Sandilands v New Zealand Law Society [2021] NZHC 713 (1 April 2021)

Last Updated: 27 April 2021

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE

CIV-2020-485-707 [2021] NZHC 713

UNDER	the Judicial Procedure Act 2016
BETWEEN	DUNCAN NIMMO SANDILANDS Plaintiff
AND	NEW ZEALAND LAW SOCIETY Respondent

On the Papers
Appearances:	Applicant in person P N Collins for Respondent
Judgment:	1 April 2021

JUDGMENT OF ISAC J

Introduction

• [1] The New Zealand Law Society (NZLS) has applied for orders directing Mr Sandilands to pay security for costs and staying this proceeding pending payment. The application is made under r 5.45 of the High Court Rules 2016 on the ground that Mr Sandilands is resident out of New Zealand.

• [2] The central question for this Court is whether it should exercise its discretion to order security.

The judicial review

• [3] Mr Sandilands has applied for judicial review, it appears in relation to two decisions of the Wellington Standards Committee (the Committee) made in 2019 and

SANDILANDS v NEW ZEALAND LAW SOCIETY [2021] NZHC 713 [1 April 2021]

2021. The decisions involved a complaint by Mr Sandilands about a lawyer, Ms Smith. The Committee decided to take no further action on both occasions.

Background

• [4] It is necessary to give a brief overview of the background to the judicial review proceeding. Many of the facts underlying this dispute are contested, but I think there are some points of commonality.

• [5] Mr Sandilands’ father (Mr Sandilands Snr) died in June 2012. He had four children. Mr Sandilands and his brother, Mr Erskine Sandilands, were appointed as the executors of the estate.

• [6] Mr Sandilands Snr left his residual estate to his four children but in unequal shares. The unequal distribution of the estate was seen as unfair amongst the four children. A solicitor, Ms Signal, was therefore instructed by the executors to prepare a deed of family arrangement varying the terms of Mr Sandilands Snr’s will to provide for the equal distribution of the estate.

• [7] Mr Sandilands understood that another of his brothers, Mr Malcolm Sandilands, had received money from his parents over the years. Mr Sandilands wanted the details of these payments before the deed of family arrangement was finalised and the estate distributed. Ms Signal was instructed to communicate with Malcolm Sandilands about these payments.

• [8] On 14 February 2013 Ms Signal received an email from Malcolm Sandilands in which he disclosed details of the payments he had received. Erskine Sandilands, the other executor, apparently asked Ms Signal not to pass this information on to Mr Sandilands, his co-executor.

• [9] Despite this, Ms Signal passed the information on to Mr Sandilands’ personal solicitor, Ms Smith, in an email dated 20 February 2013. It seems this was an error on Ms Signal’s part, given Erskine Sandilands’ previous request.
• [10] As a result, Ms Signal subsequently phoned Ms Smith explaining that she had sent the email by mistake, indicating she did not have the authority of the other executor to disclose it. Ms Smith complied with that request and appears to have deleted the email.

• [11] On 12 March 2013 Ms Signal wrote to Erskine Sandilands recommending the information should be provided to Mr Sandilands. Erskine Sandilands eventually accepted that advice. Ms Signal then sent a letter to Ms Smith on 26 March 2013, once again disclosing the information. The information was then made available to Mr Sandilands on 27 March 2013.

• [12] Mr Sandilands’ core complaint was that two documents – the 14 February email from Malcolm Sandilands and the 20 February letter from Ms Signal to Ms Smith – were withheld from him by Ms Smith in breach of her professional duties. It appears Mr Sandilands’ position may be that he signed the deed of family arrangement at a time when he was unaware of relevant information, and that information may have affected his decision to enter into it.¹

Procedural history

The Committee’s 2018 decision

• [13] Mr Sandilands alleged that Ms Smith and/or a Mr Barrett (a principal of the relevant firm) entered into an agreement with Ms Signal to withhold documents.

