ZHANG v MENG [2022] NZHC 2641

ZHANG v MENG [2022] NZHC 2641 [12 October 2022]IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYI TE KŌTI MATUA O AOTEAROATĀMAKI MAKAURAU ROHECIV-2021-404-508[2022] NZHC 2641UNDER the High Court Rules 2016BETWEEN JUNHUI ZHANG and WEI XUPlaintiffsAND XING MENG and HUIMIN GUANDefendantsHearing: 12 October 2022Appearances: CL Holland for the PlaintiffsS Maloney for the DefendantsJudgment: 12 October 2022JUDGMENT OF WOOLFORD J(Application to rescind order for joinder)Solicitors: Righteous Law (C L Holland), AucklandHeritage Law (D Liu), Auckland[1] This interlocutory hearing concerns the interpretation of the phrase "on thepapers" as it was used by Associate Judge Andrew in a minute dated 6 May 2022 (firstminute) in the present proceeding. In that minute, Associate Judge Andrew directedthat:(a) The plaintiff is to file and serve, by 20 May 2022, either:(i) An amended statement of defence and counterclaim withoutadditional parties; and/or(ii) A formal application for leave to join the additional parties.(b) The defendants are to file and serve their statement of defence to anycounterclaim or notice of opposition (as the case may be) by 3 June2022;(c) The Court will then determine any application for leave to joinadditional parties on the papers.[2] On 20 May 2022, the plaintiffs filed an interlocutory application to add parties,a reasonably lengthy affidavit from one of the plaintiffs, Wei Xu, and a five pagememorandum of counsel.[3] In response, the defendants filed a notice of opposition, dated 3 June 2022,together with a short affidavit from one of the defendants, Huimin Guan, dated 7 June2022. The defendants did not file a memorandum or submissions.[4] On 12 July 2022, Associate Judge Andrew issued a second minute in which hegranted the plaintiffs' application to add parties. He stated:[2] I am satisfied that the grounds for the orders sought have been madeout (r 4.56). The presence before the Court by these additional parties may benecessary to adjudicate on and settle all questions involved in the proceedings.There may also be some efficiency in resolving all outstanding disputesbetween the parties and there is arguably a close connection between theproposed counterclaims and the purchase of the property and the payment ofthe deposit, the essential matters at dispute in the main proceedings.[5] Two days later, on 14 July 2022, counsel for the defendants filed amemorandum seeking recall of the second minute granting joinder of the parties onthe basis that the first minute did not refer to the filing of submissions. The defendantssubmit that although the Court said it would determine the application on the papers,that was not an order made by consent. No submissions were filed by the defencebecause none were directed by the Court. Without further reference to the parties, theCourt ruled in favour of the plaintiffs on the basis that the plaintiffs had made out thegrounds of their application. The Court made no reference to the matters raised inopposition.[6] The defendants have now filed an interlocutory application for ordersextending the time to apply for an order rescinding the order for joinder made byAssociate Judge Andrew and rescinding the order for joinder. It is this applicationwhich has been set down for hearing today. The application is opposed by theplaintiffs.[7] The grounds of the plaintiffs' opposition are as follows:(a) The first minute specifically records at 1(c) that the Court willdetermine any application for leave to join additional parties "on thepapers."(b) The defendants failed to file the correct application.(c) Counsel for the defendants had sufficient opportunity to make anapplication pursuant to r 7.49 of the High Court Rules (HCR) to rescindor vary, or pursuant to r 11.9 HCR, to recall the first minute and electednot to do so.(d) The first minute was produced after a meeting betweenAssociate Judge Andrew and counsel in Chambers.Discussion[8] Although the plaintiffs submit that the defendants incorrectly relied on r 11.9when initially making their application to recall the second minute, they have nowmade application to rescind the orders made in the second minute under r 7.49. Theplaintiffs acknowledge that r 7.49 is an appropriate pathway to challenge the orders.The defendants' initial reliance on r 11.9 is not material to their application underr 7.49.[9] Nor is it material that the defendants "elected" not to make an applicationpursuant to r 7.49 when they had sufficient opportunity to do so.[10] The crucial question is whether the term "on the papers" sufficiently informscounsel that any application and opposition filed substitutes the requirement fortimetabling of submissions and of any oral hearing. The plaintiffs submit that counselwell understood that any application and/or opposition should sufficiently detail theparties' arguments.[11] The High Court Rules do not expressly specify when a hearing will be requiredfor an interlocutory application. McGechan on Procedure states that there are onlytwo circumstances in which the Court should dispense with a hearing:1There need not be a hearing of an interlocutory application if every respondenthas advised in writing that the application is consented to or is not opposed.In addition, even if the orders are opposed, it would be appropriate to dispensewith a hearing if the parties consented. In every other case, a hearing willordinarily be required for an opposed interlocutory application under pt 7.[12] The plaintiffs point out, however, that McGechan recognises the lack of clarityin the rules relating to when a hearing is required. They refer to Party Bus CompanyLimited v Attorney-General,2 in which Miller J accepted he had erred in not having ahearing but stated that on occasion the objective of the rules could be met by a decisionon the papers, in particular, when the Judge was already familiar with the file and theapplication was of a narrow compass.1 McGechan on Procedure (online ed, Thomson Reuters) at [HR7.34.04].2 The Party Bus Company Limited v Attorney-General [2012] NZHC 445.