Lee v Gao [2012] NZHC 3310 (7 December 2012)

Last Updated: 9 January 2013

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2010-404-3599 [2012] NZHC 3310

BETWEEN YOON LEE Appellant

AND ZHI JONG GAO AND LIN GE First Respondents

AND JOHN CARTER, BRENT O'CALLAGHAN AND TIMOTHY UPTON SLACK

Second Respondents

Hearing: (on the papers) Counsel: Appellant in person

P J McPherson for First Respondents

A C Challis and K J M Robinson for Second Respondents

Judgment: 7 December 2012

_{COSTS JUDGMENT OF PETERS J}

This judgment was delivered by Justice Peters on 7 December 2012 at 5 pm pursuant to r 11.5 of the High Court Rules

Registrar/Deputy Registrar

Date: ...................................

Solicitors:

Y Lee, Auckland: [e-mail]

Hesketh Henry, Auckland: [e-mail]

McElroys, Auckland: [e-mail] / [e-mail]

LEE V GAO HC AK CIV-2010-404-3599 [7 December 2012]

Introduction

[1] This decision follows a judgment I gave in May 2011. My judgment was on appeal from a judgment of Judge Gittos in the District Court at Auckland, given in May 2010.[1]

[2] The case before the District Court was brought by the First Respondents, Zhi Gao and Lin Ge (“Gaos”), against the Appellant (“Mr Lee”). Mr Lee joined the Second Respondents (“Carter & Partners”) as a party to the District Court proceedings.

[3] The Gaos’ proceedings arose out of an agreement for sale and purchase between the Gaos as purchasers and a third party as vendor. Mr Lee is a solicitor and he acted for the Gaos on the proposed purchase. The agreement for sale and purchase did not settle, as the vendor was not able to transfer title.

[4] Prior to settlement, the Gaos had paid two deposits to the vendor, one of

$27,500 and the other of $137,500, the two deposits totalling $165,000. The Gaos could not recover these deposits from the vendor.

[5] The Gaos sued Mr Lee in negligence, claiming as damages the sum of two deposits that they had paid to the vendor.

[6] Mr Lee denied liability but, if wrong in that, alleged contributory negligence on the part of the Gaos. Mr Lee also joined the Second Respondents (“Carter & Partners”) as a party to the District Court proceedings. Carter & Partners acted for the vendor under the agreement. Mr Lee joined Carter & Partners very late in the piece, alleging that an employee of that firm had given him an oral undertaking not to release the second deposit to their client, the vendor. Mr Lee’s allegation against

_{Carter & Partners led the Gaos to join them as Second Defendants.}

[7] Judge Gittos:

(a) Found that Mr Lee had been negligent and dismissed Mr Lee’s claim

that the Gaos had been contributorily negligent.

(b) Awarded damages of $165,000 and interest to the Gaos, against

Mr Lee.

(c) Found on the facts that Carter & Partners had not given the undertaking that Mr Lee alleged and so dismissed all claims against that firm.

[8] In a subsequent judgment dated 24 August 2010, Judge Gittos determined matters as to interest and as to costs in the District Court. The Judge awarded interest at the prescribed rate (8.4 per cent per annum) from the date on which the proceedings had been commenced, being 31 October 2007, to the date of judgment.

[9] As for costs, the Judge recorded that Mr Lee and Carter & Partners had resolved issues of costs between them and that the Court had sealed an order to that effect on 28 July 2010.

[10] The Judge awarded costs to the Gaos on a 2B basis, those costs totalling

$36,280, and disbursements of $8,685.61. It is apparent from the judgment that those costs included an amount in respect of an earlier hearing that had been scheduled but which had to be abandoned because it had become apparent that counsel instructed by Mr Lee might be required as a witness.

Appeal to the High Court

[11] Mr Lee filed a notice of appeal to this Court on 14 June 2010. During the hearing of the appeal I allowed counsel for Mr Lee leave to file an amended notice of appeal.

[12] Mr Lee appealed to this Court challenging the findings referred to above. In my judgment:

(a) I allowed Mr Lee’s appeal as to the Gaos’ claim against him in respect of the amount of the first deposit on the basis that any negligence on Mr Lee’s part had not caused the loss of that sum;

(b) In respect of the second deposit, I held that the Gaos had suffered the loss of a chance and assessed the damages due to them as 50 per cent of the amount of the second deposit; and

(c) I dismissed Mr Lee’s appeal against the Judge’s refusal of his claim

against Carter & Partners.

[13] The effect of my decision was to reduce the quantum of damages to the Gaos from $165,000 to $68,750.