• [14] Focusing on r 7.4 of the Conduct and Client Care Rules 2008, the Committee concluded that this was not a situation where a lawyer had actively agreed to withhold information from their client. The Committee accepted Mr Barrett’s explanation that Ms Signal had telephoned Ms Smith to advise that an email had been sent to her in error, and that Ms Smith had then deleted the email.²

¹ This is by no means a clear inference from Mr Sandilands’ pleadings and evidence.

2. Notice of Decision by Wellington Standards Committee 1 No. 16976 & 16977 1 [2018 decision], at [15].

• [15] The Committee was satisfied that there was no evidence to support the allegations made by Mr Sandilands. The Committee considered that Ms Smith and Mr Barrett had not breached any rule that would justify disciplinary action and consequently decided pursuant to s 138(2) of the Lawyers and Conveyancers Act 2006 to take no further action.

• [16] It is unclear on the material before me why the Committee did not address Mr Sandilands’ complaint under r 7, which provides:

A lawyer must promptly disclose to a client all information that the lawyer has or acquires that is relevant to the matter in respect of which the lawyer is engaged by the client.

(Emphasis added)

• [17] The footnote to r 7 states:

See McKaskell v Benseman [1989] NZHC 225; [1989] 3 NZLR 75 in which Jeffries J at 87 said, “The fiduciary must, in dealing with those to whom he owes such an obligation, reveal fully all circumstances that might affect their affairs, and is thus under a duty of disclosure not imposed on others. For whatever reasons, and notwithstanding the perceived detrimental consequences to the plaintiffs, the solicitors still were obliged to disclose to them the letter no matter what the consequences.”

• [18] Be that as it may, on Mr Sandilands’ current pleading it does not appear that he takes issue with the 2018 Committee decision.

The Committee’s 2019 decision

• [19] Following the 2018 decision, Mr Sandilands issued proceedings against Ms Signal in the High Court. During the course of these proceedings, Alistair Darroch, counsel for Ms Smith, stated that:

It is accepted that Ms Signal asked Ms [Smith] not to forward an email sent to her onto Mr Sandilands.

• [20] Against this background, Mr Sandilands made a new complaint against Ms Smith. He said that the statement made by Mr Darroch above conflicted with the explanation provided by Ms Smith to the Committee during the course of the previous complaint. He said that this, along with the email itself, amounted to “fresh evidence”

which required the Committee to reconsider the decision made in the previous complaint. Specifically, Mr Sandilands said that that Mr Darroch’s statement that “Ms Signal asked Ms [Smith] not to forward an email” to Mr Sandilands was inconsistent with Ms Smith’s statement that she had been telephoned by Ms Signal and asked to delete an email which was sent in error.³

• [21] The Committee noted that Mr Sandilands’ complaint essentially sought to relitigate the issues raised in the previous complaint, and that it is well established that standards committees do not have jurisdiction to reconsider complaints about conduct on which a decision has already been made, and that committees may resolve to take no further action on repeat complaints.⁴

• [22] Nonetheless, the Committee, having reviewed all of the material provided by the parties, was of the view that there was nothing in the fresh evidence which would alter the conclusions reached by it in the previous complaint.⁵ It said:⁶

The Standards Committee considered that there was no inconsistency between the statements made by Ms Smith and Ms Signal regarding the email. The recollections of both practitioners were entirely consistent with Ms Signal asking Ms Smith, in good faith, to hold back an email which Ms Signal had sent in error. As there was no record of the conversation between Ms Signal and Ms Smith, the Standards Committee could not conclude exactly what Ms Signal had asked of Ms Smith. However, the Standards Committee noted that the email was deleted by Ms Smith, which was consistent with her position on the matter

• [23] The Committee decided to take no further action, pursuant to s 138 of the Lawyers and Conveyancers Act, as no further action was necessary or appropriate. ⁷

The Committee’s 2021 decision

• [24] During Mr Sandilands’ ongoing High Court proceedings against Ms Signal, counsel for Ms Signal submitted that:⁸

³ Notice of Decision by Wellington Standards Committee 1 No.18199 [2019 decision], at [14].

⁴ At [12].

⁵ At [16].

