NGUY v BCH INVESTMENTS LTD [2022] NZCA 561

NGUY v BCH INVESTMENTS LTD [2022] NZCA 561 [17 November 2022]IN THE COURT OF APPEAL OF NEW ZEALANDI TE KŌTI PĪRA O AOTEAROACA682/2021[2022] NZCA 561BETWEEN JESSE SEANG TY NGUYAppellantAND BCH INVESTMENTS LIMITEDRespondentHearing: 3 November 2022Court: Gilbert, Muir and Gendall JJCounsel: G P Aspell for AppellantB A Vautier and W G Spence for RespondentJudgment: 17 November 2022 at 2.30 pmJUDGMENT OF THE COURTA The application for leave to adduce further evidence is granted.B The appeal is dismissed.C The appellant must pay costs to the respondent for a standard appeal ona band A basis and usual disbursements.____________________________________________________________________REASONS OF THE COURT(Given by Muir J)Introduction[1] Mr Nguy appeals a judgment of Venning J awarding damages against him inthe sum of $873,661.55, on a claim for breach of retainer and professional negligence.11 BCH Investments Ltd v Nguy [2021] NZHC 2932 [Substantive decision].His sole ground of appeal is that the trial was not fair because he was unable to advancean adequate defence on account of inability to fund trial counsel and his mental healthat the time. He seeks an order for retrial.Background[2] Mr Nguy was formerly a solicitor in practice under the name of Jesse andAssociates. In February 2013, he was instructed by Ms Xianghua Huang to act as hersolicitor in respect of the incorporation of a company, and on behalf of the companyin respect of a development proposal relating to land in Gills Road, Albany. His letterof engagement confirmed that he was to act in:All matters in relation to the registration of BCH Investments Ltd and allincidental matters in respect of the development at 79-95 Gills Rd,Albany.[3] BCH Investments Ltd (BCH) was subsequently incorporated. Mr Nguy actedas its solicitor in respect of a buy-out agreement, a deed of nomination in its favour,purchase of the relevant land, registration of the land in the name of BCH and variousfinancial arrangements, including mortgage registration. BCH's nomination was notconditional on it obtaining Overseas Investment Office (OIO) consent to purchasethe land and no such consent was obtained.[4] Subsequently, the Chief Executive of Land Information New Zealand (LINZ)commenced proceedings against BCH as a result of its failure to obtain OIO consent.After taking expert advice, BCH admitted liability and paid the relevant penalty.It then sued Mr Nguy for legal costs associated with attempts to obtain retrospectiveconsent;2 valuation fees;3 legal costs associated with defence of the LINZproceedings;4 the account taker's costs and LINZ's solicitor's costs ultimatelyawarded in those proceedings;5 and the penalty imposed.62 $161,537.10.3 $12,305.00.4 $111,773.27.5 $288,046.18.6 $300,000.00.[5] Mr Nguy was initially represented on the breach of retainer and negligenceclaims. On 21 May 2020, he was granted leave to issue a third-party notice againstMr Wenbing Zhu who, Mr Nguy said, was a property developer engaged to assist BCHon the development. Mr Zhu took no steps to defend the third-party claim but nor didMr Nguy take any steps to advance it.[6] On 29 September 2020, the proceeding was set down by consent for a trialcommencing on 18 October 2021. In April 2021, Mr Nguy's solicitors advised thatthey were unable to continue representing him because of outstanding fees.They subsequently sought leave to withdraw which was formally granted on2 August 2021. Mr Nguy then made an informal application for adjournment whichwas declined by Moore J in a minute dated 30 August 2021. Mr Nguy followed thatup with a formal application, filed on 3 September 2021, which was heard byVenning J on 9 September 2021. He sought adjournment of the case for a year which,he said, would enable him to: either regroup, instruct new counsel, and prepare adequately for trial, oralternatively bankruptcy may intervene and the plaintiff would not be put tofurther expense in prosecuting its case [7] Venning J declined the application.7 He noted that Mr Nguy had personalknowledge of the matters at issue in the proceeding and should therefore be ina position to respond to the allegations concerning his conduct and advice, that therewas little dispute about quantum and that there was adequate time for Mr Nguy toexchange relevant evidence.8 He also noted that although Mr Nguy was said to besuffering from acute mental stress, he had, nevertheless, been able to attendappropriately to other New Zealand Law Society-related matters.9 He consideredthe suggestion that a one year adjournment would be sufficient to resolve Mr Nguy'sdifficulties as "speculative at best".10 He did, however, allow Mr Nguy extra time toexchange his evidence.117 BCH Investments Ltd v Nguy [2021] NZHC 2360 [First adjournment decision].8 At [11].9 At [14].10 At [15].11 At [18].[8] Mr Nguy did not, at that point, prepare for trial. Instead, with the assistance ofMr Jones KC, he prepared and, in early October 2021, filed a further application foradjournment. This was declined by Venning J in a detailed (45 paragraph) judgment,dated 12 October 2021.12 Neither that judgment, nor the Judge's earlier judgment,were the subject of any application for leave to appeal to this Court.