McLean v Auckland District Court [2018] NZHC 552 (28 March 2018)

Last Updated: 16 April 2018

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CRI-2017-404-478 [2018] NZHC 552

BETWEEN	AMBER MCLEAN Appellant
AND	AUCKLAND DISTRICT COURT Respondent

	CRI-2017-404-467
BETWEEN	JOHN PENNICK Appellant
AND	AUCKLAND DISTRICT COURT Defendant

Hearing:	26 March 2018
Appearances:	J Scott for Ms McLean Mr Pennick in person M Harborow and L Fraser for Respondent
Judgment:	28 March 2018

JUDGMENT OF LANG J

[on appeal against orders requiring appellants to pay costs]

This judgment was delivered by me on 28 March 2018 at 3.30 pm, pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar Date...............

MCLEAN & PENNICK v AUCKLAND DISTRICT COURT [2018] NZHC 552 [28 March 2018]

[1] In each of these appeals the appellants acted as counsel for defendants in criminal proceedings before the District Court. Each failed to file a case management memorandum (CMM) in anticipation of a case review hearing as required by s 55 of the Criminal Procedure Act 2011 (the Act). This resulted in Judge C Ryan ordering both appellants to pay costs in the sum of $150 at case review hearings held on 29 November 2017. Each now appeals against those orders.

Background

Ms McLean

[2] Ms McLean acted for a defendant charged with defrauding the Ministry of Social Development. At the commencement of the case review hearing on 29 November 2017 the following exchange occurred:

THE COURT:

There’s no CMM, Ms McLean.

MS MCLEAN:

No, Your Honour, I have to fall on my sword there, it’s one that has fallen through the cracks. I normally would attend to those matters, I – it’s just fallen through the cracks, Your Honour.

[3] Ms McLean then advised the Judge that her client maintained not guilty pleas and elected trial by jury. At this point the prosecutor advised the Judge that this was the first she was aware the matter was to proceed to a jury trial. The prosecutor also told the Judge she had tried to contact Ms McLean on two occasions to discuss completion of the CMM with no success. After discussion about the witnesses to be called for the prosecution and the date for service of briefs of evidence the Judge adjourned the proceeding to jury trial callover. The hearing concluded in the following way:

Right, thank you very much and I’m sorry, Ms McLean, I have to impose $150 costs for not filing the CMM, so I do that now and off until the 27^th February, thank you very much.

Mr Pennick

[4] Mr Pennick acted for a defendant charged with being in possession of methamphetamine, wilful trespass and failing to answer District Court bail. Mr Pennick was assigned to act as counsel for this defendant on legal aid some weeks prior to a case review hearing scheduled for 29 November 2017. At the commencement of the case review hearing Mr Pennick immediately gave the Judge the following explanation for not filing a CMM:

MR PENNICK:

May it please Your Honour, Pennick for [the defendant]. I do apologise that no CMM was filed. The reality is due to an administrative oversight I only found out this was for case review two days ago, however I do have instructions. There are no barriers to this matter being set down for trial. He maintains his not guilty pleas. In terms of the trespass charge, I can indicate there is going to be no dispute as regards the service of the trespass notice and it is almost certain that [the defendant] will be giving evidence. Besides that, no defence evidence anticipated. I will defer to the police in terms of time estimate.

[5] The prosecutor advised the Judge there would be three witnesses for the prosecution. He estimated the hearing would take two hours or less. Mr Pennick also confirmed that his client accepted the substance the police had found was methamphetamine. The Judge then allocated the proceeding a fixture in February 2018. At the conclusion of the hearing, the Judge imposed an order for costs on Mr Pennick in the following terms:

THE COURT:

All right, thank you very much, and Mr Pennick, I’m sorry, I have to impose

$150 costs for the non-filing of the CMM so I do that. All right thank you very much.

Relevant principles

[6] Although she did not say so, the Judge clearly made the orders under s 364 of the Act which provides:

364 Costs orders

(1) In this section,—

costs order means an order under subsection (2)

procedural failure means a failure, or refusal, to comply with a requirement imposed by or under this Act or any rules of court or regulations made under it, or the Criminal Disclosure Act 2008 or any regulations made under that Act

prosecution –

(a) means any proceedings commenced by the filing of a charging document; but

(b) does not include an appeal.

