Lee v District Court at North Shore [2017] NZCA 616 (20 December 2017)

Last Updated: 30 December 2017

IN THE COURT OF APPEAL OF NEW ZEALAND
CA410/2017 [2017] NZCA 616
BETWEEN	YOON LEE Appellant
AND	DISTRICT COURT AT NORTH SHORE First Respondent YASUKI KONISHI AND MAKIKO KONISHI Second Respondents

Hearing:	28 November 2017
Court:	Winkelmann, Venning and Duffy JJ
Counsel:	Appellant in person First Respondent abides D B Hickson for Second Respondents
Judgment:	20 December 2017 at 10 am

JUDGMENT OF THE COURT

1. The application to adduce fresh evidence on appeal is declined.
2. The appeal is dismissed.

100. The appellant must pay the second respondents costs for a standard appeal on a band A basis and usual disbursements.

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REASONS OF THE COURT

(Given by Duffy J)

[1] The appellant, Yoon Lee, is the lawyer who acted for Rujing Jin in her unsuccessful judicial review proceeding against the District Court at North Shore and Mr and Mrs Konishi. Following the striking out of the judicial review proceeding,^[1] Gilbert J awarded the Konishis indemnity costs in the sum of $37,074.37, which Mr Lee was ordered to pay personally as counsel.^[2] He now appeals against that decision. Significantly, there is no appeal against the dismissal of the judicial review.

Background

[2] The judicial review was the latest step in protracted litigation between Ms Jin and the Konishis, which arose from a failed sale of residential property by Ms Jin to the Konishis. They commenced a claim against Ms Jin in the District Court at North Shore for breach of the contract for sale and purchase of that land.
[3] The Konishis’ claim for breach of contract ultimately failed at a formal proof hearing because there was never any basis for it.^[3] By then Ms Jin had been barred from defending the claim because of her repeated failures to comply with interlocutory orders of the District Court. Ms Jin’s defaults led to costs awards being made against her in that Court. Her attempts to challenge some of the interlocutory orders on appeal were also unsuccessful, and these also resulted in costs awards against her.
[4] Although Ms Jin could not be heard to oppose the formal proof hearing in the District Court, Judge Mary-Beth Sharp did hear from Ms Jin on the question of costs. The Judge decided that costs should lie where they fell.^[4] In a separate judgment delivered on the same day,^[5] Judge Sharp dealt with an earlier costs matter which, following a successful appeal to the High Court, had been sent back to the District Court for reconsideration. This matter arose from an unsuccessful application by Ms Jin to set aside the order debarring her from defending the Konishis’ claim. Here Judge Sharp ordered Ms Jin to pay indemnity costs in the sum of $13,641.75.
[5] Ms Jin successfully appealed against both costs orders of Judge Sharp.^[6] In the High Court Woodhouse J quashed the indemnity costs order which followed Ms Jin’s unsuccessful application to set aside the order debarring her from defending the proceeding and he awarded her $6,000 for the formal proof hearing. She was also awarded costs on the appeal in the sum of $5,000.
[6] Ms Jin has paid some of the costs awards against her but others were not paid, with the result that at the time the judicial review proceedings were commenced there was a remaining balance in the sum of $29,353.75. This led to the Konishis issuing a bankruptcy notice against Ms Jin to recover the outstanding costs.
[7] The judicial review proceedings were commenced the day before the High Court was due to hear Ms Jin’s application to set the bankruptcy notice aside. Gilbert J recorded Ms Jin’s purpose in the judicial review proceedings as being to achieve a cross-claim that equals or exceeds the amount of the judgment debt.^[7] Associate Judge Doogue refused to set the bankruptcy notice aside.^[8]

Judgment under appeal

[8] In a carefully reasoned judgment Gilbert J found the judicial review was an abuse of process for two reasons.^[9] First, the appeal periods for the orders Ms Jin sought to judicially review had long expired, and so those orders were finally determined and could not be revisited.^[10] Secondly, Gilbert J considered the judicial review was an attempt at a collateral challenge to Woodhouse J’s decision in order to achieve a better outcome on costs than Ms Jin had obtained from Woodhouse J.^[11]
[9] Next Gilbert J outlined in detail why the judicial review was a hopeless case, with no prospect of the relief sought being granted.
[10] Gilbert J’s factual and legal findings on the judicial review have not been appealed. Accordingly, they stand unchallenged. Further they cannot be challenged in the appeal against costs.
[11] Gilbert J’s decision to award indemnity costs payable by Mr Lee as counsel was based upon the adverse view the Judge formed of the judicial review proceedings. In his judgment on costs, after making detailed references to the various interlocutory orders that Ms Jin had attempted to judicially review long after the substantive matter was determined, as well as other matters which could never be the subject of judicial review, Gilbert J stated:^[12]

This proceeding was a blatant attempt to mount a collateral attack on Woodhouse J’s judgment and was clearly an abuse of the processes of this Court.

