CHEN v TAWA TRADE FINANCE LTD [2023] NZHC 2156

CHEN v TAWA TRADE FINANCE LTD [2023] NZHC 2156 [10 August 2023]IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYI TE KŌTI MATUA O AOTEAROATĀMAKI MAKAURAU ROHECIV-2023-404-492[2023] NZHC 2156BETWEEN LIYUN CHENFirst ApplicantLC1521319 DEVELOPMENT COLIMITEDSecond ApplicantAND TAWA TRADE FINANCE LIMITEDRespondentHearing: 10 August 2023Appearances: Ms Chen in person with Mr Lau (McKenzie Friend) and MrChang (Interpreter)DJ Chisholm KC for the RespondentJudgment: 10 August 2023ORAL JUDGMENT OF BECROFT J[As to leave to appeal]Solicitors/Counsel:Turner Hopkins, AucklandD Chisholm KC, AucklandCopy to: Ms L ChenThe application[1] Ms Liyun Chen applies for leave to appeal a judgment of Gordon J dated 31May 2023. That judgment refused an application for leave to commence proceedingsby way of an originating application under r 19.5 of the High Court Rules 2016.[2] Ms Chen also applies to stay the execution of that judgment. Self-evidently,as the judgment refused the leave sought, with great respect, there is nothing to stay.More on that, later.Background[3] By way of short background, Ms Chen is the guarantor of two loans that weremade by the respondent, Tawa Trade Finance Limited (Tawa), to LC1521319Development Company Limited (the Company). The loans were not repaid when due.Neither the Company nor Ms Chen, who was the personal guarantor, have repaid, atthis stage, a single dollar towards the outstanding principal and accruing interest.[4] Tawa accordingly resolved to proceed by way of mortgagee sale. EventuallyProperty Law Act notices were served and they expired in May. Two of the threeproperties, the subject of the mortgage, are subject to unconditional sale agreementswith settlements due 8 August 2023 and 16 August 2023. Settlement is presentlydependent upon caveats, and a notice of claim lodged by Ms Chen's former de factopartner, being removed from the titles.[5] There is a long factual background to this. There is no need for me to go intoall the facts for the purposes of this leave application – which is fundamentally to dowith the right process to use in bringing Ms Chen's proposed court actions and claims.[6] In terms of Gordon J's decision, the sole issue before her was whether thereshould be leave to commence an originating application under r 19.5 of the High CourtRules. In particular, Ms Chen wanted to use the originating application procedure tolaunch an attack on the Property Law Act notices and, effectively, obtain an injunction,restraining the mortgagee sale.[7] The substantive claims that Ms Chen was seeking to raise by the originatingapplication were, with great respect, misconceived legally. They also involvedsignificant factual disputes which would be inappropriate to resolve by way oforiginating application.[8] On top of that, Ms Chen and the Company had already commenced substantiveproceedings making essentially the same claims but in much greater detail andsubstance (CIV-2023-404-427).[9] I accept Mr Chisholm's submission that, procedurally, there was no need forthese "second proceedings" – the originating application process. The correctprocedure would have been for Ms Chen and the Company to apply for an interiminjunction in the existing substantive proceedings.[10] In fact, Ms Chen did apply for an injunction in the substantive proceeding.That application was dismissed by Davison J in a judgment dated 11 July 2023.The decision sought to be appealed[11] Gordon J's decision does not need to be repeated. It speaks for itself. It was avery careful analysis. On my assessment, Gordon J bent over backwards to help MsChen in terms of understanding her argument. In her view, the r 19.5 test for anoriginating application as here, which was outside the prescribed and allowed formatters in rr 19.2, 19.3 and 19.4, was not in the interests of justice.[12] A large part of her Honour's reasoning was based on the existence of deep andfundamental factual disputes which were not amenable to an originating applicationprocess. That process is designed to achieve fast, speedy and efficient justice whenmatters are largely uncontested or have a very narrow and precisely formulated focus.[13] For what it is worth, Gordon J went much further. Out of respect for Ms Chen,and knowing that she wanted to obtain an injunction, her Honour dealt with herapplication on the basis that it might, indeed, be an injunction application. But herHonour was very clear that, even if it was, it could never succeed. On the merits ofwhat had been put before her, there was simply no possible basis for an injunctionbeing granted.