(2) A court may order the defendant, the defendant's lawyer, or the prosecutor to pay a sum in respect of any procedural failure by that person in the course of a prosecution if the court is satisfied that the failure is significant and there is no reasonable excuse for that failure.

(3) The sum must be no more than is just and reasonable in the light of the costs incurred by the court, victims, witnesses, and any other person.

(4) A costs order may be made on the court's own motion, or on application by the defendant, the defendant's lawyer, or the prosecutor.

(5) Before making a costs order, the court must give the person against whom it is to be made a reasonable opportunity to be heard.

(6) A costs order may be made even if the defendant has not yet been convicted, or is eventually discharged, or the charge is dismissed.

(7) The court may make more than 1 costs order against the same person in the course of the same prosecution.

(8) The court may order that some or all of the amount ordered to be paid under a costs order be paid to any person connected with the prosecution.

(9) Subsections (2) to (8) do not limit or affect the Costs in Criminal Cases Act 1967.

[7] As counsel for the respondent points out, recommendations by the Law Commission lay behind many of the reforms effected by the Act. In its report Criminal Pre-trial Processes: Justice Through Efficiency the Commission highlighted an entrenched culture of non-compliance by counsel with procedural requirements under the existing criminal justice regime.¹ One of the initiatives proposed to remedy this was the provision of express power to enable Judges to order counsel to pay costs where there had been significant failure to comply with procedural requirements.² Unlike the High Court, which had the ability to exercise its inherent jurisdiction to

¹ Law Commission Criminal Pre-trial Processes: Justice Through Efficiency (NZLC R89, 2005).

² At [398]-[400].

award costs against counsel, the District Court did not have that power because it does not possess inherent jurisdiction.³

[8] The proposal was incorporated in the Criminal Procedure (Reform and Modernisation) Bill 2011 (243-1) and is now enshrined in s 364. It is obvious that Parliament intended the new power to award costs against counsel as a means of increasing the efficiency and effectiveness of the criminal justice process.

[9] There are two express limits on the exercise of the power. First, the Judge must be satisfied the failure is significant.⁴ Secondly, the Judge must be satisfied there is no reasonable excuse for the failure.⁵ The latter is buttressed by the requirement under s 364(5) that the person against whom an order is to be made must be given a reasonable opportunity to be heard.

[10] The importance of the opportunity to be heard lies in the fact that an award of costs may have unforeseen consequences. It may not only damage the reputation of counsel within the profession and in the eyes of the judiciary, but may also have practical consequences in terms of employment-related issues. Furthermore, it may cause the Legal Services Commissioner to review the status of counsel as a legal aid provider.⁶

[11] The purposes of s 364 were recently examined in considerable detail in Bublitz v R.⁷ In that case Woolford J concluded that, in contrast to the position under the Costs in Criminal Cases Act 1967, the primary purpose of s 364 is to serve as a means of sanction, although it may also provide some compensation for defendants and others who have suffered loss.⁸

[12] Mr Pennick submitted that the effect of s 364(3) is to restrict the power to award costs to cases in which the procedural failure has resulted in either institutional costs or costs being incurred by one of the other parties to the proceeding. In Bublitz,

³ Hughes v Ratcliffe (2000) 14 PRNZ 690 (HC) at [52]-[57].

⁴ Section 364(2).

⁵ Section 364(2).

⁶ As occurred in Owen v District Court at Invercargill [2017] NZHC 1105 at [23]- [26].

⁷ R v Bublitz [2018] NZHC 373.

⁸ At [107].

Woolford J implicitly rejected this argument. He accepted the Crown’s submission that the phrase “no more than is just and reasonable in light of the costs incurred” in s 364(3) is a limiting provision.⁹ It provides only that, where an award of costs is justified, the order must not exceed what is just and reasonable having regard to costs incurred by the failure.

[13] I agree with that conclusion because the restrictive interpretation suggested by Mr Pennick would significantly diminish the effectiveness of the new power to require counsel to pay costs. There will be cases in which there has been a significant procedural failure but this has not resulted in any additional discernible cost being incurred by either the court or the other parties. The court must still have the power to order costs in that situation but any order will be reduced to reflect the fact that the failure did not result in wasted or additional costs.

