsel from a Chinese speaking legal practice.

[17]     The plaintiff pointed the Court to various authorities governing applications for leave to apply for review out of time and submits the defendants should not be granted this indulgence.7   The plaintiff submitted that, during the period between the decision  and  the application  for  review,  the  defendants  never demonstrated any intention to challenge the Bell AJ’s decision and instead took steps wholly inconsistent with such an intention.  After Bell AJ issued his written judgment on

7 September 2015, the parties filed submissions and appeared before the Court in relation to a strike-out claim filed by the defendants.   On 13 October 2015, the defendants also filed and served a memorandum of counsel opposing the plaintiff’s application for costs.  Bell AJ made his costs determination on 29 October 2015, and the plaintiff had it sealed the next day.  The plaintiff served it on the defendant on

4 November 2015.  These are all steps the parties had either taken in reliance on Bell

AJ’s judgment, or steps by the defendant that were inconsistent with an intention to

challenge it.  I infer that from the proximity of the filing of this application to the

7      Sutton v New Zealand Guardian Trust Co Ltd (1989) 2 PRNZ 111 (HC); Stephens v Barron [2014] NZCA 82; Williams v Attorney-General [2014] NZHC 139; Body Corporate 325261 v Stephen Mitchell Engineers Ltd [2014] NZHC 761.

costs decision that the incidence of costs was the principal, if not the only, reason for

the extremely belated attempt to review the Associate Judge’s decision.

[18]     Lastly,  the  plaintiff  submitted  that  he  would  suffer  prejudice  if  leave  to review was granted.  He filed his first amended statement of claim, in accordance with Bell AJ’s orders, on 13 November 2015; that was one day after the defendants filed their application for review, but before the application was served.  The plaintiff submitted that if a fresh discovery application is made, the same discovery orders are likely to result and Ms Manuson properly acknowledged in oral argument that the discovery landscape had changed by the time of the hearing.   I accept that further delay caused by reconsidering an interlocutory issue which no longer has significant resonance in the proceeding would be unfair and unreasonable.

Conclusion

[19]     I was satisfied that there was nothing in the defendants’ arguments or the facts of the matter to justify exercising the discretion under r 2.3(2)(a) in favour of allowing a review out of time.  Strict compliance with time limits under the Rules is required so that interlocutory matters can be disposed of promptly to allow a matter to proceed to substantive determination.8   The parties should focus their efforts and resources on the preliminary question for hearing in August.

Costs

[20]     The application having failed, the plaintiff is entitled to costs on a category

2B scale.  If the parties cannot agree on what costs and disbursements are payable on the  application,  the  plaintiff  shall  have  leave  to  file  and  serve  a  memorandum seeking costs by 22 April 2016.  The defendants shall have until 20 May 2016 to file and serve any reply memorandum.   Costs shall then be determined on the papers unless the Court directs otherwise.

………………………………..

Toogood J

8      McGechan on Procedure (online looseleaf ed, Thomson Reuters) at [HR2.3.03].