[9] The substantive proceeding came on for trial on 18 October 2021. Mr Nguywas self-represented. He again sought to adjourn the claim and produceda psychiatrist's letter which concluded with a request that his "current impaired mentalstate" be considered by the trial Judge.13 In support of his application, Mr Nguyrepeated submissions earlier made on his behalf to the effect that his files had beenretained by his former solicitors and that he was not in a position to proceed.14[10] Venning J declined the application, noting that both Mr Nguy's mental healthissues and the position in respect of his files had been addressed in the context ofthe earlier applications.15 He pointed out that the relevant documents from the file hadbeen discovered during the proceeding and were contained in the bundles ofdocuments prepared for the hearing and to which Mr Nguy had access.16[11] The judgment records that BCH's witnesses were then called and werethe subject of cross-examination by Mr Nguy.17 The Court then adjourned early toallow Mr Nguy to prepare a brief of evidence, which was read the next morning.18The Court then further adjourned for approximately four hours to allow Mr Nguy timeto prepare his closing argument.19 Venning J recorded his observation that:[18] Mr Nguy did not appear to have any difficulty in representinghimself, certainly no more so than any other litigant representing him orherself. He obviously had personal knowledge of the issues. He conductedhimself appropriately throughout.12 BCH Investments Ltd v Nguy [2021] NZHC 2730 [Second adjournment decision].13 Substantive decision, above n 1, at [11].14 At [11].15 At [10] and [14].16 At [12].17 At [15].18 At [16].19 At [17].[12] The Judge held Mr Nguy to be in breach of his obligations under the terms ofthe contract of retainer and in breach of a co-existent duty of care owed to BCH inrelation to the OIO consent.20 He awarded damages in the amount claimed, togetherwith costs on a 2B basis.21 He regarded the legal and valuation fees incurred by BCHin its attempt to obtain retrospective consent as properly expended in mitigation.22He also rejected an ex turpi causa defence in respect of recovery of the civil penaltyand associated costs because there was no evidence BCH acted dishonestly or indeliberate breach of its obligations under the OIO.23 Rather, Mr Nguy negligentlyfailed to do the very thing he was obliged to do, which was to advise BCH of itsobligation under the relevant legislation.24The appellant's case[13] On the appeal, Ms Aspell appeared as a courtesy on behalf of Mr Jones.She said that the appellant was content to rely on the written submissions filed inadvance of the hearing. In those submissions, three grounds of appeal are advanced.Each support an overarching submission that Mr Nguy did not receive a fair trial.[14] First, it is submitted that Mr Nguy's inability to instruct counsel forced him toact for himself, despite having no experience as a litigator and that this placed him atsubstantial disadvantage against "highly experienced counsel acting for BCH".This disadvantage is said to have been further compounded by the fact that he did nothave access to his files.[15] Secondly, it is submitted that Mr Nguy was struggling with his mental healthat the time of the hearing. Reliance is placed on evidence adduced in support ofthe adjournment applications including Mr Nguy's claim to be suffering from "severe"mental health problems, correspondence from Mr Nguy's general practitioner andpsychiatric evidence that he suffered from mental fragility. Counsel submits that,mentally and emotionally, Mr Nguy was in no position either to adequately understandthe case against him or to present his defence.20 At [78].21 At [103]–[104].22 At [87].23 At [102].24 At [100].[16] Thirdly, counsel refers to Mr Nguy's failure to call Mr Zhu as a witness,describing Mr Zhu as experienced in property development, aware ofOIO requirements and as having the primary responsibility to advise Ms Huang onthat issue. Counsel says that, again, Mr Nguy's inexperience counted against him.He should have ensured Mr Zhu was called and prosecuted his third-party claim. It issubmitted that the current status of the that claim is "unclear".Application for leave to adduce further evidence[17] Mr Nguy brings an application for leave to adduce further evidence25 and hasfiled an extensive (57 paragraph) affidavit comprising the evidence he wishes admittedon appeal.[18] The affidavit largely reprises matters advanced in support of the variousadjournment applications, including the withdrawal of trial counsel, Mr Nguy'sinability to fund replacement counsel, inability to access his file, lack of experience inrespect of litigation issues and mental health problems.[19] The only matters that are strictly fresh are those relating to his decision not toappeal the adjournment judgments (he says there seemed "to be no point"),the difficulties he experienced at trial (describing himself as "completely out of mydepth") and his failure to advance the third-party claim (in respect of which, he says,he was unaware of his ability to obtain a judgment by default).[20] Although the case for admission is marginal, we allow the application, notingthat the affidavit conveniently collects material in various other documents.Discussion[21] We deal at the outset with BCH's argument that the appeal is deemedabandoned because the case on appeal was due to be filed on 21 March 2022 and wasnot in fact filed until 28 March 2022.25 Court of Appeal (Civil) Rules 2005, r 45.