[14] Bublitz provides an extreme example of procedural failure. In that case it became necessary to abort a trial held before a Judge sitting without a jury after it had been in progress for more than eight months. The trial was aborted because the prosecuting agency disclosed a large volume of relevant material to the defence after the prosecution case had concluded, and after the first of the defendants was about to close his case. Woolford J awarded costs in the sum of $10,000 to each of the defendants who were required to stand trial again as a result of the procedural failure. He also awarded the Ministry of Justice costs in the sum of $10,000.

[15] In R v Walker, a District Court Judge ordered defence counsel to pay costs in the sum of $500 for failing to advise the Court and the Crown that a pre-trial hearing was not required.¹⁰ Counsel compounded that failure by not attending Court on the day of the hearing. The Judge directed the sum of $250 be paid to the Ministry of Justice and the balance to the office of the Crown Solicitor. Of note for present purposes is that fact that the Judge first issued a Minute indicating she was considering making an award of costs under s 364 and inviting defence counsel to respond. The Judge made the award after counsel elected not to provide an explanation for what had occurred.

⁹ At [89].

¹⁰ R v Walker [2016] NZDC 15474.

[16] I accept the Crown’s submission that s 364 is intended to operate in a summary way. Judges will frequently be required to deal with instances of procedural non- compliance in the context of busy lists. The manner in which they exercise the power to award costs will necessarily be dictated by that context. Extended discussions about the reasons for non-compliance will obviously lengthen hearings and defeat one of the principal objects of the legislation, which is to ensure court appearances are meaningful occasions on which the parties and the Court endeavour to make real progress towards resolution or determination of the proceedings.

[17] Importantly, however, the power must not be exercised in cases where there is a reasonable excuse for the failure. To that end the Judge must give effect to the requirement that the person responsible for the failure be given a reasonable opportunity to provide an explanation. What constitutes a reasonable opportunity will obviously depend on the circumstances. An enquiry into the failure to file a CMM during a busy list is likely to be conducted in a far more summary fashion than a failure of the type that occurred in Walker. The likely penalty to be imposed may also inform the extent to which the Judge is required to carry out an enquiry into the reasons for the failure.

[18] In Owen v District Court at Invercargill, defence counsel had failed to file a CMM prior to a case review hearing.¹¹ This caused the hearing to be adjourned for approximately three weeks. At the resumed hearing the presiding Judge asked counsel for an explanation as to why he had not filed a CMM prior to the original hearing. The Judge also told counsel he was giving consideration to “fining” him, and asked whether he wished to be heard in relation to that. Counsel then gave a brief explanation as to why he had not filed the CMM. This resulted in the Judge giving counsel a “final warning” that he could expect to be fined in the event of any similar default in the future.

[19] Defence counsel sought judicial review of the Judge’s decision after the Judge’s warning triggered a review of his status as a legal aid provider. Williams J declined the application because the prospective nature of the Judge’s decision meant

¹¹ Owen v District Court at Invercargill [2017] NZHC 1105.

it had not affected defence counsel’s rights or interests.¹² In doing so Williams J observed of the power to award costs under s 364:

[21] Thus, a Judge can award costs directly against counsel (this provision was plainly introduced to give the Court more tools in ensuring criminal proceedings are advanced in an efficient and disciplined manner). But counsel must receive adequate warning and the Judge must be satisfied that the failure for which the costs award is imposed was “significant and there is no reasonable excuse for that failure”. The Judge may make any such order of his or her own motion.

[22] In this case, the Judge warned counsel that he was considering imposing costs of his own motion. There may be some question about whether there was sufficient notice to satisfy s 364(5), and there may well be a good deal of question about whether the “failure” was sufficiently significant and sufficiently lacking in a reasonable excuse. But all that falls away when the obvious point is made that the Judge did not actually impose the statutory sanction. He decided not to.

Decision

Does a failure to file a CMM constitute a significant procedural failure?

