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High Court of New Zealand Decisions |
Last Updated: 25 May 2018
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IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY
I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-Ā-TARA ROHE
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CIV-2015-485-635
[2018] NZHC 1102 |
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IN THE MATTER
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of an appeal under s 253 of the Lawyers and Conveyancers Act 2006
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BETWEEN
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PAPALI’I TOTI LAGOLAGO
Appellant
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AND
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WELLINGTON STANDARDS COMMITTEE 2
Respondent
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Hearing:
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2 May 2018
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Counsel:
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A C Beck for Appellant
D R La Hood for Respondent
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Judgment:
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18 May 2018
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JUDGMENT (NO. 2) OF CHURCHMAN J
[1] The applicant has filed an application for leave to appeal to the Court of Appeal the decision of Clifford J in the High Court at Wellington on 8 December 2017 in respect of costs.1
[2] The respondent opposes that application.
Background
[3] The applicant was found by the Lawyers and Conveyancers Disciplinary Tribunal (“the LCDT”) to have been negligent in her professional capacity such as
1 Lagolago v Wellington Standards Committee 2 [2017] NZHC 3038 [Lagolago].
LAGOLAGO v WELLINGTON STANDARDS COMMITTEE 2 [2018] NZHC 1102 [18 May 2018]
might bring the legal profession into disrepute on 13 August 2015.2 The LCDT made an alternative finding that, if it was wrong about negligence, the appellant would have been guilty of “unsatisfactory conduct”.3
[4] The applicant appealed against this decision to the High Court. On 30 November 2016, Clifford J allowed the appeal.4 He held that, while it was clear there was a degree of negligence, he was not satisfied that the negligence brought the profession into disrepute.5 He also allowed the appeal against the alternative finding of unsatisfactory conduct on the basis that there was an absence of reasoning in the LCDT’s decision and that it was not self-evident the applicant was guilty of unsatisfactory conduct.6 He quashed the costs orders in favour of the Law Society made in the LCDT.7
[5] On 8 December 2017, Clifford J made orders for costs, which are the subject of this application. He ordered that:
(a) no award of costs against the Law Society in the LCDT was called for;
(b) the costs order against the applicant in respect of her unsuccessful stay application should not be reversed;
(c) the respondent should pay the applicant costs on her successful appeal in the High Court; and
(d) costs on the costs application itself should lie where they fall.
Application for leave to appeal
[6] Leave is required by s 254 of the Lawyers and Conveyancers Act 2006 (“the LCA”). This section provides as follows:
3 Lawyers and Conveyancers Act 2006, s 12(a).
4 Lagolago v Wellington Standards Committee 2 [2016] NZHC 2867.
5 At [127].
6 At [131].
7 At [134].
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.
[7] Any appeal against a High Court decision is confined to questions of law and, in determining whether to grant leave, the Court 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, warrants the attention of the Court of Appeal.
Grounds of appeal
[8] The applicant seeks leave on the grounds that the decision is wrong in law in the following respects:
(a) The High Court held that the principle that costs follow the event does not apply to disciplinary proceedings. The Court effectively created a special class of civil proceedings.
(b) The High Court adopted conflicting principles to determinations in the LCDT and the Court in relation to disciplinary matters. It held that, in the High Court, costs do follow the event. In relation to costs in the LCDT, it held that costs should not follow the event.
(c) The High Court followed the decision of Baxendale-Walker v Law Society8 rather than the decision in Roberts v Professional Conduct Committee of the Nursing Council of New Zealand.9
(d) The High Court held that the principles relating to Calderbank letters do not as a matter of course apply in disciplinary proceedings. The Court failed to give proper weight to the Calderbank letter in relation to Tribunal costs; it took no account of the letter in relation to the High Court costs.
(e) The High Court failed to take relevant matters into account and took irrelevant matters into account in determining the costs for the LCDT hearing.
(f) The High Court did not take all relevant matters into account in determining whether there was a good reason to apply a different approach to costs on the stay application.
(g) The Court departed from the time allocations in the Third Schedule to the Rules without any proper basis for doing so.
