Zhang v Yu
[2019] NZCA 677
•19 December 2019 at 12.30 pm
| IN THE COURT OF APPEAL OF NEW ZEALAND I TE KŌTI PĪRA O AOTEAROA |
| CA75/2019 [2019] NZCA 677 |
| BETWEEN | YIHUA ZHANG |
| AND | CHUNLIN YU |
| Counsel: | Appellants in person |
Judgment: | 19 December 2019 at 12.30 pm |
JUDGMENT OF BROWN J
(Review of Deputy Registrar’s decision)
The application to review the Deputy Registrar’s decision declining to dispense with security for costs is declined.
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REASONS
Background
This appeal concerns three judgments of van Bohemen J in the High Court at Auckland. On 27 August 2018 judgment was given in favour of the appellants against Ms Yu for proven specific losses in the sum of $721,952.75 together with costs and certain other items.[1] However on 29 January 2019 on the application of Ms Yu the Judge made an order recalling his earlier decision. He upheld Ms Yu’s protest to jurisdiction and dismissed the appellants’ claim.[2] In a judgment dated 19 February 2019 the Judge dismissed a request by Dr Hu for recall of the second judgment.[3]
[1]Zhang v Yu [2018] NZHC 2215.
[2]Zhang v Yu [2019] NZHC 29.
[3]Zhang v Yu [2019] NZHC 206.
On 27 February 2019 the appellants filed a notice of appeal against the second and third decisions and sought an order reinstating the first decision.
Security for costs was set at $6,600. On 19 March 2019 Dr Hu applied under r 35(6)(c) of the Court of Appeal (Civil) Rules 2005 (the Rules) for an order disposing with security. However on 25 March 2019 payment of security in the sum of $6,600 was made.[4]
[4]It was acknowledged in a letter from the Registry dated 11 April 2019.
Nevertheless the appellants pursued their application, providing copies of their bank statements. In a decision dated 28 May 2019 the Deputy Registrar declined the application. The appellants seek a review of that decision.
Relevant principles
The principles applicable to dispensation from security for costs were reviewed by the Supreme Court in Reekie v Attorney-General.[5] The Court stated that the Registrar should dispense with security if of the view that it is right to require the respondent to defend the judgment under challenge without the usual protection as to costs provided by security.[6] The Court explained:
[35] … we consider that the discretion to dispense with security should be exercised so as to:
(a)preserve access to the Court of Appeal by an impecunious appellant in the case of an appeal which a solvent appellant would reasonably wish to prosecute; and
(b)prevent the use of impecuniosity to secure the advantage of being able to prosecute an appeal which would not be sensibly pursued by a solvent litigant.
A reasonable and solvent litigant would not proceed with an appeal which is hopeless. Nor would a reasonable and solvent litigant proceed with an appeal where the benefits (economic or otherwise) to be obtained are outweighed by the costs (economic and otherwise) of the exercise (including the potential liability to contribute to the respondent’s costs if unsuccessful). As should be apparent from what we have just said, analysis of costs and benefits should not be confined to those which can be measured in money.
[5]Reekie v Attorney-General [2014] NZSC 63, [2014] 1 NZLR 737.
[6]At [31].
The Court also ruled that the review function of the judge in relation to security for costs is to be exercised de novo.[7]
Deputy Registrar’s decision
[7]At [23].
Having correctly recited the relevant principles from Reekie, the Deputy Registrar first concluded that the appellants were not impecunious because they had managed to borrow funds with which they had paid the security for costs.
The Deputy Registrar then addressed their submission that there was no need for security because it was likely that the appeal would not be defended. In concluding that it was not appropriate to waive and refund security for costs at that point, the Deputy Registrar stated:
[12] … A refund would seem premature, especially when your financial circumstances suggest you may not be able to meet any costs award that could be made in this appeal. If no costs order is ultimately made against you, either because your appeal succeeds or because Ms Yu does not incur costs of legal representation, the security for costs would then be refunded to you, together with any interest accrued.
Although recognising that the potential benefits of the appeal to the appellants outweighed the potential costs, the Deputy Registrar considered that the prospects of success on the appeal were very weak and was not satisfied that a reasonable and solvent appellant would proceed with it. Nor did she consider that the appeal gives rise to any real issues of public interest as it turns on its facts which are unique to the parties.
Discussion
In Reekie the Supreme Court recognised that an application to dispense with security is likely to be based on one of two broad grounds:
(a)costs are unlikely to be ordered against an appellant and, for this reason, security should not be required; or
(b)the appellant either cannot pay or will suffer severe hardship if payment is not required.[8]
Reekie was concerned with the second of those grounds.
[8]At [19].
As the Deputy Registrar’s decision reflects, the current application for review is primarily based on the first of those grounds. Addressing the question whether Ms Yu has knowledge of the appeal, the application for review includes the following observations:
Nor her so-called lawyer or counsel in Auckland has responded to our letters. My friend Mr Zhu who is a friend of warden visited Ms Yu and told me that Ms Yu would not respond our appeal. Accordingly, in the interest of justice, we submit the security for costs be dispensed with so we can hire a counsel to represent us. Should Ms Yu’s counsel turn up, we undertake to pay back $6600 before a hearing is held.
While the appellants may be confident that Ms Yu will not respond to their appeal, the fact is that, as the Deputy Registrar noted in the conclusion to her decision, Ms Yu was represented at the High Court hearing on 21 November 2018 which culminated in the second judgment of van Bohemen J in Ms Yu’s favour. In the observations quoted above the appellants themselves recognise the possibility that Ms Yu may again instruct counsel to appear on her behalf.
Because I agree with the Deputy Registrar’s assessment of the prospects of success of the appeal, I do not consider that it is appropriate that Ms Yu should be deprived of the protection which the security for costs regime is intended to provide.
I do not consider that the appellants should suffer any prejudice because, as the Deputy Registrar correctly concluded, if no costs order is made against the appellants on the appeal, either because they succeed or because Ms Yu does not instruct counsel to appear, then the amount they have paid by security for costs will be refunded to them.
Result
The application to dispense with security for costs is declined.
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