[13] While Associate Judge Andrew had heard and determined a summaryjudgment application for the recovery of land, the joinder of three plaintiffs and onedefendant greatly widened the issues in the proceeding to include the formation andcollapse of a joint venture, an investment by the defendant into the proposed secondplaintiff, the provision of a motor car for use by the defendants, the non-payment forstock and the damage caused to and rental outstanding on two retail outlets. The fourplaintiffs now claim a total sum exceeding $1 million from the defendants. Theapplication to join three plaintiffs and one defendant was therefore not of narrowcompass.[14] The plaintiffs further submit, with respect to the authors of McGechan, thatthere are not only two circumstances in which the Court should dispense with ahearing. The Court may also dispense with a hearing where there is no expectation ofa hearing. The plaintiffs submit such an expectation was established from the firstminute. Whatever the expectation of the parties, there was no consent recorded to ahearing on the papers. It appears consent was not sought.[15] Under r 7.49 a party affected by an interlocutory order or decision may applyto the Court to vary or rescind the order or decision if the party considers that the orderor decision is wrong.[16] McGechan on Procedure states that r 7.49 will generally be engaged in thefollowing circumstances:3(a) Where there was not full argument at the initial hearing;(b) If some relevant point of evidence was overlooked;(c) If there has been a material change in circumstances; or(d) Some other special circumstances have arisen.3 McGechan on Procedure, above n 1, at [HR7.49.01].[17] The factors relevant to the Court's discretion to rescind or vary an order underr 7.49 are:4(a) Whether the order was made in Court or in Chambers;(b) The amount involved.(c) Whether there were significant legal or jurisdictional issues.(d) The nature of the hearing that resulted in the order sought to be variedor rescinded.(e) In particular:(i) Whether the issues were fully argued.(ii) Whether further evidence or other matters are placed before theCourt that justify a reconsideration of the order.[18] The threshold for recission is lower than that for recall. If the issues were notsubject to full argument before the order was made, all that the application must showis that the matter could benefit from further and more extensive argument andconsideration of the issues in dispute.5[19] I am of the view that the issues were not fully argued because the order wasmade on the papers without the benefit of a hearing or submissions from thedefendants. The reasons given by Associate Judge Andrew are brief and make noreference to the defendants' notice of opposition and affidavit in opposition.[20] This is not a case where the plaintiffs' application for joinder was sure tosucceed or that the defendants' opposition was utterly without merit and completelymisconceived. Joinder is not granted as of right. There are significant legal and factualhurdles which a plaintiff seeking joinder must overcome. Here, I agree with the4 At [HR 7.49.04](3).5 Strathmore Group Ltd v Fraser (1990) 3 PRNZ 665 at 668.defendants that at a minimum where the plaintiff seeks to join additional plaintiffs, theplaintiff must establish that each plaintiff has a claim to relief arising out of the sametransaction, matter, event, instrument, document, a series of documents, enactment, orby-law and that there is a common question of law or fact which would arise if theplaintiff brought a separate proceeding.6[21] Where a plaintiff seeks to join new defendants, the plaintiff must establish thatit has a right to relief against each defendant arising out of the same transaction, matter,event, instrument, document, series of documents, enactment, or by-law. Even if thesematters are established, the Court may deny the application if joinder may prejudiceor delay the hearing of the proceeding.[22] There is merit in the defendants' submission that the plaintiffs' application andsupporting affidavit do not disclose clear grounds for joinder. The parties sought tobe joined are companies which do not claim any right or relief in respect of, or arisingout of, the transaction underlying the substantive proceedings (the oral agreement tosell the plaintiffs' property to the defendants). There is no common question of law orfact that would arise if the new parties were to bring their claims by way of separateproceedings.[23] I therefore conclude that the defendants' application today should be granted.The joinder order was made without hearing and the matter could clearly benefit fromfurther and more extensive argument in consideration of the issues.[24] The applications for extension and rescission are granted. The followingtimetable orders are now made to advance the plaintiffs' application for joinder to ahearing:(a) The plaintiffs' submissions and authorities in support of the applicationfor joinder are to be filed and served 10 working days after today's date.6 McGechan on Procedure, above n 1, at [HR4.2.02].(b) The defendants' submissions and authorities in opposition to joinderare to be filed and served 10 working days after the plaintiffs'submissions.(c) The application for joinder is to be determined on the papers – onlywith express consent of both parties. The defendants expressly consent.The plaintiffs are to indicate whether they consent with 10 workingdays. If they do not consent, the application is to be set down for a onehour hearing at the earliest available time.________________________________Woolford J