Lagolago v Wellington Standards Committee 2 [2018] NZCA 406 (5 October 2018)

Last Updated: 18 October 2018

IN THE COURT OF APPEAL OF NEW ZEALAND I TE KŌTI PĪRA O AOTEAROA

CA263/2018 [2018] NZCA 406

	BETWEEN	PAPALI’I TOTI LAGOLAGO Applicant
	AND	WELLINGTON STANDARDS COMMITTEE 2 Respondent

Hearing:	17 September 2018
Court:	Miller, Gilbert and Williams JJ
Counsel:	A C Beck for Applicant D R La Hood and R M A Kós for Respondent
Judgment:	5 October 2018 at 3.00 pm

JUDGMENT OF THE COURT

The application for leave to appeal is declined.
____________________________________________________________________

REASONS OF THE COURT

(Given by Williams J)

[1] The applicant, Ms Lagolago, is a lawyer. The New Zealand Lawyers and Conveyancers Disciplinary Tribunal (the Tribunal) found her:^[1]

• (a) guilty of negligence or incompetence in her professional capacity to such a degree as to reflect on her fitness to practice or as to bring her profession into disrepute;^[2] or
• (b) in the alternative, guilty of unsatisfactory conduct, that is conduct that fell short of the standard of competence and diligence that a member of the public is entitled to expect of a reasonably competent lawyer.^[3]

Some relevant background

[2] In November 2009, Ms Lagolago filed proceedings in the District Court on behalf of Mr and Mrs F (the Fs). They challenged the lawfulness of a credit contract they had entered into with a firm called Finance Now Ltd. In addition to challenging the legitimacy of the contract, they claimed $100,000 in compensation for emotional stress and anxiety. The claim failed. In a costs judgment following the event, Judge Tuohy in the District Court at Porirua awarded increased costs. A short extract from the judgment gives a sense of that Judge’s concern over the way in which the case had been handled:^[4]

[40] The whole conduct of the litigation on behalf of the [Fs] has been seriously ill-judged, lacking in proper legal analysis and commercial commonsense. It is disturbing that what should have been a dispute about the amount owing under a loan contract (not exceeding $12,000), which could have been satisfactorily resolved in the Disputes Tribunal without legal fees, has been escalated into a two day hearing in the District Court, necessitating a 107 paragraph judgment which has cost the successful parties a total of over $75,000 in legal fees and disbursements and leaves the [Fs] now facing judgment, not just for the balance of the loan contract, but for far greater sums in costs, apart altogether from their own legal costs — all this despite some clear warnings from the defendants.

[3] As Clifford J noted in his subsequent substantive judgment on appeal from the Tribunal, the Fs subsequently lost their house in a mortgagee sale.^[5]
[4] A dispute then arose between Ms Lagolago and her clients over payment of her legal fees. The Fs complained to the New Zealand Law Society (the Law Society). Charges followed.
[5] The charges were heard before the Tribunal. Ms Lagolago’s presentation before the Tribunal was commented upon in these terms:^[6]

[25] ... [Ms Lagolago’s] presentation as a witness was of some concern to the Tribunal. She still appeared to misunderstand some of the legal issues, on which the Court had made clear decisions. She did not appear to understand the nature of her role, particularly in initial stages, with her clients, and her obligation to be clear and firm and provide unemotional, objective advice to them. She was frequently tangential and unclear in her response to questions.

[26] Her affidavit spanned 168 paragraphs over 94 pages. It was rambling, lacked focus, and was at times difficult to follow.

[27] Overall, we were concerned that, even after the very clear and strong comments made by the District Court Judge about the F litigation, the practitioner did not have a high level of insight into her failings.