⁶ At [17].

⁷ At [25].

⁸ Notice of Decision by Wellington Standards Committee 1 No. 21103 [2021 decision], at [4].

On 14 February 2013, Ms Signal received an email from Mr Malcolm Sandilands [Mr Sandilands’ brother]. This contained further information about the way his parents had provided funds to him in Australia. It also referred to concerns about Mr Sandilands. Ms Signal prepared and sent an email to Mr Sandilands’ then lawyer with this information. However, she then requested that it was not passed on to Mr Sandilands because Mr Erskine Sandilands did not want it to be shared with him. This was agreed by the lawyer then acting for Mr Sandilands.

• [25] Mr Sandilands once again argued that this statement from Ms Signal’s counsel constituted new evidence that Ms Smith conspired to withhold material from him.

• [26] The Committee reviewed the material provided by Mr Sandilands in the complaint. It noted that it had previously addressed Mr Sandilands’ concerns regarding Ms Smith’s conduct by not referring the email on to Mr Sandilands and had found that Ms Smith had been notified by Ms Signal that the email was sent in error and had been asked to delete it. The Committee was not satisfied that there was anything in the submission by counsel for Ms Signal which could amount to new evidence that, by complying with Ms Signal’s request to delete the email, Ms Smith had entered into any conspiracy to withhold information from Mr Sandilands.

• [27] The Committee concluded Mr Sandilands had not provided new evidence warranting reconsideration of its 2018 decision.

• [28] The Committee decided to take no further action, pursuant to ss 137(1)(c) and 138(2) of the Lawyers and Conveyancers Act.⁹

Discussion

• [29] Rule 5.45 of the High Court Rules 2016 provides jurisdiction for an order for security for costs.

• [30] The decision to order security for costs requires the Court to balance two competing – and often irreconcilable – interests. On the one hand, Mr Sandilands has a right of access to the court and to present his case. Mr Sandilands’ right must however be balanced against the NZLS’ right not to be unreasonably exposed to an

⁹ At [11].

unreasonable costs risk. The balancing of the interests of the parties is the overriding consideration.¹⁰

• [31] Another consideration in this case is that the substantive proceeding is an application for judicial review. The right to justice is affirmed by s 27 of the New Zealand Bill of Rights Act 1990. Section 27 includes the right to the observance of the principles of natural justice and the right to apply, in accordance with law, for judicial review.

• [32] The general approach to applications for security for costs was summarised in

Busch v Zion Wildlife Gardens Ltd (in rec and in liq) as follows:¹¹

(a) Has the applicant satisfied the court of the threshold under r 5.45(1)?

(b) How should the court exercise its discretion under r 5.45(2)?

(c) What amount should security for costs be fixed at?

(d) Should a stay be ordered?

• [33] I now turn to consider each of these questions in turn.

Has the applicant satisfied the Court of the threshold under r 5.45(1)?

• [34] The threshold in r 5.45(1) will be met if either:

(a) the plaintiff is resident out of New Zealand; or

(b) there is reason to believe that the plaintiff will be unable to pay costs if unsuccessful.

• [35] There is no dispute that Mr Sandilands lives in Australia. The threshold in r 5.45(1) is therefore met.

¹⁰ Highgate on Broadway Limited v Devine [2012] NZHC 2288, [2013] NZCAR 1017 at [24](c).

¹¹ Busch v Zion Wildlife Gardens Ltd (in rec and in liq) [2012] NZHC 17 at [2].

How should the Court exercise its discretion under r 5.45(2)?

• [36] Rule 5.45(2) provides that a Judge may order the giving of security if it is “just in all the circumstances”. This language reflects the discretionary nature of the power to grant security for costs.¹²

• [37] Although the discretion is a broad one sometimes security will be required even if to do so would prevent a plaintiff from pursing a claim.¹³ Applications for security call for careful consideration and judges are slow to make an order for security which will stifle a claim.¹⁴

Merits

• [38] In my view the merits of the case is the most significant factor informing the Court’s discretion.

