Lau v Westpac New Zealand Limited [2023] NZCA 278 (4 July 2023)

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IN THE COURT OF APPEAL OF NEW ZEALAND

I TE KŌTI PĪRA O AOTEAROA

CA11/2023
[2023] NZCA 278

	BETWEEN	AUGUSTINE E K LAU Appellant
	AND	WESTPAC NEW ZEALAND LIMITED First Respondent
	AND	AUCKLAND COUNCIL Second Respondent
	AND	QUOTABLE VALUE LIMITED Third Respondent

Court:	Courtney J
Counsel:	Appellant in Person B J Upton and L B Harrison for First Respondent G R Duthie for Second Respondent E B Moran for Third Respondent
Judgment: (On the papers)	4 July 2023 at 10 am

[1] Mr Lau has applied for a review of a Deputy Registrar’s decision refusing his application to dispense with security for costs.

[2] The appeal is brought against Associate Judge Brittain’s decision to strike out proceedings brought by Mr Lau against Hollis & Scholefield Ltd (against whom proceedings have since been discontinued), Westpac New Zealand Ltd, the Auckland Council and Quotable Value Ltd.^[1] These claims arose from the mortgagee sale by Westpac of properties owned by Mr Lau’s partner, Ms Zhang and over which Mr Lau had lodged caveats. Mr Lau commenced the proceedings following Ms Zhang’s bankruptcy. Many of the allegations made by Mr Lau had previously been made by Ms Zhang.

[3] The notice of appeal was accepted for filing on 16 January 2023. Security for costs was set at $28,240, with payment required within 20 working days of the date of filing.^[2] Mr Lau did not pay the security for costs. On 20 March 2023 he applied, more than a month out of time, for an order dispensing with security for costs. Mr Lau has not applied for an extension of time.

[4] In a letter dated 17 April 2023 a Deputy Registrar of this Court advised Mr Lau that an application for an extension of time was required for consideration of the application for dispensation but, even if time to apply was extended, no dispensation would be granted because none of the grounds advanced for dispensation could be made out. This is the decision under review.

[5] The Deputy Registrar set out in some detail the legal principles relating to dispensation of security for costs in this Court. These were explained by the Supreme Court in Reekie v Attorney-General.^[3] The discretion to dispense with security should be exercised so as to (1) preserve access to this Court by an impecunious appellant in an appeal that a solvent appellant would reasonably wish to prosecute; and (2) prevent the use of impecuniosity to secure the advantage of being able prosecute an appeal that would not sensibly be pursued by a solvent litigant. A reasonable and solvent litigant would not proceed with an appeal that was hopeless, nor one in which the benefits (economic or otherwise) to be obtained are outweighed by the costs (economic or otherwise).^[4] Even in cases of impecuniosity, security should only be dispensed with if the Registrar is of the view that “it is right to require the respondent to defend the judgment under challenge without the usual protection as to costs provided by security”.^[5]

[6] The Deputy Registrar also noted the rare cases where matters of public importance are raised so that dispensation with security for costs is justified even if the appellant is not impecunious. This ground, however, requires genuine public interest litigation that warrants requiring a respondent to defend the appeal without the protection of security for costs.^[6]

[7] In his application, Mr Lau had merely noted the two grounds of impecuniosity and public interest as justifying dispensation but did not provide information to substantiate a claim of impecuniosity. The Deputy Registrar saw no point in requesting further financial information because she considered that the appeal was not one that would be pursued by a reasonable solvent litigant.

[8] The focus of the Deputy Registrar’s decision was on the nature of the appeal itself. She did not view it as the kind of appeal which would raise issues of public interest because it would turn very much on its own facts, and many of the issues had already been determined in the litigation brought by Ms Zhang.