[6] The Tribunal found that Ms Lagolago’s conduct did not amount to misconduct in terms of s 7(1)(a)(i) of the Lawyers and Conveyancers Act 2006 (the Act),^[7] but her conduct of the proceedings and a failure to fully advise her clients in relation to an early settlement offer amounted to negligence in terms of s 241(c) of the Act.^[8] In the alternative, the Tribunal considered that Ms Lagolago’s conduct would amount to unsatisfactory conduct.^[9]
[7] In the High Court Clifford J allowed Ms Lagolago’s appeal and set aside the Tribunal’s verdict.^[10] In a separate costs judgment Clifford J declined Ms Lagolago’s application for costs in the Tribunal.^[11]
[8] Ms Lagolago’s application for leave to appeal to this Court in relation to that costs ruling was declined in the High Court by Churchman J.^[12] She now seeks leave of this Court to appeal the costs ruling. The respondent, Wellington Standards Committee 2, opposes.
[9] The statutory pathway for this appeal is contained in s 254 of the Act:

254 Appeal to Court of Appeal on question of law

(1) Any party to an appeal under section 253(1) who is dissatisfied with any determination of the High Court in the proceedings as being erroneous in point of law may, with the leave of that court, or, if the High Court refuses leave, with the leave of the Court of Appeal, appeal to the Court of Appeal against the determination; and section 56 of the Senior Courts Act 2016 applies to any such appeal.

(2) In determining whether to grant leave to appeal under this section, the Court of Appeal must have regard to whether the question of law involved in the appeal is one that, by reason of its general or public importance or for any other reason, ought to be submitted to the Court of Appeal for its decision.

(3) The Court of Appeal, in granting leave under this section, may, in its discretion, impose such conditions as it thinks fit, whether as to costs or otherwise.

(4) The decision of the Court of Appeal on any appeal under this section is final.

Proposed questions of law

[10] Ms Lagolago seeks leave to appeal on the following questions of law:

• (a) whether the general approach to costs in civil litigation is the starting point for determination of costs in a disciplinary proceeding in the Tribunal;
• (b) whether the principles relating to Calderbank letters are applicable in disciplinary proceedings; and
• (c) whether the High Court failed to take all relevant matters into account or took irrelevant matters into account in making its decision.

[11] Ms Lagolago argues that there is sufficient general or public importance due to the lack of appellate court authority guiding the applicable costs principles in Tribunal proceedings.

High Court costs judgment

[12] Clifford J reasoned that the New Zealand approach as to costs in disciplinary proceedings is that the Tribunal has a broad discretion and costs do not simply follow the event.^[13] While it is wrong, he considered, to suggest “extraordinary circumstances” would be required before costs could be ordered against the Law Society, the Tribunal nonetheless has a broad evaluative exercise to undertake.^[14] This reflects the special role of disciplinary proceedings and the fact that it is practitioners themselves who must fund it.^[15]
[13] As to the Calderbank letter sent by Ms Lagolago offering a settlement that ultimately reflected the result on appeal, Clifford J considered the usual effect on costs of Calderbank letters did not apply to disciplinary proceedings in the rigid manner provided for in the High Court Rules 2016.^[16] He nonetheless accepted such communications can be relevant to costs in some circumstances.^[17]
[14] The Judge concluded that while Ms Lagolago succeeded on appeal, she was not blameless.^[18] Comments from the District Court Judge whose proceedings triggered the complaint showed the Law Society was right to be concerned about Ms Lagolago’s performance.^[19] Further, Clifford J found Ms Lagolago’s inexperience meant the factual narrative both in the District Court in the substantive proceedings and in the Tribunal was confused and complicated.^[20] Clifford J considered in the circumstances it was a sufficient recognition of Ms Lagolago’s success to quash the costs order made against her by the Tribunal but it was not appropriate to award costs against the Law Society.^[21]