• [39] I think it is relevant to note at this point that Mr Sandilands has opted – either intentionally or not – to apply for judicial review rather than appeal the Committee’s decisions under ss 193 and 194 of the Lawyers and Conveyancers Act. Of course, it is Mr Sandilands’ prerogative as to how he runs his case. But I do wonder if judicial review was the appropriate avenue given there remained open to him a statutory process to examine the Committee’s decision by an independent officer.

• [40] At the end of the Committee’s decisions, it says:

Right to apply for review – Legal Complaints Review Officer (LCRO)

22. If you have received this Notice, you may have a right to apply for a review of this decision by the LCRO. On review, the LCRO may:

1. Direct the Standards Committee to reconsider the whole or any part of the complaint;

2. Confirm, modify or reverse the decision of the Standards Committee; and/or

100. Exercise any of the powers that could have been exercised by the Standards Committee in relation to this complaint.

¹² McLachlan v MEL Network Ltd [2002] NZCA 215; [2002] 16 PRNZ 747 (CA).

¹³ Lee v Lee [2019] NZCA 345 at [20].

¹⁴ Reekie v Attorney-General [2014] NZSC 63, [2014] 1 NZLR 737 at [3].

• [41] And at the end of the 2019 decision, the Committee noted:¹⁵

...although Mr Sandilands had made his complaint out of a genuine concern that the decision made by the Standards Committee in the previous complaint was incorrect, it was not appropriate for Mr Sandilands to make repeated complaints regarding the conduct of the same practitioners. If Mr Sandilands is dissatisfied with a decision made by a Standards Committee, the correct procedure is to apply for a review by the Legal Complaints Review Officer. Details of how to make a review application are set out below.

• [42] A court is only required to form an impression of the merits rather than give a definite indication of the ultimate outcome after trial.¹⁶ Of course, the more meritorious the claim the more the scales tend to favour the plaintiff’s interest in being able to pursue it, and the more meritorious the defence the more scales tend to favour the defendant’s entitlement to a degree of protection.¹⁷ But an application for security for costs should not generally become an opportunity to explore the merits in any depth.¹⁸

• [43] Mr Sandilands is reviewing two decisions of the Committee. As a lay litigant it is of course understandable that Mr Sandilands has not strictly identified – in a judicial review sense – the reviewable error(s) made by the Committee. Even with a generous approach and of course keeping in mind Mr Sandilands is not a lawyer, it is nonetheless difficult to pin down just what Mr Sandilands’ application for judicial review involves.

• [44] He questions how a self-regulatory body such as the Committee can be seen as “100% independent”. He equally takes issue with how he, a “common man”, had to represent himself at the Committee while Ms Smith was able to call on the expertise of a senior barrister. Mr Sandilands says this is hardly a “level playing field.”

• [45] Mr Sandilands highlights issues with the decision-making processes of the Committee, specifically the Committee’s view that it was not its role to require persons to provide affidavits during the course of the complaint process. Instead, Mr Sandilands says the Committee had to “just accept what Ms Smith was saying was

¹⁵ 2019 decision, above n 3, at [26].

¹⁶ Mclachlan Ltd v MEL Network Ltd, above n 12, at [21].

¹⁷ Sandilands v Signal [2020] NZHC 2354 at [25].

¹⁸ Lee v Lee, above n 13, at [73].

true and correct” which he labels as “farcical”. And, Mr Sandilands says the Committee failed to disclose certain documentation to him surrounding Ms Smith’s evidence that the email was deleted.

• [46] Some of these complaints may go to the procedural fairness of the decisions or natural justice concerns, but the link is not a strong one.

• [47] More fundamentally though, it appears Mr Sandilands takes issue with the factual findings of the Committee, especially around the 20 February email sent to Ms Smith by Ms Signal. He says Ms Smith and Ms Signal colluded to withhold information from him and denies Ms Smith’s account that she deleted the email. Of course, it is not for courts in an application for judicial review to assess whether the decision was right or wrong in a substantive sense, but whether the decision-making process was lawful. Mr Sandilands must identify an error of law, a failure to have regard to a relevant consideration (or regarding an irrelevant consideration) or a defect in procedure.

