Deliu v Hong
| Jurisdiction | New Zealand |
| Judge | Courtney J |
| Judgment Date | 21 December 2011 |
| Court | High Court |
| Docket Number | CIV-2010-404-006349 |
| Date | 21 December 2011 |
and
CIV-2010-404-006349
IN THE HIGH COURT OF NEW ZEALAND
AUCKLAND REGISTRY
Application for review of associate judge's decision to strike out plaintiffs' claims — cross-application to strike out plaintiffs' applications together with order that first plaintiff could not appeal decision in present case — application by defendant for costs on earlier unsuccessful injunction proceeding — dispute between solicitors — exchange of letters and complaints laid with Law Society lead to claim for abuse of process, malicious prosecution and defamation/injurious falsehood — associate judge struck out claims on own motion as being frivolous and not tenable — whether there was jurisdiction to strike out the claim without giving plaintiffs sufficient opportunity to be heard as required by r7.43(3) High Court Rules (making of interlocutory order on judge's own initiative) — whether associate judge erred in striking out claims as being frivolous or no tenable cause of action — whether application should be struck out as mis-founded, causing prejudice and delay, frivolous and was an abuse of process — whether defendant entitled to costs on earlier failed injunction proceedings.
First Plaintiff in Person
A D Banbrook for Defendant
A Banbrook, POBox 105870, Auckland 1143 Fax: (09) 377-0762 — Email: tony@tonybanrookco.nz
JUDGMENT OF Courtney J
Mr Hong is a solicitor in sole practice in Auckland. In 2009 he acted for Mr and Mrs Ma on the purchase of a house. They subsequently commenced proceedings against him alleging negligence and breach of fiduciary duty. 1 When Mr Hong was first served with the proceedings he directed an angry response to the solicitor acting for the Mas, Mr Baker, and their counsel, Messrs Zhao and Ram. That started a chain of events that resulted in these proceedings.
Messrs Zhao and Ram are members of legal chambers known as Amicus Lawyers. Mr Deliu, the first plaintiff, is a barrister in these chambers. He is also a director of the second plaintiff, Amicus Lawyers Ltd, which operates the chambers. It was Mr Deliu who replied to Mr Hong's first letter. He did so, he said, as the “head” of Amicus. Mr Deliu's reply was in very strong terms. There followed an exchange of derogatory remarks between Mr Hong and Mr Deliu, complaints by each against the other to the Lawyers Complaints Service of the New Zealand Law Society (LSC) and these proceedings, in which Mr Deliu and Amicus made allegations of abuse of process, malicious prosecution, intentional infliction of emotional distress and defamation/injurious falsehood against Mr Hong, and Mr Hong counterclaimed with similar allegations against Mr Deliu, Amicus and Messrs Zhao and Ram.
Mr Deliu applied to strike out Mr Hong's statement of defence and counterclaims, Mr Hong cross-applied to strike out Amicus' claim (but not Mr Deliu's claim). Following a defended hearing Associate Judge Bell gave an oral judgment in which he struck out both the statement of claim and counterclaim in their entirety on the ground that they were frivolous. The Associate Judge refused Mr Deliu's application to recall the judgment. Mr Deliu now applies to review the Associate Judge's decisions under s 26P of the Judicature Act 1908 on the grounds that:
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(a) There was no jurisdiction to dismiss his claim in the absence of an application before the Court;
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(b) Striking out the claim amounted to a denial of the principles of natural justice;
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(c) Striking out the claim amounted to a denial of access to justice; and
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(d) The Associate Judge erred in declining to recall the judgment.
Mr Hong does not seek to review the Associate Judge's decision and accepts that his counterclaim has been properly struck out. He has, however, filed a cross-application seeking to have Mr Deliu's and Amicus' applications struck out, an order that Mr Deliu cannot appeal my decision and for costs in respect of an unsuccessful injunction made by Mr Deliu at the outset of the proceedings.