[9] Nor did the Deputy Registrar see any prospect of success because, apart from the many difficulties in the substantive claim, there was no answer to the “insurmountable obstacle” identified by the Judge that Mr Lau was bankrupt and therefore had no standing to bring the proceeding.^[7]

[10] The Deputy Registrar noted that, if the appeal against Hollis & Scholefield were withdrawn (which, as noted earlier, has subsequently occurred) the amount of the security was greater than would normally be the case for three respondents. However, she considered that it was appropriate to maintain the same level of security because of the likelihood of increased costs being awarded, given that indemnity costs had been awarded in the High Court, and that Mr Lau had previously failed to pay costs awarded in the High Court.

[11] The Deputy Registrar correctly identified and applied the principles in Reekie.

[12] I am also satisfied that the Deputy Registrar correctly characterised the appeal as hopeless and one that the respondents ought not be required to defend without the protection of security. This is clear from the High Court’s consideration of the case.

[13] Ms Zhang defaulted on loans from Westpac secured over two properties she owned.^[8] Westpac began a mortgagee sale process. Hollis & Scholefield was engaged by Westpac to provide valuations. Mr Lau caveated the properties. Two of the caveats were removed voluntarily and the third by order of the Court.^[9] The properties were sold, leaving a shortfall of approximately $400,000.^[10]

[14] In August 2018 Westpac obtained summary judgment against Ms Zhang for the shortfall on the mortgagee sales.^[11] It applied to have Ms Zhang adjudicated bankrupt. Ms Zhang defended the bankruptcy proceedings and sought to have the summary judgment set aside, asserting that the mortgagee sales may not have been arm’s length transactions and Westpac had failed to take reasonable steps to obtain the best possible price for the properties.^[12] In September 2019 Ms Zhang was adjudicated bankrupt, and her application to have the summary judgment set aside was dismissed.^[13] She appealed unsuccessfully.^[14] Leave to appeal to the Supreme Court was declined.^[15]

[15] Throughout the litigation between Ms Zhang and Westpac, Mr Lau had acted as Ms Zhang’s translator and McKenzie Friend.^[16] After Ms Zhang had exhausted her legal remedies, he began proceedings against Hollis & Scholefield alleging a breach of the Fair Trading Act 1986, and against Westpac, alleging a failure by the bank to exercise reasonable care to obtain the best prices obtainable under the mortgagee sales. He alleged “commercial duress” by both and complained that the removal of the caveat had prejudiced his ability to purchase the property during the mortgagee sale process.^[17]

[16] The Judge held that none of these complaints were tenable. Mr Lau had no contractual arrangement with any of the respondents and could not assert duress.^[18] There was no basis for an allegation of misleading and deceptive conduct and in any event it could not reasonably be argued that he had suffered any loss. His assertion of loss as a “caveator and property manager” of the properties could not confer any right to claim.^[19] For similar reasons, Mr Lau’s claim under s 176 of the Property Law Act 2007 was untenable because he was not a person to whom a statutory duty was owed.^[20]

[17] Finally, the Judge referred to the “insurmountable obstacle” of Mr Lau’s 2018 bankruptcy which precludes him advancing any of the causes of action.^[21] All causes of action were vested in the Official Assignee so that Mr Lau had no standing to bring the proceedings.

[18] It could not be plainer that Mr Lau has no prospects of success in this appeal. It is not an appeal that any reasonable solvent appellant would contemplate, and it would be grossly unfair to require the respondents to take further steps in this appeal without the protection of security for costs. The Deputy Registrar’s decision to decline dispensation was therefore correct.

[19] Nor is there any error in the Deputy Registrar’s decision to maintain the level of security first fixed. If Mr Lau were to proceed with the appeal, it is very likely that indemnity costs would be awarded for the reasons just outlined.

[20] The application for review is declined. Mr Lau is required to pay the security for costs within 14 days.

[21] The appellant must pay the respondents’ costs for a standard application on a band A basis with usual disbursements.

Solicitors:
Simpson Grierson, Auckland for First Respondent
DLA Piper, Wellington for Second and Third Respondents

^[7] High Court judgment, above n 1, at [31]. Mr Lau had been bankrupted on the application of the Commissioner of Inland Revenue in May 2018.

Court of Appeal of New Zealand

Lau v Westpac New Zealand Limited [2023] NZCA 278 (4 July 2023)