Gao v Chen [2014] NZHC 3098 (5 December 2014)

Last Updated: 11 December 2014

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2013-404-1359 [2014] NZHC 3098

UNDER THE	Judicature Amendment Act 1972
IN THE MATTER OF	An application for Judicial Review
BETWEEN	HUACHI GAO Plaintiff
AND	XIKUN (TONY) CHEN First Defendant THE DISTRICT COURT OF NEW ZEALAND Second Defendant

Hearing:	On the papers
Counsel:	F C Deliu for the Plaintiff R Connell for the First Defendant
Judgment:	5 December 2014

JUDGMENT OF BROWN J [As to Costs]

This judgment was delivered by me on 5 December 2014 at 12.30 pm pursuant to r 11.5 of the High Court Rules

Registrar/Deputy Registrar

Solicitors:

F Deliu, Auckland

Connell & Connell, Auckland

GAO v CHEN [2014] NZHC 3098 [5 December 2014]

[1] By memorandum dated 13 June 2014 the plaintiff formally discontinued this proceeding and sought costs against the first defendant. The memorandum is not in the form of Form G24 as required by HCR 15.19(2) and hence does not contain any of the alternative statements A, B or C provided for in the prescribed form.

[2] Rule 15.23 provides:

Costs

Unless the defendant otherwise agrees or the court otherwise orders, a plaintiff who discontinues a proceeding against a defendant must pay costs to the defendant of and incidental to the proceeding up to and including the discontinuance.

[3] Consequently, absent an order of this Court, the plaintiff is liable to pay costs to the first and second defendants in respect of this proceeding.

[4] In fact the plaintiff seeks costs on a category 2B basis in respect of all the steps taken in the proceeding between its commencement on 15 March 2013 and the appearance before me on 1 August 2013. The total sum sought is $30,210.20 comprising costs of $27,959.50 and disbursements of $2,250.70.

[5] In his memorandum of 26 June 2014 Mr Connell advised that the first defendant’s position is that each party should bear its own costs. Hence the first defendant resists the plaintiff’s application for costs but does not himself seek costs against the plaintiff. No memorandum has been filed on behalf of the second defendant, any further attendance by it having been excused in the Minute of Cooper J dated 22 April 2013.

[6] The context to this matter is a proceeding commenced by the plaintiff against the first defendant in the District Court at Auckland on 20 September 2012. The defendant served a counter-claim on 18 October 2012. On 1 February 2013 the first defendant applied for and obtained judgment by default against the plaintiff in the sum of $12,742.50 (including costs). Then on 28 February 2013 the first defendant issued a bankruptcy notice against the plaintiff.

[7] The plaintiff then commenced this judicial review proceeding. Subsequent to a conference before Cooper J on 24 April 2013 the first defendant filed an application to strike out the proceeding on the grounds that the plaintiff was contemporaneously applying in the District Court to set aside the counter-claim judgment and that, in the first instance, the appropriate forum for a review of the default judgment was in the District Court.

[8] In his Minute of 24 April 2013 Cooper J observed:

[5] I have some misgivings about this matter. It is an application for review of a District Court decision granting judgment by default. There are rules specifically adapted for the purposes of dealing with such matters.

[9] When the matter came before me on 1 August 2013 I discussed with counsel the most appropriate way of resolving the proceeding. As my Minute of 1 August

2013 records:

[3] I then explored with Mr Deliu and Mr Connell whether there was any advantage in considering staying the judicial review proceeding at this time pending the hearing of the application in the District Court. Mr Deliu explained that a significant factor justifying the bringing of the judicial review proceeding was the fact that the first defendant had commenced bankruptcy proceedings against the plaintiff on the basis of the default judgment. I then inquired of Mr Connell whether, if the judicial review proceeding was to be stayed pending the hearing and determination in the District Court, the first defendant would likewise be prepared to stay or have adjourned the bankruptcy proceedings which are currently adjourned in this Court. Mr Connell indicated that his client would be prepared to agree to that course.

[10] In those circumstances I ordered that the judicial review proceeding and the strike out application were stayed pending the hearing and determination in the District Court of the application to set aside the default judgment on the counter- claim.

[11] The default judgment was set aside by consent in the District Court on 15

April 2014 with a timetable being made for the filing of pleadings. It was a term of that consent order that costs would lie where they fall.

[12] Subsequently the bankruptcy notice was withdrawn as a result of the consent order in the District Court. Associate Judge Bell issued a Minute that no costs order would be made on the bankruptcy matter.

[13] In his memorandum of 13 June 2014 Mr Deliu submits that the application for judgment by default on the counter-claim should never have been made as there was no factual or legal basis for the counter-claim. He contends that the first defendant appeared to tacitly accept that contention by having agreed to set the judgment aside. Consequently he argues that the judicial review proceeding would inevitably have succeeded.

[14] Mr Connell submits that it was inappropriate to issue judicial review proceedings when there was already an application before the District Court to set aside the judgment obtained by default. The application to obtain judgment by default was considered appropriate because the plaintiff had not filed its information capsule within the time provided under the District Court Rules, nor had it filed a defence to the counter-claim within the required period.

[15] In my view the course which Mr Connell proposes, that each party should bear its own costs, is the appropriate resolution of this matter in the circumstances. The appropriate venue for challenging the default judgment was an application in the District Court and I consider that a judicial review proceeding was an overreaction notwithstanding the fact that the bankruptcy notice had been issued. A further factor of significance is the fact that the default judgment was set aside by consent on the basis that costs would lie where they fell in the District Court. I do not consider that, against that background, it is appropriate for the plaintiff to seek costs on the review proceeding. Indeed, in view of r 15.23 the course which Mr Connell has proposed is reasonable and is to be commended.

Decision

[16] For the reasons above there is no order for costs in this proceeding which is now discontinued.

Brown J