[12] Before ordering Mr Lee to pay the indemnity costs award, Gilbert J reminded himself of the applicable legal principles. The Judge then took account of the role Mr Lee had played in bringing the judicial review. The Judge was satisfied that Mr Lee had:^[13]

... succumbed to a lack of objectivity and acted in serious dereliction of his duty to the Court. This was not merely an example of a hopeless case pursued on a client’s instructions against the lawyer’s advice. The proceeding was not only hopelessly misconceived, it was clearly pursued on Mr Lee’s advice in circumstances where it was also an abuse of the process of the Court. In my view, this conduct should be met with the sanction of a costs order against Mr Lee personally.

[13] Regarding the quantum of costs sought, Gilbert J was satisfied the sum of costs sought was reasonable and the Konishis should not have needed to incur such costs. The fact that they did was “directly attributable to Mr Lee’s misguided actions”.^[14]

The challenge on appeal

[14] At the hearing before us Mr Lee wrongly attempted to address the merits of the judicial review and the earlier hearings in the District Court. His submissions were lengthy and discursive. He sought and was permitted to file further submissions, a list of questions for determination and a chronology. He also made an irregular attempt to introduce a new affidavit on appeal, despite this being an appeal against a costs decision, the outcome of which turned on the material before Gilbert J. Accordingly, we refuse to admit the new evidence.
[15] Despite the voluminous material Mr Lee relied upon, he was unable to identify for us any error on the part of Gilbert J that warrants us interfering with the costs order.
[16] The unchallenged findings of Gilbert J on striking out the judicial review logically led to the conclusions the Judge expressed in the costs judgment. Our assessment of Mr Lee’s conduct in relation to the judicial review accords with that of Gilbert J. We agree that such conduct warrants an order of indemnity costs against Mr Lee.
[17] We see no reason to doubt Gilbert J’s conclusion that the quantum of the costs award sought by the Konishis was reasonable.
[18] It follows that we find the appeal should be dismissed.
[19] We saw no need to hear from Mr Hickson, counsel for the Konishis. At the end of the hearing he applied for indemnity costs against Mr Lee.
[20] In accordance with the usual principles the Konishis are entitled to costs. However, we do not consider an award of indemnity costs is warranted. The arguments advanced in support of the appeal were hopeless. Nevertheless the appeal cannot be said to have been vexatious, frivolous or improper.^[15] This was an appeal against an award of indemnity costs that Mr Lee as counsel was directed to pay personally. No great effort was required from the Konishis to defend the appeal. We are satisfied that a standard award of costs is just in all the circumstances.

Result

[21] The application to adduce fresh evidence on appeal is declined.
[22] The appeal is dismissed.
[23] The appellant must pay the second respondents costs for a standard appeal on a band A basis and usual disbursements.

Solicitors:
Crown Law Office, Wellington for First Respondent
D B Hickson, Auckland for Second Respondents

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^[1] Jin v District Court at North Shore [2017] NZHC 759.

^[2] Jin v District Court at North Shore [2017] NZHC 1481.

^[3] Konishi v Jin [2015] NZDC 6954.

^[4] At [55].

^[5] Konishi v Jin [2015] NZDC 6988.

^[6] Jin v Konishi [2015] NZHC 2417.

^[7] Jin v District Court at North Shore, above n 1, at [9].

^[8] Konishi v Jin [2016] NZHC 2702.

^[9] Jin v District Court at North Shore, above n 1.

^[10] At [13].

^[11] At [14].

^[12] Jin v District Court at North Shore, above n 2, at [11].

^[13] At [13].

^[14] At [14].

^[15] See Court of Appeal (Civil) Rules 2005, r 53E(3)(a).