XIAO v DEPARTMENT OF INTERNAL AFFAIRS [2018] NZCA 549

XIAO v DEPARTMENT OF INTERNAL AFFAIRS [2018] NZCA 549 [3 December 2018]IN THE COURT OF APPEAL OF NEW ZEALANDI TE KŌTI PĪRA O AOTEAROACA185/2018[2018] NZCA 549BETWEEN XIAOLAN XIAOApplicantAND DEPARTMENT OF INTERNAL AFFAIRSRespondentHearing: 19 November 2018Court: Cooper, Winkelmann and Gilbert JJCounsel: Applicant in person (with interpreter)S S McMullan for RespondentJudgment: 3 December 2018 at 11.30 amJUDGMENT OF THE COURTA The application for an extension of time is granted. The applicant has until20 working days after disposition of the application for waiver of security forcosts to file the case on appeal and to seek a hearing date for the appeal.B We appoint Mr Stephen Hunter as counsel assisting the Court on this appeal,to perform the tasks set out at [15].C No order is made as to costs.____________________________________________________________________REASONS OF THE COURT(Given by Winkelmann J)[1] Mr Xiao is the sole director and shareholder of Ping An Finance (Group)New Zealand Co Ltd. The respondent (Department of Internal Affairs) obtainedjudgment by default against Mr Xiao and Ping An Finance for breaches of the Anti-Money Laundering and Countering Financing of Terrorism Act 2009 (the Act).1Mr Xiao applied unsuccessfully to set that judgment aside.2 He then appealed therefusal to set the default judgment aside, but failed to apply for the allocation of ahearing date and file his case on appeal within the three months prescribed by r 43 ofthe Court of Appeal (Civil) Rules 2005. His appeal was deemed abandoned byoperation of r 43(1).3 He now applies for an extension of time under r 43(2).[2] The Department of Internal Affairs opposes the application for an extension oftime. Although conceding no prejudice is caused by the delay, it says the extensionshould be refused because the proposed appeal is without merit.Proceedings in the High Court[3] In January 2017, the Department served proceedings on Mr Xiao alleging thatPing An had obligations under the Act to carry out customer due diligence, maintainrecords, monitor customer accounts and transactions, and to report suspicioustransactions; and that it had breached these obligations. The Department sought apecuniary penalty against Ping An and orders against both Ping An and Mr Xiaorestraining them from acting as financial institutions, and costs.[4] Neither Ping An nor Mr Xiao filed a statement of defence, and bymemorandum dated 3 March 2017, the Department requested the proceeding be listedfor a formal proof under r 15.9 of the High Court Rules 2016. The Department saysthat it copied Mr Xiao into its emailed request for a hearing. Mr Xiao denies everhaving received the email. Under the High Court Rules, the Department was notobliged to serve that communication on Mr Xiao.4[5] On 12 April 2017 a formal proof hearing was held. By judgment dated28 September 2017, Toogood J expressed himself satisfied that the Department had1 Department of Internal Affairs v Ping An Finance (Group) New Zealand Co Ltd [2017] NZHC2363, [2018] 2 NZLR 552 [High Court judgment].2 Department of Internal Affairs v Ping An Finance (Group) New Zealand Co Ltd [2018] NZHC530 [Application to set aside judgment].3 Three months after the date the appeal was brought.4 High Court Rules 2016, r 15.9(2).proved all its causes of action.5 The Judge made orders requiring Ping An to pay apecuniary penalty, restraining Ping An and Mr Xiao from acting as a financialinstitution until further order of the Court, and requiring Mr Xiao to pay costs.6[6] By application dated 12 October 2017 Mr Xiao applied to set asidethe default judgment, explaining that he had not received the emailed request fromthe Department for a formal proof hearing and claiming that his "defence hassubstance".[7] Toogood J heard and dismissed Mr Xiao's application on 2 March 2018.7While not persuaded Mr Xiao had not received the email, he said:[23] Most significantly, Mr Xiao has not provided any evidence or reasonedgrounds to support a challenge to the findings in the judgment. He has saidonly that the Department's methodology and proceeding was cavalier and thathe had a substantial defence.Proceedings in this Court[8] Mr Xiao filed his appeal against that judgment in mid-April 2018 but failed topay security for costs by the due date. In late May 2018, the Department applied tostrike out the appeal on a number of grounds, including the non-payment of securityfor costs. On 6 July 2018 Mr Xiao emailed to the Court a memorandum seeking awaiver of security for costs. On that same day Brown J issued a minute advisingMr Xiao he had also to file an application under r 5(2) of the Court of Appeal (Civil)Rules 2005 for an extension of time to file the application for waiver.