[22] This issue has already been determined. On 22 March 2022, theDeputy Registrar agreed to Mr Nguy's request for a five working day extension to theperiod for filing pursuant to r 5A(1)(c)(ii) of the Court of Appeal (Civil) Rules 2005.BCH subsequently applied for review of that decision, arguing that becausethe application was not made until the day after the due date for filing the case onappeal, the Deputy Registrar had no jurisdiction to grant the extension.[23] This Court rejected that argument. In its decision, dated 3 May 2022, Clifford Jheld that the Registrar may extend the time for compliance with a rule, despite theabsence of consent, and may do so either before or after the time for compliance hasexpired.26 The Judge noted the purpose of r 5A as being to allow short, discretionaryextensions in circumstances where, but for a matter of days, a party would complywith the relevant rule.27 He identified it as a more limited power than that in r 43.28The Judge noted that Mr Nguy's request had been agreed to because the delay wasminimal, appeared to be the result of an honest mistake and there was no prejudice toBCH.29 No application for leave to appeal was made in respect of that judgment. It isdeterminative of BCH's threshold point.[24] Turning to the substance of the appeal, we are not persuaded by its merits.For a start, it raises no substantive point not already comprehensively addressed inthe two judgments declining adjournment, neither of which were the subject ofapplications for leave to appeal.[25] Venning J emphasised that the matter had been set down by consentmemorandum over one year before the scheduled trial date and that Mr Nguy hadtherefore had ample time during which to make arrangements for defence of the claimand to ensure relevant witnesses were called.30 He emphasised, as Moore J did onthe informal application, that litigants are entitled to have their cases resolved withreasonable expedition and that the interests of the parties represent only one26 Nguy v BCH Investments Ltd [2022] NZCA 157 at [8].27 At [8].28 At [8].29 At [4].30 Second adjournment decision, above n 12, at [34].component of the various matters a court is required to take into account whenconsidering where justice lies on an adjournment application.31[26] Venning J noted that there was no evidence before the Court as to Mr Nguy'scurrent livelihood or means, with the result that any adjournment for the purposes ofgiving him time to instruct other counsel was likely to be a pointless exercise.32He was not persuaded that inability to access his solicitor's file prejudiced him inpreparation of his defence because all the relevant documents were in the trialbundle.33 He noted that the trial issues were narrow, being confined to whether BCHwas correct to admit liability in the OIO proceedings, whether Mr Nguy's obligationsunder his admitted contract of retainer required him to consider whether the propertywas sensitive land and whether BCH could recover a civil penalty and associated costs,having regard to the ex turpi causa rule.34[27] We consider the landscape no different now to that at the time of theadjournment applications. As Venning J noted in his substantive decision, Mr Nguywent on to represent himself at least as well as any other litigant in person. He wasextended latitude in terms of preparation of a late brief of evidence and his closingsubmissions.[28] The case against him was strong, indeed, almost unanswerable given that thescope of the retainer was clearly defined. Overseas Investment Act 2005 advice wasclearly within that scope, and no such advice was given. There was also a clearcausative link between Mr Nguy's negligence and the loss claimed, and the damagesanalysis was conventional. We see little realistic prospect of any different result ona retrial as sought by Mr Nguy.[29] In terms of his potential claims against Mr Zhu, these have not been determinedand no issue estoppel arises. Mr Nguy remains free to pursue the claims as he sees fit.31 First adjournment decision, above n 7, at [8]–[9]; and Second adjournment decision, above n 12,at [43].32 Second adjournment decision, above n 12, at [35].33 At [37].34 At [37].[30] Significantly, there is no evidence before this Court to suggest that the allegedimpediments to Mr Nguy obtaining a fair trial before Venning J (primarily due tothe inability to instruct counsel and mental health issues) would be any less inhibitivein the context of a new trial. What Mr Nguy essentially seeks is an open-endedpostponement of the adjudication process on the speculative premise that he will, atsome future time, be better placed to defend it. That challenges one of the pillars ofcivil justice — a party's entitlement to have claims resolved with reasonableexpedition. We are not persuaded that we should lend support to such an outcome onthe facts of this case.Result[31] The application for leave to adduce further evidence is granted.[32] The appeal is dismissed.[33] The appellant must pay costs to the respondent for a standard appeal ona band A basis and usual disbursements.Solicitors:Great Wall Lawyers, Auckland for AppellantGlaister Ennor, Auckland for Respondent