• [48] To the extent that Mr Sandilands attempts to challenge the substance of the decision and the Committee’s findings, the merits of his application appear to be relatively weak.

• [49] Had Mr Sandilands identified a ground of review that more clearly engaged the Court’s review jurisdiction, such as an error of law by the Committee in considering his complaint under r 7.4 of the Rules of Conduct and Client Care rather than r 7, my assessment of the merits of his claim might have been different.

• [50] I am reinforced in the impression that the merits of the claim as currently framed are weak given Mr Sandilands had a right of appeal to the Legal Review Complaints Officer but chose not to exhaust that right before applying for judicial review. That must go to the question of whether he would be entitled to relief, even if he was able to point to an error of process before the Committee.

Relationship with Judicial Review Procedure Act 2016

• [51] In Mallon J’s minute of 1 February 2021, her Honour said:¹⁹

I note that the application relies on Rule 5.45 of the High Court Rules. The respondent (the NZLS)’s submissions should address the applicability of this rule in light of [section] 14 of the Judicial Review Procedure Act.

• [52] Mallon J was in essence inviting counsel to discuss the relationship between s 14 of the Judicial Review Procedure Act and r 5.45 of the High Court Rules.

• [53] Counsel for the NZLS have referred to several cases involving applications for security in judicial review decisions, including Prescott v Thompson and District Court at Auckland.²⁰ In that case, Palmer J declined the application for security based on the importance of the right to access to justice and giving the plaintiff his day in court.²¹ This may indicate that in judicial review proceedings – concerning as they do exercises of public power – courts are more alive to access to justice concerns, and may be more readily inclined to decline orders for security in finely balanced cases.

• [54] However, if an application for judicial review appears unmeritorious or has been brought for ulterior purposes,²² the courts do not seem to have treated the judicial review context as warranting a different approach to security.²³

• [55] At its height, Mr Sandilands’ case concerns the processes of the Committee and whether its powers were exercised correctly. Alternatively, Mr Sandilands’ case could be viewed as a private citizen simply disputing an unfavourable outcome.

• [56] I view the fact the proceeding is an application for judicial review as a neutral factor.

¹⁹ Sandilands v New Zealand Law Society HC Wellington CIV 2020-485-707, 1 February 2021 at [5].

²⁰ Prescott v Thompson and District Court at Auckland [2019] NZHC 3028; Sax v Campbell and the District Court at Tauranga [2020] NZHC 1297 (security of $10,000); Cooke v Valuers Registration Board [2015] NZHC 2815 (security of $18,000); Hauraki Gulf Enhancement Society Inc v Auckland Council and Others [2017] NZHC 1332 (security of $12,500).

²¹ Prescott v Thompson and District Court at Auckland, above n 20, at [8].

²² Sax v Campbell and the District Court at Tauranga, above n 20.

²³ Cooke v Valuers Registration Board above n 20; Hauraki Gulf Enhancement Society Inc v Auckland Council and Others above n 20.

Previous judicial review

• [57] Mr Sandilands points to the previous judicial review proceedings where the NZLS did not seek security.²⁴ He says this establishes a precedent and the NZLS should not be entitled to security now.

• [58] However, in that case NZLS as the respondent admitted a reviewable error had occurred and a decision of the Manawatu Standards Committee was set aside by consent. The position in this case is fundamentally different. NZLS is contesting Mr Sandilands’ claim. And, the fact one party has on a previous occasion not sought security does not bind it in the future. Each case – and application for security – must be assessed on its facts.

Mr Sandilands’ claimed impecuniosity

• [59] Mr Sandilands says if security is awarded, he “will have no choice but to withdraw this claim.” This is of course a relevant consideration for this Court in that ordering security may have the effect of stifling Mr Sandilands’ claim. This concern must however be balanced against all the other factors already discussed and NZLS’ right to be protected from an unreasonable costs exposure.

