Zhou v Junwei

[2022] NZHC 2190

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2021-404-000258

[2022] NZHC 2190

BETWEEN

BINGYAN ZHOU

Plaintiff / Respondent

AND

TANG JUNWEI

First Defendant / Applicant

BU QIAN YU
Second Defendant / Applicant

TANG WENBIN
Third Defendant

HUANG XIANGHUA
Fourth Defendant

BCH INVESTMENTS LIMITED
Fifth Defendant / Applicant

VATAR INVESTMENTS LIMITED
Sixth Defendant / Applicant

NAREA INVESTMENTS LIMITED

Seventh Defendant / Applicant

Hearing:	On the papers
Counsel:	K D Puddle for the Respondent H McDermott for the Applicants
Judgment:	31 August 2022

COSTS JUDGMENT OF ASSOCIATE JUDGE GARDINER

ZHOU v TANG [2022] NZHC 2190 [31 August 2022]

This judgment was delivered by me on 31 August 2022 at 12.00 p.m. pursuant to Rule 11.5 of the High Court Rules.

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

[1]  The first, second, fifth, sixth and seventh defendants filed an application for security for costs against the plaintiff. The plaintiff opposed the application. Shortly before the hearing, the parties reached an agreement to settle the application which involved the plaintiff voluntarily paying security for costs in around the amount sought by the defendants. They could not agree a position on costs associated with the application. Accordingly, the hearing was vacated by consent, with the Court to determine costs.

[2]                   The defendants seek costs from the plaintiff which they describe as wasted costs incurred due to the plaintiff’s inaction. The defendants submit that if the plaintiff had offered to pay security for costs within a reasonable time of the application being filed, rather than on the eve of the hearing, the plaintiff would have avoided the cost of preparing submissions and bundles for the hearing.

[3]                   The plaintiff says that it was unable to make an offer of settlement earlier because the defendants did not specify the amount of security sought or the means by which the amount was to be put up as security in the interlocutory application. It says it was not until the defendants filed their submissions for the hearing that they specified the sum sought as security for costs.

[4]                   Additionally, the plaintiff asserts that the application was unnecessary and unmeritorious because, as the defendants were aware, the plaintiff has substantial immovable assets in New Zealand and is not impecunious. The plaintiff says that the Court has made it clear that security will not be ordered from an overseas resident who owns substantial property in New Zealand where the property is of a permanent nature

and not easily removable from the country.1 For these reasons, the plaintiff seeks costs from the defendants on an increased or indemnity basis.

[5]                   I reject the plaintiff’s application for costs against the defendants and find that the plaintiff must pay the defendants’ costs.

[6]                   The general principle is that costs follow the event, so the party who fails pays the costs of the party who succeeds.2 This principle applies to the outcome of an interlocutory application as well as whole proceedings (with exceptions, such as an unsuccessful plaintiff summary judgment, where costs are usually reserved). The position requires further analysis where the interlocutory application has not been the subject of a decision of the Court so there is no clear winner or loser.

[7]                   Also relevant is r 15.23, which provides that in the absence of agreement or a Court order to the contrary, a plaintiff who discontinues a proceeding against a defendant must pay costs to the defendant up to and including the discontinuance. The rule concerns discontinuance of a proceeding rather an interlocutory application but has been applied analogously where an applicant has terminated an interlocutory application.3

[8]                   The Court of Appeal has held that the presumption in r 15.23 can be displaced where the Court considers that it is just and equitable that it should not apply.4 The Court may consider the reasonableness of the stance of both parties up to the point of discontinuance: whether it was reasonable for the plaintiff to bring and continue the proceedings; and for the defendant to oppose the proceedings. The reason for discontinuing may also be considered. The Court will not usually consider the merits of the respective cases, unless they are obvious. The Court’s general discretion under r 14.1 can override the general principles relating to discontinuance.

1      Neely v Attorney-General [1984] 2 NZLR 636 (CA); Jalfox Pty Ltd v Motel Association of New Zealand Inc [1984] 2 NZLR 647 (HC); and Bolton v New Zealand Insurance Co Ltd (1993) 7 PRNZ 71 (HC).

2      High Court Rules 2016, r 14.2(a).

3      MV Celebre Ltd v Airwork Flight Operations Ltd [2015] NZHC 1400 at [8], citing Rocket Surgery Ltd v Goodwin [2013] NZHC 2667.

4      Kroma Colour Prints Ltd v Tridonicato NZ Ltd [2008] NZCA 150 at [12] (referring to the equivalent rule, r 476C, in the previous version of the High Court Rules).

[9]                   In the present situation, the interlocutory application was resolved by consent after the plaintiff agreed to pay the security for costs sought. The defendant has been successful in that they have achieved the outcome they sought in the application.

[10]               I am not persuaded by the plaintiff’s argument that it was unable to offer to pay security earlier because the defendants had not specified the amount sought in the interlocutory application. It would have been a simple matter to ask the defendants to specify the amount.

[11]               As to the argument about the plaintiff’s immovable assets in New Zealand, that asks the Court to form a view on the merits of the application and the plaintiff’s defence to it, which it is unable to do.

[12]               Accordingly, I find, in my discretion under r 14.1, that it is appropriate for the plaintiff to pay the defendants their 2B scale costs and disbursements as sought.

Result

[13]               I order the plaintiff to pay the first, second, fifth, sixth and seventh defendants costs of $6,473 and disbursements of $741.50, a total of $7,194.50.

Associate Judge Gardiner

Solicitors:

K3 Legal Limited, Auckland Righteous Law, Auckland