Zhao v He

[2020] NZHC 1048

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2019-404-1790

[2020] NZHC 1048

UNDER

the Property (Relationships) Act 1976

IN THE MATTER

of an appeal against a decision of Judge S J Maude dated 8 August 2019

BETWEEN

CHONGMING ZHAO

Appellant

AND

MU HE

Respondent

On the papers:
Judgment:	19 May 2020

JUDGMENT OF HINTON J

[Re Costs]

This judgment was delivered by me on 19 May 2020 at 4:30 pm pursuant to Rule 11.5 of the High Court Rules

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

Solicitors/Counsel:

Alex Ashmore, Barrister, Ponsonby Prestige Lawyers Limited, Auckland

ZHAO v HE [2020] NZHC 1048 [19 May 2020]

[1]                 On 18 March 2020, I gave judgment in this proceeding determining Mr Zhao’s appeal against a reserved judgment of the Family Court dated 8 August 2019.1

[2]                 I allowed the appeal in respect of the Family Court Judge’s finding that there was a relationship property asset of “$400,000 received by Mr Zhao”, but otherwise dismissed the appeal.2

[3]As to costs, I expressed the view as follows:

[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.

[4]The parties did not reach agreement.

[5]                 Mr Ashmore, counsel for Mr Zhao, has filed submissions seeking that Mr Zhao be awarded costs on a 2B basis in the amount of $18,044.50, together with disbursements of $2,461.46, for a total award of $20,505.96.

[6]                 Ms Reed, for the respondent Ms He, opposes on two bases. First she submits that the appellant in effect wrongly claims twice in respect of the first case management conference, because there was “no discussion regarding discovery”, the parties filed a joint memorandum, and attendances were excused. Secondly, she submits that Mr Zhao should receive at most only 20 percent of scale costs.

[7]                 As to the first point, item 10 of sch 3 relates to “preparation for first case management conference (including discussions about discovery)” and item 11 relates to “filing memorandum for first case management conference”. Item 10 is clearly not limited to discussions about discovery, which discussions would be most unusual on

1      Zhao v He [2020] NZHC 550.

2 At [32].

an appeal. The fact a joint memorandum was filed indicates there was some “discussion” between the parties as to the contents of that memorandum. I consider it appropriate that recovery be permitted in respect of both steps. Items 10 and 11 really address attendances between filing of an appeal and preparation of the bundle, other than actual attendance at a conference.3

[8]                 In addition, Ms Reed submits that Mr Zhao should be entitled to 20 per cent of scale costs at the most, and preferably, costs should lie where they fall. She submits that the points on which the appellant failed occupied more than 80 percent of the hearing, and 90 percent of the time spent overall. She notes that my consideration of the successful ground of appeal occupied only 3 paragraphs of the judgment, while 20 paragraphs were spent on the unsuccessful grounds of appeal. Ms Reed also notes that the practical benefit Mr Zhang realised from success on the one ground, was $400,000, in contrast to something like four times that amount at stake on the other issues canvassed during the appeal.

[9]                 All of this, Ms Reed says, impels the conclusion that Mr Zhao put Ms He to considerable unmerited time and expense in taking the unsuccessful points. Ms Reed does not cite a particular rule but I take it that she is relying on r 14.7(d) of the High Court Rules 2016 to apportion costs as between the successful and unsuccessful issues.

[10]             For Mr Zhao, Mr Ashmore submits that a robust view should be taken of success and failure in determining costs.4 He further submits that the issues on which Mr Zhao was unsuccessful turned simply on application of the evidence, whereas the issue on which he succeeded was the most legally and factually involved. He notes, finally, that the need for further submissions after the hearing resulted from the respondent’s seeking at the hearing to defend the Family Court judgment on grounds not advanced in the Family Court (related to the application of s 44 of the Act).

[11]             The principles relating to costs are set out in Part 14 of the High Court Rules 2016, with the general principles set out at r 14.2.

3      Which is the subject of item 13 of sch 3.

4      Water Guard NZ Ltd v Midgen Enterprises Ltd [2017] NZCA 34 at [13], affirmed Midgen Enterprises Ltd v UV Water Systems Ltd [2017] NZSC 68. I note though that Midgen was a case about who should receive costs, not about the circumstances in which costs might be reduced.