Conclusion

• [60] The authorities are clear that the essential question the Court must answer in an application for security for costs is whether it is just to make an order. Given the limited merits of the proceeding as it is currently framed, I think Mr Sandilands’ right to bring his case must come second to NZLS’ right not to be subjected to an unreasonable costs exposure.

• [61] I do however recognise two things: first, it might still be possible for Mr Sandilands to alter the assessment of the merits if he were able to re-frame his case in a way that had greater merit, and second, the potential impact an order for security may have on his claim and his right to access the Court.

²⁴ Sandilands v New Zealand Law Society [2017] NZHC 2369.

• [62] Having weighed these competing factors, I conclude that the interests of justice currently weigh in favour of the grant of a modest security. I will order security accordingly, but I will also reserve leave for Mr Sandilands to re-plead his claim if he considers it might be open to him to raise an error of law (or any other recognised ground of review Mr Sandilands considers he can advance).

What amount should security for costs be fixed at?

• [63] The amount of security is a discretionary matter. An order for security will usually be for an amount that is less than the full amount of the likely award of costs as calculated under sch 3 of the High Court Rules.²⁵

• [64] NZLS has sought security of $16,969. That sum appears to include a claim for security for steps already completed to date, including filing of the statement of defence, attendance at a case management conference and filing the application for security.

• [65] As this Court has noted previously, security is forward looking; it is generally not appropriate to order security for steps undertaken prior to the application.²⁶

• [66] It seems the total amount of forward-looking security sought by NZLS is

$8,365 (being 2B costs for completion of evidence and attendance at a half-day hearing).

• [67] I therefore make an order for security in favour of the NZLS in the sum of

$3,500. That sum is just over 40% of the security sought by the respondent for steps to the completion of a half-day hearing of the application for review. My decision to set the security at that level reflects the public law context in which it arises, the fact that Mr Sandilands is a lay-person representing himself against a professional body, and his indication that he is not in a position to meet an adverse costs award.

²⁵ McGechan on Procedure (online looseleaf ed, Thomson Reuters) at [HR 5.45.07].

²⁶ Ambrose v Pickard [2009] NZCA 502, and adopted in Sisson v IAG New Zealand Ltd [2014] NZHC 616 at [71] and Oxygen Air Ltd v LG Electronics Australia Pty Ltd [2018] NZHC 2504, [2018] NZAR 1699 at [74].

• [68] I consider a staged approach to the payment of security is also appropriate, as it may assist Mr Sandilands to meet the requirement to pay security. I direct:

(a) Payment of $1,000 should be made within 15 working days of the date of this judgment.

(b) Payment of the balance ($2,500) should be made 10 working days after the filing of evidence by both parties in support and in opposition to the application for review.

• [69] As I have foreshadowed, I also reserve leave to Mr Sandilands to re-frame his statement of claim. If he is able to do so in a way that alters the Court’s assessment of the merits, it would be open for him to have the Court revisit the orders I have made.

Should a stay be ordered?

• [70] The Court will generally stay a proceeding until the security ordered is given.²⁷

• [71] The Court may also make a pre-emptive order to stay a proceeding if payment is not made by the date ordered.²⁸

• [72] Mr Sandilands has 15 working days to pay the first tranche of the security ordered. If that payment is not made I make an order staying this proceeding until further order of the Court. If Mr Sandilands wishes to file an amended pleading, he should do so within the 15 working day time-frame. He will not be permitted to take any other steps in the proceeding until security is paid in accordance with this judgment.

Result

• [73] NZLS’ application is granted. Orders are made in accordance with this judgment at [68] and [72].

27. Tomanovich Holdings Limited v Gibbston Community Water Company (2014) Ltd [2018] NZHC 990 at [68]- [85].

²⁸ Westpac New Zealand Ltd v Adams [2013] NZHC 3112 at [92](c).

• [74] As NZLS has been largely successful in its application, it is entitled to costs. I order costs in its favour on a 2B basis in relation to this interlocutory application, together with disbursements as fixed by the Registrar.

Isac J

Solicitors:

P N Collins, Auckland

Copy to:

D N Sandilands