[20] Ms Scott for Ms McLean submits that the failure to file a CMM does not constitute a significant failure in terms of s 364(2). She submits that the term “significant failure” requires a serious dereliction of duty to the Court of the type that was required before the High Court would exercise its inherent jurisdiction to make an order for costs against counsel. She argues that the test to be applied is therefore that explained by the Privy Council in Harley v McDonald.¹³

A simple mistake or oversight or a mere error of judgment will not, of itself, be sufficiently serious to fall into that category. Something more is required. In Myers v Elman [[1940] AC 282 (HL)] at pp 291-292 Viscount Maugham indicated that the test was whether the conduct amounted to a serious dereliction of duty, and that negligence could be so described if it was at a sufficiently high level. At p 304 Lord Atkin described the kind of negligence that could lead to an exercise of the jurisdiction as gross negligence. At p 319 Lord Wright said that, while a mere mistake or error of judgment is not generally sufficient, a gross neglect or inaccuracy in a matter which it was a solicitor’s duty to ascertain with accuracy, such as whether he had a retainer to act, might suffice. A more precise definition of the level of seriousness is not appropriate. But where negligence or incompetence is alleged the conduct must be put into its proper context.

¹² At [24].

¹³ Harley v McDonald [2002] 1 NZLR 1 (PC) at [55].

[21] Ms Scott also submits that this interpretation accords with the approach taken in similar costs regimes in Australia and the United Kingdom.

[22] I do not accept Ms Scott’s submissions on this point. Section 364 is a self- contained code designed to address perceived shortcomings by counsel towards procedural requirements in this country. It is directed to procedural failures rather than serious dereliction of duty. The threshold is therefore considerably lower than that required before the High Court may exercise its inherent jurisdiction to order costs against counsel.

[23] The case review hearing is a significant event for many proceedings in the District Court. Its importance is underscored by s 55(1)(a), which requires both counsel to confer before the hearing to ascertain whether the case will proceed to trial and, if so, to make any arrangements necessary for its fair and expeditious resolution. Section 55(1)(b) then requires counsel to jointly complete the CMM, which must be filed by counsel for the defendant no later than five working days before the hearing.¹⁴

[24] The CMM deals with a wide range of issues including confirmation of plea, proposed amendment or addition of charges and requests for judicial intervention in relation to disclosure issues, sentence indications and bail issues. Where pre-trial applications need to be determined, the CMM advises the nature and duration of the hearing required for that purpose. The CMM also advises whether the case is ready to proceed to trial before either a Judge or jury, and sets out the number of witnesses to be called for the prosecution and defence. It also includes advice as to any special arrangements that need to be made for witnesses. Proposed admissions under s 9 of the Evidence Act 2006 are also canvassed.

[25] Importantly, the CMM contains the views of counsel as to the appropriate court of trial in cases subject to the Court of Trial Protocol. These assist the Judge who decides whether to recommend trial in the District Court or High Court. That decision is usually made at or about the time of the case review hearing.

¹⁴ Criminal Procedure Rules 2012, r 4.6.

[26] Failure to file a CMM deprives the Court of receiving notice of all these matters before the case review hearing is held. It may also have practical consequences. Where a defendant is represented and a CMM has been filed, the Registrar is required to exercise the Court’s power to conduct the case review hearing in cases where the criteria under s 57(4) are satisfied. Section 57(4) provides:

57 Case review

...

(4) A Registrar must exercise the power of the court under this section if—

(a) the defendant is represented; and

(b) a case management memorandum has been filed; and

(c) according to the case management memorandum,—

(i) the defendant does not intend to change his or her plea; and

(ii) the prosecutor does not intend to seek leave to amend or withdraw any charge; and

(iii) the prosecutor does not propose to add any new charge or charges against the defendant; and

(iv) the defendant does not request a sentence indication; and

(v) no party has given notice that it intends to make any other pre-trial application; and

(vi) no other matter is identified of a kind described in section 56(1)(e).

[27] Case review hearings in which no CMM has been filed must be dealt with by a Judge. This division of responsibility between Judges and Registrars obviously reflects Parliament’s intention that Judges should only be required to conduct case review hearings in cases where judicial intervention is required or where the absence of a CMM means it is not known whether it will be required.