Applicant submissions

[15] For Ms Lagolago, Mr Beck submitted that the applicable principles in the matter of costs in Tribunal proceedings are in need of clarification from this Court. While there is authority from this Court with respect to costs in High Court appeals from disciplinary tribunals,^[22] this is not the position with respect to costs in the Tribunal itself. This made it a matter of general or public importance in terms of s 254(2).
[16] Mr Beck submitted that the costs approach generally applied in the High Court and able to be deduced from the High Court Rules ought to be the starting point for any consideration of costs in the Tribunal. Mr Beck relied upon Shirley v Wairarapa District Health Board and Prebble v Awatere Huata (No 2) in support of that submission.^[23] Mr Beck submitted logically the same approach should apply to Calderbank offers in disciplinary proceedings, citing Z v Dental Complaints Assessment Committee.^[24] Mr Beck submitted that the Judge was arguably in error on this question of principle.
[17] Mr Beck argued that the Judge had failed to take account of the fact that Ms Lagolago had been left substantially out of pocket even though she was the successful party. This was both inconsistent with general authority and unfair. Further, it was not relevant to the question of costs in the Tribunal that the evidence adduced in the District Court was confused and complicated (even if that was true). They were entirely distinct proceedings. Finally, the finding that Ms Lagolago had contributed to the unfavourable decision in the Tribunal due to the confused way in which the case was constructed in that forum was an ex post facto justification.

Analysis

[18] The authorities establish the essential applicable propositions. Roberts v A Professional Conduct Committee of the Nursing Council of New Zealand establishes that the ordinary High Court Rules on costs apply in the High Court on appeal from a professional conduct tribunal. This Court considered the standard presumption that costs follow the event applied but, at the discretion of the High Court, “the presumption may be more easily displaced than usual on account of the public function of professional conduct committees”.^[25] Contrary to the view of the High Court however, this Court found that a “compelling reason” to award costs to the practitioner is not required.^[26]
[19] The Court did however emphasise the fact that professional conduct committees carry out an important public function.^[27] That function is the maintenance of public confidence in the particular profession through enforcement of professional standards of conduct. Implicit in that emphasis is the proposition that a strict costs will follow the event rule risks undermining that function.
[20] Two High Court decisions in Daniels v Complaints Committee 2 of the Wellington District Law Society and Simes v Canterbury-Westland Standards Committee 2 of the New Zealand Law Society deal with costs in the Tribunal itself (the issue in this case).^[28] Both decisions emphasised the wide discretion available to the Tribunal on the question of costs, a discretion that includes the power to award costs against the practitioner even if acquitted.^[29]
[21] Section 249 of the Act deals with costs in Tribunal proceedings:

249 Order for payment of costs

(1) The Disciplinary Tribunal may, after hearing of any proceedings, make such order as to the payment of costs and expenses as it thinks fit.

(2) In particular, the Disciplinary Tribunal may order that costs be awarded to any person to whom the proceedings relate, and that those costs be paid—

(a) by the New Zealand Law Society (if that person is a lawyer or a former lawyer or an incorporated law firm or former incorporated law firm or an employee or former employee of a lawyer or incorporated law firm); or

(b) by the New Zealand Society of Conveyancers (if that person is a conveyancing practitioner or a former conveyancing practitioner or an incorporated conveyancing firm or former incorporated conveyancing firm or an employee or former employee of a conveyancing practitioner or incorporated conveyancing firm).

(3) In particular, without finding the person charged to be guilty, the Disciplinary Tribunal may, if it considers that the proceedings were justified and that it is just to do so, order that person to pay to the New Zealand Law Society or the New Zealand Society of Conveyancers such sums as the Disciplinary Tribunal thinks fit in respect of the expenses of and incidental to the proceedings and any investigation of that person’s conduct or of that person’s affairs or trust account carried out by, or on behalf of, a Standards Committee or the Legal Complaints Review Officer.

(4) In this section, expenses includes not only out-of-pocket expenses but also such amounts in respect of salaries of staff and overhead expenses incurred by either the New Zealand Law Society or the New Zealand Society of Conveyancers as the Disciplinary Tribunal considers properly attributable to an investigation.

