Zhang v Young
[2017] NZHC 1701
•21 July 2017
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV-2016-404-2829 [2017] NZHC 1701
UNDER the Land Transfer Act 1952 IN THE MATTER
of an application that a caveat not lapse
BETWEEN
JIE ZHANG Applicant
AND
TA-LO YOUNG First Respondent
AND
TA-WEI YANG Second Respondent
On the papers Appearances:
F Deliu and J Khoo for Applicant
First and Second Respondents in personJudgment:
21 July 2017
JUDGMENT OF TOOGOOD J
This judgment was delivered by me on 21 July 2017 at 3.00 pm
Pursuant to Rule 11.5 High Court Rules
Registrar/Deputy Registrar
Zhang v Young [2017] NZHC 1701 [21 July 2017]
Background facts
[1] In this proceeding Jie Zhang sought an order preserving a caveat she had lodged over a property at 60 Wintere Road, Papatoetoe, Auckland (“the Wintere Road property”). The respondents, Ta-Lo Young and Ta-Wei Yang, became the registered proprietors of the Wintere Road property after it was gifted to them by a company, King David Investments Limited (“KDI”), of which the respondents’ parents were shareholders. The basis upon which the caveat had been lodged was a claim by Ms Zhang that the Wintere Road property had been transferred to the respondents in order to defeat or inhibit effective enforcement of a proceeding brought by Ms Zhang against the respondents’ parents over a property deal (“the
Hoteo Avenue proceeding”) in which Duffy J had made consent orders.1
[2] The matter required prompt resolution because settlement was overdue for the sale of the Wintere Road property to bona fide third party purchasers.
[3] During a hearing on 15 November 2016, I indicated to counsel for the applicant, Mr Deliu, that I doubted that Ms Zhang had a caveatable interest in the Wintere Road property. I noted, however, that a barrister representing the respondents’ parents, Mr Hurd, had proposed, on an open basis, a settlement which involved removal of the caveat and the setting aside of a sum of $500,000 from the proceeds of the sale of the property. Mr Hurd suggested that any claim by Ms Zhang against the respondents, their parents and/or related interests could be satisfied from that sum in due course.
[4] I told Mr Deliu that, in the event that I concluded that the applicant's caveat could not be sustained, I would nevertheless be prepared to make an interim freezing order requiring that the proceeds of the sale of the property, after deduction of adjustments, any outstanding real estate agent's fees and legal fees and expenses, be held in a solicitor's trust account pending resolution of the applicant's claims. Mr Deliu proposed that such an order could be made on the condition that the
applicant would withdraw the caveat. He indicated, properly, that he would need to
1 Zhang v King David Investments Ltd HC Auckland, CIV-2014-404-680, Minute of Duffy J,
5 July 2016.
take instructions before consenting to such a course. I canvassed the possibility of such with the respondents who agreed with the course outlined. The matter was adjourned to a further hearing two days later.
[5] To explain the background to the costs issues addressed in this judgment, it is convenient to set out the terms of a Minute dated 17 November 2016, which recorded what happened at the resumed hearing, and the outcome:
[1] After hearing from the parties on 15 November 2016 and again this morning, I am satisfied that the applicant cannot sustain her argument that she has a caveatable interest in the property at 60 Wintere Road, Papatoetoe, Auckland (being the land comprised on title NA980/50 North Auckland Land District) (“the Wintere Road property”).
[2] I am satisfied, however, that the applicant has an arguable case that she has a traceable interest in the proceeds of the sale of the Wintere Road property by the respondents as a result of:
(a) the settlement of her claim against King David Investments Limited (“KDI”) by the making of consent orders by the High Court including, among other things, an order that KDI specifically perform in full its obligations under an agreement for the sale by KDI and the purchase by the applicant of the property at 48C Hoteo Avenue, Papatoetoe, Auckland (the Hoteo Avenue property);
(b) the failure of KDI to comply with the orders of the Court and its subsequent sale of the Hoteo Avenue property to a bona fide third party purchaser for value;
(c) the transfer of the Wintere Road property to the respondents, who are not at arms length from the proprietors of KDI, thereby reducing the value of the assets held by KDI; and
(d) the subsequent voluntary liquidation of KDI.