[28] These factors demonstrate that a properly completed CMM is an important tool enabling the Judge or Registrar to make meaningful progress at the case review hearing. Failure to file a CMM creates a corresponding obstacle in the path of that
objective. I am therefore satisfied that a failure to file a CMM may constitute a significant procedural failure in terms of s 364(2).

[29] As Woolford J observed in Bublitz, the issue of whether a procedural failure is significant will depend on the circumstances of the case.¹⁵ He considered it would ultimately come down to whether the court considers the failure was sufficiently serious to warrant sanction by way of monetary payment.

[30] It is not difficult to think of circumstances in which the failure to file a CMM might not amount to a significant failure. One example might be where counsel knew in advance that the defendant would be entering a guilty plea at the case review hearing. The only inconvenience at that point might be the need to have the matter transferred from the Registrar to a Judge for the plea to be entered. This highlights the need for Judges who are considering the imposition of an award under s 364 to carefully consider the circumstances of the case before doing so.

Did Ms McLean and Mr Pennick have a reasonable opportunity to be heard?

[31] The transcripts of the hearings involving Ms McLean and Mr Pennick suggest the Judge encountered their failure to file a CMM whilst dealing with a list of cases set down for case review hearings. It was therefore appropriate to deal with them both in a relatively summary fashion.

[32] In each case the Judge sought or obtained an explanation for the failure to file a CMM. In response to the Judge’s enquiry Ms McLean said she had to “fall on her sword”. She also said that although she would normally attend to such matters, the requirement to file the CMM had “just fallen through the cracks”. Mr Pennick volunteered the explanation that through administrative oversight he had only become aware of the case review hearing two days earlier.

[33] I accept that the Judge gave both appellants an opportunity to be heard. I consider, however, that she should also have advised them she was considering imposing an order for costs before receiving their explanations. That advice may have

¹⁵ R v Bublitz, above n 7, at [70].

prompted the appellants to provide more detailed explanations as to why no CMM had been filed. I am therefore prepared to reconsider whether orders for costs were justified based on the information the appellants have now provided.

Were the orders justified?

Ms McLean

[34] Ms Scott submits that the Judge’s failure to indicate she was considering the imposition of an award of costs meant Ms McLean had no opportunity to make further submissions as to why she had failed to file a CMM or as to costs generally. The explanation Ms McLean had already given meant, however, that there was little scope for her to make any further or more detailed explanation. Her acknowledgment that she had to “fall on her sword”, and her observation that the requirement to file a CMM had “fallen through the cracks” effectively confirmed that the failure had occurred through oversight. This explanation does not constitute a reasonable excuse. Ms McLean’s failure to respond to the attempts made by the prosecutor to contact her before the case review hearing also suggested a casual approach to the requirements of the Act.

[35] Ms McLean has not improved her explanation in advancing her appeal. Basic oversight does not constitute a reasonable excuse. Furthermore, it is probably the reason why many CMM’s are not being filed. If Ms McLean’s explanation was accepted as constituting a reasonable excuse, it is difficult to see when an order for costs would ever be justified in cases involving non-deliberate failure to file a CMM.

[36] The real issue is whether the failure to file a CMM constituted a significant procedural failure. Ms Scott submits that Ms McLean’s failure constituted “basic oversight” that did not prejudice either the prosecution or her client. Nor did it require the Court to adjourn the case review hearing or approach it in a materially different way. The efficiency of the proceeding was therefore not adversely affected. For that reason Ms Scott submits the failure to file a CMM did not amount to a significant procedural failure.
[37] Under s 57(4) a defended case where a CMM has been filed would be dealt with by the Registrar. Counsel advised me that in some courts this is done administratively and without the need for a hearing. Ordinarily the failure to file a CMM would therefore mean that a defended case would need to be dealt with by a Judge rather than a Registrar. This can result in Judges needlessly being required to conduct hearings that should be dealt with by the Registrar. Counsel agree, however, that the case review hearings in all defended cases in the Auckland District Court are dealt with by a Judge rather than by the Registrar. It follows that I accept that Ms McLean’s failure to file a CMM did not cause a Judge’s time to be taken up needlessly with the case review hearing.