[22] In addition to the wide terms of s 249(1), s 249(3) empowers the Tribunal to order the practitioner to pay the out-of-pocket expenses and overheads of the Law Society even where the proceeding has resulted in an acquittal, provided the Tribunal is satisfied the proceedings “were justified” and such order is “just”. A similar provision was contained in s 129(1)(b) of the Law Practitioners Act 1982 and before that in s 41(b) of the Law Practitioners Act 1955.
[23] In light of the factual findings in the Tribunal and the High Court (which we address at [26] below) Ms Lagolago had no realistic prospect of convincing either forum that she was entitled to costs even if, as Mr Beck proposed, the High Court Rules provided the “starting point”.
[24] As to the applicability of the Calderbank rules, the Judge concluded that Calderbank letters will be relevant in the exercise of the Tribunal’s costs discretion, but, unlike the approach of the High Court Rules, not determinative.^[30] For the reasons already expressed, we do not consider this point could make any difference to the result. The Calderbank rules are a corollary of the standard costs follows the event approach and so are of limited assistance in assessing costs on these facts.
[25] The applicant’s question relating to relevant considerations is really a re-work of the earlier questions, the substance of which we have dealt with.
[26] The final question relates to the High Court’s finding that the way in which the hearing before the Tribunal was conducted produced a confused factual narrative in that forum, and the way in which Ms Lagolago conducted her client’s case in the District Court produced a similar impression. Clifford J found that both contributed to the unfavourable decision in the Tribunal.^[31]
[27] These are factual issues refitted as irrelevant considerations. There can be no doubt that if the Tribunal’s wrong conclusions were in part the result of a poorly argued case and that this was consistent with the way Ms Lagolago had performed in the District Court, such considerations could properly be taken into account in costs. The true question is whether there was any evidence to support such conclusion (see Edwards (Inspector of Taxes) v Bairstow).^[32] It is clear that there was. There is no merit in this aspect of Ms Lagolago’s argument and it raises no issue of general or public importance.

Result

[28] The application for leave to appeal is dismissed.

Solicitors:
Luke Cunningham Clere, Wellington for Respondent

---

^[1] Wellington Standards Committee 2 v Lagolago [2015] NZLCDT 25 at [92]–[93].

^[2] Lawyers and Conveyancers Act 2006, s 241(c).

^[3] Section 12(a).

^[4] F and F v Finance Now Ltd DC Porirua CIV-2009-091-639 and CIV-2009-091-527, 7 September 2012.

^[5] Lagolago v Wellington Standards Committee 2 [2016] NZHC 2867 at [20].

^[6] Wellington Standards Committee 2 v Lagolago, above n 1.

^[7] At [81].

^[8] At [92].

^[9] At [93].

^[10] Lagolago v Wellington Standards Committee 2, above n 5, at [132].

^[11] Lagolago v Wellington Standards Committee 2 [2017] NZHC 3038 at [37] [Costs judgment].

^[12] Lagolago v Wellington Standards Committee 2 [2018] NZHC 1102.

^[13] Costs judgment, above n 11, at [33].

^[14] At [33].

^[15] At [34].

^[16] At [35].

^[17] At [35].

^[18] At [36].

^[19] At [36(a)].

^[20] At [36(d)].

^[21] At [37].

^[22] See Roberts v A Professional Conduct Committee of the Nursing Council of New Zealand [2014] NZCA 141, (2014) 21 PRNZ 753.

^[23] Shirley v Wairarapa District Health Board [2006] NZSC 63, [2006] 3 NZLR 523; and Prebble v Awatere Huata (No 2) [2005] NZSC 18, [2005] 2 NZLR 467.

^[24] Z v Dental Complaints Assessment Committee [2008] NZSC 55, [2009] 1 NZLR 1.

^[25] At [29].

^[26] At [29].

^[27] At [27]–[29].

^[28] Daniels v Complaints Committee 2 of the Wellington District Law Society [2011] NZHC 1359; [2011] 3 NZLR 850 (HC); and Simes v Canterbury-Westland Standards Committee 2 of the New Zealand Law Society [2013] NZHC 1501.

^[29] Daniels v Complaints Committee 2 of the Wellington District Law Society, above n 28, at [43] referring both to s 129 of the Law Practitioners Act 1982 and s 249 of the Act; and Simes v Canterbury-Westland Standards Committee 2 of the New Zealand Law Society, above n 28, at [27].

^[30] Costs judgment, above n 11, at [35].

^[31] Costs judgment, above n 11, at [36].

^[32] Edwards (Inspector of Taxes) v Bairstow [1955] UKHL 3; [1956] AC 14 (HL).