[3] I am further satisfied that the respondents have entered into a binding agreement for the sale and purchase of the Wintere Road property to a bona fide third party purchaser for value; that the agreement is overdue for settlement and that the interests of the innocent purchaser of the Wintere Road property will be unduly prejudiced if the settlement cannot take place.
[4] Balancing the interests of the parties to this proceeding, and bearing in mind that the merits of the positions taken by all interested parties have not been fully considered by the Court, I make the following orders (with the consent of the parties except as to the amount to be paid into Court pursuant to paragraph (b) below):
(a) The caveat lodged against the property at 60 Wintere Road, Papatoetoe, Auckland (being the land comprised on title NA980/50
North Auckland Land District) and numbered 10588987 shall not lapse until the earlier of the further order of the Court or the
withdrawal of the caveat by the applicant pursuant to the order at paragraph (d).
(b) The respondents jointly and severally shall procure that forthwith upon the settlement of the agreement for the sale and purchase of the Wintere Road property their solicitor shall pay into the High Court at Auckland the sum of $550,000;
(c) The sum paid into Court pursuant to paragraph (b) shall be held by the Registrar on interest-bearing deposit pending the further order of the Court;
(d) The applicant shall procure that caveat numbered 10588987 shall be withdrawn forthwith upon receipt by her solicitor of unconditional undertakings by the solicitor for the respondents that –
(i) he or she has received the proceeds of the settlement of the sale of the Wintere Road property; and that
(ii) he or she shall pay out of the proceeds the sum of $550,000 into Court forthwith on behalf of the respondents in compliance with the order at paragraph (b).
(e) The order at paragraph (c) is made upon the condition that the applicant shall pursue diligently her claims for damages or other relief against King David Investments Limited and any other party founded upon the agreement for sale and purchase of the property at
48C Hoteo Avenue, Papatoetoe, Auckland dated 13 April 2013 and/or the consent orders of the Court comprised in the Minute of
Duffy J dated 5 July 2016 in proceeding No. CIV-2104-404-680,
Auckland Registry (“the Hoteo Avenue proceeding”).
(f) Leave is reserved to any party to apply for further orders.
[5] I confirm that nothing in the above orders is intended to limit or defeat any claim or counterclaim for damages or set-off which may be available to any party to this proceeding arising out of the agreement for the sale and purchase of the Wintere Road property, the lodging of caveat numbered 10588987 or the making of the application for an order that the caveat shall not lapse.2
[6] Costs were reserved.
2 Zhang v Young HC Auckland, CIV-2016-404-2829, 17 November 2016 (Minute No 2 of
Toogood J).
Narrative of the parties’ costs submissions
[7] Rather than describe separately the respective submissions of the applicant and the respondents as to costs, it is convenient to set them out in narrative form.
The respondents’ memorandum of 15 December 2016
[8] The respondents have filed several memoranda as to costs. They are not all consistent. Nor are they easy to follow, because of the respondents’ apparent view that there is a confluence of this proceeding with the Hoteo Avenue proceeding.
[9] On 15 December 2016, the respondents submitted that, the caveat having lapsed and the sum of $550,000.00 having been paid into Court in terms of the Court’s orders, Ms Zhang should pay $23,310.00 for the penalty interest of $555.00 per day until the new settlement day, as she lodged a caveat on the property without interest in the land. The respondents represented themselves in the proceeding but they submitted that Ms Zhang should pay them $10,000.00 in costs, on the basis that Mr Hurd had assisted them in dealing with the issue of the caveat from the outset.
