Shafik v Makary [2015] NZHC 1764 (29 July 2015)

Last Updated: 20 August 2015

IN THE HIGH COURT OF NEW ZEALAND DUNEDIN REGISTRY

CIV-2014-412-000176 [2015] NZHC 1764

BETWEEN	SHERIF SHAFIK Apellant
AND	NAGY ALBERT MAKARY Respondent

Hearing:	29 July 2015
Appearances:	R S Pidgeon for Appellant N A Till QC for Respondent
Judgment:	29 July 2015

_{ORAL JUDGMENT OF GENDALL J}

[1] Some time ago an appeal against a summary judgment decision given by Judge Crosbie in the District Court was filed by the appellant. That appeal was set down for hearing today, 29 July 2015.

[2] Mr Pidgeon appeared today as counsel for the appellant. Mr Till QC

appeared as counsel for the respondent.

[3] Before me, Mr Pidgeon at the outset of this hearing indicated for the first time that effectively to all intents and purposes this appeal against the substantive summary judgment decision in the District Court was abandoned. There was earlier, as I understand it, a suggestion that the appeal today might proceed with respect to quantum issues but Mr Pidgeon confirmed, but only today, that this was now not to be the case.

[4] Mr Pidgeon went on, however, to contend that there was one small matter raised in the original notice of appeal (dated 6 October 2014) which was still

SHAFIK v MAKARY [2015] NZHC 1764 [29 July 2015]

outstanding. This related to a ground outlined at paragraph 2.i. of the original notice of appeal which stated:

2. The grounds of the appeal are that the Learned District Court Judge erred in fact and law in the following respects:

...

i. That the decision of the District Court Judge to award the Plaintiff costs and disbursements on the adjournment of the August hearing was both unreasonable and erroneous on point of law.

...

[5] Before me today Mr Pidgeon endeavoured to argue that the appeal with respect to this costs and disbursements award on the adjournment of the August 2014 hearing was still a live issue.

[6] With respect however, in my view this is drawing a rather long bow.

[7] This is because on 22 July 2015 the appellant/applicant filed in this Court an interlocutory application on notice for:

(a) Special leave to extend time for filing an appeal against the costs decision of Judge Crosbie (that costs decision being given on

8 December 2014); and

(b) A stay on the post-appeal hearing judgment sum pending the resolution of the application for orders under the Companies Act 1993 s 174 (pursuant to High Court Rules 20.19(1)(c)).

[8] With respect to that 22 July 2015 application, at the outset today I indicated that the application for stay noted in (b) above which was opposed by the respondent but who, according to Mr Till QC, had had no real opportunity to file a formal notice of opposition and material in support, was simply adjourned and would be the subject of a hearing in the future to be set by the Registrar.

[9] So far as the application for special leave to extend the time for filing the appeal against the costs decision is concerned, it is clear from that costs decision, that the award of $11,250 costs by Judge Crosbie was a fixed global amount relating to all matters which were before the Court at that point. This included the substantive summary judgment hearing and the costs and disbursements on the adjournment of the August hearing.

[10] It is that global costs and disbursements amount which is the subject of the present application for special leave. No costs and disbursements amount had been sealed with respect to the adjourned August hearing. No doubt it would have been a relatively modest amount if steps had been taken to quantify the sum in question at the time.

[11] I take the view therefore that all costs and disbursements relating to the summary judgment application, and ancillary matters concerning that application, are effectively the subject of the application for special leave to appeal which is before me.

[12] I now turn to that application which is one for special leave to appeal the

8 December 2014 costs judgment made in the District Court.

[13] So far as that application is concerned, well established considerations for this Court to take into account are the following:

(a) The length of the delay in seeking leave to appeal and the reasons for it;

(b) The parties’ conduct;

(c) The extent of prejudice caused by the delay; (d) The prospective merits of the appeal; and

(e) Whether the appeal raises any issue of public importance.

[14] Turning to consider these matters, as to the first item, the delay in seeking leave to appeal here is a reasonably lengthy period of time. The costs decision was given on 8 December 2014 and the application for special leave to appeal was filed on 22 July 2015. As to the reasons for that delay, Mr Pidgeon today indicated that primary reasons related to legal aid difficulties the appellant had encountered and further difficulties he had experienced in arranging for a legal aid provider to act for him in these matters.

[15] Next, as to the parties’ conduct here, Mr Pidgeon again urged on me concerns raised over what he suggested was an unfavourable view of the appellant Judge Crosbie had formed in the District Court with respect to the summary judgment application he was considering. Mr Pidgeon noted that this impression, he said, was formed out of a sense of frustration or exasperation on the part of the Judge relating to an earlier adjournment which had been sought, but in any event any view the District Court Judge had formed was reached without hearing or testing the evidence in question, given that the application before him was simply one for summary judgment. Under all the circumstances, it is difficult for me to make anything from the question of the parties’ conduct in this matter, although the lengthy and convoluted history of the matters affecting these parties seems clear. I take nothing from this aspect.