[9] The respondent submits that leave to appeal should not be granted because:
(a) the asserted errors lack merit;
(b) the substantive merits of the appeal do not warrant a grant of leave; and
(c) no issue of general or public importance arises, the Court of Appeal having already considered the issues in an analogous context.
8 Baxendale-Walker v Law Society [2007] EWCA 233, [2008] 1 WLR 426.
Costs in disciplinary cases
[10] The general common law rule in civil proceedings, which is reflected in the High Court Rules, r 14.2(1)(a), is that the losing party makes a contribution to the costs of the successful party. In Prebble v Awatere Huata (No 2), the Supreme Court said:10
The general rule that a successful party to an appeal will be entitled to costs was adopted as the practice of the English Court of Appeal in 1875. It has been the invariable practice of the Court of Appeal in New Zealand. It is a presumption legislatively provided for in the High Court Rules. It is consistent with the practice of the Privy Council.
[11] And further:11
In New Zealand, costs have not been awarded to indemnify successful litigants for their actual solicitor and client costs, except in rare cases generally entailing breach of confidence or flagrant misconduct. Except in such cases, in both the Court of Appeal and the High Court orders for party and party costs have been limited to a reasonable contribution to the costs of the successful party. That approach is of long standing and may have been adopted partly for reasons of access to justice, as Williams J suggested in the course of argument in Sargood v Corporation of Dunedin.
[12] The Supreme Court has held that disciplinary proceedings are civil proceedings,12 which would suggest that the general approach to costs in civil proceedings in the High Court should be the starting point for the exercise of any costs discretion.
[13] In the case of Roberts v Professional Conduct Committee of the Nursing Council, the normal practice in civil litigation in the High Court of awarding costs on the appeal to the successful party was followed.13 The Court of Appeal, however, accepted that the presumption of costs following the event might be more easily displaced in disciplinary proceedings, although it did not require a compelling reason:
[27] That is not to say we consider costs should always follow the event in these sorts of cases. We accept (as indeed did Mr Waalkens) that the fact professional conduct committees are performing a public function and have an immunity at Tribunal level may properly be taken into account in determining whether costs may be awarded and if so in what amount.
10 Prebble v Awatere Huata (No 2) [2005] NZSC 18, [2005] 2 NZLR 467 at [3] (footnotes omitted).
11 At [6] (footnotes omitted).
12 Z v Dental Complaints Assessment Committee [2008] NZSC 55, [2009] 1 NZLR 1.
13 Roberts, above n 9.
[28] Given that the fact conduct committees are performing a public function will be a factor in every appeal, it might be thought that taking this into account will for all intents and purposes produce exactly the same result as that proposed by the Judge’s compelling reason threshold. Taking the public function into account will effectively mean that “something else” in addition to success may sometimes be required before costs can be awarded to a successful applicant. Ultimately, however, it is a question of degree or emphasis.
[29] In our view, the correct and more principled approach is simply that the usual presumption still applies but, at the discretion of the Judge, the presumption may be more easily displaced than usual on account of the public function of professional conduct committees. A successful appellant is not, however, required to satisfy a “compelling reason” threshold.
[14] The applicant submitted that the leading authority on LCDT costs was Daniels v Complaints Committee 2 of the Wellington District Law Society.14 In that case, the practitioner had argued that the costs imposed against him were excessive and exceeded an accepted measure of costs of 50 per cent applicable in disciplinary proceedings. The Court declined Mr Daniels’ appeal, electing not to adopt a mathematical approach to the award of costs, instead finding that the LCDT was entitled to award costs of an amount it considered to be appropriate:
[43] An award of costs under s 129 of the 1982 Act (and the 2006 Act) is entirely discretionary. A practitioner may be ordered to pay costs if the Tribunal considers that the proceedings were justified, despite the practitioner not being subject to a guilty finding. It is clear that expenses include salaries and staff and overhead expenses incurred by the societies that investigate and bring proceedings before the Tribunal. So the scope or ambit for a costs order is very wide. The Court will only interfere in the exercise of a tribunal’s discretion if it is wrong in principle or clearly unreasonable.
