Zhao v He

[2020] NZHC 2300

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2019-404-1790

[2020] NZHC 2300

BETWEEN

CHONOGMING ZHAO

Appellant/Respondent

AND

MU HE

Respondent/Applicant

On the papers:
Judgment:	4 September 2020

JUDGMENT OF HINTON J

[Application for Leave to Appeal Costs Judgment]

This judgment was delivered by me on 4 September2020 at 2:00 pm pursuant to Rule 11.5 of the High Court Rules

…………………………………………………………………… Registrar/Deputy Registrar

Solicitors:

Meredith Connell, Auckland

ZHAO v HE [2020] NZHC 2300 [4 September 2020]

[1]        On 18 March 2020 I gave judgment in this matter allowing in part Mr Zhao’s appeal against a decision of the Family Court. I allowed the appeal in respect of the finding that there was a relationship property asset of $400,000 received by Mr Zhao, but otherwise dismissed the appeal.1

[2]        So far as costs were concerned, at the conclusion of that judgment, I expressed the indicative view that:

[33]      The appellant has had success in bringing this appeal, albeit not on all grounds. Partial success still being success, and the other points having been reasonably pursued and not having unduly prolonged the matter, I consider the appellant is entitled to costs on a 2B basis.

[34]      If the parties cannot agree costs on that basis, the appellant is to file and serve a memorandum within three weeks of the date of this judgment, with the respondent to have three weeks to reply. Memoranda are not to exceed four pages in length, exclusive of covering sheets and supporting material such as invoices.

[3]        The parties did not agree costs and so submissions were filed. On 19 May 2020 I delivered a costs judgment.2 For the reasons I summarise below, I ordered Ms He to pay Mr Zhao costs on a 2B basis in the amount of $18,044.50, together with disbursements of $2,461.46 (a total sum of $20,505.96).

[4]        Ms He now applies for leave to appeal against my costs judgment to the Court of Appeal, saying I erred in my approach to costs in a situation in which an appellant is partially but not wholly successful.

[5]        I note that Ms He has changed solicitors and is now represented by Mr Malarao of Meredith Connell.

[6]        Mr Zhao’s lawyer also withdrew following my judgment and Mr Zhao himself has not taken any steps in response to Ms He’s application for leave despite inquiries being made by the Court’s registry. He would now be well out of time to do so. In these circumstances I proceed to determine the matter on the papers.3

1      Zhao v He [2020] NZHC 550.

2      Zhao v He (Costs) [2020] NZHC 1048.

3      High Court Rules 2016, rr 7.33 and 7.43A.

Costs Decision

[7]        Ms Reed, previous counsel for Ms He, relied in her submissions as to costs on r 14.7, saying I should award Mr Zhao 20 per cent of scale costs at most. Ms Reed submitted that Mr Zhao had significantly increased Ms He’s costs by taking the unsuccessful points. I disagreed, noting the claim was factually dense and much of the hearing was spent familiarising the Court as to the factual background. The additional time and effort related to the unsuccessful points, each of which was at least arguable, was relatively modest. For this reason, I did not consider, in terms of r 14.7, that a reduction in costs was appropriate. Taking a robust view of success and failure, partial success being success, I made an award of costs according to scale. I was also influenced by the fact that the successful point involved a material sum.

Discussion

[8]        In Reid v New Zealand Fire Service Commission the Court of Appeal held, following other cases, that a party wishing to appeal a costs decision on a first appeal is to be treated as if seeking a second appeal, such that leave is required and the criteria governing application for leave to bring a second appeal apply.4 This on the basis, in summary, that it would be anomalous for an appeal to lie from the costs decision as of right where an appeal lies from the substantive decision only with leave, given that “the issue of costs is inextricably tied to the appeal from the lower court decision”.5

[9]        Mr Malarao suggests that Reid is now arguably distinguishable, as it was decided under the now-repealed Judicature Act 1908 and the corresponding provisions of the Senior Courts Act 2016 are differently worded.

[10]      The wording of the relevant provisions is only slightly changed, and I do not consider that has any impact on the application of Reid.