Under s 26P of the Judicature Act 1908 any party to a proceeding affected by the decision of an Associate Judge in chambers may apply for a review of the decision. Where the decision under review involves the exercise of discretion, as both the striking out of pleadings and the awarding of costs do, it must be shown that the Associate Judge acted on a wrong principle or failed to take some relevant matter into account or took some irrelevant matter into account or was plainly wrong. 2
Where the decision follows a defended hearing and is supported by documented reasons, the review proceeds as a rehearing. 3 Mr Deliu argued that the review application should be heard on a de novo basis. I do not accept that approaching the matter de novo would be correct in relation to the striking out of the Amicus claim because that order followed a defended hearing and lengthy reasons were given. The striking out of Mr Deliu's claim is different; there was no argument about it because there was no application in respect of it. Therefore it could not be regarded as having been the subject of a defended hearing. Mr Hong's application for costs on the injunction was not dealt with at all. These aspects of the review should therefore be approached on a de novo basis.
I do not need to consider the application regarding the striking out of Mr Deliu's claim in any detail because it is clear that that order must be set aside. An order striking out a pleading is an interlocutory order. Under r 7.43 of the High Court Rules an interlocutory order may be made either on the application of a party or on a judge's own initiative. 4 However, before making an order on his or her own initiative a judge must give the parties an opportunity to be heard. 5 Mr Deliu asserted that the possibility of his claim, as opposed to Amicus' claim, being struck out was not signalled to the parties and not argued. Mr Banbrook, for Mr Hong, had also appeared at the hearing before the Associate Judge and did not refute Mr Deliu's assertion.
Whether Mr Deliu's claim might be amenable to being struck out upon application by Mr Hong or on the Court's initiative (following a hearing) is for another day. But clearly the claim should not have been struck out in the circumstances that existed at the time.
Mr Deliu's application to recall the Associate Judge's judgment was based primarily on the complaint that the Associate Judge had struck out Mr Deliu's claim without him being heard. Because of my conclusion on that point it is unnecessary to consider the argument regarding the refusal to recall the judgment.
Mr Hong's application to strike out Amicus' claim was brought on the grounds that the pleading did not disclose a reasonably arguable cause of action, was likely to cause prejudice or delay, was frivolous or vexatious or otherwise an abuse of the Court process. The power to strike out a cause of action, and thereby preclude the issues arising from being tried, is to be used sparingly and only in clear cases. 6
Although the Associate Judge did consider whether the pleadings disclosed reasonably arguable causes of action, he did not base his decision on that assessment, but rather on r 15.1 (1)(c), the frivolous ground:
[22] The claims by Mr Deliu and Mr Hong are frivolous. The parties are using the pleadings to direct insults at each other. This proceeding is not being used to uphold interests which the law of torts sets out to protect. In the eyes of the law, the matters in issue in this proceeding are trivial. This proceeding lacks the seriousness required of matters for the court's determination.
[23] This decision that the pleadings are frivolous does not turn on whether Mr Deliu or Mr Hong have tenable causes of action for their claims, although that is a relevant consideration …
[33] I do not say that all Mr Deliu's or Mr Hong's causes of action are completely untenable but their cases are very weak. They are contrived simply as vehicles in which to deliver attacks against each other. The point remains that this proceeding is not being run to serve any useful purpose.
The Associate Judge's view that the claim and counterclaim were frivolous was entirely understandable. However, it is not consider it necessary to consider that aspect in any detail because, in my judgment, the causes of action by Amicus were not tenable and should properly have been struck out on that ground, without the need to consider the motivation of the parties.
The amended statement of claim filed by Mr Deliu and Amicus pleaded four causes of action. Both plaintiffs asserted abuse of process, malicious prosecution and defamation/malicious falsehood, There was a further cause of action by Mr Deliu alone which is not relevant to the present issue. Bell AJ considered that neither the abuse of process nor malicious prosecution causes of action were tenable. This was mainly because the communications complained of were privileged, being made either in the context of the Ma proceeding or as part of the LCS complaints process. 7
In respect of the abuse of process cause of action the Associate Judge concluded (as had Venning J in relation to the unsuccessful injunction application) that there was no arguable cause of action because, although it would have been an abuse of process to lodge a complaint with the NZLS for an ulterior purpose, in this case Mr Hong initially complained as part of his response to the earlier complaint
made by Mr Deliu about Mr Hong. I agree with...To continue reading
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