[9] The Registry received that application by email on 13 July 2018, and anextension of time was granted by Brown J on 3 August 2018.8 Nevertheless, on28 August 2018 the Registry notified the parties that Mr Xiao's appeal was treated asabandoned because of his failure to comply with the requirements of seek a hearingdate and file a case on appeal as required by r 43.5 High Court judgment, above n 1, at [5].6 At [9], [138] and [139].7 Application to set aside judgment, above n 2.8 Xiao v Department of Internal Affairs CA185/2018, 3 August 2018.[10] On 26 September 2018, Mr Xiao filed the required application for an extensionof time to apply for a hearing date and file a case on appeal, which is the applicationbefore us now.The application for an extension of time[11] Mr Xiao offers no explanation for the delay in complying with r 43(1) in hiswritten submissions. In the hearing before us he explained he did not understand theprocedural steps he needed to take. As was apparent at the hearing, Mr Xiao isunrepresented and has a very poor grasp of English. He explained that he had soughtrepresentation but could not afford a lawyer, nor find one willing to represent him onLegal Aid.[12] It is very difficult for any unrepresented litigant to make their way through theprocedural thicket of waiver of security for costs, waiver of fees and the requirementsof r 43. Mr Xiao's difficulties with the English language are yet another hurdle forhim. In these circumstances, we are satisfied the delay of a month is adequatelyexplained. As the chronology of these proceedings makes clear, none of the periodsof delay have been substantial.[13] As to the merits of his appeal, Mr Xiao's position is that he was also confusedas to the procedure in the High Court and so took no steps, expecting to be notified ofa hearing date. He says his absence from the hearing meant that the Judge reached hisdecision on penalty and disqualification without all the relevant facts before him. Atthe hearing, we attempted to get further detail of the proposed defence, and inparticular what those relevant facts might be. But notwithstanding the assistance ofan interpreter, communicating with Mr Xiao about such complex matters was verydifficult, so that we were unable to clarify the proposed grounds of appeal.[14] Against this background, we are not prepared to conclude the appeal has noprospect of success. The orders obtained by the Department have a significant impactupon Mr Xiao. They were obtained through the use of a default procedure, and itfollows, without Mr Xiao having an opportunity to be heard. Given the languagedifficulties Mr Xiao has in expressing himself, both in written and oral form, there isa risk that to take the approach the Department invites would be to deny Mr Xiao theopportunity to pursue a tenable appeal ground, and to again deprive him, this time atthe appeal stage, of an opportunity to be heard.[15] We are therefore satisfied that an extension of time to apply for a hearing dateand file the case on appeal should be granted. But we are also concerned that theabsence of representation for Mr Xiao will cause considerable delay for the Court andthe parties, and may result in relevant material not being placed before the Court. Wehave concluded that steps must be taken to provide assistance to the Court for thisappeal. We therefore appoint Mr Stephen Hunter to act as counsel assisting the Courtin this matter. His task is to:(a) engage with Mr Xiao to identify the proposed grounds of appeal; and(b) present such arguments in support of that appeal as can be reasonablyadvanced.Result[16] The application for an extension of time is granted. The applicant has until20 working days after disposition of the application for waiver of security for costs tofile the case on appeal and to seek a hearing date for the appeal.[17] We appoint Mr Stephen Hunter as counsel assisting the Court on this appeal,to perform the tasks set out at [15] above.[18] No order is made as to costs.Solicitors:Meredith Connell, Auckland for Respondent549