4      Reid v New Zealand Fire Service Commission [2010] NZCA 133, (2010) 19 PRNZ 923 at [28]- [30]; Hawthorne v Cox [2008] NZCA 146 at [14]-[15], General Manager, Auckland Central Remand Prison v Mailley [2009] NZCA 314, [2009] NZAR 649 at [22]-[36], and Attorney- General v Howard [2010] NZCA 58 at [68]-[69] per Glazebrook J, at [166] per William Young P, and at [183] per Robertson J. Compare Friends of Pakari Beach v McCallum Bros Ltd [2008] NZCA 87, [2008] 2 NZLR 649 at [48].

5      Hawthorne v Cox [2008] NZCA 146 at [14].

[11]      Here, the appeal provision in the Property (Relationships) Act 1976 is s 39B(1), the effect of which is that leave would be required to further appeal the substantive decision to the Court of Appeal. Allowing an appeal against the costs decision to lie as of right when leave is required to further appeal the substantive decision to which it is “inextricably tied” would be clearly inapt, as noted in Reid.

[12]      For these reasons, I consider the criteria governing leave for an application to bring a second appeal apply. Accordingly, the ultimate question is whether justice requires an appeal, which requires at a minimum that the proposed appeal:6

(a)raises a question of law or fact that is capable of bona fide and serious argument; and

(b)involves some public or private interest of sufficient importance to justify the cost and delay that an appeal creates.

[13]      Ms He says these criteria are satisfied because the question of who is “the successful party”, in a case where an appellant succeeds on only one of several grounds of appeal, is a matter of sufficient public and private interest to justify an appeal, and one capable of bona fide and serious argument. The correct approach to r 14.7 in such circumstances is also said to be a proper question for consideration on appeal.

[14]      In support of these contentions, Mr Malarao submits my decision on costs “will result in the washing away of a large part of the applicant’s success in the Family Court”. This because, he says, the costs decision in this Court is for about half of what will likely be awarded in the Family Court,7 and yet the appeal required significantly less preparation and a shorter hearing than the trial. He submits this is unfair, and points to the need for the Court of Appeal to develop a more “nuanced approach” in assessing success and failure, in contrast to the robust approach I adopted. Moreover, he says the financial implications for Ms He provide by themselves a sufficient private interest to warrant a second appeal.

6      Waller v Hider [1998] 1 NZLR 412 (CA) at 413.

7      Which he estimates as being between $39,155 and $49,660.

[15]      So far as the proposed appeal relates to the definition of “the successful party”, it is well established that a “robust view”, as opposed to the nuanced view the applicant says would produce a more just result, should be taken of success and failure. Sometimes costs are allocated to each issue, and those relating to unsuccessful claims declined. Other times they are not. This depends on a judicial evaluation of the circumstances of the case, such as that I undertook in my earlier judgment.8  It is not a question of policy, or even one of law, requiring appellate consideration.

[16]      Similarly, insofar as the proposed appeal relates to the application of r 14.7, that would also involve the reconsideration of well-established principles, being those detailed by the Court of Appeal in Weaver v Auckland Council. For the same reasons I did not consider Weaver assisted Ms He in this case, I do not consider this case invites reassessment of those principles.9

[17]      The perceived unfairness to which Mr Malarao points results, as he acknowledges, from the operation of the two different costs scales. That is a matter to be taken up with the Rules Committee, not the Court of Appeal.

[18]It follows there is no public interest in an appeal.

[19]      Nor do I consider a sufficient private interest exists. The total amount at stake is no more than about $18,000, which would seldom warrant an appeal to the Court of Appeal. Further, this is not a case of parties who are financially disadvantaged. The amount at issue on the appeal was about $1,600,000.

Result

[20]For all of the above reasons, the application for leave to appeal is dismissed.

[21]      Mr Zhao having taken no steps in respect of this application, costs on the application are to lie where they fall.

Hinton J

8      Zhao v He (Costs) [2020] NZHC 1048 at [16].

9      At [16]-[19], citing Weaver v Auckland Council [2017] NZCA 200, [2017] 24 PRNZ 379.