[16] Next, I need to consider the extent of prejudice caused by the delay. On this there can be no doubt that the respondent has been out of his money for some time, both with respect to the substantive judgment amount and the costs award. So far as the substantive judgment amount is concerned, until today this was the subject of an appeal effectively abandoned only this morning. That is a situation in my view which does not project the appellant in an entirely good light here.

[17] Next, I need to consider the important matter of the prospective merits of the appeal. This appeal, as I have already noted, is solely with regard to the $11,250 costs award made by Judge Crosbie in the District Court. This costs award was made against the appellant on the basis that, although he was a legally aided party, exceptional circumstances existed here under s 45(3) Legal Services Act 2011 for the award of costs to be made against him as an aided person.

45 Liability of aided person for costs

(3) In determining whether there are exceptional circumstances under subsection (2), the court may take account of, but is not limited to, the following conduct by the aided person:

(a) any conduct that causes the other party to incur unnecessary cost;

(b) any failure to comply with the procedural rules and orders of the court;

(c) any misleading or deceitful conduct;

(d) any unreasonable pursuit of 1 or more issues on which the aided person fails;

(e) any unreasonable refusal to negotiate a settlement or participate in alternative dispute resolution;

(f) any other conduct that abuses the processes of the court.

[19] In his costs judgment, Judge Crosbie determined that exceptional circumstances did exist for a range of reasons he noted at paras [36] and [45] of his decision. The first of these was that the appellant’s defence was wholly unmeritorious and amounted to an unreasonable pursuit of issues on which the defendant not only failed, but failed to raise any reasonable argument. In other words, the defence was hopeless.

[20] Next, Judge Crosbie referred to the commercial nature of the underlying transactions and what he described as unsatisfactory conduct of the defendant related to these. Before me, Mr Pidgeon for the appellant raised a strong issue regarding these findings, given that the application before Judge Crosbie was only one for summary judgment and he had not heard contested and tested evidence with respect to those matters.

[21] Next, Judge Crosbie referred to what he described as the defendant’s failure

to negotiate a settlement involving objectively reasonable minimum essential terms.

[22] Lastly, Judge Crosbie referred to the defendant’s serious and misplaced

allegation that the respondent’s application itself was an abuse of process.

[23] So far as the substantive summary judgment application against the appellant was concerned, there seems now, with the benefit of hindsight, to be very little question that there was no realistic defence available to the appellant here as the defendant in those proceedings. Notwithstanding that, the proceeding, as I have noted above, took a long and convoluted path largely as a result of the appellant’s actions. For that reason alone, in my view, Judge Crosbie was entitled to form the view that there were exceptional circumstances existing in the case such that an award of costs should be made against the appellant as a legally aided person.

[24] I need hardly go further in this matter. I repeat that, from my consideration of Judge Crosbie’s decision, fortified to an extent by the fact that at the eleventh hour here the appellant has simply chosen to abandon his appeal against the substantive summary judgment decision, I am led to the conclusion that the prospective merits of the appeal the appellant seeks leave to bring are extremely slim at best.

[25] For this reason alone the present application for leave fails.

[26] Lastly, and simply for completeness, I note that the final issue as to whether the appeal might raise any questions of public importance, in my view, has little substance. It is correct to say that an award of costs against a legally aided party must always be an exceptional matter (based upon the test of “exceptional circumstances”) but, in my view, the situation in the present case is a purely factual one relating to the circumstances of this case.

[27] For all these reasons the appellant’s application for special leave to extend time for filing the appeal against the costs decision of Judge Crosbie must fail. I rule accordingly.

...................................................

Gendall J

Addendum

[29] I now turn to deal with the issue of costs on matters before me today, 29 July

2015, which I had reserved. On this, Mr Till QC, counsel for the respondent, indicated that, given the substantive appeal which was to be heard was effectively abandoned at the eleventh hour only this morning, and the respondent was required to fully prepare for that appeal, the appellant should pay to the respondent indemnity costs with respect to this matter.

[30] In response Mr Pidgeon suggested that costs here should be limited to scale costs only. In particular he said these costs should be not more than the $995 security for costs which the appellant has paid earlier.

[31] Under all the circumstances prevailing here and, given the matters I have outlined in my substantive decision above I am of the view, but only by a fine margin, that full indemnity costs are not warranted in this case. An uplift on category 2B costs, however, is appropriate.

[32] Costs are therefore awarded to the respondent with respect to this matter on a category 2B basis together with an uplift of 50% as approved by the Registrar. There has been a failure by the appellant here to act reasonably in relation to this appeal, especially in terms of the eleventh hour abandonment of the appeal – Bradbury v

Westpac Banking Corp.¹ This failure to act reasonably has contributed to the time

_{and expense of the proceeding generally.}

¹ Bradbury v Westpac Banking Corp [2009] NZCA 234; [2009] 3 NZLR 400.

[33] In addition, disbursements are awarded to the respondent, and these are to include reasonable travel and accommodation (if necessary) costs for Mr Till QC, counsel appearing for the respondent.

[34] On all of this I note for completeness that the appellant was not legally aided here for the purposes of the matters before me today.

...................................................

Gendall J

Solicitors:

Pidgeon Law, Auckland

Nicholas Till QC, Christchurch