[15] This reasoning was also reflected in Simes v Canterbury-Westland Standards Committee 2 of the New Zealand Law Society, where the High Court said:15
Section 249 of the Act confers a broad discretion on the Tribunal to award costs in any given case. The Tribunal must not disable itself from exercising its discretion in a particular case by rigidly adopting and applying fixed rules or policies. To do so would be to improperly fetter its discretion and preclude meaningful participation in the decision-making process.
[16] In that case, charges of misconduct and unsatisfactory conduct had been laid against Ms Simes. The LCDT found that there was no evidence that the offences had
14 Daniels v Complaints Committee 2 of the Wellington District Law Society [2011] NZHC 1359; [2011] 3 NZLR 850.
been committed and awarded costs against the Standards Committee, directing them to pay a sum that represented approximately two thirds of Ms Simes’ counsel’s costs in respect of the substantive matter, but rejecting her application for costs on her costs application.16
[17] In the present case, Clifford J said:17
In my view, therefore, the correct approach in New Zealand in disciplinary proceedings where the relevant Tribunal does have a broad jurisdiction to award costs is that costs do not simply follow the event. The fact that a regulatory function is being discharged in the public interest is a relevant consideration, but is not determinative. ... What is required is an evaluative exercise of the discretion provided by the Act.
[18] Counsel for the applicant, Mr Beck, argues that the approach adopted by Clifford J treats disciplinary cases as a separate class of case where the normal approach to costs is not to be followed and instead a different approach is to be applied, effectively creating a special class of civil proceedings. Mr Beck submits that it is seriously arguable that this is not the proper approach to adopt and that it does not accord with what the Court of Appeal said in Roberts. He submits that as the question as to how costs ought to be approached in the LCDT accordingly remains a matter of considerable uncertainly and has never been addressed in the Court of Appeal, this is, therefore, a matter that should properly be addressed by the Court of Appeal.
[19] However, Roberts concerned a professional conduct committee operating in a different context and under a different statutory regime, namely the Health Practitioners Competence Assurance Act 2003 (“the HPCAA”). The HPCAA provides that, in proceedings before the Health Practitioners Disciplinary Tribunal, costs can be awarded in favour of a conduct committee but not against one.18 This contrasts with the LCA, under which the LCDT can award costs both for and against the Law Society. More importantly, Roberts did not specifically address the approach to the award of costs at the tribunal level as opposed to costs in the courts. Therefore, the Court of Appeal’s findings in relation to Roberts are of limited assistance in determining the correct approach to the award of costs at the LCDT level.
16 At [9]-[13].
17 Lagolago, above n 1, at [33].
18 Health Practitioners Competence Assurance Act 2003, s 101(1)(f).
[20] In terms of the cases that did consider costs at the LCDT, the case of Daniels is largely irrelevant as it concerns the amount of costs awarded against the applicant rather than whether or not he should have been required to pay costs. However, it is of note that the Court in Daniels stated that, in a situation where the proceedings were justified, the practitioner may be required to pay costs even if he or she is not found guilty. Simes can be distinguished from the facts before us given that costs were awarded against the Law Society as there was found to have been no evidence of any wrongdoing on the part of Ms Simes, whereas Ms Lagolago was found to have been negligent, albeit not to the standard to justify the conclusion reached by the LCDT.
General or public importance
[21] In order to obtain leave, the applicant has to demonstrate not just that the proposed appeal raises a question of law but that the question is one of general or public importance. None of the propositions relied on by the applicant and set out in
[8] of this decision are made out.
[22] The approach to be taken by the courts to costs at the LCDT is not uncertain. It is discretionary and the fact that costs will not necessarily reflect the standard principle for civil proceedings of costs following the event reflects the public function that the standards committee is fulfilling. By exercising his discretion not to award costs against the Law Society, Clifford J was not creating a special class of civil proceedings. Accordingly, this particular issue is not a matter that needs to be addressed by the Court of Appeal. Neither is there any conflict in the approaches taken to costs in the High Court and the LCDT. There is no obligation on the LCDT to apply the High Court costs regime to matters before it. It has a discretion which appropriately reflects the public benefit nature of its function.