[10] The respondents also asserted that, although Ms Zhang was warned by her solicitor that she had no caveatable interest, she persisted in lodging the caveat and blamed real estate agents for advising her to do so. They produced a copy of a signed acknowledgement from Ms Zhang that she declined to accept her solicitor’s advice that she may be found liable to damages for lodging the caveat without reasonable cause. They said believed they should be entitled to withdraw the
$550,000.00 paid into Court due to Ms Zhang’s “deliberate deception.”
The respondents’ further memorandum of 13 March 2017
[11] In a further memorandum dated 13 March 2017, the respondents increased their application for costs, on the basis of the fees said to have been charged by Mr Hurd, to $12,000.00 as being “fair” out of the sum of $66,821.75 they said had been invoiced. The respondents also sought a refund of the $550,000 on the grounds that Ms Zhang “withheld the sealed Order for two months … to trap Ms Ying contempt
of court [sic] and lodged the caveat illegally (against s 240 of Crimes Act) in order to get a ransom of $550,000, no person may profit from his wrong (Riggs v Palmer) so we pray the court to refund the deposited $550,000.”
[12] The quoted passage appears to refer to a judgment given in the Hoteo Avenue proceeding3 in which Palmer J held one of KDI’s directors, Ms Ying, to be in contempt of court for failing to comply with orders of the Court summarised in my Minute of 17 November 2016 and quoted above at [5].
The Hoteo Avenue proceeding
[13] To continue the narrative and to try to explain the respondents’ further submissions on costs, I set out relevant excerpts from a subsequent Minute of Palmer J in the Hoteo Avenue proceeding, issued on 4 April 2017:
[2] In CIV-2014-404-680 (the contempt application) Ms Zhang was successful before me on 13 December 2016 in seeking a finding of contempt against the Interested Party, Ms Ying, and obtained an order of payment from funds held by the Court. The judgment of 13 December 2016 awarded interest and indemnity costs to Ms Zhang on these terms:
[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.
[48] 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 Zhang v King David Investments Ltd (in liq) [2016] NZHC 3018.
Applications
[3] By my calculation, the deadlines of 10 and 20 working days in the contempt decision expired on 17 January 2017 and 1 February 2017 respectively.
[4] On 15 December 2016 Ms Zhang, herself, filed a memorandum seeking costs of $43,550, and the $506,000, to be paid to her personally. It is not clear it was served on the other party or on Ms Zhang’s own counsel. I understand the Registry sought clarification of the status of the memorandum. On the same day, 15 December 2016, Mr Young and Ms Ying purported to apply for a stay of execution of the judgment. It was not brought to the attention of a judge, but I find below it was not a valid application.
[5] On 20 January 2017 the Registry provided sealed orders based on the contempt judgment to Ms Zhang’s lawyer, Mr Deliu, instructed by Richard Zhao at Justicia Chambers. On 27 February 2017 the Registry paid out $506,000 to Richard Zhao Lawyers Ltd.
[6] On 9 March 2017 the plaintiff’s new counsel, Ms Finau, instructed by Miss Shi (apparently also at Justicia Chambers), filed a memorandum seeking to quantify interest and costs in both proceedings. She sought:
(a) interest of $9,487.50 for the contempt decision.
(b) costs for the caveat decision on a 2B basis of $7,307; and
(c) costs for the contempt decision on an indemnity basis of
$44,472.75. The figure was arrived at by deducting the 2B
costs of the caveat decision from the indemnity costs for both applications of $51,779.75.
[7] Ms Ying and Mr Young filed a response on 13 March 2017:
(a) They objected it was too late for costs to be awarded since the deadlines set in the contempt judgment were not met.
(b) They sought a stay of execution since they had appealed the judgment to the Court of Appeal and had applied to stay execution of the judgment on 15 December 2016.
(c) They submitted the plaintiff was not entitled to costs for the caveat application since she was not successful. Instead, they sought costs of $12,000 for the advice they received as self-represented litigants from a barrister, Mr Hurd, as well as “damages of $24,410.96 (44 days’ late settlement penalty)”.