[14] It seems that the very same decision was reached by Davison J when he laterrefused the specific and then second application for an injunction.Leave to appeal – the law[15] Against that background, Ms Chen applies for leave under s 56(3) of the SeniorCourts Act 2016. Leave to appeal is specifically required in a case such as this, wherean interlocutory application (for leave to commence proceedings by way of originatingapplication) was made. In one sense, the leave process, as has been observed, is a"filter" to weed out unmeritorious or plainly unarguable appeals.[16] As is emphasised by Mr Chisholm, the requirement for leave to appealinterlocutory applications has a high bar. And at paragraph [12] of his submissions,he sets out those now well-established principles:1(a) a high threshold exists;(b) the applicant must identify an arguable error of law or fact;(c) the alleged error should be of general or public importance warrantingdetermination or otherwise of sufficient importance to the applicant tooutweigh the lack of general or precedential value;(d) the circumstances must warrant incurring further delay; and(e) the ultimate question is whether the interests of justice are served bygranting leave.[17] As Mr Chisholm points out, and I agree, any appeal here faces, what I wouldcall, a "second hurdle" because it is an appeal of a discretion. The decision whetheror not to proceed by way of originating application is one that a Court may, but notnecessarily must, make. It is entirely discretionary. That being the case, the criteria1 Greendrake v District Court of New Zealand [2019] NZHC 1680.for a successful appeal of a discretion, and certainly relevant to a leave application,are limited to:2(a) an error of law or principle;(b) evidence that the Court has taken account of an irrelevantconsideration;(c) evidence that the Court has failed to take account of a relevantconsideration; or(d) a decision that is plainly wrong.So, any appellant seeking leave to appeal the exercise of a discretion, as occurred herewith Gordon J, faces a very difficult task.Grounds of appeal[18] I have spent considerable time with Ms Chen today, over an hour, attemptingto understand and refine her grounds for seeking leave to appeal. The Court has beenassisted by the efforts of a senior interpreter. As best as I can understand her three-fold concerns, they are as follows:First ground[19] First, that there are two parallel sets of documentation in the proceedings. Oneinvolving Tawa Finance Limited, the case in which this decision is being issued. Thesecond involving General Finance Limited (General Finance), in respect of whichGordon J delivered a very similar decision about an identical r 19.5 application.[20] Ms Chen's concern is that each case is being used to buttress the other. Inparticular, General Finance is "piggy-backing" off the arguments made by Tawa andthe Court has failed to separate them in a way that means, particularly in the case ofGeneral Finance, erroneous factual decisions have been made. And because there hasbeen reliance also on General Finance erroneous facts, so, too, any decision for Tawa2 Kacem v Bashir [2011] 2 NZLR 1 (SC) at [32].is tainted. So, I understand Ms Chen is arguing both ways, as it were: that each casehas contaminated the other.[21] Two things can be said about that. One, it does not appear to be relevant as towhether the r 19.5 process should be used in this case and, in fact, if anything, itreinforces that it should not have been. Secondly, Judges have been very clear toseparate the two causes of action, as I am doing today and have delivered separatejudgments in respect of each. There is nothing in that first ground.Second ground[22] The second argument seems to be that caveats that were issued in respect ofthe mortgaged properties, were without basis and, indeed, did not rest on any powerto do so existing in the relevant loan documents. Two parallel loan documents wereput to me. One, where there was an express power to lodge a caveat; and a secondwhere there wasn't. At least I think that is the argument. I repeat my observations forthis ground, made previously for the first ground. I simply note it is not relevant towhether the r 19.5 procedure is used. And, again, if anything, it absolutely reinforcesthe unsuitability of the originating application process given the significant factualdispute here as to which set of loan documents were signed.