[14] Mr Lee’s subsequent appeal from my decision to the Court of Appeal was

unsuccessful.

Order sought

[15] Mr Lee seeks orders as to interest on the damages, and as to costs in the

District Court and High Court.

[16] Counsel for the Gaos submits that it is not open to this Court to vary the orders that the District Court made, particularly as to costs, because no issue as to the Judge’s orders on those matters was taken on the appeal to this Court. That submission is correct in that the matter was not raised in the notice of appeal or in the amended notice of appeal. I consider that s 76(1) of the District Courts Act 1947 allows me to revisit the Judge’s orders regardless and, given the substantial reduction in damages on appeal, it is at least appropriate to consider whether there should be any variation to the orders that the Judge made as to costs in favour of the Gaos.

[17] I vary the order made by the District Court in respect of interest. Interest is to run from the same date and at the prescribed rate but on the sum of $68,750.

Carter and Partners

[18] The orders made by the District Court as to costs between Mr Lee and Carter

& Partners in the District Court are to stand. Quite aside from the fact that those parties apparently reached agreement as to costs, Mr Lee was wholly unsuccessful against Carter & Partners at first instance. Mr Lee now contends that the Gaos should bear some of Carter & Partners’ costs in the District Court, given that they also made a claim against Carter & Partners. I do not consider they should. I am satisfied, as was the Judge, that the Gaos’ claim against Carter & Partners was made only because of Mr Lee’s (unproved) allegation of the undertaking to which I have referred.

[19] Having failed on appeal against Carter & Partners, Mr Lee must pay their costs on appeal. Mr Lee is to pay Carter & Partners’ costs on appeal on a 2B basis together with disbursements. Such costs and disbursements are set out in the schedules to the memorandum filed by counsel for Carter & Partners dated

17 June 2011.

Costs as between Mr Lee and the Gaos

[20] Mr Lee wishes me to revisit the orders made by Judge Gittos and a subsequent order made by Judge Joyce QC on an application made by Mr Lee for a stay of proceedings pending determination of his appeal to this Court.

[21] Judge Joyce QC made an order for costs in favour of the Gaos on the application for stay.[2] I do not propose to vary that order. The reasons the Judge

_{made the decision are set out in his judgment. It is clear the Judge considered that}

the issues raised in the application might have been resolved much earlier if Mr Lee had been more realistic in his approach to the application.

[22] In so far as concerns Judge Gittos’ order as to costs in favour of the Gaos and against Mr Lee, in Packing In Limited (in liquidation) v Chilcott,[3] the Court of Appeal set out the approach to be taken where each side has had some success. That approach is as follows:

[5] ...where in broad terms each party has had similar success, we do not consider it helpful to focus too closely on the question which party has failed and which has succeeded. Costs in a case such as this should rather be based on the premise that approximately equal success and failure attended the efforts of both sides. To that starting point should be added issues such as how much time was spent on each transaction or group of transactions in issue and any other matters which can reasonably be said to bear on the Court’s ultimate discretion on the subject of costs. In the end, as in all costs matters, the Court must endeavour to do justice to both sides, bearing in mind all material features of the case.

[23] On the basis of my judgment, the Gaos should not have made a claim against Mr Lee for damages in respect of the sum of the first deposit but some claim was warranted in respect of at least a portion of the second deposit.

[24] However, had the claim been brought for a sum close to that for which the Gaos ultimately obtained judgment, Mr Lee might not have defended the claim at first instance or might not have appealed. I am also not satisfied that an award of costs on a 2B basis would have been appropriate had the Gaos brought a claim for

$68,750 from the outset.

[25] In my view this is a case in which it can be said that each side achieved a measure of success, taking into account the outcome on appeal.

[26] Looking at the matter in the round I consider the circumstances are best met by making an award of $15,000 in favour of the Gaos against Mr Lee in respect of all costs and disbursements. I vary the order in the District Court to that effect.

_{Costs in the High Court as between Mr Lee and the Gaos, are to lie where they fall.}

[27] As I understand Mr Lee’s submissions, he seeks that I vary an award of costs made by Priestley J on 18 August 2010. I have no jurisdiction to vary that award and nor do I consider that any variation would be warranted, having read the decision.

Result

[28] I vary the order made by the District Court on 24 August 2010, in the respects set out in [17] and [26] above.

..................................................................

M Peters J

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[1] Gao v Lee & Ors DC Auckland CIV-2007-004-2591, 14 May 2010.

[2] Gao v Lee DC Auckland CIV-2007-004-2591, 16 July 2010 at [11].

[3] Packing In Limited (in liquidation) v Chilcott [2003] NZCA 124; (2003) 16 PRNZ 869.