Yu Lawyers v Astorwood Investments (NZ) Limited HC Auckland CIV 2010-404-001243 [2011] NZHC 1511 (12 October 2011)

Last Updated: 16 November 2011

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

_{CIV 2010-404-001243}

BETWEEN YU LAWYERS Plaintiff

AND ASTORWOOD INVESTMENTS (NZ) LIMITED

First Defendant

AND SHAOLAN CAI Second Defendant

AND GUOPING LUO AND JIAN YANG Third Defendants

Counsel: R E Harrison QC for the Plaintiff

R A Edwards for the Second Defendant

Judgment: 12 October 2011

JUDGMENT AS TO AWARD OF COSTS OF ASSOCIATE JUDGE CHRISTIANSEN (ON THE PAPERS)

This judgment was delivered by me on

12.10.11 at 2:30pm, pursuant to

Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date...............

Solicitors/Counsel:

R Harrison QC, Barrister, Auckland – [e-mail] / [e-mail]

_{R Edwards, Barrister, Auckland – [e-mail] / [e-mail]}

YU LAWYERS V ASTORWOOD INVESTMENTS (NZ) LIMITED HC AK CIV 2010-404-001243 12 October

2011

[1] My minute dated 26 August 2011 recorded that save for costs, the plaintiff’s interpleader action had been concluded. I recorded I was not prepared to delay the civil proceeding for any reason in connection with the Law Society’s disciplinary process. I noted this required the second defendant to pay security into Court by 9

September 2011 and failing that her counterclaim would be struck out.

[2] On 30 August 2011 a notice of discontinuance of the second defendant’s

counterclaim was filed.

[3] Thereafter I directed submissions be filed to enable me to rule on the parties’

competing claims for costs.

[4] I have now received a memorandum from plaintiff’s counsel, and from the second defendant’s counsel in reply. The Court has also received plaintiff’s counsel’s memorandum in response to the second defendant.

[5] The costs issues concern the parties’ claims in relation to the interpleader proceedings. The plaintiff seeks that these be fixed on a 2B basis. It also seeks indemnity or increased costs in relation to the second defendant’s now discontinued counterclaim.

[6] I have reviewed the arguments on behalf of the second defendant. I conclude that they are mostly without merit.

[7] The filing of the interpleader proceeding in the High Court was justified and appropriate. It required a prior application for the restoration of Astorwood to the companies register.

[8] The interpleader proceeding related to a disputed sum of $183,462.50 held in the plaintiff’s trust account of the credit of Astorwood. That sum was paid into Court. Ultimately all of it save a sum of $26,884 retained against the plaintiff’s claim for costs, was paid to the second defendant.

[9] Usually an interpleader is entitled to the indemnity costs of and incidental to the application.

[10] I accept Mr Liu’s explanation as to the necessity for the interpleader

proceeding.

[11] The second defendant’s counterclaim was for a separate and distinct amount of $69,537.50 which had been disbursed by the plaintiff’s lawyers on the written instructions of its client, Astorwood. Issues between the parties concerning the payment out of those funds appear to have no relevance at all to the interpleader proceedings. It appears the plaintiff’s only concern in the interpleader outcome was to ensure its proper costs were met. There is no proper basis for criticism of the way in which the plaintiff carried out its obligations as the interpleader.

[12] The second defendant took advantage of her being joined as a defendant to the interpleader claim in order to issue her own counterclaim against the plaintiff.

[13] The merits of the counterclaim have never been examined in the context of this proceeding. The second defendant was required to pay security for costs before proceeding with her counterclaim. She has never paid that security. The Court’s overall impression is that she has endeavoured through the counterclaim and the Law Society complaint, to engineer an outcome to access the funds being held in this Court in relation to costs payable on the interpleader claim.

[14] The Court is now aware of settlement negotiations between the parties in connection with the counterclaim, and of proposals involving that sum held in Court. This Court does not need to get any further involved with those.

[15] The submissions for the second defendant suggest the two principals of the plaintiff ought to have disclosed their shareholding in Astorwood. But, I see no real purpose why. The plaintiff’s application identified no interest in the subject matter of the dispute other than the charges or costs. The principals were not creditors of Astorwood. It is not known on what basis the second defendant claims that the

principals stood to benefit if Astorwood was “successful in its claim to the

interpleader funds”.

[16] The second defendant’s use of the counterclaim process in the interpleader proceeding was probably inappropriate. The two disputes concerned two different sums of money. The issues were discreet and the counterclaim ought to have been pursued separately.

[17] That said, it appears clear that both parties were prepared to use the counterclaim as a basis to resolve other issues between them.

[18] The plaintiffs did what they had to when aware they were holding funds ownership of which may have been disputed between by claimants. Ultimately the second defendant received most of those, as I mentioned. The plaintiff’s proceeding was therefore successful in ensuring that the appropriate claimant was successful. It is usual and appropriate for the interpleader’s costs are met from the funds from which the successful claimant is claimed. It is wrong to suggest that somehow the interpleading lawyers should have to pay the successful claimant’s costs. In fact the second defendant should not have opposed an order for payment of costs in relation to those funds interpleaded.

[19] Costs upon the interpleader claim are sought by the plaintiff on a 2B basis. In the circumstances of this case that is appropriate and there be an order accordingly for those to be paid from the funds held in Court, together with disbursements approved by the Registrar.

[20] The plaintiff claims increased or indemnity costs in relation to the counterclaim and questions the second defendant’s actions and motives for filing the counterclaim at all. However I also observed that both parties appear to have adopted the counterclaim issue as a means of trying to resolve the other outstanding issue between them. This is not an appropriate case for other than scale costs and I fix those on a 2B basis.

[21] If counsel cannot agree upon the quantum of 2B costs then the Court will receive further memoranda in order to fix those.

[22] The plaintiff seeks costs on their costs applications. Such an award is not appropriate in this case. Indeed it is seldom appropriate at all. As I observed issues relating to the merit of the counterclaim are not before this Court and this Court is not prepared to make an assessment concerning those.

[23] Already costs have been fixed on a 2B basis the Court preferring to ignore

the positions of the respective parties’ claims regarding the merits of the case.

_{[24] The Court directs that costs upon the costs application lie where they fall.}

Associate Judge Christiansen