[23] I do not know where those two clauses come from nor what reliance has beenplaced on them in other matters. And even if (and I see no basis for this being thecase) there was incorrect reliance placed by Gordon J on one or other of the clauses,and the legality of maintaining a caveat is in doubt, it is not relevant to this application.Third ground[24] The third argument is that a valuation dated 9 February 2022 is now available.On page 12 it describes the mortgaged property as a "Residential Large Lot Zone"providing for residential development. But, Ms Chen says, Tawa provided a businessloan at a higher rate of interest than it should have done, given that this was residentialproperty.[25] Again, that serves to reinforce factual disputes, that are irrelevant to whetherthe originating application procedure should be used. If the valuation is relevant, thisdispute again serves only to reinforce the unsuitability of the originating applicationprocess.Discussion[26] With great respect to Ms Chen, as I have set out, there is nothing in her groundsof appeal. I see no error in Gordon J's approach. She gave a most comprehensivejudgment and, in my view, understood all aspects of Ms Chen's claim – and herHonour went even further than what Ms Chen was asking for by considering theinterim injunction argument as well.[27] I need also to observe, upholding Mr Chisholm's submission on this point, thatMs Chen has not only commenced a conventional substantive proceeding by statementof claim but she has also applied for, and been refused an interim injunction – whichis precisely what she wants to achieve here, through her proposed originatingapplication. In my view, it is unarguable that it would be an abuse of process to havetwo separate proceedings against Tawa covering the same claims – which would bethe result if the originating application process was approved here.[28] I echo the words of Mr Chisholm, Ms Chen, just so we are clear. In this caseMs Chen comes nowhere close to meeting the high threshold for leave to appeal,particularly given that leave to appeal is sought against the exercise of discretion.[29] As for Ms Chen's application to stay the judgment, little needs to be said aboutthis. Gordon J did not make any order. She did not direct anything that needed tohappen nor any steps that needed to be taken. There is, in fact, nothing to stay. Thestay application is also misconceived and should be dismissed.Conclusion[30] For the record, I dismiss both applications made by Ms Chen.[31] There is a question of costs. I spent some time with Ms Chen trying to explainas carefully as I could that procedural matters such as this are complicated. Ms Chenneeds legal advice. Her application today for leave to appeal was doomed. I need tobe frank with Ms Chen and I am saying this looking her in the eye and explaining toher that it just could not succeed. It has involved a considerable waste of time.[32] Tawa would be entitled to claim indemnity costs under its loan documentation.I have tried to explain to Ms Chen that this is not being claimed, for now. And todayI would not grant it. But the time might come when lawyers do ask for full indemnitycosts. And such an application might be granted.[33] Ms Chen has also accused both Mr Chisholm and Mr Martin of deliberatelyand erroneously misleading the Court. The response of both counsel to that wasrestrained and polite. But clearly both were angry. I have explained to Ms Chen thatthose claims need to be carefully considered and they are not acceptable without clearevidence to back them up. There may have been some misunderstandings. There mayhave been some factual errors made by all the Judges who have dealt with Ms Chen,including me. But the fundamentals of all the claims seems clear. The fundamentalsof the arguments made by Mr Chisholm and also Mr Martin seem clear. I see no basisfor any claim that there has been a deliberate orchestrated attempt to mislead the Court.[34] On this basis, Tawa's application to seek costs on a 2B basis on the twoapplications, in my view, is unarguable. Ms Chen, when given the opportunity torespond, had nothing to say about it.Result[35] A schedule has been provided as to quantum. Total costs are $8,006.50together with disbursements in the way of filing fees $234.78 (GST exclusive). I ordercosts to Tawa, as sought, in the sum of $8,241.28.[36] I dismiss the two applications._________________________Becroft J