[12]             The starting point, as the authorities referred to by Mr Ashmore indicate, is the presumption that “the party who fails with respect to a proceeding … should pay costs to the party who succeeds”5, a robust view of success should be taken, and the presumption should not be too readily displaced. In this respect, r 14.2(g) is particularly relevant. It provides that “as far as possible the determination of costs should be predictable and expeditious.” That objective would be undermined if too fine an approach was taken to determining costs awards.

[13]             Under r 14.7, despite the starting presumptions in r 14.2, costs may be reduced, or an order for costs refused, in various circumstances.   The most relevant here is     r 14.7(d), where:

although the party claiming costs has succeeded overall, that party has failed in relation to a cause of action or issue which significantly increased the costs of the party opposing costs.

[14]             Similarly, r 14.7(f)(i) envisages a reduction in or refusal of costs where the party claiming costs “contributed unnecessarily to the time or expense of the proceeding” by, inter alia, “taking or pursuing an … argument that lacks merit.”

[15]             I note the further implicit reminder in r 14.7(g) of the principle that “the determination of costs should be predictable and expeditious”.

[16]             It is helpful to consider the Court of Appeal decision on r 14.7(d) in Weaver v Auckland Council, to which both counsel referred.6 The Court made a number of comments that do not support, in my view, the approach proposed by the respondent in this case. First, the Court noted the need to deal with issues as to costs “in the round”7. Secondly, and relatedly, the Court emphasised that it is necessary to adopt a “realistic appraisal” of the end result in adopting costs, rather than the Judge being obliged to “unpick … in detail” the steps taken in the case and the extent to which the initiator of each step won or lost in respect of that step.8 Thirdly, the Court emphasised that, absent exceptional circumstances, the presumption that the party who fails should

5      High Court Rules 2016, r 14.2(1)(a).

6      Weaver v Auckland Council [2017] NZCA 300, [2017] 24 PRNZ 379.

7 At [18].

8      At [23]-[24].

pay costs to the party who succeeds – in the sense of being allowed or refused relief – should apply.9 Fourthly, and most importantly, the court was obviously concerned that:

although the appellants succeeded, the time and resources necessary for the respondent to meet ultimately unsuccessful arguments significantly increased its costs. Like [the High Court judge], we assess that increase at around 100 per cent or roughly a doubling of effort and time. A reduction in entitlement by half is therefore appropriate.

[17]             That comment, crucially, was made in respect of the trial of a number of matters related to a leaky building, including related third-party claims; the hearing of which had occupied over two weeks of hearing time. The doubling of the time and effort required from the unsuccessful parties by the taking of the unsuccessful points was, it follows, “significant” in terms of r 14.7(d).

[18]             The position here is quite different. This is an appeal. It occupied only three- quarters of a day of hearing time. The total costs claim is for only 7.55 notional ‘days’ work, including appearances at the hearing. As I said in my judgment, this case was factually dense. Much of the work on an appeal of this nature is spent on familiarising the Court as to the factual background, and that was so here. The additional time spent on each of the three points was relatively modest. None of them I considered to be complicated. The point on which the appellant won was clearly correct and the other two, where the appellant lost, were at least arguable.

[19]             Further, unlike in Weaver, whatever difference the appellant’s taking of the unsuccessful grounds of appeal made to the length of the hearing and the work required, I am not satisfied it was so “significant” for the purposes of r 14.7(d) as to provide a reason for refusing or reducing costs in the face of the principle that determination of costs should be predictable and expeditious. I consider that to be in accordance with the reasoning of the Court in Weaver, and the policy of the costs regime.

[20]             I paused over the appellant’s claim of $2,390 for costs in relation to the additional submissions I sought from the parties. These were on one of the appellant’s

9 At [26].

losing points but were on an argument advanced by the respondent which I ultimately considered had no merit or was unnecessary. I found for the respondent at least in part on a basis not argued by her. In all of the circumstances and particularly given the material additional time the appellant has had to spend on costs submissions, for which I make no further award, I leave the appellant’s costs claim undisturbed.

[21]             The respondent’s submission that the amount at stake in the losing points was greater than the amount at stake in the winning point is irrelevant. The appellant benefited from the appeal in the sum of $400,000. That is clearly substantial, both relatively and in absolute terms.

[22]             For all of the above reasons, I order that the respondent is to pay the appellant’s costs in the High Court on a 2B basis in the amount of $18,044.50, together with disbursements of $2,461.46. The total amount payable by the respondent to the appellant is $20,505.96.

Hinton J