(d) They also sought a refund of the $550,000 on the grounds Ms Zhang “withheld the sealed Order for two months (Exhibit B) to trap Ms Ying contempt of court and lodged the caveat illegally (against s240 of Crimes Act) in order to get a ransom of $550,000, no person may profit from his
wrong (Riggs v Palmer) so we pray the court to refund the
deposited $550,000”.
...
Costs and interest
[10] It was entirely wrong of Ms Zhang’s counsel to seek what is
effectively indemnity costs for both proceedings together and then to deduct
2B costs for one of them. She will have to apply for each set of costs separately. Toogood J and I will each consider them.
...
[15] Neither do I order a “refund” of the $550,000 which Toogood J ordered, by consent, to be paid into Court. I am not seized of that matter. Such an application can only be pursued by way of an appeal of Toogood J’s order. And that order was granted by consent – i.e. with the agreement of Ms Ying and Mr Young.
...
[26] In summary:
...
(b) I direct 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 this Minute, i.e. by 5 pm 20 April 2017.
....4
[Footnotes omitted]
[14] I infer from a comparison of the layout and content of the memorandum of
13 March 2017 filed by the respondents in this proceeding, and the memorandum of the same date filed by defendants in the Hoteo Avenue proceeding as described by Palmer J at [7](c) and (d) of his Minute of 4 April 2017, that the respondents simply photocopied the operative page of the memorandum in the Hoteo Avenue proceeding (including the defendants’ signatures) and added a coversheet for this proceeding and
their own signatures.
4 Zhang v King David Investments Ltd (in liq) HC Auckland, CIV-2014-404-680, 4 April 2007 (Minute No 2 of Palmer J).
The applicant’s memorandum of 20 April 2017
[15] In a memorandum dated 20 April 2017, counsel for Ms Zhang sought costs in relation to the application that the caveat not lapse. While it is accepted that the application was declined, Ms Zhang relies on the ruling that she had an arguable case for a traceable interest in the proceeds of the sale of the Wintere Road property. She submitted that, as the parties agreed the sale proceeds would be paid into Court, the purpose of the application to secure her interests was achieved, albeit in a different form than the remedy she sought. Accordingly, Ms Zhang says that the application had merits. Counsel submitted that Ms Zhang is entitled to costs on a category 2B basis amounting to $7,307.
The respondents’ further memorandum of 27 May 2017
[16] A further costs memorandum dated 27 May 2017 (described on the coversheet as “2nd Memorandum for Indemnity Costs”) was filed by the respondents. The Court has no record of the respondents having made an application for indemnity costs in this proceeding. In a memorandum dated 25 May 2017 filed in the Hoteo Avenue proceeding, however, the interested party and the second defendant (who are not parties to this proceeding) said:
We applied for indemnity cost of $36,200 for 60 Wintere Rd, but have not received any response from Toogood J.
[17] When the absence of any application by the respondents in this proceeding for indemnity costs was raised with them through email correspondence with Registry staff, the respondents simply sent a copy of their memorandum dated 27
May 2017. In that memorandum they refer to their December 2016 memorandum but not to the applicant’s costs memorandum. They assert that, because of the registering of the caveat, the settlement of 60 Wintere Road was 44 days late, resulting in a loss for penalty interest (15%) of $24,410.76. The respondents argue that the sum of $12,000 sought in their 13 March 2017 memorandum is reasonable, especially in comparison to costs of $17,000 claimed by Ms Zhang’s former counsel Mr Deliu in a separate proceeding in this Court where the respondents’ mother lodged a caveat on his property. In the alternative, they “pray the cost for two cases
can be set off” (without identifying the two cases to which they refer) such that Ms Zhang only need to compensate them for the loss of $24,410.76 for late settlement interest.
[18] The respondents go on to say that they lent their mother $550,000 and deposited it into a High Court trust account. They allege that Ms Zhang “has disappeared after she received the compensation of $506,000 and say “there is pending indemnity costs paid to Jie Zhang” from the Hoteo Avenue proceeding and say the amount of $24,410.76 can be deducted from those. “Otherwise, Jie Zhang has to pay [them] $37,378.39 in total.” They do not explain how that latter figure has been calculated.
