Ng v Harkness Law Limited [2015] NZCA 61 (11 March 2015)

Last Updated: 17 March 2015

IN THE COURT OF APPEAL OF NEW ZEALAND
CA275/2014 [2015] NZCA 61
BETWEEN	ADRIAN HWEE KIAT NG AND ALICIA SOCK HOON GO First Appellants MATTHEW HSUN YEAN LIM Second Appellant
AND	HARKNESS LAW LIMITED First Respondent JOHN RENWICK HARKNESS Second Respondent

Court:	Randerson, Winkelmann and Venning JJ
Counsel:	S H Barter for Appellants T Gee for Respondents
Judgment: (On the papers)	11 March 2015 at 10:15 am

JUDGMENT OF THE COURT

1. An extension of time to apply for a review of the Registrar’s decision of 30 June 2014 in relation to security for costs is granted but the application is declined.
2. The respondents must pay costs to the appellants for a standard application on a band A basis with usual disbursements.

100. Directions in respect of the application by the appellants to adduce further evidence on appeal are given in terms of [18] of this judgment.

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REASONS OF THE COURT

(Given by Randerson J)

Introduction

[1] The appellants appeal against an interim judgment of Associate Judge Bell given on 29 April 2014.^[1]
[2] The respondents applied for a stay of the appeal on the grounds that the appellants had not paid outstanding High Court costs amounting to $16,816. Alternatively, the respondents sought an order for increased security for costs.
[3] Immediately prior to the hearing of the application, the appellants paid the outstanding High Court costs. Accordingly, the respondents did not pursue the application for stay of the appeal.
[4] As recorded in my minute of 17 February 2015, it is appropriate to treat the respondents’ alternative application as a review of the Registrar’s decision of 30 June 2014 declining to order increased security for costs. Similarly, I directed that the alternative application could be treated as an application for extension of time for the purposes of the review. The parties agreed that the application for review may be dealt with on the papers. Further submissions on the review have been received.

Brief facts

[5] The appellants reside in Singapore. They paid substantial funds to developers towards the cost of acquisition of residential lots in a proposed development at Albany, Auckland. The appellants say that the payments they made were paid into the trust account of the respondent solicitors who were acting on behalf of the developers. The companies involved in the development are now in liquidation. The appellants allege misleading or deceptive conduct under the Fair Trading Act 1986 on the part of the respondents. Associate Judge Bell characterised the appellants’ claim as an allegation that the respondents were liable as accessories to misleading conduct by the developers.^[2]

Judgment in the High Court

[6] In the judgment under appeal, Associate Judge Bell struck out the cause of action against the respondents under the Fair Trading Act and made a declaration that the claim for breach of that Act could not succeed. In a subsequent judgment delivered on 15 July 2014, which is not included in this appeal, Associate Judge Bell struck out a second cause of action based on dishonest assistance^[3] and also entered summary judgment in favour of the respondents on that cause of action.^[4]

The Registrar’s decision

[7] Security for costs was set initially on 23 May 2014 in the standard sum of $5,880. That sum was paid by the appellants on 18 June 2014. However, on 20 June 2014, the respondents applied for increased security. The respondents submitted that the appeal had little prospect of success; there was no indication that the appellants had any assets within the jurisdiction and the standard costs would not adequately protect the respondents.
[8] The appellants opposed the application submitting that the appeal had merit; it would raise novel points of law and was of importance to the public generally; and there was no authority to suggest that increased security for costs ought to be awarded in respect of foreign litigants.
[9] In finding there was no reason to order increased costs, the Registrar noted there was no suggestion that the appellants were impecunious and could not pay any costs awarded; the request to increase the amount of security to $28,000 wrongly took into account costs that might be awarded in the High Court; and security for costs is not designed to protect a party from the entire costs that may be incurred or awarded. The Registrar saw no special circumstances warranting an uplift in the standard costs.

Discussion

[10] We accept the appellants’ submission that no basis has been established to warrant a review of the standard costs ordered by the Registrar. The appeal has been set down for a hearing of half a day. If the appellants fail, the costs for a standard appeal on a band A basis would amount to a sum in the order of $8,000. We see no basis at this stage for the respondents’ submission that costs on a band B basis would be justified.
[11] We agree with the Registrar’s observation that there is no evidence that the appellants are impecunious. Indeed, they have paid both the standard security for costs and the costs awarded in the High Court. We do not draw any adverse inference against the appellants arising from the fact that they only paid the High Court costs when threatened with an application for stay of the appeal. Although the filing of an appeal does not operate as a stay of judgment, if the respondents had been concerned they ought to have taken steps to enforce the costs order. Instead they took the unusual step of applying to stay the appeal. The jurisdiction to make such an order for non-payment of costs in the High Court is unclear.^[5]
[12] We also agree with the Registrar that security for costs is intended only to provide a degree of protection for a respondent where the appellant resides overseas. It is not intended to protect a respondent from a full award of costs that might be awarded in the event of the appeal failing.
[13] We accept the submission made on behalf of the appellants that the fact of an appellant residing overseas is not, without more, to be treated as justifying an increased award of security for costs. We accept there is no evidence that the appellants have assets within the jurisdiction but that is the reason why security is required in the case of foreign-based litigants.
[14] The merits of an appeal are relevant to an application for security for costs but, at this stage, we are unable to form any view other than to say that the appeal is not demonstrably hopeless, particularly if pleading difficulties could be overcome by amendment. We note too that the second judgment of the Associate Judge might be viewed as offering some support for the appellants.

Conclusion on security for costs

[15] An extension of time to apply for a review of the Registrar’s decision of 30 June 2014 in relation to security for costs is granted but the application should be declined for the reasons given. The respondents must pay costs to the appellants for a standard application on a band A basis with usual disbursements.

The application to adduce further evidence

[16] The appellants have filed an application to adduce further evidence on appeal. It appears that this relates principally to affidavits filed in the High Court after the first judgment of Associate Judge Bell. I have already directed in my minute of 17 February 2015 that the application to adduce further evidence will be dealt with at the hearing of the appeal on 11 May 2015. I directed then that if the respondents wished to adduce any opposing evidence, then affidavit or affidavits should be filed.
[17] These simple directions appear to have led to a plethora of further memoranda which are largely unnecessary, as well as a request for extended submissions. Applications of this kind are straightforward and do not warrant extensive argument and submissions. The principles are well established.
[18] We direct:

(a) The respondents are to inform the Registry by 27 March 2015 whether the application is opposed.

(b) If the application is opposed the respondents are to file and serve a notice of opposition and any opposing affidavits by 27 March 2015.

(c) The submissions in respect of the application are to be included in the substantive submissions on the merits of the appeal and the overall submissions are not to exceed 30 pages on each side. Counsel are reminded that the 30 page limit is a maximum, not a target.

Solicitors:
Barter & Co, North Shore City for Appellants
Minter Ellison Rudd Watts, Wellington for Respondents

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^[1] Ng v Harkness Law Ltd [2014] NZHC 850.

^[2] At [38].

^[3] On a limited basis relating to standing of the plaintiffs.

^[4] Ng v Harkness Law Ltd (No 2) [2014] NZHC 1667.

^[5] In a costs minute issued on 29 August 2014, Associate Judge Bell noted that the appellants had sought a stay if costs were determined. It does not appear from this minute that the Associate Judge made any determination of that request.