NEW ZEALAND YUHUA INTERNATIONAL LIMITED AND NZ YUHUA LIMITED V GLOBAL YUHUA BUILDING SUPPLIES LIMITED (IN LIQUIDATION) HC AK CIV 2009-404-006982

NEW ZEALAND YUHUA INTERNATIONAL LIMITED AND NZ YUHUA LIMITED V GLOBAL YUHUA BUILDING SUPPLIES LIMITED (IN LIQUIDATION) HC AK CIV 2009-404-006982 12 July 2011IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYCIV 2009-404-006982UNDER The Companies Act 1993BETWEEN NEW ZEALAND YUHUAINTERNATIONAL LIMITED AND NZYUHUA LIMITEDApplicantsAND GLOBAL YUHUA BUILDINGSUPPLIES LIMITED (IN LIQUIDATION)First RespondentAND HONG QUIANG ZHANGProposed Second RespondentAND GRACE WANGProposed Third RespondentAND YUE QINProposed Fourth RespondentCounsel: E Kuo for the ApplicantsJST Nguy for the Proposed Second and Third RespondentsJudgment: 12 July 2011JUDGMENT OFASSOCIATE JUDGE CHRISTIANSENThis judgment was delivered by me on12.07.11 at 4:30pm, pursuant toRule 11.5 of the High Court Rules.Registrar/Deputy RegistrarDateSolicitors:E Kuo, Dawsons, Manukau – eva@dawson-partners.co.nzJ Nguy, Jess & Associates, Auckland – jesse.associates@xtra.co.nz[1] In my interim judgment I queried the applicant's purpose in applying forapproval from the Court to file proceedings against the proposed second and thirdrespondents. As my earlier judgment noted, counsels' submissions had attached adraft of a statement of claim in which the applicants were noted as the plaintiffs and the proposed second and third respondents were noted as the first and second defendants respectively.[2] My interim judgment noted that the hearing then before me was a pre- commencement application wherein the applicants requested the Court to approve the merits of their suit against the proposed second and third respondents.[3] I commented to counsel that the applicants' application was probablymisplaced; that it was usually made where a party or intended party was in doubt about whether it was correct or appropriate to join a person as a party; that it was not intended to test the merits or strength of a case against a party the plaintiff was determined to proceed against; but was intended to operate in connection with a proceeding that had already been filed.[4] At that time I invited counsel to file further written submissions to addressthe question of the appropriateness of the applicants' application.Further submissions for the applicants[5] I have read those. It does not seem to me that counsel has appreciated the purpose for which Rule 4.56 (not Rule 4.65 as referred to in my interim judgment) operates. It refers to the striking out and adding parties to a proceeding that has already been filed i.e. not one which has yet to be filed. It is in the context of that understanding that the authorities referred to by counsel need to be read. Nor does it make any difference if there is another proceeding which may have some connection with that proposed to be filed. In this case that other proceeding is a liquidation proceeding concerning a company which it is alleged the proposed second and third respondents had some connection with. The matter of that connection of those parties to that other proceeding is properly the subject of enquiry by the liquidator.[6] Nor is there any analogy capable of being drawn between Rule 4.56 and Rule 8.25 by which an order for pre commencement discovery can be made. The latter Rule may require the discovery of documents that will serve a plaintiffs purpose pre commencement but it is for the plaintiff who obtains those documents to make its own assessment about whether or not they do indeed serve that purpose. It is not the Court, which grants that pre discovery application, that makes the decision about whether or not those documents will assist the plaintiff.[7] The present application pre supposes that the Court should assist the applicants to decide whether or not they have sufficient evidence to proceed. Quite simply the rules do not serve that purpose. It is for the applicants to make their own assessment about whether its proposed proceeding against the intended respondents, ought to be filed. In this case the purpose of any such proceeding would be to seek from the proposed respondents the repayment of monies allegedly improperly taken from the liquidated company with which they were associated. I have already made some comment about that background to the claim, in paragraph 11 of my interim judgment. At the end of the day, if a claim is filed, then such claim will only be proved after a full assessment of available evidence. Likely that will require a trial.[8] I see little option for the applicants except to file proceedings afresh. If the liquidator has some issues that are considered ought to be pursued against the intended respondents then that is a separate matter for the liquidator to consider. The liquidator is not party to this application.Result[9] The application is dismissed.Costs[10] The applicants propose these be reserved but if they are to be fixed then in accordance with the provisions of category 2B, they should be fixed in the sum of $2,632 on the basis that hearing time and hearing preparation time should of both be fixed at a quarter of a day.[11] Respondents' counsel submits costs should be fixed with an uplift oncategory 2B. Counsel submits:(a) The claim against the respondents is for $69,000, a modest sum which includes the sum of $3,000 to repay the liquidator, $3,000 - $4,000 for the value of a car. Counsel submits such sums are hardly worth the effort.(b) Unnecessary time and expense has been involved in responding to an argument that lacks any merit at all.[12] In my assessment costs should be fixed on a 2B basis in the sum of $9,400. Iconsider respondents' counsel has properly addressed the relevant factors containedin the third schedule, in his calculation of 2B costs. As well the applicants are to pay disbursements as approved by the Registrar.Associate Judge Christiansen