[38] The fact that there was no CMM meant, however, that the Judge and prosecutor were both at a disadvantage at the case review hearing. The transcript reveals that the prosecutor learned for the first time at the hearing that Ms McLean’s client elected trial by jury. This required the prosecutor to seek a trial callover date as far out as possible because the prosecution had not yet begun preparing formal witness briefs and the file would need to be transferred to the Crown Solicitor. The prosecutor may not have been placed in that position if Ms McLean had complied with her obligations to consult with her and file a CMM.

[39] I acknowledge, however, that by the end of the hearing the proceeding was on track for trial and the value of the case review hearing was not diminished by Ms McLean’s failure to file a CMM. The most that can be said is that the hearing was slightly prolonged by the Judge and prosecutor being required to process information that ought to have been contained in a CMM. The failure was also clearly caused by oversight rather than deliberate conduct or systemic failure. Furthermore, the Judge appears to have accepted Ms McLean’s assertion that she would normally attend to matters such as the filing of a CMM.

[40] In those circumstances I have concluded the failure was not sufficiently serious to justify a monetary sanction.

Mr Pennick

[41] Mr Pennick did not advance any explanation for his failure to file a CMM at the case review hearing. He said only that it had occurred through administrative oversight. He also said he had only learned two days earlier that the case review hearing was to be held.

[42] Mr Pennick now says his secretary did not diary the hearing on 29 November 2017 as a case review hearing. As a result, Mr Pennick believed it was a hearing for a plea to be entered before either a Judge or a Registrar. Had he known it was a case review hearing, he says he would have entered a series of reminders in his electronic diary concerning case management discussions and the filing of the CMM. Matters were not helped by the fact that he had no contact with his client prior to the case review hearing.

[43] Mr Pennick says he became aware of the case review hearing when he received an email from the Registrar on the afternoon of 27 November 2017. He then says:

8. At this point there was little counsel could do to remedy the situation. Due to Court commitments that afternoon and the next day, counsel was in no position to closely consider the potential contents of the CMM until the afternoon of the day before the hearing. There was also no chance of any case management discussions with Police taking place at such a late stage.

9. Counsel accepts that a “pro forma” CMM devoid of useful content could have been filed. This was considered but counsel was most hesitant to file a document of no value. It seemed that the better approach was to make apologies and give explanation at the hearing itself. In the event that Mr Webb attended then instructions could be taken immediately before the hearing and useful progress could hopefully be made.

[44] As matters transpired, Mr Pennick’s client did attend the hearing on 29 November. He provided Mr Pennick with instructions to proceed to trial. Mr Pennick was also able to have a discussion with the prosecutor that he says narrowed down the issues and reduced the number of witnesses required at trial.

[45] After apologising for failing to file a CMM, Mr Pennick went on to advise the Judge that not guilty pleas were maintained and there were no barriers to the matter
being set down for trial. He also advised there was no dispute regarding service of the trespass notice, and there was unlikely to be any defence evidence at trial. All that information would normally have been contained in a CMM.

[46] I do not accept that Mr Pennick’s current explanation amounts to a reasonable excuse because he does not explain why he did not make any attempt to contact his client during the two days leading up to the hearing on 29 November 2017. Furthermore, he could have made some attempt to discuss matters with the prosecutor. A late CMM is far better than no CMM. He does not explain why there was “no chance” of any discussions taking place with the police at such a late stage. Mr Pennick frankly accepts his performance fell below the required standard but says that he was left in a position of not knowing what to do once he learned of the case review hearing just two days before it was held.

[47] Again, however, the value of the CMM was not diminished because Mr Pennick was able to ensure the proceeding was advanced towards trial in the same manner as if a CMM had been filed. His explanation as to why he only became aware of the case review hearing at a late stage is also reasonable. Had the Judge heard Mr Pennick’s explanation I consider it is unlikely that she would have ordered him to pay costs.

[48] Taking those matters into account I do not consider Mr Pennick’s failure to file a CMM warranted sanction either.

Result

[49] Both appeals are allowed and the orders for costs are set aside.




Lang J

Solicitors:

J Scott, Public Defence Service, Auckland Crown Solicitor, Auckland

Copy to Mr Pennick