Zhang v King David Investments Ltd (in liquidation)

[2017] NZHC 1040

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2014-404-680 [2017] NZHC 1040

BETWEEN

JIE ZHANG

Plaintiff

AND

KING DAVID INVESTMENTS LTD (IN LIQUIDATION)

First Defendant

JINYUE YOUNG Second Defendant

HSIANG-FEN YING Interested Party

Hearing:	On the papers
Appearances:	P Finau for Plaintiff Second Defendant and Interested Party in person
Judgment:	26 May 2017

REPLACEMENT JUDGMENT NO 2 OF PALMER J (INTEREST AND COSTS)

This judgment is delivered by me on 26 May 2017 at 2 pm pursuant to r 11.5 of the High Court Rules.

..................................................... Registrar / Deputy Registrar

Solicitor/Parties:

Justitia Chambers, Auckland
Second Defendant

Interested Party

Copy to:

Plaintiff

ZHANG v KING DAVID INVESTMENTS LTD (IN LIQ) & ORS [2017] NZHC 1040 [26 May 2017]

Recall and replacement of judgment

[1]      This judgment replaces the earlier Judgment No 2 of 24 May 2017 in this proceeding which I recalled.   The recalled judgment recorded there had been no response from Mr Young and Ms Ying to Ms Zhang’s revised submissions on costs and interest.  That was based on the Registry’s answer to a specific question from me about whether there had been such a response.   However, Ms Ying objected there had been a response.   Further inquiry revealed a response had been filed but associated by the Registry with the wrong file.  As recorded in Minute No 3 of 25

May 2017, I considered this circumstance required the judgment to be recalled.   I have now considered the memorandum of Mr Young and Ms Ying and issue this new Judgment No 2.

Interest and costs to date

[2]      In my judgment of 13 December 2016 I awarded interest and indemnity costs to Ms Zhang on these terms:1

[47]      I also order interest at the Judicature Act rate on the $506,000 from the time at which payment under the Consent Orders was required, i.e. from

13 September 2016.  The parties are to file a joint memorandum, or failing agreement, separate memoranda, on what that amount is within 10 working days of the date of this judgment.

[48]      I order that the $506,000 be paid by the Registry to Ms Zhang as soon as practicable from the $550,000 order by Toogood J to be paid into Court in relation to the Wintere Road property.  The interest payment will also be met from the remainder of that sum.

[49]     I also order indemnity costs to be paid to Ms Zhang for these proceedings (not for the proceedings which were settled by the Consent Orders, in respect of which costs were agreed to lie where they fell).  I direct the parties to file a joint memorandum, or failing agreement separate memoranda, within 20 working days of the date of this judgment as to the amount of indemnity costs for these proceedings.  These costs will be paid from the remainder of the $550,000 fund with any excess still owing after that to be paid by Mr Young as second defendant.

[3]      Attempts to quantify the interest and costs misfired because Ms Zhang’s

counsel conflated the costs of my contempt decision with the costs for Toogood J’s

caveat decision.2   In Minute No 2 of 4 April 2017, amongst other things:

1      Zhang v King David Investments Ltd (In liquidation) & Ors [2016] NZHC 3018 at [47]-[49] and

[54](f), (g), (h).

(a)      I  directed  counsel  for  Ms  Zhang  to  file  and  serve  memoranda quantifying  the  interest  to  be  paid  from  13  September  2016  to

17 January 2017 within five working days of the date of that minute, i.e. by 5 pm 11 April 2017.   Ms Ying and Mr Young were given a further five working days to file and serve a memorandum responding to the quantification, i.e. by 5 pm 20 April 2017.

(b)I directed counsel for Ms Zhang to file and serve separate memoranda on costs in relation to the contempt decision and the caveat decision within 10 working days of the date of that minute, i.e. by 5 pm 20

April 2017.

[4]      On  11 April  2017  a  memorandum  was  filed  by  counsel  for  Ms  Zhang quantifying the interest.  On 19 April 2017 a memorandum was filed by Mr Young and Ms Ying on interest and costs.  On 20 April 2017 a memorandum was filed by counsel for Ms Zhang calculating costs on the contempt decision.  I take into account the submissions of the parties regarding the misfired applications as well as the revised applications.

[5]      After I recalled Judgment No 2 on 25 May 2017 I also received a further memorandum from Ms Ying and Mr Young.  It largely consists of allegations against Mr  Deliu,  Ms  Zhang’s  former  counsel,  and  rehashes  their  grievance  about  the original transaction that led to the Consent Orders Ms Ying breached.

[6]      In his Minute No 2 of 17 November 2016, Toogood J ordered funds to be paid into Court with the consent of the parties except as to amount.   He ordered

$550,000 to be paid in.  In my judgment of 13 December 2016 I ordered $506,000 be paid from that fund to Ms Zhang.  Accordingly, the amount remaining in the fund is

$44,000.   I am advised by the Registry that, as at 23 May 2017, net interest of

$1,780.91 has accrued, so the total in the fund stands at $45,780.91.

2      Minute No 2 of Toogood J of 17 November 2016.

Application for interest and costs

[7]      In my judgment of 13 December 2016 (at [47]) I ordered interest at the Judicature Act  rate on  the $506,000  due to  Ms  Zhang  from  the  time at  which payment under the Consent Orders was required, i.e. from 13 September 2016.  In Minute No 2 of 4 April 2017 (at [13]) I confined interest so it ran only until the end of the original 10 working day deadline for filing the quantification of interest, i.e.