Discussion
[19] The respondents have not made a proper claim for indemnity costs in this proceeding and none could be justified.
[20] I turn to the respondents’ attempt to set off costs of one kind or another from different proceedings involving different parties. As Palmer J said at [10] of his Minute No 2 dated 4 April 2017, that it is an entirely wrong approach. Costs orders in other proceedings are irrelevant to this. So is an informal claim to penalty interest which has not been put before the Court in this proceeding.
[21] The applicant and the respondents claim costs from each other, each asserting that they have succeeded in the caveat application proceedings:
(a) The applicant says she is entitled to costs on a 2B basis amounting to
$7,307;
(b)The respondents claim they are entitled to $12,000 costs as a fair sum out of what they say was $66,821.75 of their actual costs.
[22] Under High Court r 14.1(1) all matters of costs are at the discretion of the Court but the discretion must be exercised in line with the principles set out in the High Court Rules and leading costs judgments. Rule 14.2(a) provides the
fundamental principle that “the party who fails with respect to a proceeding or an
interlocutory application should pay costs to the party who succeeds”.
[23] As a general rule, in New Zealand self-represented litigants are not entitled to recover costs other than in exceptional cases.5 There are differing views in this Court, however, about whether legal fees for the provision of advice are recoverable by a self-represented litigant as a disbursement. In Sax v Simpson, Duffy J concluded that litigants in person were not entitled to any costs. The Judge said she knew “of no case where a self-represented party has obtained an award of costs for preparatory work done by a barrister who has provided the party with assistance.”6
Conversely, in an earlier decision of Knight v Veterinary Council of New Zealand Clifford J allowed a litigant in person to recover, as reasonable disbursements, money paid for legal advice in relation to preparation for the proceedings, being the cost of paying a solicitor for help in preparing documents.7 Clifford J held that sums paid to a solicitor for help in preparing documents, and assistance in preparing to appear and argue the case in person, may be awarded as reasonable disbursements.
[24] I do not need to decide that issue in this case. It is clear that Mr Hurd did not participate in the proceeding itself to qualify for the payment of schedule costs so any claim to recover costs for the provision of advice would first have to meet the threshold for indemnity costs. As I have said, no such application has been made and it would not succeed in any event.
[25] Moreover, the respondents have not provided a breakdown of Mr Hurd’s fees for any services which might have been rendered to them and for services which he provided to the defendants in the Hoteo Avenue proceeding. I accept that Mr Hurd may have engaged in limited correspondence on behalf of the respondents with the applicant’s solicitor, Mr Deliu, but despite the provision of s solicitor’s statement of receipts and payments there is no material before the Court to justify a payment of
$12,000.00 towards his fees.
5 Commissioner of Inland Revenue v Chesterfields Preschools Ltd [2010] NZCA 400, (2010) 24
NZTC 24,500 at [162]; Re Collier (A Bankrupt) [1996] 2 NZLR 438 at 441–442.
6 Sax v Simpson [2017] NZHC 1128.
7 Knight v Veterinary Council of New Zealand HC Wellington CIV-2007-485-1300, 31 July 2009.
[26] The applicant argues that, despite the failure of her application for an order that the caveat should not lapse, the overall purpose of the application – to secure her interests in the funds to be derived from the sale of the property – was achieved. This simply took place in a different form; rather than maintaining a caveat on the title to the property, a portion of the proceeds was held by the Court on trust and resulted in her receiving payment of the damages she sought in the Hoteo Avenue proceeding.
[27] I acknowledge that the respondents partly succeeded in defending the application, in that the caveat was not sustained. The applicant partly succeeded also, however, in that the respondents were required to procure the payment of a large portion of the sale proceeds into Court.
Conclusion and result
[28] In my view, both parties had a measure of success. I conclude that costs in this proceeding should lie where they fall.
[29] Accordingly, I dismiss each party’s application for costs.
……………………….
Toogood J
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