Baxendale-Walker v Law Society
[23] Mr Beck submitted that Clifford J’s decision was wrong in law as it followed the decision of Baxendale-Walker v Law Society19 rather than Roberts.
19 Above n 8.
[24] Baxendale-Walker was a decision of the Court of Appeal of England and Wales, dealing with a solicitor who faced two allegations of conduct unbecoming a solicitor, one of which was dismissed while the other was admitted by Mr Baxendale- Walker. The Law Society had been ordered by the Tribunal to pay 30 per cent of his costs. This costs order was found to have been unjustified, with the Court of Appeal reasoning that:20
... [its] regulatory function places the Law Society in a wholly different position to that of a party to ordinary civil litigation. The normal approach to costs decisions in such litigation – dealing with it very broadly, that properly incurred costs should follow the “event” and be paid by the unsuccessful party
– would appear to have no direct application to disciplinary proceedings against a solicitor.
[25] And:21
Unless the complaint is improperly brought or, for example, proceeds ... as a “shambles from start to finish”, when the Law Society is discharging its responsibilities as a regulator of the profession, and order for costs should not ordinarily be made against it on the basis that costs follow the event. The “event” is simply one factor for consideration. It is not a starting point.
[26] The Court of Appeal, therefore, found that:22
[T]he tribunal misdirected itself when it ordered the Law Society to pay part of the solicitor’s costs on the basis that the first allegation against him had failed and that costs should follow the event. This overlooked not only the public obligation of the Law Society ... but the additional fact that the solicitor brought the proceedings in relation to both allegations on himself.
[27] It is therefore clear from the paragraphs cited above that the Court in England and Wales take a comparatively rigid view of not awarding costs in disciplinary proceedings. While it is true that Clifford J referred to Baxendale-Walker in his judgment, he concluded that the LCDT had, in exercising its costs jurisdiction on the basis of Baxendale-Walker, set the bar too high as regards costs orders in favour of those who successfully defend disciplinary proceedings.23 He also acknowledged that Roberts indicates that the fact an application for costs has been made against a regulator is not as telling a consideration in the regulator’s favour in New Zealand.24
20 At [34].
21 At [39].
22 At [40].
23 Lagolago, above n 1, at [17].
24 At [32].
[28] Clifford J followed neither Baxendale-Walker nor Roberts, but merely took their reasoning into consideration in arriving at his conclusion on the facts. As addressed above, the case of Roberts was decided in the context of a different disciplinary body operating under different statutory provisions, and concerned costs at the High Court level rather than at the tribunal level, meaning that it was not an appropriate precedent to follow. While Baxendale-Walker concerned costs at the tribunal level, it was a decision from another jurisdiction where a more rigid view of costs is taken. It cannot be said that Clifford J made an error of law.
Calderbank letters
[29] Clifford J, having already held that the normal civil costs approach does not apply to disciplinary proceedings, also held that that the Calderbank rules do not apply. He said:
[35] I am satisfied that, as Mr Beck submits, my judgment on Ms Lagolago's appeal reflected the "offer" Ms Lagolago made in her settlement letter. But that is not to say that the Calderbank rules apply accordingly. Those rules are a response to the presumption in the High Court Rules that costs follow the event and, in effect, allow a defendant to redefine the event for that purpose. It follows that the outcomes provided for by those principles do not, as a matter of course, apply when the Tribunal exercises its costs discretion under the Act. Rather, such a letter, and indeed less formal exchanges between a practitioner and the Law Society relating to the progress of disciplinary proceedings, may be relevant when the question of costs falls to be assessed.
[30] Mr Beck submitted that this was not the correct approach and that the starting point should have been the normal civil costs regime. He submitted that the policy behind Calderbank offers of achieving settlements in appropriate cases is equally valid in disciplinary proceedings.
[31] Mr Beck further submitted that, whatever the correct position in the Tribunal might be, the Calderbank offer was undoubtedly relevant in the High Court. In failing to address the relevance of the Calderbank offer to the High Court appeal, Clifford J failed to take a material factor into account in determining the costs to be awarded in the appeal.