17 January 2017.   Counsel for Ms Zhang quantified the interest in the amount of

$12,788.63.

[8]      In the judgment of 13 December 2016 (at [49]) I ordered indemnity costs be paid to Ms Zhang.  Counsel for Ms Zhang calculated indemnity costs relating to the contempt proceeding to be a total of $36,386.60.

[9]      As I noted in Minute No 2 of 4 April 2017, on 31 March 2017, Ms Jennifer Shi, who appears to be the solicitor instructing Ms Finau at Amicus Law, sought leave to withdraw as solicitor representing Ms Zhang.  The grounds were that she was “bereft of instructions”.  The application relied on an affidavit by a law clerk at Amicus Law who attests to being unable to obtain instructions from Ms Zhang “for weeks”.

Response by Mr Young and Ms Ying

[10]     Mr Young and Ms Ying do not appear to have responded specifically to either the quantification of interest or the quantification of indemnity costs.  Rather, they submit  that  interest  be  suspended  until  the  outcome  of  their  appeals  of  my 13

December 2016 judgment.   On costs, they submit that, because Ms Ying was unsuccessful in defending the contempt proceeding, and Mr Young was successful, Ms Ying should pay costs to Mr Young instead of to Ms Zhang.3

[11]     Generically they submit  I should “withhold the remaining fund until the decision of appeal is made, to show fairness to all parties”.4    This appears to be a

3      Citing Andrew Beck and others McGechan on Procedure (online looseleaf ed, Brookers) at

[HR14.14.03] and Sanderson v Blyth Theatre Co [1903] 2 KB 533.

4      Memorandum for Interest and Cost of Jin Yue Young and Hsiang Fen Ying dated 17 April 2017 at [1] and see [7].

request that I not award payment of interest or costs until an appeal of my judgment by Mr Young and Ms Ying is determined.   They also traverse various actions by court staff and Ms Zhang’s various counsel.   These include allegations that Mr Richard Zhao drew down the funds paid into court while he was suspended from legal practice by the New Zealand Law Society.  They also include allegations that Ms Zhang’s legal fees had already been deducted by Amicus Law and that Ms Zhang herself cannot be found.

Decision

[12]     I explained in Minute No 2 of 4 April 2017:

(a)      I do not regard Ms Ying’s and Mr Young’s appeals as a reason to stay the interest or costs orders.   If an appeal succeeds in the Court of Appeal, a High Court costs award can be revisited.5

(b)Mr  Young’s  purported  application  for  a  stay  of  execution  of  the judgment of 13 December 2016 was not valid and, if it had been valid, I did not consider it had merit.6

(c)      Mr  Young’s  interlocutory  ex  parte  application  for  Ms  Zhang  to surrender her passport, show where the $506,000 is, have her bank accounts frozen and pay indemnity costs on that application made no sense, had no chance of success and I dismissed it.7

[13]     I have already ordered interest and indemnity costs be paid to Ms Zhang in the judgment of 13 December 2016.   Rule 14.2(a) of the High Court Rules 2016 provides that the party who fails should pay costs to the party who succeeds.  Rule

14.6(4)(b) empowers a court to order a party to pay indemnity costs if the party has ignored  or  disobeyed  an  order  or  direction  of  the  court.  What  remains  is quantification and payment. As per my explanation above, an appeal is not a basis to

stay that.  I accept Ms Zhang’s calculations of interest and costs.

5 At [14].

6 At [21].

7 At [24].

[14]     The submission that Ms Ying should pay costs to Mr Young, rather than to Ms Zhang, is not well founded.  My judgment did not find Mr Young is entitled to costs.  Rather, it expressed concern about his actions.8   However it is correct I found Ms Ying committed a contempt and Mr Young did not.9   Accordingly, it follows that the remainder of the costs still owing after payment from the funds paid into court

should be paid by Ms Ying rather than by Mr Young. [15]           Accordingly:

(a)      I direct interest in the amount of $12,788.63 should be paid to Ms Zhang from the remainder of the funds paid into Court as ordered by Toogood J.   Payment of that amount of interest would mean there would be around $32,992.28 left (based on the amount remaining on

23 May 2017).

(b)I award costs to Ms Zhang of $36,386.60 to be paid, in the first instance, from the remaining amount of the funds paid into Court, as ordered by Toogood J, toward that cost sum.

(c)       Pursuant to paragraph [49] of my judgment of 13 December 2017, I

order the remainder of the costs still owing (which, based on the 23

May 2017 total, would be around $3,394.32) must be paid to Ms

Zhang by Ms Ying, after step (b) is implemented.

[16]     I am not in a position to consider the allegations made by Mr Young and Ms Ying about Mr Zhao. They are a matter for the New Zealand Law Society.  I referred my 13 December 2016 judgment to the Law Society for consideration in relation to the actions of Mr Young.  Similarly, I now refer this judgment to the Law Society for consideration of any issues it may wish to investigate in relation to Mr Zhao or any

other law practitioner involved with these events.

8 At [44].

9      At [43] - [44].

[17]     Finally, I am concerned about the questions raised about whether Ms Zhang can be contacted, and the affidavit by the law clerk that Amicus Law have not had instructions for weeks.  I require that, before the Registry pays out the amounts to Ms Zhang ordered above, the Registry must be ensure that, if payment is made to Ms Zhang through a legal representative, she is currently instructing that representative.

..................................................................

Palmer J