Estate of Lu [2021] NZHC 631 (26 March 2021)

Last Updated: 12 April 2021

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2020-404-000696 [2021] NZHC 631

UNDER AND	the Insolvency Act 2006
IN THE MATTER OF	an application by JIANPING WANG, company director, of Christchurch, for an order that the deceased estate of JIHONG LU be administered by an appointee under Part 6 of the Insolvency Act 2006

Hearing:	On the papers
Judgment:	26 March 2021

JUDGMENT OF WYLIE J

[Costs]

This judgment was delivered by Justice Wylie On 26 March 2021 at 12.00 noon

Pursuant to r 11.5 of the High Court Rules Registrar/Deputy Registrar

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

Solicitors/counsel:

Davidson Legal/R B Stewart QC and G Slevin, Christchurch Couch Harlowe Kovacevich/Ben Liu & Co, Auckland

K Davenport QC and A E Isaacs, Auckland

Re Estate of Jihong Lu [2021] NZHC 631 [26 March 2021]

Introduction

• [1] These proceedings have not had an auspicious start. The applicant, Jianping Wang, sought that the deceased estate of Jihong Lu be administered by an appointee under Part 6 of the Insolvency Act 2006. However, the application filed did not seek such an order.

• [2] When the matter was called before me on 30 July 2020, Mr Slevin, appearing for Mr Wang, made an oral application for an order that the application filed should also be treated as an application that the late Mr Lu’s estate be administered under Part 6 of the Act. I declined this application in an oral ruling and, the following day, issued reasons for that ruling.¹

• [3] Mr Wang then sought leave to appeal my judgment. I granted leave on 16 September 2020.² The Court of Appeal heard the appeal on 25 November 2020. It issued its judgment on 21 December 2020.³ It allowed the appeal and amended the application made by Mr Wang as sought in the oral application of 30 July 2020. It dealt with costs in that Court, but made no orders in respect of costs in this Court.

• [4] Mr Wang, through his counsel, now seeks costs on the application for leave to appeal heard in this Court.

Submissions

• [5] Mr Slevin, in a memorandum filed on behalf of Mr Wang, noted that costs are in the discretion of the Court. He accepted that Mr Lu and Mrs Zhang are not named as parties on the intituling in this Court and that they are described in the judgment as interested parties, but he argued that they fully participated in the leave application and that they opposed the grant of leave. He argued that they are parties as defined by r 1.3 of the High Court Rules 2016, having been added to the proceeding. He argued that Mr Wang should not be penalised for counsel’s error in failing to initially advert to the need for an order under s 379 of the Insolvency Act. He accepted that, under

¹ Re Estate of Jihong Lu [2020] NZHC 1894.

² Re Estate of Jihong Lu [2020] NZHC 2415.

³ Wang v Lu [2020] NZCA 673.

r 14.7, if a party claiming costs has contributed unnecessarily to the time or expense of a proceeding, costs can be reduced or refused. He argued that any failure was in relation to the commencement of the substantive proceedings and not in relation to the application for leave, and that any reduction under r 14.7 should fall for consideration when costs fall to be determined following the conclusion of the substantive proceeding. He sought costs in the total sum of $7,648, together with disbursements of $550.

• [6] The application for costs was opposed by Mr Harlowe for Mr Lu and Ms Davenport QC for Mrs Zhang. They argued that the appeal was only necessary because of omissions in Mr Wang’s application, and because of Mr Wang’s failure to seek directions as to service. They noted that the deficiencies in the application were not raised by either of their clients and that they were raised by me as the Judge hearing the matter. They argued that costs should be refused to Mr Wang because he, and his counsel, are responsible for what occurred. They submitted that costs should either lie where they fall or, in the alternative, that any costs award should be reduced. They also argued that Mr Lu and Ms Zhang are not parties to the proceeding, noting that there has been no order or direction to this effect under r 7.43A(e) and that the only direction that has been made is that they be served.

Analysis

• [7] It is important to identify what is being sought. Mr Wang is seeking costs on the application for leave to appeal, not on the substantive proceedings. With respect to counsel for Mr Lu and Mrs Zhang, their submissions tend to run the two matters together. Mr Lu and Mrs Zhang opposed the application for leave to appeal. The leave application was dealt with on the papers but all counsel filed written submissions. Mr Lu and Mrs Zhang argued that my decision declining the oral application to amend on 30 July 2020 was correct. They noted that Mr Wang could make a fresh originating application in the correct form and they argued that it was unfair on their respective clients that they should have to incur the expense associated with any appeal because Mr Wang’s initial application was faulty. It was submitted that the estate is not large and that any appeal would add unnecessarily to the costs that the estate was incurring, and that the high threshold for the grant of leave to appeal was not satisfied.
• [8] They failed in their opposition.

• [9] Costs are at the discretion of the Court – r 14.1(1). The discretion is not however unfettered. It is qualified by the specific costs rules – rr 14.2 – 14.10, and it is exercisable only in situations not contemplated by the rules, or which are not fairly recognised by them.⁴

• [10] As a general principle applicable to the determination of costs, the party who fails with respect to a proceeding or an interlocutory application should pay costs to the party who succeeds – r 14.2(1)(a).

• [11] A party is any person who is a plaintiff or a defendant or who is added to a proceeding – r 1.3. Here, Mr Lu and Mrs Zhang are not named as defendants. A direction was made that they be served and, when they were served, they both filed notices of opposition to the substantive application. They also filed affidavits in support of their opposition. They resisted the oral application to amend the originating application made on 30 July 2020 and, as noted, they opposed the subsequent application for leave to appeal. They have behaved and conducted themselves as parties to the proceedings and, in my view, they have rendered themselves liable for a costs award as a consequence.

• [12] Under r 14.7, a costs award can be refused or reduced in various circumstances, including where the party claiming costs has contributed unnecessarily to the time or expense of the proceeding or a step in it by failing to comply with the rules or direction of the Court. Costs can also be reduced or refused where some other reason exists which justifies the Court refusing costs or reducing costs, despite the principle that determination of costs should be predictable and expeditious.

• [13] The oral application for leave to amend resulted from an omission by Mr Wang’s counsel in the originating application filed. However, I agree with Mr Slevin that that omission is best dealt with when costs on the substantive application are determined. There was no disqualifying conduct by Mr Wang in relation to the application for leave to appeal and I do not consider that there is any

⁴ Glaister v Amalgamated Dairies Ltd [2004] NZCA 10; [2004] 2 NZLR 606 at [21]- [24] and [28].

justification for a reduction or refusal of a costs award. Nor is there any reason to delay the issue of costs until the substantive proceedings are heard. Costs on opposed interlocutory applications should be fixed when the application is determined unless there are special reasons to the contrary – r 14.8. Here, no such special reasons have been advanced.

• [14] There is no challenge to the schedule of costs and disbursements annexed to Mr Slevin’s submissions. Unusually, costs are sought in relation to the costs application itself. Mr Slevin advises that he endeavoured to reach agreement with the respondents as to the appropriate costs award, but without success. That assertion is not disputed by counsel for Mr Lu and Mrs Zhang. Costs can be awarded on a successful costs application in such circumstances.⁵

• [15] Insofar as I can glean, costs have been sought on a 2B basis, and that would seem to be appropriate.

• [16] Accordingly, I fix costs in favour of Mr Wang and against Mr Lu and Mrs Zhang in the sum of $7,648, together with disbursements of $550. Their liability for costs is joint and several.

Wylie J

⁵ Booth v Poplar Road Farms Ltd [2019] NZHC 1889.