[32] Mr La Hood, for the Law Society, submitted that Clifford J’s decision in respect of the Calderbank letter was consistent with the Court of Appeal’s decision in Roberts
that the public interest factors that inform disciplinary proceedings differ to ordinary civil proceedings and are relevant to costs awards. He submitted that it was appropriate that the principles relating to Calderbank letters be held not to apply in disciplinary proceedings, given that a Standards Committee is not in the same position as an ordinary litigant looking to initiate civil litigation.
[33] Mr La Hood further submitted that the applicant’s submission that the Calderbank offer ought to have been taken into account in assessing the High Court costs is incorrect as the applicant was awarded costs in the High Court and the Calderbank offer could only have had relevance to the LCDT proceedings.
[34] I do not accept Mr Beck’s submission that the policy behind Calderbank offers of achieving settlements in appropriate cases is equally valid in disciplinary proceedings. Disciplinary proceedings have a dimension that is absent in most other civil litigation. That dimension justifies a different approach to Calderbank offers. While Ms Lagolago had offered to waive the balance of fees owing to her if the charges were withdrawn, the complaint alleged negligence. The Committee had an important public role to exercise in investigating possible professional misconduct. As discussed above, the normal rule with regard to costs in civil proceedings do not apply in disciplinary proceedings. Therefore, Clifford J did not err in deciding not to factor in the Calderbank offer when declining to award costs against the Committee at the LCDT level.
[35] With regards to costs at the High Court level, Mr Beck is correct in his assertion that Clifford J did not specifically address the relevance of the Calderbank offer to this High Court appeal. However, as her case was not one in which the offer made was appropriate, the relevance of the Calderbank offer to the High Court appeal was not a material factor that Clifford J needed to take into account when determining the costs to be awarded on the appeal. He made no error of law in this regard.
Relevant and irrelevant factors
[36] Mr Beck submits that Clifford J failed to take into account the fact that Ms Lagolago was wholly successful in her appeal. However, while the appeal was allowed, she was found to have been negligent, just not to such a degree as to warrant
disciplinary action. His decision was not a wholesale vindication. As noted in Daniels at [43], the LCDT may order a practitioner to pay costs even if he or she is not subject to a guilty finding, provided the proceedings were justified.
[37] Mr Beck submits that Clifford J held the fact that Ms Lagolago’s factual narrative was confused and complicated against her when it was up to the Standards Committee to provide the appropriate factual narrative.
[38] I do not accept that submission. Clifford J found that Ms Lagolago’s confused and complicated narrative in this matter reflected how she had adduced evidence in the District Court on the case which was the subject of the complaint, and is therefore of relevance in determining whether the Law Society was justified in bringing these proceedings before the LCDT.
Stay application
[39] Clifford J held that costs should not be awarded on the stay application because they had to “follow the event”.25 Mr Beck submitted that the issue is what should happen to costs in the situation where the whole of the appeal has gone against the Committee and the appeal would not have been necessary had the Committee accepted the Calderbank offer made by Ms Lagolago.
[40] However, the High Court Rules on this are clear. The party who fails with respect to an interlocutory application should pay costs to the party who succeeds.26 This is so, regardless of whether the party then goes on to succeed at the hearing. I therefore decline to grant leave to appeal on this ground.
Costs on the High Court appeal
[41] The appeal at the High Court began half an hour early at the request of Clifford J who determined that the early start was not sufficient to justify anything more that the half day for which the appeal was set down.27
25 Lagolago, above n1, at [38].
26 High Court Rules, r. 14.2(1)(a).
27 Lagolago, above n1, at [39].
[42] Mr Beck, however, submitted that Ms Lagolago is entitled to 0.75 of a day for the hearing of the appeal as, if the hearing had commenced at the scheduled time, it would have been necessary to reconvene in the afternoon.
[43] The awarding of costs is discretionary. It was perfectly reasonable that Clifford J elected not to award 0.25 of a day on the basis of a hearing being half an hour longer than anticipated. No issue of law of general or public importance is involved.
Conclusion
[44] The application does not meet the threshold in s 254. Accordingly, leave to appeal is declined.
Churchman J
Solicitors:
Luke Cunningham Clere, Wellington for Respondent
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